Republic of the Philippines

SUPREME COURT
EN BANC
G.R. No. 168056 September 1, 2005
ABAKADA GURO PART !"ST #$ormer%& AAS'AS( O$$"CERS SAMSON S. A!CANTARA )*+
ED ,"NCENT S. A!BANO, Petitioners,
vs.
T-E -ONORAB!E E.ECUT",E SECRETAR EDUARDO ERM"TA/ -ONORAB!E SECRETAR
O$ T-E DEPARTMENT O$ $"NANCE CESAR PUR"S"MA/ )*+ -ONORAB!E COMM"SS"ONER
O$ "NTERNA! RE,ENUE GU"!!ERMO PARANO, 'R., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 16!"#
A$%&'&N( $. P&)EN*E', +R., '%&,A P. E+ERC&*(-E,*RA-A, +&NGG(. E. E,*RA-A, PAN/&'(
). 'AC,(N, A'/RE-( ,. '&), +A)B. A.,. )A-R&GA', AN- ,ERG&( R. (,)E0A &&&,
Petitioners,
vs.
E.ECUT",E SECRETAR EDUARDO R. ERM"TA, CESAR ,. PUR"S"MA, SECRETAR O$
$"NANCE, GU"!!ERMO !. PARANO, 'R., COMM"SS"ONER O$ T-E BUREAU O$ "NTERNA!
RE,ENUE, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 16161
A,,(C&A*&(N (/ P&'&P&NA, ,2E'' -EA'ER,, &NC. represented b3 its President, R(,AR&(
AN*(N&(4 PE*R(N -EA'ER,5 A,,(C&A*&(N represented b3 its President, R%*2 E. BARB&B&4
A,,(C&A*&(N (/ CA'*E6 -EA'ER,5 (/ *2E P2&'&PP&NE, represented b3 its President,
)ERCE-&*A, A. GARC&A4 R(,AR&( AN*(N&( doin7 business under the n89e 8nd st3le of :ANB
N(R*2 ,2E'' ,ER;&CE ,*A*&(N:4 '(%R-E, )AR*&NE< doin7 business under the n89e 8nd
st3le of :,2E'' GA*E = N. -()&NG(:4 BE*2<A&-A *AN doin7 business under the n89e 8nd st3le
of :A-;ANCE ,2E'' ,*A*&(N:4 RE.NA'-( P. )(N*(.A doin7 business under the n89e 8nd
st3le of :NE> 'A)%AN ,2E'' ,ER;&CE ,*A*&(N:4 E/REN ,(**( doin7 business under the
n89e 8nd st3le of :RE- /&E'- ,2E'' ,ER;&CE ,*A*&(N:4 -(N&CA C(RP(RA*&(N represented
b3 its President, -E,& *()ACR%<4 R%*2 E. )ARB&B& doin7 business under the n89e 8nd st3le of
:R?R PE*R(N ,*A*&(N:4 PE*ER ). %NG,(N doin7 business under the n89e 8nd st3le of
:C'A,,&C ,*AR GA,('&NE ,ER;&CE ,*A*&(N:4 )AR&AN ,2E&'A A. 'EE doin7 business under
the n89e 8nd st3le of :N*E GA,('&NE ? ,ER;&CE ,*A*&(N:4 +%'&AN CE,AR P. P(,A-A,
doin7 business under the n89e 8nd st3le of :,*ARCARGA EN*ERPR&,E,:4 A-(RAC&(N
)A0EB( doin7 business under the n89e 8nd st3le of :C)A )(*(R&,*, CEN*ER:4 ,%,AN ).
EN*RA*A doin7 business under the n89e 8nd st3le of :'E(NA5, GA,('&NE ,*A*&(N 8nd
,ER;&CE CEN*ER:4 CAR)E'&*A BA'-(NA-( doin7 business under the n89e 8nd st3le of
:/&R,* C2(&CE ,ER;&CE CEN*ER:4 )ERCE-&*A, A. GARC&A doin7 business under the n89e
8nd st3le of :'(RPE- ,ER;&CE CEN*ER:4 R2EA)AR A. RA)(, doin7 business under the n89e
8nd st3le of :R+RA) P** GA, ,*A*&(N:4 )A. &,ABE' ;&('AG( doin7 business under the n89e
8nd st3le of :;&('AG(-P** ,ER;&CE CEN*ER:4 )(*(R&,*,5 2EAR* C(RP(RA*&(N
represented b3 its ;ice-President for (per8tions, +(,E'&*( /. /'(R-E'&<A4 )(*(R&,*,5
2AR;AR- C(RP(RA*&(N represented b3 its ;ice-President for (per8tions, +(,E'&*( /.
/'(R-E'&<A4 )(*(R&,*,5 2ER&*AGE C(RP(RA*&(N represented b3 its ;ice-President for
(per8tions, +(,E'&*( /. /'(R-E'&<A4 P2&'&PP&NE ,*AN-AR- (&' C(RP(RA*&(N
represented b3 its ;ice-President for (per8tions, +(,E'&*( /. /'(R-E'&<A4 R()E( )AN%E'
doin7 business under the n89e 8nd st3le of :R())AN GA,('&NE ,*A*&(N:4 AN*2(N. A'BER*
CR%< &&& doin7 business under the n89e 8nd st3le of :*R%E ,ER;&CE ,*A*&(N:, Petitioners,
vs.
CESAR ,. PUR"S"MA, 0* 102 3)p)30t& )2 Se3ret)r& o4 t1e Dep)rtme*t o4 $0*)*3e )*+
GU"!!ERMO !. PARANO, 'R., 0* 102 3)p)30t& )2 Comm0220o*er o4 "*ter*)%
Re5e*6e, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 1616@
/RANC&, +(,EP2 G. E,C%-ER(, ;&NCEN* CR&,('(G(, E))AN%E' +(E' +. ;&''AN%E;A,
R(-('/( G. P'A<A, -AR'ENE AN*(N&N(-C%,*(-&(, (,CAR G. )A'AP&*AN, BEN+A)&N C.
AGARA(, +R. +%AN E-GAR-( ). ANGARA, +%,*&N )ARC ,B. C2&PEC(, /'(RENC&( G.
N(E', )%+&; ,. 2A*A)AN, RENA*( B. )AG*%B(, +(,EP2 A. ,AN*&AG(, *E(/&,*( -'.
G%&NG(NA &&&, R%. E'&A, C. '(PE<, R(-('/( $. AGBA.AN& 8nd *E(-(R( A. CA,&0(,
Petitioners,
vs.
CESAR ,. PUR"S"MA, 0* 102 3)p)30t& )2 Se3ret)r& o4 $0*)*3e, GU"!!ERMO !. PARANO, 'R.,
0* 102 3)p)30t& )2 Comm0220o*er o4 "*ter*)% Re5e*6e, )*+ EDUARDO R. ERM"TA, 0* 102
3)p)30t& )2 E7e36t05e Se3ret)r&, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 16#@"
BA*AAN G(;ERN(R ENR&$%E *. GARC&A, +R. Petitioner,
vs.
2(N. E-%AR-( R. ER)&*A, in his c8p8cit3 8s the Executive ,ecret8r34 2(N. )ARGAR&*(
*E;E,, in his c8p8cit3 8s ,ecret8r3 of /in8nce4 2(N. +(,E )AR&( B%NAG, in his c8p8cit3 8s the
(&C Co99issioner of the Bure8u of &ntern8l Revenue4 8nd 2(N. A'E6AN-ER ARE;A'(, in his
c8p8cit3 8s the (&C Co99issioner of the Bure8u of Custo9s, Respondent.
- E C & , & ( N
AUSTR"A8MART"NE9, J.:
*he expenses of 7overn9ent, h8vin7 for their obAect the interest of 8ll, should be borne b3 ever3one,
8nd the 9ore 98n enAo3s the 8dv8nt87es of societ3, the 9ore he ou7ht to hold hi9self honored in
contributin7 to those expenses.
-Anne Robert +8cBues *ur7ot C1#!#-1#1D
/rench st8tes98n 8nd econo9ist
)ountin7 bud7et deficit, revenue 7ener8tion, in8deBu8te fisc8l 8lloc8tion for educ8tion, incre8sed
e9olu9ents for he8lth EorFers, 8nd Eider cover87e for full v8lue-8dded t8x benefits G t1e2e )re
t1e re)2o*2 ;1& Rep6b%03 A3t No. <==> #R.A. No. <==>(
1
;)2 e*)3te+. Re8sons, the Eisdo9 of
Ehich, the Court even Eith its extensive constitution8l poEer of revieE, c8nnot probe. T1e
pet0t0o*er2 0* t1e2e 3)2e2, 1o;e5er, ?6e2t0o* *ot o*%& t1e ;02+om o4 t1e %);, b6t )%2o
per3e05e+ 3o*2t0t6t0o*)% 0*40rm0t0e2 0* 0t2 p)22)@e.
Ever3 l8E enAo3s in its f8vor the presu9ption of constitution8lit3. *heir 8r7u9ents notEithst8ndin7,
pet0t0o*er2 4)0%e+ to A62t04& t1e0r 3)%% 4or t1e 0*5)%0+0t& o4 t1e %);. -e*3e, R.A. No. <==> 02 *ot
6*3o*2t0t6t0o*)%.
!EG"S!AT",E -"STOR
R.A. No. H@@# is 8 consolid8tion of three le7isl8tive bills n89el3, 2ouse Bill Nos. @III 8nd @#"I,
8nd ,en8te Bill No. 1HI".
House Bill No. 3555
!
E8s introduced on first re8din7 on +8nu8r3 #, !""I. *he 2ouse Co99ittee
on >83s 8nd )e8ns 8pproved the bill, in substitution of 2ouse Bill No. 116, Ehich Represent8tive
CRep.D Eric -. ,in7son introduced on Au7ust , !""1. *he President certified the bill on +8nu8r3 #,
!""I for i99edi8te en8ct9ent. (n +8nu8r3 !#, !""I, the 2ouse of Represent8tives 8pproved the
bill on second 8nd third re8din7.
House Bill No. 3705
@
on the other h8nd, substituted 2ouse Bill No. @1"I introduced b3 Rep.
,8l8cnib /. B8terin8, 8nd 2ouse Bill No. @@1 introduced b3 Rep. +8cinto ;. P8r8s. &ts :9other bill:
is 2ouse Bill No. @III. *he 2ouse Co99ittee on >83s 8nd )e8ns 8pproved the bill on /ebru8r3 !,
!""I. *he President 8lso certified it 8s ur7ent on /ebru8r3 , !""I. *he 2ouse of Represent8tives
8pproved the bill on second 8nd third re8din7 on /ebru8r3 !, !""I.
)e8nEhile, the ,en8te Co99ittee on >83s 8nd )e8ns 8pproved Senate Bill No. 1950
1
on )8rch
#, !""I, :in substitution of ,en8te Bill Nos. 1@@#, 1@ 8nd 1#@, t8Fin7 into consider8tion 2ouse
Bill Nos. @III 8nd @#"I.: ,en8tor R8lph G. Recto sponsored ,en8te Bill No. 1@@#, Ehile ,en8te Bill
Nos. 1@ 8nd 1#@ Eere both sponsored b3 ,ens. /r8nFlin ). -rilon, +u8n ). /l8vier 8nd /r8ncis
N. P8n7ilin8n. *he President certified the bill on )8rch 11, !""I, 8nd E8s 8pproved b3 the ,en8te
on second 8nd third re8din7 on April 1@, !""I.
(n the s89e d8te, April 1@, !""I, the ,en8te 87reed to the reBuest of the 2ouse of Represent8tives
for 8 co99ittee conference on the dis87reein7 provisions of the proposed bills.
Before lon7, the Conference Co99ittee on the -is87reein7 Provisions of 2ouse Bill No. @III,
2ouse Bill No. @#"I, 8nd ,en8te Bill No. 1HI", :8fter h8vin7 9et 8nd discussed in full free 8nd
conference,: reco99ended the 8pprov8l of its report, Ehich the ,en8te did on )83 1", !""I, 8nd
Eith the 2ouse of Represent8tives 87reein7 thereto the next d83, )83 11, !""I.
(n )83 !@, !""I, the enrolled cop3 of the consolid8ted 2ouse 8nd ,en8te version E8s tr8ns9itted
to the Pre20+e*t, ;1o 20@*e+ t1e 2)me 0*to %); o* M)& 2B, 2005. T162, 3)me R.A. No. <==>.
+ul3 1, !""I is the effectivit3 d8te of R.A. No. H@@#.
I
>hen s8id d8te c89e, the Court issued 8
te9por8r3 restr8inin7 order, effective i99edi8tel3 8nd continuin7 until further orders, enAoinin7
respondents fro9 enforcin7 8nd i9ple9entin7 the l8E.
(r8l 8r7u9ents Eere held on +ul3 11, !""I. ,i7nific8ntl3, durin7 the he8rin7, the Court spe8Fin7
throu7h )r. +ustice Arte9io ;. P8n78nib8n, voiced the r8tion8le for its issu8nce of the te9por8r3
restr8inin7 order on +ul3 1, !""I, to EitJ
+. PANGAN&BAN J . . . But before & 7o into the det8ils of 3our present8tion, let 9e Aust tell 3ou 8 little
b8cF7round. .ou FnoE Ehen the l8E tooF effect on +ul3 1, !""I, the Court issued 8 *R( 8t 8bout I
o5clocF in the 8fternoon. But before th8t, there E8s 8 lot of co9pl8ints 8ired on television 8nd on
r8dio. ,o9e people in 8 78s st8tion Eere co9pl8inin7 t1)t t1e @)2 pr03e2 ;e*t 6p b& 10C. ,o9e
people Eere co9pl8inin7 th8t t1e0r e%e3tr03 b0%% ;0%% @o 6p b& 10C. (ther ti9es people ridin7 in
do9estic 8ir c8rrier Eere co9pl8inin7 th8t the prices th8t the35ll h8ve to p83 Eould h8ve to 7o up b3
1"K. >hile 8ll th8t E8s bein7 8ired, per 3our present8tion 8nd per our oEn underst8ndin7 of the l8E,
th8t5s not true. &t5s not true th8t the e85)t %); *e3e22)r0%& 0*3re)2e+ pr03e2 b& 10C 6*04orm%& 02*Dt
0tE
A**.. BAN&$%E- J No, .our 2onor.
+. PANGAN&BAN J &t is notL
A**.. BAN&$%E- J &t5s not, bec8use, .our 2onor, there is 8n Executive (rder th8t 7r8nted the
Petroleu9 co9p8nies so9e subsid3 . . . interrupted
+. PANGAN&BAN J *h8t5s correct . . .
A**.. BAN&$%E- J . . . 8nd therefore th8t E8s 9e8nt to te9per the i9p8ct . . . interrupted
+. PANGAN&BAN J . . . 9iti78tin7 9e8sures . . .
A**.. BAN&$%E- J .es, .our 2onor.
+. PANGAN&BAN J As 8 98tter of f8ct 8 p8rt of the 9iti78tin7 9e8sures Eould be the eli9in8tion of
the Excise *8x 8nd the i9port duties. *h8t is Eh3, it is not correct to s83 th8t the ;A* 8s to petroleu9
de8lers incre8sed prices b3 1"K.
A**.. BAN&$%E- J .es, .our 2onor.
+. PANGAN&BAN J And therefore, there is no Austific8tion for incre8sin7 the ret8il price b3 1"K to
cover the E-;8t t8x. &f 3ou consider the excise t8x 8nd the i9port duties, the Net *8x Eould prob8bl3
be in the nei7hborhood of #KL >e 8re not 7oin7 into ex8ct fi7ures & 89 Aust tr3in7 to deliver 8 point
th8t different industries, different products, different services 8re hit differentl3. ,o it5s not correct to
s83 th8t 8ll prices 9ust 7o up b3 1"K.
A**.. BAN&$%E- J .ou5re ri7ht, .our 2onor.
+. PANGAN&BAN J NoE. /or inst8nce, -o9estic Airline co9p8nies, )r. Counsel, 8re 8t present
i9posed 8 ,8les *8x of @K. >hen this E-;8t l8E tooF effect the ,8les *8x E8s 8lso re9oved 8s 8
9iti78tin7 9e8sure. ,o, therefore, there is no Austific8tion to incre8se the f8res b3 1"K 8t best #K,
correctL
A**.. BAN&$%E- J & 7uess so, .our 2onor, 3es.
+. PANGAN&BAN J *here 8re other products th8t the people Eere co9pl8inin7 on th8t first d83, ;ere
be0*@ 0*3re)2e+ )rb0tr)r0%& b& 10C. A*+ t1)tD2 o*e re)2o* )mo*@ m)*& ot1er2 t102 Co6rt 1)+
to 0226e TRO be3)62e o4 t1e 3o*4620o* 0* t1e 0mp%eme*t)t0o*. *h8t5s Eh3 Ee 8dded 8s 8n issue
in this c8se, even if it5s t8n7enti8ll3 t8Fen up b3 the ple8din7s of the p8rties, the confusion in the
i9ple9ent8tion of the E-v8t. (ur people Eere subAected to the 9erc3 of th8t confusion of 8n 8cross
the bo8rd incre8se of 1"K, Ehich 3ou 3ourself noE 8d9it 8nd & thinF even the Govern9ent Eill 8d9it
is incorrect. &n so9e c8ses, 0t 21o6%+ be =C o*%&, in so9e c8ses it should be 6K +epe*+0*@ o*
t1e2e m0t0@)t0*@ me)26re2 )*+ t1e %o3)t0o* )*+ 20t6)t0o* o4 e)31 pro+63t, o4 e)31 2er503e, o4
e)31 3omp)*&, 02*Dt 0tE
A**.. BAN&$%E- J .es, .our 2onor.
+. PANGAN&BAN J Alri7ht. ,o th8t5s one re8son Eh3 Ee h8d to issue 8 *R( pendin7 the cl8rific8tion
of 8ll these 8nd Ee Eish the 7overn9ent Eill t8Fe ti9e to cl8rif3 8ll these b3 9e8ns of 8 9ore
det8iled i9ple9entin7 rules, in c8se the l8E is upheld b3 this Court. . . .
6
*he Court 8lso directed the p8rties to file their respective )e9or8nd8.
G.R. No. 168056
Before R.A. No. H@@# tooF effect, pet0t0o*er2 ABAKADA GURO P)rt& !02t, et al., 40%e+ ) pet0t0o*
4or pro10b0t0o* o* M)& 2>, 2005. T1e& ?6e2t0o* t1e 3o*2t0t6t0o*)%0t& o4 Se3t0o*2 B, 5 )*+ 6 o4
R.A. No. <==>, )me*+0*@ Se3t0o*2 106, 10> )*+ 108, re2pe3t05e%&, o4 t1e N)t0o*)% "*ter*)%
Re5e*6e Co+e #N"RC(. ,ection 1 i9poses 8 1"K ;A* on s8le of 7oods 8nd properties, ,ection I
i9poses 8 1"K ;A* on i9port8tion of 7oods, 8nd ,ection 6 i9poses 8 1"K ;A* on s8le of services
8nd use or le8se of properties. *hese Buestioned provisions cont8in 8 unifor9 po!iso 8uthoriMin7
the President, upon reco99end8tion of the ,ecret8r3 of /in8nce, to r8ise the ;A* r8te to 1!K,
effective +8nu8r3 1, !""6, 8fter 8n3 of the folloEin7 conditions h8ve been s8tisfied, to EitJ
. . . *h8t the President, upon the reco99end8tion of the ,ecret8r3 of /in8nce, sh8ll, effective
+8nu8r3 1, !""6, r8ise the r8te of v8lue-8dded t8x to tEelve percent C1!KD, 8fter 8n3 of the folloEin7
conditions h8s been s8tisfiedJ
CiD ;8lue-8dded t8x collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the previous
3e8r exceeds tEo 8nd four-fifth percent C! 1NIKD4 or
CiiD N8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceeds one 8nd one-
h8lf percent C1 OKD.
Petitioners 8r7ue th8t the l8E is unconstitution8l, 8s it constitutes 8b8ndon9ent b3 Con7ress of its
exclusive 8uthorit3 to fix the r8te of t8xes under Art03%e ,", Se3t0o* 28#2( o4 t1e 1<8> P10%0pp0*e
Co*2t0t6t0o*.
G.R. No. 16820>
(n +une H, !""I, ,en. ABuilino $. Pi9entel, +r., et al., filed 8 petition for certiorari liFeEise 8ss8ilin7
t1e 3o*2t0t6t0o*)%0t& o4 Se3t0o*2 B, 5 )*+ 6 o4 R.A. No. <==>.
Aside fro9 Buestionin7 the so-c8lled stand-by authority of the President to incre8se the ;A* r8te to
1!K, on the 7round th8t it 89ounts to 8n undue dele78tion of le7isl8tive poEer, petitioners 8lso
contend th8t the incre8se in the ;A* r8te to 1!K contin7ent on 8n3 of the tEo conditions bein7
s8tisfied viol8tes the due process cl8use e9bodied in Article &&&, ,ection 1 of the Constitution, 8s it
i9poses 8n unf8ir 8nd 8ddition8l t8x burden on the people, in th8tJ C1D the 1!K incre8se is
89bi7uous bec8use it does not st8te if the r8te Eould be returned to the ori7in8l 1"K if the
conditions 8re no lon7er s8tisfied4 C!D the r8te is unf8ir 8nd unre8son8ble, 8s the people 8re unsure
of the 8pplic8ble ;A* r8te fro9 3e8r to 3e8r4 8nd C@D the incre8se in the ;A* r8te, Ehich is supposed
to be 8n incentive to the President to r8ise the ;A* collection to 8t le8st !
1
NI of the G-P of the
previous 3e8r, should onl3 be b8sed on fisc8l 8deBu8c3.
Petitioners further cl8i9 th8t the inclusion of 8 stand-by authority 7r8nted to the President b3 the
Bic89er8l Conference Co99ittee is 8 viol8tion of the :no-89end9ent rule: upon l8st re8din7 of 8
bill l8id doEn in Article ;&, ,ection !6C!D of the Constitution.
G.R. No. 168B61
*here8fter, 8 petition for prohibition E8s filed on +une !H, !""I, b3 the Associ8tion of Pilipinas ,hell
-e8lers, &nc.,et al., 8ss8ilin7 the folloEin7 provisions of R.A. No. H@@#J
1D Section 8, 89endin7 ,ection 11" CADC!D of the N&RC, reBuirin7 th8t the input t8x on depreci8ble
7oods sh8ll be 89ortiMed over 8 6"-9onth period, if the 8cBuisition, excludin7 the ;A* co9ponents,
exceeds (ne )illion Pesos CP1, """,""".""D4
!D Section 8, 89endin7 ,ection 11" CBD of the N&RC, i9posin7 8 #"K li9it on the 89ount of input t8x
to be credited 878inst the output t8x4 8nd
@D Section 12, 89endin7 ,ection 111 CcD of the N&RC, 8uthoriMin7 the Govern9ent or 8n3 of its
politic8l subdivisions, instru9ent8lities or 87encies, includin7 G(CCs, to deduct 8 IK fin8l
Eithholdin7 t8x on 7ross p839ents of 7oods 8nd services, Ehich 8re subAect to 1"K ;A* under
,ections 1"6 Cs8le of 7oods 8nd propertiesD 8nd 1" Cs8le of services 8nd use or le8se of
propertiesD of the N&RC.
Petitioners contend th8t these provisions 8re unconstitution8l for bein7 8rbitr8r3, oppressive,
excessive, 8nd confisc8tor3.
Petitioners5 8r7u9ent is pre9ised on the constitution8l ri7ht of non-depriv8tion of life, libert3 or
propert3 Eithout due process of l8E under Article &&&, ,ection 1 of the Constitution. Accordin7 to
petitioners, the contested sections i9pose li9it8tions on the 89ount of input t8x th8t 983 be
cl8i9ed. Petitioners 8lso 8r7ue th8t the input t8x p8rt8Fes the n8ture of 8 propert3 th8t 983 not be
confisc8ted, 8ppropri8ted, or li9ited Eithout due process of l8E. Petitioners further contend th8t liFe
8n3 other propert3 or propert3 ri7ht, the input t8x credit 983 be tr8nsferred or disposed of, 8nd th8t
b3 li9itin7 the s89e, the 7overn9ent 7ets to t8x 8 profit or v8lue-8dded even if there is no profit or
v8lue-8dded.
Petitioners 8lso believe th8t these provisions viol8te the constitution8l 7u8r8ntee of eBu8l protection
of the l8E under Article &&&, ,ection 1 of the Constitution, 8s the li9it8tion on the credit8ble input t8x
ifJ C1D the entit3 h8s 8 hi7h r8tio of input t8x4 or C!D invests in c8pit8l eBuip9ent4 or C@D h8s sever8l
tr8ns8ctions Eith the 7overn9ent, is not b8sed on re8l 8nd subst8nti8l differences to 9eet 8 v8lid
cl8ssific8tion.
'8stl3, petitioners contend th8t the #"K li9it is 8n3thin7 but pro7ressive, viol8tive of Article ;&,
,ection !C1D of the Constitution, 8nd th8t it is the s98ller businesses Eith hi7her input t8x to output
t8x r8tio th8t Eill suffer the conseBuences thereof for it Eipes out Eh8tever 9e87er 98r7ins the
petitioners 98Fe.
G.R. No. 168B6=
,ever8l 9e9bers of the 2ouse of Represent8tives led b3 Rep. /r8ncis +oseph G. Escudero filed
this petition for certiorari on +une @", !""I. *he3 Buestion the constitution8lit3 of R.A. No. H@@# on
the folloEin7 7roundsJ
1D ,ections 1, I, 8nd 6 of R.A. No. H@@# constitute 8n undue dele78tion of le7isl8tive poEer, in
viol8tion of Article ;&, ,ection !C!D of the Constitution4
!D *he Bic89er8l Conference Co99ittee 8cted Eithout Aurisdiction in deletin7 the no pass
on provisions present in ,en8te Bill No. 1HI" 8nd 2ouse Bill No. @#"I4 8nd
@D &nsertion b3 the Bic89er8l Conference Co99ittee of ,ections !#, !, @1, 116, 11#, 11H, 1!1,
1!I,
#
11, 1I1, !@6, !@# 8nd !, Ehich Eere present in ,en8te Bill No. 1HI", viol8tes Article ;&,
,ection !1C1D of the Constitution, Ehich provides th8t 8ll 8ppropri8tion, revenue or t8riff bills sh8ll
ori7in8te exclusivel3 in the 2ouse of Represent8tives
G.R. No. 168>=0
(n the eleventh hour, Governor EnriBue *. G8rci8 filed 8 petition for certiorari 8nd prohibition on +ul3
!", !""I, 8lle7in7 unconstitution8lit3 of the l8E on the 7round th8t the li9it8tion on the credit8ble
input t8x in effect 8lloEs ;A*-re7istered est8blish9ents to ret8in 8 portion of the t8xes the3 collect,
thus viol8tin7 the principle th8t t8x collection 8nd revenue should be solel3 8lloc8ted for public
purposes 8nd expenditures. Petitioner G8rci8 further cl8i9s th8t 8lloEin7 these est8blish9ents to
p8ss on the t8x to the consu9ers is ineBuit8ble, in viol8tion of Article ;&, ,ection !C1D of the
Constitution.
RESPONDENTSD COMMENT
*he (ffice of the ,olicitor Gener8l C(,GD filed 8 Co99ent in beh8lf of respondents. Preli9in8ril3,
respondents contend th8t R.A. No. H@@# enAo3s the presu9ption of constitution8lit3 8nd petitioners
f8iled to c8st doubt on its v8lidit3.
Rel3in7 on the c8se of Tolentino vs. Secretary of Finance, !@I ,CRA
6@" C1HH1D, respondents 8r7ue th8t the procedur8l issues r8ised b3 petitioners, i.e., le78lit3 of the
bic89er8l proceedin7s, exclusive ori7in8tion of revenue 9e8sures 8nd the poEer of the ,en8te
conco9it8nt thereto, h8ve 8lre8d3 been settled. >ith re78rd to the issue of undue dele78tion of
le7isl8tive poEer to the President, respondents contend th8t the l8E is co9plete 8nd le8ves no
discretion to the President but to incre8se the r8te to 1!K once 8n3 of the tEo conditions provided
therein 8rise.
Respondents 8lso refute petitioners5 8r7u9ent th8t the incre8se to 1!K, 8s Eell 8s the #"K
li9it8tion on the credit8ble input t8x, the 6"-9onth 89ortiM8tion on the purch8se or i9port8tion of
c8pit8l 7oods exceedin7 P1,""","""."", 8nd the IK fin8l Eithholdin7 t8x b3 7overn9ent 87encies,
is 8rbitr8r3, oppressive, 8nd confisc8tor3, 8nd th8t it viol8tes the constitution8l principle on
pro7ressive t8x8tion, 89on7 others.
/in8ll3, respondents 98nifest th8t R.A. No. H@@# is the 8nchor of the 7overn9ent5s fisc8l refor9
87end8. A refor9 in the v8lue-8dded s3ste9 of t8x8tion is the core revenue 9e8sure th8t Eill tilt the
b8l8nce toE8rds 8 sust8in8ble 98croecono9ic environ9ent necess8r3 for econo9ic 7roEth.
"SSUES
*he Court defined the issues, 8s folloEsJ
PROCEDURA! "SSUE
>hether R.A. No. H@@# viol8tes the folloEin7 provisions of the ConstitutionJ
8. Article ;&, ,ection !1, 8nd
b. Article ;&, ,ection !6C!D
SUBSTANT",E "SSUES
1. >hether ,ections 1, I 8nd 6 of R.A. No. H@@#, 89endin7 ,ections 1"6, 1"# 8nd 1" of the N&RC,
viol8te the folloEin7 provisions of the ConstitutionJ
8. Article ;&, ,ection !C1D, 8nd
b. Article ;&, ,ection !C!D
!. >hether ,ection of R.A. No. H@@#, 89endin7 ,ections 11"CADC!D 8nd 11"CBD of the N&RC4 8nd
,ection 1! of R.A. No. H@@#, 89endin7 ,ection 111CCD of the N&RC, viol8te the folloEin7 provisions
of the ConstitutionJ
8. Article ;&, ,ection !C1D, 8nd
b. Article &&&, ,ection 1
RU!"NG O$ T-E COURT
As 8 prelude, the Court dee9s it 8pt to rest8te the 7ener8l principles 8nd concepts of v8lue-8dded
t8x C;A*D, 8s the confusion 8nd inevit8bl3, liti78tion, breeds fro9 8 f8ll8cious notion of its n8ture.
T1e ,AT 02 ) t)7 o* 2pe*+0*@ or 3o*26mpt0o*. "t 02 %e50e+ o* t1e 2)%e, b)rter, e731)*@e or
%e)2e o4 @oo+2 or propert0e2 )*+ 2er503e2.

