Chapter 9: POWERS OF THE CONGRESS

1. Read: Sec. 1-Sec. 32, Art. VI, 1987 Constitution

2. Digest the following cases:
A. Enactment of Law
1.
2.
3.
4.
5.

Arroyo v. De Venecia, 277 SCRA 268

Tolentino v. Sec. of Finance, 235 SCRA 630
Abakada v. Ermita, 469 SCRA 1
Lidasan v. COMELEC, 21 SCRA 496
Sumulong v. COMELEC, 73 Phil. 283

B. Power of Appropriation
6. Pascual v. Sec. of Public Works, 110 Phil. 331
7. Garcia v. Mata, 65 SCRA 520
8. Forbes v. Tiaco, 16 Phil. 534
9. Demetria v. Alba, 148 SCRA 208
10. Garces v. Estenzo, 105 SCRA 510
11. Aglipay v. Ruiz, 64 Phil. 201
12. Araullo v. B.S. Aquino III, G.R. No. 209287, July 1, 2014
C. Power of Taxation
13. Lladoc v. Commissioner, 14 SCRA 292
D. Legislative Inquiry
14. Arnault v. Nazareno, 87 Phil. 29
15. Senate v. Ermita, G.R. No. 169777, Apr. 20, 2006
16. Miguel v. Gordon, G.R. No. 174340, Oct 17, 2006
17. Bengzon v. Senate Blue Ribbon, 203 SCRA 767
E. Executive Privilege
18. Neri v. Senate Committees, G.R. No. 180843, March 25, 2008
19. Senate v. Ermita, G.R. No. 169777, Apr. 20, 2006

Page 1 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 127255 August 14, 1997

JOKER P. ARROYO, EDCEL C. LAGMAN, JOHN HENRY R. OSMEA, WIGBERTO E. TAADA,
AND RONALDO B. ZAMORA, petitioner,
vs.
JOSE DE VENECIA, RAUL DAZA, RODOLFO ALBANO, THE EXECUTIVE SECRETARY, THE
SECRETARY OF FINANCE, AND THE COMMISSIONER OF INTERNAL REVENUE, respondents.

MENDOZA, J.:
This is a petition for certiorari and/or prohibition challenging the validity of Republic Act No. 8240,
which amends certain provisions of the National Internal Revenue Code by imposing so-called "sin
taxes" (actually specific taxes) on the manufacture and sale of beer and cigarettes.
Petitioners are members of the House of Representatives. They brought this suit against
respondents Jose de Venecia, Speaker of the House of Representatives, Deputy Speaker Raul
Daza, Majority Leader Rodolfo Albano, the Executive Secretary, the Secretary of Finance, and the
Commissioner of Internal Revenue, charging violation of the rules of the House which petitioners
claim are "constitutionally mandated" so that their violation is tantamount to a violation of the
Constitution.
The law originated in the House of Representatives as H. No. 7198. This bill was approved on third
reading on September 12, 1996 and transmitted on September 16, 1996 to the Senate which
approved it with certain amendments on third reading on November 17, 1996. A bicameral
conference committee was formed to reconcile the disagreeing provisions of the House and Senate
versions of the bill.
The bicameral conference committee submitted its report to the House at 8 a.m. on November 21,
1996. At 11:48 a.m., after a recess, Rep. Exequiel Javier, chairman of the Committee on Ways and
Means, proceeded to deliver his sponsorship speech, after which he was interpellate. Rep. Rogelio
Sarmiento was first to interpellate. He was interrupted when Rep. Arroyo moved to adjourn for lack
of quorum. Rep. Antonio Cuenco objected to the motion and asked for a head count. After a roll call,
the Chair (Deputy Speaker Raul Daza) declared the presence of a quorum. 1 Rep. Arroyo appealed
the ruling of the Chair, but his motion was defeated when put to a vote. The interpellation of the
sponsor thereafter proceeded.
Petitioner Rep. Joker Arroyo registered to interpellate. He was fourth in the order, following Rep.
Rogelio Sarmiento, Rep. Edcel C. Lagman and Rep. Enrique Garcia. In the course of his
interpellation, Rep. Arroyo announced that he was going to raise a question on the quorum, although
until the end of his interpellation he never did. What happened thereafter is shown in the following

Page 2 of 557

transcript of the session on November 21, 1996 of the House of Representatives, as published by
Congress in the newspaper issues of December 5 and 6, 1996:
MR. ALBANO. MR. Speaker, I move that we now approved and ratify the conference
committee report.
THE DEPUTY SPEAKER (Mr. Daza). Any objection to the motion?
MR. ARROYO. What is that, Mr. Speaker?
THE DEPUTY SPEAKER (Mr. Daza). There being none, approved.
(Gavel)
MR. ARROYO. No, no, no, wait a minute, Mr. Speaker, I stood up. I want to know what is the
question that the Chair asked the distinguished sponsor.
THE DEPUTY SPEAKER (Mr. Daza). The session is suspended for one minute.
(It was 3:01 p.m.)
(3:40 p.m., the session was resumed)
THE DEPUTY SPEAKER (Mr. Daza). The session is resumed.
MR. ALBANO. Mr. Speaker, I move to adjourn until four o'clock, Wednesday, next week.
THE DEPUTY SPEAKER (Mr. Daza). The session is adjourned until four o'clock,
Wednesday, next week.
(It was 3:40 p.m.)
On the same day, the bill was signed by the Speaker of the House of Representatives and the
President of the Senate and certified by the respective secretaries of both Houses of Congress as
having been finally passed by the House of Representatives and by the Senate on November 21,
1996. The enrolled bill was signed into law by President Fidel V. Ramos on November 22, 1996.
Petitioners claim that there are actually four different version of the transcript of this portion of Rep.
Arroyo's interpellation: (1) the transcript of audio-sound recording of the proceedings in the session
hall immediately after the session adjourned at 3:40 p.m. on November 21, 1996, which petitioner
Rep. Edcel C. Lagman obtained from he operators of the sound system; (2) the transcript of the
proceedings from 3:00 p.m. to 3:40 p.m. of November 21, 1996, as certified by the Chief of the
Transcription Division on November 21, 1996, also obtained by Rep. Lagman; (3) the transcript of
the proceedings from 3:00 p.m. to 3:40 p.m. of November 21, 1996 as certified by the Chief of the
Transcription Division on November 28, 1996, also obtained by Rep. Lagman; and (4) the published
version abovequoted. According to petitioners, the four versions differ on three points, to wit: (1) in
the audio-sound recording the word "approved," which appears on line 13 in the three other
versions, cannot be heard; (2) in the transcript certified on November 21, 1996 the world "no" on line
17 appears only once, while in the other versions it is repeated three times; and (3) the published
version does not contain the sentence "(Y)ou better prepare for a quorum because I will raise the
question of the quorum," which appears in the other versions.