Bein7 8n indirect t8x on expenditure, the seller of

7oods or services 983 p8ss on the 89ount of t8x p8id to the bu3er,
<
;0t1 t1e 2e%%er )3t0*@ mere%&
)2 ) t)7 3o%%e3tor.
10
T1e b6r+e* o4 ,AT 02 0*te*+e+ to 4)%% o* t1e 0mme+0)te b6&er2 )*+
6%t0m)te%&, t1e e*+83o*26mer2.
&n contr8st, ) +0re3t t)7 is 8 t8x for Ehich 8 t8xp83er is directl3 li8ble on the tr8ns8ction or business
it en787es in, Eithout tr8nsferrin7 the burden to so9eone else.
11
E7)mp%e2 )re 0*+050+6)% )*+
3orpor)te 0*3ome t)7e2, tr)*24er t)7e2, )*+ re20+e*3e t)7e2.
12
&n the Philippines, the v8lue-8dded s3ste9 of s8les t8x8tion h8s lon7 been in existence, 8lbeit in 8
different 9ode. Prior to 1H#, the s3ste9 E8s 8 sin7le-st87e t8x co9puted under the :cost deduction
9ethod: 8nd E8s p838ble onl3 b3 the ori7in8l sellers. *he sin7le-st87e s3ste9 E8s subseBuentl3
9odified, 8nd 8 9ixture of the :cost deduction 9ethod: 8nd :t8x credit 9ethod: E8s used to
deter9ine the v8lue-8dded t8x p838ble.
1@
%nder the :t8x credit 9ethod,: 8n entit3 c8n credit 878inst
or subtr8ct fro9 the ;A* ch8r7ed on its s8les or outputs the ;A* p8id on its purch8ses, inputs 8nd
i9ports.
11
&t E8s onl3 in 1H#, Ehen President Cor8Mon C. ABuino issued Executive (rder No. !#@, th8t the
;A* s3ste9 E8s r8tion8liMed b3 i9posin7 8 9ulti-st87e t8x r8te of "K or 1"K on 8ll s8les usin7 the
:t8x credit 9ethod.:
1I
E.(. No. !#@ E8s folloEed b3 R.A. No. ##16 or the Exp8nded ;A* '8E,
16
R.A. No. !11 or the
&9proved ;A* '8E,
1#
R.A. No. 1!1 or the *8x Refor9 Act of 1HH#,
1
8nd fin8ll3, the presentl3
be%e)@6ere+ R.A. No. <==>, )%2o re4erre+ to b& re2po*+e*t2 )2 t1e ,AT Re4orm A3t.
*he Court Eill noE discuss the issues in lo7ic8l seBuence.
PROCEDURA! "SSUE
&.
>hether R.A. No. H@@# viol8tes the folloEin7 provisions of the ConstitutionJ
8. Article ;&, ,ection !1, 8nd
b. Article ;&, ,ection !6C!D
A. *he Bic89er8l Conference Co99ittee
Petitioners Escudero, et al., 8nd Pi9entel, et al., 8lle7e th8t the Bic89er8l Conference Co99ittee
exceeded its 8uthorit3 b3J
1D &nsertin7 the stand-by authority in f8vor of the President in ,ections 1, I, 8nd 6 of R.A. No. H@@#4
!D -eletin7 entirel3 the no pass-on provisions found in both the 2ouse 8nd ,en8te bills4
@D &nsertin7 the provision i9posin7 8 #"K li9it on the 89ount of input t8x to be credited 878inst the
output t8x4 8nd
1D &ncludin7 the 89end9ents introduced onl3 b3 ,en8te Bill No. 1HI" re78rdin7 other Finds of t8xes
in 8ddition to the v8lue-8dded t8x.
Petitioners noE beseech the Court to define the poEers of the Bic89er8l Conference Co99ittee.
&t should be borne in 9ind th8t the poEer of intern8l re7ul8tion 8nd discipline 8re intrinsic in 8n3
le7isl8tive bod3 for, 8s unerrin7l3 elucid8ted b3 +ustice ,tor3, FG0H4 t1e po;er +0+ *ot e702t, 0t ;o6%+
be 6tter%& 0mpr)3t03)b%e to tr)*2)3t t1e b620*e22 o4 t1e *)t0o*, e0t1er )t )%%, or )t %e)2t ;0t1
+e3e*3&, +e%0ber)t0o*, )*+ or+er.:
1H
*hus, Article ;&, ,ection 16 C@D of the Constitution provides th8t
:e8ch 2ouse 983 deter9ine the rules of its proceedin7s.: Pursu8nt to this inherent constitution8l
poEer to pro9ul78te 8nd i9ple9ent its oEn rules of procedure, the respective rules of e8ch house
of Con7ress provided for the cre8tion of 8 Bic89er8l Conference Co99ittee.
*hus, Rule 6&;, ,ections 8nd H of the Rules of 2ouse of Represent8tives provides 8s folloEsJ
,ec. . Conference Committee. = &n the event th8t the 2ouse does not 87ree Eith the ,en8te on
the 89end9ent to 8n3 bill or Aoint resolution, the differences 983 be settled b3 the conference
co99ittees of both ch89bers.
&n resolvin7 the differences Eith the ,en8te, the 2ouse p8nel sh8ll, 8s 9uch 8s possible, 8dhere to
8nd support the 2ouse Bill. &f the differences Eith the ,en8te 8re so subst8nti8l th8t the3 98teri8ll3
i9p8ir the 2ouse Bill, the p8nel sh8ll report such f8ct to the 2ouse for the l8tter5s 8ppropri8te 8ction.
,ec. H. Conference Committee eports. = . . . E8ch report sh8ll cont8in 8 det8iled, sufficientl3
explicit st8te9ent of the ch8n7es in or 89end9ents to the subAect 9e8sure.
. . .
*he Ch8ir98n of the 2ouse p8nel 983 be interpell8ted on the Conference Co99ittee Report prior
to the votin7 thereon. *he 2ouse sh8ll vote on the Conference Co99ittee Report in the s89e
98nner 8nd procedure 8s it votes on 8 bill on third 8nd fin8l re8din7.
Rule 6&&, ,ection @I of the Rules of the ,en8te st8tesJ
,ec. @I. &n the event th8t the ,en8te does not 87ree Eith the 2ouse of Represent8tives on the
provision of 8n3 bill or Aoint resolution, the differences sh8ll be settled b3 8 conference co99ittee of
both 2ouses Ehich sh8ll 9eet Eithin ten C1"D d83s 8fter their co9position. *he President sh8ll
desi7n8te the 9e9bers of the ,en8te P8nel in the conference co99ittee Eith the 8pprov8l of the
,en8te.
E8ch Conference Co99ittee Report sh8ll cont8in 8 det8iled 8nd sufficientl3 explicit st8te9ent of the
ch8n7es in, or 89end9ents to the subAect 9e8sure, 8nd sh8ll be si7ned b3 8 98Aorit3 of the
9e9bers of e8ch 2ouse p8nel, votin7 sep8r8tel3.
A co9p8r8tive present8tion of the conflictin7 2ouse 8nd ,en8te provisions 8nd 8 reconciled version
thereof Eith the expl8n8tor3 st8te9ent of the conference co99ittee sh8ll be 8tt8ched to the report.
. . .
*he cre8tion of such conference co99ittee E8s 8pp8rentl3 in response to 8 proble9, not 8ddressed
b3 8n3 constitution8l provision, Ehere the tEo houses of Con7ress find the9selves in dis87ree9ent
over ch8n7es or 89end9ents introduced b3 the other house in 8 le7isl8tive bill. Given th8t one of
the 9ost b8sic poEers of the le7isl8tive br8nch is to for9ul8te 8nd i9ple9ent its oEn rules of
proceedin7s 8nd to discipline its 9e9bers, 983 the Court then delve into the det8ils of hoE
Con7ress co9plies Eith its intern8l rules or hoE it conducts its business of p8ssin7 le7isl8tionL Note
th8t in the present petitions, the issue is not Ehether provisions of the rules of both houses cre8tin7
the bic89er8l conference co99ittee 8re unconstitution8l, b6t ;1et1er t1e b03)mer)% 3o*4ere*3e
3omm0ttee 1)2 2tr03t%& 3omp%0e+ ;0t1 t1e r6%e2 o4 bot1 1o62e2, t1ereb& rem)0*0*@ ;0t10* t1e
A6r02+03t0o* 3o*4erre+ 6po* 0t b& Co*@re22.
&n the recent c8se of Fari!as vs. The "#ecutive Secretary,
!"
the Court "n
$anc, 6*)*0mo62%& reiter8ted 8nd e9ph8siMed its 8dherence to the :enrolled bill doctrine,: thus,
declinin7 therein petitioners5 ple8 for the Court to 7o behind the enrolled cop3 of the bill. Ass8iled in
s8id c8se E8s Con7ress5s cre8tion of tEo sets of bic89er8l conference co99ittees, the l8cF of
records of s8id co99ittees5 proceedin7s, the 8lle7ed viol8tion of s8id co99ittees of the rules of both
houses, 8nd the dis8ppe8r8nce or deletion of one of the provisions in the co9pro9ise bill sub9itted
b3 the bic89er8l conference co99ittee. &t E8s 8r7ued th8t such irre7ul8rities in the p8ss87e of the
l8E nullified R.A. No. H""6, or the /8ir Election Act.
,triFin7 doEn such 8r7u9ent, the Court held thusJ
%nder the :enrolled bill doctrine,: the si7nin7 of 8 bill b3 the ,pe8Fer of the 2ouse 8nd the ,en8te
President 8nd the certific8tion of the ,ecret8ries of both 2ouses of Con7ress th8t it E8s p8ssed 8re
conclusive of its due en8ct9ent. A revieE of c8ses reve8ls the Court5s consistent 8dherence to the
rule. T1e Co6rt 40*+2 *o re)2o* to +e50)te 4rom t1e 2)%6t)r& r6%e 0* t102 3)2e ;1ere t1e
0rre@6%)r0t0e2 )%%e@e+ b& t1e pet0t0o*er2 mo2t%& 0*5o%5e+ t1e 0*ter*)% r6%e2 o4 Co*@re22, e.".,
3re)t0o* o4 t1e 2*+ or =
r+
B03)mer)% Co*4ere*3e Comm0ttee b& t1e -o62e. T102 Co6rt 02 *ot t1e
proper 4or6m 4or t1e e*4or3eme*t o4 t1e2e 0*ter*)% r6%e2 o4 Co*@re22, ;1et1er -o62e or
Se*)te. P)r%0)me*t)r& r6%e2 )re mere%& pro3e+6r)% )*+ ;0t1 t1e0r ob2er5)*3e t1e 3o6rt2 1)5e
*o 3o*3er*. I1)te5er +o6bt2 t1ere m)& be )2 to t1e 4orm)% 5)%0+0t& o4 Rep. A3t No. <006 m62t
be re2o%5e+ 0* 0t2 4)5or. *he Court reiter8tes its rulin7 in %rroyo vs. &e 'enecia, vi(.J
But the 3)2e2, bot1 1ere )*+ )bro)+, 0* 5)r&0*@ 4orm2 o4 e7pre220o*, )%% +e*& to t1e 3o6rt2 t1e
po;er to 0*?60re 0*to )%%e@)t0o*2 t1)t, 0* e*)3t0*@ ) %);, ) -o62e o4 Co*@re22 4)0%e+ to 3omp%&
;0t1 0t2 o;* r6%e2, 0* t1e )b2e*3e o4 21o;0*@ t1)t t1ere ;)2 ) 50o%)t0o* o4 ) 3o*2t0t6t0o*)%
pro5020o* or t1e r0@1t2 o4 pr05)te 0*+050+6)%2. &n )sme!a v. Pendatun, it E8s heldJ :At 8n3 r8te,
courts h8ve decl8red th8t Pthe rules 8dopted b3 deliber8tive bodies 8re subAect to revoc8tion,
9odific8tion or E8iver 8t the ple8sure of the bod3 8doptin7 the9.5 A*+ 0t 1)2 bee* 2)0+ t1)t
FP)r%0)me*t)r& r6%e2 )re mere%& pro3e+6r)%, )*+ ;0t1 t1e0r ob2er5)*3e, t1e 3o6rt2 1)5e *o
3o*3er*. T1e& m)& be ;)05e+ or +02re@)r+e+ b& t1e %e@02%)t05e bo+&.F Co*2e?6e*t%&, Fmere
4)0%6re to 3o*4orm to p)r%0)me*t)r& 62)@e ;0%% *ot 0*5)%0+)te t1e )3t0o* #t)Je* b& )
+e%0ber)t05e bo+&( ;1e* t1e re?6020te *6mber o4 member2 1)5e )@ree+ to ) p)rt036%)r
me)26re.:
!1
CE9ph8sis suppliedD
*he fore7oin7 decl8r8tion is ex8ctl3 in point Eith the present c8ses, Ehere petitioners 8lle7e
irre7ul8rities co99itted b3 the conference co99ittee in introducin7 ch8n7es or deletin7 provisions in
the 2ouse 8nd ,en8te bills. AFin to the Fari!as c8se,
!!
the present petitions 8lso r8ise 8n issue
re78rdin7 the 8ctions t8Fen b3 the conference co99ittee on 98tters re78rdin7 Con7ress5
co9pli8nce Eith its oEn intern8l rules. As st8ted e8rlier, one of the 9ost b8sic 8nd inherent poEer of
the le7isl8ture is the poEer to for9ul8te rules for its proceedin7s 8nd the discipline of its 9e9bers.
Con7ress is the best Aud7e of hoE it should conduct its oEn business expeditiousl3 8nd in the 9ost
orderl3 98nner. &t is 8lso the sole
concern of Con7ress to instill discipline 89on7 the 9e9bers of its conference co99ittee if it
believes th8t s8id 9e9bers viol8ted 8n3 of its rules of proceedin7s. Even the exp8nded Aurisdiction
of this Court c8nnot 8ppl3 to Buestions re78rdin7 onl3 the intern8l oper8tion of Con7ress, thus, the
Court is Eont to den3 8 revieE of the intern8l proceedin7s of 8 co-eBu8l br8nch of 7overn9ent.
)oreover, 8s f8r b8cF 8s 1HH1 or 9ore th8n ten 3e8rs 87o, in the c8se of Tolentino vs. Secretary of
Finance,
!@
the Court 8lre8d3 98de the pronounce9ent th8t :G0H4 ) 31)*@e 02 +e20re+ 0* t1e pr)3t03e
Go4 t1e B03)mer)% Co*4ere*3e Comm0tteeH 0t m62t be 2o6@1t 0* Co*@re22 20*3e t102 ?6e2t0o*
02 *ot 3o5ere+ b& )*& 3o*2t0t6t0o*)% pro5020o* b6t 02 o*%& )* 0*ter*)% r6%e o4 e)31 1o62e.:
!1
*o
d8te, Con7ress h8s not seen it fit to 98Fe such ch8n7es 8dverted to b3 the Court. &t see9s,
therefore, th8t Con7ress finds the pr8ctices of the bic89er8l conference co99ittee to be ver3 useful
for purposes of pro9pt 8nd efficient le7isl8tive 8ction.
Nevertheless, Aust to put 9inds 8t e8se th8t no bl8t8nt irre7ul8rities t8inted the proceedin7s of the
bic89er8l conference co99ittees, the Court dee9s it necess8r3 to dEell on the issue. *he Court
observes th8t there E8s 8 necessit3 for 8 conference co99ittee bec8use 8 co9p8rison of the
provisions of 2ouse Bill Nos. @III 8nd @#"I on one h8nd, 8nd ,en8te Bill No. 1HI" on the other,
reve8ls th8t there Eere indeed dis87ree9ents. As pointed out in the petitions, s8id dis87ree9ents
Eere 8s folloEsJ
-o62e B0%% No. =555 -o62e B0%% No.=>05 Se*)te B0%% No. 1<50
#it$ e"a% to &Stan%'B( Aut$oit(& in )a!o o) *esi%ent
Provides for 1!K ;A* on
ever3 s8le of 7oods or
properties C89endin7 ,ec.
1"6 of N&RCD4 1!K ;A* on
i9port8tion of 7oods
C89endin7 ,ec. 1"# of
N&RCD4 8nd 1!K ;A* on
s8le of services 8nd use or
le8se of properties
C89endin7 ,ec. 1" of
N&RCD
Provides for 1!K ;A* in 7ener8l
on s8les of 7oods or properties
8nd reduced r8tes for s8le of
cert8in loc8ll3 98nuf8ctured
7oods 8nd petroleu9 products
8nd r8E 98teri8ls to be used in
the 98nuf8cture thereof
C89endin7 ,ec. 1"6 of N&RCD4
1!K ;A* on i9port8tion of
7oods 8nd reduced r8tes for
cert8in i9ported products
includin7 petroleu9 products
C89endin7 ,ec. 1"# of N&RCD4
8nd 1!K ;A* on s8le of services
8nd use or le8se of properties
8nd 8 reduced r8te for cert8in
services includin7 poEer
7ener8tion C89endin7 ,ec. 1"
of N&RCD
Provides for 8 sin7le r8te of
1"K ;A* on s8le of 7oods or
properties C89endin7 ,ec.
1"6 of N&RCD, 1"K ;A* on
s8le of services includin7 s8le
of electricit3 b3 7ener8tion
co9p8nies, tr8ns9ission 8nd
distribution co9p8nies, 8nd
use or le8se of properties
C89endin7 ,ec. 1" of N&RCD
#it$ e"a% to t$e &no pass'on& po!ision
No si9il8r provision Provides th8t the ;A* i9posed
on poEer 7ener8tion 8nd on the
s8le of petroleu9 products sh8ll
be 8bsorbed b3 7ener8tion
co9p8nies or sellers,
respectivel3, 8nd sh8ll not be
p8ssed on to consu9ers
Provides th8t the ;A*
i9posed on s8les of
electricit3 b3 7ener8tion
co9p8nies 8nd services of
tr8ns9ission co9p8nies 8nd
distribution co9p8nies, 8s
Eell 8s those of fr8nchise
7r8ntees of electric utilities
sh8ll not 8ppl3 to residenti8l
end-users. ;A* sh8ll be
8bsorbed b3 7ener8tion,
tr8ns9ission, 8nd distribution
co9p8nies.
#it$ e"a% to 70+ li,it on input ta- .e%it
Provides th8t the input t8x
credit for c8pit8l 7oods on
Ehich 8 ;A* h8s been p8id
sh8ll be eBu8ll3 distributed
over I 3e8rs or the
depreci8ble life of such
c8pit8l 7oods4 the input t8x
credit for 7oods 8nd services
other th8n c8pit8l 7oods
sh8ll not exceed IK of the
No si9il8r provision Provides th8t the input t8x
credit for c8pit8l 7oods on
Ehich 8 ;A* h8s been p8id
sh8ll be eBu8ll3 distributed
over I 3e8rs or the
depreci8ble life of such
c8pit8l 7oods4 the input t8x
credit for 7oods 8nd services
other th8n c8pit8l 7oods sh8ll
not exceed H"K of the output
tot8l 89ount of such 7oods
8nd services4 8nd for
persons en787ed in ret8il
tr8din7 of 7oods, the
8lloE8ble input t8x credit
sh8ll not exceed 11K of the
tot8l 89ount of 7oods
purch8sed.
;A*.
#it$ e"a% to a,en%,ents to /e ,a%e to N0R1 po!isions e"a%in" in.o,e an% e-.ise
ta-es
No si9il8r provision No si9il8r provision Provided for 89end9ents to
sever8l N&RC provisions
re78rdin7 corpor8te inco9e,
percent87e, fr8nchise 8nd
excise t8xes
*he dis87ree9ents betEeen the provisions in the 2ouse bills 8nd the ,en8te bill Eere Eith re78rd to
C1D Eh8t r8te of ;A* is to be i9posed4 C!D Ehether onl3 the ;A* i9posed on electricit3 7ener8tion,
tr8ns9ission 8nd distribution co9p8nies should not be p8ssed on to consu9ers, 8s proposed in the
,en8te bill, or both the ;A* i9posed on electricit3 7ener8tion, tr8ns9ission 8nd distribution
co9p8nies 8nd the ;A* i9posed on s8le of petroleu9 products should not be p8ssed on to
consu9ers, 8s proposed in the 2ouse bill4 C@D in Eh8t 98nner input t8x credits should be li9ited4 C1D
8nd Ehether the N&RC provisions on corpor8te inco9e t8xes, percent87e, fr8nchise 8nd excise
t8xes should be 89ended.
*here bein7 differences 8ndNor dis87ree9ents on the fore7oin7 provisions of the 2ouse 8nd ,en8te
bills, the Bic89er8l Conference Co99ittee E8s 98nd8ted b3 the rules of both houses of Con7ress
to 8ct on the s89e b3 settlin7 s8id differences 8ndNor dis87ree9ents. *he Bic89er8l Conference
Co99ittee 8cted on the dis87reein7 provisions b3 98Fin7 the folloEin7 ch8n7esJ
1. >ith re78rd to the dis87ree9ent on the r8te of ;A* to be i9posed, it Eould 8ppe8r fro9 the
Conference Co99ittee Report th8t the Bic89er8l Conference Co99ittee tried to brid7e the 78p in
the difference betEeen the 1"K ;A* r8te proposed b3 the ,en8te, 8nd the v8rious r8tes Eith 1!K
8s the hi7hest ;A* r8te proposed b3 the 2ouse, b3 striFin7 8 co9pro9ise Ehereb3 the present 1"K
;A* r8te Eould be ret8ined until cert8in conditions 8rise, i.e., the v8lue-8dded t8x collection 8s 8
percent87e of 7ross do9estic product CG-PD of the previous 3e8r exceeds ! 1NIK, or N8tion8l
Govern9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceeds 1OK, Ehen the President,
upon reco99end8tion of the ,ecret8r3 of /in8nce sh8ll r8ise the r8te of ;A* to 1!K effective
+8nu8r3 1, !""6.
!. >ith re78rd to the dis87ree9ent on Ehether onl3 the ;A* i9posed on electricit3 7ener8tion,
tr8ns9ission 8nd distribution co9p8nies should not be p8ssed on to consu9ers or Ehether both the
;A* i9posed on electricit3 7ener8tion, tr8ns9ission 8nd distribution co9p8nies 8nd the ;A*
i9posed on s8le of petroleu9 products 983 be p8ssed on to consu9ers, the Bic89er8l Conference
Co99ittee chose to settle such dis87ree9ent b3 8lto7ether deletin7 fro9 its Report 8n3 no pass-
on provision.
@. >ith re78rd to the dis87ree9ent on Ehether input t8x credits should be li9ited or not, the
Bic89er8l Conference Co99ittee decided to 8dopt the position of the 2ouse b3 puttin7 8 li9it8tion
on the 89ount of input t8x th8t 983 be credited 878inst the output t8x, 8lthou7h it cr8fted its oEn
l8n7u87e 8s to the 89ount of the li9it8tion on input t8x credits 8nd the 98nner of co9putin7 the
s89e b3 providin7 thusJ
CAD Credit8ble &nput *8x. = . . .
. . .
Provided, *he input t8x on 7oods purch8sed or i9ported in 8 c8lend8r 9onth for use in tr8de or
business for Ehich deduction for depreci8tion is 8lloEed under this Code, sh8ll be spre8d evenl3
over the 9onth of 8cBuisition 8nd the fift3-nine CIHD succeedin7 9onths if the 877re78te 8cBuisition
cost for such 7oods, excludin7 the ;A* co9ponent thereof, exceeds one 9illion Pesos
CP1,""",""".""DJ PR(;&-E-, hoEever, th8t if the esti98ted useful life of the c8pit8l 7ood is less
th8n five CID 3e8rs, 8s used for depreci8tion purposes, then the input ;A* sh8ll be spre8d over such
shorter periodJ . . .
CBD Excess (utput or &nput *8x. = &f 8t the end of 8n3 t8x8ble Bu8rter the output t8x exceeds the
input t8x, the excess sh8ll be p8id b3 the ;A*-re7istered person. &f the input t8x exceeds the output
t8x, the excess sh8ll be c8rried over to the succeedin7 Bu8rter or Bu8rtersJ PR(;&-E- th8t the input
t8x inclusive of input ;A* c8rried over fro9 the previous Bu8rter th8t 983 be credited in ever3
Bu8rter sh8ll not exceed sevent3 percent C#"KD of the output ;A*J PR(;&-E-, 2(>E;ER, *2A*
8n3 input t8x 8ttribut8ble to Mero-r8ted s8les b3 8 ;A*-re7istered person 983 8t his option be
refunded or credited 878inst other intern8l revenue t8xes, . . .
1. >ith re78rd to the 89end9ents to other provisions of the N&RC on corpor8te inco9e t8x,
fr8nchise, percent87e 8nd excise t8xes, the conference co99ittee decided to include such
89end9ents 8nd b8sic8ll3 8dopted the provisions found in ,en8te Bill No. 1HI", Eith so9e ch8n7es
8s to the r8te of the t8x to be i9posed.
%nder the provisions of both the Rules of the 2ouse of Represent8tives 8nd ,en8te Rules, the
Bic89er8l Conference Co99ittee is 98nd8ted to settle the differences betEeen the dis87reein7
provisions in the 2ouse bill 8nd the ,en8te bill. *he ter9 :settle: is s3non39ous to :reconcile: 8nd
:h8r9oniMe.:
!I
*o reconcile or h8r9oniMe dis87reein7 provisions, the Bic89er8l Conference
Co99ittee 983 then C8D 8dopt the specific provisions of either the 2ouse bill or ,en8te bill, CbD
decide th8t neither provisions in the 2ouse bill or the provisions in the ,en8te bill Eould
be c8rried into the fin8l for9 of the bill, 8ndNor CcD tr3 to 8rrive 8t 8 co9pro9ise betEeen the
dis87reein7 provisions.
&n the present c8se, the ch8n7es introduced b3 the Bic89er8l Conference Co99ittee on
dis87reein7 provisions Eere 9e8nt onl3 to reconcile 8nd h8r9oniMe the dis87reein7 provisions for it
did not inAect 8n3 ide8 or intent th8t is Eholl3 forei7n to the subAect e9br8ced b3 the ori7in8l
provisions.
*he so-c8lled stand-by authority in f8vor of the President, Ehereb3 the r8te of 1"K ;A* E8nted b3
the ,en8te is ret8ined until such ti9e th8t cert8in conditions 8rise Ehen the 1!K ;A* E8nted b3 the
2ouse sh8ll be i9posed, 8ppe8rs to be 8 co9pro9ise to tr3 to brid7e the difference in the r8te of
;A* proposed b3 the tEo houses of Con7ress. Nevertheless, such co9pro9ise is still tot8ll3 Eithin
the subAect of Eh8t r8te of ;A* should be i9posed on t8xp83ers.
*he no pass-on provision E8s deleted 8lto7ether. &n the tr8nscripts of the proceedin7s of the
Bic89er8l Conference Co99ittee held on )83 1", !""I, ,en. R8lph Recto, Ch8ir98n of the ,en8te
P8nel, expl8ined the re8son for deletin7 the no pass-on provision in this EiseJ
. . . the thinFin7 E8s Aust to Feep the ;A* l8E or the ;A* bill si9ple. And Ee Eere thinFin7 th8t no
sector should be 8 benefici8r3 of le7isl8tive 7r8ce, neither should 8n3 sector be discri9in8ted on.
*he ;A* is 8n indirect t8x. "t 02 ) p)22 o*8t)7. And let5s Feep it pl8in 8nd si9ple. 'et5s not confuse
the bill 8nd put 8 no p8ss-on provision. *Eo-thirds of the Eorld h8ve 8 ;A* s3ste9 8nd in this tEo-
thirds of the 7lobe, & h8ve 3et to see 8 ;A* Eith 8 no p8ss-thou7h provision. ,o, the thinFin7 of the
,en8te is b8sic8ll3 si9ple, let5s Feep the ;A* si9ple.
!6
CE9ph8sis suppliedD
Rep. *eodoro 'ocsin further 98de the 98nifest8tion th8t the no pass-on provision :never re8ll3
enAo3ed the support of either 2ouse.:
!#
>ith re78rd to the 89ount of input t8x to be credited 878inst output t8x, the Bic89er8l Conference
Co99ittee c89e to 8 co9pro9ise on the percent87e r8te of the li9it8tion or c8p on such input t8x
credit, but 878in, the ch8n7e introduced b3 the Bic89er8l Conference Co99ittee E8s tot8ll3 Eithin
the intent of both houses to put 8 c8p on input t8x th8t 983 be
credited 878inst the output t8x. /ro9 the inception of the subAect revenue bill in the 2ouse of
Represent8tives, one of the 98Aor obAectives E8s to :plu7 8 7l8rin7 loophole in the t8x polic3 8nd
8d9inistr8tion b3 cre8tin7 vit8l restrictions on the cl8i9in7 of input ;A* t8x credits . . .: 8nd :QbR3
introducin7 li9it8tions on the cl8i9in7 of t8x credit, Ee 8re c8ppin7 8 98Aor le8F87e th8t h8s pl8ced
our collection efforts 8t 8n 8pp8rent dis8dv8nt87e.:
!
As to the 89end9ents to N&RC provisions on t8xes other th8n the v8lue-8dded t8x proposed in
,en8te Bill No. 1HI", since s8id provisions Eere 89on7 those referred to it, the conference
co99ittee h8d to 8ct on the s89e 8nd it b8sic8ll3 8dopted the version of the ,en8te.
*hus, 8ll the ch8n7es or 9odific8tions 98de b3 the Bic89er8l Conference Co99ittee Eere 7er98ne
to subAects of the provisions referred
to it for reconcili8tion. ,uch bein7 the c8se, the Court does not see 8n3 7r8ve 8buse of discretion
89ountin7 to l8cF or excess of Aurisdiction co99itted b3 the Bic89er8l Conference Co99ittee. &n
the e8rlier c8ses of Philippine *ud+es %ssociation vs. Prado
!H
8nd Tolentino vs. Secretary of
Finance,
@"
the Court reco7niMed the lon7-st8ndin7 le7isl8tive pr8ctice of 7ivin7 s8id conference
co99ittee 89ple l8titude for co9pro9isin7 differences betEeen the ,en8te 8nd the 2ouse. *hus, in
the Tolentino c8se, it E8s held th8tJ
. . . it is Eithin the poEer of 8 conference co99ittee to include in its report 8n entirel3 neE provision
th8t is not found either in the 2ouse bill or in the ,en8te bill. &f the co99ittee c8n propose 8n
89end9ent consistin7 of one or tEo provisions, there is no re8son Eh3 it c8nnot propose sever8l
provisions, collectivel3 considered 8s 8n :89end9ent in the n8ture of 8 substitute,: so lon7 8s such
89end9ent is 7er98ne to the subAect of the bills before the co99ittee. After 8ll, its report E8s not
fin8l but needed the 8pprov8l of both houses of Con7ress to beco9e v8lid 8s 8n 8ct of the le7isl8tive
dep8rt9ent. T1e 31)r@e t1)t 0* t102 3)2e t1e Co*4ere*3e Comm0ttee )3te+ )2 ) t10r+ %e@02%)t05e
31)mber 02 t162 ;0t1o6t )*& b)202.
@1
CE9ph8sis suppliedD
$. .%. ,o. -../ &oes ,ot 'iolate %rticle '0, Section 21223 of the Constitution on the 4,o-
%mendment ule4
Article ;&, ,ec. !6 C!D of the Constitution, st8tesJ
No bill p8ssed b3 either 2ouse sh8ll beco9e 8 l8E unless it h8s p8ssed three re8din7s on sep8r8te
d83s, 8nd printed copies thereof in its fin8l for9 h8ve been distributed to its )e9bers three d83s
before its p8ss87e, except Ehen the President certifies to the necessit3 of its i99edi8te en8ct9ent
to 9eet 8 public c8l89it3 or e9er7enc3. %pon the l8st re8din7 of 8 bill, no 89end9ent thereto sh8ll
be 8lloEed, 8nd the vote thereon sh8ll be t8Fen i99edi8tel3 there8fter, 8nd the 3e8s 8nd n83s
entered in the +ourn8l.
Petitioners5 8r7u9ent th8t the pr8ctice Ehere 8 bic89er8l conference co99ittee is 8lloEed to 8dd or
delete provisions in the 2ouse bill 8nd the ,en8te bill 8fter these h8d p8ssed three re8din7s is in
effect 8 circu9vention of the :no 89end9ent rule: C,ec. !6 C!D, Art. ;& of the 1H# ConstitutionD, f8ils
to convince the Court to devi8te fro9 its rulin7 in the Tolentino c8se th8tJ
Nor is there 8n3 re8son for reBuirin7 th8t the Co99ittee5s Report in these c8ses 9ust h8ve
under7one three re8din7s in e8ch of the tEo houses. &f th8t be the c8se, there Eould be no end to
ne7oti8tion since e8ch house 983 seeF 9odific8tion of the co9pro9ise bill. . . .
Art. ,". K 26 #2( m62t, t1ere4ore, be 3o*2tr6e+ )2 re4err0*@ o*%& to b0%%2 0*tro+63e+ 4or t1e 40r2t
t0me 0* e0t1er 1o62e o4 Co*@re22, *ot to t1e 3o*4ere*3e 3omm0ttee report.
@!
CE9ph8sis
suppliedD
*he Court reiter8tes here th8t t1e F*o8)me*+me*t r6%eF re4er2 o*%& to t1e pro3e+6re to be
4o%%o;e+ b& e)31 1o62e o4 Co*@re22 ;0t1 re@)r+ to b0%%2 0*0t0)te+ 0* e)31 o4 2)0+ re2pe3t05e
1o62e2, be4ore 2)0+ b0%% 02 tr)*2m0tte+ to t1e ot1er 1o62e 4or 0t2 3o*36rre*3e or )me*+me*t.
;eril3, to construe s8id provision in 8 E83 8s to proscribe 8n3 further ch8n7es to 8 bill 8fter one
house h8s voted on it Eould le8d to 8bsurdit3 8s this Eould 9e8n th8t the other house of Con7ress
Eould be deprived of its constitution8l poEer to 89end or introduce ch8n7es to s8id bill. *hus, Art.
;&, ,ec. !6 C!D of the Constitution c8nnot be t8Fen to 9e8n th8t the introduction b3 the Bic89er8l
Conference Co99ittee of 89end9ents 8nd 9odific8tions to dis87reein7 provisions in bills th8t h8ve
been 8cted upon b3 both houses of Con7ress is prohibited.
C. .%. ,o. -../ &oes ,ot 'iolate %rticle '0, Section 25 of the Constitution on "#clusive )ri+ination
of evenue $ills
Co9in7 to the issue of the v8lidit3 of the 89end9ents 98de re78rdin7 the N&RC provisions on
corpor8te inco9e t8xes 8nd percent87e, excise t8xes. Petitioners refer to the folloEin7 provisions, to
EitJ
,ection !# R8tes of &nco9e *8x on -o9estic Corpor8tion
!CADC1D *8x on Resident /orei7n Corpor8tion
!CBDC1D &nter-corpor8te -ividends
@1CBDC1D &nter-corpor8te -ividends
116 *8x on Persons Exe9pt fro9 ;A*
11# Percent87e *8x on do9estic c8rriers 8nd Feepers of G8r87e
11H *8x on fr8nchises
1!1 *8x on b8nFs 8nd Non-B8nF /in8nci8l &nter9edi8ries
11 Excise *8x on 98nuf8ctured oils 8nd other fuels
1I1 Excise *8x on 9iner8l products
!@6 Re7istr8tion reBuire9ents
!@# &ssu8nce of receipts or s8les or co99erci8l invoices
! -isposition of &ncre9ent8l Revenue
Petitioners cl8i9 th8t the 89end9ents to these provisions of the N&RC did not 8t 8ll ori7in8te fro9
the 2ouse. *he3 8ver th8t 2ouse Bill No. @III proposed 89end9ents onl3 re78rdin7 ,ections 1"6,
1"#, 1", 11" 8nd 111 of the N&RC, Ehile 2ouse Bill No. @#"I proposed 89end9ents onl3 to
,ections 1"6, 1"#,1", 1"H, 11" 8nd 111 of the N&RC4 thus, the other sections of the N&RC Ehich the
,en8te 89ended but Ehich 89end9ents Eere not found in the 2ouse bills 8re not intended to be
89ended b3 the 2ouse of Represent8tives. 2ence, the3 8r7ue th8t since the proposed 89end9ents
did not ori7in8te fro9 the 2ouse, such 89end9ents 8re 8 viol8tion of Article ;&, ,ection !1 of the
Constitution.
*he 8r7u9ent does not hold E8ter.
Article ;&, ,ection !1 of the Constitution re8dsJ
,ec. !1. All 8ppropri8tion, revenue or t8riff bills, bills 8uthoriMin7 incre8se of the public debt, bills of
loc8l 8pplic8tion, 8nd priv8te bills sh8ll ori7in8te exclusivel3 in the 2ouse of Represent8tives but the
,en8te 983 propose or concur Eith 89end9ents.
&n the present c8ses, petitioners 8d9it th8t it E8s indeed 2ouse Bill Nos. @III 8nd @#"I th8t
initi8ted the 9ove for 89endin7 provisions of the N&RC de8lin7 98inl3 Eith the v8lue-8dded t8x.
%pon tr8ns9itt8l of s8id 2ouse bills to the ,en8te, the ,en8te c89e out Eith ,en8te Bill No. 1HI"
proposin7 89end9ents not onl3 to N&RC provisions on the v8lue-8dded t8x but 8lso 89end9ents to
N&RC provisions on other Finds of t8xes. &s the introduction b3 the ,en8te of provisions not de8lin7
directl3 Eith the v8lue- 8dded t8x, Ehich is the onl3 Find of t8x bein7 89ended in the 2ouse bills, still
Eithin the purvieE of the constitution8l provision 8uthoriMin7 the ,en8te to propose or concur Eith
89end9ents to 8 revenue bill th8t ori7in8ted fro9 the 2ouseL
*he fore7oin7 Buestion h8d been sBu8rel3 8nsEered in the Tolentino c8se, Eherein the Court held,
thusJ
. . . *o be7in Eith, it is not the l8E = but the revenue bill = Ehich is reBuired b3 the Constitution to
:ori7in8te exclusivel3: in the 2ouse of Represent8tives. &t is i9port8nt to e9ph8siMe this, bec8use 8
bill ori7in8tin7 in the 2ouse 983 under7o such extensive ch8n7es in the ,en8te th8t the result 983
be 8 reEritin7 of the Ehole. . . . At this point, Eh8t is i9port8nt to note is th8t, 8s 8 result of the
,en8te 8ction, 8 distinct bill 983 be produced. To 0*202t t1)t ) re5e*6e 2t)t6te L )*+ *ot o*%& t1e
b0%% ;1031 0*0t0)te+ t1e %e@02%)t05e pro3e22 36%m0*)t0*@ 0* t1e e*)3tme*t o4 t1e %); L m62t
26b2t)*t0)%%& be t1e 2)me )2 t1e -o62e b0%% ;o6%+ be to +e*& t1e Se*)teD2 po;er *ot o*%& to
F.on.u 2it$ a,en%,entsF b6t )%2o to Fpopose a,en%,ents.F &t Eould be to viol8te the
coeBu8lit3 of le7isl8tive poEer of the tEo houses of Con7ress 8nd in f8ct 98Fe the 2ouse superior to
the ,en8te.
G
GG05e*, t1e*, t1e po;er o4 t1e Se*)te to propo2e )me*+me*t2, t1e Se*)te 3)* propo2e 0t2
o;* 5er20o* e5e* ;0t1 re2pe3t to b0%%2 ;1031 )re re?60re+ b& t1e Co*2t0t6t0o* to or0@0*)te 0*
t1e -o62e.
. . .
&ndeed, Eh8t the Constitution si9pl3 9e8ns is th8t the initi8tive for filin7 revenue, t8riff or t8x bills,
bills 8uthoriMin7 8n incre8se of the public debt, priv8te bills 8nd bills of loc8l 8pplic8tion 9ust co9e
fro9 the 2ouse of Represent8tives on the theor3 th8t, elected 8s the3 8re fro9 the districts, t1e
member2 o4 t1e -o62e 3)* be e7pe3te+ to be more 2e*20t05e to t1e %o3)% *ee+2 )*+
prob%em2. O* t1e ot1er 1)*+, t1e 2e*)tor2, ;1o )re e%e3te+ )t %)r@e, )re e7pe3te+ to
)ppro)31 t1e 2)me prob%em2 4rom t1e *)t0o*)% per2pe3t05e. Bot1 50e;2 )re t1ereb& m)+e to
be)r o* t1e e*)3tme*t o4 2631 %);2.
@@
CE9ph8sis suppliedD
,ince there is no Buestion th8t the revenue bill exclusivel3 ori7in8ted in the 2ouse of
Represent8tives, the ,en8te E8s 8ctin7 Eithin its
constitution8l poEer to introduce 89end9ents to the 2ouse bill Ehen it included provisions in
,en8te Bill No. 1HI" 89endin7 corpor8te inco9e t8xes, percent87e, excise 8nd fr8nchise t8xes.
;eril3, Article ;&, ,ection !1 of the Constitution does not cont8in 8n3 prohibition or li9it8tion on the
extent of the 89end9ents th8t 983 be introduced b3 the ,en8te to the 2ouse revenue bill.
/urther9ore, the 89end9ents introduced b3 the ,en8te to the N&RC provisions th8t h8d not been
touched in the 2ouse bills 8re still in further8nce of the intent of the 2ouse in initi8tin7 the subAect
revenue bills. *he Expl8n8tor3 Note of 2ouse Bill No. 116, the ver3 first 2ouse bill introduced on
the floor, Ehich E8s l8ter substituted b3 2ouse Bill No. @III, st8tedJ
(ne of the ch8llen7es f8ced b3 the present 8d9inistr8tion is the ur7ent 8nd d8untin7 t8sF of solvin7
the countr35s serious fin8nci8l proble9s. *o do this, 7overn9ent expenditures 9ust be strictl3
9onitored 8nd controlled 8nd revenues 9ust be si7nific8ntl3 incre8sed. *his 983 be e8sier s8id
th8n done, but our fisc8l 8uthorities 8re still opti9istic the 7overn9ent Eill be oper8tin7 on 8
b8l8nced bud7et b3 the 3e8r !""H. &n f8ct, sever8l 9e8sures th8t Eill result to si7nific8nt expenditure
s8vin7s h8ve been identified b3 the 8d9inistr8tion. "t 02 26pporte+ ;0t1 ) 3re+0b%e p)3J)@e o4
re5e*6e me)26re2 t1)t 0*3%6+e me)26re2 to 0mpro5e t)7 )+m0*02tr)t0o* )*+ 3o*tro% t1e
%e)J)@e2 0* re5e*6e2 4rom 0*3ome t)7e2 )*+ t1e 5)%6e8)++e+ t)7 #,AT(. CE9ph8sis suppliedD
Rep. Eric -. ,in7son, in his sponsorship speech for 2ouse Bill No. @III, decl8red th8tJ
&n the bud7et 9ess87e of our President in the 3e8r !""I, she reiter8ted th8t Ee 8ll 8cFnoEled7ed
th8t on top of our 87end8 9ust be the restor8tion of the he8lth of our fisc8l s3ste9.
&n order to consider8bl3 loEer the consolid8ted public sector deficit 8nd eventu8ll3 8chieve 8
b8l8nced bud7et b3 the 3e8r !""H, ;e *ee+ to 2e0Me ;0*+o;2 o4 opport6*0t0e2 ;1031 m0@1t
2eem po0@*)*t 0* t1e be@0**0*@, b6t 0* t1e %o*@ r6* pro5e e44e3t05e )*+ be*e4030)% to t1e
o5er)%% 2t)t62 o4 o6r e3o*om&. O*e 2631 opport6*0t& 02 ) re50e; o4 e702t0*@ t)7 r)te2,
e5)%6)t0*@ t1e re%e5)*3e @05e* o6r pre2e*t 3o*+0t0o*2.
@1
CE9ph8sis suppliedD
Not8bl3 therefore, the 98in purpose of the bills e98n8tin7 fro9 the 2ouse of Represent8tives is to
brin7 in siMe8ble revenues for the 7overn9ent
to supple9ent our countr35s serious fin8nci8l proble9s, 8nd i9prove t8x 8d9inistr8tion 8nd control
of the le8F87es in revenues fro9 inco9e t8xes 8nd v8lue-8dded t8xes. As these house bills Eere
tr8ns9itted to the ,en8te, the l8tter, 8ppro8chin7 the 9e8sures fro9 the point of n8tion8l
perspective, c8n introduce 89end9ents Eithin the purposes of those bills. &t c8n provide for E83s
th8t Eould soften the i9p8ct of the ;A* 9e8sure on the consu9er,i.e., b3 distributin7 the burden
8cross 8ll sectors inste8d of puttin7 it entirel3 on the shoulders of the consu9ers. *he sponsorship
speech of ,en. R8lph Recto on Eh3 the provisions on inco9e t8x on corpor8tion Eere included is
Eorth Buotin7J
All in 8ll, the propos8l of the ,en8te Co99ittee on >83s 8nd )e8ns Eill r8ise P61.@ billion in
8ddition8l revenues 8nnu8ll3 even Ehile b3 9iti78tin7 prices of poEer, services 8nd petroleu9
products.
2oEever, not 8ll of this Eill be Erun7 out of ;A*. &n f8ct, onl3 P1.# billion 89ount is fro9 the ;A* on
tEelve 7oods 8nd services. *he rest of the t8b = P1".I billion- Eill be picFed b3 corpor8tions.
>h8t Ee therefore prescribe is 8 burden sh8rin7 betEeen corpor8te Philippines 8nd the consu9er.
>h3 should the l8tter be8r 8ll the p8inL >h3 should the fisc8l s8lv8tion be onl3 on the burden of the
consu9erL
*he corpor8te Eorld5s eBuit3 is in for9 of the incre8se in the corpor8te inco9e t8x fro9 @! to @I
percent, but up to !"" onl3. *his Eill r8ise P1".I billion 8 3e8r. After th8t, the r8te Eill slide b8cF, not
to its old r8te of @! percent, but tEo notches loEer, to @" percent.
Cle8rl3, Ee 8re tellin7 those Eith the c8p8cit3 to p83, corpor8tions, to be8r Eith this e9er7enc3
provision th8t Eill be in effect for 1,!"" d83s, Ehile Ee put our fisc8l house in order. *his fisc8l
9edicine Eill h8ve 8n expir3 d8te.
/or their 8ssist8nce, 8 reE8rd of t8x reduction 8E8its the9. >e intend to Feep the len7th of their
s8crifice brief. >e Eould liFe to 8ssure the9 th8t not bec8use there is 8 li7ht 8t the end of the tunnel,
this 7overn9ent Eill Feep on 98Fin7 the tunnel lon7.
*he responsibilit3 Eill not rest solel3 on the Ee8r3 shoulders of the s98ll 98n. Bi7 business Eill be
there to sh8re the burden.
@I
As the Court h8s s8id, the ,en8te c8n propose 89end9ents 8nd in f8ct, the 89end9ents 98de on
provisions in the t8x on inco9e of corpor8tions 8re 7er98ne to the purpose of the house bills Ehich
is to r8ise revenues for the 7overn9ent.
'iFeEise, the Court finds the sections referrin7 to other percent87e 8nd excise t8xes 7er98ne to the
refor9s to the ;A* s3ste9, 8s these sections Eould cushion the effects of ;A* on consu9ers.
Considerin7 th8t cert8in 7oods 8nd services Ehich Eere subAect to percent87e t8x 8nd excise t8x
Eould no lon7er be ;A*-exe9pt, the consu9er Eould be burdened 9ore 8s the3 Eould be p83in7
the ;A* in 8ddition to these t8xes. *hus, there is 8 need to 89end these sections to soften the
i9p8ct of ;A*. A78in, in his sponsorship speech, ,en. Recto s8idJ
2oEever, for poEer pl8nts th8t run on oil, Ee Eill reduce to Mero the present excise t8x on bunFer
fuel, to lessen the effect of 8 ;A* on this product.
/or electric utilities liFe )er8lco, Ee Eill Eipe out the fr8nchise t8x in exch8n7e for 8 ;A*.
And in the c8se of petroleu9, Ehile Ee Eill lev3 the ;A* on oil products, so 8s not to destro3 the ;A*
ch8in, Ee Eill hoEever brin7 doEn the excise t8x on soci8ll3 sensitive products such 8s diesel,
bunFer, fuel 8nd Ferosene.
. . .
>h8t do 8ll these exercises point toL *hese 8re not contortions of 7ivin7 to the left h8nd Eh8t E8s
t8Fen fro9 the ri7ht. R8ther, these spr8n7 fro9 our concern of softenin7 the i9p8ct of ;A*, so th8t
the people c8n cushion the bloE of hi7her prices the3 Eill h8ve to p83 8s 8 result of ;A*.
@6
*he other sections 89ended b3 the ,en8te pert8ined to 98tters of t8x 8d9inistr8tion Ehich 8re
necess8r3 for the i9ple9ent8tion of the ch8n7es in the ;A* s3ste9.
*o reiter8te, the sections introduced b3 the ,en8te 8re 7er98ne to the subAect 98tter 8nd purposes
of the house bills, Ehich is to supple9ent our countr35s fisc8l deficit, 89on7 others. *hus, the ,en8te
8cted Eithin its poEer to propose those 89end9ents.
SUBSTANT",E "SSUES
&.
>hether ,ections 1, I 8nd 6 of R.A. No. H@@#, 89endin7 ,ections 1"6, 1"# 8nd 1" of the N&RC,
viol8te the folloEin7 provisions of the ConstitutionJ
8. Article ;&, ,ection !C1D, 8nd
b. Article ;&, ,ection !C!D
%. ,o 6ndue &ele+ation of 7e+islative Po8er
Petitioners %$%9%&% :6) P8rt3 'ist, et al., Pi9entel, +r., et al., 8nd Escudero, et al. contend in
co99on th8t ,ections 1, I 8nd 6 of R.A. No. H@@#, 89endin7 ,ections 1"6, 1"# 8nd 1",
respectivel3, of the N&RC 7ivin7 the President the stand-by authority to r8ise the ;A* r8te fro9 1"K
to 1!K Ehen 8 cert8in condition is 9et, constitutes undue dele78tion of the le7isl8tive poEer to t8x.
*he 8ss8iled provisions re8d 8s folloEsJ
,EC. 1. ,ec. 1"6 of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
,EC. 1"6. ;8lue-Added *8x on ,8le of Goods or Properties. =
CAD R8te 8nd B8se of *8x. = *here sh8ll be levied, 8ssessed 8nd collected on ever3 s8le, b8rter or
exch8n7e of 7oods or properties, 8 v8lue-8dded t8x eBuiv8lent to ten percent C1"KD of the 7ross
sellin7 price or 7ross v8lue in 9one3 of the 7oods or properties sold, b8rtered or exch8n7ed, such
t8x to be p8id b3 the seller or tr8nsferorJpro50+e+, t1)t t1e Pre20+e*t, 6po* t1e re3omme*+)t0o*
o4 t1e Se3ret)r& o4 $0*)*3e, 21)%%, e44e3t05e ')*6)r& 1, 2006, r)02e t1e r)te o4 5)%6e8)++e+ t)7
to t;e%5e per3e*t #12C(, )4ter )*& o4 t1e 4o%%o;0*@ 3o*+0t0o*2 1)2 bee* 2)t0240e+.
#0( 5)%6e8)++e+ t)7 3o%%e3t0o* )2 ) per3e*t)@e o4 Gro22 Dome2t03 Pro+63t #GDP( o4 t1e
pre50o62 &e)r e73ee+2 t;o )*+ 4o6r8404t1 per3e*t #2 BN5C( or
#00( *)t0o*)% @o5er*me*t +e4030t )2 ) per3e*t)@e o4 GDP o4 t1e pre50o62 &e)r e73ee+2 o*e )*+
o*e81)%4 per3e*t #1 OC(.
,EC. I. ,ection 1"# of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
,EC. 1"#. ;8lue-Added *8x on &9port8tion of Goods. =
CAD &n Gener8l. = *here sh8ll be levied, 8ssessed 8nd collected on ever3 i9port8tion of 7oods 8
v8lue-8dded t8x eBuiv8lent to ten percent C1"KD b8sed on the tot8l v8lue used b3 the Bure8u of
Custo9s in deter9inin7 t8riff 8nd custo9s duties, plus custo9s duties, excise t8xes, if 8n3, 8nd
other ch8r7es, such t8x to be p8id b3 the i9porter prior to the rele8se of such 7oods fro9 custo9s
custod3J Provided, *h8t Ehere the custo9s duties 8re deter9ined on the b8sis of the Bu8ntit3 or
volu9e of the 7oods, the v8lue-8dded t8x sh8ll be b8sed on the l8nded cost plus excise t8xes, if
8n3J pro50+e+, 46rt1er, t1)t t1e Pre20+e*t, 6po* t1e re3omme*+)t0o* o4 t1e Se3ret)r& o4
$0*)*3e, 21)%%, e44e3t05e ')*6)r& 1, 2006, r)02e t1e r)te o4 5)%6e8)++e+ t)7 to t;e%5e per3e*t
#12C( )4ter )*& o4 t1e 4o%%o;0*@ 3o*+0t0o*2 1)2 bee* 2)t0240e+.
#0( 5)%6e8)++e+ t)7 3o%%e3t0o* )2 ) per3e*t)@e o4 Gro22 Dome2t03 Pro+63t #GDP( o4 t1e
pre50o62 &e)r e73ee+2 t;o )*+ 4o6r8404t1 per3e*t #2 BN5C( or
#00( *)t0o*)% @o5er*me*t +e4030t )2 ) per3e*t)@e o4 GDP o4 t1e pre50o62 &e)r e73ee+2 o*e )*+
o*e81)%4 per3e*t #1 OC(.
,EC. 6. ,ection 1" of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
,EC. 1". ;8lue-8dded *8x on ,8le of ,ervices 8nd %se or 'e8se of Properties =
CAD R8te 8nd B8se of *8x. = *here sh8ll be levied, 8ssessed 8nd collected, 8 v8lue-8dded t8x
eBuiv8lent to ten percent C1"KD of 7ross receipts derived fro9 the s8le or exch8n7e of
servicesJ pro50+e+, t1)t t1e Pre20+e*t, 6po* t1e re3omme*+)t0o* o4 t1e Se3ret)r& o4 $0*)*3e,
21)%%, e44e3t05e ')*6)r& 1, 2006, r)02e t1e r)te o4 5)%6e8)++e+ t)7 to t;e%5e per3e*t #12C(,
)4ter )*& o4 t1e 4o%%o;0*@ 3o*+0t0o*2 1)2 bee* 2)t0240e+.
#0( 5)%6e8)++e+ t)7 3o%%e3t0o* )2 ) per3e*t)@e o4 Gro22 Dome2t03 Pro+63t #GDP( o4 t1e
pre50o62 &e)r e73ee+2 t;o )*+ 4o6r8404t1 per3e*t #2 BN5C( or
#00( *)t0o*)% @o5er*me*t +e4030t )2 ) per3e*t)@e o4 GDP o4 t1e pre50o62 &e)r e73ee+2 o*e )*+
o*e81)%4 per3e*t #1 OC(. CE9ph8sis suppliedD
Petitioners 8lle7e th8t the 7r8nt of the stand-by authority to the President to incre8se the ;A* r8te is
8 virtu8l 8bdic8tion b3 Con7ress of its exclusive poEer to t8x bec8use such dele78tion is not Eithin
the purvieE of ,ection ! C!D, Article ;& of the Constitution, Ehich providesJ
*he Con7ress 983, b3 l8E, 8uthoriMe the President to fix Eithin specified li9its, 8nd 983 i9pose,
t8riff r8tes, i9port 8nd export Buot8s, tonn87e 8nd Eh8rf87e dues, 8nd other duties or i9posts Eithin
the fr89eEorF of the n8tion8l develop9ent pro7r89 of the 7overn9ent.
*he3 8r7ue th8t the ;A* is 8 t8x levied on the s8le, b8rter or exch8n7e of 7oods 8nd properties 8s
Eell 8s on the s8le or exch8n7e of services, Ehich c8nnot be included Eithin the purvieE of t8riffs
under the exe9pted dele78tion 8s the l8tter refers to custo9s duties, tolls or tribute p838ble upon
9erch8ndise to the 7overn9ent 8nd usu8ll3 i9posed on 7oods or 9erch8ndise i9ported or
exported.
Petitioners %$%9%&% :6) P8rt3 'ist, et al., further contend th8t dele78tin7 to the President the
le7isl8tive poEer to t8x is contr8r3 to republic8nis9. *he3 insist th8t 8ccount8bilit3, responsibilit3 8nd
tr8nsp8renc3 should dict8te the 8ctions of Con7ress 8nd the3 should not p8ss to the President the
decision to i9pose t8xes. *he3 8lso 8r7ue th8t the l8E 8lso effectivel3 nullified the President5s poEer
of control, Ehich includes the 8uthorit3 to set 8side 8nd nullif3 the 8cts of her subordin8tes liFe the
,ecret8r3 of /in8nce, b3 98nd8tin7 the fixin7 of the t8x r8te b3 the President upon the
reco99end8tion of the ,ecret8r3 of /in8nce.
Petitioners Pi9entel, et al. 8ver th8t the President h8s 89ple poEers to c8use, influence or cre8te
the conditions provided b3 the l8E to brin7 8bout either or both the conditions precedent.
(n the other h8nd, petitioners Escudero, et al. find biM8rre 8nd revoltin7 the situ8tion th8t the
i9position of the 1!K r8te Eould be subAect to the Ehi9 of the ,ecret8r3 of /in8nce, 8n unelected
bure8ucr8t, contr8r3 to the principle of no t8x8tion Eithout represent8tion. *he3 sub9it th8t the
,ecret8r3 of /in8nce is not 98nd8ted to 7ive 8 f8vor8ble reco99end8tion 8nd he 983 not even 7ive
his reco99end8tion. )oreover, the3 8lle7e th8t no 7uidin7 st8nd8rds 8re provided in the l8E on
Eh8t b8sis 8nd 8s to hoE he Eill 98Fe his reco99end8tion. *he3 cl8i9, nonetheless, th8t 8n3
reco99end8tion of the ,ecret8r3 of /in8nce c8n e8sil3 be brushed 8side b3 the President since the
for9er is 8 9ere 8lter e7o of the l8tter, such th8t, ulti98tel3, it is the President Eho decides Ehether
to i9pose the incre8sed t8x r8te or not.
A brief discourse on the principle of non-dele78tion of poEers is instructive.
*he principle of sep8r8tion of poEers ord8ins th8t e8ch of the three 7re8t br8nches of 7overn9ent
h8s exclusive co7niM8nce of 8nd is supre9e in 98tters f8llin7 Eithin its oEn constitution8ll3 8lloc8ted
sphere.
@#
A lo7ic8l
coroll8r3 to the doctrine of sep8r8tion of poEers is the principle of non-dele78tion of poEers, 8s
expressed in the '8tin 98xi9J potestas dele+ata non dele+ari potest Ehich 9e8ns :Eh8t h8s been
dele78ted, c8nnot be dele78ted.:
@
*his doctrine is b8sed on the ethic8l principle th8t such 8s
dele78ted poEer constitutes not onl3 8 ri7ht but 8 dut3 to be perfor9ed b3 the dele78te throu7h the
instru9ent8lit3 of his oEn Aud79ent 8nd not throu7h the intervenin7 9ind of 8nother.
@H
>ith respect to the 'e7isl8ture, ,ection 1 of Article ;& of the Constitution provides th8t :the
7e+islative po8er shall be vested in the Con+ress of the Philippines 8hich shall consist of a Senate
and a ;ouse of epresentatives.: *he poEers Ehich Con7ress is prohibited fro9 dele78tin7 8re
those Ehich 8re strictl3, or inherentl3 8nd exclusivel3, le7isl8tive. Purel3 le7isl8tive poEer, Ehich c8n
never be dele78ted, h8s been described 8s the )6t1or0t& to m)Je ) 3omp%ete %); L 3omp%ete )2
to t1e t0me ;1e* 0t 21)%% t)Je e44e3t )*+ )2 to ;1om 0t 21)%% be )pp%03)b%e L )*+ to +eterm0*e
t1e e7pe+0e*3& o4 0t2 e*)3tme*t.
1"
*hus, the rule is th8t in order th8t 8 court 983 be Austified in
holdin7 8 st8tute unconstitution8l 8s 8 dele78tion of le7isl8tive poEer, it 9ust 8ppe8r th8t the poEer
involved is purel3 le7isl8tive in n8ture = th8t is, one 8ppert8inin7 exclusivel3 to the le7isl8tive
dep8rt9ent. &t is the n8ture of the poEer, 8nd not the li8bilit3 of its use or the 98nner of its exercise,
Ehich deter9ines the v8lidit3 of its dele78tion.
Nonetheless, the 7ener8l rule b8rrin7 dele78tion of le7isl8tive poEers is subAect to the folloEin7
reco7niMed li9it8tions or exceptionsJ
C1D -ele78tion of t8riff poEers to the President under ,ection ! C!D of Article ;& of the Constitution4
C!D -ele78tion of e9er7enc3 poEers to the President under ,ection !@ C!D of Article ;& of the
Constitution4
C@D -ele78tion to the people 8t l8r7e4
C1D -ele78tion to loc8l 7overn9ents4 8nd
CID -ele78tion to 8d9inistr8tive bodies.
&n ever3 c8se of per9issible dele78tion, there 9ust be 8 shoEin7 th8t the dele78tion itself is v8lid. &t
is v8lid onl3 if the l8E C8D is co9plete in itself, settin7 forth therein the polic3 to be executed, c8rried
out, or i9ple9ented b3 the dele78te4
11
8nd CbD fixes 8 st8nd8rd S the li9its of Ehich 8re sufficientl3
deter9in8te 8nd deter9in8ble S to Ehich the dele78te 9ust confor9 in the perfor98nce of his
functions.
1!
A sufficient st8nd8rd is one Ehich defines le7isl8tive polic3, 98rFs its li9its, 98ps out its
bound8ries 8nd specifies the public 87enc3 to 8ppl3 it. &t indic8tes the circu9st8nces under Ehich
the le7isl8tive co998nd is to be effected.
1@
Both tests 8re intended to prevent 8 tot8l tr8nsference of
le7isl8tive 8uthorit3 to the dele78te, Eho is not 8lloEed to step into the shoes of the le7isl8ture 8nd
exercise 8 poEer essenti8ll3 le7isl8tive.
11
&n People vs. 'era,
1I
the Court, throu7h e9inent +ustice +ose P. '8urel, expounded on the concept
8nd extent of dele78tion of poEer in this EiseJ
&n testin7 Ehether 8 st8tute constitutes 8n undue dele78tion of le7isl8tive poEer or not, it is usu8l to
inBuire Ehether the st8tute E8s co9plete in 8ll its ter9s 8nd provisions Ehen it left the h8nds of the
le7isl8ture so th8t nothin7 E8s left to the Aud79ent of 8n3 other 8ppointee or dele78te of the
le7isl8ture.
. . .
PT1e tr6e +02t0*3t0o*D, 2)&2 '6+@e R)**e&, P02 bet;ee* t1e +e%e@)t0o* o4 po;er to m)Je t1e
%);, ;1031 *e3e22)r0%& 0*5o%5e2 ) +023ret0o* )2 to ;1)t 0t 21)%% be, )*+ 3o*4err0*@ )* )6t1or0t&
or +023ret0o* )2 to 0t2 e7e36t0o*, to be e7er302e+ 6*+er )*+ 0* p6r26)*3e o4 t1e %);. T1e 40r2t
3)**ot be +o*e/ to t1e %)tter *o 5)%0+ obAe3t0o* 3)* be m)+e.D
. . .
&t is contended, hoEever, th8t 8 le7isl8tive 8ct 983 be 98de to the effect 8s l8E 8fter it le8ves the
h8nds of the le7isl8ture. &t is true th8t l8Es 983 be 98de effective on cert8in contin7encies, 8s b3
procl898tion of the executive or the 8doption b3 the people of 8 p8rticul8r co99unit3. &n >8398n
vs. ,outh8rd, the ,upre9e Court of the %nited ,t8tes ruled th8t the le7isl8ture 983 dele78te 8
poEer not le7isl8tive Ehich it 983 itself ri7htfull3 exercise.T1e po;er to )23ert)0* 4)3t2 02 2631 )
po;er ;1031 m)& be +e%e@)te+. T1ere 02 *ot10*@ e22e*t0)%%& %e@02%)t05e 0* )23ert)0*0*@ t1e
e702te*3e o4 4)3t2 or 3o*+0t0o*2 )2 t1e b)202 o4 t1e t)J0*@ 0*to e44e3t o4 ) %);. T1)t 02 ) me*t)%
pro3e22 3ommo* to )%% br)*31e2 o4 t1e @o5er*me*t. NotEithst8ndin7 the 8pp8rent tendenc3,
hoEever, to rel8x the rule prohibitin7 dele78tion of le7isl8tive 8uthorit3 on 8ccount of the co9plexit3
8risin7 fro9 soci8l 8nd econo9ic forces 8t EorF in this 9odern industri8l 87e, the orthodox
pronounce9ent of +ud7e Coole3 in his EorF on Constitution8l 'i9it8tions finds rest8te9ent in Prof.
>illou7hb3Ts tre8tise on the Constitution of the %nited ,t8tes in the folloEin7 l8n7u87e S spe8Fin7
of decl8r8tion of le7isl8tive poEer to 8d9inistr8tive 87enciesJ T1e pr0*30p%e ;1031 perm0t2 t1e
%e@02%)t6re to pro50+e t1)t t1e )+m0*02tr)t05e )@e*t m)& +eterm0*e ;1e* t1e 30r36m2t)*3e2
)re 2631 )2 re?60re t1e )pp%03)t0o* o4 ) %); 02 +e4e*+e+ 6po* t1e @ro6*+ t1)t )t t1e t0me t102
)6t1or0t& 02 @r)*te+, t1e r6%e o4 p6b%03 po%03&, ;1031 02 t1e e22e*3e o4 t1e %e@02%)t05e )3t, 02
+eterm0*e+ b& t1e %e@02%)t6re. "* ot1er ;or+2, t1e %e@02%)t6re, )2 0t 02 0t2 +6t& to +o,
+eterm0*e2 t1)t, 6*+er @05e* 30r36m2t)*3e2, 3ert)0* e7e36t05e or )+m0*02tr)t05e )3t0o* 02 to
be t)Je*, )*+ t1)t, 6*+er ot1er 30r36m2t)*3e2, +044ere*t or *o )3t0o* )t )%% 02 to be t)Je*.
I1)t 02 t162 %e4t to t1e )+m0*02tr)t05e o44030)% 02 *ot t1e %e@02%)t05e +eterm0*)t0o* o4 ;1)t
p6b%03 po%03& +em)*+2, b6t 20mp%& t1e )23ert)0*me*t o4 ;1)t t1e 4)3t2 o4 t1e 3)2e re?60re to
be +o*e )33or+0*@ to t1e term2 o4 t1e %); b& ;1031 1e 02 @o5er*e+. T1e e44030e*3& o4 )* A3t
)2 ) +e3%)r)t0o* o4 %e@02%)t05e ;0%% m62t, o4 3o6r2e, 3ome 4rom Co*@re22, b6t t1e
)23ert)0*me*t o4 t1e 3o*t0*@e*3& 6po* ;1031 t1e A3t 21)%% t)Je e44e3t m)& be %e4t to 2631
)@e*30e2 )2 0t m)& +e20@*)te. T1e %e@02%)t6re, t1e*, m)& pro50+e t1)t ) %); 21)%% t)Je e44e3t
6po* t1e 1)ppe*0*@ o4 46t6re 2pe3040e+ 3o*t0*@e*30e2 %e)50*@ to 2ome ot1er per2o* or bo+&
t1e po;er to +eterm0*e ;1e* t1e 2pe3040e+ 3o*t0*@e*3& 1)2 )r02e*.CE9ph8sis suppliedD.
16
&n "du vs. "ricta,
1#
the Court reiter8tedJ
>h8t c8nnot be dele78ted is the 8uthorit3 under the Constitution to 98Fe l8Es 8nd to 8lter 8nd
repe8l the94 the test is the co9pleteness of the st8tute in 8ll its ter9s 8nd provisions Ehen it le8ves
the h8nds of the le7isl8ture. *o deter9ine Ehether or not there is 8n undue dele78tion of le7isl8tive
poEer, the inBuir3 9ust be directed to the scope 8nd definiteness of the 9e8sure en8cted. T1e
%e@02%)t05e +oe2 *ot )b+03)te 0t2 46*3t0o*2 ;1e* 0t +e23r0be2 ;1)t Aob m62t be +o*e, ;1o 02 to
+o 0t, )*+ ;1)t 02 t1e 23ope o4 102 )6t1or0t&. /or 8 co9plex econo93, th8t 983 be the onl3 E83 in
Ehich the le7isl8tive process c8n 7o forE8rd. A +02t0*3t0o* 1)2 r0@1t46%%& bee* m)+e bet;ee*
+e%e@)t0o* o4 po;er to m)Je t1e %);2 ;1031 *e3e22)r0%& 0*5o%5e2 ) +023ret0o* )2 to ;1)t 0t
21)%% be, ;1031 3o*2t0t6t0o*)%%& m)& *ot be +o*e, )*+ +e%e@)t0o* o4 )6t1or0t& or +023ret0o* )2
to 0t2 e7e36t0o* to be e7er302e+ 6*+er )*+ 0* p6r26)*3e o4 t1e %);, to ;1031 *o 5)%0+
obAe3t0o* 3)* be m)+e. *he Constitution is thus not to be re78rded 8s den3in7 the le7isl8ture the
necess8r3 resources of flexibilit3 8nd pr8ctic8bilit3. CE9ph8sis suppliedD.
1
Cle8rl3, the le7isl8ture 983 dele78te to executive officers or bodies the poEer to deter9ine cert8in
f8cts or conditions, or the h8ppenin7 of contin7encies, on Ehich the oper8tion of 8 st8tute is, b3 its
ter9s, 98de to depend, but the le7isl8ture 9ust prescribe sufficient st8nd8rds, policies or li9it8tions
on their 8uthorit3.
1H
>hile the poEer to t8x c8nnot be dele78ted to executive 87encies, det8ils 8s to
the enforce9ent 8nd 8d9inistr8tion of 8n exercise of such poEer 983 be left to the9, includin7 the
poEer to deter9ine the existence of f8cts on Ehich its oper8tion depends.
I"
*he r8tion8le for this is th8t the preli9in8r3 8scert8in9ent of f8cts 8s b8sis for the en8ct9ent of
le7isl8tion is not of itself 8 le7isl8tive function, but is si9pl3 8ncill8r3 to le7isl8tion. *hus, the dut3 of
correl8tin7 infor98tion 8nd 98Fin7 reco99end8tions is the Find of subsidi8r3 8ctivit3 Ehich the
le7isl8ture 983 perfor9 throu7h its 9e9bers, or Ehich it 983 dele78te to others to perfor9.
&ntelli7ent le7isl8tion on the co9plic8ted proble9s of 9odern societ3 is i9possible in the 8bsence of
8ccur8te infor98tion on the p8rt of the le7isl8tors, 8nd 8n3 re8son8ble 9ethod of securin7 such
infor98tion is proper.
I1
*he Constitution 8s 8 continuousl3 oper8tive ch8rter of 7overn9ent does not
reBuire th8t Con7ress find for itself
ever3 f8ct upon Ehich it desires to b8se le7isl8tive 8ction or th8t it 98Fe for itself det8iled
deter9in8tions Ehich it h8s decl8red to be prereBuisite to 8pplic8tion of le7isl8tive polic3 to p8rticul8r
f8cts 8nd circu9st8nces i9possible for Con7ress itself properl3 to investi78te.
I!
&n the present c8se, the ch8llen7ed section of R.A. No. H@@# is the co99on proviso in ,ections 1, I
8nd 6 Ehich re8ds 8s folloEsJ
*h8t the President, upon the reco99end8tion of the ,ecret8r3 of /in8nce, sh8ll, effective +8nu8r3 1,
!""6, r8ise the r8te of v8lue-8dded t8x to tEelve percent C1!KD, 8fter 8n3 of the folloEin7 conditions
h8s been s8tisfiedJ
CiD ;8lue-8dded t8x collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the previous
3e8r exceeds tEo 8nd four-fifth percent C! 1NIKD4 or
CiiD N8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceeds one 8nd one-
h8lf percent C1 OKD.
*he c8se before the Court is not 8 dele78tion of le7isl8tive poEer. &t is si9pl3 8 dele78tion of
8scert8in9ent of f8cts upon Ehich enforce9ent 8nd 8d9inistr8tion of the incre8se r8te under the l8E
is contin7ent. *he le7isl8ture h8s 98de the oper8tion of the 1!K r8te effective +8nu8r3 1, !""6,
contin7ent upon 8 specified f8ct or condition. &t le8ves the entire oper8tion or non-oper8tion of the
1!K r8te upon f8ctu8l 98tters outside of the control of the executive.
No discretion Eould be exercised b3 the President. 2i7hli7htin7 the 8bsence of discretion is the f8ct
th8t the Eordshall is used in the co99on proviso. *he use of the Eord shall connotes 8 98nd8tor3
order. &ts use in 8 st8tute denotes 8n i9per8tive obli78tion 8nd is inconsistent Eith the ide8 of
discretion.
I@
>here the l8E is cle8r 8nd un89bi7uous, it 9ust be t8Fen to 9e8n ex8ctl3 Eh8t it s83s,
8nd courts h8ve no choice but to see to it th8t the 98nd8te is obe3ed.
I1
*hus, it is the 9inisteri8l dut3 of the President to i99edi8tel3 i9pose the 1!K r8te upon the
existence of 8n3 of the conditions specified b3 Con7ress. *his is 8 dut3 Ehich c8nnot be ev8ded b3
the President. &n8s9uch 8s the l8E specific8ll3 uses the Eord shall, the exercise of discretion b3 the
President does not co9e into pl83. &t is 8 cle8r directive to i9pose the 1!K ;A* r8te Ehen the
specified conditions 8re present. *he ti9e of t8Fin7 into effect of the 1!K ;A* r8te is b8sed on the
h8ppenin7 of 8 cert8in specified contin7enc3, or upon the 8scert8in9ent of cert8in f8cts or
conditions b3 8 person or bod3 other th8n the le7isl8ture itself.
*he Court finds no 9erit to the contention of petitioners %$%9%&% :6) P8rt3 'ist, et 8l. th8t the
l8E effectivel3 nullified the President5s poEer of control over the ,ecret8r3 of /in8nce b3 98nd8tin7
the fixin7 of the t8x r8te b3 the President upon the reco99end8tion of the ,ecret8r3 of /in8nce. *he
Court c8nnot 8lso subscribe to the position of petitioners
Pi9entel, et al. th8t the Eord shall should be interpreted to 9e8n may in vieE of the phr8se :upon
the reco99end8tion of the ,ecret8r3 of /in8nce.: Neither does the Court find persu8sive the
sub9ission of petitioners Escudero, et al. th8t 8n3 reco99end8tion b3 the ,ecret8r3 of /in8nce c8n
e8sil3 be brushed 8side b3 the President since the for9er is 8 9ere 8lter e7o of the l8tter.
>hen one spe8Fs of the ,ecret8r3 of /in8nce 8s the 8lter e7o of the President, it si9pl3 9e8ns th8t
8s he8d of the -ep8rt9ent of /in8nce he is the 8ssist8nt 8nd 87ent of the Chief Executive. *he
9ultif8rious executive 8nd 8d9inistr8tive functions of the Chief Executive 8re perfor9ed b3 8nd
throu7h the executive dep8rt9ents, 8nd the 8cts of the secret8ries of such dep8rt9ents, such 8s the
-ep8rt9ent of /in8nce, perfor9ed 8nd pro9ul78ted in the re7ul8r course of business, 8re, unless
dis8pproved or reprob8ted b3 the Chief Executive, presu9ptivel3 the 8cts of the Chief
Executive. *he ,ecret8r3 of /in8nce, 8s such, occupies 8 politic8l position 8nd holds office in 8n
8dvisor3 c8p8cit3, 8nd, in the l8n7u87e of *ho98s +efferson, :should be of the PresidentTs boso9
confidence: 8nd, in the l8n7u87e of Attorne3-Gener8l Cushin7, is :subAect to the direction of the
President.:
II
&n the present c8se, in 98Fin7 his reco99end8tion to the President on the existence of either of the
tEo conditions, the ,ecret8r3 of /in8nce is not 8ctin7 8s the 8lter e7o of the President or even her
subordin8te. &n such inst8nce, he is not subAect to the poEer of control 8nd direction of the President.
2e is 8ctin7 8s the 87ent of the le7isl8tive dep8rt9ent, to deter9ine 8nd decl8re the event upon
Ehich its expressed Eill is to t8Fe effect.
I6
*he ,ecret8r3 of /in8nce beco9es the 9e8ns or tool b3
Ehich le7isl8tive polic3 is deter9ined 8nd i9ple9ented, considerin7 th8t he possesses 8ll the
f8cilities to 78ther d8t8 8nd infor98tion 8nd h8s 8 9uch bro8der perspective to properl3 ev8lu8te
the9. 2is function is to 78ther 8nd coll8te st8tistic8l d8t8 8nd other pertinent infor98tion 8nd verif3 if
8n3 of the tEo conditions l8id out b3 Con7ress is present. 2is person8lit3 in such inst8nce is in
re8lit3 but 8 proAection of th8t of Con7ress. *hus, bein7 the 87ent of Con7ress 8nd not of the
President, the President c8nnot 8lter or 9odif3 or nullif3, or set 8side the findin7s of the ,ecret8r3 of
/in8nce 8nd to substitute the Aud79ent of the for9er for th8t of the l8tter.
Con7ress si9pl3 7r8nted the ,ecret8r3 of /in8nce the 8uthorit3 to 8scert8in the existence of 8 f8ct,
n89el3, Ehether b3 -ece9ber @1, !""I, the v8lue-8dded t8x collection 8s 8 percent87e of Gross
-o9estic Product CG-PD of the previous 3e8r exceeds tEo 8nd four-fifth percent C!
1
NIKD or the
n8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceeds one 8nd one-h8lf
percent C1OKD. &f either of these tEo inst8nces h8s occurred, the ,ecret8r3 of /in8nce, b3 le7isl8tive
98nd8te, 9ust sub9it such infor98tion to the President. *hen the 1!K ;A* r8te 9ust be i9posed
b3 the President effective +8nu8r3 1, !""6. T1ere 02 *o 6*+6e +e%e@)t0o* o4 %e@02%)t05e po;er b6t
o*%& o4 t1e +023ret0o* )2 to t1e e7e36t0o* o4 ) %);. T102 02 3o*2t0t6t0o*)%%&
perm0220b%e.
I#
Con7ress does not 8bdic8te its functions or undul3 dele78te poEer Ehen it describes
Eh8t Aob 9ust be done, Eho 9ust do it, 8nd Eh8t is the scope of his 8uthorit34 in our co9plex
econo93 th8t is freBuentl3 the onl3 E83 in Ehich the le7isl8tive process c8n 7o forE8rd.
I
As to the 8r7u9ent of petitioners %$%9%&% :6) P8rt3 'ist, et al. th8t dele78tin7 to the President
the le7isl8tive poEer to t8x is contr8r3 to the principle of republic8nis9, the s89e deserves sc8nt
consider8tion. Co*@re22 +0+ *ot +e%e@)te t1e po;er to t)7 b6t t1e mere 0mp%eme*t)t0o* o4 t1e
%);. *he intent 8nd Eill to incre8se the ;A* r8te to 1!K c89e fro9 Con7ress 8nd the t8sF of the
President is to si9pl3 execute the le7isl8tive polic3. *h8t Con7ress chose to do so in such 8 98nner
is not Eithin the province of the Court to inBuire into, its t8sF bein7 to interpret the l8E.
IH
*he insinu8tion b3 petitioners Pi9entel, et al. th8t the President h8s 89ple poEers to c8use,
influence or cre8te the conditions to brin7 8bout either or both the conditions precedent does not
deserve 8n3 9erit 8s this 8r7u9ent is hi7hl3 specul8tive. *he Court does not rule on 8lle78tions
Ehich 8re 98nifestl3 conAectur8l, 8s these 983 not exist 8t 8ll. *he Court de8ls Eith f8cts, not
f8ncies4 on re8lities, not 8ppe8r8nces. >hen the Court 8cts on 8ppe8r8nces inste8d of re8lities,
Austice 8nd l8E Eill be short-lived.
$. The 12< 0ncrease '%T ate &oes ,ot 0mpose an 6nfair and 6nnecessary %dditional Ta# $urden
Petitioners Pi9entel, et al. 8r7ue th8t the 1!K incre8se in the ;A* r8te i9poses 8n unf8ir 8nd
8ddition8l t8x burden on the people. Petitioners 8lso 8r7ue th8t the 1!K incre8se, dependent on 8n3
of the ! conditions set forth in the contested provisions, is 89bi7uous bec8use it does not st8te if the
;A* r8te Eould be returned to the ori7in8l 1"K if the r8tes 8re no lon7er s8tisfied. Petitioners 8lso
8r7ue th8t such r8te is unf8ir 8nd unre8son8ble, 8s the people 8re unsure of the 8pplic8ble ;A* r8te
fro9 3e8r to 3e8r.
%nder the co99on provisos of ,ections 1, I 8nd 6 of R.A. No. H@@#, if 8n3 of the tEo conditions set
forth therein 8re s8tisfied, the President sh8ll incre8se the ;A* r8te to 1!K. *he provisions of the l8E
8re cle8r. &t does not provide for 8 return to the 1"K r8te nor does it e9poEer the President to so
revert if, 8fter the r8te is incre8sed to 1!K, the ;A* collection 7oes beloE the !
1
NI of the G-P of the
previous 3e8r or th8t the n8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r
does not exceed 1OK.
*herefore, no st8tutor3 construction or interpret8tion is needed. Neither c8n conditions or li9it8tions
be introduced Ehere none is provided for. ReEritin7 the l8E is 8 forbidden 7round th8t onl3 Con7ress
983 tre8d upon.
6"
*hus, in the 8bsence of 8n3 provision providin7 for 8 return to the 1"K r8te, Ehich in this c8se the
Co6rt 40*+2 *o*e, pet0t0o*er2D )r@6me*t 02, )t be2t, p6re%& 2pe36%)t05e. T1ere 02 *o b)202 4or
pet0t0o*er2D 4e)r o4 ) 4%63t6)t0*@ ,AT r)te be3)62e t1e %); 0t2e%4 +oe2 *ot pro50+e t1)t t1e r)te
21o6%+ @o b)3J to 10C 04 t1e 3o*+0t0o*2 pro50+e+ 0* Se3t0o*2 B, 5 )*+ 6 )re *o %o*@er
pre2e*t. *he rule is th8t Ehere the provision of the l8E is cle8r 8nd un89bi7uous, so th8t there is no
occ8sion for the courtTs seeFin7 the le7isl8tive intent, the l8E 9ust be t8Fen 8s it is, devoid of Audici8l
8ddition or subtr8ction.
61
Petitioners 8lso contend th8t the incre8se in the ;A* r8te, Ehich E8s 8lle7edl3 8n incentive to the
President to r8ise the ;A* collection to 8t le8st !
1
NI of the G-P of the previous 3e8r, should be
b8sed on fisc8l 8deBu8c3.
Petitioners obviousl3 overlooFed th8t incre8se in ;A* collection is not the only condition. *here is
8nother condition, i.e., the n8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r
exceeds one 8nd one-h8lf percent C1 OKD.
Respondents expl8ined the philosoph3 behind these 8ltern8tive conditionsJ
1. ;A*NG-P R8tio U !.K
*he condition set for incre8sin7 ;A* r8te to 1!K h8ve econo9ic or fisc8l 9e8nin7. &f ;A*NG-P is
less th8n !.K, it 9e8ns th8t 7overn9ent h8s Ee8F or no c8p8bilit3 of i9ple9entin7 the ;A* or th8t
;A* is not effective in the function of the t8x collection. *herefore, there is no v8lue to incre8se it to
1!K bec8use such 8ction Eill 8lso be ineffectu8l.
!. N8t5l Gov5t -eficitNG-P U1.IK
*he condition set for incre8sin7 ;A* Ehen deficitNG-P is 1.IK or less 9e8ns the fisc8l condition of
7overn9ent h8s re8ched 8 rel8tivel3 sound position or is toE8rds the direction of 8 b8l8nced bud7et
position. *herefore, there is no need to incre8se the ;A* r8te since the fisc8l house is in 8 rel8tivel3
he8lth3 position. (therEise st8ted, if the r8tio is 9ore th8n 1.IK, there is indeed 8 need to incre8se
the ;A* r8te.
6!
*h8t the first condition 89ounts to 8n incentive to the President to incre8se the ;A* collection does
not render it unconstitution8l so lon7 8s there is 8 public purpose for Ehich the l8E E8s p8ssed,
Ehich in this c8se, is 98inl3 to r8ise revenue. &n f8ct, fiscal ade=uacy dict8ted the need for 8 r8ise in
revenue.
*he principle of fisc8l 8deBu8c3 8s 8 ch8r8cteristic of 8 sound t8x s3ste9 E8s ori7in8ll3 st8ted b3
Ad89 ,9ith in his Canons of Ta#ation C1##6D, 8sJ
&;. Ever3 t8x ou7ht to be so contrived 8s both to t8Fe out 8nd to Feep out of the pocFets of the
people 8s little 8s possible over 8nd 8bove Eh8t it brin7s into the public tre8sur3 of the st8te.
6@
&t si9pl3 9e8ns th8t sources of revenues 9ust be 8deBu8te to 9eet 7overn9ent expenditures 8nd
their v8ri8tions.
61
*he dire need for revenue c8nnot be i7nored. (ur countr3 is in 8 Bu879ire of fin8nci8l Eoe. -urin7
the Bic89er8l Conference Co99ittee he8rin7, then /in8nce ,ecret8r3 Purisi98 bluntl3 depicted the
countr35s 7loo93 st8te of econo9ic 8ff8irs, thusJ
/irst, let 9e expl8in the position th8t the Philippines finds itself in ri7ht noE. >e 8re in 8 position
Ehere H" percent of our revenue is used for debt service. ,o, for ever3 peso of revenue th8t Ee
currentl3 r8ise, H" 7oes to debt service. *h8t5s interest plus 89ortiM8tion of our debt. ,o cle8rl3, this
is not 8 sust8in8ble situ8tion. *h8t5s the first f8ct.
*he second f8ct is th8t our debt to G-P level is E83 out of line co9p8red to other peer countries th8t
borroE 9one3 fro9 th8t intern8tion8l fin8nci8l 98rFets. (ur debt to G-P is 8pproxi98tel3 eBu8l to
our G-P. A78in, th8t shoEs 3ou th8t this is not 8 sust8in8ble situ8tion.
*he third thin7 th8t &5d liFe to point out is the environ9ent th8t Ee 8re presentl3 oper8tin7 in is not 8s
beni7n 8s Eh8t it used to be the p8st five 3e8rs.
>h8t do & 9e8n b3 th8tL
&n the p8st five 3e8rs, Ee5ve been lucF3 bec8use Ee Eere oper8tin7 in 8 period of b8sic8ll3 7lob8l
7roEth 8nd loE interest r8tes. *he p8st feE 9onths, Ee h8ve seen 8n inchin7 up, in f8ct, 8 r8pid
incre8se in the interest r8tes in the le8din7 econo9ies of the Eorld. And, therefore, our 8bilit3 to
borroE 8t re8son8ble prices is 7oin7 to be ch8llen7ed. &n f8ct, ulti98tel3, the Buestion is our 8bilit3 to
8ccess the fin8nci8l 98rFets.
>hen the President 98de her speech in +ul3 l8st 3e8r, the environ9ent E8s not 8s b8d 8s it is noE,
8t le8st b8sed on the forec8st of 9ost fin8nci8l institutions. ,o, Ee Eere 8ssu9in7 th8t r8isin7 "
billion Eould put us in 8 position Ehere Ee c8n then convince the9 to i9prove our 8bilit3 to borroE 8t
loEer r8tes. But conditions h8ve ch8n7ed on us bec8use the interest r8tes h8ve 7one up. &n f8ct, Aust
Eithin this roo9, Ee tried to 8ccess the 98rFet for 8 billion doll8rs bec8use for this 3e8r 8lone, the
Philippines Eill h8ve to borroE 1 billion doll8rs. (f th8t 89ount, Ee h8ve borroEed 1.I billion. >e
issued l8st +8nu8r3 8 !I-3e8r bond 8t H.# percent cost. >e Eere tr3in7 to 8ccess l8st EeeF 8nd the
98rFet E8s not 8s f8vor8ble 8nd up to noE Ee h8ve not 8ccessed 8nd Ee 9i7ht pull b8cF bec8use
the conditions 8re not ver3 7ood.
,o 7iven this situ8tion, Ee 8t the -ep8rt9ent of /in8nce believe th8t Ee re8ll3 need to front-end our
deficit reduction. Bec8use it is deficit th8t is c8usin7 the incre8se of the debt 8nd Ee 8re in Eh8t Ee
c8ll 8 debt spir8l. *he 9ore debt 3ou h8ve, the 9ore deficit 3ou h8ve bec8use interest 8nd debt
service e8ts 8nd e8ts 9ore of 3our revenue. >e need to 7et out of this debt spir8l. And the onl3 E83,
& thinF, Ee c8n 7et out of this debt spir8l is re8ll3 h8ve 8 front-end 8dAust9ent in our revenue b8se.
6I
*he i987e portr83ed is chillin7. Con7ress p8ssed the l8E hopin7 for rescue fro9 8n inevit8ble
c8t8strophe. >hether the l8E is indeed sufficient to 8nsEer the st8te5s econo9ic dile998 is not for
the Court to Aud7e. &n theFari!as c8se, the Court refused to consider the v8rious 8r7u9ents r8ised
therein th8t dEelt on the Eisdo9 of ,ection 11 of R.A. No. H""6 C*he /8ir Election ActD, pronouncin7
th8tJ
. . . polic3 98tters 8re not the concern of the Court. Govern9ent polic3 is Eithin the exclusive
do9inion of the politic8l br8nches of the 7overn9ent. &t is not for this Court to looF into the Eisdo9
or propriet3 of le7isl8tive deter9in8tion. &ndeed, Ehether 8n en8ct9ent is Eise or unEise, Ehether it
is b8sed on sound econo9ic theor3, Ehether it is the best 9e8ns to 8chieve the desired results,
Ehether, in short, the le7isl8tive discretion Eithin its prescribed li9its should be exercised in 8
p8rticul8r 98nner 8re 98tters for the Aud79ent of the le7isl8ture, 8nd the serious conflict of opinions
does not suffice to brin7 the9 Eithin the r8n7e of Audici8l co7niM8nce.
66
&n the s89e vein, the Court in this c8se Eill not d8Edle on the purpose of Con7ress or the executive
polic3, 7iven th8t it is not for the Audici8r3 to :p8ss upon Buestions of Eisdo9, Austice or expedienc3
of le7isl8tion.:
6#
&&.
>hether ,ection of R.A. No. H@@#, 89endin7 ,ections 11"CADC!D 8nd 11"CBD of the N&RC4 8nd
,ection 1! of R.A. No. H@@#, 89endin7 ,ection 111CCD of the N&RC, viol8te the folloEin7 provisions
of the ConstitutionJ
8. Article ;&, ,ection !C1D, 8nd
b. Article &&&, ,ection 1
A. -ue Process 8nd EBu8l Protection Cl8uses
Petitioners Associ8tion of Pilipinas ,hell -e8lers, &nc., et al. 8r7ue th8t ,ection of R.A. No. H@@#,
89endin7 ,ections 11" CADC!D, 11" CBD, 8nd ,ection 1! of R.A. No. H@@#, 89endin7 ,ection 111 CCD
of the N&RC 8re 8rbitr8r3, oppressive, excessive 8nd confisc8tor3. *heir 8r7u9ent is pre9ised on the
constitution8l ri7ht 878inst depriv8tion of life, libert3 of propert3 Eithout due process of l8E, 8s
e9bodied in Article &&&, ,ection 1 of the Constitution.
Petitioners 8lso contend th8t these provisions viol8te the constitution8l 7u8r8ntee of eBu8l protection
of the l8E.
*he doctrine is th8t Ehere the due process 8nd eBu8l protection cl8uses 8re invoFed, considerin7
th8t the3 8re not fixed rules but r8ther bro8d st8nd8rds, there is 8 need for proof of such persu8sive
ch8r8cter 8s Eould le8d to such 8 conclusion. Absent such 8 shoEin7, the presu9ption of v8lidit3
9ust prev8il.
6
,ection of R.A. No. H@@#, 89endin7 ,ection 11"CBD of the N&RC i9poses 8 li9it8tion on the
89ount of input t8x th8t 983 be credited 878inst the output t8x. &t st8tes, in p8rtJ :QPRrovided, th8t the
input t8x inclusive of the input ;A* c8rried over fro9 the previous Bu8rter th8t 983 be credited in
ever3 Bu8rter sh8ll not exceed sevent3 percent C#"KD of the output ;A*J G:
0nput Ta# is defined under ,ection 11"CAD of the N&RC, 8s 89ended, 8s the v8lue-8dded t8x
due from or paid b3 8 ;A*-re7istered person on the i9port8tion of 7oods or loc8l purch8se of 7ood
8nd services, includin7 le8se or use of propert3, in the course of tr8de or business, fro9 8 ;A*-
re7istered person, 8nd )utput Ta# is the v8lue-8dded t8x due on the s8le or le8se of t8x8ble 7oods
or properties or services b3 8n3 person re7istered or reBuired to re7ister under the l8E.
Petitioners cl8i9 th8t the contested sections i9pose li9it8tions on the 89ount of input t8x th8t 983
be cl8i9ed. &n effect, 8 portion of the input t8x th8t h8s 8lre8d3 been p8id c8nnot noE be credited
878inst the output t8x.
Petitioners5 8r7u9ent is not 8bsolute. &t 8ssu9es th8t the input t8x exceeds #"K of the output t8x,
8nd therefore, the input t8x in excess of #"K re98ins uncredited. 2oEever, to the extent th8t the
input t8x is less th8n #"K of the output t8x, then 1""K of such input t8x is still credit8ble.
)ore i9port8ntl3, the excess input t8x, if 8n3, is ret8ined in 8 business5s booFs of 8ccounts 8nd
re98ins credit8ble in the succeedin7 Bu8rterNs. *his is explicitl3 8lloEed b3 ,ection 11"CBD, Ehich
provides th8t :if the input t8x exceeds the output t8x, the excess sh8ll be c8rried over to the
succeedin7 Bu8rter or Bu8rters.: &n 8ddition, ,ection 11!CBD 8lloEs 8 ;A*-re7istered person to 8ppl3
for the issu8nce of 8 t8x credit certific8te or refund for 8n3 unused input t8xes, to the extent th8t
such input t8xes h8ve not been 8pplied 878inst the output t8xes. ,uch unused input t8x 983 be
used in p839ent of his other intern8l revenue t8xes.
*he non-8pplic8tion of the unutiliMed input t8x in 8 7iven Bu8rter is not ad infinitum, 8s petitioners
ex877er8tedl3 contend. *heir 8n8l3sis of the effect of the #"K li9it8tion is inco9plete 8nd one-
sided. &t ends 8t the net effect th8t there Eill be un8ppliedNunutiliMed inputs ;A* for 8 7iven Bu8rter. &t
does not proceed further to the f8ct th8t such un8ppliedNunutiliMed input t8x 983 be credited in the
subseBuent periods 8s 8lloEed b3 the c8rr3-over provision of ,ection 11"CBD or th8t it 983 l8ter on
be refunded throu7h 8 t8x credit certific8te under ,ection 11!CBD.
*herefore, petitioners5 8r7u9ent 9ust be reAected.
(n the other h8nd, it 8ppe8rs th8t petitioner G8rci8 f8iled to co9prehend the oper8tion of the #"K
li9it8tion on the input t8x. Accordin7 to petitioner, the li9it8tion on the credit8ble input t8x in effect
8lloEs ;A*-re7istered est8blish9ents to ret8in 8 portion of the t8xes the3 collect, Ehich viol8tes the
principle th8t t8x collection 8nd revenue should be for public purposes 8nd expenditures
As e8rlier st8ted, the input t8x is the t8x p8id b3 8 person, p8ssed on to hi9 b3 the seller, Ehen he
bu3s 7oods. (utput t8x 9e8nEhile is the t8x due to the person Ehen he sells 7oods. &n co9putin7
the ;A* p838ble, three possible scen8rios 983 8riseJ
/irst, if 8t the end of 8 t8x8ble Bu8rter the output t8xes ch8r7ed b3 the seller 8re eBu8l to the input
t8xes th8t he p8id 8nd p8ssed on b3 the suppliers, then no p839ent is reBuired4
,econd, Ehen the output t8xes exceed the input t8xes, the person sh8ll be li8ble for the excess,
Ehich h8s to be p8id to the Bure8u of &ntern8l Revenue CB&RD4
6H
8nd
*hird, if the input t8xes exceed the output t8xes, the excess sh8ll be c8rried over to the succeedin7
Bu8rter or Bu8rters. ,hould the input t8xes result fro9 Mero-r8ted or effectivel3 Mero-r8ted
tr8ns8ctions, 8n3 excess over the output t8xes sh8ll inste8d be refunded to the t8xp83er or credited
878inst other intern8l revenue t8xes, 8t the t8xp83er5s option.
#"
,ection of R.A. No. H@@# hoEever, i9posed 8 #"K li9it8tion on the input t8x. *hus, 8 person c8n
credit his input t8x onl3 up to the extent of #"K of the output t8x. &n l8398n5s ter9, the v8lue-8dded
t8xes th8t 8 personNt8xp83er p8id 8nd p8ssed on to hi9 b3 8 seller c8n onl3 be credited up to #"K
of the v8lue-8dded t8xes th8t is due to hi9 on 8 t8x8ble tr8ns8ction. *here is no retention of 8n3 t8x
collection bec8use the personNt8xp83er h8s 8lre8d3 previousl3 p8id the input t8x to 8 seller, 8nd the
seller Eill subseBuentl3 re9it such input t8x to the B&R. *he p8rt3 directl3 li8ble for the p839ent of
the t8x is the seller.
#1
>h8t onl3 needs to be done is for the personNt8xp83er to 8ppl3 or credit these
input t8xes, 8s evidenced b3 receipts, 878inst his output t8xes.
Petitioners Associ8tion of Pilipinas ,hell -e8lers, &nc., et al. 8lso 8r7ue th8t the input t8x p8rt8Fes
the n8ture of 8 propert3 th8t 983 not be confisc8ted, 8ppropri8ted, or li9ited Eithout due process of
l8E.
*he input t8x is not 8 propert3 or 8 propert3 ri7ht Eithin the constitution8l purvieE of the due process
cl8use. A ;A*-re7istered person5s entitle9ent to the credit8ble input t8x is 8 9ere st8tutor3 privile7e.
*he distinction betEeen st8tutor3 privile7es 8nd vested ri7hts 9ust be borne in 9ind for persons
h8ve no vested ri7hts in st8tutor3 privile7es. *he st8te 983 ch8n7e or t8Fe 8E83 ri7hts, Ehich Eere
cre8ted b3 the l8E of the st8te, 8lthou7h it 983 not t8Fe 8E83 propert3, Ehich E8s vested b3 virtue
of such ri7hts.
#!
%nder the previous s3ste9 of sin7le-st87e t8x8tion, t8xes p8id 8t ever3 level of distribution 8re not
recover8ble fro9 the t8xes p838ble, 8lthou7h it beco9es p8rt of the cost, Ehich is deductible fro9
the 7ross revenue. >hen Pres. ABuino issued E.(. No. !#@ i9posin7 8 1"K 9ulti-st87e t8x on 8ll
s8les, it E8s then th8t the creditin7 of the input t8x p8id on purch8se or i9port8tion of 7oods 8nd
services b3 ;A*-re7istered persons 878inst the output t8x E8s introduced.
#@
*his E8s 8dopted b3 the
Exp8nded ;A* '8E CR.A. No. ##16D,
#1
8nd *he *8x Refor9 Act of 1HH# CR.A. No. 1!1D.
#I
*he ri7ht
to credit input t8x 8s 878inst the output t8x is cle8rl3 8 privile7e cre8ted b3 l8E, 8 privile7e th8t 8lso
the l8E c8n re9ove, or in this c8se, li9it.
Petitioners 8lso contest 8s 8rbitr8r3, oppressive, excessive 8nd confisc8tor3, ,ection of R.A. No.
H@@#, 89endin7 ,ection 11"CAD of the N&RC, Ehich providesJ
,EC. 11". Ta# Credits. =
CAD Creditable 0nput Ta#. = G
Provided, *h8t the input t8x on 7oods purch8sed or i9ported in 8 c8lend8r 9onth for use in tr8de or
business for Ehich deduction for depreci8tion is 8lloEed under this Code, sh8ll be spre8d evenl3
over the 9onth of 8cBuisition 8nd the fift3-nine CIHD succeedin7 9onths if the 877re78te 8cBuisition
cost for such 7oods, excludin7 the ;A* co9ponent thereof, exceeds (ne 9illion pesos
CP1,""",""".""DJ Provided, hoEever, *h8t if the esti98ted useful life of the c8pit8l 7oods is less th8n
five CID 3e8rs, 8s used for depreci8tion purposes, then the input ;A* sh8ll be spre8d over such 8
shorter periodJ Provided, finally, *h8t in the c8se of purch8se of services, le8se or use of properties,
the input t8x sh8ll be credit8ble to the purch8ser, lessee or license upon p839ent of the
co9pens8tion, rent8l, ro38lt3 or fee.
*he fore7oin7 section i9poses 8 6"-9onth period Eithin Ehich to 89ortiMe the credit8ble input t8x
on purch8se or i9port8tion of c8pit8l 7oods Eith 8cBuisition cost of P1 )illion pesos, exclusive of the
;A* co9ponent. ,uch spre8d out onl3 poses 8 del83 in the creditin7 of the input t8x. Petitioners5
8r7u9ent is Eithout b8sis bec8use the t8xp83er is not per98nentl3 deprived of his privile7e to credit
the input t8x.
&t is Eorth 9entionin7 th8t Con7ress 8d9itted th8t the spre8d-out of the credit8ble input t8x in this
c8se 89ounts to 8 1-3e8r interest-free lo8n to the 7overn9ent.
#6
&n the s89e bre8th, Con7ress 8lso
Austified its 9ove b3 s83in7 th8t the provision E8s desi7ned to r8ise 8n 8nnu8l revenue of !!.6
billion.
##
*he le7isl8ture 8lso dispelled the fe8r th8t the provision Eill fend off forei7n invest9ents,
s83in7 th8t forei7n investors h8ve other t8x incentives provided b3 l8E, 8nd citin7 the c8se of Chin8,
Ehere despite 8 1#.IK non-credit8ble ;A*, forei7n invest9ents Eere not deterred.
#
A78in, for
Eh8tever is the purpose of the 6"-9onth 89ortiM8tion, this involves executive econo9ic polic3 8nd
le7isl8tive Eisdo9 in Ehich the Court c8nnot intervene.
>ith re78rd to the IK credit8ble Eithholdin7 t8x i9posed on p839ents 98de b3 the 7overn9ent for
t8x8ble tr8ns8ctions, ,ection 1! of R.A. No. H@@#, Ehich 89ended ,ection 111 of the N&RC, re8dsJ
,EC. 111. Return 8nd P839ent of ;8lue-8dded *8x. =
CCD >ithholdin7 of ;8lue-8dded *8x. = *he Govern9ent or 8n3 of its politic8l subdivisions,
instru9ent8lities or 87encies, includin7 7overn9ent-oEned or controlled corpor8tions CG(CCsD
sh8ll, before 98Fin7 p839ent on 8ccount of e8ch purch8se of 7oods 8nd services Ehich 8re subAect
to the v8lue-8dded t8x i9posed in ,ections 1"6 8nd 1" of this Code, deduct 8nd Eithhold 8 fin8l
v8lue-8dded t8x 8t the r8te of five percent CIKD of the 7ross p839ent thereofJ Provided, *h8t the
p839ent for le8se or use of properties or propert3 ri7hts to nonresident oEners sh8ll be subAect to
ten percent C1"KD Eithholdin7 t8x 8t the ti9e of p839ent. /or purposes of this ,ection, the p83or or
person in control of the p839ent sh8ll be considered 8s the Eithholdin7 87ent.
*he v8lue-8dded t8x Eithheld under this ,ection sh8ll be re9itted Eithin ten C1"D d83s folloEin7 the
end of the 9onth the Eithholdin7 E8s 98de.
,ection 111CCD 9erel3 provides 8 9ethod of collection, or 8s st8ted b3 respondents, 8 9ore
si9plified ;A* Eithholdin7 s3ste9. *he 7overn9ent in this c8se is constituted 8s 8 Eithholdin7 87ent
Eith respect to their p839ents for 7oods 8nd services.
Prior to its 89end9ent, ,ection 111CCD provided for different r8tes of v8lue-8dded t8xes to be
Eithheld -- @K on 7ross p839ents for purch8ses of 7oods4 6K on 7ross p839ents for services
supplied b3 contr8ctors other th8n b3 public EorFs contr8ctors4 .IK on 7ross p839ents for services
supplied b3 public EorF contr8ctors4 or 1"K on p839ent for the le8se or use of properties or
propert3 ri7hts to nonresident oEners. %nder the present ,ection 111CCD, these different r8tes,
except for the 1"K on le8se or propert3 ri7hts p839ent to nonresidents, Eere deleted, 8nd 8 unifor9
r8te of IK is 8pplied.
*he Court observes, hoEever, th8t the l8E the used the Eord final. &n t8x us87e, final, 8s opposed to
credit8ble, 9e8ns full. *hus, it is provided in ,ection 111CCDJ :fin8l v8lue-8dded t8x 8t the r8te of five
percent CIKD.:
&n Revenue Re7ul8tions No. "!-H, i9ple9entin7 R.A. No. 1!1 C*he *8x Refor9 Act of 1HH#D, the
concept of fin8l Eithholdin7 t8x on inco9e E8s expl8ined, to EitJ
,EC*&(N !.I#. >ithholdin7 of *8x 8t ,ource
CAD /in8l >ithholdin7 *8x. = %nder the fin8l Eithholdin7 t8x s3ste9 the 89ount of inco9e t8x
Eithheld b3 the Eithholdin7 87ent is constituted 8s 46%% )*+ 40*)% p)&me*t of the inco9e t8x due
fro9 the p83ee on the s8id inco9e. *he li8bilit3 for p839ent of the t8x rests pri98ril3 on the p83or 8s
8 Eithholdin7 87ent. *hus, in c8se of his f8ilure to Eithhold the t8x or in c8se of underEithholdin7,
the deficienc3 t8x sh8ll be collected fro9 the p83orNEithholdin7 87ent. G
CBD Credit8ble >ithholdin7 *8x. = %nder the credit8ble Eithholdin7 t8x s3ste9, t8xes Eithheld on
cert8in inco9e p839ents 8re intended to eBu8l or 8t le8st 8pproxi98te the t8x due of the p83ee on
s8id inco9e. G *8xes Eithheld on inco9e p839ents covered b3 the exp8nded Eithholdin7 t8x
Creferred to in ,ec. !.I#.! of these re7ul8tionsD 8nd co9pens8tion inco9e Creferred to in ,ec. !.#
8lso of these re7ul8tionsD 8re credit8ble in n8ture.
As 8pplied to v8lue-8dded t8x, this 9e8ns th8t t8x8ble tr8ns8ctions Eith the 7overn9ent 8re subAect
to 8 IK r8te, Ehich constitutes 8s full p839ent of the t8x p838ble on the tr8ns8ction. *his represents
the net ;A* p838ble of the seller. *he other IK effectivel3 8ccounts for the st8nd8rd input ;A*
Cdee9ed input ;A*D, in lieu of the 8ctu8l input ;A* directl3 or 8ttribut8ble to the t8x8ble tr8ns8ction.
#H
*he Court need not explore the r8tion8le behind the provision. &t is cle8r th8t Con7ress intended to
tre8t differentl3 t8x8ble tr8ns8ctions Eith the 7overn9ent.
"
*his is supported b3 the f8ct th8t under
the old provision, the IK t8x Eithheld b3 the 7overn9ent re98ins credit8ble 878inst the t8x li8bilit3
of the seller or contr8ctor, to EitJ
,EC. 111. Return 8nd P839ent of ;8lue-8dded *8x. =
CCD I0t11o%+0*@ o4 Cre+0t)b%e ,)%6e8)++e+ T)7. = *he Govern9ent or 8n3 of its politic8l
subdivisions, instru9ent8lities or 87encies, includin7 7overn9ent-oEned or controlled corpor8tions
CG(CCsD sh8ll, before 98Fin7 p839ent on 8ccount of e8ch purch8se of 7oods fro9 sellers 8nd
services rendered b3 contr8ctors Ehich 8re subAect to the v8lue-8dded t8x i9posed in ,ections 1"6
8nd 1" of this Code, deduct 8nd Eithhold the v8lue-8dded t8x due 8t the r8te of three percent C@KD
of the 7ross p839ent for the purch8se of 7oods 8nd six percent C6KD on 7ross receipts for services
rendered b3 contr8ctors on ever3 s8le or inst8ll9ent p839ent Ehich sh8ll be3re+0t)b%e )@)0*2t t1e
5)%6e8)++e+ t)7 %0)b0%0t& o4 t1e 2e%%er or 3o*tr)3torJ Provided, hoEever, *h8t in the c8se of
7overn9ent public EorFs contr8ctors, the Eithholdin7 r8te sh8ll be ei7ht 8nd one-h8lf percent
C.IKDJ Provided, further, *h8t the p839ent for le8se or use of properties or propert3 ri7hts to
nonresident oEners sh8ll be subAect to ten percent C1"KD Eithholdin7 t8x 8t the ti9e of p839ent. /or
this purpose, the p83or or person in control of the p839ent sh8ll be considered 8s the Eithholdin7
87ent.
*he v8lued-8dded t8x Eithheld under this ,ection sh8ll be re9itted Eithin ten C1"D d83s folloEin7 the
end of the 9onth the Eithholdin7 E8s 98de. CE9ph8sis suppliedD
As 89ended, the use of the Eord final 8nd the deletion of the Eord creditable exhibits Con7ress5s
intention to tre8t tr8ns8ctions Eith the 7overn9ent differentl3. ,ince it h8s not been shoEn th8t the
cl8ss subAect to the IK fin8l Eithholdin7 t8x h8s been unre8son8bl3 n8rroEed, there is no re8son to
inv8lid8te the provision. Petitioners, 8s petroleu9 de8lers, 8re not the onl3 ones subAected to the IK
fin8l Eithholdin7 t8x. &t 8pplies to 8ll those Eho de8l Eith the 7overn9ent.
)oreover, the 8ctu8l input t8x is not tot8ll3 lost or uncredit8ble, 8s petitioners believe. Revenue
Re7ul8tions No. 11-!""I or the Consolid8ted ;8lue-Added *8x Re7ul8tions !""I issued b3 the B&R,
provides th8t should the 8ctu8l input t8x exceed IK of 7ross p839ents, the excess 983 for9 p8rt of
the cost. EBu8ll3, should the 8ctu8l input t8x be less th8n IK, the difference is tre8ted 8s inco9e.
1
Petitioners 8lso 8r7ue th8t b3 i9posin7 8 li9it8tion on the credit8ble input t8x, the 7overn9ent 7ets
to t8x 8 profit or v8lue-8dded even if there is no profit or v8lue-8dded.
Petitioners5 st8nce is purel3 h3pothetic8l, 8r7u9ent8tive, 8nd 878in, one-sided. *he Court Eill not
en787e in 8 le78l Aoust Ehere pre9ises 8re Eh8t ifs, 8r7u9ents, theoretic8l 8nd f8cts, uncert8in. An3
disBuisition b3 the Court on this point Eill onl3 be, 8s ,h8Fespe8re describes life in >acbeth,
!
:full of
sound 8nd fur3, si7nif3in7 nothin7.:
>h8t5s 9ore, petitioners5 contention 8ssu9es the proposition th8t there is no profit or v8lue-8dded. &t
need not t8Fe 8n 8stute business98n to FnoE th8t it is 8 98tter of exception th8t 8 business Eill sell
7oods or services Eithout profit or v8lue-8dded. &t c8nnot be overstressed th8t 8 business is cre8ted
precisel3 for profit.
*he eBu8l protection cl8use under the Constitution 9e8ns th8t :no person or cl8ss of persons sh8ll
be deprived of the s89e protection of l8Es Ehich is enAo3ed b3 other persons or other cl8sses in the
s89e pl8ce 8nd in liFe circu9st8nces.:
@
*he poEer of the ,t8te to 98Fe re8son8ble 8nd n8tur8l cl8ssific8tions for the purposes of t8x8tion
h8s lon7 been est8blished. >hether it rel8tes to the subAect of t8x8tion, the Find of propert3, the
r8tes to be levied, or the 89ounts to be r8ised, the 9ethods of 8ssess9ent, v8lu8tion 8nd collection,
the ,t8te5s poEer is entitled to presu9ption of v8lidit3. As 8 rule, the Audici8r3 Eill not interfere Eith
such poEer 8bsent 8 cle8r shoEin7 of unre8son8bleness, discri9in8tion, or 8rbitr8riness.
1
Petitioners point out th8t the li9it8tion on the credit8ble input t8x if the entit3 h8s 8 hi7h r8tio of input
t8x, or invests in c8pit8l eBuip9ent, or h8s sever8l tr8ns8ctions Eith the 7overn9ent, is not b8sed on
re8l 8nd subst8nti8l differences to 9eet 8 v8lid cl8ssific8tion.
*he 8r7u9ent is ped8ntic, if not outri7ht b8seless. *he l8E does not 98Fe 8n3 cl8ssific8tion in the
subAect of t8x8tion, the Find of propert3, the r8tes to be levied or the 89ounts to be r8ised, the
9ethods of 8ssess9ent, v8lu8tion 8nd collection. Petitioners5 8lle7ed distinctions 8re b8sed on
v8ri8bles th8t be8r different conseBuences. >hile the i9ple9ent8tion of the l8E 983 3ield v8r3in7
end results dependin7 on one5s profit 98r7in 8nd v8lue-8dded, the Court c8nnot 7o be3ond Eh8t the
le7isl8ture h8s l8id doEn 8nd interfere Eith the 8ff8irs of business.
*he eBu8l protection cl8use does not reBuire the univers8l 8pplic8tion of the l8Es on 8ll persons or
thin7s Eithout distinction. *his 9i7ht in f8ct so9eti9es result in uneBu8l protection. >h8t the cl8use
reBuires is eBu8lit3 89on7 eBu8ls 8s deter9ined 8ccordin7 to 8 v8lid cl8ssific8tion. B3 cl8ssific8tion
is 9e8nt the 7roupin7 of persons or thin7s si9il8r to e8ch other in cert8in p8rticul8rs 8nd different
fro9 8ll others in these s89e p8rticul8rs.
I
Petitioners brou7ht to the Court5s 8ttention the introduction of ,en8te Bill No. !"@ b3 ,ens. ,.R.
(s9eV8 &&& 8nd )8. An8 Consuelo A.,. = )8dri78l on +une 6, !""I, 8nd 2ouse Bill No. 11H@ b3
Rep. Eric -. ,in7son. *he proposed le7isl8tion seeFs to 89end the #"K li9it8tion b3 incre8sin7 the
s89e to H"K. *his, 8ccordin7 to petitioners, supports their st8nce th8t the #"K li9it8tion is 8rbitr8r3
8nd confisc8tor3. (n this score, suffice it to s83 th8t these 8re still proposed le7isl8tions. %ntil
Con7ress 89ends the l8E, 8nd 8bsent 8n3 uneBuivoc8l b8sis for its unconstitution8lit3, the #"K
li9it8tion st83s.
B. %nifor9it3 8nd EBuit8bilit3 of *8x8tion
Article ;&, ,ection !C1D of the Constitution re8dsJ
*he rule of t8x8tion sh8ll be unifor9 8nd eBuit8ble. *he Con7ress sh8ll evolve 8 pro7ressive s3ste9
of t8x8tion.
%nifor9it3 in t8x8tion 9e8ns th8t 8ll t8x8ble 8rticles or Finds of propert3 of the s89e cl8ss sh8ll be
t8xed 8t the s89e r8te. -ifferent 8rticles 983 be t8xed 8t different 89ounts provided th8t the r8te is
unifor9 on the s89e cl8ss ever3Ehere Eith 8ll people 8t 8ll ti9es.
6
&n this c8se, the t8x l8E is unifor9 8s it provides 8 st8nd8rd r8te of "K or 1"K Cor 1!KD on 8ll 7oods
8nd services. ,ections 1, I 8nd 6 of R.A. No. H@@#, 89endin7 ,ections 1"6, 1"# 8nd 1",
respectivel3, of the N&RC, provide for 8 r8te of 1"K Cor 1!KD on s8le of 7oods 8nd properties,
i9port8tion of 7oods, 8nd s8le of services 8nd use or le8se of properties. *hese s89e sections 8lso
provide for 8 "K r8te on cert8in s8les 8nd tr8ns8ction.
Neither does the l8E 98Fe 8n3 distinction 8s to the t3pe of industr3 or tr8de th8t Eill be8r the #"K
li9it8tion on the credit8ble input t8x, I-3e8r 89ortiM8tion of input t8x p8id on purch8se of c8pit8l
7oods or the IK fin8l Eithholdin7 t8x b3 the 7overn9ent. &t 9ust be stressed th8t the rule of unifor9
t8x8tion does not deprive Con7ress of the poEer to cl8ssif3 subAects of t8x8tion, 8nd onl3 de98nds
unifor9it3 Eithin the p8rticul8r cl8ss.
#
R.A. No. H@@# is 8lso eBuit8ble. *he l8E is eBuipped Eith 8 threshold 98r7in. *he ;A* r8te of "K or
1"K Cor 1!KD does not 8ppl3 to s8les of 7oods or services Eith 7ross 8nnu8l s8les or receipts not
exceedin7 P1,I"","""."".

Also, b8sic 98rine 8nd 87ricultur8l food products in their ori7in8l st8te
8re still not subAect to the t8x,
H
thus ensurin7 th8t prices 8t the 7r8ssroots level Eill re98in
8ccessible. As E8s st8ted in 9apatiran n+ m+a ,a+lilin+?od sa Pamahalaan n+ Pilipinas, 0nc. vs.
TanJ
H"
*he disputed s8les t8x is 8lso eBuit8ble. &t is i9posed onl3 on s8les of 7oods or services b3 persons
en787ed in business Eith 8n 877re78te 7ross 8nnu8l s8les exceedin7 P!"","""."". ,98ll
corner sari-sari stores 8re conseBuentl3 exe9pt fro9 its 8pplic8tion. 'iFeEise exe9pt fro9 the t8x
8re s8les of f8r9 8nd 98rine products, so th8t the costs of b8sic food 8nd other necessities, sp8red
8s the3 8re fro9 the incidence of the ;A*, 8re expected to be rel8tivel3 loEer 8nd Eithin the re8ch of
the 7ener8l public.
&t is 8d9itted th8t R.A. No. H@@# puts 8 pre9iu9 on businesses Eith loE profit 98r7ins, 8nd undul3
f8vors those Eith hi7h profit 98r7ins. Con7ress E8s not oblivious to this. *hus, to eBu8liMe the
Eei7ht3 burden the l8E ent8ils, the l8E, under ,ection 116, i9posed 8 @K percent87e t8x on ;A*-
exe9pt persons under ,ection 1"HCvD, i.e., tr8ns8ctions Eith 7ross 8nnu8l s8les 8ndNor receipts not
exceedin7 P1.I )illion. *his 8cts 8s 8 eBu8liMer bec8use in effect, bi77er businesses th8t Bu8lif3 for
;A* cover87e 8nd ;A*-exe9pt t8xp83ers st8nd on eBu8l-footin7.
Moreo5er, Co*@re22 pro50+e+ m0t0@)t0*@ me)26re2 to 36210o* t1e 0mp)3t o4 t1e 0mpo20t0o* o4
t1e t)7 o* t1o2e pre50o62%& e7empt. E7302e t)7e2 o* petro%e6m pro+63t2
<1
)*+ *)t6r)%
@)2
<2
;ere re+63e+. Per3e*t)@e t)7 o* +ome2t03 3)rr0er2 ;)2 remo5e+.
<=
Po;er pro+63er2 )re
*o; e7empt 4rom p)&0*@ 4r)*3102e t)7.
<B
Aside fro9 these, Con7ress 8lso incre8sed the inco9e t8x r8tes of corpor8tions, in order to
distribute the burden of t8x8tion. Dome2t03, 4ore0@*, )*+ *o*8re20+e*t 3orpor)t0o*2 )re *o;
26bAe3t to ) =5C 0*3ome t)7 r)te, 4rom ) pre50o62 =2C.
HI
&ntercorpor8te dividends of non-
resident forei7n corpor8tions 8re still subAect to 1IK fin8l Eithholdin7 t8x but the t8x credit 8lloEed
on the corpor8tion5s do9icile E8s incre8sed to !"K.
H6
T1e P10%0pp0*e Am62eme*t )*+ G)m0*@
Corpor)t0o* #PAGCOR( 02 *ot e7empt 4rom 0*3ome t)7e2 )*&more.
<>
E5e* t1e 2)%e b& )* )rt02t
o4 102 ;orJ2 or 2er503e2 per4orme+ 4or t1e pro+63t0o* o4 2631 ;orJ2 ;)2 *ot 2p)re+.
All these Eere desi7ned to e8se, 8s Eell 8s spre8d out, the burden of t8x8tion, Ehich Eould
otherEise rest l8r7el3 on the consu9ers. &t c8nnot therefore be 78ins8id th8t R.A. No. H@@# is
eBuit8ble.
C. Pro7ressivit3 of *8x8tion
'8stl3, petitioners contend th8t the li9it8tion on the credit8ble input t8x is 8n3thin7 but re7ressive. &t
is the s98ller business Eith hi7her input t8x-output t8x r8tio th8t Eill suffer the conseBuences.
Pro7ressive t8x8tion is built on the principle of the t8xp83er5s 8bilit3 to p83. *his principle E8s 8lso
lifted fro9 Ad89 ,9ith5s Canons of Ta#ation, 8nd it st8tesJ
&. *he subAects of ever3 st8te ou7ht to contribute toE8rds the support of the 7overn9ent, 8s ne8rl3
8s possible, in proportion to their respective 8bilities4 th8t is, in proportion to the revenue Ehich the3
respectivel3 enAo3 under the protection of the st8te.
*8x8tion is pro7ressive Ehen its r8te 7oes up dependin7 on the resources of the person 8ffected.
H
*he ;A* is 8n 8ntithesis of pro7ressive t8x8tion. B3 its ver3 n8ture, it is re7ressive. *he principle of
pro7ressive t8x8tion h8s no rel8tion Eith the ;A* s3ste9 in8s9uch 8s the ;A* p8id b3 the consu9er
or business for ever3 7oods bou7ht or services enAo3ed is the s89e re78rdless of inco9e. &n
other Eords, the ;A* p8id e8ts the s89e portion of 8n inco9e, Ehether bi7 or s98ll. *he disp8rit3
lies in the inco9e e8rned b3 8 person or profit 98r7in 98rFed b3 8 business, such th8t the hi7her
the inco9e or profit 98r7in, the s98ller the portion of the inco9e or profit th8t is e8ten b3 ;A*. %
converso, the loEer the inco9e or profit 98r7in, the bi77er the p8rt th8t the ;A* e8ts 8E83. At the
end of the d83, it is re8ll3 the loEer inco9e 7roup or businesses Eith loE-profit 98r7ins th8t is
8lE83s h8rdest hit.
Nevertheless, the Constitution does not re8ll3 prohibit the i9position of indirect t8xes, liFe the ;A*.
>h8t it si9pl3 provides is th8t Con7ress sh8ll :evolve 8 pro7ressive s3ste9 of t8x8tion.: *he Court
st8ted in the Tolentino case, thusJ
*he Constitution does not re8ll3 prohibit the i9position of indirect t8xes Ehich, liFe the ;A*, 8re
re7ressive. >h8t it si9pl3 provides is th8t Con7ress sh8ll Pevolve 8 pro7ressive s3ste9 of t8x8tion.5
*he constitution8l provision h8s been interpreted to 9e8n si9pl3 th8t Pdirect t8xes 8re . . . to be
preferred Q8ndR 8s 9uch 8s possible, indirect t8xes should be 9ini9iMed.5 CE. /ERNAN-(, *2E
C(N,*&*%*&(N (/ *2E P2&'&PP&NE, !!1 C,econd ed. 1H##DD &ndeed, the 98nd8te to Con7ress
is not to prescribe, but to evolve, 8 pro7ressive t8x s3ste9. (therEise, s8les t8xes, Ehich perh8ps
8re the oldest for9 of indirect t8xes, Eould h8ve been prohibited Eith the procl898tion of Art. ;&&&,
W1# C1D of the 1H#@ Constitution fro9 Ehich the present Art. ;&, W! C1D E8s t8Fen. ,8les t8xes 8re
8lso re7ressive.
Resort to indirect t8xes should be 9ini9iMed but not 8voided entirel3 bec8use it is difficult, if not
i9possible, to 8void the9 b3 i9posin7 such t8xes 8ccordin7 to the t8xp83ersT 8bilit3 to p83. &n the
c8se of the ;A*, the l8E 9ini9iMes the re7ressive effects of this i9position b3 providin7 for Mero
r8tin7 of cert8in tr8ns8ctions CR.A. No. ##16, W@, 89endin7 W1"! CbD of the N&RCD, Ehile 7r8ntin7
exe9ptions to other tr8ns8ctions. CR.A. No. ##16, W1 89endin7 W1"@ of the N&RCD
HH
CONC!US"ON
&t h8s been s8id th8t t8xes 8re the lifeblood of the 7overn9ent. &n this c8se, it is Aust 8n ene98, 8
first-8id 9e8sure to resuscit8te 8n econo93 in distress. *he Court is neither blind nor is it turnin7 8
de8f e8r on the pli7ht of the 98sses. But it does not h8ve the p8n8ce8 for the 98l8d3 th8t the l8E
seeFs to re9ed3. As in other c8ses, the Court c8nnot striFe doEn 8 l8E 8s unconstitution8l si9pl3
bec8use of its 3oFes.
'et us not be overl3 influenced b3 the ple8 th8t for ever3 Eron7 there is 8 re9ed3, 8nd th8t the
Audici8r3 should st8nd re8d3 to 8fford relief. *here 8re undoubtedl3 98n3 Eron7s the Audic8ture 983
not correct, for inst8nce, those involvin7 politic8l Buestions. . . .
'et us liFeEise dis8buse our 9inds fro9 the notion th8t the Audici8r3 is the repositor3 of re9edies for
8ll politic8l or soci8l ills4 >e should not for7et th8t the Constitution h8s Audiciousl3 8lloc8ted the
poEers of 7overn9ent to three distinct 8nd sep8r8te co9p8rt9ents4 8nd th8t Audici8l interpret8tion
h8s tended to the preserv8tion of the independence of the three, 8nd 8 Me8lous re78rd of the
prero78tives of e8ch, FnoEin7 full Eell th8t one is not the 7u8rdi8n of the others 8nd th8t, for offici8l
Eron7-doin7, e8ch 983 be brou7ht to 8ccount, either b3 i9pe8ch9ent, tri8l or b3 the b8llot box.
1""
*he Eords of the Court in 'era vs. %velino
1"1
holds true then, 8s it still holds true noE. All thin7s
considered, there is no raison d@Atre for the unconstitution8lit3 of R.A. No. H@@#.
I-ERE$ORE, Rep6b%03 A3t No. <==> *ot be0*@ 6*3o*2t0t6t0o*)%, t1e pet0t0o*2 0* G.R.
No2. 168056, 16820>, 168B61, 168B6=, )*+ 168>=0, )re 1ereb& D"SM"SSED.
*here bein7 no constitution8l i9pedi9ent to the full enforce9ent 8nd i9ple9ent8tion of R.A. No.
H@@#, the te9por8r3 restr8inin7 order issued b3 the Court on +ul3 1, !""I is !"$TED upon fin8lit3 of
herein decision.
,( (R-ERE-.
MA. A!"C"A AUSTR"A8MART"NE9
Associ8te +ustice
EN BANC
G.R. No. 168056 8 ABAKADA GURO PART !"ST, 34 A5. ,. E.ECUT",E
SECRETAR EDUARDO R. ERM"TA, ET A!.
G.R. No. 16820> 8 AQU"!"NO P"MENTE!, 'R., 34 A5. ,. E.ECUT",E SECRETAR EDUARDO
ERM"TA, 34 A5.
G.R. No. 168B61 8 ASSOC"AT"ON O$ P"!"P"NAS S-E!! DEA!ERS, "NC, 34 A5. ,. CESAR ,.
PUR"S"MA, 34 A5.
G.R. No. 168B6= 8 $RANC"S 'OSEP- G. ESCUDERO, 34 A5. ,. CESAR ,. PUR"S"MA, 34 A5.
6- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6
SEPARATE CONCURR"NG
AND D"SSENT"NG OP"N"ON
DA,"DE, 'R., 1.J.J
>hile & still hold on to 93 position expressed in 93 dissentin7 opinion in the first ;A* c8ses,
1
& p8rtl3
3ield to the 8pplic8tion to the c8ses 8t b8r of the rule on :7er98neness: therein enunci8ted. *hus, &
concur Eith the ponenciaof 93 hi7hl3-estee9ed colle87ue )9e. +ustice )8. Alici8 Austri8-)8rtineM
except 8s re78rds its rulin7 on the issue of Ehether Republic Act No. H@@# viol8tes ,ection !1,
Article ;& of the Constitution.
R.A. No. H@@# pri98ril3 8i9s to restructure the v8lue-8dded t8x C;A*D s3ste9 b3 bro8denin7 its b8se
8nd r8isin7 the r8te so 8s to 7ener8te 9ore revenues for the 7overn9ent th8t c8n 8ssu87e the
econo9ic predic89ent th8t our countr3 is noE f8cin7. *his recentl3 en8cted l8E ste99ed fro9 three
le7isl8tive billsJ 2ouse Bill C2BD No. @III, 2B No. @#"I, 8nd ,en8te Bill C,BD 1HI". *he first C2B No.
@IIID c8lled for the 89end9ent of ,ections 1"6, 1"#, 1", 1"H, 11", 8nd 111 of the N8tion8l &ntern8l
Revenue Code CN&RCD 8s 89ended4 Ehile the second C2B No. @#"ID proposed 89end9ents to
,ections 1"6, 1"#, 1", 11", 8nd 111 of the N&RC, 8s 89ended. &t is si7nific8nt to note th8t 8ll these
,ections specific8ll3 de8l Eith ;A*. And indubit8bl3, these bills 8re revenue bills in th8t the3 8re
intended to lev3 t8xes 8nd r8ise funds for the 7overn9ent.
!
(n the other h8nd, ,B No. 1HI" introduced 89end9ents to :,ections !#, !, @1, 1"6, 1", 1"H,
11", 111, 11!, 11@, 111, 116, 11#, 11, 11H, 1!I, 11, !@6, !@#, 8nd !: of the N&RC, 8s 89ended.
A9on7 the provisions sou7ht to be 89ended, onl3 ,ections 1"6, 1", 1"H, 11", 111, 11!, 11@, 111,
8nd 116 pert8in to ;A*. And Ehile ,ections !@6, !@#, 8nd ! 8re 8d9inistr8tive provisions
pert8inin7 to re7istr8tion reBuire9ents 8nd issu8nce of receipts co99erci8l invoices, the proposed
89end9ents thereto 8re rel8ted to ;A*. 2ence, the proposed 89end9ents to these ,ections Eere
v8lidl3 t8Fen co7niM8nce of 8nd properl3 considered b3 the Bic89er8l Conference Co99ittee
CBCCD.
2oEever, & 89 of the opinion th8t the inclusion into the l8E of the 89end9ents proposed in ,B No.
1HI" to the folloEin7 provisions CEith 9odific8tions on the r8tes of t8xesD is inv8lid.
Provision ,ubAect 98tter
,ection !# R8te of inco9e t8x on do9estic corpor8tions
,ection !CADC1D R8te of inco9e t8x on resident forei7n corpor8tion
,ection !CBDC1D R8te of inco9e t8x on non-resident forei7n corpor8tion
,ection !CBDCI-bD R8te of inco9e t8x on intr8-corpor8te dividends received b3 non-resident forei7n
corpor8tion
,ection @1CBDC1D -eductions fro9 7ross inco9e
,ection 11# Percent87e t8x on do9estic c8rriers 8nd Feepers of 78r87es
,ection 11H *8x on fr8nchises
,ection 11 Excise t8x on 98nuf8ctured oils 8nd other fuels
(bviousl3, these provisions do not de8l Eith ;A*. &t 9ust be noted th8t the 2ouse Bills initi8ted
89end9ents to provisions pert8inin7 to ;A* onl3. -oubtless, the ,en8te h8s the constitution8l
poEer to concur Eith the 89end9ents to the ;A* provisions introduced in the 2ouse Bills or even to
propose its oEn version of ;A* 9e8sure. But th8t poEer does not extend to initi8tion of other t8x
9e8sures, such 8s introducin7 89end9ents to provisions on corpor8te inco9e t8xes, percent87e
t8xes, fr8nchise t8xes, 8nd excise t8xes liFe Eh8t the ,en8te did in these c8ses. &t E8s be3ond the
89bit of the 8uthorit3 of the ,en8te to propose 89end9ents to provisions not covered b3 the 2ouse
Bills or not rel8ted to the subAect 98tter of the 2ouse Bills, Ehich is ;A*. *o 8lloE the ,en8te to do
so Eould be t8nt89ount to vestin7 in it the poEer to initi8te revenue bills -- 8 poEer th8t exclusivel3
pert8ins to the 2ouse of Represent8tives under ,ection !1, Article ;& of the Constitution, Ehich
providesJ
,ec. !1. All 8ppropri8tion, revenue or t8riff bills, bills 8uthoriMin7 incre8se of the public debt, bills of
loc8l 8pplic8tion, 8nd priv8te bills sh8ll ori7in8te exclusivel3 in the 2ouse of Represent8tives but the
,en8te 983 propose or concur Eith 89end9ents.
)oreover, ,ections 1!1 CPercent87e *8x on B8nFs 8nd Non-B8nF /in8nci8l &nter9edi8riesD 8nd 1I1
CExcise *8x on )iner8l ProductsD of the N&RC, 8s 89ended, h8ve been included b3 the BCC in R.A.
N". H@@# even thou7h the3 Eere not found in the ,en8te 8nd 2ouse Bills.
&n Philippine *ud+es %ssociation v. Prado,
@
the Court described the function of 8 conference
co99ittee in this EiseJ :A conference co99ittee 983 de8l 7ener8ll3 Eith the subAect 98tter or it 983
be li9ited to resolvin7 the precise differences betEeen the tEo houses. Even Ehere the conference
co99ittee is not b3 rule li9ited in its Aurisdiction, le7isl8tive custo9 2e5ere%& %0m0t2 t1e 4ree+om
;0t1 ;1031 *e; 26bAe3t m)tter 3)* be 0*2erte+ 0*to t1e 3o*4ere*3e b0%%.:
*he li9it8tion on the poEer of 8 conference co99ittee to insert neE provisions E8s l8id doEn
in Tolentino v. Secretary of Finance.
1
*here, the Court, Ehile reco7niMin7 the poEer of 8 conference
co99ittee to include in its report 8n entirel3 neE provision th8t is not found either in the 2ouse bill or
in the ,en8te bill, held th8t the exercise of th8t poEer is subAect to the condition th8t the s8id
provision is :@erm)*e to t1e 26bAe3t o4 t1e -o62e an%Se*)te b0%%2.F
As pointed out b3 the petitioners, Tolentino differs fro9 the present c8ses in the sense th8t in th8t
c8se the 89end9ents introduced in the ,en8te bill Eere on the 2)me 26bAe3t m)tter tre8ted in the
2ouse bill, Ehich E8s ;A*, 8nd the neE provision inserted b3 the conference co99ittee h8d rel8tion
to th8t subAect 98tter. ,pecific8ll3, 2B No. 111H# c8lled for the C1D 89end9ent of ,ections
HH,1"",1"!,1"@,1"1,1"I,1"6,1"#, 1", 11", 11!,11I, 116, !@6,!@#, 8nd !@ of the N&RC, 8s
89ended4 8nd C!D repe8l of ,ections 11@ 8nd 111 of the N&RC, 8s 89ended. ,B No. 16@", on the
other h8nd, proposed the C1D 89end9ent of ,ections HH,1"",1"!,1"@,1"1,1"I,1"#, 1", 11", 11!,
!@6, !@#, 8nd !@ of the N&RC, 8s 89ended4 8nd C!D repe8l of ,ections 11@, 111, 8nd 116 of the
N&RC, 8s 89ended. &n short, 8ll the provisions sou7ht to be ch8n7ed in the ,en8te bill Eere covered
in the 2ouse bill. Althou7h the neE provisions inserted b3 the conference co99ittee Eere not found
in either the 2ouse or ,en8te bills, the3 Eere 7er98ne to the 7ener8l subAect of the bills.
&n the present c8ses, the provisions inserted b3 the BCC, n89el3, ,ections 1!1 CPercent87e *8x on
B8nFs 8nd Non-B8nF /in8nci8l &nter9edi8riesD 8nd 1I1 CExcise *8x on )iner8l ProductsD of the
N&RC, 8s 89ended, 8re undoubtedl3 7er98ne to ,B No. 1HI", Ehich introduced 89end9ents to the
provisions on percent87e 8nd excise t8xes -- but forei7n to 2B Nos. @III 8nd @#"I, Ehich de8lt Eith
;A* onl3. ,ince the proposed 89end9ents in the ,en8te bill rel8tin7 to percent87e 8nd excise t8xes
c8nnot the9selves be sust8ined bec8use the3 did not t8Fe their root fro9, or 8re not rel8ted to the
subAect of, 2B Nos. @#"I 8nd @III, in viol8tion of ,ection !1, Article ;& of the Constitution, the neE
provisions inserted b3 the BCC on percent87e 8nd excise t8xes Eould h8ve no le7 to st8nd on.
& underst8nd ver3 Eell th8t the 89end9ents of the ,en8te 8nd the BCC rel8tin7 to corpor8te
inco9e, percent87e, fr8nchise, 8nd excise t8xes Eere desi7ned to :soften the i9p8ct of ;A*
9e8sure on the consu9er, i.e., b3 distributin7 the burden 8cross 8ll sectors inste8d of puttin7 it
entirel3 on the shoulders of the consu9ers: 8nd to 8llevi8te the countr35s fin8nci8l proble9s b3
brin7in7 9ore revenues for the 7overn9ent. 2oEever, these co99end8ble intentions do not Austif3 8
devi8tion fro9 the Constitution, Ehich 98nd8tes th8t the initi8tive for filin7 revenue bills should co9e
fro9 the 2ouse of Represent8tives, not fro9 the ,en8te. After 8ll, these 8i9s 983 still be re8liMed b3
9e8ns of 8nother bill th8t 983 l8ter be initi8ted b3 the 2ouse of Represent8tives.
*herefore, & vote to decl8re R.A. No. H@@# 8s 3o*2t0t6t0o*)% insof8r 8s it 89ends provisions
pert8inin7 to ;A*. 2oEever, & vote to decl8re 8s 6*3o*2t0t6t0o*)% ,ections 1, !, @, 11, 1I, 16, 1#,
8nd 1 thereof Ehich, respectivel3, 89end ,ections !#, !, @1, 11#, 11H, 1!1, 11, 8nd 1I1 of the
N&RC, 8s 89ended bec8use these 89end9ents de8l Eith subAect 98tters Ehich Eere not touched
or covered b3 the bills e98n8tin7 fro9 the 2ouse of Represent8tives, thereb3 viol8tin7 ,ection !1 of
Article ;& of the Constitution.
-"!AR"O G. DA,"DE, 'R.
CONCURR"NG AND
D"SSENT"NG OP"N"ON
PUNO, J.:
*he 98in opinion of )8d89 +ustice )8rtineM exh8ustivel3 discusses the nu9erous constitution8l
8nd le78l issues r8ised b3 the petitioners. Be th8t 8s it 983, & Eish to r8ise the folloEin7 points, vi(J
$0r2t. Petitioners 8ss8il sections 1 to 6 of Republic Act No. H@@# 8s viol8tive of the principle of non-
dele78tion of le7isl8tive poEer. *hese sections 8uthoriMe the President, upon reco99end8tion of the
,ecret8r3 of /in8nce, to r8ise the v8lue-8dded t8x C;A*D r8te to 1!K e44e3t05e ')*6)r& 1, 2006,
upon s8tisf8ction of the folloEin7 conditionsJ vi(J
CiD ;8lue-8dded t8x collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the previous
3e8r exceeds tEo 8nd four-fifth percent C! 1NIKD4 or
CiiD N8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceeds one 8nd one-
h8lf percent C1 OKD.
*he poEer of Audici8l revieE under Article ;&&&, section IC!D of the 1H# Constitution is li9ited to the
revieE of :)3t6)% 3)2e2 )*+ 3o*tro5er20e2.:
1
As ri7htl3 stressed b3 retired +ustice ;icente ;.
)endoM8, this reBuire9ent 7ives the Audici8r3 :the opportunit3, denied to the le7isl8ture, of seein7
the 8ctu8l oper8tion of the st8tute 8s it is 8pplied to 8ctu8l f8cts 8nd thus en8bles it to re8ch sounder
Aud79ent: 8nd :enh8nces public 8ccept8nce of its role in our s3ste9 of 7overn9ent.:
!
&t 8lso 8ssures
th8t the Audici8r3 does not intrude on 8re8s co99itted to the other br8nches of 7overn9ent 8nd is
confined to its role 8s defined b3 the Constitution.
@
Apposite thereto is the doctrine
of r0pe*e22 Ehose b8sic r8tion8le is :to prevent the courts, throu7h prem)t6re )+A6+03)t0o*, fro9
ent8n7lin7 the9selves in 8bstr8ct dis87ree9ents.:
1
Centr8l to the doctrine is the deter9in8tion of
:Ehether the c8se involves6*3ert)0* or 3o*t0*@e*t 46t6re e5e*t2 th8t 983 not occur 8s
8nticip8ted, or indeed 983 not occur 8t 8ll.:
I
*he ripeness reBuire9ent 9ust be s8tisfied for e)31
31)%%e*@e+ %e@)% pro5020o* 8nd p8rts of 8 st8tute so th8t those Ehich 8re :not 0mme+0)te%&
0*5o%5e+ 8re not thereb3 throEn open for 8 Audici8l deter9in8tion of constitution8lit3.:
6
&t is 98nifest th8t the constitution8l ch8llen7e to sections 1 to 6 of R.A. No. H@@# c8nnot hurdle the
reBuire9ent of ripeness. T1e2e 2e3t0o*2 @05e t1e Pre20+e*t t1e po;er to r)02e t1e ,AT r)te to
12C o* ')*6)r& 1, 2006 6po* 2)t024)3t0o* o4 3ert)0* 4)3t8b)2e+ 3o*+0t0o*2. >e 8re not
endoEed Eith the inf8llible 7ift of prophes3 to FnoE Ehether these conditions 8re cert8in to h8ppen.
*he poEer to 8dAust the t8x r8te 7iven to the President is futuristic 8nd 983 or 983 not be exercised.
*he Court is therefore beseeched to render 8 conAectur8l Aud79ent b8sed on h3pothetic8l f8cts.
,uch 8 supplic8tion h8s to be reAected.
Se3o*+. >ith due respect, & sub9it th8t the 9ost i9port8nt constitution8l issue posed b3 the
petitions 8t b8r rel8tes to the p)r)meter2 o4 po;er o4 ) B03)mer)% Co*4ere*3e Comm0ttee. )ost
of the issues in the petitions 8t b8r 8rose bec8use the Bic89er8l Conference Co99ittee concerned
exercised poEers th8t Eent be3ond reconcilin7 the +044ere*3e2 betEeen ,en8te Bill No. 1HI" 8nd
2ouse Bill Nos. @#"I 8nd @III. &n To%e*t0*o 5. Se3ret)r& o4 $0*)*3e,
#
& ventured the vieE th8t 8
Bic89er8l Conference Co99ittee h8s %0m0te+ po;er2 8nd c8nnot be 8lloEed to 8ct 8s if it Eere 8
:t10r+ 1o62e: of Con7ress. & further E8rned th8t unless its ro50*@ po;er28re rei7ned in, 8
Bic89er8l Conference Co99ittee c8n ErecF the l8E98Fin7 process Ehich is 8 cornerstone of the
de9ocr8tic, republic8n re7i9e est8blished in our Constitution. *he p8ss87e of ti9e fortifies 93 f8ith
th8t there ou7ht to be no le78l u-turn on this pree9inent principle. & Eish, therefore, to reiter8te 93
re8sons for this unbendin7 vieE, vi(J

,ection !"H, Rule 6&& of the Rules of the ,en8te providesJ

&n the event th8t the ,en8te does not 87ree Eith the 2ouse of Represent8tives on the provision of
8n3 bill or Aoint resolution, the differences shall be settled by a conference committee of both
;ouses Ehich sh8ll 9eet Eithin ten d83s 8fter their co9position.
E8ch Conference Co99ittee Report sh8ll cont8in 8 det8iled 8nd sufficientl3 explicit st8te9ent of the
ch8n7es in or 89end9ents to the subAect 9e8sure, 8nd sh8ll be si7ned b3 the conferees.
CE9ph8sis suppliedD
*he counterp8rt rule of the 2ouse of Represent8tives is c8st in ne8r identic8l l8n7u87e. ,ection I
of the Rules of the 2ouse of Represent8tives pertinentl3 providesJ
0n the event that the ;ouse does not a+ree 8ith the Senate on the amendments to any bill or Boint
resolution, the differences may be settled by a conference committee of both chambers.
x x x. E8ch report sh8ll cont8in 8 det8iled, sufficientl3 explicit st8te9ent of the ch8n7es in or
89end9ents to the subAect 9e8sure. CE9ph8sis suppliedD
*he +efferson5s )8nu8l h8s been 8dopted 8s 8 supple9ent to our p8rli89ent8r3 rules 8nd pr8ctice.
,ection 1I6 of +efferson5s )8nu8l si9il8rl3 confines the poEers of 8 conference co99ittee, vi(J
*he 98n87ers of 8 conference 9ust confine the9selves to the differences co99itted to the9 G
8nd 983 not include subAects not Eithin the dis87ree9ents, even thou7h 7er98ne to 8 Buestion in
issue.
*his rule of 8ntiBuit3 h8s been honed 8nd honored in pr8ctice b3 the Con7ress of the %nited ,t8tes.
*hus, it is chronicled b3 /lo3d BiddicF, P8rli89ent8ri8n E9eritus of the %nited ,t8tes ,en8te, vi(J
Co99ittees of conference 8re 8ppointed for the sole purpose of compromisin+ and adBustin+ the
differin+ and conflictin+ opinions of the t8o ;ouses 8nd the co99ittees of conference 8lone c8n
7r8nt co9pro9ises 8nd 9odif3 propositions of either 2ouses Eithin the li9its of the dis87ree9ent.
Conferees 8re li9ited to the consider8tion of differences betEeen the tEo 2ouses.
Con+ress shall not insert in their report matters not committed to them by either ;ouse, nor shall
they stri?e from the bill matters a+reed to by both ;ouses. No 98tter on Ehich there is nothin7 in
either the ,en8te or 2ouse p8ssed versions of 8 bill 983 be included in the conference report 8nd
8ctions to the contr8r3 Eould subAect the report to 8 point of order. CE9ph8sis oursD
&n fine, there is neither 8 sound nor 8 s3ll8ble in the Rules of the ,en8te 8nd the 2ouse of
Represent8tives to support the thesis of the respondents th8t 8 bic89er8l conference co99ittee is
clothed Eith 8n e# post veto poEer.
But the thesis th8t 8 Bic89er8l Conference Co99ittee c8n Eield e# post veto poEer does not onl3
contr8vene the rules of both the ,en8te 8nd the 2ouse. &t E87es E8r 878inst our settled ide8ls of
represent8tive de9ocr8c3. /or the inevit8ble, c8t8strophic effect of the thesis is to inst8ll 8 Bic89er8l
Conference Co99ittee 8s the *hird Ch89ber of our Con7ress, similarly vested Eith the poEer to
98Fe l8Es but Eith the dissimilarity th8t its l8Es 8re not the subAect of 8 free 8nd full discussion of
both 2ouses of Con7ress. >ith such 8 v87r8nt poEer, 8 Bic89er8l Conference Co99ittee 8ctin7 8s
8 *hird Ch89ber Eill be 8 constitution8l 9onstrosit3.
&t needs no o9niscience to perceive th8t our Constitution did not provide for 8 Con7ress co9posed
of three ch89bers. (n the contr8r3, section 1, Article ;& of the Constitution provides in cle8r 8nd
cert8in l8n7u87eJ :*he le7isl8tive poEer shall be vested in the Con7ress of the Philippines
Ehich shall consist of 8 ,en8te 8nd 8 2ouse of Represent8tives G: Note th8t in vestin7 le7isl8tive
poEer exclusivel3 to the ,en8te 8nd the 2ouse, the Constitution used the Eord :sh8ll.: &ts co998nd
for 8 Con7ress of tEo houses is 98nd8tor3. &t is not 98nd8tor3 so9eti9es.
&n vestin7 le7isl8tive poEer to the ,en8te, the Constitution 9e8ns the ,en8te :G co9posed of
tEent3-four ,en8tors xxx elected 8t l8r7e b3 the Bu8lified voters of the Philippines G: ,i9il8rl3,
Ehen the Constitution vested the le7isl8tive poEer to the 2ouse, it 9e8ns the 2ouse :G co9posed
of not 9ore th8n tEo hundred 8nd fift3 9e9bers xxx Eho sh8ll be elected fro9 le7isl8tive districts
xxx 8nd those Eho xxx sh8ll be elected throu7h 8 p8rt3-list s3ste9 of re7istered n8tion8l, re7ion8l,
8nd sector8l p8rties or or78niM8tions.: *he Constitution thus, did not vest on 8 Bic89er8l Conference
Co99ittee Eith 8n ad hoc 9e9bership the poEer to le7isl8te for it exclusivel3 vested le7isl8tive
poEer to the ,en8te 8nd the 2ouse 8s co-eBu8l bodies. *o be sure, the Constitution does not
9ention the Bic89er8l Conference Co99ittees of Con7ress. No constitution8l st8tus is 8ccorded to
the9. *he3 8re not even st8tutor3 cre8tions. *he3 oEe their existence fro9 the intern8l rules of the
tEo 2ouses of Con7ress. .et, respondents peddle the disconcertin7 ide8 th8t the3 should be
reco7niMed 8s 8 *hird Ch89ber of Con7ress 8nd Eith e# post veto poEer 8t th8t.
*he thesis th8t 8 Bic89er8l Conference Co99ittee c8n exercise l8E 98Fin7 poEer Eith e#
post veto poEer is frei7hted Eith 9ischief. '8E 98Fin7 is 8 poEer th8t c8n be used for 7ood or for ill,
hence, our Constitution c8refull3 l8id out 8 pl8n 8nd 8 procedure for its exercise. /irstl3, it
vouchs8fed th8t the poEer to 98Fe l8Es should be exercised b3 no other bod3 except the ,en8te
8nd the 2ouse. &t ou7ht to be indubit8ble th8t Eh8t is conte9pl8ted is the ,en8te 8ctin7 8s 8 full
,en8te 8nd the 2ouse 8ctin7 8s 8 full 2ouse. &t is onl3 Ehen the ,en8te 8nd the 2ouse 8ct 8s Ehole
bodies th8t the3 trul3 represent the people. And it is onl3 Ehen the3 represent the people th8t the3
c8n le7iti98tel3 p8ss l8Es. '8Es th8t 8re not en8cted b3 the people5s ri7htful represent8tives
subvert the people5s soverei7nt3. Bic89er8l Conference Co99ittees, Eith their ad hoc ch8r8cter 8nd
li9ited 9e9bership, c8nnot p8ss l8Es for the3 do not represent the people. *he Constitution does
not 8lloE the t3r8nn3 of the 98Aorit3. .et, the respondents Eill i9pose the Eorst Find of t3r8nn3 = the
t3r8nn3 of the 9inorit3 over the 98Aorit3. ,econdl3, the Constitution deline8ted in deft stroFes the
steps to be folloEed in 98Fin7 l8Es. *he overridin7 purpose of these procedur8l rules is to 8ssure
th8t onl3 bills th8t successfull3 survive the se8rchin7 scrutin3 of the proper co99ittees of Con7ress
8nd the full 8nd unfettered deliber8tions of both 2ouses c8n beco9e l8Es. /or this re8son, 8 bill h8s
to under7o three C@D 98nd8tor3 sep8r8te re8din7s in e8ch 2ouse. &n the c8se 8t bench, the
8dditions 8nd deletions 98de b3 the Bic89er8l Conference Co99ittee did not enAo3 the enli7htened
studies of 8ppropri8te co99ittees. &t is 9eet to note th8t the co9plexities of 9odern d83 le7isl8tions
h8ve 98de our co99ittee s3ste9 8 si7nific8nt p8rt of the le7isl8tive process. *ho98s Reed c8lled
the co99ittee s3ste9 8s :the e3e, the e8r, the h8nd, 8nd ver3 often the br8in of the house.:
President >oodroE >ilson of the %nited ,t8tes once referred to the 7overn9ent of the %nited
,t8tes 8s :8 7overn9ent b3 the Ch8ir9en of the ,t8ndin7 Co99ittees of Con7ress G: Neither did
these 8dditions 8nd deletions of the Bic89er8l Conference Co99ittee p8ss throu7h the coils of
collective deliber8tion of the 9e9bers of the tEo 2ouses 8ctin7 sep8r8tel3. -ue to this
shortcircuitin7 of the constitution8l procedure of 98Fin7 l8Es, confusion shrouds the en8ct9ent of
R.A. No. ##16. >ho inserted the 8dditions 8nd deletions re98ins 8 93ster3. >h3 the3 Eere inserted
is 8 riddle. *o use 8 Churchilli8n phr8se, l8E98Fin7 should not be 8 riddle Er8pped in 8n eni798. &t
c8nnot be, for Article &&, section ! of the Constitution 98nd8tes the ,t8te to 8dopt 8nd i9ple9ent 8
:polic3 of full public disclosure of 8ll its tr8ns8ctions involvin7 public interest.: *he Constitution could
not h8ve conte9pl8ted 8 Con7ress of invisible 8nd un8ccount8ble +ohn 8nd )8r3 -oes. A l8E
Ehose r8tion8le is 8 riddle 8nd Ehose 8uthorship is obscure c8nnot bind the people.
All these notEithst8ndin7, respondents resort to the le78l cos9etolo73 th8t these 8dditions 8nd
deletions should 7overn the people 8s l8Es bec8use the Bic89er8l Conference Co99ittee Report
E8s 8n3E83 sub9itted to 8nd 8pproved b3 the ,en8te 8nd the 2ouse of Represent8tives. *he
sub9ission 983 h8ve so9e 9erit Eith respect to provisions 87reed upon b3 the Co99ittee in the
process of reconcilin7 conflicts betEeen ,.B. No. 16@" 8nd 2.B. No. 111H#. &n these inst8nces, the
conflictin7 provisions h8d been previousl3 screened b3 the proper co99ittees, deliber8ted upon b3
both 2ouses 8nd 8pproved b3 the9. &t is, hoEever, 8 different 98tter Eith respect to 8dditions 8nd
deletions Ehich Eere entirel3 neE 8nd Ehich Eere 98de not to reconcile inconsistencies betEeen
,.B. No. 16@" 8nd 2.B. No. 111H#. *he 9e9bers of the Bic89er8l Conference Co99ittee did not
h8ve 8n3 8uthorit3 to 8dd neE provisions or delete provisions 8lre8d3 8pproved b3 both 2ouses 8s it
E8s not necess8r3 to disch8r7e their li9ited t8sF of reconcilin7 differences in bills. At th8t l8te st87e
of l8E 98Fin7, the Conference Co99ittee c8nnot 8ddNdelete provisions Ehich c8n beco9e l8Es
Eithout under7oin7 the stud3 8nd deliber8tion of both ch89bers 7iven to bills on 1st, !nd, 8nd @rd
re8din7s. Even the ,en8te 8nd the 2ouse c8nnot en8ct 8 l8E Ehich Eill not under7o these
98nd8tor3 three C@D re8din7s reBuired b3 the Constitution. &f the ,en8te 8nd the 2ouse c8nnot en8ct
such 8 l8E, neither c8n the lesser Bic89er8l Conference Co99ittee.
)oreover, the so-c8lled choice 7iven to the 9e9bers of both 2ouses to either 8pprove or
dis8pprove the s8id 8dditions 8nd deletions is 9ore of 8n optic8l illusion. *hese 8dditions 8nd
deletions 8re not sub9itted sep8r8tel3 for 8pprov8l. *he3 8re tucFed to the entire bill. *he vote is on
the bill 8s 8 p8cF87e, i.e., to7ether Eith the insertions 8nd deletions. And the vote is either :83e: or
:n83,: Eithout 8n3 further deb8te 8nd deliber8tion. $uite often, le7isl8tors vote :3es: bec8use the3
8pprove of the bill 8s 8 Ehole 8lthou7h the3 983 obAect to its 89end9ents b3 the Conference
Co99ittee. *his l8cF of re8l choice is Eell observed b3 Robert 'uceJ
*heir poEer lies chiefl3 in the f8ct th8t reports of conference co99ittees 9ust be 8ccepted Eithout
89end9ent or else reAected in toto. *he i9pulse is to 7et done Eith the 98tter 8nd so the 9otion to
8ccept h8s undue 8dv8nt87e, for so9e 9e9bers 8re sure to prefer sE8lloEin7 unp8l8t8ble
provisions r8ther th8n prolon7 controvers3. *his is the 9ore liFel3 if the report co9es in the rush of
business toE8rd the end of 8 session, Ehen to seeF further conference 9i7ht result in the loss of the
9e8sure 8lto7ether. At 8n3 ti9e in the session there is so9e risF of such 8 result folloEin7 the
reAection of 8 conference report, for it 983 not be possible to secure 8 second conference, or del83
983 7ive opposition to the 98in propos8l ch8nce to develop 9ore stren7th.
&n 8 si9il8r vein, Prof. +8cF -8vies co99ented th8t :conference reports 8re returned to 8sse9bl3
8nd ,en8te on 8 t8Fe-it or le8ve-it-b8sis, 8nd the bodies 8re 7ener8ll3 pl8ced in the position th8t to
le8ve-it is 8 pr8ctic8l i9possibilit3.: *hus, he concludes th8t :conference co99ittee 8ction is the
9ost unde9ocr8tic procedure in the le7isl8tive process.:
*he respondents 8lso contend th8t the 8dditions 8nd deletions 98de b3 the Bic89er8l Conference
Co99ittee Eere in 8ccord Eith le7isl8tive custo9s 8nd us87es. *he 8r7u9ent does not persu8de
for it 9is8ppreci8tes the v8lue of custo9s 8nd us87es in the hier8rch3 of sources of le7isl8tive rules
of procedure. *o be sure, ever3 le7isl8tive 8sse9bl3 h8s the inherent ri7ht to pro9ul78te its oEn
intern8l rules. &n our Aurisdiction, Article ;&, section 16C@D of the Constitution provides th8t :E8ch
2ouse 983 deter9ine the rules of its proceedin7s x x x.: But it is hornbooF l8E th8t the sources of
Rules of Procedure 8re 98n3 8nd hier8rchic8l in ch8r8cter. )8son l8id the9 doEn 8s folloEsJ
x x x
1. Rules of Procedure 8re derived fro9 sever8l sources. *he princip8l sources 8re 8s folloEsJ
8. Constitution8l rules.
b. ,t8tutor3 rules or ch8rter provisions.
c. Adopted rules.
d. +udici8l decisions.
e. Adopted p8rli89ent8r3 8uthorit3.
f. P8rli89ent8r3 l8E.
7. Customs and usa+es.
!. The rules from the different sources ta?e precedence in the order listed above except th8t Audici8l
decisions, since the3 8re interpret8tions of rules fro9 one of the other sources, t8Fe the s89e
precedence 8s the source interpreted. *hus, for ex89ple, 8n interpret8tion of 8 constitution8l
provision t8Fes precedence over 8 st8tute.
@. Chenever there is conflict bet8een rules from these sources the rule from the source listed earlier
prevails over the rule from the source listed later. *hus, Ehere the Constitution reBuires three
re8din7s of bills, this provision controls over 8n3 provision of st8tute, 8dopted rules, 8dopted 98nu8l,
or of p8rli89ent8r3 l8E, 8nd 8 rule of p8rli89ent8r3 l8E controls over 8 loc8l us87e but 9ust 7ive
E83 to 8n3 rule fro9 8 hi7her source of 8uthorit3. CE9ph8sis oursD
As discussed 8bove, the un8uthoriMed 8dditions 8nd deletions 98de b3 the Bic89er8l Conference
Co99ittee viol8ted the procedure fixed b3 the Constitution in the 98Fin7 of l8Es. &t is re8sonless for
respondents therefore to Austif3 these insertions 8s s8nctioned b3 custo9s 8nd us87es.
/in8ll3, respondents seeF s8nctu8r3 in the conclusiveness of 8n enrolled bill to b8r 8n3 Audici8l
inBuir3 on Ehether Con7ress observed our constitution8l procedure in the p8ss87e of R.A. No. ##16.
*he enrolled bill theor3 is 8 historic8l relic th8t should not continuousl3 rule us fro9 the fossiliMed
p8st. &t should be i99edi8tel3 e9ph8siMed th8t the enrolled bill theor3 ori7in8ted in En7l8nd Ehere
there is no Eritten constitution 8nd Ehere P8rli89ent is supre9e. &n this Aurisdiction, Ee h8ve 8
Eritten constitution 8nd the le7isl8ture is 8 bod3 of li9ited poEers. 'iFeEise, it 9ust be pointed out
th8t st8rtin7 fro9 the dec8de of the 1"s, even A9eric8n courts h8ve veered 8E83 fro9 the ri7idit3
8nd unre8lis9 of the conclusiveness of 8n enrolled bill. Prof. ,utherl8nd observedJ
x x x
>here the f8ilure of constitution8l co9pli8nce in the en8ct9ent of st8tutes is not discover8ble fro9
the f8ce of the 8ct itself but 983 be de9onstr8ted b3 recourse to the le7isl8tive Aourn8ls, deb8tes,
co99ittee reports or p8pers of the 7overnor, courts h8ve used sever8l conflictin7 theories Eith
Ehich to dispose of the issue. *he3 h8ve heldJ C1D th8t the enrolled bill is conclusive 8nd liFe the
sheriff5s return c8nnot be 8tt8cFed4 C!D th8t the enrolled bill is prima facie correct 8nd onl3 in c8se the
le7isl8tive Aourn8l shoEs 8ffir98tive contr8diction of the constitution8l reBuire9ent Eill the bill be held
inv8lid4 C@D th8t 8lthou7h the enrolled bill is prima facie correct, evidence fro9 the Aourn8ls, or other
extrinsic sources is 8d9issible to striFe the bill doEn4 C1D th8t the le7isl8tive Aourn8l is conclusive 8nd
the enrolled bills is v8lid onl3 if it 8ccords Eith the recit8l in the Aourn8l 8nd the constitution8l
procedure.
;8rious Aurisdictions h8ve 8dopted these 8ltern8tive 8ppro8ches in vieE of stron7 dissent 8nd
diss8tisf8ction 878inst the philosophic8l underpinnin7s of the conclusiveness of 8n enrolled bill. Prof.
,utherl8nd further observedJ
x x x. Nu9erous re8sons h8ve been 7iven for this rule. *r8dition8ll3, 8n enrolled bill E8s :8 record:
8nd 8s such E8s not subAect to 8tt8cF 8t co99on l8E. 'iFeEise, the rule of conclusiveness E8s
si9il8r to the co99on l8E rule of the inviol8bilit3 of the sheriff5s return. &ndeed, the3 h8d the s89e
ori7in, th8t is, the sheriff E8s 8n officer of the Fin7 8nd liFeEise the p8rli89ent8r3 8ct E8s 8 re78l 8ct
8nd no offici8l 9i7ht dispute the Fin75s Eord. *r8nsposed to our de9ocr8tic s3ste9 of 7overn9ent,
courts held th8t 8s the le7isl8ture E8s 8n offici8l br8nch of 7overn9ent the court 9ust indul7e ever3
presu9ption th8t the le7isl8tive 8ct E8s v8lid. *he doctrine of sep8r8tion of poEers E8s 8dv8nced
8s 8 stron7 re8son Eh3 the court should tre8t the 8cts of 8 co-ordin8te br8nch of 7overn9ent Eith
the s89e respect 8s it tre8ts the 8ction of its oEn officers4 indeed, it E8s thou7ht th8t it E8s entitled
to even 7re8ter respect, else the court 9i7ht be in the position of revieEin7 the EorF of 8 supposedl3
eBu8l br8nch of 7overn9ent. >hen these 8r7u9ents f8iled, 8s the3 freBuentl3 did, the doctrine of
convenience E8s 8dv8nced, th8t is, th8t it E8s not onl3 8n undue burden upon the le7isl8ture to
preserve its records to 9eet the 8tt8cF of persons not 8ffected b3 the procedure of en8ct9ent, but
8lso th8t it unnecess8ril3 co9plic8ted liti78tion 8nd confused the tri8l of subst8ntive issues.
Althou7h 98n3 of these 8r7u9ents 8re persu8sive 8nd 8re indeed the b8sis for the rule in 98n3
st8tes tod83, the3 8re not invulner8ble to 8tt8cF. *he rule 9ost relied on = the sheriff5s return or
sEorn offici8l rule = did not in civil liti78tion deprive the inAured p8rt3 of 8n 8ction, for 8lE83s he could
sue the sheriff upon his offici8l bond. 'iFeEise, 8lthou7h coll8ter8l 8tt8cF E8s not per9itted, direct
8tt8cF per9itted r8isin7 the issue of fr8ud, 8nd 8t 8 l8ter d8te 8tt8cF in eBuit3 E8s 8lso 8v8il8ble4 8nd
th8t the evidence of the sheriff E8s not of unusu8l Eei7ht E8s de9onstr8ted b3 the f8ct th8t in 8n
8ction 878inst the sheriff no presu9ption of its 8uthenticit3 prev8iled.
*he 8r7u9ent th8t the enrolled bill is 8 :record: 8nd therefore uni9pe8ch8ble is liFeEise 9isle8din7,
for the correction of records is 8 98tter of est8blished Audici8l procedure. App8rentl3, the Austific8tion
is either the historic8l one th8t the Fin75s Eord could not be Buestioned or the sep8r8tion of poEers
principle th8t one br8nch of the 7overn9ent 9ust tre8t 8s v8lid the 8cts of 8nother.
Persuasive as these ar+uments are, the tendency today is to avoid reachin+ results by artificial
presumptions and thus it 8ould seem desirable to insist that the enrolled bill stand or fall on the
basis of the relevant evidence 8hich may be submitted for or a+ainst it. CE9ph8sis oursD
*hus, 8s f8r b8cF 8s the 1H1"s, Prof. ,utherl8nd confir9ed th8t :x x x the tendenc3 see9s to be
toE8rd the 8b8ndon9ent of the conclusive presu9ption rule 8nd the 8doption of the third rule
le8vin7 onl3 8 prima faciepresu9ption of v8lidit3 Ehich 983 be 8tt8cFed b3 8n3 8uthorit8tive source
of infor98tion.
T10r+. & respectfull3 sub9it th8t it is o*%& b& 2tr03t%& folloEin7 the contours of poEers of 8 Bic89er8l
Conference Co99ittee, )2 +e%0*e)te+ b& t1e r6%e2 of the 2ouse 8nd the ,en8te, th8t ;e 3)*
pre5e*t s8id Co99ittee fro9 8ctin7 8s 8 Ft10r+F 31)mber of Con7ress. %nder the cle8r rules of
both the ,en8te 8nd 2ouse, 0t2 po;er 3)* @o *o 46rt1er th8n settlin7 +044ere*3e2 in their bills or
Aoint resolutions. ,ections 8nd H, Rule 6&; of theR6%e2 o4 t1e -o62e o4
Repre2e*t)t05e2 provide 8s folloEsJ
,ec. . Conference Committee. = &n the event th8t the 2ouse does not 87ree Eith the ,en8te on
the 89end9ent to 8n3 bill or Aoint resolution, the differences 983 be settled b3 the conference
co99ittees of both ch89bers.
&n resolvin7 the differences Eith the ,en8te, the 2ouse p8nel sh8ll, 8s 9uch 8s possible, 8dhere to
8nd support the 2ouse Bill. &f the differences Eith the ,en8te 8re so subst8nti8l th8t the3 98teri8ll3
i9p8ir the 2ouse Bill, the p8nel sh8ll report such f8ct to the 2ouse for the l8tter5s 8ppropri8te 8ction.
,ec. H. Conference Committee eports. - . . . E8ch report sh8ll cont8in 8 det8iled, sufficientl3
explicit st8te9ent of the ch8n7es in or 89end9ents to the subAect 9e8sure.
. . .
*he Ch8ir98n of the 2ouse p8nel 983 be interpell8ted on the Conference Co99ittee Report prior
to the votin7 thereon. *he 2ouse sh8ll vote on the Conference Co99ittee Report in the s89e
98nner 8nd procedure 8s it votes 8 bill on third 8nd fin8l re8din7.
,ection @I, Rule 6&& of the R6%e2 o4 t1e Se*)te st8tesJ
,ec. @I. &n the event th8t the ,en8te does not 87ree Eith the 2ouse of Represent8tives on the
provision of 8n3 bill or Aoint resolution, the differences sh8ll be settled b3 8 conference co99ittee of
both 2ouses Ehich sh8ll 9eet Eithin ten C1"D d83s 8fter their co9position. *he President sh8ll
desi7n8te the 9e9bers of the ,en8te P8nel in the conference co99ittee Eith the 8pprov8l of the
,en8te.
E8ch Conference Co99ittee Report sh8ll cont8in 8 det8iled 8nd sufficientl3 explicit st8te9ent of the
ch8n7es in, or 89end9ents to the subAect 9e8sure, 8nd sh8ll be si7ned b3 8 98Aorit3 of the
9e9bers of e8ch 2ouse p8nel, votin7 sep8r8tel3.
*he -o62e r6%e bri7htlines the folloEin7J C1D the poEer of the Conference Co99ittee is %0m0te+ . . .
it is onl3 to settle +044ere*3e2 Eith the ,en8te4 C!D if the differences 8re 26b2t)*t0)%, the Co99ittee
9ust report to the 2ouse for the l8tter5s 8ppropri8te 8ction4 8nd C@D the Co99ittee report h8s to be
voted upon in the s89e 98nner 8nd procedure 8s 8 bill on third 8nd fin8l re8din7. ,i9il8rl3,
the Se*)te r6%e underscores in cri9son th8t C1D the poEer of the Co99ittee is %0m0te+ - - - to
settle +044ere*3e2 Eith the 2ouse4 C!D it c8n 98Fe ch8n7es or 89end9entso*%& in the disch8r7e of
this li9ited poEer to settle differences Eith the 2ouse4 8nd C@D the ch8n7es or 89end9ents 8re
9erel3 re3omme*+)tor& for the3 still h8ve to be 8pproved b3 the ,en8te.
U*+er bot1 r6%e2, it is obvious th8t 8 Bic89er8l Conference Co99ittee is 8 9ere )@e*t of the
2ouse or the ,en8te Eith li9ited poEers. T1e -o62e 3o*t0*@e*t 0* t1e Comm0ttee 3)**ot, o* 0t2
o;*, 2ett%e +044ere*3e2 ;1031 )re 26b2t)*t0)% 0* 31)r)3ter. &f it is confronted Eith subst8nti8l
differences, it h8s to 7o b8cF to the ch89ber th8t cre8ted it :4or t1e %)tterD2 )ppropr0)te )3t0o*.: &n
other Eords, it 9ust t8Fe the proper instructions fro9 the ch89bers th8t cre8ted it. "t 3)**ot
e7er302e 0t2 6*br0+%e+ +023ret0o*. >here there is *o +044ere*3ebetEeen the bills, it c8nnot 98Fe
8n3 ch8n7e. >here the +044ere*3e 02 26b2t)*t0)%, it h8s to return to the ch89ber of its ori7in 8nd
8sF for 8ppropri8te instructions. &t ou7ht to be indubit8ble th8t 0t 3)**ot 3re)te ) *e; %);, i.e., th8t
Ehich h8s never been discussed in either ch89ber of Con7ress. "t2 p)r)meter2 o4 po;er )re *ot
poro62, for the3 8re hed7ed b3 the cle8r li9it8tion th8t its o*%& po;er is to settle differences in bills
8nd Aoint resolutions of the tEo ch89bers of Con7ress.
$o6rt1. Prescindin7 fro9 these pre9ises, & respectfull3 sub9it th8t the folloEin7 8cts of the
Bic89er8l Conference Co99ittee constitute 7r8ve 8buse of discretion 89ountin7 to l8cF or excess
of Aurisdiction 8nd should be strucF doEn 8s unconstitution8l nullities, vi(J
). &ts +e%et0o* of the pro poor :no p8ss on provision: Ehich is 3ommo* in both ,en8te Bill No. 1HI"
8nd 2ouse Bill No. @#"I.
,ec. 1 of 2ouse Bill No. @#"I
H
providesJ
,ection 1"6 of the N8tion8l &ntern8l Revenue Code of 1HH#, 8s 89ended, is hereb3 further 89ended
to re8d 8s folloEsJ
,EC. 1"6. ;8lue-8dded *8x on ,8le of Goods or Properties. =
x x x
Provided, further, th8t notEithst8ndin7 the provision of the second p8r87r8ph of ,ection 1"I of this
Code, the ;8lue-8dded *8x herein levied on the s8le of petroleu9 products under ,ubp8r87r8ph C1D
hereof sh8ll be p8id 8nd 8bsorbed b3 the 2e%%er2 o4 petro%e6m pro+63t2 ;1o 21)%% be pro10b0te+
4rom p)220*@ o* t1e 3o2t o4 2631 t)7 p)&me*t2, e0t1er +0re3t%& or 0*+0re3t%&G,H to )*&
3o*26mer 0* ;1)te5er 4orm or m)**er, it bein7 the express intent of this 8ct th8t the ;8lue-8dded
*8x sh8ll be borne 8nd 8bsorbed exclusivel3 b3 the sellers of petroleu9 products x x x.
,ec. @ of the s89e -o62e b0%% providesJ
,ection 1" of the N8tion8l &ntern8l Revenue Code of 1HH#, 8s 89ended, is hereb3 further 89ended
to re8d 8s folloEsJ
,ec. 1". ;8lue-8dded *8x on ,8le of Goods or Properties. =
Provided, further, th8t notEithst8ndin7 the provision of the second p8r87r8ph of ,ection 1"I of this
Code, the ;8lue-8dded *8x i9posed under this p8r87r8ph sh8ll be p8id 8nd 8bsorbed b3 t1e
26bAe3t @e*er)t0o* 3omp)*0e2 ;1o 21)%% be pro10b0te+ 4rom p)220*@ o* t1e 3o2t o4 2631 t)7
p)&me*t2, e0t1er +0re3t%& or 0*+0re3t%&G,H to )*& 3o*26mer 0* ;1)te5er 4orm or m)**er, it bein7
the express intent of this 8ct th8t the ;8lue-8dded *8x sh8ll be borne 8nd 8bsorbed exclusivel3 Qb3R
the poEer-7ener8tin7 co9p8nies.
&n contr8st 8nd co9p8rison, ,ec. I of Se*)te B0%% No. 1HI" providesJ
;8lue-8dded *8x on s8le of ,ervices 8nd %se or 'e8se of Properties. =
x x x Provided, th8t the ;A* on s8les of electricit3 b3 7ener8tion co9p8nies, 8nd services of
tr8ns9ission co9p8nies 8nd distribution co9p8nies, 8s Eell 8s those of fr8nchise 7r8ntees of
electric8l utilities sh8ll not 8ppl3 to residenti8l end-usersJ Provided, th8t the ;8lue-8dded *8x herein
levied sh8ll be 8bsorbed 8nd p8id b3 the 7ener8tion, tr8ns9ission 8nd distribution co9p8nies
concerned. T1e 2)0+ 3omp)*0e2 21)%% *ot p)22 o* 2631 t)7 p)&me*t2 to NAPOCOR or
6%t0m)te%& to t1e 3o*26mer2, includin7 but not li9ited to residenti8l end users, either 8s costs or in
8n3 other for9 Eh8tsoever, directl3 or indirectl3. x x x.
Even the 4)0*te2t e&e 3o*t)3t Eith the 8bove provisions Eill reve8l th8tJ C8D bot1 the 2ouse bill 8nd
the ,en8te bill pro10b0te+ the p8ssin7 on to consu9ers of the ;A* on s8les of e%e3tr030t& 8nd CbD
the 2ouse bill prohibited the p8ssin7 on to consu9ers of the ;A* on s8les of petro%e6m products
Ehile the ,en8te bill is 20%e*t on the prohibition.
&n the 7uise of reconcilin7 dis87reein7 provisions of the 2ouse 8nd the ,en8te bills on the
98tter, t1e B03)mer)% Co*4ere*3e Comm0ttee +e%ete+ t1e F*o p)22 o* pro5020o*F o* bot1 t1e
2)%e2 o4 e%e3tr030t& )*+ petro%e6m pro+63t2. *his 8ction b3 the Co99ittee is not E8rr8nted b3 the
rules of either the ,en8te or the 2ouse. As 8forediscussed, the o*%& po;er of 8 Bic89er8l
Conference Co99ittee is to reconcile dis87reein7 provisions in the bills or Aoint resolutions of the
tEo houses of Con7ress. *he 2ouse 8nd the ,en8te bills bot1prohibited the p8ssin7 on to
consu9ers of the ;A* on 2)%e2 o4 e%e3tr030t&. *he Bic89er8l ConferenceComm0ttee 3)**ot
o5err0+e t102 6*e?605o3)% +e3020o* o4 t1e Se*)te )*+ t1e -o62e. Nor is it cle8r th8t there is 8
conflict betEeen the 2ouse 8nd ,en8te versions on the :no p8ss on provisions: of the ;A* on 2)%e2
o4 petro%e6m pro+63t2. *he 2ouse version cont8ined 8 :no p8ss on provision: but the ,en8te h8d
none.E%eme*t)r& %o@03 ;0%% te%% 62 t1)t ;10%e t1ere m)& be ) +044ere*3e 0* t1e t;o 5er20o*2, 0t
+oe2 *ot *e3e22)r0%& me)* t1)t t1ere 02 ) +02)@reeme*t or 3o*4%03t bet;ee* t1e Se*)te )*+
t1e -o62e. *he silence of the ,en8te on the issue c8nnot be interpreted 8s 8n o6tr0@1t
oppo20t0o* to the 2ouse decision prohibitin7 the p8ssin7 on of the ;A* to the consu9ers on s8les
of petroleu9 products. ,ilence c8n even be confor9it3, 8lbeit i9plicit in n8ture. But 7r8ntin7 for the
nonce th8t there is conflict betEeen the tEo versions, the conflict c8nnot esc8pe the ch8r8cteriM8tion
8s 8 26b2t)*t0)% difference. *he 2e02m03 3o*2e?6e*3e of the deletion of the :no p8ss on provision:
of the ;A* on s8les of petroleu9 products o* t1e )b0%0t& o4 o6r 3o*26mer2, especi8ll3 on the
roofless 8nd the shirtless of our societ3, to 26r505e the onsl8u7ht of spir8lin7 prices ou7ht to be
be3ond Buibble. *he rules reBuire th8t the Bic89er8l Conference Co99ittee should not, on its oEn,
8ct on this subst8nti8l conflict. &t h8s to seeF 7uid8nce fro9 the ch89ber th8t cre8ted it. &t 9ust
receive proper instructions fro9 its princip8l, for it is the l8E of n8ture th8t no sprin7 c8n rise hi7her
th8n its source. *he records of both the ,en8te 8nd the 2ouse do not reve8l th8t this step E8s t8Fen
b3 the 9e9bers of the Bic89er8l Conference Co99ittee. *he3 b3p8ssed their princip8l 8nd r8n riot
Eith the exercise of poEers th8t the rules never bestoEed on the9.
b. Even 9ore 3o*2t0t6t0o*)%%& ob*o70o62 8re the )++e+ re2tr03t0o*2 o* %o3)% @o5er*me*tD2 62e
o4 0*3reme*t)% re5e*6e 4rom t1e ,AT in ,ection !1 of R.A. No. H@@# ;1031 ;ere *ot pre2e*t 0*
t1e Se*)te or -o62e B0%%2. ,ection !1 of R.A. No. H@@# providesJ
/ift3 percent of the loc8l 7overn9ent unit5s sh8re fro9 ;A* sh8ll be 8lloc8ted 8nd used exclusivel3
for the folloEin7 purposesJ
1. /ifteen percent C1IKD for public ele9ent8r3 8nd second8r3 educ8tion to fin8nce the construction
of buildin7s, purch8ses of school furniture 8nd in-service te8cher tr8inin7s4
!. *en percent C1"KD for he8lth insur8nce pre9iu9s of enrolled indi7ents 8s 8 counterp8rt
contribution of the loc8l 7overn9ent to sust8in the univers8l cover87e of the n8tion8l he8lth
insur8nce pro7r894
@. /ifteen percent C1IKD for environ9ent8l conserv8tion to full3 i9ple9ent 8 co9prehensive n8tion8l
reforest8tion pro7r894 8nd
1. *en percent C1"KD for 87ricultur8l 9oderniM8tion to fin8nce the construction of f8r9-to-98rFet
ro8ds 8nd irri78tion f8cilities.
,uch 8lloc8tions sh8ll be se7re78ted 8s sep8r8te trust funds b3 the n8tion8l tre8sur3 8nd sh8ll be
over 8nd 8bove the 8nnu8l 8ppropri8tion for si9il8r purposes.
*hese 89end9ents +0+ *ot 1)rmo*0Me 3o*4%03t0*@ pro5020o*2 betEeen the constituent bills of
R.A. No. H@@# but 8re e*t0re%& *e; 8nd e7tr)*eo62 3o*3ept2 Ehich f8ll be3ond the 9edi8n
thereof. *he3 tr8ns7ress the li9its of the Bic89er8l Conference Co99ittee5s 8uthorit3 8nd 9ust be
strucF doEn.
& c8nnot therefore subscribe to the thesis of the 98Aorit3 th8t :the ch8n7es introduced b3 the
Bic89er8l Conference Co99ittee on dis87reein7 provisions Eere 9e8nt onl3 to reconcile 8nd
h8r9oniMe the dis87reein7 provisions 4or 0t +0+ *ot 0*Ae3t )*& 0+e) or 0*te*t t1)t 02 ;1o%%& 4ore0@*
to t1e 26bAe3t embr)3e+ b& t1e or0@0*)% pro5020o*2.:
$04t1. *he 98Aorit3 further defends the constitution8lit3 of the 8bove provisions b3 holdin7 th8t :8ll
the ch8n7es or 9odific8tions Eere @erm)*e to subAects of the provisions referred to it for
reconcili8tion.:
>ith due respect, it is hi7h ti9e to re8e7)m0*e the test of 7er98neness proffered in To%e*t0*o.
*he test of 7er98neness is o5er%& bro)+ 8nd is the 4o6*t)0*1e)+ of 9ischief for it 8lloEs the
Bic89er8l Conference Co99ittee to ch8n7e provisions in the bills of the 2ouse 8nd the ,en8te
Ehen the3 8re not even in dis87ree9ent. >orse still, it en8bles the Co99ittee to introduce
89end9ents Ehich 8re entirel3 neE 8nd h8ve not previousl3 p8ssed throu7h the coils of scrutin3 of
the 9e9bers of both houses. *he Constitution did not est8blish 8 Bic89er8l Conference Co99ittee
th8t c8n 8ct 8s 8 Ft10r+ 1o62eF of Con7ress Eith 26per 5eto po;er over bills p8ssed b3 the ,en8te
8nd the 2ouse. >e c8nnot concede th8t 26per 5eto po;er Eithout ErecFin7 the delic8te
8rchitecture of le7isl8tive poEer so c8refull3 l8id doEn in our Constitution. *he cle8r intent of our
fund89ent8l l8E is to inst8ll 8 l8E98Fin7 2tr63t6re co9posed onl3 of tEo houses Ehose 9e9bers
Eouldt1oro6@1%& +eb)te proposed le7isl8tions in represent8tion of the Eill of their respective
constituents. *he institution of this l8E98Fin7 structure is 6*m02t)J)b%e fro9 the folloEin7
provisionsJ C1D reBuirin7 th8t le7isl8tive poEer sh8ll be vested in 8 bic89er8l le7isl8ture4
1"
C!D
providin7 for Buoru9 reBuire9ents4
11
C@D reBuirin7 th8t 8ppropri8tion, revenue or t8riff bills, bills
8uthoriMin7 incre8se of public debt, bills of loc8l 8pplic8tion, 8nd priv8te bills ori7in8te exclusivel3 in
the 2ouse of Represent8tives4
1!
C1D reBuirin7
th8t bills e9br8ce one subAect expressed in the title thereof4
1@
8nd CID 98nd8tin7 th8t bills under7o
three re8din7s on sep8r8te d83s in e8ch 2ouse prior to p8ss87e into l8E 8nd prohibitin7
89end9ents on the l8st re8din7 thereof.
11
A Bic89er8l Conference Co99ittee Eith untr899eled
poEers Eill destro3 this l8E98Fin7 structure. At the ver3 le8st, it Eill di9inish the free 8nd open
deb8te of proposed le7isl8tions 8nd 4)30%0t)te t1e 2m6@@%0*@ o4 ;1)t p6rport2 to be %);2.
O* t102 po0*t, Mr. Robert !63eD2 +023o*3ert0*@ ob2er5)t0o*2 )re )propo2:
:*heir poEer lies chiefl3 in the f8ct th8t reports of conference co99ittees 9ust be 8ccepted Eithout
89end9ent or else reAected in toto. T1e 0mp6%2e 02 to @et +o*e ;0t1 t1e m)tter2 )*+ 2o t1e
mot0o* to )33ept 1)2 6*+6e )+5)*t)@e, 4or 2ome member2 )re 26re to pre4er 2;)%%o;0*@
6*p)%)t)b%e pro5020o*2 r)t1er t1)* pro%o*@ 3o*tro5er2&. *his is 9ore liFel3 if the report co9es in
the rush of business toE8rd the end of the session, Ehen to seeF further conference 9i7ht result in
the loss of the 9e8sure 8lto7ether. At 8n3 ti9e in the session there is so9e risF of such 8 result
folloEin7 the reAection of 8 conference report, for it 983 not be possible to secure 8 second
conference, or del83 983 7ive opposition to the 98in propos8l ch8nce to develop 9ore stren7th.
xxx xxx xxx
Ent8n7led in 8 netEorF of rule 8nd custo9, the Represent8tive Eho resents 8nd Eould resist this
theft of his ri7hts, finds hi9self helpless. R8rel3 c8n be vote, r8rel3 c8n he voice his 9ind, in the
98tter of 8n3 fr8ction of the bill. %su8ll3 he c8nnot even record hi9self 8s protestin7 878inst so9e
one fe8ture Ehile 8cceptin7 the 9e8sure 8s Ehole. >orst of 8ll, he c8nnot b3 8r7u9ent or
su77ested ch8n7e, tr3 to i9prove Eh8t the other br8nch h8s done.
*his 9e8ns 9ore th8n the subversion of individu8l ri7hts. "t me)*2 to ) +e@ree t1e )b)*+o*me*t
o4 ;1)te5er )+5)*t)@e t1e b03)mer)% 2&2tem m)& 1)5e. B& 2o m631 0t 0* e44e3t tr)*24er2 t1e
%);m)J0*@ po;er to 2m)%% @ro6p o4 member2 ;1o ;orJ o6t 0* pr05)te ) +e3020o* t1)t )%mo2t
)%;)&2 pre5)0%2. >h8t is Eorse, these 9en 8re not chosen in 8 E83 to ensure the Eisest choice. &t
h8s beco9e the pr8ctice to n89e 8s conferees the r8nFin7 9e9bers of the co99ittee, so th8t the
8ccident of seniorit3 deter9ines. Exceptions 8re 98de, but in 7ener8l it is not 8 Buestion of Eho 8re
9ost co9petent to serve. Ch8nce 7overns, so9eti9es 7ivin7 E83 to f8vor, r8rel3 to 9erit.
xxx xxx xxx
,pe8Fin7 bro8dl3, the s3ste9 of le7isl8tin7 b3 conference co99ittee is unscientific 8nd therefore
defective.U26)%%& 0t 4or4e0t2 t1e be*e40t o4 23r6t0*& )*+ A6+@me*t b& )%% t1e ;02+om )5)0%)b%e.
U*3o*tro%%e+, 0t 02 0*4er0or to t1)t pro3e22 b& ;1031 e5er& )me*+me*t 02 2e36re+ 0*+epe*+e*t
+0236220o* )*+ 5ote. . . .:
1I
&t c8nnot be overe9ph8siMed th8t in 8 republic8n for9 of 7overn9ent, l8Es c8n onl3 be en8cted
b3 )%% the dul3 elected represent8tives of the people. "t 36t2 )@)0*2t 3o*5e*t0o*)% ;02+om 0*
+emo3r)3& to %o+@e t102 po;er 0* t1e 1)*+2 o4 ) 4e; or 0* t1e 3%);2 o4 ) 3omm0ttee. &t is for
these re8sons th8t the 8r7u9ent th8t Ee should overlooF the excesses of the Bic89er8l Conference
Co99ittee bec8use its report is 8n3E83 8pproved b3 both houses is 8 futile 8tte9pt to sBu8re the
circle for 8n unconstitution8l 8ct is void 8nd c8nnot be redee9ed b3 8n3 subseBuent r8tific8tion.
Neither c8n Ee shut our e3es to the unconstitution8l 8cts of the Bic89er8l Conference Co99ittee b3
holdin7 th8t the Court c8nnot interpose its checFin7 poEers over 9ere viol8tions of the intern8l rules
of Con7ress. &n Arro&o, et )%. 5. +e ,e*e30), et )%.,
16
Ee ruled th8t Ehen the viol8tions 8ffect priv8te
ri7hts or 0mp)0r t1e Co*2t0t6t0o*,t1e Co6rt 1)2 )%% t1e po;er, *)&, t1e +6t& to 2tr0Je t1em +o;*.
"* 3o*3%620o*, & Eish to stress th8t this is not the first ti9e nor Eill it be l8st th8t 8r7u9ents Eill be
foisted for the Court to 9erel3 EinF 8t 8ss8ults
on the Constitution on the 7round of so9e n8tion8l interest, so9eti9es cle8r 8nd 8t other ti9es
incho8te. *o be sure, it c8nnot be 78ins8id th8t the countr3 is in the vortex of 8 fin8nci8l crisis. *he
bro8dsheets scre89 the disconcertin7 neEs th8t our debt p839ents for the 3e8r !""6 Eill exceed
Pph1 billion d8il3 for interest 8lone. Experts underscore so9e f8ctors th8t Eill further drive up the
debt service expenses such 8s the dev8lu8tion of the peso, credit doEn7r8des 8nd 8 spiFe in
interest r8tes.
1#
But no doo9sd83 scen8rio Eill ever Austif3 the thr8shin7 of the Constitution. *he
Constitution is 9e8nt to be our rule both in 7ood ti9es 8s in b8d ti9es. &t is the Court5s
unco9pro9isin7 obli78tion to defend the Constitution 8t 8ll ti9es lest it be conde9ned 8s 8n
irrelev8nt relic.
I-ERE$ORE, & concur Eith the 98Aorit3 but dissent on the folloEin7 pointsJ
8D & vote to Eithhold Aud79ent on the constitution8lit3 of the :st8ndb3 8uthorit3: in ,ections 1 to 6 of
Republic Act No. H@@# 8s this issue is not ripe for 8dAudic8tion.4
bD & vote to decl8re unconstitution8l the deletion b3 the Bic89er8l Conference Co99ittee of the pro
poor :no p8ss on provision: on electricit3 to residenti8l consu9ers 8s it contr8vened the uneBuivoc8l
intent of both 2ouses of Con7ress4 8nd
cD & vote to decl8re ,ection !1 of Republic Act No. H@@# 8s unconstitution8l 8s it cont8ins extr8neous
provisions not found in its constituent bills.
RENATO S. PUNO
Associ8te +ustice
EN BANC
GR No. 168056 88 ABAKADA GURO PART !"ST, et3. et )%. 5. -ON. E.ECUT",E SECRETAR
EDUARDO R. ERM"TA et )%.
GR No. 16820> 88 AQU"!"NO Q. P"MENTE! 'R. et )%. 5. E.ECUT",E SECRETAR EDUARDO R.
ERM"TA et )%.
GR No. 168B61 88 ASSOC"AT"ON O$ P"!"P"NAS S-E!! DEA!ERS, "NC., et3. et )%. 5. CESAR ,.
PUR"S"MA, et3. et )%.
GR No. 168B6= 88 $RANC"S 'OSEP- G. ESCUDERO et )%. 5. CESAR ,. PUR"S"MA et3., et )%.
GR No. 168>=0 88 BATAAN GO,ERNOR ENR"QUE T. GARC"A 'R. 5. -ON. EDUARDO R.
ERM"TA, et3. et )%.
Prom6%@)te+: September 1, 2005
7 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 88 7
SEPARATE OP"N"ON
PANGAN"BAN, J.6
*he ponencia Eritten b3 the estee9ed )8d89e +ustice )8. Alici8 Austri8-)8rtineM decl8res th8t the
enrolled bill doctrine h8s been historic8ll3 8nd unifor9l3 upheld in our countr3. Cited 8s recent
reiter8tions of this doctrine 8re the tEo Tolentino v. Secretary of Finance Aud79ents
1
8nd Fari!as v.
"#ecutive Secretary.
!
*e.e%en.e o) 7an%ato(
1onstitutional *o!isions
O!e t$e 3nolle% Bill Do.tine
& believe, hoEever, th8t the enrolled bill doctrine
@
is not 8bsolute. &t 983 be 8ll-enco9p8ssin7 in
so9e countries liFe Gre8t Brit8in,
1
but 8s 8pplied to our Aurisdiction, it 9ust 3ield to 98nd8tor3
provisions of our 1H# Constitution. *he Court c8n t8Fe Audici8l notice of the for9 of 7overn9ent
I
in
Gre8t Brit8in.
6
&t is unliFe th8t in our countr3 8nd, therefore, the doctrine fro9 Ehich it
ori7in8ted
#
could be 9odified 8ccordin7l3 b3 our Constitution.
&n fine, the enrolled bill doctrine 8pplies 98inl3 to the intern8l rules 8nd processes folloEed b3
Con7ress in its princip8l dut3 of l8E98Fin7. 2oEever, Ehen the Constitution i9poses cert8in
conditions, restrictions or li9it8tions on the exercise of con7ression8l prero78tives, the Audici8r3 h8s
both the poEer 8nd the dut3 to striFe doEn con7ression8l 8ctions th8t 8re done in pl8in
contr8vention of such conditions, restrictions or li9it8tions.