Page 3 of 557

Petitioners' allegations are vehemently denied by respondents. However, there is no need to discuss
this point as petitioners have announced that, in order to expedite the resolution of this petition, they
admit, without conceding, the correctness of the transcripts relied upon by the respondents.
Petitioners agree that for purposes of this proceeding the word "approved" appears in the transcripts.
Only the proceedings of the House of Representatives on the conference committee report on H.
No. 7198 are in question. Petitioners' principal argument is that R.A. No. 8240 is null and void
because it was passed in violation of the rules of the House; that these rules embody the
"constitutional mandate" in Art. VI, 16(3) that "each House may determine the rules of its
proceedings" and that, consequently, violation of the House rules is a violation of the Constitution
itself. They contend that the certification of Speaker De Venecia that the law was properly passed is
false and spurious.
More specifically, petitioners charge that (1) in violation of Rule VIII, 35 and Rule XVII, 103 of the
rules of the House, 2 the Chair, in submitting the conference committee report to the House, did not
call for the years or nays, but simply asked for its approval by motion in order to prevent petitioner
Arroyo from questioning the presence of a quorum; (2) in violation of Rule XIX, 112, 3 the Chair
deliberately ignored Rep. Arroyo's question, "What is that . . . Mr. Speaker?" and did not repeat Rep.
Albano's motion to approve or ratify; (3) in violation of Rule XVI, 97, 4 the Chair refused to recognize
Rep. Arroyo and instead proceeded to act on Rep. Albano's motion and afterward declared the
report approved; and (4) in violation of Rule XX, 121-122, Rule XXI, 123, and Rule XVIII, 109, 5
the Chair suspended the session without first ruling on Rep. Arroyo's question which, it is alleged, is
a point of order or a privileged motion. It is argued that Rep. Arroyo's query should have been
resolved upon the resumption of the session on November 28, 1996, because the parliamentary
situation at the time of the adjournment remained upon the resumption of the session.
Petitioners also charge that the session was hastily adjourned at 3:40 p.m. on November 21, 1996
and the bill certified by Speaker Jose De Venecia to prevent petitioner Rep. Arroyo from formally
challenging the existence of a quorum and asking for a reconsideration.
Petitioners urge the Court not to feel bound by the certification of the Speaker of the House that the
law had been properly passed, considering the Court's power under Art. VIII, 1 to pass on claims of
grave abuse of discretion by the other departments of the government, and they ask for a
reexamination of Tolentino v. Secretary of Finance, 6 which affirmed the conclusiveness of an
enrolled bill, in view of the changed membership of the Court.
The Solicitor General filed a comment in behalf of all respondents. In addition, respondent De
Venecia filed a supplemental comment. Respondents' defense is anchored on the principle of
separation of powers and the enrolled bill doctrine. They argue that the Court is not the proper forum
for the enforcement of the rules of the House and that there is no justification for reconsidering the
enrolled bill doctrine. Although the Constitution provides in Art. VI, 16(3) for the adoption by each
House of its rules of proceedings, enforcement of the rules cannot be sought in the courts except
insofar as they implement constitutional requirements such as that relating to three readings on
separate days before a bill may be passed. At all events, respondents contend that, in passing the
bill which became R.A. No. 8240, the rules of the House, as well as parliamentary precedents for
approval of conference committee reports on mere motion, were faithfully observed.
In his supplemental comment, respondent De Venecia denies that his certification of H. No. 7198 is
false and spurious and contends that under the journal entry rule, the judicial inquiry sought by the
petitioners is barred. Indeed, Journal No. 39 of the House of Representatives, covering the sessions
of November 20 and 21, 1996, shows that "On Motion of Mr. Albano, there being no objection, the

Page 4 of 557

Body approved the Conference Committee Report on House Bill No. 7198." 7 This Journal was
approved on December 2, 1996 over the lone objection of petitioner Rep. Lagman. 8
After considering the arguments of the parties, the Court finds no ground for holding that Congress
committed a grave abuse of discretion in enacting R.A. No. 8240. This case is therefore dismissed.
First. It is clear from the foregoing facts that what is alleged to have been violated in the enactment
of R.A. No. 8240 are merely internal rules of procedure of the House rather than constitutional
requirements for the enactment of a law, i.e., Art. VI, 26-27. Petitioners do not claim that there
was no quorum but only that, by some maneuver allegedly in violation of the rules of the House,
Rep. Arroyo was effectively prevented from questioning the presence of a quorum.
Petitioners contend that the House rules were adopted pursuant to the constitutional provision that
"each House may determine the rules of its proceedings" 9 and that for this reason they are judicially
enforceable. To begin with, this contention stands the principle on its head. In the decided cases, 10
the constitutional provision that "each House may determine the rules of its proceedings" was
invoked by parties, although not successfully, precisely to support claims of autonomy of the
legislative branch to conduct its business free from interference by courts. Here petitioners cite the
provision for the opposite purpose of invoking judicial review.
But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power
to inquire into allegations that, in enacting a law, a House of Congress failed to comply with its own
rules, in the absence of showing that there was a violation of a constitutional provision or the rights
of private individuals. In Osmea v. Pendatun, 11 it was held: "At any rate, courts have declared that
'the rules adopted by deliberative bodies are subject to revocation, modification or waiver at the
pleasure of the body adopting them.' And it has been said that 'Parliamentary rules are merely
procedural, and with their observance, the courts have no concern. They may be waived or
disregarded by the legislative body.' Consequently, 'mere failure to conform to parliamentary usage
will not invalidate the action (taken by a deliberative body) when the requisite number of members
have agreed to a particular measure.'"
In United States v. Ballin, Joseph & Co., 12 the rules was stated thus: "The Constitution empowers
each house to determine its rules of proceedings. It may not by its rules ignore constitutional
restraints or violate fundamental rights, and there should be a reasonable relation between the mode
or method of proceeding established by the rule and the result which is sought to be attained. But
within these limitations all matters of method are open to the determination of the House, and it is no
impeachment of the rule to say that some other way would be better, more accurate, or even more
just. It is no objection to the validity of a rule that a different one has been prescribed and in force for
a length of time. The power to make rules is not one which once exercised is exhausted. It is a
continuous power, always subject to be exercised by the House, and within the limitations
suggested, absolute and beyond the challenge of any other body or tribunal."
In Crawford v. Gilchrist, 13 it was held: "The provision that each House shall determine the rules of its
proceedings does not restrict the power given to a mere formulation of standing rules, or to the
proceedings of the body in ordinary legislative matters; but in the absence of constitutional restraints,
and when exercised by a majority of a constitutional quorum, such authority extends to a
determination of the propriety and effect of any action as it is taken by the body as it proceeds in the
exercise of any power, in the transaction of any business, or in the performance of any duty
conferred upon it by the Constitution."
In State ex rel. City Loan & Savings Co. v. Moore, 14 the Supreme Court of Ohio stated: "The
provision for reconsideration is no part of the Constitution and is therefore entirely within the control
Page 5 of 557

of the General Assembly. Having made the rule, it should be regarded, but a failure to regard it is not
the subject-matter of judicial inquiry. It has been decided by the courts of last resort of many states,
and also by the United States Supreme Court, that a legislative act will not be declared invalid for
noncompliance with rules."
In State v. Savings Bank, 15 the Supreme Court of Errors of Connecticut declared itself as follows:
"The Constitution declares that each house shall determine the rules of its own proceedings and
shall have all powers necessary for a branch of the Legislature of a free and independent state.
Rules of proceedings are the servants of the House and subject to its authority. This authority may
be abused, but when the House has acted in a matter clearly within its power, it would be an
unwarranted invasion of the independence of the legislative department for the court to set aside
such action as void because it may think that the House has misconstrued or departed from its own
rules of procedure."
In McDonald v. State, 16 the Wisconsin Supreme Court held: "When it appears that an act was so
passed, no inquiry will be permitted to ascertain whether the two houses have or have not complied
strictly with their own rules in their procedure upon the bill, intermediate its introduction and final
passage. The presumption is conclusive that they have done so. We think no court has ever
declared an act of the legislature void for non-compliance with the rules of procedure made by itself ,
or the respective branches thereof, and which it or they may change or suspend at will. If there are
any such adjudications, we decline to follow them."
Schweizer v. Territory 17 is illustrative of the rule in these cases. The 1893 Statutes of Oklahoma
provided for three readings on separate days before a bill may be passed by each house of the
legislature, with the proviso that in case of an emergency the house concerned may, by two-thirds
vote, suspend the operation of the rule. Plaintiff was convicted in the district court of violation of a
law punishing gambling. He appealed contending that the gambling statute was not properly passed
by the legislature because the suspension of the rule on three readings had not been approved by
the requisite two-thirds vote. Dismissing this contention, the State Supreme Court of Oklahoma held:
We have no constitutional provision requiring that the legislature should read a bill in any
particular manner. It may, then, read or deliberate upon a bill as it sees fit. either in
accordance with its own rules, or in violation thereof, or without making any rules. The
provision of section 17 referred to is merely a statutory provision for the direction of the
legislature in its action upon proposed measures. It receives its entire force from legislative
sanction, and it exists only at legislative pleasure. The failure of the legislature to properly
weigh and consider an act, its passage through the legislature in a hasty manner, might be
reasons for the governor withholding his signature thereto; but this alone, even though it is
shown to be a violation of a rule which the legislature had made to govern its own
proceedings, could be no reason for the court's refusing its enforcement after it was actually
passed by a majority of each branch of the legislature, and duly signed by the governor. The
courts cannot declare an act of the legislature void on account of noncompliance with rules
of procedure made by itself to govern its deliberations. McDonald v. State, 80 Wis. 407, 50
N.W. 185; In re Ryan, 80 Wis. 414, 50 N.W. 187; State v. Brown, 33 S.C. 151, 11 S.E. 641;
Railway Co. v. Gill, 54 Ark. 101, 15 S.W. 18.
We conclude this survey with the useful summary of the rulings by former Chief Justice Fernando,
commenting on the power of each House of Congress to determine its rules of proceedings. He
wrote:
Rules are hardly permanent in character. The prevailing view is that they are subject to
revocation, modification or waiver at the pleasure of the body adopting them as they are
Page 6 of 557