&nsof8r 8s the present c8se is

concerned, the three 9ost i9port8nt restrictions or li9it8tions to the enrolled bill doctrine 8re the
:ori7in8tion,: :no-89end9ent: 8nd :three-re8din7: rules Ehich & Eill discuss l8ter.
;eril3, these restrictions or li9it8tions to the enrolled bill doctrine 8re s8fe7u8rded b3 the
exp8nded
H
constitution8l 98nd8te of the Audici8r3 :to deter9ine Ehether or not there h8s been 8
7r8ve 8buse of discretion 89ountin7 to l8cF or excess of Aurisdiction on the p8rt of 8n3 br8nch or
instru9ent8lit3 of the 7overn9ent.:
1"
Even the ponenteof Tolentino,
11
the le8rned )r. +ustice ;icente
;. )endoM8, concedes in 8nother decision th8t e8ch house :983 not b3 its rules i7nore
constitution8l restr8ints or viol8te fund89ent8l ri7hts, 8nd there should be 8 re8son8ble rel8tion
betEeen the 9ode or 9ethod of proceedin7 est8blished b3 the rule 8nd the result Ehich is sou7ht to
be 8tt8ined.:
1!
*he Bic89er8l Conference Co99ittee CBCCD cre8ted b3 Con7ress to iron out differences betEeen
the ,en8te 8nd the 2ouse of Represent8tives versions of the E-;A* bills
1@
is one such :br8nch or
instru9ent8lit3 of the 7overn9ent,: over Ehich this Court 983 exercise certior8ri revieE to deter9ine
Ehether or not 7r8ve 8buse of discretion h8s been co99itted4 8nd, specific8ll3, to find out Ehether
the constitution8l conditions, restrictions 8nd li9it8tions on l8E-98Fin7 h8ve been viol8ted.
&n 7ener8l, the BCC h8s 8t le8st five options in perfor9in7 its functionsJ C1D 8dopt the 2ouse version
in p8rt or in toto, C!D 8dopt the ,en8te version in p8rt or in toto, C@D consolid8te the tEo versions, C1D
reAect non-conflictin+provisions, 8nd CID 8dopt co9pletel3 neE provisions not found in either version.
*his, therefore, is the si9ple BuestionJ &n the perfor98nce of its function of reconcilin7 conflictin7
provisions, h8s the Co99ittee bl8t8ntl3 viol8ted the ConstitutionL
)3 short 8nsEer isJ No, except those rel8tin7 to inco9e t8xes referred to in ,ections 1, ! 8nd @ of
Republic Act CRAD No. H@@#. 'et 9e expl8in.
A%optin" t$e House
8esion in *at o 0* Toto
First, the BCC h8d the option of 8doptin7 the 2ouse bills either in p8rt or in toto, endorsin7 the9
Eithout ch8n7es. ,ince these bills h8d p8ssed the three-re8din7 reBuire9ent
11
under the
Constitution,
1I
it re8dil3 beco9es 8pp8rent th8t no procedur8l i9pedi9ent Eould 8rise. *here Eould
8lso be no Buestion 8s to their ori7in8tion,
16
bec8use the bills ori7in8ted exclusivel3 fro9 the 2ouse of
Represent8tives itself.
&n the present c8se, the BCC did not i7nore the ,en8te 8nd 8dopt 8n3 of the 2ouse bills in p8rt or in
toto. *herefore, this option E8s not t8Fen b3 the BCC.
A%optin" t$e Senate
8esion in *at o 0* Toto
Second, the BCC 983 choose to 8dopt the ,en8te version either
in p8rt or in toto, endorsin7 it 8lso Eithout ch8n7es. &n so doin7, the Buestion of ori7in8tion 8rises.
%nder the 1H# Constitution, 8ll :revenue x x x bills x x x sh8ll ori7in8te exclusivel3 in the 2ouse of
Represent8tives, but the ,en8te 983 propose or concur Eith 89end9ents.:
1#
&f the revenue bill ori7in8tes exclusivel3 fro9 the ,en8te, then obviousl3 the ori7in8tion provision
1
of
the Constitution Eould be viol8ted. &f, hoEever, it ori7in8tes exclusivel3 fro9 the 2ouse 8nd
presu98bl3 p8sses the three-re8din7 reBuire9ent there, then the Buestion to contend Eith is
Ehether the ,en8te 89end9ents co9plied Eith the :7er98ne: principle.
>hile in the ,en8te, the 2ouse version 983, per Tolentino, under7o extensive ch8n7es, such th8t
the ,en8te 983 reErite not onl3 portions of it but even 8ll of it.
1H
& believe th8t such reEritin7 is li9ited
b3 the :7er98ne: principleJ 8lthou7h :relev8nt:
!"
or :rel8ted:
!1
to the 7ener8l subAect of t8x8tion, the
,en8te version is not necess8ril3 :7er98ne: 8ll the ti9e. *he :7er98ne: principle reBuires 8 le78l --
not necess8ril3 8n econo9ic
!!
or politic8l -- interpret8tion. *here 9ust be 8n :inherent lo7ic8l
connection.:
!@
>h8t 983 be 7er98ne in 8n economic or political sense is not necess8ril3 7er98ne in
the le+al sense. (therEise, 8n3 provision in the ,en8te version th8t is entirel3 neE 8nd extr8neous,
or th8t is re9otel3 or even sli7htl3 connected, to the v8st 8nd perplexin7 subAect of t8x8tion, Eould
8lE83s be 7er98ne. %nder this interpret8tion, the ori7in8tion principle Eould surel3 be rendered
inutile.
*o repe8t, in Tolentino, the Court s8id th8t the ,en8te 983 even Erite its oEn version, Ehich in effect
Eould be 8n 89end9ent b3 substitution.
!1
*he Court Eent further b3 s83in7 th8t :the Constitution
does not prohibit the filin7 in the ,en8te of 8 substitute bill in 8nticip8tion of its receipt of the bill fro9
the 2ouse, so lon7 8s 8ction b3 the ,en8te 8s 8 bod3 is Eithheld pendin7 receipt of the 2ouse
bill.:
!I
After 8ll, the initi8tive for filin7 8 revenue bill 9ust co9e fro9 the 2ouse
!6
on the theor3 th8t,
elected 8s its 9e9bers 8re fro9 their respective districts, the 2ouse is 9ore sensitive to loc8l needs
8nd proble9s. B3 contr8st, the ,en8te Ehose 9e9bers 8re elected 8t l8r7e 8ppro8ches the 98tter
fro9 8 n8tion8l perspective,
!#
Eith 8 bro8der 8nd 9ore circu9spect outlooF.
!
Even if & h8ve so9e reserv8tions on the fore7oin7 sEeepin7 pronounce9ents in Tolentino, & sh8ll not
co99ent 8n3 further, bec8use the BCC, in reconcilin7 conflictin7 provisions, 8lso did not t8Fe the
second option of i7norin7 the 2ouse bills co9pletel3 8nd of 8doptin7 onl3 the ,en8te version in p8rt
or in toto. &nste8d, the BCC used or 8pplied the third option 8s Eill be discussed beloE.
1o,po,isin"
/( 1onsoli%atin"
As 8 third option, the BCC 983 re8ch 8 co9pro9ise b3
consolid8tin7 both the ,en8te 8nd the 2ouse versions. &t c8n 8dopt so9e p8rts 8nd reAect other
p8rts of both bills, 8nd cr8ft neE provisions or even 8 substitute bill. & believe this option is vi8ble,
provided th8t there is no viol8tion of the ori7in8tion 8nd 7er98ne principles, 8s Eell 8s the three-
re8din7 rule. After 8ll, the report 7ener8ted b3 the BCC Eill not beco9e 8 fin8l v8lid 8ct of the
'e7isl8tive -ep8rt9ent until the BCC obt8ins the 8pprov8l of both houses of Con7ress.
!H
Stan%/( Aut$oit(. & believe th8t the BCC did not exceed its 8uthorit3 Ehen it cr8fted the so-c8lled
:st8ndb3 8uthorit3: of the President. *he ori7in8tin7 bills fro9 the 2ouse i9posed 8 1! percent ;A*
r8te,
@"
Ehile the bill fro9 the ,en8te ret8ined the
ori7in8l 1" percent.
@1
*he BCC opted to initi8ll3 use the 1" percent ,en8te provision 8nd to incre8se
this r8te to the 1! percent 2ouse provision, effective +8nu8r3 1, !""6, upon the occurrence of 8
predeter9ined f8ctu8l scen8rio 8s folloEsJ
:CiD Q;A*R collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the previous 3e8r exceeds
tEo 8nd four-fifth percent C!
1
NIKD or
CiiD N8tion8l Govern9ent -eficit 8s 8 percent87e of G-P of the previous 3e8r exceeds one 8nd one-
h8lf percent C1
1
N!KD.:
@!
&n the co9put8tion of the percent87e reBuire9ents in the 8ltern8tive conditions under the l8E, the
89ounts of the ;A* collection, N8tion8l -eficit,
@@
8nd G-P
@1
-- 8s Eell 8s the interrel8tionship 89on7
the9 -- c8n e8sil3 be derived b3 the fin8nce secret8r3 fro9 the proper 7overn9ent bodies ch8r7ed
Eith their deter9in8tion. *he l8E is co9plete 8nd st8nd8rds h8ve been fixed.
@I
(nl3 the f8ct-findin7
98the98tic8l co9put8tion for its i9ple9ent8tion on +8nu8r3 1, !""6, is necess8r3.
(nce either of the f8ctu8l 8nd 98the98tic8l events provided in the l8E t8Fes pl8ce, the President
h8s no choice but to i9ple9ent the incre8se of the ;A* r8te to 1! percent.
@6
*his eventu8lit3 h8s
been predeter9ined b3 Con7ress.
@#
*he t8xin7 poEer h8s not been dele78ted b3 Con7ress to either or both the President 8nd the
fin8nce secret8r3. >h8t E8s dele78ted
E8s onl3 the poEer to 8scert8in the f8cts in order to brin7 the l8E into oper8tion. &n f8ct, there E8s
re8ll3 no :dele78tion5 to spe8F of4
XXXXXXXXXXXXXXXXXX
Culled fro9 the s89e record, the folloEin7 excerpts shoE the position of public respondentsJ
:+ustice P8n78nib8nJ &t Eill be b8sed on 8ctu8l fi7uresL
:%sec. Bono8nJ &t Eill be b8sed on 8ctu8l fi7ures.
:+ustice P8n78nib8nJ *h8t cre8tes 8 proble9Q,R bec8use Ehere do 3ou 7et the 8ctu8l fi7uresQLR
:%sec. Bono8nJ & underst8nd th8tQ,R tr)+0t0o*)%%&G,H ;e 3)* 3ome 0* M)r31, b6t t1ere 02 *o
0mpe+0me*t to 2pee+0*@ 6p t1e @)t1er0*@.
:+ustice P8n78nib8nJ ,peed it up. /ebru8r3 1IL
:%sec. Bono8nJ E5e* ;0t10* ')*6)r&, .our 2onor, & thinF this c8n beG.
:+ustice P8n78nib8nJ Alri7ht 8t the end of +8nu8r3, 0tD2 A62t e2t0m)te to @et t1e 40@6re2 0* ')*6)r&.
:%sec. Bono8nJ e2, .our 2onor Cpp. 661-66!D4 8nd
x x x
:+ustice P8n78nib8nJ )3 onl3 point is, & r8ised this e8rlier 8nd & pro9ised counsel for the petitioner
Eho9 & E8s BuestioninQ7R th8t & Eill r8ise it Eith 3ou, ;1et1er t1e +)te ')*6)r& 1, 2006 ;o6%+
pre2e*t )* 0mpo220b0%0t& o4 ) 3o*+0t0o* 1)ppe*0*@.
:%sec. Bono8nJ "t ;0%% *ot, .our 2onor.
:+ustice P8n78nib8nJ ,o, 3our position QisR it Eill not present 8n i9possibilit3. El8bor8te on it in 3our
9e9or8ndu9.
:%sec. Bono8nJ .es, .our 2onor.
:+ustice P8n78nib8nJ Bec8use it is i9port8nt. T1e )+m0*02tr)t05e re@6%)t0o*2 )re 0mport)*tG,H
be3)62e t1e& 3%)r04& t1e %); )*+ 0t ;0%% @60+e t)7p)&er2. ,oQ,R b3 +8nu8r3 1Q,R Qt8xp83ersR Eould
not be Eonderin7. -o Ee ch8r7e the end consu9ers 1" QpercentR or 1! QpercentRL *he re7ul8tions
should be 8ble to spell th8t out QiRn the s89e 98nner th8t even noE the v8rious consu9ers of
v8rious products 8nd services 9ust be 8ble to 7et fro9 3our
there E8s 9erel3 8 decl8r8tion of 8n administrative, not 8 le+islative, function.
@
& concur Eith the ponencia in th8t there E8s no undue dele78tion of le+islative poEer in the incre8se
fro9 1" percent to 1! percent of the ;A* r8te. & respectfull3 dis87ree, hoEever, Eith the st8te9ents
therein th8t, first, the secret8r3 of fin8nce is :8ctin7 8s the 87ent of the le7isl8tive dep8rt9ent: or 8n
:87ent of Con7ress: in deter9inin7 8nd decl8rin7 the event upon Ehich its expressed Eill is to t8Fe
effect4 8nd, second, th8t the secret8r35s person8lit3 :is in re8lit3 but 8 proAection of th8t of Con7ress.:
*he secret8r3 of fin8nce is not 8n 8lter e7o of Con+ress, but of the President. *he 98nd8te 7iven b3
RA H@@# to the secret8r3 is not eBuipollent to 8n 8uthorit3 to 98Fe l8Es. &n p8ssin7 this l8E,
Con7ress did not restrict or curt8il the constitution8l poEer of the President to ret8in control 8nd
supervision over the entire Executive -ep8rt9ent. *he l8E should be construed to be 9erel3 8sFin7
the President, Eith 8 reco99end8tion fro9 the President5s 8lter e7o in fin8nce 98tters, to deter9ine
the f8ctu8l b8ses for 98Fin7 the incre8se in ;A* r8te oper8tive.
@H
&ndeed, 8s & h8ve 9entioned
e8rlier, the f8ct-findin7 condition is 8 9ere administrative, not le+islative, function.
*he ponencia st8tes th8t Con7ress 9erel3 dele78tes the i9ple9ent8tion of the l8E to the secret8r3
of fin8nce. 2oE then c8n the l8tter be its 87entL >a?in+ a la8 is different fro9 implementin+ it. >hile
the first Cthe 98Fin7 of l8EsD 983 be dele78ted under cert8in conditions 8nd onl3 in specific
inst8nces provided under the Constitution, the second Cthe i9ple9ent8tion of l8EsD 983 not be done
b3 Con7ress. After 8ll, the le7isl8ture does not h8ve the poEer to i9ple9ent l8Es. *herefore,
con7ression8l 87enc3 8rises onl3 in the first, not in the second. *he first is 8 le7isl8tive function4
the second, 8n executive one.
Petitioners5 8r7u9ent is th8t bec8use the G-P does not 8ccount for the econo9ic effects of so-
c8lled under7round businesses, it is 8n in8ccur8te indic8tor of either econo9ic 7roEth or sloEdoEn
in tr8nsition8l econo9ies.
1"
Cle8rl3, this 98tter is Eithin the confines of l8E98Fin7. *his Court is
neither 8 substitute for the Eisdo9, or l8cF of it, in Con7ress,
11
nor 8n 8rbiter of fl8Es Eithin the
l8tter5s intern8l rules.
1!
Polic3 98tters lie Eithin the do98in of the politic8l br8nches of
7overn9ent,
1@
outside the r8n7e of Audici8l co7niM8nce.
11
:Q*Rhe ri7ht to select the 9e8sure 8nd
obAects of t8x8tion devolves upon the Con7ress, 8nd not upon the courts, 8nd such selections 8re
v8lid unless constitution8l li9it8tions 8re overstepped.:
1I
)oreover, e8ch house of Con7ress h8s the
poEer 8nd 8uthorit3 to deter9ine the rules of its proceedin7s.
16
*he contention th8t this c8se is not
ripe for deter9in8tion bec8use there is no viol8tion 3et of the Constitution re78rdin7 the exercise of
the President5s st8ndb3 8uthorit3 h8s no b8sis. *he Buestion r8ised is Ehether the BCC, in p8ssin7
the l8E, co99itted 7r8ve 8buse of discretion, not Ehether the provision in Buestion h8d been
viol8ted. 2ence, this c8se is not pre98ture 8nd is, in f8ct, subAect to Audici8l deter9in8tion.
A,en%,ents on 0n.o,e 4a-es. & respectfull3 sub9it th8t the 89end9ents 98de b3 the BCC Cth8t
Eere culled fro9 the ,en8te versionD re78rdin7 inco9e t8xes
1#
8re not le78ll3 7er98ne to the subAect
98tter of the 2ouse bills. Revisin7 the inco9e t8x r8tes on do9estic, resident forei7n 8nd
nonresident forei7n corpor8tions4 incre8sin7 the t8x credit 878inst t8xes due fro9 nonresident
forei7n corpor8tions on intercorpor8te dividends4 8nd reducin7 the 8lloE8ble deduction for interest
expense 8re le78ll3 unrel8ted 8nd not 7er98ne to the subAect 98tter cont8ined in the 2ouse bills4
the3 viol8te the ori7in8tion principle.
1
*he re8sons 8re 8s folloEsJ
)ne, 8n inco9e t8x is 8 direct ta# i9posed on 8ctu8l or presu9ed inco9e -- 7ross or net -- re8liMed
b3 8 t8xp83er durin7 8 7iven t8x8ble 3e8r,
1H
Ehile 8 ;A* is 8n indirect ta# not in the context of Eho is
directl3 8nd le78ll3 li8ble for its p839ent, but in ter9s of its n8ture 8s :8 t8x on
consu9ption.:
I"
*he former c8nnot be p8ssed on to the consu9er, but the latter c8n.
I1
&t is too Eide 8
stretch of the i987in8tion to even rel8te one concept Eith the other. &n liFe 98nner, it is
inconceiv8ble hoE the provisions th8t incre8se corpor8te inco9e t8xes c8n be considered
8smiti+atin+ measures for incre8sin7 the ;A* 8nd, 8s & Eill expl8in l8ter, for effectivel3 i9posin7 8
98xi9u9 of @ percent t8x on 7ross s8les or revenues bec8use of the #" percent c8p. Even the
8r7u9ent th8t the corpor8te inco9e t8x r8tes Eill be reduced to @" percent does not hold E8ter. *his
reduction Eill t8Fe effect onl3 in !""H, not !""6 Ehen the 1! percent ;A* r8te Eill h8ve been
i9ple9ented.
T8o, t8xes on intercorpor8te dividends 8re final, but the input ;A* is 7ener8ll3 creditable. %nder
8 finalEithholdin7 t8x s3ste9, the 89ount of inco9e t8x th8t is Eithheld b3 8 Eithholdin7 87ent is
constituted 8s 8 full 8nd fin8l p839ent of the inco9e t8x due fro9 the p83ee on s8id inco9e.
I!
*he
li8bilit3 for the t8x pri98ril3 rests upon the p83or 8s 8 Eithholdin7 87ent.
I@
%nder
8 creditable Eithholdin7 t8x s3ste9, t8xes Eithheld on cert8in p839ents 8re 9e8nt to 8pproxi98te
the t8x th8t is due of the p83ee on s8id p839ents.
I1
*he li8bilit3 for the t8x rests upon the p83ee Eho
is 98nd8ted b3 l8E to still file 8 t8x return, report the t8x b8se, 8nd p83 the difference betEeen the
t8x Eithheld 8nd the t8x due.
II
/ro9 this observ8tion 8lone, it c8n 8lre8d3 be seen th8t not onl3 8re dividends 8lien to the t8x b8se
upon Ehich the ;A* is i9posed, but their respective 9ethods of Eithholdin7 8re tot8ll3 different. ;A*-
re7istered persons 983 not 8lE83s be nonresident forei7n corpor8tions th8t decl8re 8nd p83
dividends, Ehile intercorpor8te dividends 8re cert8inl3 not 7oods or properties for s8le, b8rter,
exch8n7e, le8se or i9port8tion. Cert8inl3, input ;A* credits 8re different fro9 t8x credits on
dividends received b3 nonresident forei7n corpor8tions.
Three, ite9iMed deductions fro9 7ross inco9e p8rt8Fe of the n8ture of 8 t8x exe9ption.
I6
&nterest --
Ehich is 89on7 such deductions -- refers to the 89ount p8id b3 8 debtor to 8 creditor for the use or
forbe8r8nce of 9one3.
I#
&t is 8n expense ite9 th8t is p8id or incurred Eithin 8 7iven t8x8ble 3e8r on
indebtedness in connection Eith 8 t8xp83er5s tr8de, business or exercise of profession.
I
&n order to
reduce revenue losses, Con7ress en8cted RA 1!1
IH
Ehich reduces the 89ount of interest expense
deductible b3 8 t8xp83er fro9 7ross inco9e, eBu8l to the 8pplic8ble percent87e of interest inco9e
subAect to fin8l t8x.
6"
*o 8ssert th8t reducin7 the 8lloE8ble deduction in interest expense is 8 98tter
th8t is le78ll3 rel8ted to the proposed ;A* 89end9ents is too f8r-fetched. &nterest expenses 8re not
8lloEed 8s credits 878inst output ;A*. Neither 8re ;A*-re7istered persons 8lE83s li8ble for interest.
28vin7 8r7ued on the unconstitution8lit3 Cnon-7er98nenessD of the BCC insertions on inco9e t8xes,
let 9e noE proceed to the other provisions th8t Eere 8tt8cFed b3 petitioners.
No *ass'on *o!isions. & 87ree Eith the ponencia th8t the BCC did not exceed its 8uthorit3 Ehen it
deleted the no p8ss-on provisions found in the con7ression8l bills. &ts 8uthorit3 to 98Fe 89end9ents
not onl3 i9plies the poEer to 98Fe insertions, but 8lso deletions, in order to
resolve conflictin+ provisions.
*he no p8ss-on provision in 2ouse Bill C2BD No. @#"I referred to the petroleu9 products subAect to
excise t8x C8nd the r8E 98teri8ls used in the 98nuf8cture of such productsD, the sellers of petroleu9
products, 8nd the 7ener8tion co9p8nies.
61
*he 8n8lo7ous provision in ,en8te Bill C,BD No. 1HI"
de8lt Eith electricit3, businesses other th8n 7ener8tion co9p8nies, 8nd services of fr8nchise
7r8ntees of electric utilities.
6!
&n contr8st, there E8s 8 98rFed 8bsence of the no p8ss-on provision in
2B @III. /8ced Eith such v8ri8nces, the BCC h8d the option of ret8inin7 or 9odif3in7 the no p8ss-
on provisions 8nd deter9inin7 their extent, or of deletin7 the9 8lto7ether. &n optin7 for deletion to
resolve the v8ri8nces, it E8s 9erel3 8ctin7 Eithin its discretion. No 7r8ve 8buse 983 be i9puted to
the BCC.
4$e 70 *e.ent 1ap on 0nput 4a- an% t$e 5 *e.ent 9inal #it$$ol%in" 8A4. -ecidin7 on the #"
percent c8p 8nd the I percent fin8l Eithholdin7 ;A* in the consolid8ted bill is 8lso Eithin the poEer
of the BCC. >hile 2B @III included li9its of I percent 8nd 11 percent on input t8x,
6@
,B 1HI"
proposed 8n even spre8d over 6" 9onths.
61
*he decision to put 8 c8p 8nd fix its r8te, so 8s to
h8r9oniMe or to find 8 co9pro9ise in settlin7 the 8pp8rent differences in these versions,
6I
E8s Eithin
the sound discretion of the BCC.
&n liFe 98nner, 2B @III cont8ined provisions on the Eithholdin7 of credit8ble ;A* 8t the r8tes of I
percent, percent, 1".I percent, 8nd 1! percent.
66
2B @#"I h8d no such eBuiv8lent 89end9ent,
8nd ,B 1HI" pe77ed the r8tes 8t onl3 I percent 8nd 1" percent.
6#
& believe th8t the decision to
i9pose 8 fin8l Cnot credit8bleD ;A* 8nd to fix the r8tes 8t I percent 8nd 1" percent, so 8s to
h8r9oniMe the 8pp8rent differences in 8ll three versions, E8s 8lso Eithin the sound discretion of the
BCC.
&ndeed, the t8x credit 9ethod under our ;A* s3ste9 is not onl3 pr8ctic8l, but 8lso princip8ll3 used in
8l9ost 8ll t8xin7 Aurisdictions. *his does not 9e8n, hoEever, th8t in the e3es of Con7ress throu7h
the BCC, our countr3 c8n neither devi8te fro9 this 9ethod nor 9odif3 its 8pplic8tion to suit our fisc8l
reBuire9ents. *he ;A* is usuallycollected throu7h the t8x credit 9ethod C8nd in the p8st, even
throu7h the cost deduction 9ethod or 8 9ixture of these tEo 9ethodsD,
6
but there is no h8rd 8nd
f8st rule th8t 1"" percent of the input t8xes Eill 8lE83s be 8lloEed 8s 8 t8x credit.
&n f8ct, it E8s )8urice '8urY, 8 /rench en7ineer,
6H
Eho invented the ;A*. &n 1HI1, he h8d the ide8 of
i9posin7 8n indirect t8x on consu9ption, c8lled ta#e sur la valeur aBoutDe,
#"
Ehich E8s BuicFl3
8dopted b3 the &irection :DnDrale des 0mpost, the neE /rench t8x 8uthorit3 of Ehich he bec89e
Aoint director. ConseBuentl3, t8xp83ers 8t 8ll levels in the production process, r8ther th8n ret8ilers or
t8x 8uthorities, Eere forced to 8d9inister 8nd 8ccount for the t8x the9selves.
#1
,ince the unutiliMed input ;A* c8n be c8rried over to succeedin7 Bu8rters, there is no undue
depriv8tion of propert3. Altern8tivel3, it c8n be p8ssed on to the consu9ers4
#!
there is no l8E
prohibitin7 th8t. )erel3 specul8tive 8nd unproven, therefore, is the contention th8t the l8E is 8rbitr8r3
8nd oppressive.
#@
'8Es th8t i9pose t8xes 8re necess8ril3 burdenso9e, co9pulsor3, 8nd involunt8r3.
*he deferred input ta# 8ccount -- Ehich 8ccu9ul8tes the unutiliMed input ;A* -- re98ins 8n 8sset in
the 8ccountin7 records of 8 business. &t is not 8t 8ll confisc8ted b3 the 7overn9ent. B3 deletin7
,ection 11!CBD of the *8x Code,
#1
Con7ress no lon7er 98de 8v8il8ble ta# credit certificates for such
8sset 8ccount until retire9ent fro9 or cess8tion of business, or ch8n7es in or cess8tion of ;A*-
re7istered st8tus.
#I
*his is 8 98tter of polic3, not le78lit3. *he Court c8nnot step be3ond the confines
of its constitution8l poEer, if there is 8bsolutel3 no cle8r shoEin7 of 7r8ve 8buse of discretion in the
en8ct9ent of the l8E.
*h8t the unutiliMed input ;A* Eould be rendered useless is 9erel3 specul8tive.
#6
Althou7h it is
recorded 8s 8 deferred 8sset in the booFs of 8 co9p8n3, it re98ins to be 8 9ere privile7e. &t 983 be
Eritten off or expensed outri7ht4 it 983 8lso be denied 8s 8 t8x credit.
*here is no vested ri7ht in 8 deferred input ta# 8ccount4 it is 8 9ere st8tutor3 privile7e.
##
*he ,t8te
983 9odif3 or Eithdr8E such privile7e, Ehich is 9erel3 8n 8sset 7r8nted b3 oper8tion of
l8E.
#
)oreover, there is no vested ri7ht in 7ener8ll3 8ccepted 8ccountin7 principles.
#H
*hese refer to
8ccountin7 concepts, 9e8sure9ent techniBues, 8nd st8nd8rds of present8tion in 8 co9p8n35s
fin8nci8l st8te9ents, 8nd 8re not rooted in l8Es of n8ture, 8s 8re the l8Es of ph3sic8l science, for
these 8re 9erel3 developed 8nd continu8ll3 9odified b3 loc8l 8nd intern8tion8l re7ul8tor3 8ccountin7
bodies.
"
*o st8te otherEise 8nd reco7niMe such 8sset 8ccount 8s 8 vested ri7ht is to li9it the t8xin7
poEer of the ,t8te. %nli9ited, plen8r3, co9prehensive 8nd supre9e, this poEer c8nnot be undul3
restricted b3 9ere cre8tions of the ,t8te.
*h8t the unutiliMed input ;A* Eould 8lso h8ve 8n uneBu8l effect on businesses -- so9e Eith loE,
others Eith hi7h, input-output r8tio -- is not 8 le78l 7round for inv8lid8tin7 the l8E. Profit 98r7ins 8re
8 v8ri8ble of sound business Aud79ent, not of le78l doctrine. *he l8E 8pplies eBu8ll3 to 8ll
businesses4 it is up to e8ch of the9 to deter9ine the best for9ul8 for sellin7 their 7oods or services
in the f8ce of stiffer co9petition. *here is, thus, no viol8tion of the eBu8l protection cl8use. &f the
i9ple9ent8tion of the #" percent c8p Eould c8use 8n ad infinitum defer9ent of input t8xes or 8n
uneBu8l effect upon different t3pes of businesses Eith v8r3in7 profit 98r7ins 8nd c8pit8l
reBuire9ents, then the re9ed3 Eould be 8n 89end9ent of the l8E -- not 8n unE8rr8nted 8nd
outri7ht decl8r8tion of unconstitution8lit3.
*he 98tter of business est8blish9ents shoulderin7 @" percent of output t8x 8nd re9ittin7 the
89ount, 8s co9puted, to the 7overn9ent is in effect i9posin7 8 t8x th8t is eBuiv8lent to 8 98xi9u9
of @ percent of 7ross s8les or revenues.
1
*his i9position is 8r7u8bl3 8nother t8x on 7ross -- not net
-- inco9e 8nd thus 8 devi8tion fro9 the concept of ;A* 8s 8 t8x on consu9ption4 it 8lso 8ssu9es
th8t s8les or revenues 8re on c8sh b8sis or, if on credit, 7iven credit ter9s shorter th8n 8 Bu8rter of 8
3e8r. 2oEever, such 8ddition8l i9position 8nd 8ssu9ption 8re 8lso 8r7u8bl3 Eithin the poEer of
Con7ress to 98Fe. *he ,t8te 983 in f8ct choose to i9pose 8n 8ddition8l @ percent t8x on 7ross
inco9e, in lieu of the #" percent c8p, 8nd thus subAect the inco9e of businesses to tEo t3pes of
t8xes -- one on 7ross, the other on net. *hese i9positions 983 constitute double t8x8tion,
!
Ehich is
not constitution8ll3 proscribed.
@
Besides, prior to the 89end9ents introduced b3 the BCC, 8lre8d3 ext8nt in the *8x Code E8s 8 @
percentpercenta+e ta# on the 7ross Bu8rterl3 s8les or receipts of persons Eho Eere not ;A*-
re7istered, 8nd Ehose s8les or receipts Eere exe9pt fro9 ;A*.
1
*his is 8nother t3pe of t8x i9posed
b3 the *8x Code, in 8ddition to the t8x on their respective inco9es. No Buestion 8s to its v8lidit3 E8s
r8ised before4 none is bein7 brou7ht noE. )ore i9port8nt, there is 8 presu9ption in f8vor of
constitution8lit3,
I
:rooted in the doctrine of sep8r8tion of poEers Ehich enAoins upon the three
coordin8te dep8rt9ents of the Govern9ent 8 beco9in7 courtes3 for e8ch other5s 8cts.:
6
As to the 8r7u9ent th8t ,ection of RA H@@# contr8venes ,ection 1 of Article &&& 8nd ,ection !" of
Article && of the 1H# Constitution, & respectfull3 dis87ree.
)ne, petitioners h8ve not been denied due process or, 8s & h8ve illustr8ted e8rlier, eBu8l protection.
&n the exercise of its inherent poEer to t8x, the ,t8te v8lidl3 interferes Eith the ri7ht to propert3 of
persons, n8tur8l or 8rtifici8l. *hose si9il8rl3 situ8ted 8re 8ffected in the s89e E83 8nd tre8ted 8liFe,
:both 8s to privile7es conferred 8nd li8bilities enforced.:
#
RA H@@# E8s en8cted precisel3 to 8chieve the obAective of r8isin7 revenues to defr83 the necess8r3
expenses of 7overn9ent.

*he 9e8ns th8t this l8E e9plo3s 8re re8son8bl3 rel8ted to the
8cco9plish9ent of such obAective, 8nd not undul3 oppressive. *he reduction of t8x credits is 8
Buestion of econo9ic polic3, not of le78l perlustr8tion. &ts deter9in8tion is vested in Con7ress, not in
this Court. ,ince the purpose of the l8E is to r8ise revenues, it c8nnot be denied th8t the 9e8ns
e9plo3ed is re8son8bl3 rel8ted to the 8chieve9ent of th8t purpose. )oreover, the proper
con7ression8l procedure for its en8ct9ent E8s folloEed4
H
neither public notice nor public he8rin7s
Eere denied.
T8o, priv8te enterprises 8re not discour87ed. *8x burdens 8re never deli7htful, but Eith the
i9position of the #" percent c8p, there Eill be 8n 8ssur8nce of 8 ste8d3 c8sh floE to the
7overn9ent, Ehich c8n be tr8nsl8ted to the production of i9proved 7oods, rendition of better
services, 8nd construction of better f8cilities for the people, includin7 8ll priv8te enterprises.
Perh8ps, Con7ress dee9s it best to 98Fe our econo93 depend 9ore on businesses th8t 8re e8sier
to 9onitor, so there Eill be 8 9ore efficient collection of t8xes. >h8tever is expected of the outco9e
of the l8E, or its Eisdo9, should be the sole responsibilit3 of the represent8tives chosen b3 the
elector8te.
*he profit 98r7in rates of v8rious industries 7ener8ll3 do not ch8n7e. 2oEever, the profit
98r7in fi+ures do, bec8use these 8re obviousl3 9onet8r3 v8ri8bles th8t 8ffect business, 8lon7 Eith
the level of co9petition, the Bu8lit3 of 7oods 8nd services offered, 8nd the cost of their production.
And there Eill inevit8bl3 be 8 conscious desire on the p8rt of those Eho en787e in business 8nd
those Eho consu9e their output to 8d8pt or 8dAust 8ccordin7l3 to 8n3 con7ression8l 9odific8tion of
the ;A* s3ste9.
&n 8ddition, it is contended th8t the ;A* should be proportion8l in n8ture. & sub9it th8t this
proportion8lit3 pert8ins to the rate i9pos8ble, not the credit 8lloE8ble. Priv8te enterprises 8re
subAected to 8 proportion8l ;A* r8te, but ;A* credits need not be. *he ;A* is, 8fter 8ll, 8 hu98n
concept th8t is neither i99ut8ble nor inv8ri8ble. &n f8ct, it h8s ch8n7ed 8fter it E8s 8dopted 8s 8
s3ste9 of indirect t8x8tion b3 other countries. A78in unliFe the l8Es of ph3sic8l science, the ;A*
s3ste9 c8n 8lE83s be 9odified to suit 9odern fisc8l de98nds. *he ,t8te, throu7h the 'e7isl8tive
-ep8rt9ent, 983 even choose to do 8E83 Eith it 8nd revert to our previous s3ste9 of turnover
t8xes, s8les t8xes 8nd co9pens8tin7 t8xes, in Ehich credits 983 be dis8lloEed 8lto7ether.
Not expensed, but 89ortiMed over its useful life, is c8pit8l eBuip9ent, Ehich is purch8sed or tre8ted
8s c8pit8l le8ses b3 priv8te enterprises. Ai9ed 8t 8chievin7 the tEin obAectives of profit8bilit3 8nd
solvenc3, such purch8se or le8se is 8 98tter of prudence in business decision-98Fin7.
2ence, business Aud79ents, s8les volu9e, 8nd their effect on co9petition 8re for businesses to
deter9ine 8nd for Con7ress to re7ul8te -- not for this Court to interfere Eith, 8bsent 8 cle8r shoEin7
th8t constitution8l provisions h8ve been viol8ted. *8x collection 8nd 8d9inistr8tive fe8sibilit3 8re for
the executive br8nch to focus on, 878in not for this Court to dEell upon.
*he *r8nscript of the (r8l Ar7u9ents on +ul3 11, !""I cle8rl3 point out in 8 lon7 line of relev8nt
Buestionin7 th8t, 8bsent 8 viol8tion of constitution8l provisions, the Court c8nnot interfere Eith the #"
percent c8p, the I percent fin8l Eithholdin7 t8x, 8nd the 6"-9onth 89ortiM8tion, there bein7 other
extr8-Audici8l re9edies 8v8il8ble to petitioners, thusJ
:Att3. B8niBuedJ But if 3our profit 98r7in is loE 8s iQnR the c8se of the petroleu9 de8lers, x x x then
Ee Eould h8ve 8 serious proble9, .our 2onor.
:+ustice P8n78nib8nJ &sn5t the solution to incre8se the price thenL
:Att3. B8niBuedJ &f 3ou incre8se the price Ehich 3ou c8n ver3 Eell do, .our 2onor, then th8t QEillR be
defl8tion8r3 8nd it QEillR h8ve 8 c8sc8din7 effect on 8ll other b8sic co99oditiesQ, especi8ll3R bec8use
Eh8t is involved here is petroleu9, .our 2onor.
:+ustice P8n78nib8nJ *h8t 983 be trueQ,R but 0tD2 *ot 6*3o*2t0t6t0o*)%L
:Att3. B8niBuedJ T1)t m)& be tr6e, .our 2onor, but the ver3 li9it8tion of the Qsevent3 percentR input
Q;A*R, Ehen 8pplied to the c8se of the petroleu9 de8lersQ,R is oppressiveQ.R Q&Rt5s unAust 8nd it5s
unre8son8ble, .our 2onor.
:+ustice P8n78nib8nJ But it c8n be p8ssed 8s 8 p8rt of s8les, s8les costs r8ther.
:Att3. B8niBuedJ But the petroleu9 de8lers here the9selvesGG interrupted
:+ustice P8n78nib8nJ &n 3our QbR8l8nce QsRheet, it could be reflected 8s Cost of ,8les 8nd therefore
the price Eill 7o upL
:Att3. B8niBuedJ Even if it Eere to be reflected 8s p8rt of the Cost of ,8les, .our 2onor, the Qinput
;A*R th8t 3ou c8nnot cl8i9, the benefit to 3ou is onl3 to the extent of the corpor8te t8x r8te Ehich is
@! noE @I QpercentR.
:+ustice P8n78nib8nJ .es.
:Att3. B8niBuedJ &t5s not 1"" QpercentR crediQt8Rbilit3Q,R unliFe if it Eere 8pplied 878inst 3our Qoutput
;A*R, 3ou 7et to cl8i9 1"" QpercentR of it, .our 2onor.
:+ustice P8n78nib8nJ *h8t 9i7ht be true, but Ee 8re t8lFin7 8bout Ehether th8t p8rticul8r provision
Eould be unconstitution8l. .ou s83 it5s oppressive, but &o6 1)5e ) reme+&, &o6 A62t p)22 0t o* to
t1e 362tomer. & 89 not s83inQ7R it5s 7oodQ.R QNReither 89 & s83in7 it5s EiseQ.R QARll &59 t8lFin7 8bout is,
Ehether it5s constitution8l or not.
:Att3. B8niBuedJ e2, 0* 4)3t ;e )3J*o;%e+@e, .our 2onor, t1)t t1)t 02 ) reme+& )5)0%)b%e to the
petroleu9 de8lers, but considerin7 the i9p8ct of th8t li9it8tionQ,R 8nd Eere Aust t8lFin7 of the #"
Qpercent c8pR on Qinput ;A*R in the level of the petroleu9 de8lers. >ere not even t8lFin7 3et of the
li9it8tion on the Qinput ;A*R 8v8il8ble to the 98nuf8cturers, so, Eh8t if the3 p8ss th8t on 8s EellL
:+ustice P8n78nib8nJ .es.
:Att3. B8niBuedJ *hen, it Eould co9plic8teG interrupted
:+ustice P8n78nib8nJ >h8t & 89 s83in7 is, there is 8 re9ed3, Ehich is business in ch8r8cter. *he
9ere f8ct th8t the 7overn9ent is i9posin7 th8t Qsevent3 percentR c8p does not 98Fe the l8E
unconstitution8l, isn5t itL
:Att3. B8niBuedJ &t does, .our 2onor, if it c8n be shoEn. And 8s Ee h8ve shoEn, it is oppressive 8nd
unre8son8ble, it is excessive, .our 2onorG interrupted
:+ustice P8n78nib8nJ &f 3ou h8ve no E83 of recoupin7 it. &f 3ou h8ve no E83 of recoupin7 th8t
89ount, then it Eill be oppressive, but 3ou h8ve 8 business E83 of recoupin7 itQ.R & 89 s83in7 th8t,
not 8dvisin7 th8t it5s 7ood. All & 89 s83in7 is, is it constitution8l or notQLR >e5re not here to deter9ine
the Eisdo9 of the l8E, th8t5s up for Con7ress. As pointed out e8rlier, if the l8E is not Eise, the l8E
98Fers Eill be ch8n7ed b3 the peopleQ.R Q*Rh8t is their solution tQoR the l8cF of Eisdo9 of 8 l8E. &f the
l8E is unconstitution8lQ,R then the ,upre9e Court Eill decl8re it unconstitution8l 8nd void it, butQ,R in
this c8seQ,R there see9s to be 8 business re9ed3 in the s89e 98nner th8t Con7ress 983 Aust
i9pose th8t t8x str8i7ht Eithout s83in7 it5s Q;A*R. &f Con7ress Eill Aust s83 8ll petroleu9 Eill p83 @
QpercentR of their Gross ,8les, but 3ou don5t be8r th8t, 3ou p8ss th8t on, isn5t itL
:Att3. B8niBuedJ >e 8cFnoEled7e 3our concern, .our 2onor, but Ee should not for7et th8t Ehen the
petroleu9 de8lers p8ss these fin8nci8l burden or this t8x differenti8l to the consu9ers, the3
the9selves 8re consu9ers in their oEn ri7ht. As 8 98tter of f8ct, the3 filed this c8se both 8s
petroleu9 de8lerQsR 8nd 8s t8xp83ers. &f the3 p8ss if on, the3 the9selves Eould ulti98tel3 be8r the
burdenQ, especi8ll3R in incre8seQdR cost of electricit3, l8nd tr8nsport, food, ever3thin7, .our 2onor.
:+ustice P8n78nib8nJ .es, but the issue here in this Court, is Ehether th8t 8ct of Con7ress is
unconstitution8l.
:Att3. B8niBuedJ .es, Ee believe it is unconstitution8l, .our 2onor.
:+ustice P8n78nib8nJ .ou h8ve 8 ri7ht to co9pl8in th8t it is oppressive, it is excessive, it burdens the
people too 9uch, but is it unconstitution8lL
:Att3. B8niBuedJ Besides, p8ssin7 it on, .our 2onor, 983 not be 8s si9ple 8s it 983 see9. As 8
98tter of f8ct, 8t the striFe of 9idni7ht on +une @", Ehen petroleu9 prices Eere bein7 ch8n7ed
upE8rd, the QsRecret8r3 of QtheR -ep8rt9ent of Ener73 E8s 7oin7 8roundQ.R Q2Re E8s seen on *;
7oin7 8round Aust to checF th8t prices don5t 7o up. And 8s 8 98tter of f8ct, he h8d pronounce9ents
th8t, the incre8se in petroleu9 price should onl3 be li9ited to the effect of 1" QpercentR E-;A*.
:+ustice P8n78nib8nJ &t5s bec8usQeR the i9ple9entin7 rules Eere not cle8r 8nd Eere not extensive
enou7h to cover hoE 9uch re8ll3 should be the incre8se for v8rious oil products, refined oil
products. &t5s up for the de8lers to 7uess, 8nd the de8lers Eere 7uessin7 to their 8dv8nt87e b3
s83in7 plus 1" QpercentR 8n3E83, ri7htL
:Att3. B8niBuedJ &n f8ct, the petroleu9 de8lers, .our 2onors, 8re not onl3 f8ced Eith constitution8l
issues before this Court. *he3 8re 8lso f8ced Eith 8 possibilit3 of the -ep8rt9ent of Ener73 not
8lloEin7 the9 to p8ss it onQ,R bec8use this Eould be 8n unre8son8ble price incre8se. And so, the3
8re bein7 hit fro9 both sidesGinterrupted
:+ustice P8n78nib8nJ *h8t5s Eh3 & s83, th8t there is need to refine the i9ple9entin7 rules so th8t
ever3one Eill FnoE, the custo9ers Eill FnoE hoE 9uch to p83 for 78soline, not onl3 78soline,
78soline, 8nd so on, diesel 8nd 8ll Finds of products, so there5ll be no confusion 8nd there5ll be no
undue t8Fin7 8dv8nt87e. *here Eill be 8 s9ooth i9ple9ent8tionQ,R if the l8E Eere to be upheld b3
the Court. &n 3our c8se, 8s & s8id, it 983 be unEise to p8ss th8t on to the custo9ers, but definitel3,
the de8lers Eill not be8r th8t Q--R to suffer the loss th8t 3ou 9entioned in 3our consolid8ted b8l8nce
sheets. Cert8inl3, the de8lers Eill not be8r th8t QcostR, isn5t itL
:Att3. B8niBuedJ &t Eill be 8 ver3 h8rd decision to 98Fe, .our 2onor.
:+ustice P8n78nib8nJ >h3, 3ou Eill not p8ss it onL
:Att3. B8niBuedJ & c8nnot spe8F for the de8lersG. interrupted.
:+ustice P8n78nib8nJ As 8 consu9er, & Eill th8nF 3ou if 3ou don5t p8ss it onQ4R but 3ou or 3our clients
8s business9QeRn, & FnoE, Eill p8ss it on.
:Att3. B8niBuedJ As & h8ve s8id, .our 2onor, there 8re 98n3 constr8ints on their 8bilit3 to do th8tQ,R
8nd th8t is Eh3 the first step th8t Ee 8re seeFin7 is to seeF redress fro9 this 2onor8ble CourtQ,R
bec8use Ee feel th8t the i9position is excessive 8nd oppressiveG.. interrupted
:+ustice P8n78nib8nJ .ou c8n find redress here, onl3 if 3ou c8n shoE th8t the l8E is unconstitution8l.
:Att3. B8niBuedJ >e re8liMed th8t, .our 2onor.
:+ustice P8n78nib8nJ Alri7ht. 'et5s t8lF 8bout the 5 Gper3e*tH G+Hepre30)t0o* r)te, but th8t 8pplies
onl3 to the c8pit8l eBuip9ent Eorth over 8 9illionL
:Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ And th8t +oe2*Dt )pp%& 8t 8ll ti9es, isn5t itL
:Att3. B8niBuedJ >ellGG
:+ustice P8n78nib8nJ *h8t doesn5t 8t 8ll ti9esL
:Att3. B8niBuedJ $or 3)p0t)% @oo+2 3o2t0*@ %e22 t1)* 1 m0%%0o*, .our 2onor, thenG.
:+ustice P8n78nib8nJ *h8t Eill not 8ppl3L
:Att3. B8niBuedJ T1)t ;0%% *ot )pp%&, but 3ou Eill h8ve the #" QpercentR c8p on input Q;A*R, .our
2onor.
:+ustice P8n78nib8nJ .es, but Ee t8lFed 8lre8d3 8bout the #" QpercentR.
:Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ >hen 3ou 98de 3our present8tion on the b8l8nce sheet, it is 8s if ever3 c8pit8l
expenditure 3ou 98de is subAect to the I Qpercent,R r8ther the Qfive 3e8rR depreci8tion scheduleQ.R
Q*Rh8t5s not so. ,o, the present8tion 3ou 98de is 8 little in8ccur8te 8nd 9isle8din7.
:Att3. B8niBuedJ At the st8rt of our present8tion, .our 2onorQ,R Ee st8ted cle8rl3 th8t this 8pplies onl3
to c8pit8l 7oods costin7 9ore th8n one Q9illionR.
:+ustice P8n78nib8nJ .es, but 3ou co9bined it l8ter on Eith the #" QpercentR c8p to shoE th8t the
de8lers 8re so dis8dv8nt87ed. But 3ou didn5t tell us th8t th8t Eill 8ppl3 onl3 Ehen c8pit8l eBuip9ent
or 7oods is one 9illion or 9ore. And in 3our c8se, Eh8t Find of c8pit8l 7oods Eill be Eorth one 9illion
or 9ore in 3our existin7 78s st8tionsL
:Att3. B8niBuedJ >ell, 3ou Eould h8ve petroleu9 de8lers, .our 2onor, Eho Eould h8veQ,R 8side fro9
s8le of petroleu9Q,R the3 Eould h8ve their service centersQ,R liFeQGR to service c8rs 8nd the3 Eould
h8ve those eBuip9ents, the3 8re, .our 2onor.
:+ustice P8n78nib8nJ But th8t5s 8 different profit center, th8t5s not fro9 the s8le ofG
:Att3. B8niBuedJ No, the3 Eould for9 p8rt of their Q;A*8bleR s8le, .our 2onor.
+ustice P8n78nib8nJ &t5s 8 different profit centerQ4R it5s not in the s8le of petroleu9 products. &n f8ct the
9ode noE is to put up super stores in hu7e 78s st8tions. & do not be7rud7e the 78s st8tionQ.R QARll &
89 s83in7 is it should be presented to us in perspective. Neither 89 & sidin7 Eith the 7overn9ent. All
& 89 s83in7 is, Ehen & s8E 3our co9plic8ted b8l8nce sheet 8nd 98the98tics, & s8E th8t 3ou Eere to
put in 8ll the ti9e the depreci8tion th8t should be spre8d over QfiveR 3e8rs. But Ee h8ve 87reed th8t
th8t 8pplies onl3 to c8pit8l eBuip9ent Q-- Rnot to 8n3 Find of 7oods Q--R but to c8pit8l eBuip9ent
costin7 over 1 9illion pesos.
:Att3. B8niBuedJ .es, .our 2onor, Ee 8polo7iMe if it h8s c8used 8 little confusionG.
:+ustice P8n78nib8nJ A78in t1e 2o%6t0o* 3o6%+ bGeH to p)22 t1)t o*, be3)62e t1)tD2 )* )++e+
3o2t, isn5t itL
:Att3. B8niBuedJ >ell, &e2, &o6 3)* p)22 0t o*G.
:+ustice P8n78nib8nJ & 89 not te8chin7 3ou, & 89 Aust s83in7 th8t 3ou h8ve 8 re9ed3G & 89 not
s83in7 either th8t the re9ed3 is Eise or should be done, bec8useQ,R 8s 8 consu9erQ,R & Eouldn5t E8nt
th8t to be done to 9e.
:Att3. B8niBuedJ >e re8liMQeR th8t, .our 2onor, but the f8ct re98inQsR th8t Ehether it is in the h8nds of
the petroleu9 de8lers or in the h8nds of the consu9ersQ,R if this i9position is unre8son8ble 8nd
oppressive, it Eill re98in so, even 8fter it is p8ssed on, .our 2onor.
:+ustice P8n78nib8nJ Alri7ht. 'et5s 7o to the third. *he I QpercentR Eithholdin7 t8x, QfRin8l QERithholdin7
QtR8x, but this 8pplies to s8les to 7overn9entL
:Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ ,o, &o6 3)* p)22 o* t102 5 Gper3e*tH to t1e G@Ho5er*me*t. After 8ll, th8t I
QpercentR Eill still 7o b8cF to the 7overn9ent.
:Att3. B8niBuedJ *hen it Eill co9e b8cF to h8unt us, .our 2onorG..
:+ustice P8n78nib8nJ >h3L
:Att3. B8niBuedJ B3 E83 of, for ex89ple s8les to NAP(C(R or N*CG. interrupted
:+ustice P8n78nib8nJ ,8les of petroleu9 productsG.
:Att3. B8niBuedJ GGGG in the c8se of N*C, .our 2onor, it Eould co9e b8cF to us b3 E83 of
incre8seQdR cost, .our 2onor.
:+ustice P8n78nib8nJ (F83, let5s see. .ou sell, let5s s83Q,R 3our petroleu9 products to the ,upre9e
Court, 8s 8 78s st8tion th8t sells 78soline to us here. %nder this l8E, the I QpercentR Eithholdin7 t8x
Eill h8ve to be ch8r7ed, ri7htL
:Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ .ou Eill ch8r7e th8tQ.R Q*RhereforeQ,R the s8les to the ,upre9e Court b3 th8t 78s
st8tion Eill effectivel3 be hi7herL
:Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ ,o, the ,upre9e Court Eill p83 9ore, 3ou Eill not QbeR 7oin7 to Q8bsorbR th8t I
QpercentR, Eill 3ouL
:Att3. B8niBued4 &f it is p8ssed on, .our 2onor, th8t5s of course Ee 87reeG. &nterrupted.
:+ustice P8n78nib8nJ Not if, 3ou c8n p8ss it onG.
:Att3. B8niBuedJ e2, ;e 3)*G. interrupted
:+ustice P8n78nib8nJ *here is no prohibition to p8ssin7 it onQ.R QPRrob8bl3 the 78s st8tion Eill si9pl3
p8ss it on to the ,upre9e Court 8nd s83Q,R EellQ,R there is this I QpercentR fin8l ;A* on 3ou soQ,R
therefore, for ever3 t8nF full 3ou bu3Q,R Ee5ll Aust h8ve to Qch8r7eR 3ou I QpercentR 9ore. >ell, the
,upre9e Court Eill prob8bl3 s83, Eell, 8n3E83, th8t I QpercentR th8t Ee Eill p83 the 78s de8ler, Eill
be p8id b8cF to the 7overn9ent, isn5t itQLR ,o, hoE QEillR 3ou be 8ffectedL
:Att3. B8niBuedJ & hope the p8ssin7 on of the burden, .our 2onor, doesn5t co9e b8cF to p8rt3
liti78nts b3 E83 of incre8se in docFet fees, .our 2onor.
:+ustice P8n78nib8nJ But th8t5s Buite 8nother 9Q8Rtter, thou7hGCl8u7hsD Q>Rh8t & 89 s83in7, )r.
QCRounsel is, 3ou still h8ve to shoE to us th8t 3our re9ed3 is to decl8re the l8E unconstitution8lQ,R
8nd it5s not business in ch8r8cter.
:Att3. B8niBuedJ .es, .our 2onor, it is our sub9ission th8t this li9it8tion in the input Q;A*R credit 8s
Eell 8s the 89ortiM8tionGG.
:+ustice P8n78nib8nJ All 3ou t8lF 8bout is eBu8l protection cl8use, 8bout due process, depreci8tion
of propert3 Eithout observ8nce of due processQ,R could re8ll3 be 8 re9ed3 th8n 8 business E83.
:Att3. B8niBuedJ Business in the level of the petroleu9 de8lers, .our 2onor, or in the level of
Con7ress, .our 2onor.
:+ustice P8n78nib8nJ .es, 3ou c8n p8ss the9 on to custo9ersQ,R in other Eords. &t5s the custo9ers
Eho should Qco9pl8inR.
:Att3. B8niBuedJ .es, .our 2onorG interrupted
:+ustice P8n78nib8nJ And perh8ps Eill not elect their represent8tives 8n39oreQ.R
:Att3. B8niBuedJ .es, .our 2onorG..
:+ustice P8n78nib8nJ /or 87reein7 to it, bec8use the Eisdo9 of 8 l8E is not for the ,upre9e Court to
p8ss upon.
:Att3. B8niBuedJ &t Aust so h8ppens, .our 2onor, th8t Eh8t is QinvolvedR here is 8 co99odit3 th8t
Ehen it 7oes up, it 8ffects ever3bod3G.
:+ustice P8n78nib8nJ .es, infl8tion8r3 8nd infl8998tor3G.
:Att3. B8niBuedJ GAust liFe Eh8t +ustice Puno s83s it sh8Fes the entire econo9ic found8tion, .our
2onor.
:+ustice P8n78nib8nJ .es, it5s infl8tion8r3Q,R brin7s up the prices of ever3thin7G
:Att3. B8niBuedJ And it is our sub9ission th8tQ,R if the petroleu9 de8lers c8nnot 8bsorb it 8nd the3
p8ss it on to the custo9ers, 8 lot of consu9ers Eould neither be in 8 position to 8bsorb it too 8nd
th8tQ5sR Eh3 Ee p8troniMe, .our 2onor.
:+ustice P8n78nib8nJ *here 9i7ht be Eisdo9 in Eh8t 3ou5re s83in7, but is th8t unconstitution8lL
:Att3. B8niBuedJ .es, bec8use 8s & s8id, .our 2onor, there 8re even constr8ints in the petroleu9
de8lers to p8ss it on, 8nd EeQPRre not even sure EhetherG.interrupted
:+ustice P8n78nib8nJ Are t1e2e 3o*2tr)0*t2 G88H %e@)% 3o*2tr)0*t2E
:Att3. B8niBuedJ >ell, it Eould be 8 different stor3, .our 2onorQ.R GTH1)tD2 2omet10*@ ;e prob)b%&
1)5e to t)Je 6p ;0t1 t1e Dep)rtme*t o4 E*er@&, lest QEe 983R be 8ccused of G..
:+ustice P8n78nib8nJ &n other Eords, th8t5s 3our re9ed3
Q--R to t8Fe it up Eith the -ep8rt9ent of Ener73
:Att3. B8niBuedJ G..unre8son8ble price incre8ses, .our 2onor.
:+ustice P8n78nib8nJ Not for us to decl8re those provisions unconstitution8l.
:Att3. B8niBuedJ >e, 878in, Eish to stress th8t the petroleu9 de8lers Eent to this CourtQ,R both 8s
business9en 8nd 8s consu9ers. And 8s consu9ers, QEe5reR 8lso 7oin7 to be8r the burden of
Eh8tever the3 the9selves p8ss on.
:+ustice P8n78nib8nJ .ou FnoEQ,R 8s 8 consu9er, & Eish 3ou c8n re8ll3 shoE th8t the l8Es 8re
unconstitution8l, so & don5t h8ve to p83 it. But 8s 8 987istr8te of this Court, & Eill h8ve to p8ss upon
Aud79ent on the b8sis of Q--R Ehether the l8E is unconstitution8l or not. And & hope 3ou c8n in 3our
9e9or8ndu9 shoE th8t.
:Att3. B8niBuedJ >e reco7niMed th8t, .our 2onor.: Cboldf8ce supplied, pp. @6-11"D.
A,en%,ents on Ot$e 4a-es an% A%,inistati!e 7attes. /in8ll3, the BCC5s 89end9ents
re78rdin7 other t8xes
H"
8re both 7er98ne in 8 le78l sense 8nd re8son8bl3 necess8r3 in 8n econo9ic
sense. *his f8ct is evident, considerin7 th8t the proposed ch8n7es in the ;A* l8E Eill h8ve inevit8ble
i9plic8tions 8nd repercussions on such t8xes, 8s Eell 8s on the procedur8l reBuire9ents 8nd the
disposition of incre9ent8l revenues, in the *8x Code. Either miti+atin+ measures
H1
h8ve to be put in
pl8ce or increased rates i9posed, in order to 8chieve the purpose of the l8E, cushion the i9p8ct of
incre8sed t8x8tion, 8nd still 98int8in the eBuit8bilit3 desired of 8n3 other revenue l8E.
H!
-irectl3
rel8ted to the proposed ;A* ch8n7es, these 89end9ents 8re expected 8lso to h8ve 8 s8lut8r3 effect
on the n8tion8l econo93.
*he no-89end9ent rule
H@
in the Constitution E8s not viol8ted b3 the BCC, bec8use no co9pletel3
neE provision E8s inserted in the 8pproved bill. *he 89end9ents 983 be unpopul8r or even EorF
h8rdship upon ever3one Cthis Eriter includedD. &f so, the re9ed3 c8nnot be prescribed b3 this Court,
but b3 Con7ress.
Re:e.tin" No*8Co*4%03t0*@
*o!isions
Fourth, the BCC 983 choose neither to 8dopt nor to consolid8te the versions presented to it b3 both
houses of Con7ress, but inste8d to reAect non-conflictin+ provisions in those versions. &n other
Eords, despite the l8cF of conflict in the9, such provisions 8re still eli9in8ted entirel3 fro9 the
consolid8ted bill. *here 983 be 8 constitution8l proble9 here.
*he no p8ss-on provisions in the con7ression8l bills 8re the onl3 ite9 r8ised b3 petitioners
concernin7 deletion.
H1
As & h8ve 8lre8d3 9entioned e8rlier, these provisions Eere in conflict. *hus, the
BCC exercised its prero78tive to re9ove the9. &n f8ct, con7ression8l rules 7ive the BCC the poEer
to reconcile dis87reein7 provisions, 8nd in the process of reconcili8tion, to delete the9. ,o other
non-conflictin+ provision 8as deleted.
At this point, 8nd 8fter the extensive discussion 8bove, it c8n re8dil3 be seen no non-
conflictin+ provisions of the E-;A* bills Eere reAected indiscri9in8tel3 b3 the BCC.
Appo!in" an% 0nsetin"
1o,pletel( Ne2 *o!isions
Fifth, the BCC h8d the option of insertin7 co9pletel3 neE provisions not found in 8n3 of the
provisions of the bills of either house of Con7ress, or 98Fe 8nd endorse 8n entirel3 neE bill 8s 8
substitute. *8Fin7 this option 983 be 8 bl8t8nt viol8tion of the Constitution, for not onl3 Eill the
surreptitious insertion or unE8rr8nted cre8tion contr8vene the :ori7in8tion: principle4 it 983 liFeEise
desecr8te the three-re8din7 reBuire9ent 8nd the no-89end9ent rule.
HI
/ortun8tel3, hoEever, the BCC did not 8pprove or insert co9pletel3 neE provisions. *hus, no
viol8tion of the Constitution E8s co99itted in this re78rd.
Su,,a(
*he enrolled bill doctrine is s8id to be conclusive not onl3 8s to the provisions of 8 l8E, but 8lso to its
due en8ct9ent. &t is not 8bsolute, hoEever, 8nd 9ust 3ield to 98nd8tor3 provisions of the 1H#
Constitution. ,pecific8ll3, this Court h8s the dut3 of striFin7 doEn provisions of 8 l8E th8t in their
en8ct9ent viol8te conditions, restrictions or li9it8tions i9posed b3 the Constitution.
H6
*he Bic89er8l
Conference Co99ittee CBCCD is 8 9ere cre8tion of Con7ress. 2ence, the BCC 983 resolve
differences onl3 in conflictin7 provisions of con7ression8l bills th8t 8re referred to it4 8nd it 983 do so
onl3 on the condition th8t such resolution does not viol8te the ori7in8tion, the three-re8din7, 8nd the
no-89end9ent rules of the Constitution.
&n cr8ftin7 RA H@@#, the BCC opted to reconcile the conflictin7 provisions of the ,en8te 8nd 2ouse
bills, p8rticul8rl3 those on the #" percent c8p on input t8x4 the I percent fin8l Eithholdin7 t8x4
percent87e t8xes on do9estic c8rriers, Feepers of 78r87es 8nd intern8tion8l c8rriers4 fr8nchise
t8xes4 89use9ent t8xes4 excise t8xes on 98nuf8ctured oils 8nd other fuels4 re7istr8tion
reBuire9ents4 issu8nce of receipts or s8les or co99erci8l invoices4 8nd disposition of incre9ent8l
revenues. *o 93 9ind, these ch8n7es do not viol8te the ori7in8tion or the 7er98neness principles.
Neither is there undue dele78tion of le7isl8tive poEer in the st8ndb3 8uthorit3 7iven b3 Con7ress to
the President. *he l8E is co9plete, 8nd the st8nd8rds 8re fixed. >hile & concur Eith
the ponenciaEs vieE th8t the President E8s 7iven 9erel3 the poEer to 8scert8in the f8cts to brin7 the
l8E into oper8tion -- cle8rl3 8n 8d9inistr8tive, not 8 le7isl8tive, function -- & stress th8t the fin8nce
secret8r3 re98ins the Chief Executive5s 8lter e7o, not 8n 87ent of Con7ress.
*he BCC exercised its prero78tive to delete the no p8ss-on provisions, bec8use these Eere in
conflict. & believe, hoEever, th8t it bl8t8ntl3 viol8ted the ori7in8tion 8nd the 7er98neness principles
Ehen it inserted provisions not found in the 2ouse versions of the E-;A* '8EJ C1D incre8sin7 the t8x
r8tes on do9estic, resident forei7n 8nd nonresident forei7n corpor8tions4 C!D incre8sin7 the t8x credit
878inst t8xes due fro9 nonresident forei7n corpor8tions on intercorpor8te dividends4 8nd C@D
reducin7 the 8lloE8ble deduction for interest expense. 2ence, & find these insertions
unconstitution8l.
,o9e h8ve criticiMed the E-;A* '8E 8s oppressive to our 8lre8d3 sufferin7 people. (n the other
h8nd, respondents h8ve Austified it b3 co9p8rin7 it to bitter 9edicine th8t p8tients 9ust endure to be
he8led eventu8ll3 of their 98l8dies. *he 8dv8nt87es 8nd dis8dv8nt87es of the E-;A* '8E, 8s Eell
8s its lon7-ter9 effects on the econo93, 8re be3ond the re8ch of Audici8l revieE. *he econo9ic
repercussions of the st8tute 8re polic3 in n8ture 8nd 8re be3ond the poEer of the courts to p8ss
upon.
& h8ve co9bed throu7h the specific points r8ised in the Petitions. (ther th8n the three ite9s on
inco9e t8xes th8t & respectfull3 sub9it 8re unconstitution8l, & c8nnot otherEise 8ttribute 7r8ve 8buse
of discretion to the BCC, or Con7ress for th8t 98tter, for p8ssin7 the l8E.
:Q*Rhe Court -- 8s 8 rule -- is deferenti8l to the 8ctions t8Fen b3 the other br8nches of 7overn9ent
th8t h8ve pri98r3 responsibilit3 for the econo9ic develop9ent of our countr3.:
H#
*hus, in upholdin7
the Philippine r8tific8tion of the tre8t3 est8blishin7 the >orld *r8de (r78niM8tion C>*(D, Ta!ada v.
%n+ara held th8t :this Court never for7ets th8t the ,en8te, Ehose 8ct is under revieE, is one of tEo
soverei7n houses of Con7ress 8nd is thus entitled to 7re8t respect in its 8ctions. &t is itself 8
constitution8l bod3, independent 8nd coordin8te, 8nd thus its 8ctions 8re presu9ed re7ul8r 8nd
done in 7ood f8ith. %nless convincin7 proof 8nd persu8sive 8r7u9ents 8re presented to overthroE
such presu9ption, this Court Eill resolve ever3 doubt in its f8vor.:
H
As pointed our inCa8alin+ *r. v.
Comelec, the 7rounds for nullit3 of the l8E :9ust be be3ond re8son8ble doubt, for to doubt is to
sust8in.:
HH
&ndeed, :there 9ust be cle8r 8nd uneBuivoc8l shoEin7 th8t Eh8t the Constitutions
prohibits, the st8tute per9its.:
1""
>2ERE/(RE, & vote to GRAN4 the Petitions in p8rt 8nd to decl8re ,ections 1, !, 8nd @ of Republic
Act No. H@@# unconstitution8l, insof8r 8s these sections C8D amend the rates of income ta# on
do9estic, resident forei7n, 8nd nonresident forei7n corpor8tions4 CbD amend the ta# credit 878inst
t8xes due fro9 nonresident forei7n corpor8tions on intercorpor8te dividends4 8nd CcD reduce the
allo8able deduction for interest e#pense. *he other provisions 8re constitution8l, 8nd 8s to these &
vote to D0S70SS the Petitions.
ARTEM"O ,. PANGAN"BAN
Associ8te +ustice
$oot*ote2
1
!@I ,CRA 6@", Au7ust !I, 1HH14 8nd !1H ,CRA 6!, (ctober @", 1HHI. *he second c8se
is 8n en b8nc Resolution on the )otions for Reconsider8tion of the first c8se.
!
11# ,CRA I"@, -ece9ber 1", !""@.
@
:Q&Rt is Eell settled th8t the enrolled bill doctrine is conclusive upon the courts 8s re78rds the
tenor of the 9e8sure p8ssed b3 Con7ress 8nd 8pproved b3 the President.: esins 0nc. v.
%uditor :eneral, 1@1 Phil. 6H#, #"", (ctober !H, 1H6, per /ern8ndo, *., l8ter C*.4
Ccitin7 Casco Philippine Chemical Co., 0nc. v. :imene(, 11# Phil. @6@, @66, /ebru8r3 !,
1H6@, per ConcepciZn, *., l8ter C*.D. &t is 8 doctrine th8t floEs 8s 8 coroll8r3 to the sep8r8tion
of poEers, 8nd b3 Ehich due respect is 7iven b3 one br8nch of 7overn9ent to the 8ctions of
the others. See >orales v. Subido, 1@6 Phil. 1"I, 11!, /ebru8r3 !#, 1H6H.
/olloEin7 Field v. Clar? C11@ %, 61H, 1! ,.Ct. 1HI, /ebru8r3 !H, 1H!D, such conclusiveness
refers not onl3 to the provisions of the l8E, but 8lso to its due en8ct9ent. >abana+ v. 7ope(
'ito, # Phil. 1, 1@-1, )8rch I, 1H1#.
:Q*Rhe si7nin7 of 8 bill b3 the ,pe8Fer of the 2ouse 8nd the ,en8te President 8nd the
certific8tion of the ,ecret8ries of both QhRouses of Con7ress th8t it E8s p8ssed 8re
conclusive of its due en8ct9ent.: Fari!as v. "#ecutive Secretary, supr8, p. I!H, per C8lleAo
,r., *.
1
>abana+ v. 7ope( 'ito, supr8, p. 1!.
I
W1 of Rule 1!H of the Rules of Court.
6
*he %nited [in7do9 h8s 8n uncodified Constitution, consistin7 of both Eritten 8nd
unEritten sources, c8p8ble of evolvin7 to be responsive to politic8l 8nd soci8l ch8n7e, 8nd
found p8rtl3 in conventions 8nd custo9s 8nd p8rtl3 in st8tute. &ts P8rli89ent h8s the poEer
to ch8n7e or 8bolish 8n3 Eritten or unEritten ele9ent of the Constitution. *here is neither
sep8r8tion of poEers nor for98l checFs 8nd b8l8nces. Ever3 bill dr8fted h8s to be 8pproved
b3 both the 2ouse of Co99ons 8nd the 2ouse of 'ords, before it receives the Ro38l Assent
8nd beco9es 8n Act of P8rli89ent. *he 2ouse of 'ords is the second ch89ber th8t
co9ple9ents the EorF of the Co99ons, Ehose 9e9bers 8re elected to represent their
constituents. *he first is the 2ouse of Co99ons th8t 8lone 983 st8rt bills to r8ise t8xes or
8uthoriMe expenditures. E8ch bill 7oes throu7h sever8l st87es in e8ch 2ouse. *he first st87e,
c8lled the first re8din7, is 8 9ere for98lit3. *he second -- the second re8din7 -- is Ehen
7ener8l principles of the bill 8re deb8ted upon. At the second re8din7, the 2ouse 983 vote to
reAect the bill. (nce the 2ouse considers the bill, the third re8din7 folloEs. &n the 2ouse of
Co99ons, no further 89end9ents 983 be 98de, 8nd the p8ss87e of the 9otion 89ounts to
p8ss87e of the Ehole bill. *he 2ouse of 'ords, hoEever, 983 not 89end 8 bill so 8s to insert
8 provision rel8tin7 to t8x8tion.
httpJNNen.EiFipedi8.or7NEiFiNConstitutionXofXtheX%nitedX[in7do94 httpJNN
EEE.oefre.unibe.chNl8ENiclNuF"""""X.ht9l4 EEE.p8rli89ent.uF4 8nd
httpJNNenc3clopedi8.thefreediction8r3.co9NBritish\P8rli89ent C'8st visited Au7ust 1, !""I,
11J@"89 P,*D.
#
See -issentin7 (pinion of Puno, *. in Tolentino v. Secretary of Finance, supr8, p. 1.