primarily procedural. Courts ordinary have no concern with their observance. They may be
waived or disregarded by the legislative body. Consequently, mere failure to conform to them
does not have the effect of nullifying the act taken if the requisite number of members have
agreed to a particular measure. The above principle is subject, however, to this qualification.
Where the construction to be given to a rule affects person other than members of the
legislative body the question presented is necessarily judicial in character. Even its validity is
open to question in a case where private rights are involved. 18
In this case no rights of private individuals are involved but only those of a member who, instead of
seeking redress in the House, chose to transfer the dispute to this Court. We have no more power to
look into the internal proceedings of a House than members of that House have to look over our
shoulders, as long as no violation of constitutional provisions is shown.
Petitioners must realize that each of the three departments of our government has its separate
sphere which the others may not invade without upsetting the delicate balance on which our
constitutional order rests. Due regard for the working of our system of government, more than mere
comity, compels reluctance on our part to enter upon an inquiry into an alleged violation of the rules
of the House. We must accordingly decline the invitation to exercise our power.
Second. Petitioners, quoting former Chief Justice Roberto Concepcion's sponsorship in the
Constitutional Commission, contend that under Art. VIII, 1, "nothing involving abuse of discretion
[by the other branches of the government] amounting to lack or excess of jurisdiction is beyond
judicial review." 19 Implicit in this statement of the former Chief Justice, however, is an
acknowledgment that the jurisdiction of this Court is subject to the case and controversy requirement
of Art. VIII. 5 and, therefore, to the requirement of a justiciable controversy before courts can
adjudicate constitutional questions such as those which arise in the field of foreign relations. For
while Art. VIII, 1 has broadened the scope of judicial inquiry into areas normally left to the political
departments to decide, such as those relating to national security, 20 it has not altogether done away
with political questions such as those which arise in the field of foreign relations. As we have already
held, under Art. VIII, 1, this Court's function
is merely [to] check whether or not the governmental branch or agency has gone beyond the
constitutional limits of its jurisdiction, not that it erred or has a different view. In the absence
of a showing . . . [of] grave abuse of discretion amounting to lack of jurisdiction, there is no
occasion for the Court to exercise its corrective power. . . . It has no power to look into what it
thinks is apparent error. 21
If, then, the established rule is that courts cannot declare an act of the legislature void on account
merely of noncompliance with rules of procedure made by itself, it follows that such a case does not
present a situation in which a branch of the government has "gone beyond the constitutional limits of
its jurisdiction" so as to call for the exercise of our Art. VIII. 1 power.
Third. Petitioners claim that the passage of the law in the House was "railroaded." They claim that
Rep. Arroyo was still making a query to the Chair when the latter declared Rep. Albano's motion
approved.
What happened is that, after Rep. Arroyo's interpellation of the sponsor of the committee report,
Majority Leader Rodolfo Albano moved for the approval and ratification of the conference committee
report. The Chair called out for objections to the motion. Then the Chair declared: "There being
none, approved." At the same time the Chair was saying this, however, Rep. Arroyo was asking,
"What is that . . . Mr. Speaker?" The Chair and Rep. Arroyo were talking simultaneously. Thus,
although Rep. Arroyo subsequently objected to the Majority Leader's motion, the approval of the
Page 7 of 557

conference committee report had by then already been declared by the Chair, symbolized by its
banging of the gavel.
Petitioners argue that, in accordance with the rules of the House, Rep. Albano's motion for the
approval of the conference committee report should have been stated by the Chair and later the
individual votes of the members should have been taken. They say that the method used in this case
is a legislator's nightmare because it suggests unanimity when the fact was that one or some
legislators opposed the report.
No rule of the House of Representative has been cited which specifically requires that in case such
as this involving approval of a conference committee report, the Chair must restate the motion and
conduct a viva voce or nominal voting. On the other hand, as the Solicitor General has pointed out,
the manner in which the conference committee report on H. No. 7198 was approval was by no
means a unique one. It has basis in legislative practice. It was the way the conference committee
report on the bills which became the Local Government Code of 1991 and the conference committee
report on the bills amending the Tariff and Customs Code were approved.
In 1957, the practice was questioned as being contrary to the rules of the House. The point was
answered by Majority Leader Arturo M. Tolentino and his answer became the ruling of the Chair Mr.
Tolentino said:
Mr. TOLENTINO. The fact that nobody objects means a unanimous action of the House.
Insofar as the matter of procedure is concerned, this has been a precedent since I came
here seven years ago, and it has been the procedure in this House that if somebody objects,
then a debate follows and after the debate, then the voting comes in.
xxx xxx xxx
Mr. Speaker, a point of order was raised by the gentleman from Leyte, and I wonder what his
attitude is nor on his point of order. I should just like to state that I believe that we have had a
substantial compliance with the Rules. The Rule invoked is not one that refers to statutory or
constitutional requirement, and a substantial compliance, to my mind, is sufficient. When the
Chair announces the vote by saying "Is there any objection?" and nobody objects, then the
Chair announces "The bill is approved on second reading." If there was any doubt as to the
vote, any motion to divide would have been proper. So, if that motion is not presented, we
assume that the House approves the measure. So I believe there is substantial compliance
here, and if anybody wants a division of the House he can always ask for it, and the Chair
can announce how many are in favor and how many are against. 22
Indeed, it is no impeachment of the method to say that some other way would be better, more
accurate and even more just. 23 The advantages or disadvantages, the wisdom or folly of a method
do not present any matter for judicial consideration. 24 In the words of the U.S. Circuit Court of
Appeals, "this Court cannot provide a second opinion on what is the best procedure. Notwithstanding
the deference and esteem that is properly tendered to individual congressional actors, our deference
and esteem for the institution as a whole and for the constitutional command that the institution be
allowed to manage its own affairs precludes us from even attempting a diagnosis of the problem." 25
Nor does the Constitution require that the yeas and the nays of
the Members be taken every time a House has to vote, except only in the following instances; upon
the last and third readings of a bill, 26 at the request of one-fifth of the Members present, 27 and in
repassing a bill over the veto of the President. 28 Indeed, considering the fact that in the approval of

Page 8 of 557

the original bill the votes of the members by yeas and nays had already been taken, it would have
been sheer tedium to repeat the process.
Petitioners claim that they were prevented from seeking reconsideration allegedly as a result of the
precipitate suspension and subsequent adjournment of the session. 29 It would appear, however,
that the session was suspended to allow the parties to settle the problem, because when it resumed
at 3:40 p.m. on that day Rep. Arroyo did not say anything anymore. While it is true that the Majority
Leader moved for adjournment until 4 p.m. of Wednesday of the following week, Rep. Arroyo could
at least have objected if there was anything he wanted to say. The fact, however, is that he did not.
The Journal of November 21, 1996 of the House shows.
ADJOURNMENT OF SESSION
On motion of Mr. Albano, there being no objection, the Chair declared the session adjourned
until four o'clock in the afternoon of Wednesday, November 27, 1996.
It was 3:40 p.m. Thursday, November 21, 1996. (emphasis added)
This Journal was approved on December 3, 1996. Again, no one objected to its approval except
Rep. Lagman.
It is thus apparent that petitioners' predicament was largely of their own making. Instead of
submitting the proper motions for the House to act upon, petitioners insisted on the pendency of
Rep. Arroyo's question as an obstacle to the passage of the bill. But Rep. Arroyo's question was not,
in form or substance, a point of order or a question of privilege entitled to precedence. 30 And even if
Rep. Arroyo's question were so, Rep. Albano's motion to adjourn would have precedence and would
have put an end to any further consideration of the question. 31
Given this fact, it is difficult to see how it can plausibly be contended that in signing the bill which
became R.A. No. 8240, respondent Speaker of the House be acted with grave abuse of his
discretion. Indeed, the phrase "grave abuse of discretion amounting to lack or excess of jurisdiction"
has a settled meaning in the jurisprudence of procedure. It means such capricious and whimsical
exercise of judgment by a tribunal exercising judicial or quasi judicial power as to amount to lack of
power. As Chief Justice Concepcion himself said in explaining this provision, the power granted to
the courts by Art. VIII. 1 extends to cases where "a branch of the government or any of its officials
has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse
of discretion amounting to excess of jurisdiction." 32
Here, the matter complained of concerns a matter of internal procedure of the House with which the
Court should not he concerned. To repeat, the claim is not that there was no quorum but only that
Rep. Arroyo was effectively prevented from questioning the presence of a quorum. Rep. Arroyo's
earlier motion to adjourn for lack of quorum had already been defeated, as the roll call established
the existence of a quorum. The question of quorum cannot be raised repeatedly especially when
the quorum is obviously present for the purpose of delaying the business of the House. 33 Rep.
Arroyo waived his objection by his continued interpellation of the sponsor for in so doing he in effect
acknowledged the presence of a quorum. 34
At any rate it is noteworthy that of the 111 members of the House earlier found to be present on
November 21, 1996, only the five, i.e., petitioners in this case, are questioning the manner by which
the conference committee report on H. No. 7198 was approved on that day. No one, except Rep.
Arroyo, appears to have objected to the manner by which the report was approved. Rep. John Henry
Osmea did not participate in the bicameral conference committee proceedings. 35 Rep. Lagman
Page 9 of 557

and Rep. Zamora objected to the report 36 but not to the manner it was approved; while it is said that,
if voting had been conducted. Rep. Taada would have voted in favor of the conference committee
report. 37
Fourth. Under the enrolled bill doctrine, the signing of H. No. 7198 by the Speaker of the House and
the President of the Senate and the certification by the secretaries of both Houses of Congress that
it was passed on November 21, 1996 are conclusive of its due enactment. Much energy and
learning is devoted in the separate opinion of Justice Puno, joined by Justice Davide, to disputing
this doctrine. To be sure, there is no claim either here or in the decision in the EVAT cases
[Tolentino v. Secretary of Finance] that the enrolled bill embodies a conclusive presumption. In one
case 38 we "went behind" an enrolled bill and consulted the Journal to determine whether certain
provisions of a statute had been approved by the Senate.
But, where as here there is no evidence to the contrary, this Court will respect the certification of the
presiding officers of both Houses that a bill has been duly passed. Under this rule, this Court has
refused to determine claims that the three-fourths vote needed to pass a proposed amendment to
the Constitution had not been obtained, because "a duly authenticated bill or resolution imports
absolute verify and is binding on the courts." 39 This Court quoted from Wigmore on Evidence the
following excerpt which embodies good, if old-fashioned, democratic theory:
The truth is that many have been carried away with the righteous desire to check at any cost
the misdoings of Legislatures. They have set such store by the Judiciary for this purpose that
they have almost made them a second and higher Legislature. But they aim in the wrong
direction. Instead of trusting a faithful Judiciary to check an inefficient Legislature, they
should turn to improve the Legislature. The sensible solution is not to patch and mend casual
errors by asking the Judiciary to violate legal principle and to do impossibilities with the
Constitution; but to represent ourselves with competent, careful, and honest legislators, the
work of whose hands on the statute-roll may come to reflect credit upon the name of popular
government. 40
This Court has refused to even look into allegations that the enrolled bill sent to the President
contained provisions which had been "surreptitiously" inserted in the conference committee:
[W]here allegations that the constitutional procedures for the passage of bills have not been
observed have no more basis than another allegation that the Conference Committee
"surreptitiously" inserted provisions into a bill which it had prepared, we should decline the
invitation to go behind the enrolled copy of the bill. To disregard the "enrolled bill" rule in
such cases would be to disregard the respect due the other two departments of our
government. 41
It has refused to look into charges that an amendment was made upon the last reading of a bill in
violation of Art. VI. 26(2) of the Constitution that "upon the last reading of a bill, no amendment shall
be allowed." 42
In other cases, 43 this Court has denied claims that the tenor of a bill was otherwise than as certified
by the presiding officers of both Houses of Congress.
The enrolled bill doctrine, as a rule of evidence, is well established. It is cited with approval by text
writers here and abroad. 44 The enrolled bill rule rests on the following considerations:
. . . As the President has no authority to approve a bill not passed by Congress, an enrolled
Act in the custody of the Secretary of State, and having the official attestations of the
Page 10 of 557

Speaker of the House of Representatives, of the President of the Senate, and of the
President of the United States, carries, on its face, a solemn assurance by the legislative and
executive departments of the government, charged, respectively, with the duty of enacting
and executing the laws, that it was passed by Congress. The respect due to coequal and
independent departments requires the judicial department to act upon that assurance, and to
accept, as having passed Congress, all bills authenticated in the manner stated; leaving the
court to determine, when the question properly arises, whether the Act, so authenticated, is
in conformity with the Constitution. 45
To overrule the doctrine now, as the dissent urges, is to repudiate the massive teaching of our cases
and overthrow an established rule of evidence.
Indeed, petitioners have advanced no argument to warrant a departure from the rule, except to say
that, with a change in the membership of the Court, the three new members may be assumed to
have an open mind on the question of the enrolled bill rule Actually, not three but four (Cruz,
Feliciano, Bidin, and Quiason, JJ.) have departed from the Court since our decision in the EVAT
cases and their places have since been taken by four new members (Francisco, Hermosisima,
Panganiban, and Torres, JJ.) Petitioners are thus simply banking on the change in the membership
of the Court.
Moreover, as already noted, the due enactment of the law in question is confirmed by the Journal of
the House of November 21, 1996 which shows that the conference committee report on H. No.
7198, which became R.A. No. 8740, was approved on that day. The keeping of the Journal is
required by the Constitution, Art. VI, 16(4) provides:
Each House shall keep a Journal of its proceedings, and from time to time publish the same,
excepting such parts as may, in its judgment, affect national security; and the yeas and nays
on any question shall, at the request of one-fifth of the Members present, be entered in the
Journal.
Each House shall also keep a Record of its proceedings.
The Journal is regarded as conclusive with respect to matters that are required by the Constitution to
be recorded therein. 46 With respect to other matters, in the absence of evidence to the contrary, the
Journals have also been accorded conclusive effect. Thus, in United States v. Pons, 47 this Court
spoke of the imperatives of public policy for regarding the Journals as "public memorials of the most
permanent character," thus: "They should be public, because all are required to conform to them;
they should be permanent, that rights acquired today upon the faith of what has been declared to be
law shall not be destroyed tomorrow, or at some remote period of time, by facts resting only in the
memory of individuals." As already noted, the bill which became R.A. No. 8240 is shown in the
Journal. Hence its due enactment has been duly proven.
It would be an unwarranted invasion of the prerogative of a coequal department for this Court either
to set aside a legislative action as void because the Court thinks the House has disregarded its own
rules of procedure, or to allow those defeated in the political arena to seek a rematch in the judicial
forum when petitioners can find their remedy in that department itself. The Court has not been
invested with a roving commission to inquire into complaints, real or imagined, of legislative
skullduggery. It would be acting in excess of its power and would itself be guilty of grave abuse of its
discretion were it to do so. The suggestion made in a case 48 may instead appropriately be made
here: petitioners can seek the enactment of a new law or the repeal or amendment of R.A. No. 8240.
In the absence of anything to the contrary, the Court must assume that Congress or any House

Page 11 of 557

thereof acted in the good faith belief that its conduct was permitted by its rules, and deference rather
than disrespect is due the judgment of that body. 49
WHEREFORE, the petition for certiorari and prohibition is DISMISSED.
SO ORDERED.
Narvasa, C.J., Padilla, Melo, Kapunan, Francisco and Hermosisima, Jr., JJ., concur.
Regalado, J., concurs in the result.
Bellosillo and Panganiban, JJ., took no part.
Torres, Jr., J., is on leave.