Cf. Francisco *r. v. ;ouse of epresentatives, 11I ,CRA 11, Nove9ber 1", !""@.
H
Tolentino v. Secretary of Finance, supr8.
1"
!nd p8r87r8ph, W1 of Article ;&&& of the 1H# Constitution.
11
Tolentino v. Secretary of Finance, supr8.
1!
%rroyo v. &e 'enecia, @1@ Phil. 1!, 61-6!, Au7ust 11, 1HH#, per )endoM8, *.
1@
*hese refer to 2ouse Bill Nos. @III ? @#"I4 8nd ,en8te Bill No. 1HI".
11
W!6C!D of Article ;& of the 1H# Constitution.
1I
:*he purpose for Ehich three re8din7s on sep8r8te d83s is reBuired is s8id to be tEo-foldJ
C1D to infor9 the 9e9bers of Con7ress of Eh8t the3 9ust vote on 8nd C!D to 7ive the9 notice
th8t 8 9e8sure is pro7ressin7 throu7h the en8ctin7 process, thus en8blin7 the9 8nd others
interested in the 9e8sure to prep8re their positions Eith reference to it.: Tolentino v.
Secretary of Finance, supr8, p. 61#, (ctober @", 1HHI, per )endoM8, *.
16
W!1 of Article ;& of the 1H# Constitution.
1#
W!1 of Article ;& of the 1H# Constitution.
*he poEer of the ,en8te to propose or concur Eith 89end9ents is, 8pp8rentl3, Eithout
restriction. B3 virtue of this poEer, the ,en8te c8n pr8ctic8ll3 reErite 8 bill th8t is reBuired to
co9e fro9 the 2ouse 8nd le8ve onl3 8 tr8ce of the ori7in8l bill. ,ee Flint v. Stone Tracy Co.,
!!" %, 1"#, @1 ,.Ct. @1!, )8rch 1@, 1H11.
1
W!1 of Article ;& of the 1H# Constitution.
1H
Tolentino v. Secretary of Finance, supr8, p. 661, Au7ust !I, 1HH1.
!"
G8rner Ced. in chiefD, $lac?Es 7a8 &ictionary Cth ed., !""1D, p. #".
!1
,t8tsF3, CestEs 7e+al ThesaurusF&ictionary C1H6D, p. @1.
!!
*o 8r7ue th8t the r8isin7 of revenues 98Fes the non-;A* provisions of 8 ;A* bill
8uto98tic8ll3 7er98ne is to brin7 le78l 8n8l3sis Eithin the penu9br8 of econo9ic scrutin3.
*he burden or i9p8ct of 8n3 t8x depends on the rel8tive el8sticities of suppl3 8nd de98nd
8nd is chiefl3 8 98tter of polic3 confined Eithin the 8u7ust h8lls of Con7ress. See Pind3cF
8nd Rubinfeld, >icroeconomics CIth ed., !""@D, pp. @11-@1#.
!@
"##on >obil Corp. v. %llapattah Services, 0nc., 1!I ,.Ct. !611, !6!!, +une !@, !""I, per
[enned3, *.
!1
Tolentino v. Secretary of Finance, supr8, p. 66@, Au7ust !I, 1HH1. See CruM, Philippine
Political 7a8C!""!D, p. 1I1.
!I
Tolentino v. Secretary of Finance, supr8, Au7ust !I, 1HH1, per )endoM8, *.
!6
CruM, Philippine Political 7a8 C!""!D, p. 1II.
!#
Tolentino v. Secretary of Finance, supr8, Au7ust !I, 1HH1.
!
CruM, Philippine Political 7a8 C!""!D, p. 111.
!H
Tolentino v. Secretary of Finance, supr8, p. 66, Au7ust !I, 1HH1.
*here is no 8lle78tion in 8n3 of the 9e9or8nd8 sub9itted to this Court th8t the consolid8ted
bill E8s not 8pproved. &n f8ct, both houses of Con7ress voted sep8r8tel3 8nd 98Aorit3 of
e8ch house 8pproved it.
@"
(n the one h8nd, WW1-@ of 2ouse Bill C2BD No. @III seeF to 89end WW1"6, 1"# ? 1" the
*8x Code b3 incre8sin7 the ;A* r8te to 1!K on ever3 s8le, b8rter or exch8n7e of 7oods or
properties4 i9port8tion of 7oods4 8nd s8le or exch8n7e of services, includin7 the use or
le8se of properties.
WW1-@ of 2B @#"I, on the other, seeF to 89end WW1"6, 1"# ? 1" the *8x Code b3
8lso increasin+ the ;A* r8te to 1!K on ever3 s8le, b8rter or exch8n7e of 7oods or
properties4 i9port8tion of 7oods4 8nd s8le or exch8n7e of services, includin7 the use or
le8se of properties, but decreasin+ such r8te to K on ever3 i9port8tion of cert8in 7oods4
6K on the s8le, b8rter or exch8n7e of cert8in loc8ll3 98nuf8ctured 7oods4 8nd 1K on the
s8le, b8rter or exch8n7e, 8s Eell 8s i9port8tion, of petroleu9 products subAect to excise t8x
8nd r8E 98teri8ls to be used in their 98nuf8cture CsubAect to subseBuent incre8ses of such
reduced r8tesD, 8nd on the 7ross receipts derived fro9 services rendered on the s8le of
7ener8ted poEer.
*he *8x Code referred to in this c8se is RA 1!1, otherEise FnoEn 8s the :*8x Refor9 Act of
1HH#.:
@1
WW1-I of ,en8te Bill C,BD No. 1HI" seeF to 89end WW1"6 ? 1" of the *8x Code b3
ret8inin7 the ;A* r8te of 1"K on ever3 s8le, b8rter or exch8n7e of 7oods or properties4 8nd
on the s8le or exch8n7e of services, includin7 the use or le8se of properties, 8nd the s8le of
electricit3 b3 7ener8tion, tr8ns9ission, 8nd distribution co9p8nies.
@!
WW1-6 of the consolid8ted bill 89endin7 WW1"6-1" of the *8x Code,
respectivel3. Conference Committee eport on ;$s .GGG H ./IG, and S$ 1-GI, pp. 1-#.
*he predeter9ined f8ctu8l scen8rio in the 8bove-cited sections of the consolid8ted bill 8lso
8ppe8rs in WW1-6 of Republic Act CRAD No. H@@#, 89endin7 the s89e provisions of the *8x
Code. )8the98tic8ll3, it is expressed 8s folloEsJ
;A* Collection U !.K
G-P
or
N8tion8l Govern9ent -eficit U 1.IK
G-P
@@
A ne78tive bud7et surplus, or 8n excess of expenditure over revenues, is 8 bud7et deficit.
-ornbusch, /ischer, 8nd ,t8rtM, >acroeconomics CHth ed., !""ID, p. !@1.
@1
G-P refers to the v8lue of 8ll 7oods 8nd services produced do9estic8ll34 the su9 of 7ross
v8lue 8dded of 8ll resident institution8l units en787ed in production Cplus 8n3 t8xes, 8nd
9inus 8n3 subsidies, on products not included in the v8lues of their outputsD.
EEE.nscb.7ov.phNsn8Ndef8ult.8sp C'8st visited +ul3 11, !""I 1"89 P,*D.
@I
,ee Pelae( v. %uditor :eneral, 1!! Phil. H6I, H#1, -ece9ber !1, 1H6I.
@6
*he 8cts of retro8ctivel3 i9ple9entin7 the 1! percent ;A* r8te, should the fin8nce
secret8r3 be 8ble to 98Fe reco99end8tion onl3 EeeFs or 9onths 8fter the end of fisc8l 3e8r
!""I, or revertin7 to 1" percent if both conditions 8re not 9et, 8re best 8ddressed to the
politic8l br8nches of 7overn9ent.
*he folloEin7 excerpts fro9 the Transcript of the )ral %r+uments in : ,os. 118511,
11851., 118IG1, and 1182I/, held on +ul3 11, !""I 8t the ,upre9e Court ,ession 28ll, 8re
instructive on the position of petitionersJ
:Att3. GorospeJ Q&t5sR supposed to be !""I, .our 2onor, but 8pp8rentl3, 0t G;0%%H be
0mpo220b%e to +eterm0*e GDP t1e 40r2t +)& o4 2006, .our 2onor.: Cp. I#D4
x x x
:+ustice P8n78nib8nJ NoE Qlet5s seeR Ehen it is possible then to deter9ine this for9ul8. &t
c8nnot be on the first d83 of +8nu8r3 !""6, bec8use the 3e8r Q!""IR ended Aust the 9idni7ht
before, isn5t itL
:Att3. GorospeJ .es, .our 2onor.
:+ustice P8n78nib8nJ x x x if it5s onl3 deter9ined on )8rch 1Q,R then hoE c8n the l8E beco9e
effective +8nu8r3 1Q.R &n other Eords, hoE Eill the Qpeople beR 8ble to p83 the t8x if ever th8t
for9ul8 is exceeded x x xL: Cpp. IH-6"D4
x x x
:Att3. G8n8J >ell, x x x 0t ;o6%+ t)Je ) @r)3e per0o+ o4 6 to 8 mo*t12G,H be3)62e
ob50o62%&, +eterm0*)t0o* 3o6%+ *ot be m)+e o* ')*6)r& 1, 2006. .es, the3 Eere under
the i9pression th8t 8t the e8rliest it Eould t8Fe @" d83s.
:+ustice P8n78nib8nJ 2istoric8ll3, Ehen QEillR these fi7ures QbeR 8v8il8bleQJR the G-P, Q;A*R
collectionL: Cp. 1H!D4
x x x
:+ustice P8n78nib8nJ But cert8inl3 not on +8nu8r3 1. *herefore, b& ')*6)r& 1, peop%e
;o6%+ *ot J*o; ;1et1er t1e r)te ;o6%+ be 0*3re)2e+ or *ot, e5e* 04 t1ere 02 *o
+023ret0o*E
:Att3. G8n8J T1)tD2 tr6e, .our 2onor, even if there is no discretion.
:+ustice P8n78nib8nJ &t Eill t8Fe EeeFs, or 9onths to be 8ble to deter9ine th8tL
:Att3. G8n8J >ell, the3 8nticip8ted it, ;o6%+ t)Je )t mo2t b& M)r31.: Cp. 1H@D4 8nd
x x x
:+ustice P8n78nib8nJ )8rch, & Eill 8sF the 7overn9ent l8ter on Ehen the3 8r7ue.
:Att3. G8n8J A2 e)r%& )2 ')*6)r& b6t *ot %)ter t1)* 60 to <0 +)&2.: Cboldf8ce supplied4 p.
1H1D.
@#
@
re7ul8tions hoE 9uch the3 QEouldR be ch8r7ed, hoE 9uch should 78soline st8tions ch8r7e
in 8ddition to their correct prices, hoE 9uch c8rriers should ch8r7eQ,R 2o t1ere G;o6%+H be
*o 3o*4620o*.
:%sec. Bono8nJ e2, .our 2onor.: Cboldf8ce supplied4 pp. 66I-666D.
@# %sin7 8v8il8ble st8tistics, it is 8pproxi98ted th8t the !
1
NI percent h8s been re8ched. ;A*
collection Cin 9illion pesosD for the first Bu8rter 8lone of !""1 is @,I1!.@, or @ percent of
revenue collections 89ountin7 to 1"",6I1."1. -ivided into G-P of 1@,"I@, the Buotient is
8lre8d3 6.1 percent. httpJNNEEE.nscb.7ov.phNsn8N!""IN1st$!""IN!""Iper1.8sp4 8nd the !""@
Bure8u of &ntern8l Revenue CB&RD Annu8l Report found on EEE.bir.7ov.ph C'8st visited +ul3
11, !""I, 1"J1I89 P,*D.
Q@R Besides, the use of the Eord :sh8ll: in WW1"6CAD, 1"#CAD ? 1"CAD of the *8x Code, 8s
89ended respectivel3 b3 WW1, I ? 6 of RA H@@#, is 98nd8tor3, i9per8tive 8nd co9pulsor3.
,ee A7p8lo, Statutory Construction C1th ed., 1HHD, p. @@@.
@H
See ,ep8r8te (pinion CConcurrin7 8nd -issentin7D of P8n78nib8n, *., in Southern Cross
Cement Corp. v. Philippine Cement >anufacturers Corp., GR No. 1II1", Au7ust @, !""I, p.
@1.
1"
Escudero )e9or8ndu9, pp. @-@H.
G-P d8t8 8re f8r fro9 perfect 9e8sures of either econo9ic output or Eelf8re. *here 8re
three 98Aor proble9sJ C1D so9e outputs 8re poorl3 9e8sured bec8use the3 8re not tr8ded in
the 98rFet, 8nd 7overn9ent services 8re not directl3 priced b3 such 98rFet4 C!D so9e
8ctivities 9e8sured 8s 8dditions to G-P in f8ct onl3 represent the use of resources in order
to 8void cri9e or risFs to n8tion8l securit34 8nd C@D it is difficult to 8ccount correctl3 for
i9prove9ents in the Bu8lit3 of 7oods. -ornbusch, /ischer, 8nd ,t8rtM,>acroeconomics CHth
ed., !""ID, pp. @I-@6.
11
Fari!as v. "#ecutive Secretary, 11# ,CRA, I"@, I@", -ece9ber 1", !""@.
1!
:An3 9e8nin7ful ch8n7e in the 9ethod 8nd procedures of Con7ress or its co99ittees
9ust x x x be sou7ht in th8t bod3 itself.: Tolentino v. Secretary of Finance, supr8, p. 6I",
(ctober @", 1HHI, per )endoM8, *.
1@
*he necessit3, desir8bilit3 or expedienc3 of 8 l8E 9ust be 8ddressed to Con7ress 8s the
bod3 th8t is responsible to the elector8te, for :le7isl8tors 8re the ulti98te 7u8rdi8ns of the
liberties 8nd Eelf8re of the people in Buite 8s 7re8t 8 de7ree Q8s theR courts.: Tolentino v.
Secretary of Finance, supr8, p. 6I", (ctober @", 1HHI, per )endoM8, *.4 Ccitin7 >issouri, 9.
H T. y. Co. v. >ay, 1H1 %, !6#, !#", !1 ,.Ct. 6@, 6@H, )83 !, 1H"1, per 2ol9es, *.D
11
Fari!as v. "#ecutive Secretary, 11# ,CRA, I"@, I!1, -ece9ber 1", !""@.
1I
Flint v. Stone Tracy Co., !!" %, 1"#, 16#, @1 ,.Ct. @1!, @II, )8rch 1@, 1H11, per -83, *.
16
W16C@D of Article ;& of the 1H# Constitution.
:P8rli89ent8r3 rules 8re 9erel3 procedur8l, 8nd Eith their observ8nce, the courts h8ve no
concern. *he3 983 be E8ived or disre78rded b3 the le7isl8tive bod3.: %rroyo v. &e 'enecia,
supr8, p. 61, Au7ust 11, 1HH#, per )endoM8, *.4 Ccitin7 )sme!a *r. v. Pendatun, 1"H Phil
6@, #"-#1, (ctober !, 1H6", per Ben7Mon,*.D.
1#
2Bs @III ? @#"I do not cont8in 8n3 provision th8t seeFs to revise non-;A* provisions of
the *8x Code, but ,B 1HI" h8s WW1-@ th8t seeF to 89end the r8tes of inco9e t8x on
do9estic, resident forei7n 8nd nonresident forei7n corpor8tions 8t @IK C@"K in !""HD, Eith 8
t8x credit on intercorpor8te dividends 8t !"K C1IK in !""HD4 8nd to reduce the 8lloE8ble
deductions for interest expense b3 1!K C@@K in !""HD of the interest inco9e subAect to fin8l
t8x.
1
*he 89end9ents to inco9e t8xes 8lso p8rt8Fe of the n8ture of t8x8tion Eithout
represent8tion. As & Eill discuss in the succeedin7 p8r87r8phs of this (pinion, the3 did not
e98n8te fro9 the 2ouse of Represent8tives th8t, under W!1 of Article ;& of the 1H#
Constitution, is the onl3 bod3 fro9 Ehich revenue bills should exclusivel3 ori7in8te.
1H
)898l8teo, Philippine 0ncome Ta# C!""1D, p. 1.
I"
Commissioner of 0nternal evenue v. %merican "#press 0nternational, 0nc. 2Philippine
$ranch3, GR No. 1I!6"H, p. !", +une !H, !""I, per P8n78nib8n, *. See -eoferio +r. ?
)898l8teo, The 'alue %dded Ta# in the Philippines C!"""D, p. @6.
I1
-e 'eon, The Fundamentals of Ta#ation C1!th ed., 1HHD, pp. H! ? 1@!.
I!
)898l8teo, Philippine 0ncome Ta# C!""1D, p. @#H.
I@
;itu7, Ta# 7a8 and *urisprudence C!nd ed., !"""D, p. 1.
I1
)898l8teo, Philippine 0ncome Ta# C!""1D, p. @".
II
-e 'eon, The 7a8 on Transfer and $usiness Ta#ation 8ith 0llustrations, Problems, and
Solutions C1HHD, pp. 1HI-1H6 ? !!!-!!1.
I6
)898l8teo, Philippine 0ncome Ta# C!""1D, p. 1#@.
I#
See W# of evenue e+ulations ,o. 2-1-5I, reco99ended b3 Bibi8no '. )eer, then
Collector of &ntern8l Revenue, 8nd pro9ul78ted b3 )8nuel Rox8s, then ,ecret8r3 of
/in8nce, l8ter President of the Republic of the Philippines, on /ebru8r3 11, 1H11, 666&6 (G
1, @!I.
I
)898l8teo, Philippine 0ncome Ta# C!""1D, p. 1H6.
IH
RA 1!1 refers to the *8x Refor9 Act of 1HH#.
6"
*he 1! percent reduction r8te under W@ of RA H@@#, 89endin7 W@1CBDC1D of the *8x Code,
is derived b3 first subtr8ctin7 the !" percent t8x on interest inco9e fro9 the incre8sed t8x
r8te of @I percent i9posed on do9estic, resident forei7n, 8nd nonresident forei7n
corpor8tions, 8nd then dividin7 the difference obt8ined b3 the incre8sed r8te. 2ence, it is
co9puted 8s folloEsJ
@IK - !"K ] 1IK
1IK J @IK ] 1!K, the 89ount of reduction.
61
WW1-@ of 2B @#"I.
6!
WI of ,B 1HI". *here see9s to be 8 discrep8nc3 betEeen the Conference Co99ittee
Report 8nd the v8rious ple8din7s before this Court. >hile such report, 8tt8chin7 8 cop3 of
the bill 8s reconciled 8nd 8pproved b3 its conferees, 8s Eell 8s the report sub9itted b3 the
,en8te5s Co99ittee on >83s ? )e8ns to the ,en8te President on )8rch #, !""I, shoE th8t
,B 1HI" does not cont8in 8 no-p8ss on provision, the petitioners 8nd respondents shoE th8t
it does CPi9entel )e9or8ndu9, Annex A shoEin7 8 :)8trix on the -is87reein7 Provisions of
the Q;A*R Bills,: pp. H-114 Escudero )e9or8ndu9, p. 1!4 8nd Respondents5 )e9or8ndu9,
pp. 1"H-11"D. Not8bl3, the Bu8lified dissent of ,en8tor +oFer Arro3o to the Bic89er8l
Conference Report st8tes th8t the ,en8te version prohibits the poEer co9p8nies fro9
p8ssin7 on the ;A* th8t the3 Eill p83.
6@
W1 of 2B @III seeFs to 89end W11"CAD of the *8x Code b3 li9itin7 to IK 8nd 11K of their
respective tot8l 89ounts the cl8i9 for input t8x credit of c8pit8l 7oods, throu7h eBu8l
distribution of the 89ount of such cl8i9 over their depreci8ble lives4 8nd of 7oods 8nd
services other th8n c8pit8l 7oods, 8nd 7oods purch8sed b3 persons en787ed in ret8il tr8de.
61
W# of ,B 1HI" seeFs to 89end W11" of the *8x Code b3 8lso li9itin7 the cl8i9 for input t8x
credit of 7oods purch8sed or i9ported for use in tr8de or business, throu7h 8n even
depreci8tion or 89ortiM8tion over the 9onth of 8cBuisition 8nd the IH succeedin7 9onths, if
the 877re78te 8cBuisition cost of such 7oods exceeds P 66",""".
*he depreci8tion or 89ortiM8tion in the 89end9ents is referred to 8s 8 :spre8d-out: in 8n
unnu9bered Revenue )e9or8ndu9 Circul8r d8ted +ul3 1!, !""I, sub9itted to this Court b3
public respondents in their Co9pli8nce d8ted Au7ust 16, !""I. ,uch spre8d-out reco7niMes
industries Ehere c8pit8l 8ssets 8re constructed or 8sse9bled.
6I
No c8p is found in 2B @#"I.
66
WI of 2B @III seeFs to 89end W111 of the *8x Code b3 reBuirin7 th8t the ;A* be
deducted 8nd Eithheld b3 the 7overn9ent or b3 8n3 of its politic8l subdivisions,
instru9ent8lities or 87encies -- includin7 7overn9ent-oEned-8nd-controlled corpor8tions
CG(CCsD -- before 98Fin7 8n3 p839ent on 8ccount of e8ch purch8se of 7oods fro9 sellers
8nd services rendered b3 contr8ctors. *he ;A* deducted 8nd Eithheld sh8ll be 8t the r8tes
of IK of the 7ross p839ent for the purch8se of 7oods 8nd K of the 7ross receipts for
services rendered b3 contr8ctors on ever3 s8le or inst8ll9ent p839ent. *he ;A* th8t is
deducted 8nd Eithheld sh8ll be credit8ble 878inst their respective ;A* li8bilities -- 1".IK, in
c8se of 7overn9ent public EorFs contr8ctors4 8nd 1!K of the p839ents for the le8se or use
of properties or propert3 ri7hts to nonresident oEners.
6#
W11 of ,B 1HI" seeFs to 89end W111 of the *8x Code b3 reBuirin7 th8t the ;A* be
deducted 8nd Eithheld b3 the 7overn9ent or b3 8n3 of its politic8l subdivisions,
instru9ent8lities or 87encies -- includin7 7overn9ent-oEned or -controlled corpor8tions
CG(CCsD -- before 98Fin7 8n3 p839ent on 8ccount of e8ch purch8se of 7oods fro9 sellers
8nd services rendered b3 contr8ctors. *he ;A* deducted 8nd Eithheld sh8ll be 8t the r8tes
of IK of the 7ross p839ent for the purch8se of 7oods 8nd on the 7ross receipts for services
rendered b3 contr8ctors, includin7 public EorFs contr8ctors. *he ;A* th8t is deducted 8nd
Eithheld sh8ll be credit8ble 878inst the ;A* li8bilit3 of the seller4 8nd 1"K of the 7ross
p839ent for the le8se or use of properties or propert3 ri7hts to nonresident oEners.
6
-eoferio +r. ? )898l8teo, The 'alue %dded Ta# in the Philippines C!"""D, pp. @1-@I ? 11.
6H
httpJNNexpl8n8tion-7uide.infoN9e8nin7N)8urice-'8ur^_.ht9l C'8st visited Au7ust !@, !""I,
@J!Ip9 P,*D.
#"
*his refers to 8 :t8x on v8lue 8dded: -- *;A in /rench 8nd ;A* in En7lish.
#1
httpJNNen.EiFipedi8.or7NEiFiN )8urice-'8ur^_ C'8st visited Au7ust !@, !""I, @J!"p9 P,*D.
#!
*he Transcript of the )ral %r+uments in : ,os. 118511, 11851., 118IG1, and 1182I/,
held on +ul3 11, !""I 8t the ,upre9e Court ,ession 28ll, shoE th8t the 8ct of p8ssin7 on to
consu9ers is 8 9ere c8sh floE proble9, 8s 87reed to b3 counsel for petitioners in GR No.
16161J
:+ustice P8n78nib8nJ ,o, the fin8l consu9er p83s the t8xL
:Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ *he tr8de people in betEeen the 9iddle9en Aust t8Fe it 8s 8n input 8nd
then QcollectR it 8s output, isn5t itL
Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ &t5s Aust 8 c8sh floE proble9 for the9, essenti8ll3L
:Att3. B8niBuedJ .es x x x.: Cp. @#ID.
#@
*he I percent fin8l Eithholdin7 t8x 983 8lso be ch8r7ed 8s p8rt of 8 supplier5s Cost of
,8les.
#1
*his refers to RA 1!1, 8s 89ended.
#I
&n f8ct, W11!CBD of the *8x Code, prior to 8nd 8fter its 89end9ent b3 W1" of RA H@@#, does
not 8t 8ll prohibit the 8pplic8tion of unused input t8xes 878inst other intern8l revenue t8xes.
*he 98nner of 8pplic8tion is deter9ined thou7h b3 the B&R throu7h W1.11!-1CbD of Revenue
Re7ul8tions No. 11-!""I, otherEise FnoEn 8s the :Consolid8ted ;A* Re7ul8tions of !""I,:
d8ted +une !!, !""I.
#6
*h8t the unutiliMed input ;A* c8n be considered 8n ordin8r3 8nd necess8r3 expense for
Ehich 8 correspondin7 deduction Eill be 8lloEed 878inst 7ross inco9e under W@1CADC1D of
the *8x Code -- inste8d of 8 deferred 8sset -- is 8nother 98tter to be 8dAudic8ted upon in
proper c8ses.
##
,ee 6nited Paracale >inin+ Co. v. &e la osa, !!1 ,CRA 1", 11I, April #, 1HH@.
#
*he l8E referred to is not onl3 the *8x Code, but 8lso RA H!H, otherEise FnoEn 8s the
:Philippine Account8nc3 Act of !""1.:
#H
*hese 8re b8sed on pronounce9ents of reco7niMed bodies involved in settin7 8ccountin7
principles. Gre8test Eei7ht sh8ll be 7iven to their pronounce9ents in the order listed beloEJ
1. ,ecurities 8nd Exch8n7e Co99ission C,ECD4
!. Accountin7 ,t8nd8rds Council4
@. ,t8nd8rds issued b3 the &ntern8tion8l Accountin7 ,t8nd8rds Bo8rd CnoE Co99itteeD4 8nd
1. Accountin7 principles 8nd pr8ctices for Ehich there h8s been 8 lon7 histor3 of 8ccept8nce
8nd us87e.
&f there 8ppe8rs to be 8 conflict betEeen 8n3 of the bodies listed 8bove, the pronounce9ents
of the first listed bod3 sh8ll be 8pplied. ,EC Securities e+ulation Code ule 182132b32iv3 8s
89ended, cited in Appendix C of )or8les, The Philippine Securities e+ulation Code
2%nnotated3, Q!""IR, p. I#.
Reco99ended b3 the >orld B8nF 8nd the Asi8n -evelop9ent B8nF, 8nd incre8sin7l3
reco7niMed EorldEide, intern8tion8l 8ccountin7 st8nd8rds C&A,D h8ve been 9erel3 8dopted
b3 Philippine re7ul8tor3 bodies 8nd 8ccredited profession8l or78niM8tions. *he ,EC, for
inst8nce, co9plies Eith the 87ree9ent 89on7 co-9e9bers of the &ntern8tion8l (r78niM8tion
of ,ecurities Co99issions to 8dopt &A, in order to ensure hi7h-Bu8lit3 8nd tr8nsp8rent
fin8nci8l reportin7, Eith full disclosure 8s 8 9e8ns to pro9ote credibilit3 8nd efficienc3 in the
c8pit8l 98rFets. &n i9ple9entin7 the Gener8l A7ree9ent on *r8de in ,ervices, the
Profession8l Re7ul8tor3 Bo8rd of Account8nc3 CPRB(AD of the Profession8l Re7ul8tor3
Co99ission supports the 8doption of &A,. *he Philippine &nstitute of Certified Public
Account8nts, 8 9e9ber of the &ntern8tion8l Accountin7 ,t8nd8rds Co99ittee C&A,CD, 8lso
h8s the co99it9ent to support the EorF of the &A,C 8nd uses best ende8vors to foster
co9pli8nce Eith &A,. httpJNNEEE.picp8.co9.phN8dbNindex.ht9 C'8st visited Au7ust !@, !""I,
@J1Ip9 P,*D.
"
)ei7s ? )ei7s, %ccountin+J The $asis for $usiness &ecisions C1H1D, pp. ! ? I1I.
%nder WHCbD ? C7D of RA H!H, the PRB(A sh8ll supervise the pr8ctice of 8ccount8nc3 in the
Philippines 8nd 8dopt 9e8sures -- such 8s the pro9ul78tion of 8ccountin7 8nd 8uditin7
st8nd8rds, rules 8nd re7ul8tions, 8nd best pr8ctices -- th8t 983 be dee9ed proper for the
enh8nce9ent 8nd 98inten8nce of hi7h profession8l, ethic8l, 8ccountin7, 8nd 8uditin7
st8nd8rds th8t include intern8tion8l 8ccountin7 8nd 8uditin7 st8nd8rds 8nd 7ener8ll3
8ccepted best pr8ctices.
1
*he ;A* is collected on e8ch s8le of 7oods or properties or upon the 8ctu8l or constructive
receipt of consider8tion for services, st8rtin7 fro9 the production st87e, folloEed b3 the
inter9edi8te st87es in the distribution process, 8nd cul9in8tin7 Eith the s8le to the fin8l
consu9er. *his is the essence of 8 ;A*4 it is 8 t8x on the v8lue 8dded, th8t is, on the excess
of s8les over purch8ses. See -eoferio +r. ? )898l8teo, The 'alue %dded Ta# in the
Philippines C!"""D, pp. @@-@1. >ith the #" percent c8p on output t8x th8t is 8lloE8ble 8s 8n
input t8x credit, the re98inin7 @" percent beco9es 8n outri7ht expense th8t is, hoEever,
i99edi8tel3 p838ble 8nd re9itted b3 the business est8blish9ent to the 7overn9ent. *his
89ount c8n never be recovered or p8ssed on to the consu9er, but it c8n be 8n 8lloE8ble
deduction fro9 7ross inco9e under W@1CADC1D of the *8x Code. &n effect, it is 8 t8x co9puted
b3 9ultipl3in7 @" percent to the 1" percent ;A* th8t is i9posed on 7ross s8les, receipts or
revenues. &t is not 8 t8x on t8x 8nd, 98the98tic8ll3, it is derived 8s folloEsJ
@"K x 1"K ] @K of 7ross s8les, receipts or revenues.
!
:-ouble t8x8tion 9e8ns t8xin7 the s89e propert3 Qor subAect 98tterR tEice Ehen it should
be t8xed onl3 once4 th8t is, Pt8xin7 the s89e person tEice b3 the s89e Aurisdiction for the
s89e thin7.5: Commissioner of 0nternal evenue v. Solidban? Corp., 116 ,CRA 1@6,
Nove9ber !I, !""@, per P8n78nib8n, *.4 Ccitin7 %fisco 0nsurance Corp. v. C%, @61 Phil. 6#1,
6#, +8nu8r3 !I, 1HHH, per P8n78nib8n, *.D. ,ee Commissioner of 0nternal evenue v. $an?
of Commerce, GR No. 11H6@6, pp. 1#-1, +une , !""I.
@
:*he rule x x x is Eell settled th8t there is no constitution8l prohibition 878inst double
t8x8tion.: China $an?in+ Corp. v. C%, 1"@ ,CRA 6@1, 661, +une 1", !""@, per C8rpio, *.
CruM, Constitutional 7a8 C1HHD, p. H.
1
W116 of the *8x Code 8s 89ended.
I
:QCRourts 8ccord the presu9ption of constitution8lit3 to le7isl8tive en8ct9ents, not onl3
bec8use the le7isl8ture is presu9ed to 8bide b3 the ConstitutionQ,R but 8lso bec8use the
Audici8r3Q,R in the deter9in8tion of 8ctu8l c8ses 8nd controversiesQ,R 9ust reflect the Eisdo9
8nd Austice of the people 8s expressed throu7h their represent8tives in the executive 8nd
le7isl8tive dep8rt9ents of the 7overn9ent.: %n+ara v. "lectoral Commission, 6@ Phil. 1@H,
1I-1IH, +ul3 1I, 1H@6, per '8urel, *.4 Ccited in Francisco *r. v. ;ouse of epresentatives,
supr8, pp. 1!1-1!!.D
6
Ca8alin+ *r. v. C)>"7"C, 1!" Phil. I!1, I@", (ctober !6, !""1, per ,8ndov8l-
GutierreM, *.
#
0chon+ v. ;ernande(, 1"1 Phil. 11II, 1161, )83 @1, 1HI#, per '8br8dor, *.

-e 'eon, The Fundamentals of Ta#ation C1!th ed., 1HHD, p. 1.

H
Except, 8s e8rlier discussed, for ,ections 1, ! 8nd @ of the l8E.
H"
WW1@-!" of ,B 1HI" seeF to 89end *8x Code provisions on percent87e t8xes on do9estic
c8rriers 8nd Feepers of 78r87es in W11#, 8nd on intern8tion8l c8rriers in W114 fr8nchise
t8xes in W11H4 89use9ent t8xes in W1!I4 excise t8xes on 98nuf8ctured oils 8nd other fuels
in W114 re7istr8tion reBuire9ents in W!@64 issu8nce of receipts or s8les or co99erci8l
invoices in W!@#4 8nd disposition of incre9ent8l revenues in W!.
H1
:Q*Rhe re9ov8l of the excise t8x on diesel x x x 8nd other soci8ll3 sensitive products such
8s Ferosene 8nd fuel oil subst8nti8ll3 lessened the i9p8ct of ;A*. *he reduction in i9port
dut3 x x x 8lso e8sed the i9p8ct of ;A*.: )8nil8 Bulletin, :0mpact of '%T on prices of oil
products should be less than 1I<, says &o",: b3 +89es A. 'o3ol8, Business Bulletin B-@,
/rid83, +ul3 1, !""I, 8tt8ched 8s Annex A to the )e9or8ndu9 filed b3 the Associ8tion of
Pilipin8s ,hell -e8lers, &nc.
*he Transcript of the )ral %r+uments in : ,os. 118511, 11851., 118IG1, and 1182I/ on
+ul3 11, !""I 8lso reve8ls the effect of miti+atin+ measures upon petitioners in GR No.
16161J
:+ustice P8n78nib8nJ As 8 98tter of f8ctQ,R 8 p8rt of the 9iti78tin7 9e8sures Eould be the
eli9in8tion of the QeRxcise QtR8x 8nd the i9port duties. *h8t is QEh3R it is not correct to s83 th8t
the Q;A*R 8s to petroleu9 de8lers incre8se to 1" QpercentR.
:Att3. B8niBuedJ .es, .our 2onor.
:+ustice P8n78nib8nJ AndQ,R therefore, there is no Austific8tion for incre8sin7 the ret8il price b3
1" QpercentR to cover the E-Q;A*.R Q&Rf 3ou consider the excise t8x 8nd the i9port duties, the
QnRet QtR8x Eould prob8bl3 be in the nei7hborhood of # QpercentRL >e 8re not 7oin7 into ex8ct
fi7uresQ.R & 89 Aust tr3in7 to deliver 8 point th8t different industries, different products, different
services 8re hit differentl3. ,o it5s not correct to s83 th8t 8ll prices 9ust 7o up b3 1" QpercentR.
:Att3. B8niBuedJ .ou5re ri7ht, .our 2onor.
:+ustice P8n78nib8nJ NoE. /or inst8nce, QdRo9estic Q8Rirline co9p8nies, )r. Counsel, 8re 8t
present i9posed 8 QsR8les QtR8x of @ QpercentR. >hen this E-Q;A*R l8E tooF effectQ,R the QsR8les
QtR8x E8s 8lso re9oved 8s 8 9iti78tin7 9e8sure. ,o, therefore, there is no Austific8tion to
incre8se the f8res b3 1" Qpercent4R 8t best # QpercentR, correctL
:Att3. B8niBuedJ & 7uess so, .our 2onor, 3es.: Cpp. @6#-@6D.
H!
W!C1D of Article ;& of the 1H# Constitution.
H@
W!6C!D of Article ;& of the 1H# Constitution.
H1
*hese bills refer to 2B @#"I 8nd ,B 1HI".
HI
W!6C!D, supr8.
H6
:E8ch house 983 not b3 its rules i7nore constitution8l restr8ints or viol8te fund89ent8l
ri7hts, 8nd there should be 8 re8son8ble rel8tion betEeen the 9ode or 9ethod of proceedin7
est8blished b3 the rule 8nd the result Ehich is sou7ht to be 8tt8ined.: 6S v. $allin, 111 %, 1,
I, 1! ,.Ct. I"#, I"H, /ebru8r3 !H, 1H!, per BreEer, *.
H#
P8n78nib8n, 7evelin+ the Playin+ Field C!""1D, PR&N**(>N Group of Co9p8nies, pp. 16-
1#.
H
@@ Phil. I16, 6"1-6"I, )83 !, 1HH#, per P8n78nib8n, *.
HH
1!" Phil. I!I, I@1, (ctober !6, !""1, per ,8ndov8l-GutierreM, *.4 Ccitin7 The Philippine
*ud+es %ssociation v. Prado, !!# ,CRA #"@, #"6, Nove9ber 11, 1HH@, per CruM, *.D.
1""
'eterans Federation Party v. C)>"7"C, @H6 Phil. 11H, 1I!-1I@, (ctober 6, !""", per
P8n78nib8n, *.4 Ccitin7 :arcia v. C)>"7"C, !!# ,CRA 1"", 1"#-1", (ctober I, 1HH@D.
The Lawphil Project - Arellano Law Foundation
EN BANC
G.R. No. 16"I6 --- ABAKADA G6ro P)rt& !02t #$ormer%& AAS'AS( O4403er2 S)m2o* S.
A%3)*t)r) )*+ E+ ,0*3e*t S. A%b)*o, Petitioners, versus T1e -o*or)b%e E7e36t05e Se3ret)r&
E+6)r+o Erm0t), et )%.,espondents.
G.R. No. 16!"# --- A?60%0*o Q. P0me*te%, 'r., et )%., Petitioners, versus E7e36t05e Se3ret)r&
E+6)r+o R. Erm0t), et )%., espondents.
G.R. No. 16161 --- A22o30)t0o* o4 P0%0p0*)2 S1e%% De)%er2, "*3., et )%., Petitioners, versus Ce2)r
,. P6r020m), et )%., espondents.
G.R. No. 1616@ --- $r)*302 'o2ep1 G. E236+ero, et )%., Petitioners, versus Ce2)r ,. P6r020m), et
)%.,espondents.
G.R. No. 16#@" --- B)t))* Go5er*or E*r0?6e T. G)r30), 'r., et )%., Petitioners, versus -o*.
E+6)r+o R. Erm0t), et )%., espondents.
Pro9ul78tedJ
,epte9ber 1, !""I
7 8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888 7
1ON1URR0NG AND D0SS3N40NG O*0N0ON
NARES8SANT"AGO, J.6
*he ponencia st8tes th8t under the provisions of the Rules of the 2ouse of Represent8tives 8nd the
,en8te Rules, the Bic89er8l Conference Co99ittee is 98nd8ted to settle differences betEeen the
dis87reein7 provisions in the 2ouse bill 8nd ,en8te bill. 2oEever, the ponencia construed the ter9
:settle: 8s s3non39ous to :reconcile: 8nd :h8r9oniMe,: 8nd 8s such, the Bic89er8l Conference
Co99ittee 983 either #)( 8dopt the specific provisions of either the 2ouse bill or ,en8te
bill, #b( decide th8t neither provisions in the 2ouse bill or the provisions in the ,en8te bill Eould be
c8rried into the fin8l for9 of the bill, 8ndNor #3( tr& to )rr05e )t ) 3omprom02e bet;ee* t1e
+02)@ree0*@ pro5020o*2.
& be7 to differ on the third proposition.
&ndeed, ,ection 16C@D, Article ;& of the 1H# Constitution explicitl3 8lloEs e8ch 2ouse to deter9ine
the rules of its proceedin7s. 2oEever, the rules 9ust not contr8vene constitution8l provisions. *he
rule-98Fin7 poEer of Con7ress should t8Fe its be8rin7s fro9 the Constitution. &f in the exercise of
this rule-98Fin7 poEer, Con7ress f8iled to set p8r89eters in the functions of the co99ittee 8nd
8lloEed the l8tter unbridled 8uthorit3 to perfor9 8cts Ehich Con7ress itself is prohibited, liFe the
p8ss87e of 8 l8E Eithout under7oin7 the reBuisite three-re8din7 8nd the so-c8lled no-89end9ent
rule, then the s89e 89ount to 7r8ve 8buse of discretion Ehich this Court is e9poEered to correct
under its exp8nded certior8ri Aurisdiction. NotEithst8ndin7 the doctrine of sep8r8tion of poEers,
therefore, it is the dut3 of the Court to decl8re 8s void 8 le7isl8tive en8ct9ent, e0t1er 4rom ;)*t o4
3o*2t0t6t0o*)% po;er to e*)3t or be3)62e t1e 3o*2t0t6t0o*)% 4orm2 or 3o*+0t0o*2 1)5e *ot
bee* ob2er5e+.
1
>hen the Court decl8res 8s unconstitution8l 8 l8E or 8 specific provision thereof
bec8use procedur8l reBuire9ents for its p8ss87e Eere not co9plied, the Court is b3 no 9e8ns
8ssertin7 its 8scend8nc3 over the 'e7isl8ture, but si9pl3 8ffir9in7 the supre98c3 of the Constitution
8s repositor3 of the soverei7n Eill.
!
*he Audici8l br8nch 9ust ensure th8t constitution8l nor9s for the
exercise of poEers vested upon the tEo other br8nches 8re properl3 observed. *his is the ver3
essence of Audici8l 8uthorit3 conferred upon the Court under ,ection 1, Article ;&& of the 1H#
Constitution.
*he Rules of the 2ouse of Represent8tives 8nd the Rules of the ,en8te provide th8t in the event
there is dis87ree9ent betEeen the provisions of the 2ouse 8nd ,en8te bills, the differences sh8ll be
settled b3 8 bic89er8l conference co99ittee.
B3 this, & full3 subscribe to the theor3 8dv8nced in the -issentin7 (pinion of Chief +ustice 2il8rio G.
-8vide, +r. inTolentino v. Secretary of Finance
@
th8t the 8uthorit3 of the bic89er8l conference
co99ittee E8s li9ited to the reconcili8tion of dis87reein7 provisions or the resolution of differences
or inconsistencies. *hus, it could onl3 either #)( re2tore, ;1o%%& or p)rt%&, t1e 2pe30403 pro5020o*2
o4 t1e -o62e b0%% )me*+e+ b& t1e Se*)te b0%%, #b( 262t)0*, ;1o%%& or p)rt%&, t1e Se*)teD2
)me*+me*t2, or #3( b& ;)& o4 ) 3omprom02e, to )@ree t1)t *e0t1er pro5020o*2 0* t1e -o62e
b0%% )me*+e+ b& t1e Se*)te *or t1e %)tterD2 )me*+me*t2 t1ereto be 3)rr0e+ 0*to t1e 40*)% 4orm
o4 t1e 4ormer.
(therEise st8ted, the Bic89er8l Conference Co99ittee is 8uthoriMed onl3 to 8dopt either the
version of the 2ouse bill or the ,en8te bill, or 8dopt neither. &t c8nnot, 8s the ponencia proposed, :tr3
to 8rrive 8t 8 co9pro9ise:, such 8s introducin7 provisions not included in either the 2ouse or ,en8te
bill, 8s it Eould 8lloE 8 9ere 8d hoc co99ittee to substitute the Eill of the entire Con7ress 8nd
Eithout under7oin7 the reBuisite three-re8din7, Ehich 8re both constitution8ll3 proscribed. *o 8lloE
the co99ittee unbridled discretion to overturn the collective Eill of the Ehole Con7ress defies lo7ic
considerin7 th8t the bills 8re p8ssed presu98bl3 8fter stud3, deliber8tion 8nd deb8te in both houses.
A lesser bod3 liFe the Bic89er8l Conference Co99ittee should not be 8lloEed to substitute its
Aud79ent for th8t of the entire Con7ress, Ehose Eill is expressed collectivel3 throu7h the p8ssed
bills.
>hen the Bic89er8l Conference Co99ittee 7oes be3ond its li9ited function b3 substitutin7 its oEn
Aud79ent for th8t of either of the tEo houses, it viol8tes the intern8l rules of Con7ress 8nd
contr8venes 98teri8l restrictions i9posed b3 the Constitution, p8rticul8rl3 on the p8ss87e of l8E.
>hile concededl3, the intern8l rules of both 2ouses do not explicitl3 li9it the Bic89er8l Conference
Co99ittee to 8 consider8tion onl3 of conflictin7 provisions, it is understood th8t the provisions of the
Constitution should be re8d into these rules 8s i9posin7 li9its on Eh8t the co99ittee c8n or c8nnot
do. As such, it c8nnot perfor9 its dele78ted function in viol8tion of the three-re8din7 reBuire9ent 8nd
the no-89end9ent rule.
,ection !6C!D of Article ;& of the 1H# Constitution provides th8tJ
C!D No bill sh8ll be p8ssed b3 either 2ouse sh8ll beco9e 8 l8E unless it h8s p8ssed three re8din7s
on sep8r8te d83s, 8nd printed copies thereof in its fin8l for9 h8ve been distributed to its )e9bers
three d83s before its p8ss87e, except Ehen the President certifies to the necessit3 of its i99edi8te
en8ct9ent to 9eet 8 public c8l89it3 or e9er7enc3. %pon the l8st re8din7 of 8 bill, no 89end9ent
hereto sh8ll be 8lloEed, 8nd the vote thereon sh8ll be t8Fen i99edi8tel3 there8fter, 8nd
the yeas 8nd nays entered in the +ourn8l.
*hus, before 8 bill beco9es 8 l8E, it 9ust p8ss three re8din7s. 2ence, the ponenciaEs sub9ission
th8t despite its li9ited 8uthorit3, the Bic89er8l Conference Co99ittee could :co9pro9ise the
dis87reein7 provisions: b3 substitutin7 it Eith its oEn version = cle8rl3 viol8te the three-re8din7
reBuire9ent, 8s the co99ittee5s version Eould no lon7er under7o the s89e since it Eould be
i99edi8tel3 put into vote b3 the respective houses. &n effect, it is not 8 bill th8t E8s p8ssed b3 the
entire Con7ress but b3 the 9e9bers of the 8d hoc co99ittee onl3, Ehich of course is constitution8ll3
infir9.
& dis87ree th8t the no-89end9ent rule referred onl3 to :the procedure to be folloEed b3 e8ch house
of Con7ress Eith re78rd to bills initi8ted in e8ch of s8id respective houses: bec8use it Eould rele78te
the no-89end9ent rule to 8 9ere rule of procedure. *o 93 9ind, the no-89end9ent rule should be
construed 8s prohibitin7 the Bic89er8l Conference Co99ittee fro9 introducin7 89end9ents 8nd
9odific8tions to non-dis87reein7 provisions of the 2ouse 8nd ,en8te bills. &n su9, the co99ittee
could onl3 either 8dopt the version of the 2ouse bill or the ,en8te bill, or 8dopt neither. As +ustice
Re3n8to ,. Puno s8id in his -issentin7 (pinion in Tolentino v. Secretary of Finance,
1
there is
8bsolutel3 no le78l E8rr8nt for the bold sub9ission th8t 8 Bic89er8l Conference Co99ittee
possesses the poEer to 8ddNdelete provisions in bills 8lre8d3 8pproved on third re8din7 b3 both
2ouses or 8n e# post veto poEer.
&n vieE thereof, it is 93 sub9ission th8t the 89end9ents introduced b3 the Bic89er8l Conference
Co99ittee Ehich 8re not found either in the 2ouse or ,en8te versions of the ;A* refor9 bills, but
8re inserted 9erel3 b3 the Bic89er8l Conference Co99ittee 8nd there8fter included in Republic Act
No. H@@#, should be decl8red unconstitution8l. *he insertions 8nd deletions 98de do not 9erel3
settle conflictin7 provisions but 98teri8ll3 8ltered the bill, thus 7ivin7 rise to the inst8nt petitions.
&, therefore, Aoin the concurrin7 8nd dissentin7 opinion of )r. +ustice Re3n8to ,. Puno.
CONSUE!O NARES8SANT"AGO
Associ8te +ustice
$oot*ote2
1
Coole3 on Constitution8l 'i9it8tions, th Ed., ;ol. &, p. @@!.
!
An78r8 v. Elector8l Co99ission, 6@ Phil. 1@H, 1I Q1H@6R.
@
G.R. Nos. 11I1II, 11II!I, 11II1@, 11II11, 11I#I1, 11I#1, 11II!, 11I#@, 11IH@1, !I
Au7ust 1HH1, !@I ,CRA 6@", #I".
1
Supra, p. 11.
The Lawphil Project - Arellano Law Foundation
G.R. NO. 168056 = ABA[A-A G%R( PAR*. '&,* C/(R)ER'. AA,+A,D (//&CER, ,A),(N ,.
A'CAN*ARA AN- E- ;&NCEN* ,. A'BAN(, petitioners K versus = *2E 2(N(RAB'E
E6EC%*&;E ,ECRE*AR. E-%AR-( ER)&*A, E* A'., respondents.
G.R. NO. 16820> = A$%&'&N( $. P&)EN*E', +R., E* A'., petitioners K versus = *2E
2(N(RAB'E E6EC%*&;E ,ECRE*AR. E-%AR-( ER)&*A, E* A'., respondents.
G.R. NO. 168B61 = A,,(C&A*&(N (/ P&'&P&NA, ,2E'' -EA'ER,, &NC., E* A'., petitioners
K versus = CE,AR ;. P%R&,&)A, E* A'., respondents.
G.R. NO. 168B6= = /RANC&, +(,EP2 G. E,C%-ER(, E* A'., petitioners K versus = CE,AR ;.
P%R&,&)A, E* A'., respondents.
G.R. NO. 168>=0 = BA*AAN G(;ERN(R ENR&$%E *. GARC&A, +R., E* A'., petitioners K versus =
2(N(RAB'E E6EC%*&;E ,ECRE*AR. E-%AR-( ER)&*A, E* A'., respondents.
Pro9ul78tedJ
,epte9ber 1, !""I
x----------------------------------------------------------------------------------------------x
CONCURR"NG AND D"SSENT"NG OP"N"ON
SANDO,A! L GUT"ERRE9, J.:
Ad89 ,9ith, the 7re8t 1
th
= centur3 politic8l econo9ist, enunci8ted the dictu9 th8t 4the subBects of
every state ou+ht to contribute to the support of +overnment, as nearly as possible, in proportion to
their respective abilitiesL that is, in proportion to the revenue 8hich they respectively enBoy under the
protection of the state.4
1
At no other ti9e this dictu9 beco9es 9ore ur7ent 8nd obli78tor3 8s in the
present ti9e, Ehen the Philippines is in its 9ost prec8rious fisc8l position.
At this Auncture, 983 & st8te th8t & Aoin )r. ,enior +ustice Re3n8to ,. Puno in his (pinion, specific8ll3
on the folloEin7 pointsJ
1. &t is :hi7h ti9e to re-ex89ine the test of 7er98neness proffered in Tolentino4:
!. *he Bic89er8l Conference Co99ittee :c8nnot exercise its unbridled discretion,: :it c8nnot cre8te
8 neE l8E,: 8nd its deletion of the :no p8ss on provision: co99on in both ,en8te Bill No. 1HI" 8nd
2ouse Bill No. @#"I is :unconstitution8l.:
&n 8ddition to the 8bove points r8ised b3 )r. ,enior +ustice Puno, 983 & expound on the issues
specified hereunderJ
*here is no re8son to rush 8nd st89p the i9pri98tur of v8lidit3 to 8 t8x l8E, R.A. H@@#, th8t cont8ins
p8tentl3 unconstitution8l provisions. & refer to ,ections 1 to 6 Ehich viol8te the principle of non-
dele78tion of le7isl8tive poEer. *hese ,ections 8uthoriMe the President, upon reco99end8tion of
the ,ecret8r3 of /in8nce, to r8ise the ;A* r8te fro9
1"K to 1!K effective +8nu8r3 1, !""6, if the conditions specified therein 8re 9et, thusJ
. . . *h8t the President, upon the reco99end8tion of the ,ecret8r3 of /in8nce, sh8ll, effective
+8nu8r3 1, !""6, r8ise the r8te of v8lue-8dded t8x to tEelve percent C1!KD 8fter 8n3 of the folloEin7
conditions h8s been s8tisfiedJ
#0( ,)%6e8)++e+ t)7 3o%%e3t0o* )2 ) per3e*t)@e o4 Gro22 Dome2t03 Pro+63t #GDP( o4 t1e
pre50o62 &e)r e73ee+2 t;o )*+ 4o6r8404t1 per3e*t #2 BN5C(/ or
#00( N)t0o*)% @o5er*me*t +e4030t )2 ) per3e*t)@e o4 GDP o4 t1e pre50o62 &e)r e73ee+2 o*e )*+
o*e81)%4 per3e*t #1 OC(.
*his proviso on the aut$oit( of the President is unifor9l3 8ppended to ,ections 1, I 8nd 6 of R.A.
No. H@@#, provisions 89endin7 ,ections 1"6, 1"# 8nd 1" of the N&RC, respectivel3. ,ection 1
i9poses 8 1"K ;A* on s8les of 7oods 8nd properties, ,ection I i9poses 8 1"K ;A* on i9port8tion
of 7oods, 8nd ,ection 6 i9poses 8 1"K ;A* on s8le of services 8nd use or le8se of properties.
Petitioners in G.R. Nos. 16"I6,
!
16!"#
@
8nd 1616@
1
8ss8il the constitution8lit3 of the 8bove
provisions on the 7round th8t such stand-by authority 7r8nted to the President constitutesJ #1( undue
dele78tion of le7isl8tive poEer4 #2( viol8tion of due process4 8nd #=( viol8tion of the principle of
:e#clusive ori+ination.: *he3 cited 8s their b8sis Article ;&, ,ection ! C!D4 Article &&&, ,ection 14 8nd
Article ;&, ,ection !1 of the Constitution.
0
Un%ue Dele"ation o) 5e"islati!e *o2e
*8x8tion is 8n inherent 8ttribute of soverei7nt3.
I
&t is 8 poEer th8t is purel3 le7isl8tive 8nd Ehich the
centr8l le7isl8tive bod3 c8nnot dele78te either to the executive or Audici8l dep8rt9ent of 7overn9ent
Eithout infrin7in7 upon the theor3 of sep8r8tion of poEers.
6
*he r8tion8le of this doctrine 983 be
tr8ced fro9 the de9ocr8tic principle of :no ta#ation 8ithout representation.: *he poEer of t8x8tion
bein7 so perv8sive, it is in the best interest of the people th8t such poEer be lod7ed onl3 in the
'e7isl8ture. Co9posed of the people5s represent8tives, it is :closer to the pulse of the people 8ndG
8re therefore in 8 better position to deter9ine both the extent of the le78l burden the people 8re
c8p8ble of be8rin7 8nd the benefits the3 need.:
#
Also, this set-up provides securit3 878inst the 8buse
of poEer. As Chief +ustice )8rsh8ll s8idJ :&n i9posin7 8 t8x, the le7isl8ture 8cts upon its
constituents. *he poEer 983 be 8bused4 but the interest, Eisdo9, 8nd Austice of the represent8tive
bod3, 8nd its rel8tions Eith its constituents, furnish 8 sufficient securit3.:
ConseBuentl3, ,ection !1, Article ;& of our Constitution enshrined the principle of :no ta#ation
8ithout representation: b3 providin7 th8t :8llG revenue billsG sh8ll ori7in8te exclusivel3 in the
2ouse of Represent8tives, but the ,en8te 983 propose or concur Eith 89end9ents.: *his provision
7ener8ll3 confines the poEer of t8x8tion to the 'e7isl8ture.
R.A. No. H@@#, in 7r8ntin7 to the President the stan%'/( aut$oit( to incre8se the ;A* r8te fro9
1"K to 1!K, the 'e7isl8ture 8bdic8ted its poEer b3 dele78tin7 it to the President. *his is
constitution8ll3 i9per9issible. *he 'e7isl8ture 983 not esc8pe its duties 8nd responsibilities b3
dele78tin7 its poEer to 8n3 other bod3 or 8uthorit3. An3 8tte9pt to 8bdic8te the poEer is
unconstitution8l 8nd void, on the principle th8t potestas dele+ata non dele+are potest.

As +ud7e
Coole3 enunci8tedJ
:(ne of the settled 98xi9s in constitution8l l8E is, th8t the poEer conferred upon the le7isl8ture to
98Fe l8Es c8nnot be dele78ted b3 th8t dep8rt9ent to 8n3 other bod3 or 8uthorit3. I1ere t1e
2o5ere0@* po;er o4 t1e 2t)te 1)2 %o3)te+ t1e )6t1or0t&, t1ere 0t m62t rem)0*/ )*+ b& t1e
3o*2t0t6t0o*)% )@e*3& )%o*e t1e %);2 m62t be m)+e 6*t0% t1e Co*2t0t6t0o* 0t2e%4 02
31)*@e+. *he poEer to Ehose Aud79ent, Eisdo9, 8nd p8triotis9 this hi7h prero78tive h8s been
entrusted c8nnot relieve itself of the responsibilit3 b3 choosin7 other 87encies upon Ehich the poEer
sh8ll be devolved, nor c8n it substitute the Aud79ent, Eisdo9, 8nd p8triotis9 of 8n3 other bod3 for
those to Ehich 8lone the people h8ve seen fit to confide this soverei7n trust.:
H
(f course, the rule Ehich forbids the dele78tion of the poEer of t8x8tion is not 8bsolute 8nd
inflexible. &t 8d9its of exceptions. Retired +ustice +ose C. ;itu7 enu9er8ted such exceptions, to
EitJ #1( dele78tions to loc8l 7overn9ents Cto be exercised b3 the loc8l le7isl8tive bodies thereofD or
politic8l subdivisions4 #2( dele78tions 8lloEed b3 the Constitution4 8nd #=( dele78tions rel8tin7 9erel3
to 8d9inistr8tive i9ple9ent8tion th8t 983 c8ll for so9e de7ree of discretion8r3 poEers under 8 set
of sufficient st8nd8rds expressed b3 l8E.
1"
P8tentl3, the 8ct of the 'e7isl8ture in dele78tin7 its poEer to t8x does not f8ll under 8n3 of the
exceptions.
9ist, it does not involve 8 dele78tion of t8xin7 poEer to the loc8l 7overn9ent. &t is 8 dele78tion to
the President.
Se.on%, it is not 8lloEed b3 the Constitution. ,ection ! C!D, Article ;& of the Constitution
enu9er8tes the ch8r7es or duties, the r8tes of Ehich 983 be fixed b3 the President pursu8nt to 8
l8E p8ssed b3 Con7ress, thusJ
*he Con7ress 983, b3 l8E, )6t1or0Me t1e Pre20+e*t to 407 ;0t10* 2pe3040e+ %0m0t2, 8nd subAect to
such li9it8tions 8nd restrictions 8s it 983 i9pose, t)r044 r)te2, 0mport 8nd e7port
?6ot)2, to**)@e 8nd ;1)r4)@e +6e2, 8nd other +6t0e2 or 0mpo2t2 Eithin the fr89eEorF of the
n8tion8l develop9ent pro7r89 of the Govern9ent.
NoteEorth3 is the 8bsence of t)7 r)te2 or ,AT r)te2 in the enu9er8tion. &f the intention of the
/r89ers of the Constitution is to per9it the dele78tion of the poEer to fix t)7 r)te2 or ,AT r)te2 to
the President, such could h8ve been e8sil3 8chieved b3 the 9ere inclusion of the ter9 :t)7 r)te2: or
:,AT r)te2F in the enu9er8tion. &t is 8 dictu9 in st8tutor3 construction th8t ;1)t 02 e7pre22e+ p6t2
)* e*+ to ;1)t 02 0mp%0e+. "#pressium facit cessare tacitum.
11
*his is 8 deriv8tive of the 9ore
f89ili8r 98xi9 e7pre22 me*t0o* 02 0mp%0e+ e73%620o* ore#pressio unius est e#clusio
alterius. Considerin7 th8t ,ection ! C!D, Article ;& expressl3 spe8Fs onl3 of :t8riff
r8tes,
1!
i9port
1@
8nd export
Buot8s,
11
tonn87e
1I
8nd Eh8rf87e dues
16
8nd other duties 8nd i9posts,
1#
: b3 no stretch of i987in8tion
c8n this enu9er8tion be extended to include the ;A*.
And t$i%, it does not rel8te 9erel3 to the 8d9inistr8tive i9ple9ent8tion of R.A. No. H@@#.
&n testin7 Ehether 8 st8tute constitutes 8n undue dele78tion of le7isl8tive poEer or not, it is usu8l to
inBuire Ehether the st8tute E8s co9plete in 8ll its ter9s 8nd provisions Ehen it left the h8nds of the
'e7isl8ture so th8t nothin7 E8s left to the Aud79ent of 8n3 other 8ppointee or dele78te of the
le7isl8ture.
1
&n the present c8se, the President is the dele78te of the 'e7isl8ture, endoEed Eith the poEer to
r8ise the ;A* r8te fro9 1" K to 1!K if 8n3 of the folloEin7 conditions, to reiter8te, h8s been
s8tisfiedJ #0( v8lue-8dded t8x collection 8s 8 percent87e of 7ross do9estic product CG-PD of the
previous 3e8r exceeds tEo 8nd four-fifths percent C! 1NIKD or #00( N8tion8l Govern9ent deficit 8s 8
percent87e of G-P of the previous 3e8r exceeds one 8nd one-h8lf percent C1 OKD.
At first 7l8nce, the tEo conditions 983 8ppe8r to be definite st8nd8rds sufficient to 7uide the
President. 2oEever, to 93 9ind, the3 8re ineffectu8l 8nd 98lle8ble 8s the3 7ive the President 89ple
opportunit3 to exercise heraut$oit( in 8rbitr8r3 8nd discretion8r3 f8shion.
*he tEo conditions set forth b3 l8E Eould h8ve been sufficient h8d it not been for the f8ct th8t the
President, bein7 8t the hel9 of the entire offici8ldo9, h8s 9ore th8n enou7h poEer of control to
brin7 8bout the existence of such conditions. (bviousl3, R.A. No. H@@# 8lloEs the President to
deter9ine for herself Ehether the ;A* r8te sh8ll be incre8sed or not 8t 8ll. *he fulfill9ent of the
conditions is entirel3 pl8ced in her h8nds. &f she Eishes to incre8se the ;A* r8te, 8ll she h8s to do is
to strictl3 enforce the ;A* collection so 8s to exceed the ! 1NIK ceilin7. *he s89e holds true Eith the
n8tion8l 7overn9ent deficit. ,he Eill Aust li9it 7overn9ent expenses so 8s not to exceed the 1 OK
ceilin7. (n the other h8nd, if she does not Eish to incre8se the ;A* r8te, she 983 discour87e the
,ecret8r3 of /in8nce fro9 98Fin7 the reco99end8tion.
*h8t the President5s exercise of 8n 8uthorit3 is pr8ctic8ll3 Eithin her control is t8nt89ount to 7ivin7
no conditions 8t 8ll. & believe this 89ounts to 8 virtu8l surrender of le7isl8tive poEer to her. &t 9ust be
stressed th8t the v8lidit3 of 8 l8E is not tested b3 Eh8t h8s been done but b3 ;1)t m)& be +o*e
6*+er 0t2 pro5020o*2.
1H
00
8iolation o) Due *o.ess
*he constitution8l s8fe7u8rd of due process is briefl3 Eorded in ,ection 1, Article &&& of the
Constitution Ehich st8tes th8t, :no person sh8ll be deprived of life, libert3 or propert3 Eithout due
process of l8E.:
!"
,ubst8ntive due process reBuires the intrinsic v8lidit3 of the l8E in interferin7 Eith the ri7hts of the
person to his propert3. *he inBuir3 in this re78rd is not Ehether or not the l8E is bein7 enforced in
8ccord8nce Eith the prescribed 98nner but ;1et1er or *ot, to be@0* ;0t1, 0t 02 ) proper e7er302e
o4 %e@02%)t05e po;er.
*o be so, the l8E 9ust h8ve 8 5)%0+ @o5er*me*t)% obAe3t05e, i.e., the interest of the public 8s
distin7uished fro9 those of 8 p8rticul8r cl8ss, reBuires the intervention of the ,t8te. *his obAective
9ust be pursued in 8 %);46% m)**er, or in other Eords, the 9e8ns e9plo3ed 9ust be re8son8bl3
rel8ted to the 8cco9plish9ent of the purpose 8nd *ot 6*+6%& oppre2205e.
*here is no doubt th8t R.A. No. H@@# E8s en8cted pursu8nt to 8 v8lid 7overn9ent8l obAective, i.e. to
r8ise revenues for the 7overn9ent. 2oEever, Eith respect to the 9e8ns e9plo3ed to 8cco9plish
such obAective, & 89 convinced th8t R.A. No. H@@#, p8rticul8rl3 ,ections 1, I 8nd 6 thereof, 8re
8rbitr8r3 8nd undul3 oppressive.
A re8din7 of the ,en8te deliber8tion reve8ls th8t the first condition constitutes 8 reE8rd to the
President for her effective collection of ;A*. *hus, the President 983 incre8se the ;A* r8te fro9
1"K to 1!K if her ;A* collection durin7 the previous 3e8r exceeds ! 1NIK of the Gross -o9estic
Product. & Buote the deliber8tionJ
,en8tor '8cson. *h8nF 3ou, )r. President. NoE, & Eill 7o b8cF to 93 ori7in8l Buestion, 93 first
Buestion. >ho 8re Ee thre8tenin7 to punish on the i9posed condition No. 1 = the public or the
PresidentL
Se*)tor Re3to. T1)t 02 *ot ) p6*021me*t, t1)t 02 26ppo2e+ to be ) re;)r+ 2&2tem.
Se*)tor !)32o*. e2, )* 0*3e*t05e. So ;e )re o44er0*@ )* 0*3e*t05e to t1e C10e4 E7e36t05e.
Se*)tor Re3to. T1)t 02 r0@1t.
Se*)tor !)32o*. L 0* or+er 4or 1er to be )b%e to r)02e t1e ,AT to 12 C.
Se*)tor Re3to. T1)t 02 r0@1t. T1)t 02 t1e 0*te*t0o*, &e2.
7 7 7 7 7 7
Se*)tor O2me*). A%% r0@1t. T1ere4ore, ;0t1 t1e %04t0*@ o4 e7empt0o*2 0t 2t)*+2 to re)2o* t1)t
,)%6e8)++e+ t)7 3o%%e3t0o*2 )2 ) per3e*t)@e o4 GDP ;0%% be m631 10@1er t1)*R No;, 04 0t 02
10@1er t1)* 2.5C, 0* ot1er ;or+2, be3)62e t1e& 3o%%e3te+ more, ;e ;0%% )%%o; t1em to e5e* t)7
more. "2 t1)t t1e me)*0*@ o4 t102 p)rt036%)r p1r)2eE
Se*)tor Re3to. e2, Mr. Pre20+e*t, t1)t 02 ;1& 0t 02 )2 %o; )2 2.8C. "t 02 %0Je 04 ) per2o* 1)2 )
2o* )*+ 102 2o* )2J2 10m 4or )* )%%o;)*3e, " +o *ot t10*J t1)t 1e ;o6%+ 0mme+0)te%& @05e 102
2o* )* 0*3re)2e 0* )%%o;)*3e 6*%e22 1e te%%2 102 2o*, o6 better 0mpro5e &o6r @r)+e2 )*+ "
;0%% @05e &o6 )* )%%o;)*3e. T1)t 02 t1e )*)%o@& o4 t102.
7 7 7 7 7 7
Se*)tor O2me*). So t1e @e*t%em)* 02 te%%0*@ t1e Pre20+e*t, "4 &o6 3o%%e3t more t1)* 1=8
b0%%0o*, " ;0%% @05e &o6 )++0t0o*)% po;er2 to t)7 t1e peop%e.
Se*)tor Re3to. 7 7 7 Ie )re 2)&0*@, J6*@ m)t))2 )*+ @r)+e mo, +)+)@+)@)* Jo )* )%%o;)*3e
mo. K)t6%)+ *@ 20*)b0 *)t0* +0tto. I1)t ;e )re 2)&0*@ 1ere 02 &o6 pro5e to me t1)t &o6 3)*
3o%%e3t 0t, t1e* ;e ;0%% 0*3re)2e &o6r r)te, &o6 3)* r)02e &o6r r)te. "t 02 )* 0*3e*t05e.
!1
>h3 8uthoriMe the President to incre8se the ;A* r8te on the pre9ise 8lone th8t she deserves 8n
:incentive: or :reE8rd:L &ndeed, Eh3 should she be reE8rded for perfor9in7 8 dut3 reposed upon
her b3 l8EL
*he r8tion8le st8ted b3 ,en8tor Recto is fl8Eed. (ne of the principles of sound t8x8tion is fisc8l
8deBu8c3. *he proceeds of t8x revenue should coincide Eith, 8nd 8pproxi98te the needs of,
7overn9ent expenditures. Ne0t1er )* e-.ess *or ) %e)i.ien.( o4 re5e*6e !is';'!is t1e *ee+2 o4
@o5er*me*t ;o6%+ be 0* Jeep0*@ ;0t1 t1e pr0*30p%e.
!!
EBu8tin7 the 7r8nt of aut$oit( to the President to incre8se the ;A* r8te Eith the 7r8nt of 8ddition8l
8lloE8nce to 8 studious son is hi7hl3 in8ppropri8te. (ur ,en8tors 9ust h8ve for7otten th8t for ever3
incre8se of t8xes, the burden 8lE83s redounds to the people. %nliFe the 8ddition8l 8lloE8nce 7iven
to 8 studious son th8t co9es fro9 the pocFet of the 7r8ntin7 p8rent 8lone, the incre8se in the ;A*
r8te Eould be shouldered b3 the 98sses. &ndeed, 98nd8tin7 the9 to p83 the incre8sed r8te 8s 8n
8E8rd to the President is 8rbitr8r3 8nd undul3 oppressive. *8x8tion is not 8 poEer to be exercised 8t
one5s Ehi9.
000
3-.lusi!e Oi"ination )o, t$e
House o) Repesentati!es
,ection !1, Article ;& of the Constitution providesJ
SEC. 2B. All 8ppropri8tions, re5e*6e or t8riff bills, bills 8uthoriMin7 incre8se of the public debt, bills of
loc8l 8pplic8tion, 8nd priv8te bills sh8ll or0@0*)te e73%6205e%& in the 2ouse of Represent8tives, but
the ,en8te 983 propose or concur Eith 89end9ents.
&n Tolentino vs. Secretary of Finance,
!@
this Court expounded on the fore7oin7 provision b3 holdin7
th8tJ
:x x x *o be7in Eith, it is not the l8E = but the revenue bill = Ehich is reBuired b3 the Constitution to
Pori7in8te exclusivel3 in the 2ouse of Represent8tives. &t is i9port8nt to e9ph8siMe this, bec8use 8
bill ori7in8tin7 the in the 2ouse 983 under7o such extensive ch8n7es in the ,en8te th8t the result
983 be 8 reEritin7 of the Ehole x x x. At this point, Eh8t is i9port8nt to note is th8t, 8s 8 result of the
,en8te 8ction, 8 distinct bill 983 be produced. *o insist th8t 8 revenue st8tute -- 8nd not onl3 the bill
Ehich initi8ted the le7isl8tive process cul9in8tin7 in the en8ct9ent of the l8E = 9ust subst8nti8ll3 be
the s89e 8s the 2ouse Bill Eould be to den3 the ,en8te5s poEer not onl3 to Pconcur Eith
89end9entsJ but 8lso to Ppropose 89end9ents.5 &t Eould be to viol8te the co-eBu8lit3 of the
le7isl8tive poEer of the tEo houses of Con7ress 8nd in f8ct, 98Fe the 2ouse superior to the
,en8te.:
*he c8se 8t b8r 7ives us 8n opportunit3 to t8Fe 8 second h8rd looF 8t the effic8c3 of the fore7oin7
Aurisprudence.
,ection !I, Article ;& is 8 verb8ti9 re-en8ct9ent of ,ection 1, Article ;& of the 1H@I Constitution.
*he l8tter provision E8s 9odeled fro9 ,ection # C1D, Article & of the %nited ,t8tes Constitution, Ehich
st8tesJ
:All bills for r8isin7 revenue sh8ll or0@0*)te in the 2ouse of Represent8tives, but the ,en8te
983 propo2e or 3o*36r ;0t1 )me*+me*t2, 8s on other bills.:
*he A9eric8n people, in entrustin7 Eh8t +89es )8dison ter9ed :the poEer of the purse: to their
elected represent8tives, dreE inspir8tion fro9 the British pr8ctice 8nd experience Eith the 2ouse of
Co99ons. As one co99ent8tor puts itJ
:*he3 FneE the inesti98ble v8lue of the 2ouse of Co99ons, 8s 8 co9ponent br8nch of the British
p8rli89ent4 8nd the3 believed th8t it h8d 8t 8ll ti9es furnished the best securit3 878inst the
oppression of the croEn 8nd the 8ristocr8c3. I10%e t1e po;er o4 t)7)t0o*, o4 re5e*6e, )*+ o4
26pp%0e2 rem)0*e+ 0* t1e 1)*+2 o4 ) pop6%)r br)*31, 0t ;)2 +044036%t 4or 626rp)t0o* to e702t 4or
)*& %e*@t1 o4 t0me ;0t1o6t 31e3J, )*+ prero@)t05e m62t &0e%+ o4 t1)t *e3e220t& ;1031
3o*tro%%e+ )t o*3e t1e 2;or+ )*+ t1e p6r2e.:
But Ehile the fund89ent8l principle underl3in7 the vestin7 of the poEer to propose revenue bills
solel3 in the 2ouse of Represent8tives is present in both the Philippines 8nd %, Constitutions,
stress 9ust be l8id on the differences betEeen the tEo Buoted provisions. /or one, the Eord
:e73%6205e%&: 8ppe8rin7 in ,ection !1, Article ;& of our Constitution is noEhere to be found in
,ection # C1D, Article & of the %, Constitution. /or 8nother, the phr8se :)2 o* ot1er b0%%2,: present in
the s89e provision of the %, Constitution, is not Eritten in our Constitution.
*he 8dverb :exclusivel3: 9e8ns :in 8n exclusive 98nner.:
!1
*he ter9 :exclusive: is defined 8s
:excludin7 or h8vin7 poEer to exclude4 li9itin7 to or li9ited to4 sin7le, sole, undivided, Ehole.:
!I
&n
one c8se, this Court define the ter9 :exclusive: 8s :possessed to the exclusion of others4
8ppert8inin7 to the subAect 8lone, not includin7, 8d9ittin7, or pert8inin7 to 8nother or others.:
!6
As for the ter9 :or0@0*)te,: its 9e8nin7 8re :to 3)62e t1e be@0**0*@ o4/ to @05e r02e to/ to 0*0t0)te/
to 2t)rt o* ) 3o6r2e or Ao6r*e&/ to t)Je or 1)5e or0@0*/ to be +epr05e+/ )r02e/ be@0* or 2t)rt.:
!#
>ith the fore7oin7 definitions in 9ind, it c8n be re8son8bl3 concluded th8t Ehen ,ection !1, Article
;& provides th8t revenue bills sh8ll or0@0*)te e73%6205e%& fro9 the 2ouse of Represent8tives, Eh8t
the Constitution 98nd8tes is th8t 8n3 revenue st8tute 9ust be@0* or 2t)rt 2o%e%& 8nd onl3 in the
2ouse. Not the ,en8te. Not both Ch89bers of Con7ress. But there is 9ore to it th8n th8t. "t )%2o
me)*2 t1)t F)* )3t 4or t)7)t0o* m62t p)22 t1e -o62e 40r2t.: &t is no conseBuence Eh8t
89end9ents the ,en8te 8dds.
!
A perus8l of the le7isl8tive histor3 of R.A. No. H@@# shoEs th8t it did not :e73%6205e%& or0@0*)te:
fro9 the 2ouse of Represent8tives.
*he 2ouse of Represent8tives 8pproved -o62e B0%% No2. =555
!H
8nd =>05
@"
. *hese Bills intended to
89end ,ections 1"6, 1"#, 1", 1"H, 11", 111 8nd 111 of the N&RC. /or its p8rt, the ,en8te
8pproved Se*)te B0%% No.1<50,
@1
t8Fin7 into consider8tion 2ouse Bill Nos. =555 8nd =>05. &t
intended to 89end ,ections !#, !, @1, 1"6, 1", 1"H, 11", 11!, 11@, 111, 116, 11#, 11H, 1!1, 1!I,
11, 1I1, !@6, !@# 8nd ! of the N&RC.
*here8fter, on April 1@, !""I, 8 Co99ittee Conference E8s cre8ted to thresh out the dis87reein7
provisions of the three proposed bills.
&n less th8n 8 9onth, the Conference Co99ittee :8fter h8vin7 9et 8nd discussed in full free 8nd
conference,: c89e up Eith 8 report 8nd reco99ended the 8pprov8l of the consolid8ted version of
the bills. *he ,en8te 8nd the 2ouse of Represent8tives 8pproved it.
(n )83 !@, !""I, the enrolled cop3 of the consolid8ted version of the bills E8s tr8ns9itted to
President Arro3o, Eho si7ned it into l8E. *hus, the en8ct9ent of R.A. No. H@@#, entitled :%n %ct
%mendin+ Sections 2/, 28, .5, 1I1, 1I/, 1I8, 1I-, 11I, 111, 112, 11., 115, 111, 11/, 11-, 121, 158,
1G1, 2.1, 2./ and 288 of the ,ational 0nternal evenue Code of 1--/, %s %mended and For )ther
Purposes.4
Cle8rl3, ,en8te Bill No. 1HI" is not b8sed on 8n3 bill p8ssed b3 the 2ouse of Represent8tives. &t h8s
8 le7isl8tive identit3 8nd existence sep8r8te 8nd 8p8rt fro9 2ouse Bills No. @III 8nd @#"I. &nste8d
of concurrin7 or proposin7 89end9ents, ,en8te Bill No. 1HI" 9erel3 :t)Je2 0*to 3o*20+er)t0o*:
the tEo 2ouse Bills. *o t8Fe into consider8tion 9e8ns :to t8Fe into 8ccount.: Consider8tion, in this
sense, 9e8ns :deliber8tion, 8ttention, observ8tion or conte9pl8tion.
@!
,i9pl3 put, the ,en8te in
p8ssin7 ,en8te Bill No. 1HI", 8 t8x 9e8sure, 9erel3 tooF into 8ccount 2ouse Bills No. @III 8nd
@#"I, but did not concur Eith or 89end either or both bills. As 8 98tter of f8ct, it did not even t8Fe
these tEo 2ouse Bills 8s 8 fr89e of reference.
&n Tolentino, the 98Aorit3 subscribed to the vieE th8t ,en8te 983 89end the 2ouse revenue bill b3
substitution or b3 presentin7 its oEn version of the bill. &n either c8se, the result is :t;o b0%%2 o* t1e
2)me 26bAe3t.:
@@
*his is the source of the :7er98neness: rule Ehich st8tes th8t the ,en8te bill 9ust
be 7er98ne to the bill ori7in8ll3 p8ssed b3 the 2ouse of Represent8tives. &n Tolentino, this E8s not
re8ll3 8n issue 8s both the 2ouse 8nd ,en8te Bills in Buestion h8d one subAect = the ;A*.
*he f8cts obt8inin7 here is ver3 9uch different fro9 Tolentino. &t is ver3 8pp8rent th8t 2ouse Bills
No. @III 8nd @#"I 9erel3 intended to 89end ,ections 1"6, 1"#, 1", 1"H, 11", 111 8nd 111 of the
N&RC of 1HH#, pert8inin7 to the ;A* provisions. (n the other h8nd, ,en8te Bill No. 1HI" intended to
89end ,ections !#, !, @1, 1"6, 1", 1"H, 11", 11!, 11@, 111, 116, 11#, 11H, 1!1, 1!I, 11, 1I1,
!@6, !@# 8nd ! of the N&RC, pert8inin7 to 98tters outside of ;A*, such 8s inco9e t8x, percent87e
t8x, fr8nchise t8x, t8xes on b8nFs 8nd other fin8nci8l inter9edi8ries, excise t8xes, etc.
*hus, & 89 of the position th8t the ,en8te could not, Eithout viol8tin7 the 7er98neness rule 8nd the
principle of :exclusive ori7in8tion,: propose t8x 98tters not included in the 2ouse Bills.
I-ERE$ORE, & vote to CONCUR Eith the 98Aorit3 opinion except Eith respect to the points 8bove-
9entioned.
ANGE'&NA ,AN-(;A'-G%*&ERRE<
Associ8te *ustice
G.R. No. 168056 L #A/a<a%a Guo *at( 5ist =9o,el( AASJAS> O))i.es Sa,son S. Al.antaa
an% 3% 8in.ent S. Al/ano !. 4$e Hon. 3-e.uti!e Se.eta( 3%ua%o 3,ita, et al.(
G.R. No. 16820> L #A?uilino @. *i,entel, J., et al. !. 3-e.uti!e Se.eta( 3%ua%o R. 3,ita,
et al.(
G.R. No. 168B61 L #Asso.iation o) 9ilipinas S$ell Deales, 0n.., et al. !. 1esa 8. *uisi,a, et
al.(
G.R. No. 168B6= L #9an.is Josep$ G. 3s.u%eo, et al. !. 1esa 8. *uisi,a, et al.(
G.R. No. 168>=0 L #Bataan Go!eno 3ni?ue 4. Ga.ia, J. !. Hon. 3%ua%o R. 3,ita, et al.(
Pro9ul78tedJ
September 1, 2005
6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6
CONCURR"NG AND D"SSENT"NG OP"N"ON
CA!!E'O, SR., J.:
& Aoin the concurrin7 8nd dissentin7 opinion of )r. +ustice Re3n8to ,. Puno 8s & concur Eith the
98Aorit3 opinion but vote to decl8re 8s unconstitution8l the deletion of the :no-p8ss on provision:
cont8ined in ,en8te Bill No. 1HI" 8nd 2ouse Bill No. @#"I Cthe constituent bills of Republic Act No.
H@@#D.
The present petitions provide an opportune
occasion for the Court to re-e#amine
Tolentino v. Secretary of Finance
&n rulin7 th8t Con7ress, in en8ctin7 R.A. No. H@@#, co9plied Eith the for98l reBuire9ents of the
Constitution, theponencia relies 98inl3 on the Court5s rulin7s in Tolentino v. Secretary of Finance.
1
*o
rec8ll, Tolentino involved Republic Act No. ##16, Ehich si9il8rl3 89ended the N&RC b3 Eidenin7 the
t8x b8se of the ;A* s3ste9. *he procedur8l 8tt8cFs 878inst R.A. No. H@@# 8re subst8nti8ll3 the
s89e 8s those leveled 878inst R.A. No. ##16, e.+., viol8tion of the :(ri7in8tion Cl8use: CArticle ;&,
,ection !1D 8nd the :*hree-Re8din7 Rule: 8nd the :No-A9end9ent Rule: CArticle ;&, ,ection !6Q!RD
of the Constitution.
*he present petitions provide 8n opportune occ8sion for the Court to re-ex89ine its rulin7s
in Tolentinop8rticul8rl3 Eith respect to the scope of the poEers of the Bic89er8l Conference
Co99ittee vis-`-vis Article ;&, ,ection !6C!D of the Constitution.
*he cruci8l issue posed b3 the present petitions is Ehether the Bic89er8l Conference Co99ittee
983 v8lidl3 introduce 89end9ents th8t Eere not cont8ined in the respective bills of the ,en8te 8nd
the 2ouse of Represent8tives. As 8 coroll8r3, Ehether it 983 v8lidl3 delete provisions unifor9l3
cont8ined in the respective bills of the ,en8te 8nd the 2ouse of Represent8tives.
&n Tolentino, the Court decl8red 8s v8lid 89end9ents introduced b3 the Bic89er8l Conference
Co99ittee even if these Eere not cont8ined in the ,en8te 8nd 2ouse bills. *he 98Aorit3 opinion
therein heldJ
As to the possibilit3 of 8n entirel3 neE bill e9er7in7 out of 8 Conference Co99ittee, it h8s been
expl8inedJ
%nder con7ression8l rules of procedures, conference co99ittees 8re not expected to 98Fe 8n3
98teri8l ch8n7e in the 9e8sure 8t issue, either b3 deletin7 provisions to Ehich both houses h8ve
8lre8d3 87reed or b3 insertin7 neE provisions. But this is 8 difficult provision to enforce. Note the
proble9 Ehen one house 89ends 8 propos8l ori7in8tin7 in either house b3 striFin7 out ever3thin7
folloEin7 the en8ctin7 cl8use 8nd substitutin7 provisions Ehich 98Fe it 8n entirel3 neE bill. *he
versions 8re noE 8lto7ether different, per9ittin7 8 conference co99ittee to dr8ft essenti8ll3 8 neE
bill G
*he result is 8 third version, Ehich is considered 8n :89end9ent in the n8ture of 8 substitute,: the
onl3 reBuire9ent for Ehich bein7 th8t the third version be 7er98ne to the subAect of the 2ouse 8nd
,en8te bills.
&ndeed, this Court recentl3 held th8t it is Eithin the poEer of 8 conference co99ittee to include in its
report 8n entirel3 neE provision th8t is not found either in the 2ouse bill or in the ,en8te Bill. &f the
co99ittee c8n propose 8n 89end9ent consistin7 of one or tEo provisions, collectivel3 considered
8s 8n :89end9ent in the n8ture of 8 substitute,: so lon7 8s such 8n 89end9ent is 7er98ne to the
subAect of the bills before the co99ittee. After 8ll, its report E8s not fin8l but needed the 8pprov8l of
both houses of Con7ress to beco9e v8lid 8s 8n 8ct of the le7isl8tive dep8rt9ent. *he ch8r7e th8t in
this c8se the Conference Co99ittee 8cted 8 third le7isl8tive ch89ber is thus Eithout 8n3 b8sis.
!
*he 98Aorit3 opinion in Tolentino relied 98inl3 on the pr8ctice of the %nited ,t8tes le7isl8ture in
98Fin7 the fore7oin7 disBuisition. &t E8s held, in effect, th8t folloEin7 the %, Con7ress5 pr8ctice
Ehere 8 conference co99ittee is per9itted to dr8ft 8 bill th8t is entirel3 different fro9 the bills of
either the 2ouse of Represent8tives or ,en8te, the Bic89er8l Conference Co99ittee is si9il8rl3
e9poEered to 98Fe 89end9ents not found in either the 2ouse or ,en8te bills.
*he ponencia upholds the 8cts of the Bic89er8l Conference Co99ittee Eith respect to R.A. No.
H@@#, folloEin7 the s8id rulin7 in Tolentino.
*o 93 9ind, this unBu8lified 8dherence b3 the 98Aorit3 opinion in Tolentino, 8nd noE b3
the ponencia, to the pr8ctice of the %, Con7ress 8nd its conference co99ittee s3ste9 ou7ht to be
re-ex89ined. *here 8re si7nific8nt textu8l differences betEeen the %, /eder8l Constitution5s 8nd our
Constitution5s prescribed con7ression8l procedure for en8ctin7 l8Es. Accordin7l3, the de7ree of
freedo9 8ccorded b3 the %, /eder8l Constitution to the %, Con7ress 98rFedl3 differ fro9 th8t
8ccorded b3 our Constitution to the Philippine Con7ress.
,ection #, Article & of the %, /eder8l Constitution re8dsJ
Q1R All Bills for r8isin7 Revenue sh8ll ori7in8te in the 2ouse of Represent8tives4 but the ,en8te 983
propose or concur Eith A9end9ents 8s on other Bills.
Q!R Ever3 Bill Ehich sh8ll h8ve p8ssed the 2ouse of Represent8tives 8nd the ,en8te, sh8ll, before it
beco9e 8 '8E, be presented to the President of the %nited ,t8tes4 &f he 8pprove he sh8ll it, but if not
he sh8ll return it, Eith his (bAections to the 2ouse in Ehich it sh8ll h8ve ori7in8ted, Eho sh8ll enter
the (bAections 8t l8r7e on their +ourn8l, 8nd proceed to reconsider it. &f 8fter such Reconsider8tion
tEo thirds of th8t 2ouse sh8ll 87ree to p8ss the Bill, it sh8ll be sent to7ether Eith the (bAections, to
the other 2ouse, b3 Ehich it sh8ll, liFeEise, be reconsidered, 8nd if 8pproved b3 tEo thirds of th8t
2ouse, it sh8ll beco9e 8 '8E. But in 8ll such C8ses the ;otes of both 2ouses sh8ll be deter9ined
b3 3e8s 8nd N83s, 8nd the N89es of the Persons votin7 for 8nd 878inst the Bill sh8ll be entered on
the +ourn8l of e8ch 2ouse respectivel3. &f 8n3 Bill sh8ll not be returned b3 the President Eithin ten
-83s C,und83s exceptedD 8fter it sh8ll h8ve been presented to hi9, the ,89e sh8ll be 8 '8E, in liFe
)8nner 8s if he h8d si7ned it, unless the Con7ress b3 their AdAourn9ent prevent its return in Ehich
C8se it sh8ll not be 8 '8E.
Q@R Ever3 (rder, Resolution, or ;ote to >hich the Concurrence of the ,en8te 8nd 2ouse of
Represent8tives 983 be necess8r3 Cexcept on 8 Buestion of AdAourn9entD sh8ll be presented to the
President of the %nited ,t8tes4 8nd before the ,89e sh8ll t8Fe Effect, sh8ll be 8pproved b3 hi9, or
bein7 dis8pproved b3 hi9, sh8ll be rep8ssed b3 tEo thirds of the ,en8te 8nd 2ouse of
Represent8tives, 8ccordin7 to the Rules 8nd 'i9it8tions prescribed in the C8se of 8 Bill.
(n the other h8nd, Article ;& of our Constitution prescribes for the folloEin7 procedure for en8ctin7 8
l8EJ
,ec. !6. C1D Ever3 bill p8ssed b3 Con7ress sh8ll e9br8ce onl3 one subAect Ehich sh8ll be expressed
in the title thereof.
C!D No bill p8ssed b3 either 2ouse sh8ll beco9e 8 l8E unless it h8s p8ssed three re8din7s on
sep8r8te d83s, 8nd printed copies thereof in its fin8l for9 h8ve been distributed to its )e9bers three
d83s before its p8ss87e, except Ehen the President certifies to the necessit3 of its i99edi8te
en8ct9ent to 9eet 8 public c8l89it3 or e9er7enc3. %pon the l8st re8din7 of 8 bill, no 89end9ent
thereto sh8ll be 8lloEed, 8nd the vote thereon sh8ll be t8Fen i99edi8tel3 there8fter, 8nd
the yeas 8nd nays entered in the +ourn8l.
,ec. !#. C1D Ever3 bill p8ssed b3 Con7ress sh8ll, before it beco9es 8 l8E, be presented to the
President. &f he 8pproves the s89e, he sh8ll si7n it4 otherEise, he sh8ll veto it 8nd return the s89e
Eith his obAections to the 2ouse Ehere it ori7in8ted, Ehich sh8ll enter the obAections 8t l8r7e in its
+ourn8l 8nd proceed to reconsider it. &f, 8fter such reconsider8tion, tEo-thirds of 8ll the )e9bers of
such 2ouse sh8ll 87ree to p8ss the bill, it sh8ll be sent, to7ether Eith the obAections, to the other
2ouse b3 Ehich it sh8ll liFeEise be reconsidered, 8nd if 8pproved b3 tEo-thirds of 8ll the )e9bers of
th8t 2ouse, it sh8ll beco9e 8 l8E. &n 8ll such c8ses, the votes of e8ch 2ouse sh8ll be deter9ined
b3 yeas 8nd nays, 8nd the n89es of the )e9bers votin7 for or 878inst sh8ll be entered in its
+ourn8l. *he President sh8ll co99unic8te his veto of 8n3 bill to the 2ouse Ehere it ori7in8ted Eithin
thirt3 d83s 8fter the d8te of receipt thereof4 otherEise, it sh8ll beco9e 8 l8E 8s if he h8d si7ned it.
C!D *he President sh8ll h8ve the poEer to veto 8n3 p8rticul8r ite9 or ite9s in 8n 8ppropri8tion,
revenue, or t8riff bill, but the veto sh8ll not 8ffect the ite9 or ite9s to Ehich he does not obAect.
*Eo distinctions 8re re8dil3 8pp8rent betEeen the tEo proceduresJ
1. %nliFe the %, /eder8l Constitution, our Constitution prescribes the :three-re8din7: rule or th8t no
bill sh8ll beco9e 8 l8E unless it sh8ll h8ve been re8d on three sep8r8te d83s in e8ch house except
Ehen its ur7enc3 is certified b3 the President4 8nd
!. %nliFe the %, /eder8l Constitution, our Constitution prescribes the :no-89end9ent: rule or th8t
no 89end9ents sh8ll be 8lloEed upon the l8st re8din7 of the bill.
A9eric8n constitution8l experts h8ve l89ented th8t cert8in con7ression8l procedures h8ve not been
entrenched in the %, /eder8l Constitution. Accordin7 to 8 noted constitution8l l8E professor, the
8bsence of the :three-re8din7: reBuire9ent 8s Eell 8s si9il8r le7isl8tive-procedure rules fro9 the %,
/eder8l Constitution is 8 :c8use for re7ret.:
@
&n this connection, it is interestin7 to note th8t the conference co99ittee s3ste9 in the %, Con7ress
h8s been described in this EiseJ
Conference Committees
Another 98in 9ech8nis9 of Aoint 2ouse 8nd ,en8te 8ction is the conference co99ittee. &nherited
fro9 the En7lish Constitution, the conference co99ittee s3ste9 is 8n evolution8r3 product Ehose
princip8l thre8ds Eere Eoven on the loo9 of con7ression8l pr8ctice into 8 unified p8ttern b3 the
9iddle of the nineteenth centur3. :B3 1I!,: Erites Ad8 )cCoEn, histori8n of the ori7in 8nd
develop9ent of the conference co99ittee, :the custo9s of presentin7 identic8l reports fro9 the
co99ittees of conference in both houses, of 7r8ntin7 hi7h privile7e to these conference reports, of
votin7 upon the conference report 8s 8 Ehole 8nd per9ittin7 no 89end9ent of it, of Feepin7 secret
the discussions c8rried on in the 9eetin7s of the conference co99ittee, h8d beco9e est8blished in
A9eric8n p8rli89ent8r3 pr8ctice.:
Conference co99ittees 8re co9posed of ,en8tors 8nd Represent8tives, usu8ll3 three e8ch,
8ppointed b3 the presidin7 officers of both houses, for the purpose of 8dAustin7 differences betEeen
bills the3 h8ve p8ssed. *his device h8s been extensivel3 used b3 ever3 Con7ress since 1#H. (f the
11I# l8Es en8cted b3 the #th Con7ress, for ex89ple, 1"# Eent throu7h conference 8nd, of these,
@6 Eere 8ppropri8tion bills on Ehich the 2ouse h8d dis87reed to ,en8te 89end9ents. &n pr8ctice,
9ost i9port8nt le7isl8tion 7oes throu7h the conference closet 8nd is there revised, so9eti9es
be3ond reco7nition, b3 the 8ll-poEerful conferees or 98n87ers, 8s the3 8re st3led. A l8r7e bod3 of
l8E 8nd pr8ctice h8s been built up over the 3e8rs 7overnin7 conference procedure 8nd reports.
,uffice it to s83 here th8t serious evils h8ve 98rFed the develop9ent of the conference co99ittee
s3ste9. &n the first pl8ce, it is hi7hl3 prodi78l of 9e9bers5 ti9e. )cCon8chie c8lcul8ted th8t the
8ver87e ti9e consu9ed in conference E8s @@ d83s per bill. Bills 8re sent to conference Eithout
re8din7 the 89end9ents of the other ch89ber. -espite rules to the contr8r3, conferees do not
confine the9selves to 98tters in dispute, but often initi8te entirel3 neE le7isl8tion 8nd even striFe out
identic8l provisions previousl3 8pproved b3 both houses. *his h8ppened durin7 the #th Con7ress,
for inst8nce, Ehen 8n i9port8nt 89end9ent to the surplus propert3 bill, Ehich h8d been 8pproved
b3 both houses, E8s deleted in conference.
Conference co99ittees, 9oreover, suffer liFe other co99ittees fro9 the seniorit3 rule. *he senior
9e9bers of the co99ittees concerned, Eho 8re custo98ril3 8ppointed 8s 98n87ers on the p8rt of
the 2ouse 8nd ,en8te, 8re not 8lE83s the best infor9ed on the Buestions 8t issue, nor do the3
8lE83s reflect the 98Aorit3 senti9ent of their houses. /urther9ore, conference reports 9ust be
8ccepted or reAected in toto Eithout 89end9ent 8nd the3 8re often so co9plex 8nd obscure th8t
the3 8re voted upon Eithout FnoEled7e of their contents. >h8t h8ppens in pr8ctice is th8t Con7ress
surrenders its le7isl8tive function to irresponsible co99ittees of conference. *he st8ndin7 rules
878inst includin7 neE 8nd extr8neous 98tter in conference reports h8ve been 7r8du8ll3 Ehittled
8E83 in recent 3e8rs b3 the decisions of presidin7 officers. ,en8te riders 8tt8ched to 8ppropri8tion
bills en8ble conference co99ittees to le7isl8te 8nd the 2ouse usu8ll3 8ccepts the9 r8ther th8n
Eithhold suppl3, thus puttin7 it, 8s ,en8tor 2o8r once decl8red, under 8 de7r8din7 duress.
&t is 8lso 8lle7ed th8t under this secret s3ste9 lobb3ist 8re 8ble to Fill le7isl8tion the3 disliFe 8nd th8t
:AoFers: desi7ned to defe8t the Eill of Con7ress c8n be inserted Eithout detection. ,en8tor Geor7e
>. Norris once ch8r8cteriMed the conference co99ittee 8s 8 third house of Con7ress. :*he
9e9bers of this Phouse,5 he s8id, :8re not elected b3 the people. *he people h8ve no voice 8s to
Eho these 9e9bers sh8ll be ... *his conference co99ittee is 98n3 ti9es, in ver3 i9port8nt 98tters
of le7isl8tion, the 9ost i9port8nt br8nch of our le7isl8ture.*here is no record Fept of the EorFin7s of
the conference co99ittee. &ts EorF is perfor9ed, in the 98in, in secret.No constituent h8s 8n3
definite FnoEled7e 8s to hoE 9e9bers of this conference co99ittee vote, 8nd there is no record to
prove the 8ttitude of 8n3 9e9ber of the conference co99ittee ... As 8 pr8ctic8l proposition Ee h8ve
le7isl8tion, then, not b3 the voice of the 9e9bers of the ,en8te, not b3 the 9e9bers of the 2ouse of
Represent8tives, but Ee h8ve le7isl8tion b3 the voice of five or six 9en. And for pr8ctic8l purposes,
in 9ost c8ses, it is i9possible to defe8t the le7isl8tion proposed b3 this conference co99ittee.
Ever3 experienced le7isl8tor FnoEs th8t it is the h8rdest thin7 in the Eorld to defe8t 8 conference
report.:
-espite these 8d9itted evils, i9p8rti8l students of the conference co99ittee s3ste9 defend it on net
b8l8nce 8s 8n essenti8l p8rt of the le7isl8tive process. ,o9e 9ech8nis9 for reconcilin7 differences
under bic89er8l s3ste9 is obviousl3 indispens8ble. *he re9ed3 for the defects of the device is not
to 8bolish it, but to Feep it under con7ression8l control. *his c8n be done b3 enforcin7 the rules
Ehich prohibit the inclusion in conference reports of 98tter not co99itted to the9 b3 either house
8nd forbid the deletion of ite9s 8pproved b3 both bodies4 b3 per9ittin7 conference 98n87ers to
report necess8r3 neE 98tter sep8r8tel3 8nd the houses to consider it 8p8rt fro9 the conference
report4 b3 fixin7 8 de8dline toE8rd the close of 8 session 8fter Ehich no bills could be sent to
conference, so 8s to eli9in8te con7estion 8t the end of the session = 8 su77estion 98de b3 the
elder ,en8tor '8 /ollete in 1H1H4 b3 holdin7 conferences in sessions open to the public, lettin7
conference reports lie over lon7er, 8nd printin7 the9 in bill for9 CEith conference ch8n7es in it8licsD
so 8s to 8lloE 9e9bers 9ore ti9e to ex89ine the9 8nd discover :AoFers.:
1
*he :three-re8din7: 8nd :no-89end9ent: rules, 8bsent in the %, /eder8l Constitution, but expressl3
98nd8ted b3 Article ;&, ,ection !6C!D of our Constitution 8re 9ech8nis9s instituted to re9ed3 the
:evils: inherent in 8 bic89er8l s3ste9 of le7isl8ture, includin7 the conference co99ittee s3ste9.
,8dl3, the ponenciaEs refus8l to 8ppl3 Article ;&, ,ection !6C!D of the Constitution on the Bic89er8l
Conference Co99ittee 8nd the 89end9ents it introduced to R.A. No. H@@# h8s :effectivel3
dis98ntled: the :three-re8din7 rule: 8nd :no-89end9ent rule.: As posited b3 /r. +o8Buin Bern8s, 8
9e9ber of the Constitution8l Co99issionJ
&n 8 bic89er8l s3ste9, bills 8re independentl3 processed b3 both 2ouse of Con7ress. &t is not
unusu8l th8t the fin8l version 8pproved b3 one 2ouse differs fro9 Eh8t h8s been 8pproved b3 the
other. *he :conference co99ittee,: consistin7 of 9e9bers no9in8ted fro9 both 2ouses, is 8n extr8-
constitution8l cre8tion of Con7ress Ehose function is to propose to Con7ress E83s of reconcilin7
conflictin7 provisions found in the ,en8te version 8nd in the 2ouse version of 8 bill. &t perfor9s 8
necess8r3 function in 8 bic89er8l s3ste9. 2oEever, since conference co99ittees h8ve 9erel3
dele78ted 8uthorit3 fro9 Con7ress, the3 should not perfor9 functions th8t Con7ress itself 983 not
do. )oreover, their propos8ls need confir98tion b3 both 2ouses of Con7ress.
&n Tolentino v. Secretary of Finance, the Court h8d the opportunit3 to delve into the li9its of Eh8t
conference co99ittees 983 do. *he petitioners contended th8t the consolid8tion of the 2ouse 8nd
,en8te bills 98de b3 the conference co99ittee cont8ined provisions Ehich neither the ,en8te bill
nor the 2ouse bill h8d. &n her dissentin7 opinion, +ustice Ro9ero l8id out in 7re8t det8il the
provisions th8t h8d been inserted b3 the conference co99ittee. *hese provisions, 8ccordin7 to the
petitioners h8d been introduced :surreptitiousl3: durin7 8 closed door 9eetin7 of the co99ittee.
*he Court5s 8nsEer to this E8s th8t in %nited ,t8tes pr8ctice conference co99ittees could be held
in executive sessions 8nd 89end9ents 7er98ne to the purpose of the bill could be introduced even
if these Eere not in either ori7in8l bill. But the Court did not bother to checF Ehether perh8ps the
A9eric8n pr8ctice E8s b8sed on 8 constitution8l text different fro9 th8t of the Philippine
Constitution.
*here 8re 8s 8 98tter of f8ct si7nific8nt differences in the de7ree of freedo9 A9eric8n 8nd
Philippine le7isl8tors h8ve. *he onl3 rule th8t binds the /eder8l Con7ress is th8t it 983 for9ul8te its
oEn rules of procedure. /or this re8son, the /eder8l Con7ress is 98ster of its oEn procedures. &t is
different Eith the Philippine Con7ress. (ur Con7ress indeed is 8lso 8uthoriMed to for9ul8te its oEn
rules of procedure = but Eithin li9its not found in A9eric8n l8E. /or inst8nce, there is the :three
re8din7s on sep8r8te d83s: rule. Another i9port8nt rule is th8t no 89end9ents 983 be introduced
b3 either house durin7 third re8din7. *hese li9it8tions Eere introduced b3 the 1H@I 8nd 1H#@
Constitutions 8nd confir9ed b3 the 1H# Constitution 8s 8 defense 878inst the inventiveness of the
ste8lth3 8nd surreptitious. *hese, hoEever, Eere disre78rded b3 the Court in Tolentino in f8vor of
contr8r3 A9eric8n pr8ctice.
*his is not to s83 th8t conference co99ittees should not be 8lloEed. But 8n effort should be 98de to
l83 out the scope of Eh8t conference co99ittees 983 do 8ccordin7 to the reBuire9ents 8nd the
re8sons of the Philippine Constitution 8nd not 8ccordin7 to the pr8ctice of the A9eric8n Con7ress.
/or inst8nce, if the tEo 2ouses 8re not 8lloEed to introduce 8nd deb8te 89end9ents on third
re8din7, c8n the3 circu9vent this rule b3 coursin7 neE provisions throu7h the instru9ent8lit3 of 8
conference co99ittee cre8ted b3 Con7ress 8nd 9eetin7 in secretL *he effect of the Court5s
uncritic8l e9br8ce of the pr8ctice of the A9eric8n Con7ress 8nd its conference co99ittees is to
dis98ntle the no-89end9ent rule.
I
*he t8sF 8t h8nd for the Court, but Ehich the ponencia escheEs, is to circu9scribe the poEers of the
Bic89er8l Conference Co99ittee in li7ht of the :three-re8din7: 8nd :no-89end9ent: rules in Article
;&, ,ection !6C!D of the Constitution.
The $icameral Conference Committee, in
deletin+ the 4no pass on provision4 contained in
Senate $ill ,o. 1-GI and ;ouse $ill ,o. ./IG,
violated %rticle '0 , Section 21223 of the Constitution
Pertinentl3, in his dissentin7 opinion in Tolentino, +ustice -8vide CnoE Chief +usticeD opined th8t the
dut3 of the Bic89er8l Conference Co99ittee E8s li9ited to the reconcili8tion of dis87reein7
provisions or the resolution of differences or inconsistencies. *his proposition still 8pplies 8s c8n be
7le8ned fro9 the folloEin7 text of ,ections 8nd H, Rule 6&; of the Rules of the 2ouse of
Represent8tivesJ
,ec. . Conference Committee. = &n the event th8t the 2ouse does not 87ree Eith the ,en8te on
the 89end9ents to 8n3 bill or Aoint resolution, the differences 983 be settled b3 the conference
co99ittees of both ch89bers.
&n resolvin7 the differences Eith the ,en8te, the 2ouse p8nel sh8ll, 8s 9uch 8s possible, 8dhere to
8nd support the 2ouse Bill. &f the differences Eith the ,en8te 8re so subst8nti8l th8t the3 98teri8ll3
i9p8ir the 2ouse Bill, the p8nel sh8ll report such f8ct to the 2ouse for the l8tter5s 8ppropri8te 8ction.
,ec. H. Conference Committee eports. - GE8ch report sh8ll cont8in 8 det8iled, sufficientl3 explicit
st8te9ent of the ch8n7es in or 89end9ents to the subAect 9e8sure.
G
*he Ch8ir98n of the 2ouse p8nel 983 be interpell8ted on the Conference Co99ittee Report prior
to the votin7 thereon. *he 2ouse sh8ll vote on the Conference Co99ittee report in the s89e
98nner 8nd procedure 8s it votes on 8 bill on third 8nd fin8l re8din7.
8nd Rule 6&&, ,ection @I of the Rules of the ,en8teJ
,ec. @I. &n the event th8t the ,en8te does not 87ree Eith the 2ouse of Represent8tives on the
provision of 8n3 bill or Aoint resolution, the differences sh8ll be settled b3 8 conference co99ittee of
both 2ouses Ehich sh8ll 9eet Eithin ten C1"D d83s 8fter their co9position. *he President sh8ll
desi7n8te the 9e9bers of the ,en8te P8nel in the conference co99ittee Eith the 8pprov8l of the
,en8te.
E8ch Conference Co99ittee Report sh8ll cont8in 8 det8iled 8nd sufficientl3 explicit st8te9ent of the
ch8n7es in, or 89end9ents to the subAect 9e8sure, 8nd sh8ll be si7ned b3 8 98Aorit3 of the
9e9bers of e8ch 2ouse p8nel, votin7 sep8r8tel3.
+ustice -8vide further expl8ined th8t under its li9ited 8uthorit3, the Bic89er8l Conference
Co99ittee could onl3 C8D restore, Eholl3 or p8rtl3, the specific provisions of the 2ouse Bill 89ended
b3 the ,en8te Bill4 CbD sust8in, Eholl3 or p8rtl3, the ,en8te5s 89end9ents, or CcD b3 E83 of
co9pro9ise, to 87ree th8t neither provisions in the 2ouse Bill 89ended b3 the ,en8te nor the
l8tter5s 89end9ents thereto be c8rried into the fin8l for9 of the for9er. +ustice Ro9ero, Eho 8lso
dissented in Tolentino, 8dded th8t the conference co99ittee is not 8uthoriMed to initi8te or propose
co9pletel3 neE 98tters 8lthou7h under cert8in le7isl8tive rules liFe the *effersonEs >anual, 8
conference co99ittee 983 introduce +ermane 98tters in 8 p8rticul8r bill. 2oEever, such 98tters
should be circu9scribed b3 the co99ittee5s sole 8uthorit3 8nd function to reconcile differences.
&n the c8se of R.A. No. H@@#, the Bic89er8l Conference Co99ittee 98de 8n :89end9ent b3
deletion: Eith respect to the :no p8ss on provision: cont8ined in both 2ouse Bill C2BD No. @#"I 8nd
,en8te Bill C,BD No. 1HI". 2B @#"I proposed to 89end ,ections 1"6 8nd 1" of the N&RC b3
expressl3 st8tin7 therein th8t sellers of petroleu9 products 8nd poEer 7ener8tion co9p8nies sellin7
electricit3 8re prohibited fro9 p8ssin7 on the ;A* to the consu9ers. ,B 1HI" proposed to 89end
,ection 1" b3 liFeEise prohibitin7 poEer 7ener8tion co9p8nies fro9 p8ssin7 on the ;A* to the
consu9ers. 2oEever, these :no p8ss on provisions: Eere 8lto7ether deleted b3 the Bic89er8l
Conference Co99ittee. At the le8st, since there E8s no dis87ree9ent betEeen 2B @#"I 8nd ,B
1HI" Eith respect to the :no p8ss on provision: on the s8le of electricit3, the Bic89er8l Conference
Co99ittee 8cted be3ond the scope of its 8uthorit3 in deletin7 the pertinent proviso.
At this point, it is Eell to rec8ll the r8tion8le for the :no-89end9ent rule: 8nd the :three-re8din7 rule:
in Article ;&, ,ection !6C!D of the Constitution. *he proscription on 89end9ents upon the l8st
re8din7 is intended to subAect 8ll bills 8nd their 89end9ents to intensive deliber8tion b3 the
le7isl8tors 8nd the 89ple ventil8tion of issues to 8fford the public 8n opportunit3 to express their
opinions or obAections thereon.
6
An8lo7ousl3, it is s8id th8t the :three-re8din7 rule: oper8tes :8s 8
self-bindin7 9ech8nis9 th8t 8lloEs the le7isl8ture to 7u8rd 878inst the conseBuences of its oEn
future p8ssions, 93opi8, or herd beh8vior. B3 reBuirin7 th8t bills be re8d 8nd deb8ted on successive
d83s, le7isl8ture 983 8nticip8te 8nd forest8ll future occ8sions on Ehich it Eill be seiMed b3
deliber8tive p8tholo7ies.:
#
As +ere93 Benth89, 8 noted politic8l 8n8l3st, put itJ :QtRhe 9ore
susceptible 8 people 8re of excite9ent 8nd bein7 led 8str83, so 9uch the 9ore ou7ht the3 to pl8ce
the9selves under the protection of for9s Ehich i9pose the necessit3 of reflection, 8nd prevent
surprises.:

Reports of the Bic89er8l Conference Co99ittee, especi8ll3 in c8ses Ehere subst8nti8l

89end9ents, or in this c8se deletions, h8ve been 98de to the respective bills of either house of
Con7ress, ou7ht to under7o the :three-re8din7: reBuire9ent in order to 7ive effect to the letter 8nd
spirit of Article ;&, ,ection !6C!D of the Constitution.
*he Bic89er8l Conference Co99ittee Report th8t eventu8ll3 bec89e R.A. No. H@@#, in f8ct,
bolsters the 8r7u9ent for the strict co9pli8nce b3 Con7ress of the le7isl8tive procedure prescribed
b3 the Constitution. As c8n be 7le8ned fro9 the s8id Report, of the H ,en8tors-Conferees,
H
onl3 I
,en8tors
1"
unBu8lifiedl3 8pproved it. ,en8tor +oFer P. Arro3o expressed his Bu8lified dissent Ehile
,en8tors ,er7io R. (s9eV8 &&& 8nd +u8n Ponce Enrile 8pproved it Eith reserv8tions. (n the other
h8nd, of the tEent3-ei7ht C!D )e9bers of the 2ouse of Represent8tives-Conferees,
11
fourteen
C11D
1!
8pproved the s89e Eith reserv8tions Ehile three
1@
voted no. All the reserv8tions expressed b3
the conferees rel8te to the deletion of the :no p8ss on provision.: (nl3 eleven C11D unBu8lifiedl3
8pproved it. &n other Eords, even 89on7 the9selves, the conferees Eere not un8ni9ous on their
Report. Nonetheless, Con7ress 8pproved it Eithout even thorou7hl3 discussin7 the reserv8tions or
Bu8lific8tions expressed b3 the conferees therein.
*his :t8Fe it or le8ve it: st8nce vis-`-vis conference co99ittee reports opens the possibilit3 of
89end9ents, Ehich 8re subst8nti8l 8nd not even 7er98ne to the ori7in8l bills of either house, bein7
introduced b3 the conference co99ittees 8nd voted upon b3 the le7isl8tors Eithout FnoEled7e of
their contents. *his pr8ctice c8nnot be counten8nced 8s it p8tentl3 runs 8foul of the essence of
Article ;&, ,ection !6C!D of the Constitution. >orse, it is t8nt89ount to Con7ress surrenderin7 its
le7isl8tive functions to the conference co99ittees.
atification by Con+ress did not cure the
unconstitutional act of the $icameral Conference
Committee of deletin+ the 4no pass on provision4
*h8t both the ,en8te 8nd the 2ouse of Represent8tives 8pproved the Bic89er8l Conference
Co99ittee Report Ehich deleted the :no p8ss on provision: did not cure the unconstitution8l 8ct of
the s8id co99ittee. As succinctl3 put b3 Chief +ustice -8vide in his dissent in Tolentino, :QtRhis
doctrine of r8tific8tion 983 8ppl3 to 9inor procedur8l fl8Es or toler8ble bre8ches of the p8r89eters
of the bic89er8l conference co99ittee5s li9ited poEers but never to viol8tions of the Constitution.
Con7ress is not 8bove the Constitution.:
11
"nrolled $ill &octrine is not applicable 8here, as in
this case, there is +rave violation of the Constitution
As expected, the ponencia invoFes the enrolled bill doctrine to buttress its refus8l to p8ss upon the
v8lidit3 of the 8ss8iled 8cts of the Bic89er8l Conference Co99ittee. %nder the :enrolled bill
doctrine,: the si7nin7 of 8 bill b3 the ,pe8Fer of the 2ouse 8nd the ,en8te President 8nd the
certific8tion of the ,ecret8ries of both houses of Con7ress th8t it E8s p8ssed 8re conclusive of its
due en8ct9ent. &n 8ddition to Tolentino, the ponencia citesFari!as v. "#ecutive Secretary
1I
Ehere the
Court declined to 7o behind the enrolled bill vis-`-vis the 8lle78tions of the petitioners therein th8t
irre7ul8rities 8ttended the p8ss87e of Republic Act No. H""6, otherEise FnoEn 8s the /8ir Election
Act.
Reli8nce b3 the ponencia on Fari!as is Buite 9ispl8ced. *he Court5s 8dherence to the enrolled bill
doctrine in the s8id c8se E8s Austified for the folloEin7 re8sonsJ
*he Court finds no re8son to devi8te fro9 the s8lut8r3 in this c8se Ehere the irre7ul8rities 8lle7ed b3
the petitioners 9ostl3 involved the intern8l rules of Con7ress, Ehether 2ouse or ,en8te.
P8rli89ent8r3 rules 8re 9erel3 procedur8l 8nd Eith their observ8nce the courts h8ve no concern.
>h8tever doubts there 983 be 8s to the for98l v8lidit3 of Rep. Act No. H""6 9ust be resolved in its
f8vor. *he Court reiter8tes its rulin7 in %rroyo v. &e 'enecia, vi(.J
But the c8ses, both here 8nd 8bro8d, in v8r3in7 for9s of expression, 8ll den3 to the courts the poEer
to inBuire into the 8lle78tions th8t, in en8ctin7 8 l8E, 8 2ouse of Con7ress f8iled to co9pl3 Eith its
oEn rules, in the 8bsence of shoEin7 th8t there E8s 8 viol8tion of 8 constitution8l provision or the
ri7hts of priv8te individu8ls. &n )sme!a v. Pendatun, it E8s heldJ :At 8n3 r8te, courts h8ve decl8red
th8t Pthe rules 8dopted b3 deliber8tive bodies 8re subAect to revoc8tion, 9odific8tion or E8iver 8t the
ple8sure of the bod3 8doptin7 the9.5 And it h8s been s8id th8t PP8rli89ent8r3 rules 8re 9erel3
procedur8l, 8nd Eith their observ8nce, the courts h8ve no concern. *he3 983 be E8ived or
disre78rded b3 the le7isl8tive bod3.5 ConseBuentl3, P9ere f8ilure to confor9 to p8rli89ent8r3 us87e
Eill not inv8lid8te the 8ction Ct8Fen b3 8 deliber8tive bod3D Ehen the reBuisite nu9ber of 9e9bers
h8ve 87reed to 8 p8rticul8r 9e8sure.
16
*hus, in Fari!as, the Court5s refus8l to 7o behind the enrolled bill E8s b8sed on the f8ct th8t the
8lle7ed irre7ul8rities th8t 8ttended the p8ss87e of R.A. No. H""6 9erel3 involved the intern8l rules of
both houses of Con7ress. *he procedur8l irre7ul8rities 8lle7edl3 co99itted b3 the conference
co99ittee therein did not 89ount to 8 viol8tion of 8 provision of the Constitution.
1#
&n contr8st, the 8ct of the Bic89er8l Conference Co99ittee of deletin7 the :no p8ss on provision: of
,B 1HI" 8nd 2B @#"I infrin7e Article ;&, ,ection !6C!D of the Constitution. *he viol8tion of this
constitution8l provision E8rr8nts the exercise b3 the Court of its constitution8ll3-ord8ined poEer to
striFe doEn 8n3 8ct of 8 br8nch or instru9ent8lit3 of 7overn9ent or 8n3 of its offici8ls done Eith
7r8ve 8buse of discretion 89ountin7 to l8cF or excess of Aurisdiction.
1
ACCORD"NG!, & Aoin the concurrin7 8nd dissentin7 opinion of )r. +ustice Re3n8to ,. Puno 8nd
vote to dis9iss the petitions Eith respect to ,ections 1, I 8nd 6 of Republic Act No. H@@# for bein7
pre98ture. /urther, & vote to decl8re 8s unconstitution8l ,ection !1 thereof 8nd the deletion of the
:no p8ss on provision: cont8ined in the constituent bills of Republic Act No. H@@#.
ROMEO '. CA!!E'O, SR.
Associ8te +ustice
$oot*ote2
1
G.R. No. 11I1II, !I Au7ust 1HH1, !@I ,CRA 6@".
!
Tolentino v. Secretary of Finance, supra, 8t 66#-66.
@
,ee, for ex89ple, ;er9uele, A., *he Constitution8l '8E of Con7ression8l Procedure, #1 %.
Chi. '. Rev. @61 C,prin7 !""1D.
1
G8lloE83, G., Con7ress 8t the Crossro8ds, pp. H-1"".
I
Bern8s ,+, +., *he 1H# Constitution of the Republic of the Philippines, A Co99ent8r3, pp.
#"!-#"@ C1HH6 Ed.D.
6
-issentin7 (pinion of +ustice Ro9ero in Tolentino, supra.
#
;er9uele, supra.

0d. citin7 Benth89, +., Politic8l *8ctics.

H
,en8tors R8lph G. Recto, +oFer P. Arro3o, )8nuel B. ;ill8r, Rich8rd +. Gordon, Rodolfo G.
Bi8Mon, Ed78rdo G. An78r8, ).A. )8dri78l, ,er7io R. (s9en8 &&&, +u8n Ponce Enrile.
1"
,en8tors Recto, ;ill8r, Gordon, Bi8Mon.
11
Represent8tives +esli A. '8pus, -8nilo E. ,u8reM, Arnulfo P. /uentebell8, Eric -. ,in7son,
+unie E. Cu8, *eodoro '. 'ocsin, +r., ,8l8cnib B8terin8, Edcel C. '8798n, 'uis R. ;ill8fuerte,
2er9inio G. *eves, Edu8rdo G. Gull8s, +oe3 ,8rte ,8lced8, Prospero C. No7r8les, ExeBuiel
B. +8vier, Rol8ndo G. And838, +r., Guiller9o P. Cu8, Arthur -. -efensor, R8ul ;. -el )8r,
Ron8ldo B. <89or8, Rolex P. ,uplico, +8cinto ;. P8r8s, ;incent P. Crisolo7o, Al8n Peter ,.
C83et8no, +oseph ,8nti87o, (sc8r G. )8l8pit8n, C8t8lino /i7uero8, Antonino P. Ro98n 8nd
&9ee R. )8rcos.
1!
Represent8tives ,u8reM, /uentebell8, Cu8, 'ocsin, +r., *eves, Gull8s, +8vier, Cu8,
-efensor, Crisolo7o, C83et8no, ,8nti87o, )8l8pit8n 8nd )8rcos.
1@
Represent8tives -el )8r, ,uplico 8nd P8r8s.
11
-issentin7 (pinion in Tolentino, supra.
1I
G.R. No. 11#@#, 1" -ece9ber !""@, 11# ,CRA I"@.
16
0d., pp. I!H-I@". CE9ph8ses 9ine.D
1#
B3 E83 of expl8n8tion, the constitution8l issues r8ised in Fari!as Eere C1D Ehether ,ection
11 of R.A. No. H""6 E8s 8 rider or th8t it viol8ted Article ;&, ,ection !6C1D of the Constitution
reBuirin7 th8t :QeRver3 bill p8ssed b3 Con7ress sh8ll e9br8ce onl3 one subAect Ehich sh8ll be
expressed in the title thereof4: 8nd C!D Ehether ,ection 11 of R.A. No. H""6 viol8ted the
eBu8l protection cl8use of the Constitution. (n both issues the Court ruled in the ne78tive. *o
reiter8te, unliFe in the present c8ses, the 8cts of the conference co99ittee Eith respect to
R.A. No. H""6 in Fari!as 8lle7edl3 viol8ted the intern8l rules of either house of Con7ress, but
it E8s not 8lle7ed therein th8t the3 89ounted to 8 viol8tion of 8n3 constitution8l provision on
le7isl8tive procedure.
1
Article ;&&&, ,ection 1, C(N,*&*%*&(N.
The Lawphil Project - Arellano Law Foundation
EN BANC
G.R. No. 168056 #ABAKADA G6ro P)rt& !02t G4ormer%& ASS'SH O4403er2 S)m2o* S. A%3)*t)r),
et )%. 5. -o*. E7e36t05e Se3ret)r& E+6)r+o Erm0t), et )%.(/
G.R. No. 16820> #A?60%0*o Q. P0me*te%, 'r., et )%. 5. E7e36t05e Se3ret)r& E+6)r+o R. Erm0t), et
)%.(/
G.R. No. 168B61 #A22o30)t0o* o4 P0%0p0*)2 S1e%% De)%er2, "*3., et3., et )%. 5. Ce2)r ,. P6r020m),
et3., et )%.(/
G.R. No. 168B6= #$r)*302 'o2ep1 G. E236+ero, et )%. 5. Ce2)r ,. P6r020m), et3., et )%.(/ )*+
G.R. No. 168>=0 #B)t))* Go5er*or E*r0?6e T. G)r30), 'r. 5. -o*. E+6)r+o R. Erm0t), et3., et )%.(
Prom6%@)te+:
September 1, 2005
6----------------------------------------------------------------------------------------6
CONCURR"NG AND D"SSENT"NG OP"N"ON
A9CUNA, J.:
Republic Act No. H@@#, the E-;A* l8E, is 8ss8iled 8s 8n unconstitution8l 8bdic8tion of Con7ress of
its poEer to t8x throu7h its dele78tion to the President of the decision to incre8se the r8te of the t8x
fro9 1"K to 1!K, effective +8nu8r3 1, !""6, 8fter 8n3 of tEo conditions h8s been s8tisfied.
1
*he tEo conditions 8reJ
CiD ;8lue-8dded t8x collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the previous
3e8r exceeds tEo 8nd four-fifth percent C!
1
NIKD4 or
CiiD N8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceeds one 8nd one-
h8lf percent C1 OKD.
!
A scrutin3 of these :conditions: shoEs th8t one of the9 is cert8in to h8ppen on +8nu8r3 1, !""6.
*he first condition is th8t the collection fro9 the E-;A* exceeds !
1
NIK of the Gross -o9estic
Product CG-PD of the previous 3e8r, 8 r8tio th8t is FnoEn 8s the t8x effort.
*he second condition is th8t the n8tion8l 7overn9ent deficit exceeds 1 OK of the G-P of the
previous 3e8r.
Note th8t the l8E s83s th8t the r8te sh8ll be incre8sed if 8n3 of the tEo conditions h8ppens, i.e., if
condition CiD orcondition CiiD occurs.
NoE, in re8listic ter9s, considerin7 the short ti9e-fr89e 7iven, the onl3 pr8ctic8ble E83 th8t the
present deficit of the n8tion8l 7overn9ent c8n be reduced to 1 OK or loEer, thus preventin7
condition CiiD fro9 h8ppenin7, is to incre8se the t8x effort, Ehich 98inl3 h8s to co9e fro9 the E-;A*.
But incre8sin7 the t8x effort throu7h the E-;A*, to the extent needed to reduce the n8tion8l deficit to
1 OK or less, Eill tri77er the h8ppenin7 of condition CiD under the l8E. *hus, the h8ppenin7 of
condition CiD or condition CiiD is in re8lit3 cert8in 8nd un8void8ble, 8s of +8nu8r3 1, !""6.
*his beco9es 8ll the 9ore cle8r Ehen Ee consider the fi7ures provided durin7 the or8l 8r7u9ents.
*he Gross -o9estic Product for !""I is esti98ted 8t PI.@ *rillion pesos.
*he t8x effort of the present ;A* is noE 8t 1.IK.
*he n8tion8l bud7et8r3 deficit 878inst the G-P is noE 8t @K.
,o to reduce the deficit to 1.IK fro9 @K, one h8s to incre8se the t8x effort fro9 ;A*, noE 8t 1.IK,
to 8t le8st @K, thereb3 exceedin7 the !
1
NI percent ceilin7 in condition CiD, 98Fin7 condition CiD
h8ppen.
&f, on the other h8nd, this is not done, then condition CiiD h8ppens = the bud7et deficit re98ins over
1.IK.
>h8t is the result of thisL *he result is th8t in re8lit3, the l8E does not i9pose 8n3 condition, or the
r8te incre8se thereunder, fro9 1"K to 1!K, effective +8nu8r3 1, !""6, is uncondition8l. /or 8
condition is 8n event th8t 983 or 983 not h8ppen, or one Ehose occurrence is uncert8in.
@
NoE Ehile
condition CiD is indeed uncert8in 8nd condition CiiD is liFeEise uncert8in, the co9bin8tion of both
98Fes the occurrence of one of the9 cert8in.
Accordin7l3, there is here no 8bdic8tion b3 Con7ress of its poEer to fix the r8te of the t8x since the
r8te incre8se provided under the l8E, fro9 1"K to 1!K, is definite 8nd cert8in to occur, effective
+8nu8r3 1, !""6. All th8t the President Eill do is st8te Ehich of the tEo conditions occurred 8nd
thereupon i9ple9ent the r8te incre8se.
At first 7l8nce, therefore, it Eould 8ppe8r th8t the decision to incre8se the r8te is to be 98de b3 the
President, or th8t the incre8se is still uncert8in, 8s it is subAect to the h8ppenin7 of 8n3 of tEo
conditions.
Nevertheless, the contr8r3 is true 8nd thus it Eould be best in these difficult 8nd critic8l ti9es to let
our people FnoE precisel3 Eh8t burdens the3 8re bein7 8sFed to be8r 8s the necess8r3 9e8ns to
recover fro9 8 crisis th8t c8lls for 8 heroic s8crifice b3 8ll.
&t is for this re8son th8t the Court reBuired respondents to sub9it 8 cop3 of the rules to i9ple9ent
the E-;A*, p8rticul8rl3 8s to the i9p8ct of the t8x on prices of 8ffected co99odities, speci8ll3 oil 8nd
electricit3. /or the onset of the l8E l8st +ul3 1, !""I E8s confusin7, resultin7 in 8cross-the-bo8rd
incre8ses of 1"K in the prices of co99odities. *his is not supposed to be the effect of the l8E, 8s
E8s 98de cle8r durin7 the or8l 8r7u9ents, bec8use the l8E 8lso cont8ins provisions th8t 9iti78te
the i9p8ct of the E-;A* throu7h reduction of other Finds of t8xes 8nd duties, 8nd other si9il8r
9e8sures, speci8ll3 8s to 7oods th8t 7o into the suppl3 ch8in of the 8ffected products. A proper
i9ple9ent8tion of the E-;A*, therefore, should c8use onl3 the 8ppropri8te incre9ent8l incre8se in
prices, reflectin7 the net incre9ent8l effect of the t8x, Ehich is not necess8ril3 1"K, but possibl3
less, dependin7 on the products involved.
*he introduction of the 9iti78tin7 or cushionin7 9e8sures throu7h the ,en8te or throu7h the
Bic89er8l Conference Co99ittee, is 8lso bein7 Buestioned b3 petitioners 8s unconstitution8l for
viol8tin7 the rule 878inst 89end9ents 8fter third re8din7 8nd the rule th8t t8x 9e8sures 9ust
ori7in8te exclusivel3 in the 2ouse of Represent8tives CArt. ;&, ,ecs. !1 8nd !6 Q!R, ConstitutionD. /or
93 p8rt, & Eould r8ther 7ive the necess8r3 leeE83 to Con7ress, 8s lon7 8s the ch8n7es 8re 7er98ne
to the bill bein7 ch8n7ed, the bill Ehich
ori7in8ted fro9 the 2ouse of Represent8tives, 8nd these 8re so, since these Eere precisel3 the
9iti78tin7 9e8sures th8t 7o h8nd-on-h8nd Eith the E-;A*, 8nd 8re, therefore, essenti8l -- 8nd
hopefull3 sufficient -- 9e8ns to en8ble our people to be8r the s8crifices the3 8re bein7 8sFed to
98Fe. ,uch 8n 8ppro8ch is in 8ccord8nce Eith the Enrolled Bill -octrine th8t is the prev8ilin7 rule in
this Aurisdiction. C*olentino v. ,ecret8r3 of /in8nce, !1H ,CRA 6! Q1HH1RD. *he exceptions & find 8re
the provisions on corpor8te inco9e t8xes, Ehich 8re not 7er98ne to the E-;A* l8E, 8nd 8re not
found in the ,en8te 8nd 2ouse bills.
& thus 87ree Eith Chief +ustice 2il8rio G. -8vide, +r. in his sep8r8te opinion th8t the folloEin7 8re not
7er98ne to the E-;A* le7isl8tionJ
A9ended *A6
C(-E Provision ,ubAect )8tter
,ection !# R8te of inco9e t8x on do9estic corpor8tions
,ection !CADC1D R8te of inco9e t8x on resident forei7n corpor8tions
,ection !CBDC1D R8te of inco9e t8x on non-resident forei7n corpor8tions
,ection !CBDCI-bD R8te of inco9e t8x on intercorpor8te dividends received b3 non-resident forei7n
corpor8tions
,ection @1CBDC1D -eduction fro9 7ross inco9e
,i9il8rl3, & 87ree Eith +ustice Arte9io ;. P8n78nib8n in his sep8r8te opinion th8t the folloEin7 8re
not 7er98ne to the E-;A* l8EJ
:,ections 1, !, 8nd @ of the Republic Act No. H@@#G, in so f8r 8s these sections C8D amend the rates
of income ta#on do9estic, resident forei7n, 8nd nonresident forei7n corpor8tions4 CbD amend the ta#
credit 878inst t8xes due fro9 nonresident forei7n corpor8tions on the intercorpor8te dividends4 8nd
CcD reduce the allo8able deduction from interest e#pense.:
Respondents should, in 8n3 c8se, noE be 8ble to i9ple9ent the E-;A* l8E Eithout confusion 8nd
thereb3 8chieve its purpose.
1
& vote to GRAN* the petitions to the extent of decl8rin7 unconstitution8l the provisions in Republic
Act. No. H@@# th8t 8re not 7er98ne to the subAect 98tter 8nd -EN. s8id petitions 8s to the rest of
the l8E, Ehich 8re constitution8l.
ADO!$O S. A9CUNA
Associ8te +ustice
$oot*ote2
1
*he Constitution st8tes th8t :Con7ress 983, b3 l8E, 8lloE the President to fix Eithin
specified li9its, 8nd subAect to such li9it8tions 8nd restrictions 8s it 983 i9pose, t8riff r8tes,
i9port 8nd export Buot8s, tonn87e 8nd Eh8rf87e dues, 8nd other duties 8s i9posts Eithin
the fr89eEorF of the n8tion8l develop9ent pro7r89 of the Govern9ent.: CArt. ;&, ,ec. ! Q!R,
e9ph8sis supplied.D
Petitioners cl8i9 th8t the poEer does not extend to fixin7 the r8tes of t8xes, since t8xes
8re not t8riffs, i9port 8nd export Buot8s, tonn87e 8nd Eh8rf87e dues, or other duties or
i9posts.
!
,ection 1, Republic Act No. H@@#. *he pertinent portion of the provision st8tesJ
,EC. 1. ,ection 1"6 of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s
folloEsJ
:,EC. 1"6. 'alue-added Ta# on Sale of :oods or Properties. =
:CAD ate and $ase of Ta#. = *here sh8ll be levied, 8ssessed 8nd collected on ever3 s8le,
b8rter or exch8n7e of 7oods or properties, 8 v8lue-8dded t8x eBuiv8lent to ten percent C1"KD
of the 7ross sellin7 price or 7ross v8lue in 9one3 of the 7oods or properties sold, b8rtered or
exch8n7ed, such t8x to be p8id b3 the seller or tr8nsferorJ Provided, *h8t the President,
upon the reco99end8tion of the ,ecret8r3 of /in8nce, sh8ll, effective +8nu8r3 1, !""6, r8ise
the r8te of v8lue-8dded t8x to tEelve percent C1!KD, 8fter 8n3 of the folloEin7 conditions h8s
been s8tisfiedJ
:CiD ;8lue-8dded t8x collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the
previous 3e8r exceeds tEo 8nd four-fifth percent C!
1
NIKD4 or
:CiiD N8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceeds one
8nd one-h8lf percent C1 OKD.:
@
Condition h8s been defined b3 Escriche 8s :ever3 future 8nd uncert8in event upon Ehich
8n obli78tion or provision is 98de to depend.: &t is 8 future 8nd uncert8in event upon Ehich
the 8cBuisition or resolution of ri7hts is 98de to depend b3 those Eho execute the Auridic8l
8ct. /uturit3 8nd uncert8int3 9ust concur 8s ch8r8cteristics of the event.
. . .
An event Ehich is not uncert8in but 9ust necess8ril3 h8ppen c8nnot be 8 condition4 the
obli78tion Eill be considered 8s one Eith 8 ter9. C&; *('EN*&N(, C())EN*AR&E, AN-
+%R&,PR%-ENCE (N *2E C&;&' C(-E (/ *2E P2&'&PP&NE,, 111D.
1
& voted for the issu8nce of the te9por8r3 restr8inin7 order to prevent the disorderl3
i9ple9ent8tion of the l8E th8t Eould h8ve defe8ted its ver3 purpose 8nd disrupted the entire
;A* s3ste9, resultin7 in less revenues. *he r8tion8le, therefore, of the rule 878inst enAoinin7
the collection of t8xes, th8t t8xes 8re the lifeblood of Govern9ent, le8ned in f8vor of the
te9por8r3 restr8inin7 order.
GR No. 168056 8 #ABAKADA GURO *AR4A 50S4 B9o,el( AASJASC O99013RS SA7SON S.
A51AN4ARA an% 3D 80N13N4 S. A5BANO !. 4H3 HONORAB53 3D31U4083 S31R34ARA
3DUARDO 3R704AE HONORAB53 S31R34ARA O9 4H3 D3*AR473N4 O9 90NAN13 13SAR
*UR0S07AE an% HONORAB53 1O770SS0ON3R O9 0N43RNA5 R383NU3 GU0553R7O
*ARAANO, JR.C
GR No. 16820> L #A@U050NO @. *073N435, JR., 5U0SA *. 3J3R104O'3S4RADA, J0NGGOA 3.
3S4RADA, *AN905O 7. 5A1SON, A59R3DO S. 507, JA7BA A.S. 7ADR0GA5, an% S3RG0O R.
OS73FA 000 !. 3D31U4083 S31R34ARA 3DUARDO R. 3R704A, 13SAR 8. *UR0S07A,
S31R34ARA O9 90NAN13, GU0553R7O 5. *ARAANO, JR., 1O770SS0ON3R O9 4H3 BUR3AU
O9 0N43RNA5 R383NU3C
GR No. 168B61 L ASSO10A40ON O9 *050*0NAS SH355 D3A53RS, 0N1. epesente% /( its
*esi%ent, ROSAR0O AN4ON0OE *34RON D3A53RSG ASSO10A40ON epesente% /( its
*esi%ent, RU4H 3. BARB0B0E ASSO10A40ON O9 1A543D D3A53RSG O9 4H3 *H050**0N3S
epesente% /( its *esi%ent, 73R13D04AS A. GAR10AE ROSAR0O AN4ON0O %oin" /usiness
un%e t$e na,e an% st(le o) &ANB NOR4H SH355 S3R8013 S4A40ON&E 5OURD3S 7AR40N3H
%oin" /usiness un%e t$e na,e an% st(le o) &SH355 GA43 I N. DO70NGO&E B34HHA0DA 4AN
%oin" /usiness un%e t$e na,e an% st(le o) &AD8AN13D SH355 S4A40ON&E R3ANA5DO *.
7ON4OAA %oin" /usiness un%e t$e na,e an% st(le o) &N3# 5A7UAN SH355 S3R8013
S4A40ON&E 39R3N SO44O %oin" /usiness un%e t$e na,e an% st(le o) &R3D9035D SH355
S3R8013 S4A40ON&E DON01A 1OR*ORA40ON epesente% /( its *esi%ent, D3S0
4O7A1RUHE RU4H 3. 7ARB0B0 %oin" /usiness un%e t$e na,e an% st(le o) &RJR *34RO
S4A40ON&E *343R 7. UNGSON %oin" /usiness un%e t$e na,e an% st(le o) &15ASS01 S4AR
GASO50N3 S3R8013 S4A40ON&E 7AR0AN SH305A A. 533 %oin" /usiness un%e t$e na,e an%
st(le &N43 GASO50N3 J S3R8013 S4A40ON&E JU50AN 13SAR *. *OSADAS %oin" /usiness
un%e t$e na,e an% st(le o) &S4AR1ARGA 3N43R*R0S3S&E ADORA10ON 7AF3BO %oin"
/usiness un%e t$e na,e an% st(le o) &17A 7O4OR0S4S 13N43R&E SUSAN 7. 3N4RA4A
%oin" /usiness un%e t$e na,e an% st(le o) &53ONAGS GASO50N3 S4A40ON an% S3R8013
13N43R&E 1AR73504A BA5DONADO %oin" /usiness un%e t$e na,e an% st(le o) &90RS4
1HO013 S3R8013 13N43RG6 RH3A7AR A. RA7OS %oin" /usiness un%e t$e na,e an% st(le
o) &RJA7 *44 GAS S4A40ON&E 7A. 0SAB35 80O5AGO %oin" /usiness un%e t$e na,e an%
st(le o) &80O5AGO'*44 S3R8013 13N43R&E 7O4OR0S4SG H3AR4 1OR*ORA4ON
epesente% /( its 8i.e'*esi%ent )o Opeations, JOS3504O 9. 95ORD350HAE 7O4OR0S4SG
HAR8ARD 1OR*ORA40ON epesente% /( its 8i.e'*esi%ent )o Opeations, JOS3504O 9.
95ORD350HAE 7O4OR0S4SG H3R04AG3 1OR*ORA40ON epesente% /( its 8i.e'*esi%ent )o
Opeations, JOS3504O 9. 95ORD350HAE *H050**0N3 S4ANDARD O05 1OR*ORA40ON
epesente% /( its 8i.e'*esi%ent )o Opeations, JOS3504O 9. 95ORD350HAE RO73O
7ANU35 %oin" /usiness un%e t$e na,e an% st(le o) &RO77AN GASO50N3 S4A40ON&E
AN4HONA A5B3R4 1RUH 000 %oin" /usiness un%e t$e na,e an% st(le o) &4RU3 S3R8013
S4A40ON& 5. 13SAR 8. *UR0S07A, in $is .apa.it( as Se.eta( o) t$e Depat,ent o) 9inan.e
an% GU0553R7O 5. *ARAANO, JR., in $is .apa.it( as 1o,,issione o) 0ntenal Re!enue.
GR No. 168B6= L 9RAN10S JOS3*H G. 3S1UD3RO, 80N13N4 1R0SO5OGO, 377ANU35
JOS35 J. 8055ANU38A, RODO59O G. *5AHA, DAR53N3 AN4ON0NO'1US4OD0O, OS1AR G.
7A5A*04AN, B3NJA70N 1. AGARAO, JR., JUAN 3DGARDO 7. ANGARA, JUS40N 7AR1 SB.
1H0*31O, 95OR3N10O0 G. NO35, 7UJ08 S. HA4A7AN, R3NA4O B. 7AG4UBO, JOS3*H A.
SAN40AGO, 43O90S4O D5. GU0NGONA 000, RUA 350AS 1. 5O*3H, RODO59O @. AGBAAAN0
an% 43ODORO A. 1AS0FO, !. 13SAR 8. *UR0S07A, in $is .apa.it( as Se.eta( o) 9inan.e,
GU0553R7O 5. *ARAANO, JR., in $is .apa.it( as 1o,,issione o) 0ntenal Re!enue, an%
3DUARDO R. 3R704A, in $is .apa.it( as 3-e.uti!e Se.eta(.
GR. No. 168>=0 L BA4AAN GO83RNOR 3NR0@U3 4. GAR10A, JR. !. HON. 3DUARDO R.
3R704A, in $is .apa.it( as t$e 3-e.uti!e Se.eta(E HON. 7ARGAR04O 4383S, in $is
.apa.it( as Se.eta( o) 9inan.eE HON. JOS3 7AR0O BUNAG, in $is .apa.it( as t$e O01
1o,,issione o) t$e Bueau o) 1usto,s.
x-------------------------------------------------------------------x
D"SSENT"NG OP"N"ON
T0*@), J.:
T1e E8,AT !);,
1
)2 0t 2t)*+2, ;0%% e7term0*)te o6r 3o6*tr&D2 2m)%% to me+06m e*terpr02e2. *his
Eill be the net effect of 8ffir9in7 ,ection of the l8E, Ehich 89ends ,ections 11" of the N8tion8l
&ntern8l Revenue Code CN&RCD b3 i9posin7 8 sevent3 percent C#"KD c8p on the credit8ble input t8x
8 ;A*-re7istered person 983 8ppl3 ever3 Bu8rter 8nd 8 98nd8tor3 sixt3 C6"D -9onth 89ortiM8tion
period on the input t8x on 7oods purch8sed or i9ported in 8 c8lend8r 9onth if the 8cBuisition cost of
such 7oods exceeds (ne )illion Pesos CP1,""",""".""D.
T)7e2 m)& be 0*1ere*t%& p6*0t05e, b6t ;1e* t1e 40*e %0*e bet;ee* +)m)@e )*+ +e2tr63t0o* 02
3ro22e+, t1e 3o6rt2 m62t 2tep 4ort1 )*+ 36t t1e 1)*@m)*D2 *oo2e. +ustice 2ol9es once
confidentl3 8sserted th8t :the poEer to t8x is not the poEer to destro3 Ehile this Court sits:, 8nd Ee
should ver3 Eell live up to this expect8tion not onl3 of the revered 2ol9es, but of the /ilipino people
Eho rel3 on this Court 8s the 7u8rdi8n of their ri7hts. At 2t)Je 02 t1e r0@1t to e702t )*+ 26b202t
+e2p0te t)7e2, ;1031 02 e*3omp)22e+ 0* t1e +6e pro3e22 3%)62e.
& respectfull3 sub9it these vieEs Ehile 98int8inin7 the deepest respect for the prero78tive of the
le7isl8ture to i9pose t8xes, 8nd of the n8tion8l 7overn9ent to ch8rt econo9ic polic3. ,uch respect
i9pels 9e to vote to den3 the petitions in G.R. Nos. 16"I6, 16!"#, 1616@,
!
8nd 16#@", even 8s
& 8cFnoEled7e cert8in 9erit in the ch8llen7es 878inst the E-;A* l8E th8t 8re 8sserted in those
petitions. &n the fin8l 8n8l3sis, petitioners therein 8re un8ble to convincin7l3 de9onstr8te the
constitution8l infir9it3 of the provisions the3 seeF to 8ss8il. *he onl3 exception is ,ection !1 of the
l8E, Ehich & consider unconstitution8l, for re8sons & sh8ll l8ter el8bor8te.
2oEever, & see the petition in G.R. No. 16161 8s 9eritorious 8nd Eould vote to 7r8nt it. Accordin7l3,
& dissent 8nd hold 8s unconstitution8l ,ection of Republic Act No. H@@#, insof8r 8s it 89ends
,ection 11"CAD 8nd CBD of the N8tion8l &ntern8l Revenue Code CN&RCD 8s Eell 8s ,ection 1! of the
s89e l8E, Eith respect to its 89end9ent of ,ection 111CCD of the N&RC.
*he first p8rt of 93 discussion pert8ins to the petitions in G.R. Nos. 16"I6, 16!"#, 1616@, 8nd
16#@", Ehile the second p8rt is devoted to Eh8t & dee9 the 9ost cruci8l issue before the Court, the
petition in G.R. No. 16161.
0.
6ndue &ele+ation and the 0ncrease
)f the '%T ate
)3 first point pert8ins to Ehether or not ,ections 1, I 8nd 6 of the E-;A* '8E constitutes 8n undue
dele78tion of le7isl8tive poEer. &n 8ppreci8tin7 the 8spect of undue dele78tion 8s re78rds t8x8tion
st8tutes, the fund89ent8l point re98ins th8t the poEer of t8x8tion is inherentl3 le7isl8tive,
@
8nd 983
be i9posed or revoFed onl3 b3 the le7isl8ture.
1
&n t8nde9 Eith ,ection 1, Article ;& of the
Constitution Ehich institution8liMes the l8E-98Fin7 poEer of Con7ress, ,ection !1 under the s89e
Article cr3st8lliMes this principle, 8s it provides th8t :Q8Rll 8ppropri8tion, revenue or t8riff bills G sh8ll
ori7in8te exclusivel3 in the 2ouse of Represent8tives.:
I
ConseBuentl3, neither the executive nor Audici8l br8nches of 7overn9ent 983 ori7in8te t8x
9e8sures. Even if the President desires to lev3 neE t8xes, the i9position c8nnot be done b3 9ere
executive fi8t. &n such 8n inst8nce, the President Eould h8ve to rel3 on Con7ress to en8ct t8x l8Es.
)oreover, this plen8r3 poEer of t8x8tion c8nnot be dele78ted b3 Con7ress to 8n3 other br8nch of
7overn9ent or priv8te persons, unless its dele78tion is 8uthoriMed b3 the Constitution itself.
6
&n this
re78rd, the situ8tion st8nds different fro9 th8t in the recent c8se Southern Cross v.
P;07C">C),
#
Eherein & noted in 93 ponencia th8t the *8riff Co99ission 8nd the -*& ,ecret8r3
983 be re78rded 8s 87ents of Con7ress for the purpose of i9posin7 s8fe7u8rd 9e8sures. *h8t
pronounce9ent E8s 98de in li7ht of ,ection !C!D Article ;&, Ehich 8lloEs Con7ress to dele78te to
the President throu7h l8E the poEer to i9pose t8riffs 8nd i9posts, subAect to li9it8tions 8nd
restrictions 8s 983 be ord8ined b3 Con7ress. &n the c8se of t8xes, no such constitution8l
8uthoriM8tion exists, 8nd the discretion to 8scert8in the r8tes, subAects, 8nd conditions of t8x8tion
983 not be dele78ted 8E83 b3 Con7ress.
2oEever, 8s the 98Aorit3 correctl3 points out, the poEer to 8scert8in the f8cts or conditions 8s the
b8sis of the t8Fin7 into effect of 8 l8E 983 be dele78ted b3 Con7ress,