Separate Opinions

VITUG, J., concurring:

When the 1987 Constitution has embodied, in its circumscription of judicial power under
Section 1, Article VIII, of the Constitution, the determination of whether or not there is grave
abuse of discretion on the part of any branch or instrumentality of government, the Supreme
Court, upon which that great burden has been imposed, could not have been thought of as
likewise being thereby tasked with the awesome responsibility of overseeing the entire
bureaucracy. The term grave abuse of discretion has long been understood in our
jurisprudence as, and confined to, a capricious and whimsical or despotic exercise of
judgment as amounting to lack or excess of jurisdiction.
I see nothing of that sort in the case at bar. Absent a clear case of grave abuse of discretion,
like the patent disregard of a Constitutional proscription, I would respect the judgment of
Congress under whose province the specific responsibility falls and the authority to act is
vested. To do otherwise would be an unwarranted intrusion into the internal affairs of a coequal, independent and coordinate branch of government. At no time, it would seem to me,
has it been intended by the framers of the fundamental law to cause a substantial deviation,
let alone departure, from the time-honored and accepted principle of separation, but
balanced, powers of the three branches of government. There is, of course, a basic variant
between the old rule and the new Charter on the understanding of the term "judicial power."
Now, the Court is under mandate to assume jurisdiction over, and to undertake judicial
inquiry into, what may even be deemed to be political questions provided, however, that
grave abuse of discretion the sole test of justiciability on purely political issues is shown
to have attended the contested act.

Page 12 of 557

All taken, I most humbly reiterate my separate opinion in Tolentino vs. Secretary of Finance
and companion cases (G.R. No. 115455, etc., 235 SCRA 630) and vote to deny the instant
petition.
ROMERO, J., separate opinion:
In filing this separate opinion for the dismissal of the instant petition, I am not backtracking
from the dissent which I expressed in Tolentino v. Secretary of Finance. 1 I am somewhat
bothered that if I do not elaborate, the vote which I cast today might be wrongly construed as
an implied abandonment of, and inconsistent with, my firm stance in Tolentino.
The landmark case of Tolentino, just like the one under consideration, involved a similar
challenge to the constitutionality of a significant tax measure namely, Republic Act No. 7716,
otherwise known as the Expanded Value-Added Tax (EVAT) Law. There, a number of
issues, both substantive and procedural, were posed by petitioners, each of which was
discussed by the majority opinion of Mr. Justice Vicente V. Mendoza who, incidentally, is
also the ponente of instant decision. At any rate, it is worth noting that I did not entirely
disagree with each and every argument of the opinion, most especially those touching upon
substantive issues. My main objection in Tolentino, it will be recalled, focused instead on
what I perceived was a substantial breach and disregard by the Legislature of vital
constitutional requirements ordaining the procedures to be followed in the passage of a bill
which, in my opinion, the majority seemed to have cavalierly put to rest by hiding under the
cloak of the enrolled bill theory 2 and the precept that the Court is not the proper forum for
the enforcement of internal legislative rules allegedly violated. 3 To me, the position then
taken by the majority exhibited blind adherence to otherwise sound principles of law which
did not, however, fit the facts as presented before the Court. Hence, I objected, not so much
because I found these principles unwise or obsolete, but rather because they were applied,
or misapplied, to a case which I believe did not call for their application.
When I differed from the majority opinion which applied the enrolled bill theory, I was very
careful to emphasize that reliance thereon is not to be discontinued but that its application
must be limited to minor matters relating more to form and factual issues which do not
materially alter the essence and substance of the law itself. Thus:
As applied to the instant petition, the issue posed is whether or not the procedural
irregularities that attended the passage of House Bill No. 11197 and Senate Bill No.
1630, outside of the reading and printing requirements which were exempted by the
Presidential certification, may no longer be impugned, having been "saved" by the
conclusiveness on us of the enrolled bill. I see no cogent reason why we cannot
continue to place reliance on the enrolled bill, but only with respect to matters
pertaining to the procedure followed in the enactment of bills in Congress and their
subsequent engrossment, printing errors, omission of words and phrases and similar
relatively minor matters relating more to form and factual issues which do not
materially alter the essence and substance of the law itself .
Certainly, courts cannot claim greater ability to judge procedural legitimacy, since
constitutional rules on legislative procedure are easily mastered. Procedural disputes
are over facts whether or not the bill had enough votes, or three readings, or
whatever not over the meaning of the constitution. Legislators, as eyewitnesses,
are in a better position than a court to rule on the facts. The argument is also made
that legislatures would be offended if courts examined legislative procedure.

Page 13 of 557

Such a rationale, however, cannot conceivably apply to substantive changes in a bill

introduced towards the end of its tortuous trip through Congress, catching both
legislators and the public unawares and altering the same beyond recognition even
by its sponsors.
This issue I wish to address forthwith. 4
As regards the principle that the Court is not the proper forum for the enforcement of internal
legislative rules, both the majority and I were actually of one mind such that I was quick to
qualify the extent of the Court's review power in respect of internal procedures in this wise:
I wish to consider this issue in light of Article VIII, Sec. 1 of the Constitution which
provides that "(j)udicial power includes the duty of the courts of justice . . . to
determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government." We are also guided by the principle that a court may interfere with the
internal procedures of its coordinate branch only to uphold the Constitution. 5
I differed, however, from the majority insofar as that principle was applied. In this respect, I
showed that the introduction of several provisions in the Bicameral Conference Committee
Report did not only violate the pertinent House and Senate Rules defining the limited power
of the conference committee but that the Constitutional proscription against any amendment
upon the last reading of a bill was likewise breached. Hence, in view of these lapses, I
thought that judicial review would have been proper in order to uphold the Constitution. This
the majority, however, disregarded invoking the same principle which should have justified
the Court in questioning the actuations of the legislative branch.
At this juncture, I wish to reiterate my continuing adherence to the aforesaid reasons I cited
in the Tolentino dissent. At the same time, I realize that the arguments I raised in my dissent
would not hold true in the instant petition.
For one thing, unlike in Tolentino, the rules of the House of Representatives allegedly
violated by respondents in the instant petition are purely internal rules designed for the
orderly conduct of the House's business. They have no direct or reasonable nexus to the
requirements and proscriptions of the Constitution in the passage of a bill which would
otherwise warrant the Court's intervention. Likewise, the petitioners are not in any way
complaining that substantial alterations have been introduced in Republic Act No. 8240. The
thrust of petitioners' arguments in attacking the validity of the law is merely with respect to
the fact that Rep. Joker Arroyo was effectively prevented from invoking the question of
quorum and not that the substance thereof offends constitutional standards. This being the
case, I do not now feel called upon to invoke my previous argument that the enrolled bill
theory should not be conclusive as regards "substantive changes in a bill introduced towards
the end of its tortuous trip through Congress," when it is palpably unwarranted under the
circumstances of instant petition.
PUNO, J., concurring and dissenting:
I concur in the result. I do appreciate the fine legal disquisition of Mr. Justice Mendoza to
justify the dismissal of the case at bar. Nevertheless, I have to express my views on the
alleged non-justiciability of the issue posed by the petitioner as well as the applicability of the
archaic enroll bill doctrine in light of what I perceive as new wrinkles in our law brought about
by the 1987 Constitution and the winds of changing time.
Page 14 of 557

I
With due respect, I do not agree that the issues posed by the petitioner are non-justiciable.
Nor do I agree that we will trivialize the principle of separation of power if we assume
jurisdiction over the case at bar. Even in the United States, the principle of separation of
power is no longer an impregnable impediment against the interposition of judicial power on
cases involving breach of rules of procedure by legislators.
Rightly, the ponencia uses the 1891 case of US v. Ballin, 1 as a window to view the issues
before the Court. It is in Ballin where the US Supreme Court first defined the boundaries of
the power of the judiciary to review congressional rules. 2 It held:
xxx xxx xxx
The Constitution, in the same section, provides, that "each house may determine the
rules of its proceedings." It appears that in pursuance of this authority the House had,
prior to that day, passed this as one of its rules:
Rule XV
3. On the demand of any member, or at the suggestion of the Speaker, the names of
members sufficient to make a quorum in the hall of the House who do not vote shall
be noted by the clerk and recorded in the journal, and reported to the Speaker with
the names of the members voting, and be counted and announced in determining the
presence of a quorum to do business. (House Journal, 230, Feb. 14, 1890)
The action taken was in direct compliance with this rule. The question, therefore, is
as to the validity of this rule, and not what methods the Speaker may of his own
motion resort to for determining the presence of a quorum, nor what matters the
Speaker or clerk may of their own volition place upon the journal. Neither do the
advantages or disadvantages, the wisdom or folly, of such a rule present any matters
for judicial consideration. With the courts the question is only one of power. The
Constitution empowers each house to determine its rules of proceedings. It may not
by its rules ignore constitutional restraints or violate fundamental rights, and there
should be a reasonable relation between the mode or method of proceedings
established by the rule and the result which is sought to be attained. But within these
limitations all matters of method are open to the determination of the House, and it is
no impeachment of the rule to say that some other way would be better, more
accurate, or even more just. It is no objection to the validity of a rule that a different
one has been prescribed and in force for a length of time. The power to make rules is
not one which once exercised is exhausted. It is a continuous power, always subject
to be exercised by the House, and within the limitations suggested, absolute and
beyond the challenge of any other body or tribunal.
Ballin, clearly confirmed the jurisdiction of courts to pass upon the validity of congressional
rules, i.e., whether they are constitutional. Rule XV was examined by the Court and it was
found to satisfy the test: (1) that it did not ignore any constitutional restraint; (2) it did not
violate any fundamental right; and (3) its method has a reasonable relationship with the
result sought to be attained. By examining Rule XV, the Court did not allow its jurisdiction to
be defeated by the mere invocation of the principle of separation of powers.

Page 15 of 557

Ballin was followed in 1932 by the case of US v. Smith. 3 In Smith, the meaning of sections 3
and 4 of Rule XXXVIII of the US Senate was in issue, viz:
xxx xxx xxx
3. When a nomination is confirmed or rejected, any Senator voting in the majority
may move for a reconsideration on the same day on which the vote was taken, or on
either of the next two days of actual executive session of the Senate; but if a
notification of the confirmation or rejection of a nomination shall have been sent to
the President before the expiration of the time within which a motion to reconsider
may be made, the motion to reconsider shall be accompanied by a motion to request
the President to return such notification to the Senate. Any motion to reconsider the
vote on a nomination may be laid on the table without prejudice to the nomination,
and shall be a final disposition of such motion.
4. Nominations confirmed or rejected by the Senate shall not be returned by the
Secretary to the President until the expiration of the time limited for making a motion
to reconsider the same, or while a motion to reconsider is pending, unless otherwise
ordered by the Senate.
It appears that the nomination of Mr. Smith as member of the Federal Power Commission
has been confirmed by the US Senate. The resolution of confirmation was sent to the US
President who then signed the appointment of Mr. Smith. The Senate, however,
reconsidered the confirmation of Mr. Smith and requested the President to return its
resolution of confirmation. The President refused. A petition for quo warranto was filed
against Mr. Smith. The Court, speaking thru Mr. Justice Brandeis, assumed jurisdiction over
the dispute relying on Ballin. It exercised jurisdiction although "the question primarily at issue
relates to the construction of the applicable rules, not to their constitutionality." Significantly,
the Court rejected the Senate interpretation of its own rules even while it held that it must be
accorded the most sympathetic consideration.
xxx xxx xxx
Sixth. To place upon the standing rules of the Senate a construction different from
that adopted by the Senate itself when the present case was under debate is a
serious and delicate exercise of judicial power. The Constitution commits to the
Senate the power to make its own rules; and it is not the function of the Court to say
that another rule would be better. A rule designed to ensure due deliberation in the
performance of the vital function of advising and consenting to nominations for public
office, moreover, should receive from the Court the most sympathetic consideration.
But the reasons, above stated, against the Senate's construction seem to us
compelling. We are confirmed in the view we have taken by the fact, since the
attempted reconsideration of Smith's confirmation, the Senate itself seems uniformly
to have treated the ordering of immediate notification to the President as tantamount
to authorizing him to proceed to perfect the appointment.
Smith, of course, involves the right of a third person and its ruling falls within the test spelled
out in Ballin.
Smith was followed by the 1948 case of Christoffel v. United States. 4 Christoffel testified
before the Committee on Education and Labor of the House of Representatives. He denied
he was a communist and was charged with perjury in the regular court. He adduced
Page 16 of 557

evidence during the trial that the committee had no quorum when the perjurious statement
was given. Nonetheless, he was convicted in view of the judge's charge to the members of
the jury that to find Christoffel guilty, they had to find beyond a reasonable doubt that
xxx xxx xxx
. . . the defendant Christoffel appeared before a quorum of at least thirteen members
of the said Committee, and that "at least that number must have been actually and
physically present . . . If such a Committee so met, that is, if thirteen members did
meet at the beginning of the afternoon session of March 1, 1947, and thereafter
during the progress of the hearing some of them left temporarily or otherwise and no
question was raised as to the lack of a quorum, then the fact that the majority did not
remain there would not affect, for the purposes of this case, the existence of that
Committee as a competent tribunal provided that before the oath was administered
and before the testimony of the defendant was given there were present as many as
13 members of that Committee at the beginning of the afternoon session . . . .
Christoffel objected to the charge on the ground that it allowed the jury to assume there was
a continuous quorum simply because it was present at the start of the meeting of the
Committee. Under the House rules, a quorum once established is presumed to continue until
the lack of quorum is raised. Again, the court assumed jurisdiction over the case. A majority
of the Court, with Mr. Justice Murphy, as ponente, defined the issue as "what rules the
House had established and whether they have been followed." It held:
xxx xxx xxx
Congressional practice in the transaction of ordinary legislative business is of course
none of our concern, and by the same token the considerations which may lead
Congress as a matter of legislative practice to treat as valid the conduct of its
committees do not control the issue before us. The question is neither what rules
Congress may establish for its own governance, nor whether presumptions of
continuity may protect the validity of its legislative conduct. The question is rather
what rules the House has established and whether they have been followed. It of
course has the power to define what tribunal is competent to exact testimony and the
conditions that establish its competency to do so. The heart of this case is that by the
charge that was given it the jury was allowed to assume that the conditions of
competency were satisfied even though the basis in fact was not established and in
face of a possible finding that the facts contradicted the assumption.
We are measuring a conviction of crime by the statute which defined it. As a
consequence of this conviction, petitioner was sentenced to imprisonment for a term
of from two to six years. An essential part of a procedure which can be said fairly to
inflict such a punishment is that all the elements of the crime charged shall be proved
beyond a reasonable doubt. An element of the crime charged in the instant
indictment is the presence of a competent tribunal, and the trial court properly so
instructed the jury. The House insists that to be such a tribunal a committee must
consist of a quorum, and we agree with the trial court's charge that to convict, the
jury had to be satisfied beyond a reasonable doubt that there were "actually and
physically present" a majority of the committee.
Then to charge, however, that such requirement is satisfied by a finding that there
was a majority present two or three hours before the defendant offered his testimony,
Page 17 of 557

in the face of evidence indicating the contrary, is to rule as a matter of law that a
quorum need not be present when the offense is committed. This not only seems to
us contrary to the rules and practice of the Congress but denies petitioner a
fundamental right. That right is that he be convicted of crime only on proof of all the
elements of the crime charged against him. A tribunal that is not competent is no
tribunal, and it is unthinkable that such a body can be the instrument of criminal
conviction.
The minority complained that the "House has adopted the rule and practice that a quorum
once established is presumed to continue unless and until a point of no quorum is raised. By
this decision, the Court, in effect, invalidates that rule . . . ." The minority view commanded
only the vote of three (3) justices.
The US Supreme Court pursued the same line in 1963 in deciding the case of Yellin v.
United States. 5 Yellin was indicted on five counts of willfully refusing to answer questions put
to him by a sub-committee of the House Committee on Un-American Activities. He was
convicted by the District Court of contempt of Congress on four counts. The conviction was
affirmed by the Court of Appeals for the 7th Circuit. On certiorari, he assailed his conviction
on the ground that the Committee illegally denied his request to be heard in executive
session. He alleged there was a violation of Committee Rule IV which provides that "if a
majority of the Committee or sub-committee, duly appointed as provided by the rules of the
House of Representatives, believes that the interrogation of a witness in a public hearing
might endanger national security or unjustly injure his reputation, or the reputation of other
individuals, the Committee shall interrogate such witness in an executive session for the
purpose of determining the necessity or admissibility of conducting such interrogation
thereafter in a public hearing." in a 5-4 decision, the Court, speaking thru Mr. Chief Justice
Warren, held:
xxx xxx xxx
Yellin should be permitted the same opportunity for judicial review when he discovers
at trial that his rights have been violated. This is especially so when the Committee's
practice leads witnesses to misplaced reliance upon its rules. When reading a copy
of the Committee's rules, which must be distributed to every witness under Rule XVII,
the witness' reasonable expectation is that the Committee actually does what it
purports to do, adhere to its own rules. To foreclose a defense based upon those
rules, simply because the witness was deceived by the Committee's appearance of
regularity, is not fair. The Committee prepared the groundwork for prosecution in
Yellin's case meticulously. It is not too exacting to require that the Committee be
equally meticulous in obeying its own rules.
It additionally bears stressing that in the United States, the judiciary has pruned the "political
thicket." In the benchmark case of Baker v. Carr, 6 the US Supreme Court assumed
jurisdiction to hear a petition for re-apportionment of the Tennessee legislature ruling that
"the political question doctrine, a tool for maintenance of government order, will not be so
applied as to promote only disorder" and that "the courts cannot reject as 'no law suit,' a
bona fide controversy as to whether some action denominated 'political' exceeds
constitutional authority."
In the Philippine setting, there is a more compelling reason for courts to categorically reject
the political question defense when its interposition will cover up abuse of power. For section
1, Article VIII of our Constitution was intentionally cobbled to empower courts ". . . to
Page 18 of 557

determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the government." This
power is new and was not granted to our courts in the 1935 and 1972 Constitutions. It was
not also xeroxed from the US Constitution or any foreign state constitution. The CONCOM
granted this enormous power to our courts in view of our experience under martial law where
abusive exercises of state power were shielded from judicial scrutiny by the misuse of the
political question doctrine. Led by the eminent former Chief Justice Roberto Concepcion, the
CONCOM expanded and sharpened the checking powers of the judiciary vis-a-vis the
Executive and the Legislative departments of government. In cases involving the
proclamation of martial law and suspension of the privilege of habeas corpus, it is now
beyond dubiety that the government can no longer invoke the political question defense.
Section 18 of Article VII completely eliminated this defense when it provided:
xxx xxx xxx
The Supreme Court may review, in an appropriate proceeding filed by any citizen,
the sufficiency of the factual basis of the proclamation of martial law or the
suspension of the privilege of the writ or the extension thereof, and must promulgate
its decision thereon within thirty days from its filing.
A state of martial law does not suspend the operation of the Constitution, nor
supplant the functioning of the civil courts or legislative assemblies, nor authorize the
conferment of jurisdiction on military courts and agencies over civilians where civil
courts are able to function, nor automatically suspend the privilege of the writ.
The CONCOM did not only outlaw the use of the political question defense in national
security cases. To a great degree, it diminished its use as a shield to protect other abuses of
government by allowing courts to penetrate the shield with the new power to review acts of
any branch or instrumentality of the government ". . . to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction." In Tolentino v.
Secretary of Finance, 7 I posited the following postulates:
xxx xxx xxx
Sec. 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government.
Former Chief Justice Roberto R. Concepcion, the sponsor of this provision in the
Constitutional Commission explained the sense and the reach of judicial power as
follows:
xxx xxx xxx
. . . In other words, the judiciary is the final arbiter on the question of
whether or not a branch of government or any of its officials has
acted without jurisdiction or in excess of jurisdiction, or so
capriciously as to constitute an abuse of discretion amounting to
Page 19 of 557

excess of jurisdiction. This is not only a judicial power but a duty to

pass judgment on matters of this nature.
This is the background of paragraph 2 of Section 1, which means that
the courts cannot hereafter evade the duty to settle matters of this
nature, by claiming that such matters constitute political question.
The Constitution cannot be any clearer. What it granted to this Court is not a mere
power which it can decline to exercise. Precisely to deter this disinclination, the
Constitution imposed it as a duty of this Court to strike down any act of a branch or
instrumentality of government or any of its officials done with grave abuse of
discretion amounting to lack or excess of jurisdiction. Rightly or wrongly, the
Constitution has elongated the checking powers of this Court against the other
branches of government despite their more democratic character, the President and
the legislators being elected by the people.
It is, however, theorized that this provision is nothing new. I beg to disagree for the
view misses the significant changes made in our constitutional canvass to cure the
legal deficiencies we discovered during martial law. One of the areas radically
changed by the framers of the 1987 Constitution is the imbalance of power between
and among the three great branches of our government the Executive, the
Legislative and the Judiciary. To upgrade the powers of the Judiciary, the
Constitutional Commission strengthened some more the independence of courts.
Thus, it further protected the security of tenure of the members of the Judiciary by
providing "No law shall be passed reorganizing the Judiciary when it undermines the
security of tenure of its Members." It also guaranteed fiscal autonomy to the
Judiciary.
More, it depoliticalized appointments in the judiciary by creating the Judicial and Bar
Council which was tasked with screening the list of prospective appointees to the
judiciary. The power of confirming appointments to the judiciary was also taken away
from Congress. The President was likewise given a specific time to fill up vacancies
in the judiciary ninety (90) days from the occurrence of the vacancy in case of the
Supreme Court and ninety (90) days from the submission of the list of
recommendees by the Judicial and Bar Council in case of vacancies in the lower
courts. To further insulate appointments in the judiciary from the virus of politics, the
Supreme Court was given the power to "appoint all officials and employees of the
Judiciary in accordance with the Civil Service Law." And to make the separation of
the judiciary from the other branches of government more watertight, it prohibited
members of the judiciary to be ". . . designated to any agency performing quasi
judicial or administrative functions." While the Constitution strengthened the sinews
of the Supreme Court, it reduced the powers of the two other branches of
government, especially the Executive. Notable of the powers of the President clipped
by the Constitution is his power to suspend the writ of habeas corpus and to proclaim
martial law. The exercise of this power is now subject to revocation by Congress.
Likewise, the sufficiency of the factual basis for the exercise of said power may be
reviewed by this Court in an appropriate proceeding filed by any citizen.
The provision defining judicial power as including the "duty of the courts of justice . . .
to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government" constitutes the capstone of the efforts of the Constitutional Commission
Page 20 of 557

to upgrade the powers of this court vis-a-vis the other branches of government. This
provision
was dictated by our experience under martial law which taught us that a stronger and
more independent judiciary is needed to abort abuses in government. . . .
xxx xxx xxx
In sum, I submit that in imposing to this Court the duty to annul acts of government
committed with grave abuse of discretion, the new Constitution transformed this
Court from passivity to activism. This transformation, dictated by our distinct
experience as a nation, is not merely evolutionary but revolutionary. Under the 1935
and 1973 Constitutions, this Court approached constitutional violations by initially
determining what it cannot do; under the 1987 Constitution, there is a shift in stress
this Court is mandated to approach constitutional violations not by finding out what
it should not do but what it must do. The Court must discharge this solemn duty by
not resuscitating a past that petrifies the present.
I urge my brethren in the Court to give due and serious consideration to this new
constitutional provision as the case at bar once more calls us to define the parameters of our
power to review violations of the rules of the House. We will not be true to our trust as the
last bulwark against government abuses if we refuse to exercise this new power or if we
wield it with timidity. To be sure, it is this exceeding timidity to unsheath the judicial sword
that has increasingly emboldened other branches of government to denigrate, if not defy,
orders of our courts. In Tolentino, 8 I endorsed the view of former Senator Salonga that this
novel provision stretching the latitude of judicial power is distinctly Filipino and its
interpretation should not be depreciated by undue reliance on inapplicable foreign
jurisprudence. In resolving the case at bar, the lessons of our own history should provide us
the light and not the experience of foreigners.
II
Again with due respect, I dissent from the majority insofar as it relied on the enrolled bill
doctrine to justify the dismissal of the petition at bar.
An enrolled bill is one which has been duly introduced, finally enacted by both Houses,
signed by the proper officers of each House and approved by the President. 9 It is a
declaration by the two Houses, through their presiding officers, to the President that a bill,
thus attested, has received in due the sanction of the legislative branch of the government,
and that it is delivered to him in obedience to the constitutional requirement that all bills
which pass Congress shall be presented to him.
The enrolled bill originated in England where there is no written Constitution controlling the
legislative branch of the government, and the acts of Parliament, being regarded in their
nature as judicial as emanating from the highest tribunal in the land are placed on the
same footing and regarded with the same veneration as the judgment of the courts which
cannot be collaterally attacked. 10 In England, the conclusiveness of the bill was premised on
the rationale that "an ad of parliament thus made is the exercise of the highest authority that
this kingdom acknowledges upon earth. And it cannot be altered, amended, dispensed with,
suspended or repealed, but in the same forms and by the same authority of parliament; for it
is a maxim in law that it requires the same strength to dissolve as to create an obligation. 11