8nd th8t the det8ils 8s to the

enforce9ent 8nd 8d9inistr8tion of 8n exercise of t8xin7 poEer 983 be dele78ted to executive
87encies, includin7 the poEer to deter9ine the existence of f8cts on Ehich its oper8tion depends.
H
Proceedin7 fro9 these principles, ,ections 1, I, 8nd 6 of the E-;A* '8E E8rr8nt ex89in8tion. *he
provisions re8dJ
,EC. 1. ,ec. 1"6 of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
,EC. 1"6. ;8lue-Added *8x on ,8le of Goods or Properties. S
CAD R8te 8nd B8se of *8x. S *here sh8ll be levied, 8ssessed 8nd collected on ever3 s8le, b8rter or
exch8n7e of 7oods or properties, 8 v8lue-8dded t8x eBuiv8lent to ten percent C1"KD of the 7ross
sellin7 price or 7ross v8lue in 9one3 of the 7oods or properties sold, b8rtered or exch8n7ed, such
t8x to be p8id b3 the seller or tr8nsferor4pro50+e+, t1)t t1e Pre20+e*t, 6po* t1e re3omme*+)t0o*
o4 t1e Se3ret)r& o4 $0*)*3e, 21)%%, e44e3t05e ')*6)r& 1, 2006, r)02e t1e r)te o4 5)%6e8)++e+ t)7
to t;e%5e per3e*t #12C(, )4ter )*& o4 t1e 4o%%o;0*@ 3o*+0t0o*2 1)2 bee* 2)t0240e+.
#0( 5)%6e8)++e+ t)7 3o%%e3t0o* )2 ) per3e*t)@e o4 Gro22 Dome2t03 Pro+63t #GDP( o4 t1e
pre50o62 &e)r e73ee+2 t;o )*+ 4o6r8404t1 per3e*t #2 BN5C( or
#00( *)t0o*)% @o5er*me*t +e4030t )2 ) per3e*t)@e o4 GDP o4 t1e pre50o62 &e)r e73ee+2 o*e )*+
o*e81)%4 per3e*t 1 OC(.
,ec. I. ,ection 1"# of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
,EC. 1"#. ;8lue-Added *8x on &9port8tion of Goods.S
C8D &n Gener8l.S *here sh8ll be levied, 8ssessed 8nd collected on ever3 i9port8tion of 7oods 8
v8lue-8dded t8x eBuiv8lent to ten percent C1"KD b8sed on the tot8l v8lue used b3 the Bure8u of
Custo9s in deter9inin7 t8riff 8nd custo9s duties, plus custo9s duties, excise t8xes, if 8n3, 8nd
other ch8r7es, such t8x to be p8id b3 the i9porter prior to the rele8se of such 7oods fro9 custo9s
custod3J Provided, *h8t Ehere the custo9s duties 8re deter9ined on the b8sis of the Bu8ntit3 or
volu9e of the 7oods, the v8lue-8dded t8x sh8ll be b8sed on the l8nded cost plus excise t8xes, if
8n3J pro50+e+, 46rt1er, t1)t t1e Pre20+e*t, 6po* t1e re3omme*+)t0o* o4 t1e Se3ret)r& o4
$0*)*3e, 21)%%, e44e3t05e ')*6)r& 1, 2006, r)02e t1e r)te o4 5)%6e8)++e+ t)7 to t;e%5e per3e*t
#12C( )4ter )*& o4 t1e 4o%%o;0*@ 3o*+0t0o*2 1)2 bee* 2)t0240e+.
#0( *)t0o*)% 5)%6e8)++e+ t)7 3o%%e3t0o* )2 ) per3e*t)@e o4 Gro22 Dome2t03 Pro+63t #GDP( o4
t1e pre50o62 &e)r e73ee+2 t;o )*+ 4o6r8404t1 per3e*t #2 BN5C( or
#00( @o5er*me*t +e4030t )2 ) per3e*t)@e o4 GDP o4 t1e pre50o62 &e)r e73ee+2 o*e )*+ o*e81)%4
per3e*t #1 OC(.
SEC. 6. Se3t0o* 108 o4 t1e 2)me Co+e, )2 )me*+e+, 02 1ereb& 46rt1er )me*+e+ to re)+ )2
4o%%o;2:
SEC. 108. ,)%6e8)++e+ T)7 o* S)%e o4 Ser503e2 )*+ U2e o4 !e)2e o4 Propert0e28
#A( R)te )*+ B)2e o4 T)7. L T1ere 21)%% be %e50e+, )22e22e+ )*+ 3o%%e3te+, ) 5)%6e8)++e+ t)7
e?605)%e*t to te* per3e*t #10C( o4 @ro22 re3e0pt2 +er05e+ 4rom t1e 2)%e or e731)*@e o4
2er503e2/provided, th8t the President, upon the reco99end8tion of the ,ecret8r3 of /in8nce, sh8ll,
effective +8nu8r3 1, !""6, r8ise the r8te of v8lue-8dded t8x to tEelve percent C1!KD, 8fter 8n3 of the
folloEin7 conditions h8s been s8tisfied.
CiD v8lue-8dded t8x collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the previous
3e8r exceeds tEo 8nd four-fifth percent C! 1NIKD or
2ii3 n8tion8l 7overn9ent deficit 8s 8 percent87e of G-P of the previous 3e8r exceed s89e 8nd on-
h8lf percent C1 OKD.
*he petitioners dee9 8s noxious the proviso co99on to these provisions th8t :the President, upon
the reco99end8tion of the ,ecret8r3 of /in8nce, sh8ll, effective +8nu8r3 1, !""6, r8ise the r8te of
v8lue-8dded t8x to tEelve percent C1!KD,: 8fter the s8tisf8ction of the tEin conditions th8t v8lue-
8dded t8x collection 8s 8 percent87e of Gross -o9estic Product CG-PD of the previous 3e8r
exceeds tEo 8nd four-fifth percent C! 1NIKD4 or th8t the n8tion8l 7overn9ent deficit 8s 8 percent87e
of G-P of the previous 3e8r exceed s89e 8nd on-h8lf percent C1 OKD.
At first blush, it does see9 th8t the 8ss8iled provisions 8re constitution8ll3 deficient. &t is Con7ress,
8nd not the President, Ehich is 8uthoriMed to r8ise the r8te of ;A* fro9 1"K to 1!K, no 98tter the
circu9st8nce. .et 8 closer 8n8l3sis of the proviso reve8ls th8t this is not ex8ctl3 the oper8tive effect
of the l8E. *he Bu8lifier :sh8ll: denotes 8 98nd8tor3, r8ther th8n discretion8r3 function on the p8rt of
the President to r8ise the r8te of ;A* to 1!K upon the existence of 8n3 of the tEo listed conditions.
,ince the President is not 7iven 8n3 discretion in refusin7 to r8ise the ;A* r8te to 1!K, there is
cle8rl3 no dele78tion of the le7isl8tive poEer to t8x b3 Con7ress to the executive br8nch. *he use of
the Eord :sh8ll: obvi8tes 8n3 lo7ic8l construction th8t Eould 8lloE the President leeE83 in not r8isin7
the t8x r8te. )ore so, it is 8ccepted th8t the principle of constitution8l construction th8t ever3
presu9ption should be indul7ed in f8vor of constitution8lit3 8nd the court in considerin7 the v8lidit3
of the Tst8tute in Buestion should 7ive it such re8son8ble construction 8s c8n be re8ched to brin7 it
Eithin the fund89ent8l l8E.
1"
>hile 8ll re8son8ble doubts should be resolved in f8vor, of the
constitution8lit3 of 8 st8tute,
11
it should necess8ril3 folloE th8t the construction upheld should be one
th8t is not itself noxious to the Constitution.
Con7ress should be t8Fen to t8sF for i9perfect dr8fts98nship 8t le8st. )uch trouble Eould h8ve
been 8voided h8d the provisos inste8d re8dJ :th8t effective +8nu8r3 1, !""6, the r8te of v8lue-8dded
t8x sh8ll be r8ised to tEelve percent C1!KD, 8fter 8n3 of the folloEin7 conditions h8s been s8tisfied
xxx.: *his, 8fter 8ll is the oper8tive effect of the provision 8s it st8nds. &n rel8tion to the oper8tion of
the t8x incre8se, the deno9in8ted role of the President 8nd the ,ecret8r3 of /in8nce 983 be
re78rded 8s 8 superfluit3, 8s their imprimatur 8s 8 precondition to the incre8se of the ;A* r8te 9ust
h8ve no be8rin7.
Nonetheless, & c8nnot i7nore the f8ct th8t both the President 8nd the ,ecret8r3 of /in8nce h8ve
desi7n8ted roles in the i9ple9ent8tion of the t8x incre8se. Considerin7 th8t it is Con7ress, 8nd not
these offici8ls, Ehich properl3 h8ve i9posed the incre8se in the ;A* r8te, hoE should these roles be
construedL
*he en8ct9ent of 8 l8E should be distin7uished fro9 its i9ple9ent8tion. Even if it is Con7ress Ehich
exercises the plen8r3 poEer of t8x8tion, it is not the bod3 th8t 8d9inisters the i9ple9ent8tion of the
t8x. %nder ,ection ! of the N8tion8l &ntern8l Revenue Code CN&RCD, the 8ssess9ent 8nd collection
of 8ll n8tion8l intern8l revenue t8xes, 8nd the enforce9ent of 8ll forefeitures, pen8lties 8nd fines
connected thereEith h8d been previousl3 dele78ted to the Bure8u of &ntern8l Revenue, under the
supervision 8nd control of the -ep8rt9ent of /in8nce.
1!
)oreover, 8s inti98ted e8rlier, Con7ress 983 dele78te to other co9ponents of the 7overn9ent the
poEer to 8scert8in the f8cts or conditions 8s the b8sis of the t8Fin7 into effect of 8 l8E. &t folloEs th8t
8scert8in9ent of the existence of the tEo conditions precedent for the incre8se 8s st8ted in the l8E
could ver3 Eell be dele78ted to the President or the ,ecret8r3 of /in8nce.
1@
Nonetheless, the 8pprehensions 8rise th8t the process of 8scert8in9ent of the listed conditions
dele78ted to the ,ecret8r3 of /in8nce 8nd the President effectivel3 vest discretion8r3 8uthorit3 to
r8ise the ;A* r8te on the President, throu7h the subterfu7es th8t 983 be e9plo3ed to del83 the
deter9in8tion, or even to 98nipul8te the f8ctu8l pre9ises. Assu9in7 ar+uendo th8t these fe8red
8buses 983 8rise, & thinF it possible to seeF Audici8l enforce9ent of the incre8sed ;A* r8te, even
Eithout the p8rticip8tion or consent of the President or ,ecret8r3 of /in8nce, upon indubit8ble
shoEin7 th8t 8n3 of the tEo listed conditions do exist. After 8ll, the Court is rulin7 th8t the incre8se in
the ;A* r8te is 98nd8tor3 8nd be3ond the discretion of the President to i9pose or del83.
*he 98Aorit3 st8tes th8t in 98Fin7 the reco99end8tion to the President on the existence of either of
the tEo conditions, the ,ecret8r3 of /in8nce is 8ctin7 8s the 87ent of the le7isl8tive br8nch, to
deter9ine 8nd decl8re the event upon Ehich its expressed Eill is to t8Fe effect.
11
*his reco7nition of
87enc3 9ust be Bu8lified. & do not doubt the 8bilit3 of Con7ress to dele78te to the ,ecret8r3 of
/in8nce 8d9inistr8tive functions in the i9ple9ent8tion of t8x l8Es, 8s it does under ,ection ! of the
N&RC. .et it Eould be i9per9issible for Con7ress to dele78te to the ,ecret8r3 of /in8nce the
plen8r3 function of en8ctin7 8 t8x l8E. As st8ted e8rlier, the situ8tion st8nds different fro9 th8t
in Southern Cross Eherein the Constitution itself 8uthoriMes the dele78tion b3 Con7ress throu7h 8
l8E to the President of the discretion to i9pose t8riff 9e8sures, subAect to restrictions 8nd li9it8tions
provided in the l8E.
1I
2erein, Con7ress c8nnot dele78te to either the President or the ,ecret8r3 of
/in8nce the discretion to r8ise the t8x, 8s such poEer belon7s exclusivel3 to the le7isl8tive br8nch.
Perh8ps the ter9 :87enc3: is not 9ost suit8ble in describin7 the dele78tion exercised b3 Con7ress
in this c8se, for 87enc3 i9plies th8t the 87ent t8Fes on 8ttributes of the princip8l b3 re8son of
represent8tive c8p8cit3. &n this c8se, Eh8tever :87enc3: th8t c8n be 8ppreci8ted Eould be of
severel3 li9ited c8p8cit3, enco9p8ssin7 8s it onl3 could the 8d9inistr8tion, not en8ct9ent, of the t8x
9e8sure.
& do not doubt the i9pression left b3 the provisions th8t it is the President, 8nd not Con7ress, Ehich
is 8uthoriMed to r8ise the ;A* r8te. (n p8per 8t le8st, these i9perfect provisions could be 9ultiple
sources of 9ischief. (n the politic8l front, Eh8tever bl89e or scorn th8t 983 be 8ttended Eith the
incre8se of the ;A* r8te Eould f8ll on the President, 8nd not on Con7ress Ehich 8ctu8ll3 incre8sed
the t8x r8te. (n the le78l front, 8 President 8verse to incre8sin7 the ;A* r8te despite the existence
of the tEo listed conditions 983 t8Fe refu7e in the infelicities of the provision, 8nd refuse to do so on
the 7round th8t the l8E, 8s Eritten, i9plies so9e for9 of discretion on the p8rt of the President Eho
E8s, 8fter 8ll, :8uthoriMed: to incre8se the t8x r8te. &t is critic8l for the Court to dis8buse this notion
ri7ht noE.
The Continued 'iability of
Tolentino v. Secretary of Finance
(ne of the 9ore cruci8l issues noE before us, one th8t h8s seriousl3 divided the Court, pert8ins to
the 8bilit3 of the Bic89er8l Conference Co99ittee to introduce 89end9ents to the fin8l bill Ehich
Eere not cont8ined in the 2ouse bill fro9 Ehich the E-;A* '8E ori7in8ted. )ost of the points
8ddressed b3 the petitioners h8ve been settled in our rulin7 in Tolentino v. Secretary of Finance,
16
3et
8 revisit of th8t precedent is ur7ed upon this Court. (n this score, & offer 93 Bu8lified concurrence
Eith the ponencia.
*Eo Fe3 provisions of the Constitution co9e into pl83J ,ections !1 8nd !6C!D, Article ;& of the
Constitution. *he3 re8dJ
,ection !1J All 8ppropri8tion, revenue or t8riff bills, bills 8uthoriMin7 incre8se of the public debt, bills
of loc8l 8pplic8tion, 8nd priv8te bills sh8ll ori7in8te exclusivel3 in the 2ouse of Represent8tives, but
the ,en8te 983 propose or concur Eith 89end9ents.
,ection !6C!DJ No bill p8ssed b3 either 2ouse sh8ll beco9e 8 l8E unless it h8s p8ssed three
re8din7s on sep8r8te d83s, 8nd printed copies thereof in its fin8l for9 h8ve been distributed to its
)e9bers three d83s before its p8ss87e, except Ehen the President certifies to the necessit3 of its
i99edi8te en8ct9ent to 9eet 8 public c8l89it3 or e9er7enc3. %pon the l8st re8din7 of 8 bill, no
89end9ent thereto sh8ll be 8lloEed, 8nd the vote thereon sh8ll be t8Fen i99edi8tel3 there8fter,
8nd the 3e8s 8nd n83s entered in the +ourn8l.
,ection !1 is 8lso FnoEn 8s the ori7in8tion cl8use, Ehich derives ori7in fro9 British pr8ctice. /ro9
the 8ssertion th8t the poEer to t8x the public 8t l8r7e 9ust reside in the represent8tives of the
people, the principle evolved th8t 9one3 bills 9ust ori7in8te in the 2ouse of Co99ons 8nd 983 not
be 89ended b3 the 2ouse of 'ords.
1#
*he principle E8s 8dopted 8cross the shores in the %nited
,t8tes, 8nd E8s f89ousl3 described b3 +89es )8dison inThe Federalist Papers 8s folloEsJ
*his poEer over the purse, 983 in f8ct be re78rded 8s the 9ost co9ple8t 8nd effectu8l Ee8pon Eith
Ehich 8n3 constitution c8n 8r9 the i99edi8te represent8tives of the people, for obt8inin7 8 redress
of ever3 7riev8nce, 8nd for c8rr3in7 into effect ever3 Aust 8nd s8lut8r3 9e8sure.
1
*here is 8n e9inent difference fro9 the British s3ste9 fro9 Ehich the principle e9er7ed, 8nd fro9
our oEn polit3. *o this d83, onl3 9e9bers of the British 2ouse of Co99ons 8re directl3 elected b3
the people, Eith the 9e9bers of the 2ouse of 'ords derivin7 their se8ts fro9 heredit8r3 peer87e.
Even in the %nited ,t8tes, 9e9bers of the ,en8te Eere not directl3 elected b3 the people, but
chosen b3 st8te le7isl8tures, until the 8doption of the ,eventeenth A9end9ent in 1H1@. 2ence, the
rule 8ssured the British 8nd A9eric8n people th8t t8x le7isl8tion 8rises Eith the consent of the
soverei7n people, throu7h their directl3 elected represent8tives. &n our countr3 thou7h, both
9e9bers of the 2ouse 8nd ,en8te 8re directl3 elected b3 the people, hence the vit8lit3 of the
ori7in8l conception of the rule h8s so9eEh8t lost luster.
,till, the ori7in8tion cl8use deserves obeis8nce in this Aurisdiction, si9pl3 bec8use it is provided in
the Constitution. At the s89e ti9e, its proper interpret8tion is settled precedent, 8s enunci8ted
in TolentinoJ
*o be7in Eith, it is not the l8E S but the revenue bill S Ehich is reBuired b3 the Constitution to
:ori7in8te exclusivel3: in the 2ouse of Represent8tives. &t is i9port8nt to e9ph8siMe this, bec8use 8
bill ori7in8tin7 in the 2ouse 983 under7o such extensive ch8n7es in the ,en8te th8t the result 983
be 8 reEritin7 of the Ehole. *he possibilit3 of 8 third version b3 the conference co99ittee Eill be
discussed l8ter. At this point, Eh8t is i9port8nt to note is th8t, 8s 8 result of the ,en8te 8ction, 8
distinct bill 983 be produced. *o insist th8t 8 revenue st8tute S 8nd not onl3 the bill Ehich initi8ted
the le7isl8tive process cul9in8tin7 in the en8ct9ent of the l8E S 9ust subst8nti8ll3 be the s89e 8s
the 2ouse bill Eould be to den3 the ,en8teTs poEer not onl3 to :concur Eith 89end9ents: but 8lso
to : propose 89end9ents.: &t Eould be to viol8te the coeBu8lit3 of le7isl8tive poEer of the tEo
houses of Con7ress 8nd in f8ct 98Fe the 2ouse superior to the ,en8te.
1H
*he vested poEer of the ,en8te to : propose or concur Eith 89end9ents: necess8ril3 i9plies the
8bilit3 to 8dduce tr8nsfor98tions fro9 the ori7in8l 2ouse bill into the fin8l l8E. ,ince the 2ouse 8nd
,en8te sit sep8r8tel3 in sessions, the onl3 opportunit3 for the ,en8te to introduce its 89end9ents
Eould be in the Bic89er8l Conference Co99ittee, Ehich e9er7es onl3 8fter both the 2ouse 8nd the
,en8te h8ve 8pproved their respective bills.
&n the present petitions, Tolentino co9es under fire on tEo fronts. *he first controvers3 8rises fro9
the 8doption inTolentino of A9eric8n le7isl8tive pr8ctices rel8tin7 to bic89er8l co99ittees despite
the difference in constitution8l fr89eEorFs, p8rticul8rl3 the li9it8tion under ,ection !6C!D, Article ;&
Ehich does not exist in the A9eric8n Constitution.
*he 98Aorit3 points out th8t the :no 89end9ent rule: refers onl3 to the procedure to be folloEed b3
e8ch house of Con7ress Eith re78rd to bills initi8ted in the house concerned, before s8id bills 8re
tr8ns9itted to the other house for its concurrence or 89end9ent. & 87ree Eith this st8te9ent.
Cle8rl3, the procedure under ,ection !6C!D, Article ;& onl3 rel8tes to the p8ss87e of 8 bill before the
2ouse 8nd ,en8te, 8nd not the process undert8Fen 8fterE8rds in the Bic89er8l Conference
Co99ittee.
&ndeed, ,ections !6 8nd !# of Article ;&, Ehich det8il the procedure hoE 8 bill beco9es 8 l8E, 8re
silent 8s to Eh8t occurs betEeen the p8ss87e b3 both houses of their respective bills, 8nd the
present8tion to the President of
:ever3 bill p8ssed b3 the Con7ress:.
!"
Evidentl3, :Con7ress: 9e8ns both 2ouses, such th8t 8 bill
8pproved b3 the ,en8te but not b3 the 2ouse is not presented to the President for 8pprov8l. *here is
obviousl3 8 need for Aoint concurrence b3 the 2ouse 8nd ,en8te of 8 bill before it is tr8ns9itted to
the President, but the Constitution does not provide hoE such concurrence is 8cBuired. *his l8cun8
h8s to be filled, otherEise no bill 983 be tr8ns9itted to the President.
Even if the Bic89er8l Conference Co99ittee is not 8 constitution8ll3 or78niMed bod3, it h8s existed
8s the necess8r3 concl8ve for both ch89bers of Con7ress to reconcile their respective versions of 8
prospective l8E. *he 9e9bers of the Bic89er8l Conference Co99ittee 983 possess in the9 the
c8p8cit3 to represent their p8rticul8r ch89ber, 3et the collective is neither the 2ouse nor the ,en8te.
2ence, the procedure cont8ined in ,ection !6C!D, Article ;& c8nnot 8ppl3 to the Bic89er8l
Conference Co99ittee.
*ellin7l3, the version 8pproved b3 the Bic89er8l Conference Co99ittee still under7oes deliber8tion
8nd 8pprov8l b3 both 2ouses. (nl3 one vote is t8Fen to 8pprove the reconciled bill, Aust 8s onl3 one
vote is t8Fen in order to 8pprove the ori7in8l bill. Cert8inl3, it could not be contended th8t this fin8l
version surreptitiousl3 ev8des 8pprov8l of either the 2ouse or ,en8te.
*he second front concerns the scope 8nd li9it8tions of the Bic89er8l Conference Co99ittee to
89end, delete, or otherEise 9odif3 the bills 8s 8pproved b3 the 2ouse 8nd the ,en8te.
Tolentino 8dduced the principle, 8dopted fro9 A9eric8n pr8ctice, th8t the version 8s 8pproved b3
the Bic89er8l Conference Co99ittee need onl3 be 7er98ne to the subAect of the 2ouse 8nd ,en8te
bills in order to be v8lid.
!1
*he 98Aorit3, in 8ppl3in7 the test of 7er98neness, upholds the contested
provisions of the E-;A* '8E. Even the 9e9bers of the Court Eho prep8red to striFe doEn provisions
of the l8E 8ppl3in7 7er98neness nonetheless 8ccept the b8sic pre9ise th8t such test is controllin7.
& 87ree th8t 8n3 89end9ent 98de b3 the Bic89er8l Conference Co99ittee th8t is not 7er98ne to
the subAect 98tter of the 2ouse or ,en8te Bills is not v8lid. &t is the onl3 v8lid 7round b3 Ehich 8n
89end9ent introduced b3 the Bic89er8l Conference Co99ittee 983 be Audici8ll3 stricFen.
*he 7er98neness st8nd8rd Ehich should 7uide Con7ress or the Bic89er8l Conference Co99ittee
should be 8ppreci8ted in its *orm)% b6t tot)% 2e*2e. &n th8t re78rd, 93 vieEs contr8st Eith th8t of
+ustice P8n78nib8n, Eho 8sserts th8t provisions th8t 8re not :le78ll3 7er98ne: should be stricFen
doEn. T1e %e@)% *ot0o* o4 @erm)*e*e22 02 A62t b6t o*e 3ompo*e*t, )%o*@ ;0t1 ot1er 4)3tor2
2631 )2 e3o*om032 )*+ po%0t032, ;1031 @60+e2 t1e B03)mer)% Co*4ere*3e Comm0ttee, or t1e
%e@02%)t6re 4or t1)t m)tter, 0* t1e e*)3tme*t o4 %);2. After 8ll, f8ctors such 8s econo9ics or
politics 8re expected to c8st 8 perv8sive influence on the le7isl8tive process in the first pl8ce, 8nd it
is essenti8l 8s Eell to 8lloE such :non-le78l: ele9ents to be considered in 8scert8inin7 Ehether
Con7ress h8s co9plied Eith the criteri8 of 7er98neness.
Co*@re22 02 ) po%0t03)% bo+&, )*+ 0t2 r)t0o*)%e 4or %e@02%)t0*@ m)& be @60+e+ b& 4)3tor2 ot1er
t1)* e2t)b%021e+ %e@)% 2t)*+)r+2. " +eem 0t 6*+6%& re2tr03t05e o* t1e p%e*)r& po;er2 o4
Co*@re22 to %e@02%)te, to 3oer3e t1e bo+& to )+1ere to A6+@e8m)+e 2t)*+)r+2, 2631 )2 )
2t)*+)r+ o4 F%e@)% @erm)*e*e22F. T1e Co*2t0t6t0o* 02 t1e o*%& %e@)% 2t)*+)r+ t1)t Co*@re22
02 re?60re+ to )b0+e b& 0* 0t2 e*)3tme*t o4 %);2.
/olloEin7 these vieEs, & c8nnot 87ree Eith the position 98int8ined b3 the Chief +ustice, +ustices
P8n78nib8n 8nd AMcun8 th8t the provisions of the l8E th8t do not pert8in to ;A* should be stricFen
8s unconstitution8l. *hese Eould include, for ex89ple, the provisions r8isin7 corpor8te inco9e
t8xes. *he Bic89er8l Conference Co99ittee, in ev8lu8tin7 the proposed 89end9ents, necess8ril3
t8Fes into 8ccount not Aust the provisions rel8tin7 to the ;A*, but the entire revenue 7ener8tin7
9ech8nis9 in pl8ce. &f, for ex89ple, 89end9ents to non-;A* rel8ted provisions of the N&RC Eere
intended to offset the exp8nded cover87e for the ;A*, then such 89end9ents 8re 7er98ne to the
purpose of the 2ouse 8nd ,en8te Bills.
)oreover, it Eould be 93opic to consider th8t the subAect 98tter of the 2ouse Bill is solel3 the ;A*
s3ste9, r8ther th8n the 7ener8tion of revenue. *he 98Aorit3 h8s sufficientl3 de9onstr8ted th8t the
le7isl8tive intent behind the bills th8t led to the E-;A* '8E E8s the 7ener8tion of revenue to counter
the countr35s dire fisc8l situ8tion.
*he 9ere f8ct th8t the l8E is popul8rl3 FnoEn 8s the E-;A* '8E, or th8t 9ost of its provisions pert8in
to the ;A*, or indirect t8xes, does not 9e8n th8t 8n3 8nd 8ll 89end9ents Ehich 8re introduced b3
the Bic89er8l Conference Co99ittee 9ust pert8in to the ;A* s3ste9. As the Court noted in Tatad v.
Secretary of "ner+yJ
!!
Q&Rt is contended th8t section ICbD of R.A. No. 1" on t8riff differenti8l viol8tes the provision 1# of the
Constitution reBuirin7 ever3 l8E to h8ve onl3 one subAect Ehich should be expressed in its title. >e
do not concur Eith this contention. A2 ) po%03&, t102 Co6rt 1)2 )+opte+ ) %0ber)% 3o*2tr63t0o* o4
t1e o*e t0t%e 8 o*e 26bAe3t r6%e. Ie 1)5e 3o*202te*t%& r6%e+ t1)t t1e t0t%e *ee+ *ot m0rror, 46%%&
0*+e7 or 3)t)%o@6e )%% 3o*te*t2 )*+ m0*6te +et)0%2 o4 ) %);. A %); 1)50*@ ) 20*@%e @e*er)%
26bAe3t 0*+03)te+ 0* t1e t0t%e m)& 3o*t)0* )*& *6mber o4 pro5020o*2, *o m)tter 1o; +05er2e
t1e& m)& be, 2o %o*@ )2 t1e& )re *ot 0*3o*202te*t ;0t1 or 4ore0@* to t1e @e*er)% 26bAe3t, )*+
m)& be 3o*20+ere+ 0* 46rt1er)*3e o4 2631 26bAe3t b& pro50+0*@ 4or t1e met1o+ )*+ me)*2 o4
3)rr&0*@ o6t t1e @e*er)% 26bAe3t. >e hold th8t section ICbD providin7 for t8riff differenti8l is
7er98ne to the subAect of R.A. No. 1" Ehich is the dere7ul8tion of the doEnstre89 oil industr3.
*he section is supposed to sE83 prospective investors to put up refineries in our countr3 8nd 98Fe
the9 rel3 less on i9ported petroleu9.
!@
& sub9it th8t if the 89end9ents 8re 8ttuned to the 7o8l of revenue 7ener8tion, the st8ted purpose of
the ori7in8l 2ouse Bills, then the test of 7er98neness is s8tisfied. &t 9i7ht see9 th8t the 7o8l of
revenue 7ener8tion, Ehich is st8ted in virtu8ll3 8ll t8x or t8riff bills, is so enco9p8ssin7 in scope 8s to
Austif3 the inclusion b3 the Bic89er8l Conference Co99ittee of Aust 8bout 8n3 revenue 7ener8tion
9e8sure. *his 983 be so, but it does not 9e8n th8t the test of 7er98neness Eould be rendered
inutile Ehen it co9es to revenue l8Es.
& do believe th8t the test of 7er98neness E8s viol8ted b3 the E-;A* '8E in one re78rd. ,ection !1
of the l8E, Ehich E8s not cont8ined in either the 2ouse or ,en8te Bills, i9poses restrictions on the
use b3 loc8l 7overn9ent units of their incre9ent8l revenue fro9 the ;A*. *hese restrictions 8re 8lien
to the princip8l purposes of revenue 7ener8tion, or the purposes of restructurin7 the ;A* s3ste9. &
could not see hoE the provision, Ehich rel8tes to bud7et8r3 8lloc8tions, is 7er98ne to the E-;A*
'8E. ,ince it E8s introduced onl3 in the Bic89er8l Conference Co99ittee, the test of 7er98neness
is essenti8l, 8nd the provision does not p8ss 9uster. & Aoin +ustice Puno 8nd the Chief +ustice in
votin7 to decl8re ,ection !1 8s unconstitution8l.
& 8lso offer this brief co99ent re78rdin7 the deletion of the so-c8lled :no p8ss on: provisions, Ehich
sever8l of 93 colle87ues dee9 unconstitution8l. Both the 2ouse 8nd ,en8te Bills cont8ined these
provisions th8t Eould prohibit the sellerNproducer fro9 p8ssin7 on the cost of the ;A* p839ents to
the consu9ers. 2oEever, 8n ex89in8tion of the s8id bills reve8l th8t the :no p8ss on: provisions in
the 2ouse Bill 8ffects 8 different subAect of t8x8tion fro9 th8t of the ,en8te Bill. &n the 2ouse Bill No.
@#"I, the t8xp83ers Eho 8re prohibited fro9 p8ssin7 on the ;A* p839ents 8re the sellers of
petroleu9 products 8nd electricit3NpoEer 7ener8tion co9p8nies. &n ,en8te Bill No. 1HI", no
prohibition E8s 8dopted 8s to sellers of petroleu9 products, but enAoined therein 8re
electricit3NpoEer 7ener8tion co9p8nies but 8lso tr8ns9ission 8nd distribution co9p8nies.
& consider such deletions 8s v8lid, for the s89e re8son th8t & dee9 the 89end9ents v8lid. *he
deletion of the tEo disp8r8te :no p8ss on: provisions Ehich Eere 8pproved b3 the 2ouse in one
inst8nce, 8nd onl3 b3 the ,en8te in the other, re98ins in the sphere of co9pro9ise th8t ulti98tel3
7uides the 8pprov8l of the fin8l version. A78in, & point out th8t even Ehile the tEo provisions 983
h8ve been ori7in8ll3 8pproved b3 the 2ouse 8nd ,en8te respectivel3, their subseBuent deletion b3
the Bic89er8l Conference Co99ittee is still subAect to 8pprov8l b3 both ch89bers of Con7ress
Ehen the fin8l version is sub9itted for deliber8tion 8nd votin7.
)oreover, the f8ct th8t the n8ture of the :no p8ss on: provisions 8dopted b3 the 2ouse essenti8ll3
differs fro9 th8t of the ,en8te necess8ril3 reBuired the corrective relief fro9 the Bic89er8l
Conference Co99ittee. *he Co99ittee could h8ve either insisted on the 2ouse version, the ,en8te
version, or both versions, 8nd it is not difficult to divine th8t 8n3 of these steps Eould h8ve obt8ined
e8s3 8pprov8l. 2ence, the deletion 8lto7ether of the :no p8ss on: provisions existed 8s 8 t8n7ible
solution to the possible i9p8sse, 8nd the Co99ittee should be 8ccorded leeE83 to i9ple9ent such
8 co9pro9ise, especi8ll3 considerin7 th8t the deletion Eould h8ve re98ined 7er98ne to the l8E,
8nd Eould not be constitution8ll3 prohibited since the prohibition on 89end9ents under ,ection
!6C!D, Article ;& does not 8ppl3 to the Co99ittee.
An outri7ht decl8r8tion th8t the deletion of the tEo ele9ent8ll3 different :no-p8ss on: provisions is
unconstitution8l, is of dubious effic8c3 in this c8se. 28d such pronounce9ent 78ined endorse9ent
of 8 98Aorit3 of the Court, it could not result in the ipso facto restor8tion of the provision, the
o9ission of Ehich E8s ulti98tel3 8pproved in both the 2ouse 8nd ,en8te. )oreover, since the
2ouse version of the :no p8ss on: is Buite different fro9 th8t of the ,en8te, there Eould be 8
Buestion 8s to Ehether the 2ouse version, the ,en8te version, or both versions Eould be reinst8ted.
And of course, if it Eere the Court Ehich Eould be c8lled upon to choose, such Eould be E83 be3ond
the bounds of Audici8l poEer.
&ndeed, to inti98te th8t the Court 983 reBuire Con7ress to reinst8te 8 provision th8t f8iled to 9eet
le7isl8tive 8pprov8l Eould result in 8 bl8t8nt viol8tion of the principle of sep8r8tion of poEers, Eith
the Court effectivel3 dict8tin7 to Con7ress the content of its le7isl8tion. *he Court c8nnot si9pl3
decree to Con7ress Eh8t l8Es or provisions to en8ct, but is li9ited to revieEin7 those en8ct9ents
Ehich 8re 8ctu8ll3 r8tified b3 the le7isl8ture.
&&.
)3 e8rlier vieEs, 8s 8re the sub9issions & 89 8bout to offer, 8re rooted in nothin7 9ore th8n
constitution8l interpret8tion. Perh8ps 93 precedin7 discussion 983 le8d to 8n i9pression th8t &
Ehole-he8rtedl3 Eelco9e the p8ss87e of the E-;A* '8E. .et Eh8tever relief & 983 h8ve over the
en8ct9ent of 8 l8E desi7ned to relieve our countr35s fin8nci8l Eoes 8re s8dl3 obvi8ted Eith the
re8liM8tion th8t 8 Fe3 89end9ent introduced in the l8E is not onl3 unconstitution8l, but of f8t8l
conseBuences. *he cl8rion c8ll of Audici8l revieE is 9ost critic8l Ehen it st8nds 8s the sole b8rrier
878inst the depriv8tion of life, libert3 8nd propert3 Eithout due process of l8E. &t beco9es even 9ore
i9pellin7 noE 8s Ee 8re f8ced Eith provisions of the E-;A* '8E Ehich, thou7h in bl8nd dis7uise,
Eould oper8te 8s the 9ost destructive of t8x 9e8sures en8cted in 7ener8tions.
Ta# Statutes and the &ue Process Clause
&t is the dut3 of the courts to nullif3 l8Es th8t contr8vene the due process cl8use of the Bill of Ri7hts.
*his t8sF is 8t the he8rt not onl3 of Audici8l revieE, but of the de9ocr8tic s3ste9, for the fund89ent8l
7u8r8ntees in the Bill of Ri7hts beco9e 9erel3 hort8tor3 if their Audici8l enforce9ent is un8v8ilin7.
Even if the void l8E in Buestion is 8 t8x st8tute, or one th8t enco9p8sses n8tion8l econo9ic polic3,
the courts should not shirF fro9 striFin7 it doEn notEithst8ndin7 8n3 notion of deference to the
executive or le7isl8tive br8nch on Buestions of polic3. Neither Con7ress nor the President h8s the
ri7ht to en8ct or enforce unconstitution8l l8Es.
*he Bill of Ri7hts is b3 no 9e8ns the onl3 constitution8l 38rdsticF b3 Ehich the v8lidit3 of 8 t8x l8E
c8n be 9e8sured. Nonetheless, it st8nds 8s the 9ost un3ieldin7 of constitution8l st8nd8rds, 7iven its
position of pri98c3 in the fund89ent8l l8E E83 8bove the 8rticles on 7overn9ent8l poEer.
!1
&f the
Buestion lod7ed, for ex89ple, hin7es on the proper exercise of le7isl8tive poEers in the en8ct9ent
of the t8x l8E, leeE83 c8n be 8ppreci8ted in f8vor of 8ffir9in7 the le7isl8ture5s inherent poEer to lev3
t8xes. (n the other h8nd, no Bu8rter c8n be ceded, no concession 3ielded, on the people5s
fund89ent8l ri7hts 8s enshrined in the Bill of Ri7hts, even if the s8crifice is ostensibl3 98de :in the
n8tion8l interest.: &t is 93 underst8ndin7 th8t :the n8tion8l interests,: hoEever co9ported, 8lE83s
subsu9es in the first pl8ce reco7nition 8nd enforce9ent of the Bill of Ri7hts, Ehich 98nifests Ehere
Ee st8nd 8s 8 de9ocr8tic societ3.
*he constitution8l s8fe7u8rd of due process is e9bodied in the fi8t :No person sh8ll be deprived of
life, libert3 or propert3 Eithout due process of l8E:.
!I
*he purpose of the 7u8r8nt3 is to prevent
7overn9ent8l encro8ch9ent 878inst the life, libert3 8nd propert3 of individu8ls4 to secure the
individu8l fro9 the 8rbitr8r3 exercise of the poEers of the 7overn9ent, unrestr8ined b3 the
est8blished principles of priv8te ri7hts 8nd distributive Austice4 to protect propert3 fro9 confisc8tion
b3 le7isl8tive en8ct9ents, fro9 seiMure, forfeiture, 8nd destruction Eithout 8 tri8l 8nd conviction b3
the ordin8r3 9ode of Audici8l procedure4 8nd to secure to 8ll persons eBu8l 8nd i9p8rti8l Austice 8nd
the benefit of the 7ener8l l8E.
!6
&n >a+nano Co. v. ;amilton,
!#
the %.,. ,upre9e Court reco7niMed th8t the due process cl8use 983
be utiliMed to striFe doEn 8 t8x8tion st8tute, :if the 8ct be so 8rbitr8r3 8s to co9pel the conclusion
th8t it does not involve 8n exertion of the t8xin7 poEer, but constitutes, in subst8nce 8nd effect, the
direct exertion of 8 different 8nd forbidden poEer, 8s, for ex89ple, the confisc8tion of
propert3.:
!
'oc8ll3, Sison v. %ncheta
!H
h8s lon7 provided s8nctu8r3 for persons 8ss8ilin7 the
constitution8lit3 of t8xin7 st8tutes. *he oft-Buoted pronounce9ent of +ustice /ern8ndo folloEsJ
!. *he poEer to t8x 9oreover, to borroE fro9 +ustice )8lcol9, :is 8n 8ttribute of soverei7nt3. &t is the
stron7est of 8ll the poEers of 7overn9ent.: "t 02, o4 3o6r2e, to be )+m0tte+ t1)t 4or )%% 0t2
p%e*0t6+e, t1e po;er to t)7 02 *ot 6*3o*40*e+. T1ere )re re2tr03t0o*2. T1e Co*2t0t6t0o* 2et2
4ort1 2631 %0m0t2. A+5er2e%& )44e3t0*@ )2 0t +oe2 propert& r0@1t2, bot1 t1e +6e pro3e22 )*+
e?6)% prote3t0o* 3%)62e2 m)& proper%& be 0*5oJe+, )2 pet0t0o*er +oe2, to 0*5)%0+)te 0*
)ppropr0)te 3)2e2 ) re5e*6e me)26re. &f it Eere otherEise, there Eould be truth to the 1"@
dictu9 of Chief +ustice )8rsh8ll th8t :the poEer to t8x involves the poEer to destro3.: &n 8 sep8r8te
opinion in Gr8ves v. NeE .orF, +ustice /r8nFfurter, 8fter referrin7 to it 8s 8n :unfortun8te re98rF,:
ch8r8cteriMed it 8s :8 flourish of rhetoric Q8ttribut8ble toR the intellectu8l f8shion of the ti9es Q8lloEin7R
8 free use of 8bsolutes.: *his is 9erel3 to e9ph8siMe th8t it is not 8nd there c8nnot be such 8
constitution8l 98nd8te. +ustice /r8nFfurter could ri7htfull3 concludeJ :*he Eeb of unre8lit3 spun fro9
)8rsh8llTs f89ous dictu9 E8s brushed 8E83 b3 one stroFe of )r. +ustice 2ol9esTs penJ T*he poEer
to t8x is not the poEer to destro3 Ehile this Court sits.T: ,o it is in the Philippines.
@. *his Court then is left Eith no choice. T1e Co*2t0t6t0o* )2 t1e 46*+)me*t)% %); o5err0+e2 )*&
%e@02%)t05e or e7e36t05e )3t t1)t r6*2 3o6*ter to 0t. "* )*& 3)2e t1ere4ore ;1ere 0t 3)* be
+emo*2tr)te+ t1)t t1e 31)%%e*@e+ 2t)t6tor& pro5020o* S )2 pet0t0o*er 1ere )%%e@e2 S 4)0%2 to
)b0+e b& 0t2 3omm)*+, t1e* t102 Co6rt m62t 2o +e3%)re+ )*+ )+A6+@e 0t *6%%. *he inBuir3 thus is
centered on the Buestion of Ehether the i9position of 8 hi7her t8x r8te on t8x8ble net inco9e
derived fro9 business or profession th8n on co9pens8tion is constitution8ll3 infir9.
1. *he difficult3 confrontin7 petitioner is thus 8pp8rent. 2e 8lle7es 8rbitr8riness. A 9ere 8lle78tion,
8s here, does not suffice. *here 9ust be 8 f8ctu8l found8tion of such unconstitution8l t8int.
Considerin7 th8t petitioner here Eould conde9n such 8 provision 8s void on its f8ce, he h8s not
98de out 8 c8se. *his is 9erel3 to 8dhere to the 8uthorit8tive doctrine th8t Ehere the due process
8nd eBu8l protection cl8uses 8re invoFed, considerin7 th8t the3 8re not fixed rules but r8ther bro8d
st8nd8rds, there is 8 need for proof of such persu8sive ch8r8cter 8s Eould le8d to such 8
conclusion. Absent such 8 shoEin7, the presu9ption of v8lidit3 9ust prev8il.
I. "t 02 6*+o6bte+ t1)t t1e +6e pro3e22 3%)62e m)& be 0*5oJe+ ;1ere ) t)70*@ 2t)t6te 02 2o
)rb0tr)r& t1)t 0t 40*+2 *o 26pport 0* t1e Co*2t0t6t0o*. A* ob50o62 e7)mp%e 02 ;1ere 0t 3)* be
21o;* to )mo6*t to t1e 3o*4023)t0o* o4 propert&. T1)t ;o6%+ be ) 3%e)r )b62e o4 po;er. "t
t1e* be3ome2 t1e +6t& o4 t102 Co6rt to 2)& t1)t 2631 )* )rb0tr)r& )3t )mo6*te+ to t1e
e7er302e o4 )* )6t1or0t& *ot 3o*4erre+. T1)t proper%& 3)%%2 4or t1e )pp%03)t0o* o4 t1e -o%me2
+03t6m. "t 1)2 )%2o bee* 1e%+ t1)t ;1ere t1e )22)0%e+ t)7 me)26re 02 be&o*+ t1e A6r02+03t0o*
o4 t1e 2t)te, or 02 *ot 4or ) p6b%03 p6rpo2e, or, 0* 3)2e o4 ) retro)3t05e 2t)t6te 02 2o 1)r21 )*+
6*re)2o*)b%e, 0t 02 26bAe3t to )tt)3J o* +6e pro3e22 @ro6*+2.
@"
Sison pronounces 9ore concretel3 hoE 8 t8x st8tute 983 contr8vene the due process cl8use.
Arbitr8riness, confisc8tion, oversteppin7 the st8te5s Aurisdiction, 8nd l8cF of 8 public purpose 8re 8ll
7rounds for nullit3 enco9p8ssed under the due process invoc8tion.
.et even these 9ore p8rticul8r st8nd8rds 8s enunci8ted in Sison 8re Buite ex8ctin7, 8nd difficult to
re8ch. Even the constitution8l ch8llen7e posed in Sison f8iled to p8ss 9uster. *he 98Aorit3
cites Sison in 8ssertin7 th8t due process 8nd eBu8l protection 8re bro8d st8nd8rds Ehich need proof
of such persu8sive ch8r8cter to le8d to such 8 conclusion.
&t is difficult thou7h to put into Bu8ntifi8ble ter9s hoE onerous 8 t8x8tion st8tute 9ust be before it
contr8venes the due process cl8use.
@1
After 8ll, the inherent n8ture of t8x8tion is to c8use p8in 8nd
inAur3 to the t8xp83er, 8lbeit for the 7re8ter 7ood of societ3. Perh8ps Eh8tever collective notion there
983 be of Eh8t constitutes 8n 8rbitr8r3, confisc8tor3, 8nd unre8son8ble t8x 9i7ht dr8E 9ore fro9
the f8ir3 t8leNle7end tr8ditions of 8bsolute 9on8rchs 8nd the oppressed pe8s8nts the3 t8x. &ndeed, it
is e8sier to Au9p to the conclusion th8t 8 t8x is oppressive 8nd unf8ir if it is i9posed b3 8 t3r8nt or 8n
8uthorit8ri8n st8te.
But could 8n 8rbitr8r3, confisc8tor3 or unre8son8ble t8x 8ctu8ll3 be en8cted b3 8 de9ocr8tic st8te
such 8s oursL (f course it could, but these Eould exist in 9ore p8l8t8ble 7uises. &n 8 de9ocr8tic
societ3 Eherein st8tutes 8re en8cted b3 8 represent8tive le7isl8ture onl3 8fter deb8te 8nd
deliber8tion, t8x st8tutes Eill 9ost liFel3, on their f8ce, see9 f8ir 8nd even-h8nded. After 8ll, if
Con7ress p8sses 8 t8x l8E th8t on f8ci8l ex89in8tion is obviousl3 h8rsh 8nd unf8ir, it f8ces the
Er8th of the votin7 public, to s83 nothin7 of the 9edi8.
&n testin7 the v8lidit3 of 8 t8x st8tute 8s 878inst the due process cl8use, & thinF th8t the Court should
7o be3ond 8 f8ci8l ex89in8tion of the st8tute, 8nd seeF to underst8nd hoE ex8ctl3 it Eould oper8te.
*he express ter9s of 8 st8tute, especi8ll3 t8x l8Es, 8re usu8ll3 in8deBu8te in spellin7 out the
pr8ctic8l effects of its i9ple9ent8tion. *he devil is usu8ll3 in the det8ils.
Ad9ittedl3, the de7ree of difficult3 involved of Audici8l revieE of t8x l8Es h8s incre8sed Eith the
7roEin7 co9plexities of business, econo9ic 8nd 8ccountin7 pr8ctices. *hese 8re sciences Ehich
l839en 8re not nor98ll3 eBuipped b3 their 7ener8l educ8tion to full3 7r8sp, hence the possible
insecurit3 on their p8rt Ehen confronted Eith such Buestions on these fields.
2oEever, Ee should not cede 7round to those tr8ns7ressions of the people5s fund89ent8l ri7hts
si9pl3 bec8use the 9ech8nis9 e9plo3ed to viol8te constitution8l 7u8r8ntees is steeped in
disciplines not nor98ll3 8ssoci8ted Eith the le78l profession. ;en8lit3 c8nnot be 8lloEed to triu9ph
si9pl3 due to its sophistic8tion. *his petition i9putes in the E-;A* '8E unconstitution8l oppression
of the f8t8l v8riet3, but in order to co9prehend ex8ctl3 hoE 8nd Eh3 th8t is so, one h8s to delve into
the co9plex 9ilieu of the ;A* s3ste9. *he p8rt3 8lle7in7 the l8E5s unconstitution8lit3 of course h8s
the burden to de9onstr8te the viol8tions in underst8nd8ble ter9s, but if such proof is presented, the
Court5s dut3 is to en787e 8ccordin7l3.
The 'iability of the Clear and Present
&an+er &octrine as Counter8ei+ht
To the Shibboleths of Speculation
and Cisdom
& do not see 8s 8n i9pedi9ent to the 8nnul9ent of 8 t8x l8E the f8ct th8t it h8s 3et to be
i9ple9ented, or the fe8r th8t doin7 so constitutes 8n undue 8tt8cF on the Eisdo9, r8ther th8n the
le78lit3 of 8 st8tute. 2oEever, 93 position in this petition h8s been ch8llen7ed on those 7rounds, 8nd
& see it fit to refute these pree9ptive 8lle78tions before delvin7 into the oper8tive 8spect of the E-;A*
'8E.
"4 t1ere 02 3)62e to 31)r)3ter0Me m& )r@6me*t2 )2 2pe36%)t05e, 0t 02 o*%& be3)62e t1e E8,AT
!); 1)2 &et to be 0mp%eme*te+. No person 8s of 3et c8n cl8i9 to h8ve sust8ined 8ctu8l inAur3 b3
re8son of the i9ple9ent8tion of the 8ss8iled provisions in G.R. No. 16161. .et this should not
9e8n th8t the Court is i9potent fro9 decl8rin7 8 provision of l8E 8s viol8tive of the due process
cl8use if it is cle8r th8t its i9ple9ent8tion Eill c8use the ille78l depriv8tion of life, libert3 or propert3
Eithout due process of
l8E. *his is especi8ll3 so if, 8s in this c8se, the inAur3 is of 98the98tic8l cert8int3, 8nd the extent of
the loss Bu8ntifi8ble throu7h e8s3 reference to the 9ost b8sic of business pr8ctices.
T1e2e )r@6me*t2 )re 3o*Ae3t6r)% 4or t1e 2)me re)2o* t1)t t1e b)re 2t)teme*t F40r0*@ )
@6*21ot 0*to t1e 1e)+ ;0%% 3)62e ) 4)t)% ;o6*+F ;o6%+ be 3o*Ae3t6r)%. ,o9e people 8re lucF3
enou7h to survive 7unshot Eounds to the he8d, Ehile 98n3 others 8re not. .et Aust bec8use the fe8r
of 9ort8lit3 Eould be 9erel3 specul8tive, it does not 9e8n th8t there should be less co9pulsion to
8void 8 situ8tion of 7ettin7 shot in the he8d.
&ndeed, the Court h8s lon7 responded to striFe doEn prospective 8ctions, even if the inAur3 h8s not
3et even occurred. O*e o4 t1e mo2t 20@*0403)*t %e@)% pr0*30p%e2 o4 t1e %)2t 3e*t6r&, t1e F3%e)r
)*+ pre2e*t +)*@erF +o3tr0*e 0* 4ree 2pee31 3)2e2, 0* 4)3t em)*)te2 4rom t1e pro2pe3t050t&,
)*+ *ot t1e )3t6)%0t& o4 +)*@er. *he Court h8s not been hesit8nt to nullif3 8cts Ehich 9i7ht c8use
inAur3, oEin7 to the presence of 8 cle8r 8nd present d8n7er of 8 subst8ntive evil Ehich the ,t8te h8s
the ri7ht to prevent. &t h8s even extended the :cle8r 8nd present d8n7er rule: be3ond the confines of
freedo9 of expression to the
re8l9 of freedo9 of reli7ion, 8s noted b3 +ustice Puno in his ponencia in "strada v. "scritor.
@!
+ustice *eodoro P8dill8 7oes further in his concurrin7 opinion in B8sco v. PAGC(R, 8nd 8sserts th8t
the cle8r 8nd present d8n7er test sBu8rel3 8pplies to the due process cl8useJ :T1e 3o6rt2, )2 t1e
+e3020o* 2t)te2, 3)**ot 0*?60re 0*to t1e ;02+om, mor)%0t& or e7pe+0e*3& o4 po%030e2 )+opte+
b& t1e po%0t03)% +ep)rtme*t2 o4 @o5er*me*t 0* )re)2 ;1031 4)%% ;0t10* t1e0r )6t1or0t&, e73ept
o*%& ;1e* 2631 po%030e2 po2e ) 3%e)r )*+ pre2e*t +)*@er to t1e %04e, %0bert& or propert& o4 t1e
0*+050+6)%.:
" 2ee *o re)2o* ;1& t1e 3%e)r )*+ pre2e*t +)*@er te2t 3)**ot )pp%& 0* t102 3)2e, or )*& 3)2e
;1ere0* ) t)70*@ 2t)t6te po2e2 ) 3%e)r )*+ pre2e*t +)*@er to t1e %04e, %0bert& or propert& o4 t1e
0*+050+6)%. T1e )pp%03)t0o* o4 t102 2t)*+)r+ 4ree2 t1e Co6rt 4rom 0*6t0%0t& 0* t1e 4)3e o4
p)te*t%& 6*3o*2t0t6t0o*)% t)7 %);2 t1)t 1)5e bee* e*)3te+ b6t )re &et to be 46%%& oper)t0o*)%.
&f for ex89ple, Con7ress dee9s it Eise to i9pose the 9ost dr8coni8n of t8x 9e8sures a such 8s
treblin7 the inco9e t8xes of 8ll persons over 1", r8isin7 the 7ross s8les t8x r8te to I"K, or
pen8liMin7 delinBuent t8xp83ers Eith I" l8shes of the Ehip a there cert8inl3 Eould be 8 98ssive
public outcr3, 8nd 8n expect8tion th8t the Court Eould i99edi8tel3 nullif3 the offensive 9e8sures
even before the3 8re 8ctu8ll3 i9posed. Appl3in7 the cle8r 8nd present d8n7er test, the Court is
e9poEered to striFe doEn the noxious 9e8sures even before the3 8re i9ple9ented. .et Eith this
:b8r on specul8tiveness: 8s 8r7ued b3 the 98Aorit3, the Court could e8sil3 refuse to p83 heed to the
pr83ers for inAunctive relief, 8nd inste8d de98nd th8t the t8xin7 subAects 9ust first suffer before the
Court c8n 8ct.
&n the s89e vein, the cl8i9 th8t 93 8r7u9ents striFe 8t the Eisdo9, r8ther th8n the constitution8lit3
of the l8E 8re 9ispl8ced. Concededl3, the 8ss8iled provisions of the E-;A* l8E 8re b8sic8ll3 unEise.
But 8n3 provision of l8E th8t directl3 contr8dicts the Constitution, especi8ll3 the Bill of Ri7hts, 8re
si9il8rl3 unEise, 8s the3 run inconsistent Eith the fund89ent8l l8E of the l8nd, the enunci8ted st8te
policies 8nd the ele9ent8l 7u8r8ntees 8ssured b3 the ,t8te to its people. Not e5er& 6*;02e %); 02
6*3o*2t0t6t0o*)%, b6t e5er& 6*3o*2t0t6t0o*)% %); 02 6*;02e, 4or )* 6*3o*2t0t6t0o*)% %);
3o*tr)5e*e2 ) pr0mor+0)% pr0*30p%e or @6)r)*tee o* ;1031 o6r po%0t& 02 4o6*+e+.
&f it c8n be shoEn th8t the E-;A* '8E viol8tes these provisions of the Constitution, especi8ll3 the
due process cl8use, then the Court should 8ccordin7l3 8ct 8nd nullif3. ,uch is the essence of Audici8l
revieE, Ehich st8nds 8s the sole b8rrier to the i9ple9ent8tion of 8n unconstitution8l l8E.
*he Separate )pinion of +ustice P8n78nib8n notes th8t :QtRhe Court c8nnot step be3ond the confines
of its constitution8l poEer, if there is 8bsolutel3 no cle8r shoEin7 of 7r8ve 8buse of discretion in the
en8ct9ent of the l8E:
@@
. *his, & feel, is 8n undul3 n8rroE vieE of Audici8l revieE, i9pl3in7 th8t such
9erel3 enco9p8sses the procedur8l 8spect b3 Ehich 8 l8E is en8cted. &f the polic3 of the l8E, 8ndNor
the 9e8ns b3 Ehich such polic3 is i9ple9ented run counter to the Constitution, then the Court is
e9poEered to striFe doEn the l8E, even if the le7isl8tive 8nd executive br8nches 8ct Eithin their
discretion in le7isl8tin7 8nd si7nin7 the l8E.
&t is 8lso 8sserted th8t if the i9ple9ent8tion of the #"K c8p i9poses 8n uneBu8l effect on different
t3pes of businesses Eith v8r3in7 profit 98r7ins 8nd c8pit8l reBuire9ents, then the re9ed3 Eould be
8n 89end9ent of the l8E.
@1
(f course, the re9ed3 of le7isl8tive 89end9ent 8pplies to even the
9ost unconstitution8l of l8Es. But if our societ3 c8n t8Fe cold co9fort in the 8bilit3 of the le7isl8ture
to 89end its en8ct9ents 8s the defense 878inst unconstitution8l l8Es, Eh8t re98ins then 8s the
function of Audici8l revieEL *his le7isl8tive c8p8cit3 to 89end unconstitution8l l8Es runs concurrentl3
Eith the Audici8l c8p8cit3 to striFe doEn unconstitution8l l8Es. &n f8ct, the lon7-st8ndin7 tr8dition h8s
been reli8nce on the Audici8l br8nch, 8nd not the le7isl8tive br8nch, for s8lv8tion fro9
unconstitution8l l8Es.
& do reco7niMe th8t the Separate )pinion of +ustice P8n78nib8n ulti98tel3 proceeds fro9 the
pre9ise th8t the 8ss8iled provisions of the E-;A* '8E 983 be 9erel3 unEise, but not
unconstitution8l. 2ence, its preference to rel3 on Con7ress to 89end the offendin7 provisions r8ther
th8n Audici8l nullific8tion. But & 98int8in th8t the 8ss8iled provisions of the E-;A* '8E viol8te the due
process cl8use of the Constitution 8nd 9ust be stricFen doEn.
The ,ature of '%T
*o underst8nd Eh3 ,ections 8nd 1! of the E-;A* l8E contr8venes the due process cl8use, it is
essenti8l to underst8nd the n8ture of the v8lue-8dded t8x itself. /ilipino consu9ers 983 co9prehend
;A* 8t its ele9ent8l for9, h8vin7 been 8ccusto9ed for sever8l 3e8rs noE in p83in7 8n extr8 1"K of
the listed sellin7 price for 8 Eide cl8ss of consu9er 7oods. /ro9 the perspective of the end
consu9er, such 8s the p8tron Eho purch8ses 8 9e8l fro9 8 f8stfood rest8ur8nt, ;A* is si9pl3 8 t8x
on tr8ns8ctions involvin7 the s8le of 7oods. *he t8x is shouldered b3 the bu3er, 8nd is b8sed on 8
percent87e of the purch8se price. ,ince 8n excise or percent87e t8x sh8res the s89e
ch8r8cteristics, there could be so9e confusion 8s betEeen such t8xes 8nd the ;A*.
2oEever, ;A* is distin7uish8ble fro9 the st8nd8rd excise or percent87e t8xes in th8t it is i9pos8ble
not onl3 on the fin8l tr8ns8ction involvin7 the end user, but on previous st87es 8s Eell so lon7 8s
there E8s 8 s8le involved. *hus, ;A* does not si9pl3 pert8in to the extr8 percent87e p8id b3 the
bu3er of 8 f8st-food 9e8l, but 8lso th8t p8id b3 rest8ur8nt itself to its suppliers of r8E food products.
*his 9ulti-st87e s3ste9 is 9ore 8ccli98ted to the v878ries of the 9odern industri8l cli98te, Ehich
h8s lon7 surp8ssed the st87e Ehen there E8s onl3 one level of tr8nsfer betEeen the f8r9er Eho
h8rvests the crop 8nd the person Eho e8ts the crop. &ndeed, fro9 the extr8ction or production of the
r8E 98teri8l to its fin8l consu9ption b3 8 user, sever8l tr8ns8ctions or s8les 98teri8liMe. *he ;A*
s3ste9 8ssures th8t the 7overn9ent sh8ll re8p inco9e for ever3 tr8ns8ction th8t is h8d, 8nd not Aust
on the fin8l s8le or tr8nsfer.
*he Europe8n %nion, Ehich h8s lon7 reBuired its 9e9ber st8tes to 8ppl3 the ;A* s3ste9, provided
the folloEin7 definition of the t8x Ehich & dee9 cle8r 8nd co9prehensiveJ
*he principle of the co99on s3ste9 of v8lue 8dded t8x involves the 8pplic8tion to 7oods 8nd
services of 8 7ener8l t8x on consu9ption e7)3t%& proport0o*)% to t1e pr03e o4 t1e @oo+2 )*+
2er503e2, ;1)te5er t1e *6mber o4 tr)*2)3t0o*2 t1)t t)Je p%)3e 0* t1e pro+63t0o* )*+
+02tr0b6t0o* pro3e22 before the st87e 8t Ehich t8x is ch8r7ed.
(n e8ch tr8ns8ction, v8lue 8dded t8x, c8lcul8ted on the price of the 7oods or services 8t the r8te
8pplic8ble to such 7oods or services, 21)%% be 31)r@e)b%e )4ter +e+63t0o* o4 t1e )mo6*t o4 5)%6e
)++e+ t)7 bor*e +0re3t%& b& t1e 5)r0o62 3o2t 3ompo*e*t2.
@I
*he 8bove definition 8lludes to 8 Fe3 ch8r8cteristic of the ;A* s3ste9, th8t the i9pos8ble t8x
re98ins proportion8l to the price of 7oods 8nd services no 98tter the nu9ber of tr8ns8ctions th8t
t8Fes pl8ce.
*here is 8nother Fe3 ch8r8cteristic of the ;A* a th8t no 98tter hoE 98n3 the t8x8ble tr8ns8ctions
th8t precede the fin8l purch8se or s8le, it is the end-user, or the consu9er, th8t ulti98tel3 shoulders
the t8x. -espite its n89e, ;A* is 7ener8ll3 not intended to be 8 t8x on v8lue 8dded, but r8ther 8s 8
t8x on consu9ption. 2ence, there is 8 9ech8nis9 in the ;A* s3ste9 th8t en8bles fir9s to offset the
t8x the3 h8ve p8id on their oEn purch8ses of 7oods 8nd services 878inst the t8x the3 ch8r7e on
their s8les of 7oods 8nd services.
@6
,ection 1"I of the N&RC 8ssures th8t :the 89ount of t8x 983 be
shifted or p8ssed on to the bu3er, tr8nsferee or lessee of the 7oods, properties or services.: *he
8ss8iled provisions of the E-;A* l8E striFe 8t the he8rt of this 8ccepted principle.
And there is one fin8l b8sic ele9ent of the ;A* s3ste9 inte7r8l to this disBuisitionJ the 9ode b3
Ehich the t8x is re9itted to the 7overn9ent. &n si9ple theor3, the ;A* p838ble c8n be re9itted to the
7overn9ent i99edi8tel3 upon the occurrence of the tr8ns8ction, but such 8 de98nd proves
excessivel3 unEield3. *he nu9ber of ;A* covered tr8ns8ctions 8 9odern enterprise 983 contr8ct in
8 sin7le d83, plus the reco7niMed principle th8t it is the fin8l end user Eho ulti98tel3 shoulders the
t8x4 render the re9itt8nce of the t8x on 8 per tr8ns8ction b8sis i9possible.
*hus, the ;A* is delivered b3 the purch8ser not directl3 to the 7overn9ent but to the seller, Eho then
coll8tes the ;A* received 8nd re9its it to the 7overn9ent ever3 Bu8rter. *he process 983 see9
si9ple if c8st in this 98nner, but there is 8 ErinFle, due to the offsettin7 9ech8nis9 desi7ned to
ulti98tel3 98Fe the end consu9er be8r the cost of the ;A*.
The Concepts of 0nput and
)utput '%T
*his 9ech8nis9 is e9plo3ed throu7h the introduction of tEo concepts, the input t8x 8nd the output
t8x. ,ection 11"CAD of the N8tion8l &ntern8l Revenue Code defines the input t8x 8s the ;A* due fro9
or p8id b3 8 ;A*-re7istered person on the i9port8tion of 7oods or loc8l purch8se of 7oods 8nd
services in the course of tr8de or business, fro9 8 ;A* re7istered person.
'et us put this in oper8tion8l ter9s. A ;A* re7istered person, en787ed in 8n enterprise, necess8ril3
purch8ses 7oods such 8s r8E 98teri8ls 8nd 98chiner3 in order to produce consu9er 7oods. *he
purch8se of such r8E 98teri8ls 8nd 98chineries is subAect to ;A*, hence the enterprise p83s 8n
8ddition8l 1"K of the purch8se price to the supplier 8s ;A*. *his extr8 89ount p8id b3 the enterprise
constitutes its input ;A*. *he enterprise liFeEise p83s input ;A* Ehen it purch8ses services covered
b3 the t8x, or rent8ls of propert3.
,ince ;A* is 8 fin8l t8x th8t is supposed to be ulti98tel3 shouldered b3 the end consu9er, the ;A*
s3ste9 8lloEs for 8 9ech8nis9 b3 Ehich the business is 8ble to recover the input ;A* th8t it p8id.
*his co9es into pl83 Ehen the business, h8vin7 tr8nsfor9ed the r8E 98teri8ls into consu9er 7oods,
sells these 7oods to the public. As Eidel3 FnoEn, the consu9er p83s to the business 8n 8ddition8l
89ount of 1"K of the purch8se price 8s ;A*. As to the business, this ;A* p839ents it collects fro9
the consu9er represents output ;A*, Ehich is for98ll3 described under ,ection 11"CAD of the N&RC
8s :the v8lue-8dded t8x due on the s8le or le8se of t8x8ble 7oods or properties or services b3: b3
8n3 ;A*-re7istered person.
*he output ;A* collected b3 the business fro9 the consu9ers 8ccu9ul8tes, until the end of ever3
Bu8rter, Ehen the enterprise is obli7ed to re9it the collected output ;A* to the 7overn9ent. *his is
Ehere the creditin7 9ech8nis9 co9es into pl83. ,ince the business is entitled to recover the prep8id
input ;A*, it does so in ever3 Bu8rter b3 8ppl3in7 the 89ount of prep8id input ;A* 878inst the
collected output ;A* Ehich is to be re9itted. &f the output ;A* collected exceeds the prep8id input
;A*, then the 89ount of input ;A* is deducted fro9 the output ;A*, 8nd it is entitled to re9it onl3 the
re98inder 8s output ;A* to the 7overn9ent. *o illustr8te, if Business 6 collects P1,""","""."" 8s
output ;A* 8nd incurs PI"","""."" 8s input ;A*, the PI"","""."" is deducted fro9
the P1,""","""."" output ;A*, 8nd 6 is reBuired to re9it onl3 PI"","""."" of the output ;A* it
collected fro9 custo9ers.
(n the other h8nd, if the input ;A* prep8id exceeds the output ;A* collected, then the business
need not re9it 8n3 89ount 8s output ;A* for the Bu8rter. )oreover, the difference betEeen the input
;A* 8nd the output ;A* 983 be credited 8s input ;A* b3 the business in the succeedin7 Bu8rter.
*hus, if in the /irst $u8rter of 8 3e8r, Business 6 prep83s P1,""","""."" 8s input ;A*, 8nd collects
onl3 PI"","""."" 8s output ;A*, it need not re9it 8n3 89ount of output ;A* to the 7overn9ent.
)oreover, in the ,econd $u8rter, Business 6 c8n credit the re98inin7 PI"","""."" 8s p8rt of its
input ;A* for th8t Bu8rter. 2ence, if in the ,econd $u8rter, 6 8ctu8ll3 prep83s P1"","""."" 8s input
;A*, 8nd collects PI"","""."" 8s output ;A*, it 983 8dd the PI"","""."" input ;A* fro9 the
previous Bu8rter to the P1"","""."" prep8id in the current Bu8rter, brin7in7 the tot8l input ;A* it
could cl8i9 to PH"","""."". ,ince the input ;A* of PH"","""."" noE exceeds the output ;A*
collected ofPI"",""", then 6 need not re9it 8n3 output ;A* 8s Eell to the 7overn9ent for the
,econd $u8rter.
2oEever, re8lit3 is f8r ble8Fer th8n th8t bef8ced b3 Business 6. *he ;A* collected 8nd re9itted is
not the 9ost relev8nt st8tistic ev8lu8ted b3 the business. *he fi7ure of pri98r3 concern of the
enterprise Eould be the profit 98r7in, Ehich is si9pl3 the excess of revenue less expenditures.
Revenue is derived fro9 the 7ross s8les of the business. Expenditures enco9p8ss 8ll expenses
incurred b3 the business includin7 overhe8d expenses, E87es 8nd purch8ses of c8pit8l 7oods.
Cruci8ll3, expenditures Eould include the input ;A* prep8id b3 the business on its c8pit8l
expenditures.
,ince 8 si7nific8nt 89ount of the c8pit8l outl83 incurred b3 8 business is subAected to the
prep839ent of input t8xes, the necessit3 of recoverin7 these losses throu7h the output ;A* collected
beco9es 9ore i9pellin7. *hese output t8xes 8re obviousl3 proportion8l to the volu9e of 7ross s8les
b the hi7her the 7ross s8les, the hi7her the output ;A* collected. *1e o6tp6t t)7e2 3o%%e3te+ o*
2)%e2 )*2;er 4or *ot o*%& t1o2e 0*p6t t)7e2 p)0+ o* t1e p6r31)2e o4 t1e r); m)ter0)%2, b6t
)%2o 4or t1e 0*p6t t)7e2 p)0+ o* t1e m6%t04)r0o62 o5er1e)+ e7pe*2e2 3o5ere+ b& ,AT. *he
burden c8rried b3 the s8les volu9e on the st8bilit3, if not surviv8l of the business thus Aust bec89e
9ore cruci8l. *he 98inten8nce of the proper eBuilibriu9 is not 8n e8s3 98tter. &ncre8sin7 the sellin7
price of the 7oods sold does not necess8ril3 incre8se the 7ross s8les, 8s it could h8ve the counter-
effect of repellin7 the consu9er 8nd di9inishin7 the nu9ber of 7oods sold. At the s89e ti9e,
Feepin7 the sellin7 price loE 983 incre8se the volu9e of 7oods sold, but not necess8ril3 the 89ount
of 7ross s8les.
Profit is 8 ch8nc3 98tter, 8nd in c8ses of s98ll to 9ediu9 enterprises, usu8ll3 s98ll if 8n3. &t is Buite
co99on for ret8il 8nd distribution enterprises to incur profits of less th8n 1K of their 7ross revenues.
'oE profit8bilit3 is not 8n 8uto98tic b8d7e of poor business sFills, but 8 re8lit3 dict8ted b3 the l8Es
of the 98rFetpl8ce. *he prob8bilit3 of profit is loEer th8n th8t of c8pit8l expenditures, 8nd ulti98tel3,
98n3 business est8blish9ents end up Eith 8 hi7her input t8x th8n output t8x in 8 7iven Bu8rter. *his
Eould be especi8ll3 true for s98ll to 9ediu9 enterprises Eho do not re8p sufficient profits fro9 its
business in the first pl8ce, 8nd for those fir9s th8t opt to 8lso invest in c8pit8l expenses in 8ddition to
the overhe8d. >h8tever 9iniscule profit 98r7ins th8t c8n be obt8ined usu8ll3 spell the difference
betEeen life 8nd de8th of the business.
*he possibilit3 of profit is further di9inished b3 the f8ct th8t businesses h8ve to shoulder the input
;A* in the purch8se of their c8pit8l expenses. et t1e er2t;10%e ,AT 2&2tem ;)2 *ot t)0*te+ b&
t1e %)be% o4 oppre2205e*e22 )*+ *e0t1er +0+ 0t be)r t1e 3o*4023)tor& mo+e. T102 ;)2 be3)62e
o4 t1e 0mme+0)te re%0e4 )44or+e+ 4rom t1e 0*p6t t)7e2 p)0+ b& t1e 3re+0t0*@ 2&2tem. "* t1eor&,
,AT 02 *ot 26ppo2e+ to )44e3t t1e pro40t m)r@0*. "4 2631 m)r@0* 02 )44e3te+, 0t 02 o*%& be3)62e
o4 t1e prep)&me*t o4 t1e 0*p6t t)7e2, )*+ t102 21o6%+ be reme+0e+ b& t1e 0mme+0)te re3o5er&
t1ro6@1 t1e 3re+0t0*@ 2&2tem o4 t1e 2ett%e+ 0*p6t t)7e2.
T1e *e; E8,AT %); 31)*@e2 )%% t1)t, )*+ p6t2 0* Aeop)r+& t1e 26r505)% o4 2m)%% to me+06m
e*terpr02e2.
The "ffects of the /I< Cap on Creditable 0nput '%T
*he first r8dic8l shift introduced b3 the E-;A* l8E to the credit8ble input s3ste9 a the #"K c8p on
the credit8ble input t8x th8t 983 be c8rried over into the next Bu8rter a is provided in ,ection of
the l8E, Ehich 89ends ,ection 11"CAD of the N&RC, 89on7 others. ,ection 11"CAD 8s 89ended
Eould noE re8dJ
,ec. 11". Ta# Credits. =
CBD "#cess )utput or 0nput Ta#. = &f 8t the end of 8n3 t8x8ble Bu8rter the output t8x exceeds the
input t8x, the excess sh8ll be p8id b3 the ;A*-re7istered person. &f the input t8x exceeds the output
t8x, the excess sh8ll be c8rried over to the succeedin7 Bu8rter or Bu8rters. *o!i%e%, T1)t t1e
0*p6t t)7 0*3%6205e o4 0*p6t ,AT 3)rr0e+ o5er 4rom t1e pre50o62 ?6)rter t1)t m)& be 3re+0te+ 0*
e5er& ?6)rter 21)%% *ot e73ee+ 2e5e*t& per3e*t #>0C( o4 t1e o6tp6t ,ATJ Provided, ho8ever,
*h8t 8n3 input t8x 8ttribut8ble to Mero r8ted s8les b3 8 ;A*-re7istered person 983 8t his option be
refunded or credited 878inst other intern8l revenue t8xes, subAect to the provisions of ,ection 11!.
Ce9ph8sis suppliedD
All hope for entrepreneuri8l st8bilit3 is d8shed Eith the i9position of the #"K c8p. %nder the E-;A*
'8E, the business, re78rdless of st8bilit3 or fin8nci8l c8p8bilit3, is obli7ed to re9it to the 7overn9ent
ever3 Bu8rter 8t le8st @"K of the output ;A* collected fro9 custo9ers, or rou7hl3 @K of the 89ount
of 7ross s8les. *hus, if 8 Bu8rterl3 7ross s8les of . Business tot8led P1,""",""", 8nd . is prudent
enou7h to Feep its c8pit8l expenses doEn toPH",""", it Eould then 8ppe8r on p8per th8t . incurred
8 profit of P!",""". 2oEever, Eith the #"K c8p, . Eould be obli7ed to re9it to the
7overn9ent P@",""", thus Eipin7 out the profit 98r7in for the Bu8rter. . Eould be entitled to credit
the excess input ;A* it prep8id for the next Bu8rter, but the continuous oper8tion of the #"K c8p
obvi8tes Eh8tever benefits this 983 7ive, 8nd c8use the 8ccu9ul8tion of the unutiliMed credit8ble
input ;A* Ehich should be returned to the business.
*he difference is even 9ore dr898tic if seen hoE the unutiliMed credit8ble input ;A* 8ccu9ul8tes
over 8 one 3e8r period. *o illustr8te, Business . prep83s the folloEin7 89ounts of input ;A* over 8
one-3e8r periodJ P1"","""."" - /irst $u8rter4 P1"","""."" = !nd $u8rter4 P@1,"""."" = @rd
$u8rter4 8nd PI","""."" = 1th $u8rter. (n the other h8nd, . collects the folloEin7 89ounts of
output ;A* fro9 consu9ersJ P6","""."" - /irst $u8rter4P6","""."" = !nd $u8rter4 P1"","""."" =
@rd $u8rter4 8nd PI","""."" = 1th $u8rter. Appl3in7 the #"K c8p, Ehich Eould li9it the 89ount of
the decl8r8ble input ;A* to #"K in 8 Bu8rter, the folloEin7 results obt8in, 8s presented in t8bul8r
for9J
P8rticul8rs 1st $u8rter !nd $u8rter @rd $u8rter 1th $u8rter
(utput ;A* 6",""" 6",""" 1"",""" I","""
&nput ;A*
C%ctualD \ C8rr3
(ver
1"",""" 1"",""" QinputR
\I,"""
@1,""" I","""
Qexcess credit8bleR
1I,"""
QinputR
\116,"""
Qexcess
credit8bleR
1I","""
QinputR
\","""
Qexcess
credit8bleR
1@","""
&eclarable&nput
;A* C#"K of
output ;A*D
C6","""x#"KD
1!,"""
C6","""x#"KD
1!,"""
C1"","""x#"KD
#","""
CI","""x#"KD
@I,"""
'oEer of 8ctu8l
8nd #"K c8p =
8lloE8ble
;A*
P838ble
C6",""" -1!,"""D
1,"""
C6",""" -1!,"""D
1,"""
C1"","""-
#","""D
@","""
CI","""-
@I,"""D
1I,"""
Creditable&nput
;A*
C1"",""" =
1!,"""D
I,"""
C1I,""" = 1!,"""D
116,"""
C1I","""-
#","""D
","""
C1@","""-
@I,"""D
HI,"""
*his st8nds in contr8st to s89e business ;A* 8ccount8bilit3 under the present s3ste9, usin7 the
s89e v8ri8bles of output ;A* 8nd input ;A*. *he need to distin7uish 8 declarable input ;A* is
obvi8ted Eith the eli9in8tion of the #"K c8p.
P8rticul8rs 1st $u8rter !nd $u8rter @rd $u8rter 1th $u8rter
(utput ;A* 6",""" 6",""" 1"",""" I","""
&nput ;A*
C%ctualD \
C8rr3 (ver
1"",""" 1"",""" QinputR
\1","""
Qexcess
credit8bleR
11","""
@1,"""
QinputR
\","""
Qexcess
credit8bleR
111,"""
I","""
QinputR
\ 11,"""
Cexcess
credit8bleD
I","""
;A* P838ble " " " "
Creditable
&nput ;A*
1",""" ",""" 11,""" 11,"""
*he difference is dr898tic, 8s is the i9p8ct on the business5s profit 98r7in 8nd 8v8il8ble c8sh on
h8nd. %nder nor98l conditions, s98ll to 9ediu9 enterprises 8re 8lre8d3 encu9bered Eith the
liFelihood of obt8inin7 onl3 8 9ini98l profit 98r7in. >ithout the #"K c8p, those businesses Eould
nonetheless be 8ble to expect 8n i99edi8te return on its input t8xes e8rlier 8dv8nced, t8xes Ehich
under the ;A* s3ste9 it is not supposed to shoulder in the first pl8ce. 2oEever, Eith the #"K c8p in
pl8ce, the unutiliMed input t8xes Eould continue to 8ccu9ul8te, 8nd the enterprise precluded fro9
i99edi8te recover3 thereof. T1e 0*)b0%0t& to 6t0%0Me t1e2e 0*p6t t)7e2, ;1031 3o6%+ 2pe%% t1e
+044ere*3e bet;ee* pro40t )*+ %o22, 2o%5e*3& )*+ 0*2o%5e*3&, ;0%% e5e*t6)%%& 0mp)0r, 04 *ot J0%%
o44 t1e e*terpr02e.
*he 98Aorit3 f8ils to consider one of the 9ost i9port8nt concepts in fin8nce, ti9e v8lue for
9one3.
@#
,i9pl3 put, the v8lue of one peso is Eorth 9ore tod83 th8n in !""6. )one3 th8t 3ou hold
tod83 is Eorth 9ore bec8use 3ou c8n invest it 8nd e8rn interest.
@
B3 re8son of the #"K c8p, the
89ount of input ;A* credit th8t re98ins unutiliMed Eould continue 8ccu9ul8te for 9onths 8nd 3e8rs.
*he lon7er the 89ount re98ins unutiliMed, the hi7her the de7ree of its depreci8tion in v8lue, in
8ccord8nce Eith the concept of ti9e v8lue of 9one3. Even 8ssu9in7 th8t the business eventu8ll3
recovers the input ;A* credit, the su9 recovered Eould h8ve decre8sed in pr8ctic8l v8lue.
"t ;o6%+ be 2)+, b6t 4)0r, 04 ) b620*e22 3e)2e2 be3)62e o4 0t2 0*)b0%0t& to 3ompete ;0t1 ot1er
b620*e22e2. "t ;o6%+ be 6tter m)%e5o%e*3e to 3o*+em* )* e*terpr02e to +e)t1 2o%e%& t1ro6@1
t1e emp%o&me*t o4 ) +e3ept05e )33o6*t0*@ ;0M)r+r&. $or t1e aison %Gete o4 t102 >0C 3)p 02
to m)Je 0t )ppe)r o* p)per t1)t t1e @o5er*me*t 02 more 2o%5e*t t1)* 0t )3t6)%%& 02. Concedin7
for the nonce, there is 8 te9por8r3 8dv8nt87e 78ined b3 the 7overn9ent b3 this #"K c8p, 8s the
ste8d3 re9itt8nce b3 businesses of the @"K output ;A* Eould 8ssure 8 c8sh floE. ,uch collection
983 onl3 9o9ent8ril3 resolve 8n ende9ic proble9 in our loc8l t8x s3ste9, the proble9 of collection
itself.
&f the #"K c8p E8s desi7ned in order to enh8nce revenue collection, then & sub9it th8t the 9e8ns
e9plo3ed st8nd be3ond re8son. &f sheer Eill proves insufficient in 8ssurin7 th8t the ,t8te 8ll t8xes
due it, there should be 8lloE8ble discretion for the 7overn9ent to for9ul8te cre8tive 9e8ns to
enh8nce collection. But to do so b3 deprivin7 loE profit enterprises of Eh8tever 9e87er inco9e
e8rned 8nd conseBuentl3 8ssurin7 the de8th of these industries 7oes be3ond 8n3 v8lid ,t8te
purpose.
(nl3 st8ble businesses Eith subst8nti8l c8sh floEs, or extr8ordin8ril3 successful enterprises Eill be
8ble to re98in in oper8tion should the #"K c8p be ret8ined. *he effect of the #"K c8p is to
effectivel3 i9pose 8 t8x 89ountin7 to @K of 7ross revenue. *he 89ount 983 see9 insi7nific8nt to
those Eithout EorFin7 FnoEled7e of the E83s of business, but 8n3bod3 Eho is 8ctu8ll3 f89ili8r Eith
business Eould be Eell 8E8re the profit 98r7ins of the ret8ilin7 8nd distribution sectors t3pic8ll3
89ount to less th8n 1K of the 7ross revenues. A t8xp83er h8s to e8rn 8 98r7in of 8t le8st @K on
7ross revenue in order to recoup the losses sust8ined due to the #"K c8p. But 8s st8ted e8rlier,
profits 8re ch8nc3, 8nd the entrepreneur does not h8ve full control of the conditions th8t le8d to
profit.
Even 9ore 78llin7 is the f8ct th8t the #"K c8p, oppressive 8s it 8lre8d3 is to the business
est8blish9ent, even li9its the options of the business to recover the unutiliMed input ;A* credit.
-urin7 the deliber8tions, the 8r7u9ent E8s r8ised th8t the proble9 presented b3 the #"K c8p E8s 8
business proble9, Ehich c8n onl3 be solved b3 business. .et there is onl3 one vi8ble option for the
enterprise to resolve the proble9, 8nd th8t is to incre8se the sellin7 price of 7oods.
@H
&t Eould be
incorrect to 8ssu9e th8t incre8se the volu9e of the 7oods sold could solve the proble9, since for
ite9s Eith the s89e purch8sin7 cost, the effect of the #"K c8p re98ins const8nt re78rdless of 8n
incre8se in volu9e.
But the 8ddition8l burden is not li9ited to the incre8se of prices b3 the ret8iler to the end consu9er.
,ince ;A* is 8 tr8ns8ction t8x, ever3 level of distribution beco9es subAect not onl3 to the ;A*, but
8lso to the #"K c8p. *he proble9 incre8ses due to 8 c8sc8din7 effect 8s the nu9ber of distribution
levels incre8ses since it Eill result in the collection of 8n effective @K percent87e t8x 8t ever3
distribution level.
&n 8n8l3Min7 the effects of the #"K c8p, 8nd 8ppreci8tin7 hoE it viol8tes the due process cl8use, Ee
should not focus solel3 on the end consu9ers. %ndoubtedl3, consu9ers Eill f8ce h8rdships due to
the incre8sed prices, but their threshold of ph3sic8l surviv8l, 8s individu8l people, is si7nific8ntl3 less
th8n th8t of enterprises. ,o9ehoE, & do not thinF the neE E-;A* Eould 7ener8ll3 deprive consu9ers
of the b8re necessities such 8s food, E8ter, shelter 8nd clothin7. *here 983 be si7nific8nt
depriv8tion of co9fort 8s 8 result, but not of life.
*he s89e does not hold true for businesses. *he st8nd8rd of :depriv8tion of life: of Auridic8l persons
e9plo3s different v8ri8bles th8n th8t of n8tur8l persons. >h8t food 8nd E8ter 983 be for persons,
profit is for 8n enterprise bb the b8re necessit3 for surviv8l. /or businesses, the i9ple9ent8tion of
the s89e l8E, Eith the #"K c8p 8nd 6"-9onth 89ortiM8tion period, Eould 9e8n the depriv8tion of
profit, Ehich is the deter9in8tive necessit3 for the surviv8l of 8 business.
&t is e8s3 to 8d9onish both the consu9er 8nd the enterprise to cut b8cF on expenditures to survive
the neE E-;A* '8E. 2oEever, this c8n be re8listic8ll3 expected onl3 of the consu9er. *he
s98llN9ediu9 enterprise c8nnot Aust cut b8cF e8sil3 on expenditures in order to survive the
i9ple9ent8tion of the E-;A* '8E. /or such businesses, expenditures do not nor98ll3 conte9pl8te
unnecess8r3 expenses such 8s executive perFs Ehich c8n be dispensed Eith Eithout inAur3 to the
enterprises. *hese expenditures pert8in to expenses necess8r3 for the surviv8l of the enterprise,
such 8s E87es, overhe8d 8nd purch8se of r8E 98teri8ls. *hose three b8sic ite9s of expenditure
c8nnot si9pl3 be reduced, 8s to do so Eith i9p8ir the 8bilit3 of the business to oper8te on 8 d8il3
b8sis.
And reduction of expenditures is not the exclusive 8ntidote to these i9positions under the E-;A*
'8E, 8s there 9ust 8lso be 8 correspondin7 incre8se in the 89ount of 7ross s8les. *o do so thou7h,
Eould reBuire 8n incre8se in the sellin7 price, d89penin7 consu9er enthusi8s9, 8nd further
i9p8irin7 the 8bilit3 of the enterprise to recover fro9 the E-;A* '8E. *his is 3our b8sic C8tch-
!!
1"
situ8tion S no 98tter Ehich 9e8ns the enterprise e9plo3s to recover fro9 the E-;A* '8E, it Eill
still 7o doEn in fl89es.
,ection of the E-;A* l8E, Ehile ostensibl3 even-h8nded in 8pplic8tion, f8ils to 8ppreci8te v8lid
subst8nti8l distinctions betEeen l8r7e sc8le enterprises 8nd s98ll 8nd 9ediu9 enterprises. *he
l8tter 7roup, oEin7 to the li9ited c8p8bilit3 for c8pit8l invest9ent, subsists on 9odest profit 98r7ins,
Ehere8s the for9er expects, b3 re8son of its subst8nti8l c8pit8l invest9ents, 8 hi7h 98r7in. "*
e22e*t0)%%& pro10b0t0*@ t1e re3o5er& o4 2m)%% pro40t m)r@0*2, t1e E8,AT %); e44e3t05e%& 2e*+2
t1e me22)@e t1)t o*%& 10@1 m)r@0* b620*e22e2 )re ;e%3ome to +o b620*e22 0* t1e
P10%0pp0*e2. "t 2t04%e2 )*& e*trepre*e6r0)% )mb0t0o*2 o4 $0%0p0*o2 6*4ort6*)te e*o6@1 to 1)5e
bee* bor* poor &et 2eeJ ) better %04e b& 2)3r04030*@ )%% to 2t)rt ) 2m)%% b620*e22.
A9on7 the enunci8ted ,t8te policies in the Constitution, 8s st8ted in ,ection !", Article &&, is th8t
:t1e St)te re3o@*0Me2 t1e 0*+02pe*2)b%e ro%e o4 t1e pr05)te 2e3tor, e*3o6r)@e2 pr05)te
e*terpr02e, )*+ pro50+e2 0*3e*t05e2 to *ee+e+ 0*5e2tme*t2.:
11
*he provision, 8s Eith other
decl8red ,t8te policies in the Constitution, h8ve sufficient i9port 8nd conseBuence such th8t in
8ssessin7 the constitution8lit3 of the 7overn9ent8l 8ction, these provisions should be considered
8nd Eei7hed 8s 878inst the r8tion8le for the 8ss8iled ,t8te 8ction.
1!
*he inco9p8tibilit3 of the #"K
c8p Eith this provision is p8tent.
Pilipin8s ,hell -e8lers, on Eho9 the burden to est8blish the viol8tion of due process 8nd eBu8l
protection lies, offers the folloEin7 ch8rt of the inco9e st8te9ent of 8 t3pic8l petroleu9 de8lerJ
QUARTER! PRO$"T AND !OSS STATEMENT
D3A53R &A&
Price ;A* CEithout #"K c8pD ;A* CEith #"K
c8pD
,8lesN(utput @!,#1,I@1 @,!#1,I@.1" @,!#1,I@.1"
Cost of ,8les @1,@1,#1# @,1@,1#1.#"
Gross )8r7in H1@,1#
(per8tin7 Expenses Non-
v8t8ble ite9s
;8t8ble &te9s
I@6,!1H
@1#,I1
@1,#I.1"
*ot8l Cost I@,@@
Net Profit 5<,<8B
*ot8l &nput *8x @,!1I,!@".1" !,!H!,@H#.@
;A* P838ble 5<,62=.=0 <82,B56.02
U*6t0%0Me+ "*p6t ,AT <22,8=2.>2
T3omp6te+ b& m6%t0p%&0*@ o6tp6t ,AT b& >0C G=,2>B,85=.B0 7 >0C U 2,2<2.=<>.=8H
*he present8tion of the Pilipin8s ,hell -e8lers 9ore or less Aibes Eith 93 oEn observ8tions on the
i9p8ct of the #"K c8p. *he de8ler Ehose inco9e is illustr8ted 8bove h8s to outl83 8 c8sh 89ount
of PH!!,@!.#! 9ore th8n Eh8t Eould h8ve been shelled out if the #"K c8p Eere not in pl8ce.
Considerin7 th8t the net profit of the de8ler is onl3 PIH,H1."", the conseBuences could ver3 Eell be
f8t8l, especi8ll3 if these st8te of events persist in succeedin7 Bu8rters.
*he burden of proof E8s on the Pilipin8s ,hell -e8lers5 to prove their 8lle78tions, 8nd 8ccordin7l3,
these fi7ures h8ve been dul3 presented to the Court for 8ppreci8tion 8nd ev8lu8tion. &nste8d, the
98Aorit3 h8s shunted 8side these present8tions 8s bein7 9erel3 theoretic8l, despite the f8ct th8t
the3 present 8 cle8r 8nd present d8n7er to the ver3 life of our n8tion5s enterprises. *he 98Aorit35s
position Eould h8ve been 9ore credible h8d it f8ced the issue sBu8rel3, 8nd ende8vored to
de9onstr8te in liFe nu9eric8l f8shion Eh3 the #"K c8p is not oppressive, confisc8tor3, or otherEise
viol8tive of the due process cl8use.
,8dl3, the 98Aorit3 refuses to confront the fi7ures or en787e in 8 9e8nin7ful de9onstr8tion of hoE
these 8ss8iled provisions trul3 oper8te. &nste8d, it counters Eith pl8titudes 8nd bro9ides th8t do not
intellectu8ll3 s8tisf3. Considerin7 th8t the ver3 vit8lit3, if not life of our do9estic econo93 is 8t st8Fe, &
thinF it derelict to our dut3 to blocF out these ur7ent concerns presented to the Court Eith blind f8ith
tin7ed Eith irr8tion8l Pan+lossian
1@
opti9is9.
*he obli78tion of the 98Aorit3 to refute on the 9erits the 8r7u9ents of the Petroleu9 -e8lers
beco9es even 9ore 7r8ve considerin7 th8t the respondents h8ve 8bAectl3 f8iled to convincin7l3
dispute the cl8i9s. -urin7 or8l 8r7u9ents, respondents 8tte9pted to counter the 8r7u9ents th8t the
#"K c8p E8s oppressive 8nd confisc8tor3 b3 presentin7 the folloEin7 illustr8tion, Ehich & fe8r is
severel3 9isle8din7J
Sli%e 1
&te9 Cost ;A*
,8les 1,""","""."" 1"",""".""
Purch8ses "","""."" ",""".""
-ue B&R Eithout c8p -ue B&R Eith #"K c8p
(utput ;A* 1"","""."" (utput ;A* 1"",""".""
Actu8l &nput ;A* ","""."" AlloE8ble &nput ;A* #",""".""
Net ;A* P838ble !","""."" Net ;A* P838ble @",""".""
Excess &nput ;A* 1",""".""
C8rr3-over to next Bu8rter
S%0+e 2
VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV
&te9 Cost ;A*
,8les 1,""","""."" 1"",""".""
Purch8ses 6"","""."" 6",""".""
-ue B&R Eithout c8p -ue B&R Eith #"K c8p



(utput ;A* 1"","""."" (utput ;A* 1"",""".""
Actu8l &nput ;A* C6"K of output ;A*D 6","""."" AlloE8ble &nput ;A* 6",""".""
Net ;A* P838ble 1","""."" Net ;A* P838ble 1",""".""
Excess &nput ;A* "
C8rr3-over to next Bu8rter
*his present8tion of the respondents is 7rossl3 deceptive, 8s it f8ils to 8ccount for the excess
credit8ble input ;A* th8t re98ins unutiliMed due to the #"K c8p. *his excess or credit8ble input ;A*
is supposed to be c8rried over for the co9put8tion of the input ;A* of the next Bu8rter. &nste8d, this
excess or credit8ble input ;A* 987ic8ll3 dis8ppe8rs fro9 the t8ble of the respondents. &n their
9e9or8ndu9, the Pilipin8s ,hell -e8lers counter Eith their oEn present8tion usin7 the s89e
v8ri8bles 8s respondents5, but t8Fin7 into 8ccount the excess credit8ble input ;A* 8nd extendin7 the
situ8tion over 8 one-3e8r period. & cite Eith 8pprov8l the folloEin7 ch8rt
11
of the Pilipin8s ,hell
-e8lersJ
Slide 1
Muarter 1
&te9 No. Cost ;A*
,8les 1,""","""."" 1"",""".""
Purch8ses "","""."" ",""".""
-ue B&R Eith #"K c8p
(utput ;A* 1"",""".""
AlloE8ble &nput ;A* #",""".""
Net ;A* P838ble @",""".""
E73e22 "*p6t ,)t
C)rr&8o5er to *e7t ?6)rter 10,000.00
Q6)rter 2
Cost ;A*
,8les 1,""","""."" 1"",""".""
Purch8ses "","""."" ",""".""
-ue B&R Eith #-K c8p
(utput ;A* 1"",""".""
'essJ &nput ;A*
Excess &nput ;A* fr. 1st $u8rter 1",""".""
&nput ;A*-Current $tr. ",""".""
*ot8l Av8il8ble &nput ;A* H",""".""
AlloE8ble &nput ;A* C1"",""" x #"KD #","""."" #",""".""
Net ;A* P838ble @",""".""
]]]]]]]]]
*ot8l Av8il8ble &nput ;A* H",""".""
AlloE8ble &nput ;A* #",""".""
E73e22 "*p6t ,AT to be 3)rr0e+ o5er to *e7t
Q6)rter 20,000.00
UUUUUUUUU
Muarter .
Cost ;A*
,8les 1,""","""."" 1"",""".""
Purch8ses "","""."" ",""".""
-ue B&R Eith #"K c8p
(utput ;A* 1"",""".""
'essJ &nput ;A*
Excess &nput ;A* fr. !nd $tr. !",""".""
&nput ;A*-Current $tr. ",""".""
*ot8l Av8il8ble &nput ;A* 1"",""".""
AlloE8ble &nput ;A* C1"",""" x #"KD #","""."" #",""".""
Net ;A* P838ble @",""".""
]]]]]]]]]
*ot8l Av8il8ble &nput ;A* 1"",""".""
AlloE8ble &nput ;A* #",""".""
E73e22 "*p6t ,AT to be 3)rr0e+ o5er to *e7t ?6)rter =0,000.00
UUUUUUUUUU
Muarter 5
Cost ;A*
,8les 1,""","""."" 1"",""".""
Purch8ses "","""."" ",""".""
-ue B&R Eith #"K c8p
(utput ;A* 1"",""".""
'essJ &nput ;A*
Excess &nput ;A* fr. @rd $tr. @",""".""
&nput ;A*-Current $tr. ",""".""
*ot8l Av8il8ble &nput ;A* 11",""".""
AlloE8ble &nput ;A* C1"",""" x #"KD #","""."" #",""".""
Net ;A* P838ble @",""".""
]]]]]]]]
*ot8l Av8il8ble &nput ;A* 11",""".""
AlloE8ble &nput ;A* #",""".""
E73e22 "*p6t ,AT to be 3)rr0e+ o5er to *e7t ?6)rter B0,000.00
UUUUUUUUUU
T1e >0C 3)p 02 *ot mere%& )* 6*;02e 0mpo20t0o*. "t 02 ) b6r+e* +e20@*e+, e0t1er t1ro6@1
21eer 1ee+%e22*e22 or 3r6e% 3)%36%)t0o*, to J0%% o44 t1e 2m)%% )*+ me+06m e*terpr02e2 t1)t )re
t1e 2o6%, 04 *ot t1e 1e)rt, o4 o6r e3o*om&. "t 02 *ot mere%& )* 6*+6e t)J0*@ o4 propert&, b6t
3o*2t0t6te2 )* 6*A62t040e+ t)J0*@ o4 %04e )2 ;e%%.
A*+ ;1)t %e@0t0m)te, @erm)*e p6rpo2e2 +oe2 t102 %et1)% >0C 3)p 2er5eE "t 3ert)0*%& +oe2 *ot
0*3re)2e t1e @o5er*me*tD2 re5e*6e 20*3e t1e 6*6t0%0Me+ 3re+0t)b%e 0*p6t ,AT 21o6%+ be
e*tere+ 0* t1e @o5er*me*t booJ2 )2 ) +ebt p)&)b%e )2 0t 02 26ppo2e+ to be e5e*t6)%%& rep)0+
to t1e t)7p)&er, )*+ 2o o* t1e 3o*tr)r& 0t 0*3re)2e2 t1e @o5er*me*tD2 +ebt2. " +o 2ee t1)t t1e
>0C 3)p tempor)r0%& )%%o;2 t1e @o5er*me*t to br)@ to t1e ;or%+ o4 )* 0*3re)2e+ 3)21 4%o;.
B6t t102 20t6)t0o* ;o6%+ be )J0* to t1e pro50*30)% m)* ;1o borro;2 4rom e5er&bo+& 0* t1e
b)rr0o 0* or+er to 21o; o44 mo*e& )*+ m)0*t)0* t1e prete*2e o4 pro2per0t& to 5020t0*@ 30t&
re%)t05e2. T1e 0%%620o* o4 ;e)%t1 02 1)r+%& ) %e@0t0m)te 2t)te p6rpo2e, e2pe30)%%& 04 proAe3te+ )t
t1e e7pe*2e o4 t1e 5er& b620*e22 %04e o4 t1e 3o6*tr&.
*he 98Aorit3, in 8n effort to belittle these concerns, points out th8t th8t the excess input t8x re98ins
credit8ble in succeedin7 Bu8rters. 2oEever, 8s seen in the 8bove illustr8tion, the 8ctu8l 8pplic8tion
of the excess input t8x Eill 8lE83s be li9ited b3 the 89ount of output t8xes collected in 8 Bu8rter, 8s
8 result of the #"K c8p. *hus, it is entirel3 possible th8t 8 ;A*-re7istered person, throu7h the
8ccu9ul8tion of unutiliMed input t8xes, Eould h8ve in 8 Bu8rter 8n express credit8ble input t8x
of PI",""",""", but Eould be 8lloEed to 8ctu8ll3 credit onl3 P#",""" if the output t8x collected for
th8t Bu8rter Eere onl3 P1"",""".
*he burden of the ;A* 983 f8ll 8t first to the i99edi8te bu3ers, but it is supposed to be eventu8ll3
shifted to the end-consu9er. *he #"K c8p effectivel3 prevents this fro9 h8ppenin7, 8s it li9its the
8bilit3 of the business to recover the prep8id input t8xes. *his is unconscion8ble, since in the first
pl8ce, these intervenin7
pl83ers a the 98nuf8cturers, producers, tr8ders, ret8ilers a 8re not even supposed to sust8in the
losses incurred b3 re8son of the prep839ent of the input t8xes. >orse, the3 Eould be obli7ed ever3
Bu8rter to p83 to the 7overn9ent fro9 out of their oEn pocFets the eBuiv8lent of @"K of the output
t8xes, no 98tter their oEn p8rticul8r fin8nci8l condition. >orst, this tEin 3oFe on the t8xp83er of
h8vin7 to sust8in 8 debit eBuiv8lent to @"K of output t8xes, 8nd h8vin7 to 8E8it forever in order to
recover the prep8id t8xes Eould i9p8ir the c8sh floE 8nd prove f8t8l for 8 shocFin7 nu9ber of
businesses Ehich, 8s the3 noE st8nd, h8ve to 98Fe do Eith 8 9ini9u9 profit th8t st8nds to be
Eiped out Eith the introduction of the #"K c8p.
Nonetheless, the 98Aorit3 notes th8t the excess credit8ble input t8x 983 be the subAect of 8 t8x
credit certific8te, Ehich then could be used in p839ent of intern8l revenue t8xes, or 8 refund to the
extent th8t such input t8xes h8ve not been 8pplied 878inst output t8xes.
1I
I1)t t1e m)Aor0t& 4)0%2 to
me*t0o* 02 t1)t 6*+er Se3t0o* 10 o4 t1e E8,AT !);, ;1031 )me*+2 Se3t0o* 112 o4 t1e N"RC,
2631 3re+0t or re46*+ m)& *ot be +o*e ;10%e t1e e*terpr02e rem)0*2 oper)t0o*)%:
,EC. 1". ,ection 11! of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
,EC. 11!. efunds or Ta# Credits of 0nput Ta#.N
xxx
:CBD Cancellation of '%T e+istration.S A per2o* ;1o2e re@02tr)t0o* 1)2 bee* 3)*3e%%e+ +6e to
ret0reme*t 4rom or 3e22)t0o* o4 b620*e22 or +6e to 31)*@e2 or 3e22)t0o* o4 2t)t62 6*+er
Se3t0o* 106#C( o4 t102 Co+e m)&, ;0t10* t;o #2( &e)r2 4rom t1e +)te o4 3)*3e%%)t0o*, )pp%& 4or
t1e 0226)*3e o4 ) t)7 3re+0t 3ert0403)te 4or )*& 6*62e+ 0*p6t t)7 ;1031 m)& be 62e+ 0*
p)&me*t o4 102 ot1er 0*ter*)% re5e*6e t)7e2.
xxx
*his st8nds in 98rFed contr8st to ,ection 11!CBD of the N&RC 8s it re8d prior to this 89end9ent.
%nder the previous rule, 8 ;A*-re7istered person E8s entitled to 8ppl3 for the t8x credit certific8te or
refund p8id on c8pit8l 7oods even Ehile it re98ined in oper8tionJ
,EC. 11!. efunds or Ta# Credits of 0nput Ta#.N
xxx
:CBD Capital :oods .S A ,AT8re@02tere+ per2o* m)& )pp%& 4or t1e 0226)*3e o4 ) t)7 3re+0t
3ert0403)te or re46*+ o4 0*p6t t)7e2 p)0+ o* 3)p0t)% @oo+2 0mporte+ or %o3)%%& p6r31)2e+, to
t1e e7te*t t1)t 2631 0*p6t t)7e2 1)5e *ot bee* )pp%0e+ )@)0*2t o6tp6t t)7e2. T1e )pp%03)t0o*
m)& be m)+e o*%& ;0t10* t;o #2( &e)r2 )4ter t1e 3%o2e o4 t1e t)7)b%e ?6)rter ;1e* t1e
0mport)t0o* or p6r31)2e ;)2 m)+e.
*his provision, Ehich could h8ve provided foresee8ble 8nd useful relief to the ;A*-re7istered person,
E8s deleted under the neE E-;A* '8E. At present, the refund or t8x credit certific8te 983 onl3 be
issued upon tEo inst8ncesJ on Mero-r8ted or effectivel3 Mero-r8ted s8les, 8nd upon c8ncell8tion of
;A* re7istr8tion due to retire9ent fro9 or cess8tion of business.
16
T102 02 t1e 3r6e%e2t 36t o4 )%%.
O*%& )4ter t1e b620*e22 3e)2e2 to be m)& t1e St)te be 3ompe%%e+ to rep)& t1e e*t0re )mo6*t
o4 t1e 6*6t0%0Me+ 0*p6t t)7. "t 02 %0Je ) m)3)bre 4orm o4 2;eep2t)Je2 ;1ere0* t1e ;0**er 02 to
be p)0+ 102 4ort6*e o*%& ;1e* 1e 02 )%re)+& +e)+. Aan$in pa an" %a,o <un" pata( na an"
<a/a(o.
)oreover, the in8bilit3 to i99edi8tel3 credit or otherEise recover the unutiliMed input ;A* could
c8use such prep8id 89ount to 8ctu8ll3 be reco7niMed in the 8ccountin7 booFs 8s 8 loss. %nder
intern8tion8l 8ccountin7 pr8ctices, the unutiliMed input ;A* due to the #"K c8p Eould not even be
reco7niMed 8s 8 deferred 8sset. *he s89e Eould not hold true if the #"K c8p Eere eli9in8ted.
%nder the &ntern8tion8l Accountin7 ,t8nd8rds
1#
, the unutiliMed input ;A* credit is reco7niMed 8s 8n
8sset :to the extent th8t it is prob8ble th8t future t8x8ble profit Eill be 8v8il8ble 878inst Ehich the
unused t8x losses 8nd unused t8x credits c8n be utiliQMRed:
1
*hus, if the i99edi8te 8ccredit8tion of
the input ;A* credit c8n be obt8ined, 8s it Eould Eithout the #"K c8p, the 8sset could be
reco7niMed.
2oEever, the s89e ,t8nd8rds hold th8t :QtRo the extent th8t it is not prob8ble th8t t8x8ble profit Eill
be 8v8il8ble 878inst Ehich the unused t8x losses or unused t8x credits c8n be utilised, the deferred
t8x 8sset is not reco7nised:.
1H
As de9onstr8ted, the continuous oper8tion of the #"K c8p precludes
the recover3 of input ;A* prep8id 9onths or 3e8rs prior. )oreover, the in8bilit3 to cl8i9 8 refund or
t8x credit certific8te until 8fter the business h8s 8lre8d3 ce8sed virtu8ll3 renders it i9prob8ble for the
input ;A* to be recovered. As such, under the &ntern8tion8l Accountin7 ,t8nd8rds, it is Eith 8ll
liFelihood th8t the prep8id input ;A*, ostensibl3 credit8ble, Eould 8ctu8ll3 be reflected 8s 8
loss.
I"
>h8t heretofore E8s reco7niMed 8s 8n 8sset Eould noE, Eith the i9position of the #"K c8p,
be noE considered 8s 8 loss, enh8ncin7 the vieE th8t the #"K c8p is ulti98tel3 confisc8tor3 in
n8ture.
*his le8ds to 93 next point. *he 98Aorit3 8sserts th8t the input t8x is not 8 propert3 or propert3 ri7ht
Eithin the purvieE of the due process cl8use.
I1
& respectfull3 but stron7l3 dis87ree.
*ellin7l3, the B&R itself h8s reco7niMed th8t unutiliMed input ;A* is one of those 8ssets, corpor8te
8ttributes or propert3 ri7hts th8t, in the event of 8 9er7er, 8re tr8nsferred to the survivin7 corpor8tion
b3 oper8tion of l8E.
I!
Assets Eould f8ll under the purvieE of propert3 under the due process cl8use,
8nd if the t8xin7 8r9 of the ,t8te reco7niMes th8t such propert3 belon7s to the t8xp83er 8nd not to
the ,t8te, then due respect should be 7iven to such expert opinion.
Even under the &ntern8tion8l Accountin7 ,t8nd8rds & 8dverted to 8bove, the unutiliMed input ;A*
credit 983 be reco7niMed 8s 8n 8sset :to the extent th8t it is prob8ble th8t future t8x8ble profit Eill be
8v8il8ble 878inst Ehich the unused t8x losses 8nd unused t8x credits c8n be utilised:
I@
&f not
prob8ble, it Eould be reco7niMed 8s 8 loss.
I1
,ince these intern8tion8l st8nd8rds, dul3 reco7niMed b3
the ,ecurities 8nd Exch8n7e Co99ission 8s controllin7 in this Aurisdiction, 8ttribute t8n7ible 78in or
loss to the ;A* credit, it necess8ril3 folloEs th8t there is propriet8r3 v8lue 8tt8ched to such 78in or
loss.
)oreover, the prep8id input t8x represents unutiliMed profit, Ehich c8n onl3 be utiliMed if it is refunded
or credited to output t8xes. *o 8ssert th8t the input ;A* is 9erel3 8 privile7e is to correspondin7l3
cl8i9 th8t the business profit is si9il8rl3 8 9ere privile7e. *he Constitution itself reco7niMes the ri7ht
to profit b3 priv8te enterprises. As & st8ted e8rlier, one of the enunci8ted ,t8te policies under the
Constitution is the reco7nition of the indispens8ble role of the priv8te sector, the encour87e9ent of
priv8te enterprise, 8nd the provision of incentives to needed invest9ents.
II
)oreover, t1e
Co*2t0t6t0o* )%2o re?60re2 t1e St)te to re3o@*0Me t1e r0@1t o4 e*terpr02e2 to re)2o*)b%e
ret6r*2 o* 0*5e2tme*t2, )*+ to e7p)*20o* )*+ @ro;t1.
I6
*his, & believe, enco9p8sses profit.
1I->onth %morti(ation Period
Another portion of ,ection of the E-;A* '8E is unconstitution8l, essenti8ll3 for the s89e re8sons
8s 8bove. *he relev8nt portion re8dsJ
SEC. 8. ,ection 11" of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
:,EC. 11". Ta# Credits. =
CAD Creditable 0nput Ta#. =
. . . .
*o!i%e%, T1)t t1e 0*p6t t)7 o* @oo+2 p6r31)2e+ or 0mporte+ 0* ) 3)%e*+)r mo*t1 4or 62e 0*
tr)+e or b620*e22 4or ;1031 +e+63t0o* 4or +epre30)t0o* 02 )%%o;e+ 6*+er t102 Co+e, 21)%% be
2pre)+ e5e*%& o5er t1e mo*t1 o4 )3?6020t0o* )*+ t1e 404t&8*0*e #5<( 2633ee+0*@ mo*t12 04 t1e
)@@re@)te )3?6020t0o* 3o2t 4or 2631 @oo+2, e73%6+0*@ t1e ,AT 3ompo*e*t t1ereo4, e73ee+2
O*e m0%%0o* pe2o2 #P1,000,000(J Provided,ho8ever, *h8t if the esti98ted useful life of the c8pit8l
7ood is less th8n five CID 3e8rs, 8s used for depreci8tion purposes, then the input ;A* sh8ll be
spre8d over such 8 shorter periodJ Provided, finally, th8t in the c8se of purch8se of services, le8se or
use of properties, the input t8x sh8ll be credit8ble to the purch8ser, lessee or licensee upon p839ent
of the co9pens8tion, rent8l, ro38lt3 or fee.
A78in, this provision unre8son8bl3 severel3 li9its the 8bilit3 of 8n enterprise to recover its prep8id
input ;A*. (n its f8ce, it 9i7ht 8ppe8r inAurious pri98ril3 to hi7h 98r7in enterprises, Ehose purch8se
of c8pit8l 7oods in 8 7iven Bu8rter Eould routinel3 exceed P1,""","""."". *he 89ortiM8tion over 8
five-3e8r period of the input ;A* on these c8pit8l 7oods Eould definitel3 e8t up into their profit
98r7in. But it is still possible for such bi7 businesses to survive despite this neE restriction, 8nd their
fin8nci8l p8in 8lone 983 not be sufficient to c8use the inv8lidit3 of 8 t8xin7 st8tute.
-o;e5er, t102 )mort0M)t0o* p%)* ;0%% pro5e e2pe30)%%& 4)t)% to 2t)rt86p2 )*+ ot1er *e;
b620*e22e2, ;1031 *ee+ to p6r31)2e 3)p0t)% @oo+2 0* or+er to 2t)rt 6p t1e0r *e;
b620*e22e2. &t is 8 FnoEn f8ct in the fin8nci8l co99unit3 th8t 8 98Aorit3 of businesses st8rt e8rnin7
profit onl3 8fter the second or third 3e8r, 8nd 98n3 enterprises do not even 7et to survive th8t lon7.
*he first feE 3e8rs of 8 business 8re the 9ost cruci8l to its surviv8l, 8nd 8n3 fin8nci8l benefits it c8n
obt8in in those 3e8rs, no 98tter hoE 9iniscule, 983 spell the difference betEeen life 8nd de8th. /or
such e9er7in7 businesses, it is 8lre8d3 difficult under the present s3ste9 to recover the prep8id
input ;A* fro9 the output ;A* collected fro9 custo9ers bec8use initi8l s8les volu9es 8re usu8ll3
loE. >ith this further li9it8tion, di9inishin7 8s it does 8n3 opportunit3 to h8ve 8 sust8in8ble c8sh
floE, the 8bilit3 of neE businesses to survive the first three 3e8rs beco9es even 9ore end8n7ered.
Even existin7 s98ll to 9ediu9 enterprises 8re i9periled b3 this 6" 9onth 89ortiM8tion restriction,
especi8ll3 considerin7 the 8pplic8tion of the #"K c8p. *he 8ddition8l purch8se of c8pit8l 7oods
be8rs 8s 8 9e8ns of 8ddin7 v8lue to the consu9er 7ood, 8s 8 9e8ns to Austif3 the incre8sed sellin7
price. 2oEever, the purch8se of c8pit8l 7oods in excess of P1,""","""."" Eould i9pose 8nother
burden on the s98ll to 9ediu9 enterprise b3 further restrictin7 their 8bilit3 to i99edi8tel3 recover
the entire prep8id input ;A* CEhich Eould exceed 8t le8stP1"",""".""D, 8s the3 Eould be co9pelled
to E8it for 8t le8st five 3e8rs before the3 c8n do so. Another hurdle is i9posed for such s98ll to
9ediu9 enterprise to obt8in the profit 98r7in critic8l to surviv8l. $or 2ome %63J& e*terpr02e2 ;1o
m)& be )b%e to 26r505e t1e 0*A6r& bro6@1t )bo6t b& t1e >0C 3)p, t102 60 mo*t1 )mort0M)t0o*
per0o+ m0@1t 0*2te)+ pro50+e t1e mort)% 1e)+ ;o6*+.
)oreover, the incre8sed 8d9inistr8tive burden on the t8xp83er should not be discounted,
considerin7 this Court5s previous reco7nition of the 8i9s of the ;A* s3ste9 to :r8tion8liMe the s3ste9
of t8xes on 7oods 8nd services, Q8ndR si9plif3 t8x 8d9inistr8tion:.
I#
>ith the 89ortiM8tion
reBuire9ent, the t8xp83er Eould be forced to se7re78te 8ssets into sever8l cl8sses 8nd strictl3
9onitor the useful life of 8ssets so th8t proper cl8ssific8tion c8n be 98de. *he 8d9inistr8tive
reBuire9ents of the t8xp83er in order to 9onitor the input ;A* fro9 the purch8se of c8pit8l 8ssets
thus h8s exponenti8ll3 incre8sed.
G< Cithholdin+ '%T on Sales
Pilipin8s ,hell -e8lers 8r7ue th8t ,ection 1! of the E-;A* l8E, Ehich 89ends ,ection 111CCD of the
N&RC, is 8lso unconstitution8l. T1e pro5020o* 02 26preme%& 6*;02e, oppre2205e )*+ 3o*4023)tor&
0* *)t6re, )*+ r60*o62 to pr05)te e*terpr02e )*+ e5e* St)te +e5e%opme*t. *he provision re8dsJ
,EC. 1!. ,ection 111 of the s89e Code, 8s 89ended, is hereb3 further 89ended to re8d 8s folloEsJ
:,EC. 111. eturn and Payment of 'alue-%dded Ta#. =
xxx
:CCD Cithholdin+ of 'alue-added Ta#. = *he Govern9ent or 8n3 of its politic8l subdivisions,
instru9ent8lities or 87encies, includin7 7overn9ent-oEned or =controlled corpor8tions CG(CCsD
sh8ll, before 98Fin7 p839ent on 8ccount of e8ch purch8se of 7oods 8nd services Ehich 8re subAect
to the v8lue-8dded t8x i9posed in ,ections 1"6 8nd 1" of this Code, deduct 8nd Eithhold 8 fin8l
v8lue-8dded t8x 8t the r8te of five percent CIKD of the 7ross p839ent thereofJ Provided, *h8t the
p839ent for le8se or use of properties or propert3 ri7hts to nonresident oEners sh8ll be subAect to
ten percent C1"KD Eithholdin7 t8x 8t the ti9e of p839ent. /or purposes of this ,ection, the p83or or
person in control of the p839ent sh8ll be considered 8s the Eithholdin7 p839ent. xxx
*he principle th8t the Govern9ent 8nd its subsidi8ries 983 deduct 8nd Eithhold 8 fin8l v8lue-8dded
t8x on its purch8se of 7oods 8nd services is not neE, 8s the N&RC h8d 8lloEed such deduction 8nd
Eithholdin7 8t the r8te of @K of the 7ross p839ent for the purch8se of 7oods, 8nd 6K of the 7ross
receipts for services. -o;e5er, t1e N"RC 1)+ )%2o pro50+e+ t1)t t102 t)7 ;0t11e%+ ;o6%+ )%2o be
3re+0t)b%e )@)0*2t t1e ,AT %0)b0%0t& o4 t1e 2e%%er or 3o*tr)3tor, ) me31)*02m t1)t ;)2 +e%ete+
b& t1e E8,AT %);. T1e +e%et0o* o4 t102 3re+0t )pp)r)t62 e44e3t05e%& 3ompe%2 t1e pr05)te
e*terpr02e tr)*2)3t0*@ ;0t1 t1e @o5er*me*t to 21o6%+er t1e o6tp6t ,AT t1)t 21o6%+ 1)5e bee*
p)0+ b& t1e @o5er*me*t 0* e73e22 o4 5C o4 t1e @ro22 2e%%0*@ pr03e, )*+ )t t1e 2)me t0me
6*+6%& b6r+e*2 t1e pr05)te e*terpr02e b& pre3%6+0*@ 0t 4rom )pp%&0*@ )*& 3re+0t)b%e 0*p6t ,AT
o* t1e 2)me tr)*2)3t0o*.
Not8bl3, the re9ov8l of the credit 9ech8nis9 runs contr8r3 to the essence of the ;A* s3ste9, Ehich
ch8r8cteristic8ll3 8lloEs the creditin7 of input t8xes 878inst output t8xes. I0t1o6t 2631 3re+0t0*@
me31)*02m, ;1031 )%%o;2 t1e 2104t0*@ o4 t1e ,AT to o*%& t1e 40*)% e*+ 62er, t1e t)7 be3ome2 )
2tr)0@1t4or;)r+ t)7 o* b620*e22 or 0*3ome. T1e e44e3t o* t1e e*terpr02e +o0*@ b620*e22 ;0t1
t1e @o5er*me*t ;o6%+ be t1)t t;o t)7e2 ;o6%+ be 0mpo2e+ o* t1e 0*3ome b& t1e b620*e22
+er05e+ o* 2631 tr)*2)3t0o*: t1e re@6%)r per2o*)% or 3orpor)te 0*3ome t)7 o* 2631 0*3ome,
)*+ t102 40*)% ;0t11o%+0*@ t)7 o4 5C.
Gr8nted th8t Con7ress is not bound to 8dopt Eith strict confor9it3 the ;A* s3ste9, 8nd th8t it h8s to
poEer to i9pose neE t8xes on business inco9e, this 89end9ent to ,ection 111CCD of the N&RC still
re98ins unconstitution8l. "t 6*4)0r%& +023r0m0*)te2 )@)0*2t e*t0t0e2 ;1031 3o*tr)3t ;0t1 t1e
@o5er*me*t b& 0mpo20*@ )* )++0t0o*)% t)7 o* t1e 0*3ome +er05e+ 4rom 2631 tr)*2)3t0o*2.
T1e e*+ re26%t o4 2631 +023r0m0*)t0o* 02 +o6b%e t)7)t0o* o* 0*3ome t1)t 02 bot1 oppre2205e
)*+ 3o*4023)tor&.
"t 02 ) %e@0t0m)te p6rpo2e o4 ) t)7 %); to +e502e ) m)**er b& ;1031 t1e @o5er*me*t 3o6%+ 2)5e
mo*e& o* 0t2 o;* tr)*2)3t0o*2, b6t 0t 02 )*ot1er m)tter 04 ) pr05)te e*terpr02e 02 p6*021e+ 4or
+o0*@ b620*e22 ;0t1 t1e @o5er*me*t. *he erstEhile N&RC EorFed toE8rds such 8dv8nt87e, b3
8lloEin7 the 7overn9ent to reduce its c8sh outl83 on purch8ses of 7oods 8nd services b3
Eithholdin7 the p839ent of 8 percent87e thereof. >hile the neE E-;A* l8E ret8ins this benefit to the
7overn9ent, 8t the s89e ti9e it burdens the priv8te enterprise Eith 8n 8ddition8l t8x b3 refusin7 to
8lloE the creditin7 of this t8x Eithheld to the business5s input ;A*.
*his i9position Eould be 7rossl3 unf8ir for priv8te entities th8t tr8ns8ct Eith the 7overn9ent,
especi8ll3 on 8 re7ul8r b8sis. &t 9i7ht be 8r7ued th8t the provision, even if concededl3 unEise,
nonetheless f8ils to 9eet the st8nd8rd of unconstitution8lit3, 8s it 8ffects onl3 those persons or
est8blish9ents th8t choose to do business Eith the 7overn9ent. 2oEever, it is 8n 8cFnoEled7ed
f8ct th8t the 7overn9ent 8nd its subsidi8ries rel3 on contr8cts Eith priv8te enterprises in order to be
8ble to c8rr3 out innu9er8ble functions of the ,t8te. T102 pro5020o* e44e3t05e%& +023o6r)@e2
pr05)te e*terpr02e2 to +o b620*e22 ;0t1 t1e St)te, )2 0t ;o6%+ 0mpo2e o* t1e b620*e22 )
10@1er r)te o4 t)7 04 0t ;ere to tr)*2)3t ;0t1 t1e St)te, )2 3omp)re+ to tr)*2)3t0o*2 ;0t1 ot1er
pr05)te e*t0t0e2.
Est8blished industries Eith tr8cF records of Bu8lit3 perfor98nce could ver3 Eell be dissu8ded fro9
doin7 further business Eith 7overn9ent entities 8s the hi7her t8x r8te Eould 98Fe no econo9ic
sense. (nl3 those enterprises Ehich re8ll3 need the 9one3, such 8s those Eith subst8nd8rd tr8cF
records th8t h8ve 8ffected their vi8bilit3 in the 98rFetpl8ce, Eould bother seeFin7 out 7overn9ent
contr8cts. *he correspondin7 s8crifice in Bu8lit3 Eould eventu8ll3 prove detri9ent8l to the ,t8te. (ur
societ3 c8n ill 8fford shodd3 infr8structures such 8s ro8ds, brid7es 8nd buildin7s th8t Eould
unnecess8ril3 pose d8n7er to the public 8t l8r7e si9pl3 bec8use the 7overn9ent E8nted to sFi9p on
expenses.
T1e pro5020o* 2?6)re%& 3o*tr)+03t2 Se3t0o* 20, Art03%e "" o4 t1e Co*2t0t6t0o* )2 0t 5)36o62%&
+023o6r)@e2 pr05)te e*terpr02e, )*+ pro50+e2 +020*3e*t05e2 to *ee+e+ 0*5e2tme*t2 2631 )2
t1o2e e7pe3te+ b& t1e St)te 4rom pr05)te b620*e22e2. >h8tever 8dv8nt87es 983 be 78ined b3
the te9por8r3 incre8se in the 7overn9ent coffers Eould be overturned b3 the dis8dv8nt87es of
h8vin7 8 reduced pool of priv8te enterprises Eillin7 to do business Eith the 7overn9ent. )oreover,
since 7overn9ent contr8cts Eith priv8te enterprises Eill still re98in 8 necess8r3 f8ct of life, the
89end9ent to ,ection 111CCD of the N&RC introduced b3 the E-;A* '8E.
-ouble t8x8tion 9e8ns t8xin7 for the s89e t8x period the s89e thin7 or 8ctivit3 tEice, Ehen it should
be t8xed but once, for the s89e purpose 8nd Eith the s89e Find of ch8r8cter of t8x.
I
-ouble
t8x8tion is not expressl3 forbidden in our constitution, but the Court h8s reco7niMed it 8s obnoxious
:Ehere the t8xp83er is t8xed tEice for the benefit of the s89e 7overn9ent8l entit3 or b3 the s89e
Aurisdiction for the s89e purpose.:
IH
Cert8inl3, both the IK fin8l t8x Eithheld 8nd the 7ener8l
corpor8te inco9e t8x 8re both p8id for the benefit of the n8tion8l 7overn9ent, 8nd for the s89e
incidence of t8x8tion, the s8leNle8se of 7oods 8nd services to the 7overn9ent.
*he Court, in eJ e=uest of %tty. $ernardo Oialcita
6"
h8d c8use to 98Fe the folloEin7 observ8tion &
sub9itapropos to the c8se 8t b8r, on double t8x8tion in 8 c8se involvin7 the 8tte9pt of the B&R to t8x
the co99uted 8ccu9ul8ted le8ve credits of 8 7overn9ent l8E3er upon his retire9entJ
,ection !1 of the Revised Ad9inistr8tive Code 7r8nts to 8 7overn9ent e9plo3ee 1I d83s v8c8tion
le8ve 8nd 1I d83s sicF le8ve for ever3 3e8r of service. 2ence, even if the 7overn9ent e9plo3ee
8bsents hi9self 8nd exh8usts his le8ve credits, he is still dee9ed to h8ve EorFed 8nd to h8ve
rendered services. -02 %e)5e be*e40t2 )re )%re)+& 0mp6te+ 0*, )*+ 4orm p)rt o4, 102 2)%)r& ;1031
0* t6r* 02 26bAe3t to ;0t11o%+0*@ t)7 o* 0*3ome. -e 02 t)7e+ o* t1e e*t0ret& o4 102 2)%)r0e2
;0t1o6t )*& +e+63t0o*2 4or )*& %e)5e2 *ot 6t0%0Me+. "t 4o%%o;2 t1e* t1)t t1e mo*e& 5)%6e2
3orre2po*+0*@ to t1e2e %e)5e be*e40t2 bot1 t1e 62e+ )*+ 6*62e+ 1)5e )%re)+& bee* t)7e+
+6r0*@ t1e &e)r t1)t t1e& ;ere e)r*e+. To t)7 t1em )@)0* ;1e* t1e ret0r0*@ emp%o&ee re3e05e2
t1e0r mo*e& 5)%6e )2 ) 4orm o4 @o5er*me*t 3o*3er* )*+ )ppre30)t0o* p%)0*%& 3o*2t0t6te2 )*
)ttempt to t)7 t1e emp%o&ee ) 2e3o*+ t0me. T102 02 t)*t)mo6*t to +o6b%e t)7)t0o*.
61
Conclusions
*he ;A* s3ste9, in itself, is intelli7entl3 desi7ned, 8nd st8nds 8s 8 f8ir 9e8ns to r8ise revenue. &t
h8s been 8dopted EorldEide b3 countries hopin7 to e9plo3 8n efficient 9e8ns of t8x8tion. *he
concerns & h8ve r8ised do not detr8ct fro9 93 7ener8l 8pprov8l of the ;A* s3ste9.
& do l89ent thou7h th8t our 7overn9ent5s Eholehe8rted 8doption of the ;A* s3ste9 is ende9ic of
Eh8t & dee9 8 fl8E in our n8tion8l t8x polic3 in the l8st feE dec8des. *he poEer of t8x8tion, inherent
in the ,t8te 8nd ever so poEerful, h8s been 7ener8ll3 e9plo3ed b3 our fin8nci8l pl8nners for 8
solit8r3 purposeJ the r8isin7 of revenue. Revenue 7ener8tion is 8 le7iti98te purpose of t8x8tion, but
st8ndin7 8lone, it is 8 Eoefull3 unsophistic8ted desi7n. &ntelli7ent t8x polic3 should extend be3ond
the sin7ul8r-9inded 7o8l of r8isin7 ,t8te funds a the old-ti9e philosoph3 behind the t8xin7 sche9es
of E8r-9on7erin7 9on8rchs 8nd tot8lit8ri8n st8tes a 8nd should sincerel3 explore the concept of
t8x8tion 8s 8 9e8ns of providin7 7enuine incentives to priv8te enterprise to spur econo9ic 7roEth4
of pro9otin7 e78lit8ri8n soci8l Austice th8t Eould 8lloE ever3one to their f8ir sh8re of the n8tion5s
Ee8lth.
&nste8d, Ee 8re conde9ned b3 8 n8tion8l polic3 driven b3 the 9ono98ni8 for ,t8te revenue. &t 983
be be3ond 93 o8th 8s 8 +ustice to co9pel the 7overn9ent to 8dopt 8n econo9ic polic3 in
conson8nce Eith 93 person8l vieEs, but & offer these observ8tions since the3 lie 8t the ver3 he8rt of
the noxiousness of the 8ss8iled provisions of the E-;A* l8E. *he #"K c8p, the 6"-9onth
89ortiM8tion period 8nd the IK Eithholdin7 t8x on 7overn9ent tr8ns8ctions Eere selfishl3 desi7ned
to incre8se 7overn9ent revenue 8t the expense of the surviv8l of loc8l industries.
& 89 not insensitive to the concerns r8ised b3 the respondents 8s to the dire conseBuences to the
econo93 should the E-;A* l8E be strucF doEn. & 89 8E8re th8t the 7r8ntin7 of the petition in G.R.
No. 16161 Eill ne78tivel3 8ffect the c8sh floE of the 7overn9ent. &f th8t Eere the onl3 relev8nt
concern 8t st8Fe, & Eould h8ve no proble9s den3in7 the petition. U*4ort6*)te%&, 6*+er t1e +e503e
emp%o&e+ 0* t1e E8,AT %);, t1e pr03e to be p)0+ 4or ) more 262t)0*)b%e %0?60+0t& o4 t1e
@o5er*me*tD2 40*)*3e2 ;0%% be t1e +e)t1 o4 %o3)% b620*e22, )*+ 3orre2po*+0*@%&, t1e +em02e
o4 o6r 2o30et&. "t 02 ) me)26re A62t )2 +r)3o*0)* )2 t1e 2t)*+)r+ 0226e t)7e2 o4 me+0e5)%
t&r)*t2.
& 89 not nor98ll3 inclined toE8rds the l8n7u87e of the overErou7ht, 3et if the sF3 Eere indeed trul3
f8llin7, hoE else could th8t f8ct be co99unic8ted. *he E-;A* '8E is of 9ultiple f8t8l conseBuences.
2oE 8re Ee to survive 8s 8 n8tion Eithout the bulE8rF of priv8te industriesL Perh8ps the l8r7er
sc8le, est8blished businesses 983 ulti98tel3 re98in st8ndin7, but the3 Eill be un8ble to sust8in the
void left b3 the de9ise of s98ll to 9ediu9 enterprises. (r Eorse, do9estic industr3 Eould be left in
the 8bsolute control of 9onopolies, co9bines or c8rtels, Ehether do9in8ted b3 forei7ners or loc8l
oli78rchs. *he destruction of subsistin7 industries Eould be b8d enou7h, the destruction of
opportunit3 8nd the entrepreneuri8l spirit Eould be even 9ore 7rievous 8nd tr87ic, 8s it Eould 98rF
8s Eell the end of hope. *8xes 983 be the lifeblood of the st8te, but never 8t the expense of the life
of its subAects.
Accordin7l3, & ;(*E toJ
1D -EN. the Petitions in G.R. Nos. 16"I6, 16!"#, 8nd 16#@" for l8cF of 9erit4
!D PAR*&A''. GRAN* the Petition in G.R. Nos. 1616@ 8nd decl8re ,ection !1 of the E-;A* '8E 8s
unconstitution8l4
@D GRAN* the Petition in G.R. No. 16161 8nd decl8re 8s unconstitution8l ,ection of Republic Act
No. H@@#, insof8r 8s it 89ends ,ection 11"CAD 8nd CBD of the N8tion8l &ntern8l Revenue Code
CN&RCD 8s Eell 8s ,ection 1! of the s89e l8E, Eith respect to its 89end9ent of ,ection 111CCD of
the N&RC.
-AN*E (. *&NGA
%ssociate *ustice
EN BANC
G.R. No. 168056 L ABAKADA GURO PART !"ST #$ormer%& AAS'AS( O$$"CERS SAMSON S.
A!CANTARA )*+ ED ,"NCENT S. A!BANO 5. T-E -ONORAB!E E.ECUT",E SECRETAR
EDUARDO ERM"TA, ET A!.
G.R. No. 16820> L AQU"!"NO Q. P"MENTE!, 'R., ET A!. 5. E.ECUT",E SECRETAR
EDUARDO R. ERM"TA
G.R. No. 168B61 L ASSOC"AT"ON O$ P"!"P"NAS S-E!! DEA!ERS, "NC., ET A!. 5. CESAR ,.
PUR"S"MA, ET A!.
G.R. No. 168B6= L $RANC"S 'OSEP- G. ESCUDERO, ET A!. 5. CESAR ,. PUR"S"MA, ET A!.
G.R. No. 168>=0 L BATAAN GO,ERNOR ENR"QUE T. GARC"A, 'R., ET A!. 5. -ON. EDUARDO
R. ERM"TA, ET A!.
Prom6%@)te+:
September 1, 2005
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
CONCURR"NG OP"N"ON
C-"CO8NA9AR"O, J.:
/ive petitions Eere filed before this Court Buestionin7 the constitution8lit3 of Republic Act No. H@@#.
Rep. Act No. H@@#, Ehich 89ended cert8in provisions of the N8tion8l &ntern8l Revenue Code of
1HH#,
1
b3 essenti8ll3 incre8sin7 the t8x r8tes 8nd exp8ndin7 the cover87e of the ;8lue-Added *8x
C;A*D. %ndoubtedl3, durin7 these fin8nci8ll3 difficult ti9es, 9ore t8xes Eould be 8ddition8ll3
burdenso9e to the citiMenr3. 2oEever, liFe 8 bitter pill, 8ll /ilipino citiMens 9ust be8r the burden of
these neE t8xes so 8s to r8ise the 9uch-needed revenue for the 8ilin7 Philippine econo93. *8x8tion
is the indispens8ble 8nd inevit8ble price for 8 civiliMed societ3, 8nd Eithout t8xes, the 7overn9ent
Eould be p8r8l3Med.
!
>ithout the t8x refor9s introduced b3 Rep. Act No. H@@#, the then ,ecret8r3 of
the -ep8rt9ent of /in8nce, Ces8r ;. Purisi98, 8ssessed th8t :8ll econo9ic scen8rios point to the
N8tion8l Govern9ent5s in8bilit3 to sust8in its prec8rious fisc8l position, resultin7 in severe erosion of
investor confidence 8nd econo9ic st87n8tion.:
@
/indin7 Rep. Act No. H@@# 8s not unconstitution8l, both in its procedur8l en8ct9ent 8nd in its
subst8nce, & hereb3 concur in full in the fore7oin7 98Aorit3 opinion, penned b3 93 estee9ed
colle87ue, +ustice )8. Alici8 Austri8-)8rtineM.
Accordin7 to petitioners, the en8ct9ent of Rep. Act No. H@@# b3 Con7ress E8s riddled Eith
irre7ul8rities 8nd viol8tions of the Constitution. &n p8rticul8r, the3 8lle7ed th8tJ C1D *he Bic89er8l
Conference Co99ittee exceeded its 8uthorit3 to 9erel3 settle or reconcile the differences 89on7
2ouse Bills No. @III 8nd @#"I 8nd ,en8te Bill No. 1HI", b3 includin7 in Rep. Act No. H@@#
provisions not found in 8n3 of the s8id bills, or deletin7 fro9 Rep. Act No. H@@# or 89endin7
provisions therein even thou7h the3 Eere not in conflict Eith the provisions of the other bills4 C!D *he
89end9ents introduced b3 the Bic89er8l Conference Co99ittee viol8ted Article ;&, ,ection !6C!D,
of the Constitution Ehich forbids the 89end9ent of 8 bill 8fter it h8d p8ssed third re8din74 8nd C@D
Rep. Act No. H@@# contr8vened Article ;&, ,ection !1, of the Constitution Ehich prescribes th8t
revenue bills should ori7in8te exclusivel3 fro9 the 2ouse of Represent8tives.
&nvoFin7 the exp8nded poEer of Audici8l revieE 7r8nted to it b3 the Constitution of 1H#, petitioners
8re c8llin7 upon this Court to looF into the en8ct9ent of Rep. Act No. H@@# b3 Con7ress 8nd,
conseBuentl3, to revieE the 8pplic8bilit3 of the enrolled bill doctrine in this Aurisdiction. %nder the s8id
doctrine, the enrolled bill, 8s si7ned b3 the ,pe8Fer of the 2ouse of Represent8tives 8nd the ,en8te
President, 8nd certified b3 the ,ecret8ries of both 2ouses of Con7ress, sh8ll be conclusive proof of
its due en8ct9ent.
1
Petitioners5 8r7u9ents f8iled to convince 9e of the Eisdo9 of 8b8ndonin7 the enrolled bill doctrine. &
believe th8t it is 9ore prudent for this Court to re98in conserv8tive 8nd to continue its 8dherence to
the enrolled bill doctrine, for to 8b8ndon the s8id doctrine Eould be to open 8 P8ndor85s Box, 7ivin7
rise to 8 situ8tion 9ore fr8u7ht Eith evil 8nd 9ischief. ,t8tutes en8cted b3 Con7ress 983 not 8tt8in
fin8lit3 or conclusiveness unless decl8red so b3 this Court. *his Eould under9ine the 8uthorit3 of our
st8tutes bec8use despite h8vin7 been si7ned 8nd certified b3 the desi7n8ted officers of Con7ress,
their v8lidit3 Eould still be in doubt 8nd their i9ple9ent8tion Eould be 7re8tl3 h89pered b3
8lle78tions of irre7ul8rities in their p8ss87e b3 the 'e7isl8ture. ,uch 8n uncert8int3 in the st8tutes
Eould indubit8bl3 result in confusion 8nd disorder. &n 8ll prob8bilit3, it is the conte9pl8tion of such 8
scen8rio th8t led 8n A9eric8n Aud7e to procl8i9, thus =
. . . Better, f8r better, th8t 8 provision should occ8sion8ll3 find its E83 into the st8tute throu7h
9ist8Fe, or even fr8ud, th8n, th8t ever3 Act, st8te 8nd n8tion8l, should 8t 8n3 8nd 8ll ti9es be li8ble
to put in issue 8nd i9pe8ched b3 the Aourn8ls, loose p8pers of the 'e7isl8ture, 8nd p8rol evidence.
,uch 8 st8te of uncert8int3 in the st8tute l8Es of the l8nd Eould le8d to 9ischiefs 8bsolutel3
intoler8ble. . . .
I
)oreover, this Court 9ust 8ttribute 7ood f8ith 8nd 8ccord ut9ost respect to the 8cts of 8 co-eBu8l
br8nch of 7overn9ent. >hile it is true th8t its Aurisdiction h8s been exp8nded b3 the Constitution, the
exercise thereof should not viol8te the b8sic principle of sep8r8tion of poEers. *he exp8nded
Aurisdiction does not conte9pl8te Audici8l supre98c3 over the other br8nches of 7overn9ent. *hus,
in resolvin7 the procedur8l issues r8ised b3 the petitioners, this Court should li9it itself to 8
deter9in8tion of co9pli8nce Eith, or conversel3, the viol8tion of 8 specified procedure in the
Constitution for the p8ss87e of l8Es b3 Con7ress, 8nd not of 8 9ere intern8l rule of proceedin7s of
its 2ouses.
&t be8rs e9ph8sis th8t 9ost of the irre7ul8rities in the en8ct9ent of Rep. Act No. H@@# concern the
89end9ents introduced b3 the Bic89er8l Conference Co99ittee. *he Constitution is silent on such
8 co99ittee, it neither prescribes the cre8tion thereof nor does it prohibit it. *he cre8tion of the
Bic89er8l Conference Co99ittee is 8uthoriMed b3 the Rules of both 2ouses of Con7ress. *h8t the
Rules of both 2ouses of Con7ress provide for the cre8tion of 8 Bic89er8l Conference Co99ittee is
Eithin the prero78tive of e8ch 2ouse under the Constitution to deter9ine its oEn rules of
proceedin7s.
*he Bic89er8l Conference Co99ittee is 8 cre8tion of necessit3 8nd pr8ctic8lit3 considerin7 th8t our
Con7ress is co9posed of tEo 2ouses, 8nd it is hi7hl3 i9prob8ble th8t their respective bills on the
s89e subAect 98tter sh8ll 8lE83s be in 8ccord 8nd consistent Eith e8ch other. &nste8d of 8ll their
9e9bers, onl3 the 8ppointed represent8tives of both 2ouses sh8ll 9eet to reconcile or settle the
differences in their bills. *he resultin7 bill fro9 their 9eetin7s, e9bodied in the Bic89er8l
Conference Report, sh8ll be subAect to 8pprov8l 8nd r8tific8tion b3 both 2ouses, votin7 sep8r8tel3.
&t does perplex 9e th8t 9e9bers of both 2ouses Eould 878in 8sF the Court to define 8nd li9it the
poEers of the Bic89er8l Conference Co99ittee Ehen such co99ittee is of their oEn cre8tion. &n 8
nu9ber of c8ses,
6
this Court 8lre8d3 98de 8 deter9in8tion of the extent of the poEers of the
Bic89er8l Conference Co99ittee 8fter t8Fin7 into 8ccount the existin7 Rules of both 2ouses of
Con7ress. &n 7ist, the poEer of the Bic89er8l Conference Co99ittee to reconcile or settle the
differences in the tEo 2ouses5 respective bills is not li9ited to the conflictin7 provisions of the bills4
but 983 include 98tters not found in the ori7in8l bills but 7er98ne to the purpose thereof. &f both
2ouses vieEed the pronounce9ent 98de b3 this Court in such c8ses 8s extre9e or be3ond Eh8t
the3 intended, the3 h8d the poEer to 89end their respective Rules to cl8rif3 or li9it even further the
scope of the 8uthorit3 Ehich the3 7r8nt to the Bic89er8l Conference Co99ittee. Petitioners5
7riev8nce th8t, unfortun8tel3, the3 c8nnot brin7 8bout such 8n 89end9ent of the Rules on the
Bic89er8l Conference Co99ittee bec8use the3 8re 9e9bers of the 9inorit3, deserves sc8nt
consider8tion. *h8t the 98Aorit3 of the 9e9bers of both 2ouses refuses to 89end the Rules on the
Bic89er8l Conference Co99ittee is 8n indic8tion th8t it is still s8tisfied thereEith. At 8n3 r8te, this is
hoE de9ocr8c3 EorFs = the Eill of the 98Aorit3 sh8ll be controllin7.
>orth reiter8tin7 herein is the concludin7 p8r87r8ph in %rroyo v. &e 'enecia,
#
Ehich re8ds =
&t Eould be unE8rr8nted inv8sion of the prero78tive of 8 coeBu8l dep8rt9ent for this Court either to
set 8side 8 le7isl8tive 8ction 8s void bec8use the Court thinFs the house h8s disre78rded its oEn
rules of procedure, or to 8lloE those defe8ted in the politic8l 8ren8 to seeF 8 re98tch in the Audici8l
foru9 Ehen petitioners c8n find re9ed3 in th8t dep8rt9ent. *he Court h8s not been invested Eith 8
rovin7 co99ission to inBuire into co9pl8ints, re8l or i987ined, of le7isl8tive sFulldu77er3. &t Eould
be 8ctin7 in excess of its poEer 8nd Eould itself be 7uilt3 of 7r8ve 8buse of its discretion Eere it to
do so. . . .
Present Aurisprudence 8lloEs the Bic89er8l Conference Co99ittee to 89end, 8dd, 8nd delete
provisions of the Bill under consider8tion, even in the 8bsence of conflict thereon betEeen the
,en8te 8nd 2ouse versions, but onl3 so f8r 8s s8id provisions 8re 7er98ne to the purpose of the
Bill.

NoE, there is 8 Buestion 8s to Ehether the Bic89er8l Conference Co99ittee, Ehich produced
Rep. Act No. H@@#, exceeded its 8uthorit3 Ehen it included therein 89end9ents of provisions of the
N8tion8l &ntern8l Revenue Code of 1HH# not rel8ted to ;A*.
Althou7h 2ouse Bills No. @III 8nd @#"I Eere li9ited to the 89end9ents of the provisions on ;A*
of the N8tion8l &ntern8l Revenue Code of 1HH#, ,en8te Bill No. 1HI" h8d 8 9uch Eider scope 8nd
included 89end9ents of other provisions of the s8id Code, such 8s those on inco9e, percent87e,
8nd excise t8xes. &t should be borne in 9ind th8t the ver3 purpose of these three Bills 8nd,
subseBuentl3, of Rep. Act No. H@@#, E8s to r8ise 8ddition8l revenues for the 7overn9ent to 8ddress
the dire econo9ic situ8tion of the countr3. *he N8tion8l &ntern8l Revenue Code of 1HH#, 8s its title
su77ests, is the sin7le Code th8t 7overns 8ll our n8tion8l intern8l revenue t8xes. >hile it does cover
different t8xes, 8ll of the9 8re i9posed 8nd collected b3 the n8tion8l 7overn9ent to r8ise revenues.
&f Ee h8ve one Code for 8ll our n8tion8l intern8l revenue t8xes, then there is no re8son Eh3 Ee
c8nnot h8ve 8 sin7le st8tute 89endin7 provisions thereof even if the3 involve different t8xes under
sep8r8te titles. & hereb3 sub9it th8t the 89end9ents introduced b3 the Bic89er8l Conference
Co99ittee to non-;A* provisions of the N8tion8l &ntern8l Revenue Code of 1HH# 8re not
unconstitution8l for the3 8re 7er98ne to the purpose of 2ouse Bills No. @III 8nd @#"I 8nd ,en8te
Bill No. 1HI", Ehich is to r8ise n8tion8l revenues.
/urther9ore, the procedur8l issues r8ised b3 the petitioners Eere 8lre8d3 8ddressed 8nd resolved
b3 this Court inTolentino v. "#ecutive Secretary.
H
S0*3e pet0t0o*er2 4)0%e+ to pro44er *o5e% 4)3t6)%
or %e@)% )r@6me*t 0* 26pport o4 t1e0r po20t0o*2 t1)t ;ere *ot pre50o62%& 3o*20+ere+ b& t102
Co6rt 0* t1e 2)me 3)2e, t1e* " )m *ot 3ompe%%e+ to +ep)rt 4rom t1e 3o*3%620o*2 m)+e
t1ere0*.
*he 98Aorit3 opinion h8s 8lre8d3 thorou7hl3 discussed e8ch of the subst8nti8l issues r8ised b3 the
petitioners. & Eould Aust Eish to discuss 8ddition8l 98tters pert8inin7 to the petition of the petroleu9
de8lers in G.R. No. 16161.
*he3 cl8i9 th8t the provision of Rep. Act No. H@@# li9itin7 their input ;A* credit to onl3 #"K of their
output ;A* deprives the9 of their propert3 Eithout due process of l8E. *he3 8r7ue further th8t such
#"K c8p viol8tes the eBu8l protection 8nd unifor9it3 of t8x8tion cl8uses under Article &&&, ,ection 1,
8nd Article ;&, ,ection !C1D, respectivel3, of the Constitution, bec8use it Eill undul3 preAudice
t8xp83ers Eho h8ve hi7h input ;A* 8nd Eho, bec8use of the c8p, c8nnot full3 utiliMe their input ;A*
8s credit.
& c8nnot sust8in the petroleu9 de8lers5 position for the folloEin7 re8sons =
First, & 8dhere to the vieE th8t the input ;A* is not 8 propert3 to Ehich the t8xp83er h8s vested
ri7hts. &nput ;A* consists of the ;A* 8 ;A*-re7istered person h8d p8id on his purch8ses or
i9port8tion of 7oods, properties, 8nd services fro9 8 ;A*-re7istered supplier4 9ore si9pl3, it is ,AT
p)0+. &t is not, 8s 8verred b3 petitioner petroleu9 de8lers, 8 propert3 th8t the t8xp83er 8cBuired for
v8lu8ble consider8tion.
1"
A ;A*-re7istered person incurs input ;A* bec8use he co9plied Eith the
N8tion8l &ntern8l Revenue Code of 1HH#, Ehich i9posed the ;A* 8nd 98de the p839ent thereof
98nd8tor34 8nd not bec8use he p8id for it or purch8sed it for 8 price.
Gener8ll3, Ehen one p83s t8xes to the 7overn9ent, he c8nnot expect 8n3 direct 8nd concrete
benefit to hi9self for such p839ent. *he benefit of p839ent of t8xes sh8ll redound to the societ3 8s
8 Ehole. 2oEever, b3 virtue of ,ection 11"CAD of the N8tion8l &ntern8l Revenue Code of 1HH#, prior
to its 89end9ent b3 Rep. Act No. H@@#, 8 ;A*-re7istered person is 8lloEed, subAect to cert8in
subst8nti8tion reBuire9ents, to credit his input ;A* 878inst his output ;A*.
(utput ;A* is the ;A* i9posed b3 the ;A*-re7istered person on his oEn s8les of 7oods, properties,
8nd services or the ;A* he p8sses on to his bu3ers. 2ence, the ;A*-re7istered person sellin7 the
7oods, properties, 8nd services does not p83 for the output ;A*4 s8id output ;A* is p8id for b3 his
consu9ers 8nd he onl3 collects 8nd re9its the s89e to the 7overn9ent.
*he creditin7 of the input ;A* 878inst the output ;A* is 8 st8tutor3 privile7e, 7r8nted b3 ,ection 11"
of the N8tion8l &ntern8l Revenue Code of 1HH#. &t 7ives the ;A*-re7istered person the opportunit3 to
recover the input ;A* he h8d p8id, so th8t, in effect, the input ;A* does not constitute 8n 8ddition8l
cost for hi9. >hile it is true th8t input ;A* credits 8re reported 8s 8ssets in 8 ;A*-re7istered
person5s fin8nci8l st8te9ents 8nd booFs of 8ccount, this 8ccountin7 tre8t9ent is still b8sed on the
st8tutor3 provision reco7niMin7 the input ;A* 8s 8 credit. >ithout ,ection 11" of the N8tion8l &ntern8l
Revenue Code of 1HH#, then the 8ccountin7 tre8t9ent of 8n3 input ;A* Eill 8lso ch8n7e 8nd 983 no
lon7er be booFed outri7ht 8s 8n 8sset. ,ince the privile7e of 8n input ;A* credit is 7r8nted b3 l8E,
then 8n 89end9ent of such l8E 983 li9it the exercise of or 983 tot8ll3 Eithdr8E the privile7e.
*he 89end9ent of ,ection 11" of the N8tion8l &ntern8l Revenue Code of 1HH# b3 Rep. Act No.
H@@#, Ehich i9posed the #"K c8p on input ;A* credits, is 8 le7iti98te exercise b3 Con7ress of its
l8E-98Fin7 poEer. *o s83 th8t Con7ress 983 not trifle Eith ,ection 11" of the N8tion8l &ntern8l
Revenue Code of 1HH# Eould be to viol8te 8 b8sic precept of constitution8l l8E = th8t no l8E is
irrepe8l8ble.
11
*here c8n be no vested ri7ht to the continued existence of 8 st8tute, Ehich precludes
its ch8n7e or repe8l.
1!
&t be8rs to e9ph8siMe th8t Rep. Act No. H@@# does not tot8ll3 re9ove the privile7e of creditin7 the
input ;A* 878inst the output ;A*. &t 9erel3 li9its the 89ount of input ;A* one 983 credit 878inst his
output ;A* per Bu8rter to 8n 89ount eBuiv8lent to #"K of the output ;A*. >h8t is 9ore, 8n3 input
;A* in excess of the #"K c8p 983 be c8rried-over to the next Bu8rter.
1@
&t is cert8inl3 8 dep8rture
fro9 the ;A* creditin7 s3ste9 under ,ection 11" of the N8tion8l &ntern8l Revenue Code of 1HH#, but
it is 8n innov8tion th8t Con7ress 983 ver3 Eell introduce, bec8use =
;A* Eill continue to evolve fro9 its pioneerin7 ori7in8l structure. -3n89ic8ll3, it Eill be subAected to
refor9s th8t Eill 98Fe it confor9 to 98n3 f8ctors, 89on7 Ehich 8reJ the ch8n7in7 reBuire9ents of
7overn9ent revenue4 the soci8l, econo9ic 8nd politic8l vicissitudes of the ti9es4 8nd the conflictin7
interests in our societ3. &n the course of its evolution, it Eill be inAected Eith so9e oddities 8nd
inevit8bl3 tr8nsfor9ed into 8 structure Ehich its revisionists believe Eill be 8n i9prove9ent
overti9e.
11
Second, 8ssu9in7 for the s8Fe of 8r7u9ent, th8t the input ;A* credit is indeed 8 propert3, the
petroleu9 de8lers5 ri7ht thereto h8s not vested. A ri7ht is dee9ed vested 8nd subAect to
constitution8l protection Ehen =
:. . . Q*Rhe ri7ht to enAo39ent, present or prospective, h8s beco9e the propert3 of so9e p8rticul8r
person or persons 8s 8 present interest. *he ri7ht 9ust be 8bsolute, co9plete, 8nd uncondition8l,
independent of 8 contin7enc3, 8nd 8 9ere expect8nc3 of future benefit, or 8 contin7ent interest in
propert3 founded on 8nticip8ted continu8nce of existin7 l8Es, does not constitute 8 vested ri7ht. ,o,
incho8te ri7hts Ehich h8ve not been 8cted on 8re not vested.: C16 C. +. ,. !11-!1ID
1I
U*+er t1e N)t0o*)% "*ter*)% Re5e*6e Co+e o4 1<<>, be4ore 0t ;)2 )me*+e+ b& Rep. A3t No.
<==>, t1e 2)%e or 0mport)t0o* o4 petro%e6m pro+63t2 ;ere e7empt 4rom ,AT, )*+ 0*2te)+, ;ere
26bAe3t to e7302e t)7.
16
Petroleu9 de8lers did not i9pose 8n3 output ;A* on their s8les to
consu9ers. ,ince the3 h8d no output ;A* 878inst Ehich the3 could credit their input ;A*, t1e&
21o6%+ere+ t1e 3o2t2 o4 t1e 0*p6t ,AT t1)t t1e& p)0+ o* t1e0r p6r31)2e2 o4 @oo+2, propert0e2,
)*+ 2er503e2. T1e0r 2)%e2 *ot be0*@ 26bAe3t to ,AT, t1e petro%e6m +e)%er2 1)+ *o 0*p6t ,AT
3re+0t2 to 2pe)J o4.
"t 02 o*%& 6*+er Rep. A3t No. <==> t1)t t1e 2)%e2 b& t1e petro%e6m +e)%er2 1)5e be3ome
26bAe3t to ,AT )*+ o*%& 0* 0t2 0mp%eme*t)t0o* m)& t1e& 62e t1e0r 0*p6t ,AT )2 3re+0t )@)0*2t
t1e0r o6tp6t ,AT. >hile e87er to use their input ;A* credit 8ccorded to it b3 Rep. Act No. H@@#, the
petroleu9 de8lers reAect the li9it8tion i9posed b3 the ver3 s89e l8E on such use.
&t should be re9e9bered th8t prior to Rep. Act No. H@@#, the petroleu9 de8lers5 input ;A* credits
Eere inexistent = the3 Eere unreco7niMed 8nd dis8lloEed b3 l8E. *he petroleu9 de8lers h8d no
such propert3 c8lled input ;A* credits. &t is onl3 r8tion8l, therefore, th8t the3 c8nnot 8cBuire vested
ri7hts to the use of such input ;A* credits Ehen the3 Eere never entitled to such credits in the first
pl8ce, 8t le8st, not until Rep. Act No. H@@#.
)3 vieE, 8t this point, Ehen Rep. Act No. H@@# h8s not 3et even been i9ple9ented, is th8t
petroleu9 de8lers5 ri7ht to use their input ;A* 8s credit 878inst their output ;A* unli9itedl3 h8s not
vested, bein7 8 9ere expect8nc3 of 8 future benefit 8nd bein7 contin7ent on the continu8nce of
,ection 11" of the N8tion8l &ntern8l Revenue Code of 1HH#, prior to its 89end9ent b3 Rep. Act No.
H@@#.
Third, 8lthou7h the petroleu9 de8lers presented fi7ures 8nd co9put8tions to support their
contention th8t the c8p sh8ll le8d to the de9ise of their businesses, & re98in unconvinced.
Rep. Act No. H@@#, Ehile i9posin7 the #"K c8p on input ;A* credits, 8lloEs the t8xp83er to c8rr3-
over to the succeedin7 Bu8rters 8n3 excess input ;A*. *he petroleu9 de8lers presented 8 situ8tion
Eherein their input ;A* Eould 8lE83s exceed #"K of their output ;A*, 8nd thus, their excess input
;A* Eill be perenni8ll3 c8rried-over 8nd Eould re98in unutiliMed. Even thou7h the3 consistentl3
Buestioned the #"K c8p on their input ;A* credits, the petroleu9 de8lers f8iled to est8blish Eh8t is
the 8ver87e r8tio of their input ;A* vis-P-vis their output ;A* per Bu8rter. >ithout such f8ct, &
consider their obAection to the #"K c8p 8rbitr8r3 bec8use there is no b8sis therefor.
(n the other, & find th8t the #"K c8p on input ;A* credits E8s not i9posed b3 Con7ress 8rbitr8ril3.
)e9bers of the Bic89er8l Conference Co99ittee settled on the s8id percent87e so 8s to ensure
th8t the 7overn9ent c8n collect 8 9ini9u9 of @"K output ;A* per t8xp83er. *his is to put 8 ;A*-
t8xp83er, 8t le8st, on eBu8l footin7 Eith 8 ;A*-exe9pt t8xp83er under ,ection 1"HC;D of the N8tion8l
&ntern8l Revenue Code, 8s 89ended b3 Rep. Act No. H@@#.
1#
*he l8tter t8xp83er is exe9pt fro9 ;A*
on the b8sis th8t his s8le or le8se of 7oods or properties or services do not exceed P1,I"","""4
inste8d, he is subAect to p83 8 three percent C@KD t8x on his 7ross receipts in lieu of the ;A*.
1
&f 8
t8xp83er Eith presu98bl3 8 s98ller business is reBuired to p83 three percent C@KD 7ross receipts
t8x, 8 t3pe of t8x Ehich does not even 8lloE for 8n3 creditin7, 8 ;A*-t8xp83er Eith 8 bi77er business
should be obli78ted, liFeEise, to p83 8 9ini9u9 of @"K output ;A* CEhich should be eBuiv8lent to
@K of the 7ross sellin7 price per 7ood or propert3 or service soldD. *he c8p 8ssures the 7overn9ent
8 collection of 8t le8st @"K output ;A*, contributin7 to 8n i9proved c8sh floE for the 7overn9ent.
Attention is further c8lled to the f8ct th8t the output ;A* is the ;A* i9posed on the s8les b3 8 ;A*-
t8xp83er4 it is p8id b3 the purch8sers of the 7oods, properties, 8nd services, 8nd 9erel3 collected
throu7h the ;A*-re7istered seller. *he l8tter, therefore, serves 8s 8 collectin7 87ent for the
7overn9ent. *he ;A*-re7istered seller is 9erel3 bein7 reBuired to re9it to the 7overn9ent 8
9ini9u9 of @"K of his output ;A* collection.
Fourth, & 7ive no Eei7ht to the fi7ures 8nd co9put8tions presented before this Court b3 the
petroleu9 de8lers, p8rticul8rl3 the supposed Bu8rterl3 profit 8nd loss st8te9ent of 8 :t3pic8l de8ler.:
2oE these d8t8 represent the fin8nci8l st8tus of 8 t3pic8l de8ler, & Eould not FnoE Ehen there E8s
no effort to expl8in the 98nner b3 Ehich the3 Eere surve3ed, coll8ted, 8nd 8ver87ed out. >ithout
est8blishin7 their source therefor, the fi7ures 8nd co9put8tions presented b3 the petroleu9 de8lers
8re 9erel3 self-servin7 8nd unsubst8nti8ted, deservin7 sc8nt consider8tion b3 this Court. Even
8ssu9in7 th8t these fi7ures trul3 represent the fin8nci8l st8ndin7 of petroleu9 de8lers, the
introduction 8nd 8pplic8tion thereto of the ;A* f8ctor, Ehich forebode the coll8pse of s8id petroleu9
de8lers5 businesses, Eould be nothin7 9ore th8n 8n 8nticip8ted d8987e = 8n inAur3 th8t 983 or 983
not h8ppen. *o resolve their petition on this b8sis Eould be pre98ture 8nd contr8r3 to the
est8blished tenet of ripeness of 8 c8use of 8ction before this Court could v8lidl3 exercise its poEer of
Audici8l revieE.
Fifth, in response to the contention of the petroleu9 de8lers durin7 or8l 8r7u9ents before this Court
th8t the3 c8nnot p8ss on to the consu9ers the ;A* burden 8nd incre8se the prices of their 7oods, it
is Eorth3 to Buote beloE this Court5s rulin7 in Churchill v. Concepcion,
1H
to Eit =
&t Eill thus be seen th8t the contention th8t the r8tes ch8r7ed for 8dvertisin7 c8nnot be r8ised is
purel3 h3pothetic8l, b8sed entirel3 upon the opinion of the pl8intiffs, unsupported b3 8ctu8l test, 8nd
th8t the pl8intiffs the9selves 8d9it th8t 8 nu9ber of other persons h8ve volunt8ril3 8nd Eithout
protest p8id the t8x herein co9pl8ined of. %nder these circu9st8nces, c8n it be held 8s 8 98tter of
f8ct th8t the t8x is confisc8tor3 or th8t, 8s 8 98tter of l8E, the t8x is unconstitution8lL &s the exercise
of the t8xin7 poEer of the 'e7isl8ture dependent upon 8nd restricted b3 the opinion of tEo interested
EitnessesL *here c8n be but one 8nsEer to these Buestions, especi8ll3 in vieE of the f8ct th8t
others 8re p83in7 the t8x 8nd presu98bl3 98Fin7 re8son8ble profit fro9 their business.
As 8 fin8l observ8tion, & perceive th8t Eh8t trul3 underlies the opposition to Rep. Act No. H@@# is not
the Buestion of its constitution8lit3, b6t r)t1er t1e ;02+om o4 0t2 e*)3tme*t. Io6%+ 0t tr6%& r)02e
*)t0o*)% re5e*6e )*+ be*e40t t1e e*t0re 3o6*tr&, or ;o6%+ 0t o*%& 0*3re)2e t1e b6r+e* o4 t1e
$0%0p0*o peop%eE >ould it contribute to 8 reviv8l of our econo93 or onl3 contribute to the difficulties
8nd eventu8l closure of businessesL *hese 8re issues th8t Ee c8nnot resolve 8s the ,upre9e
Court. As this Court expl8ined in %+ustin v. "du,
!"
to Eit =
&t does 8ppe8r cle8rl3 th8t petitioner5s obAection to this 'etter of &nstruction is not pre9ised on l8cF of
poEer, the Austific8tion for 8 findin7 of unconstitution8lit3, but on the pessi9istic, not to s83 ne78tive,
vieE he entert8ins 8s to its Eisdo9. *h8t 8ppro8ch, it put it 8t its 9ildest, is distin7uished, if th8t is
the 8ppropri8te Eord, b3 its unorthodox3. &t be8rs repe8tin7 :th8t this Court, in the l8n7u87e of
+ustice '8urel, Pdoes not p8ss upon Buestions of Eisdo9, Austice or expedienc3 of le7isl8tion.5 As
expressed b3 +ustice *u8sonJ P&t is not the province of the courts to supervise le7isl8tion 8nd Feep it
Eithin the bounds of propriet3 8nd co99on sense. *h8t is pri98ril3 8nd exclusivel3 8 le7isl8tive
concern.5 *here c8n be no possible obAection then to the observ8tion of +ustice )onte983orJ PA2
%o*@ )2 %);2 +o *ot 50o%)te )*& Co*2t0t6t0o*)% pro5020o*, t1e Co6rt2 mere%& 0*terpret )*+
)pp%& t1em re@)r+%e22 o4 ;1et1er or *ot t1e& )re ;02e or 2)%6t)r&.D $or t1e&, )33or+0*@ to
'62t03e !)br)+or, P)re *ot 26ppo2e+ to o5err0+e %e@0t0m)te po%03& )*+ T T T *e5er 0*?60re 0*to
t1e ;02+om o4 t1e %);.D &t is thus settled, to p8r8phr8se Chief +ustice Concepcion in GonM8les v.
Co99ission on Elections, th8t onl3 con7ression8l poEer or co9petence, not the Eisdo9 of the
8ction t8Fen, 983 be the b8sis for decl8rin7 8 st8tute inv8lid. *his is 8s it ou7ht to be. *he principle
of sep8r8tion of poEers h8s in the 98in Eisel3 8lloc8ted the respective 8uthorit3 of e8ch dep8rt9ent
8nd confined its Aurisdiction to such sphere. *here Eould then be intrusion not 8lloE8ble under the
Constitution if on 8 98tter left to the discretion of 8 coordin8te br8nch, the Audici8r3 Eould substitute
its oEnG:
!1
*o reiter8te, Ee c8nnot substitute our discretion for Con7ress, 8nd even thou7h there 8re provisions
in Rep. Act No. H@@# Ehich Ee 983 believe 8s unEise or iniBuitous, but not unconstitution8l, Ee
c8nnot striFe the9 off b3 invoFin7 our poEer of Audici8l revieE. &n such 8 situ8tion, the recourse of
the people is not Audici8l, but r8ther politic8l. &f the3 severel3 doubt the Eisdo9 of the present
Con7ress for p8ssin7 8 st8tute such 8s Rep. Act No. H@@#, then the3 h8ve the poEer to hold the
9e9bers of s8id Con7ress 8ccount8ble b3 usin7 their votin7 poEer in the next elections.
"* 50e; o4 t1e 4ore@o0*@, " 5ote 4or t1e +e*0)% o4 t1e pre2e*t pet0t0o*2 )*+ t1e 6p1o%+0*@ o4 t1e
3o*2t0t6t0o*)%0t& o4 Rep. A3t No. <==> 0* 0t2 e*t0ret&.
M"N"TA ,. C-"CO8NA9AR"O