Page 21 of 557

Over the years, the enrolled bill theory has undergone important mutations. Some
jurisdictions have adopted the modified entry or affirmative contradiction rule. Under this rule,
the presumption in favor of the enrolled bill is not conclusive. The rule concedes validity to
the enrolled bill unless there affirmatively appears in the journals of the legislature a
statement that there has not been compliance with one or more of the constitutional
requirements. 12 Other jurisdictions have adopted the Extrinsic Evidence Rule which holds
that an enrolled bill is only prima facie evidence that it has been regularly enacted. The prima
facie presumption, however, can be destroyed by clear, satisfactory and convincing evidence
that the constitutional requirements in enacting a law have been violated. For this purpose,
journals and other extrinsic evidence are allowed to be received. 13 Some limit the use of
extrinsic evidence to issues of fraud or mistakes. 14
These variants developed after a re-examination of the rationale of the enrolled bill. The
modern rationale for the enrolled bill theory was spelled out in Field v. Clark, 15 viz.:
xxx xxx xxx
The signing by the Speaker of the House of Representatives, and, by the President
of the Senate, in open session, of an enrolled bill, is an official attestation by the two
houses of such bill as one that has passed Congress. It is a declaration by the two
Houses, through their presiding officers, to the President, that a bill, thus attested,
has received, in due form, the sanction of the legislative branch of the government,
and that it is delivered to him in obedience to the constitutional requirement that all
bills which pass Congress shall be presented to him. And when a bill, thus attested,
receives his approval, and is deposited in the public archives, its authentication as a
bill that has passed Congress should be deemed complete and unimpeachable. As
the President has no authority to approve a bill not passed by Congress, an enrolled
Act in the custody of the Secretary of State, and having the official attestations of the
Speaker of the House of Representatives, of the President of the Senate, and of the
President of the United States, carries, on its face, a solemn assurance by the
legislative and executive departments of the government, charged, respectively, with
the duty of enacting and executing the laws, that it was passed by Congress. The
respect due to coequal and independent departments requires the judicial
department to act upon the assurance, and to accept, as having passed Congress,
all bills authenticated in the manner stated; leaving the courts to determine, when the
question properly arises, whether the Act, so authenticated, is in conformity with the
Constitution.
The principle of separation of powers is thus the principal prop of the enrolled bill doctrine.
The doctrine is also justified as a rule of convenience. Supposedly, it avoids difficult
questions of evidence. 16 It is also believed that it will prevent the filing of too many cases
which will cast a cloud of uncertainty on laws passed by the legislature. As explained in Ex
Pacte Wren 17 "if the validity of every act published as law is to be tested by examining its
history, as shown by the journals of the two houses of the legislature, there will be an amount
of litigation, difficulty, and painful uncertainty appalling in its contemplation, and multiplying a
hundredfold the alleged uncertainty of the law." The conclusiveness of the enrolled bill is also
justified on the ground that journals and other extrinsic evidence are conducive to mistake, if
not fraud.
These justifications for the enrolled bill theory have been rejected in various jurisdictions in
the United States. In his Dissenting Opinion in Tolentino v. Secretary of Finance, and its

Page 22 of 557

companion cases, 18 Mr. Justice Regalado cited some of the leading American cases which
discussed the reasons for the withering, if not demise of the enrolled bill theory, viz:
xxx xxx xxx
Even in the land of its source, the so-called conclusive presumption of validity
originally attributed to that doctrine has long been revisited and qualified, if not
altogether rejected. On the competency of judicial inquiry, it has been held that
"(u)nder the "enrolled bill rule" by which an enrolled bill is sole expository of its
contents and conclusive evidence of its existence and valid enactment, it is
nevertheless competent for courts to inquire as to what prerequisites are fixed by the
Constitution of which journals of respective houses of Legislature are required to
furnish the evidence.
In fact, in Gwynn vs. Hardee, etc., et al., the Supreme Court of Florida declared
(1) While the presumption is that the enrolled bill, as signed by the legislative offices
and filed with the secretary of state, is the bill as it passed, yet this presumption is not
conclusive, and when it is shown from the legislative journals that a bill though
engrossed and enrolled, and signed by the legislative officers, contains provisions
that have not passed both houses, such provisions will be held spurious and not a
part of the law. As was said by Mr. Justice Cockrell in the case of Wade vs. Atlantic
Lumber Co., 51 Fla. 628, text 633, 41 So. 72, 73:
This Court is firmly committed to the holding that when the journals
speak they control, and against such proof the enrolled bill is not
conclusive.
More enlightening and apropos to the present controversy is the decision
promulgated on May 13, 1980 by the Supreme Court of Kentucky in D & W Auto
Supply, et al. vs. Department of Revenue, et al., pertinent excerpts wherefrom are
extensively reproduced hereunder.
. . . In arriving at our decision we must, perforce, reconsider the validity of a long line
of decisions of this court which created and nurtured the so-called "enrolled bill"
doctrine.
xxx xxx xxx
[1] Section 46 of the Kentucky Constitution sets out certain procedures that the
legislature must follow before a bill can be considered for final passage. . . .
xxx xxx xxx
. . . Under the enrolled bill doctrine as it now exists in Kentucky, a court may not look
behind such a bill, enrolled and certified by the appropriate officers, to determine if
there are any defects.
xxx xxx xxx

Page 23 of 557

. . . In Lafferty, passage of the law in question violated this provision, yet the bill was
properly enrolled and approved by the governor. In declining to look behind the law
to determine the propriety of its enactment, the court enunciated three reasons for
adopting the enrolled bill rule. First, the court was reluctant to scrutinize the
processes of the legislature, an equal branch of government. Second, reasons of
convenience prevailed, which discouraged requiring the legislature to preserve its
records and anticipated considerable complex litigation if the court ruled otherwise.
Third, the court acknowledged the poor record-keeping abilities of the General
Assembly and expressed a preference for accepting the final bill as enrolled, rather
than opening up the records of the legislature. . . .
xxx xxx xxx
Nowhere has the rule been adopted without reason, or as a result of judicial whim.
There are four historical bases for the doctrine. (1) An enrolled bill was a "record"
and, as such, was not subject to attack at common law. (2) Since the legislature is
one of the three branches of government, the courts, being coequal, must indulge in
every presumption that legislative acts are valid. (3) When the rule was originally
formulated, record-keeping of the legislatures was so inadequate that a balancing of
equities required that the final act, the enrolled bill, be given efficacy. (4) There were
theories of convenience as expressed by the Kentucky court in Lafferty.
The rule is not unanimous in the several states, however and it has not been without
its critics. From an examination of cases and treaties, we can summarize the
criticism as follows: (1) Artificial presumptions, especially conclusive ones, are not
favored. (2) Such a rule frequently (as in the present case) produces results which do
not accord with facts or constitutional provisions. (3) The rule is conducive to fraud,
forgery, corruption and other wrongdoings. (4) Modern automatic and electronic
record-keeping devices now used by legislatures remove one of the original reasons
for the rule. (5) The rule disregards the primary obligation of the courts to seek the
truth and to provide a remedy for a wrong committed by any branch of government.
In light of these considerations, we are convinced that the time has come to reexamine the enrolled bill doctrine.
[2] This court is not unmindful of the admonition of the doctrine of stare decisis. The
maxim is "Stare decisis et non quieta movere," which simply suggests that we stand
by precedents and to disturb settled points of law. Yet, this rule is not inflexible, nor is
it of such a nature as to require perpetuation of error or logic. As we stated in
Daniel's Adm'r v. Hoofnel, 287 Ky 834, 155 S.W.2d 469, 471-72 (1941).
The force of the rule depends upon the nature of the question to be
decided and the extent of the disturbance of rights and practices
which a change in the interpretation of the law or the course of
judicial opinions may create. Cogent considerations are whether
there is clear error and urgent reasons "for neither justice nor wisdom
requires a court to go from one doubtful rule to another," and whether
or not the evils of the principle that has been followed will be more
injurious than can possibly result from a change.
Certainly, when a theory supporting a rule of law is not grounded on facts, or upon
sound logic, or is unjust, or has been discredited by actual experience, it should be
discarded, and with it the rule it supports.
Page 24 of 557

[3] It is clear to us that the major premise of the Lafferty decision, the poor recordkeeping of the legislature, has disappeared. Modern equipment and technology are
the rule in record-keeping by our General Assembly. Tape recorders, electric
typewriters, duplicating machines, recording equipment, printing presses, computers,
electronic voting machines, and the like remove all doubts and fears as to the ability
of the General Assembly to keep accurate and readily accessible records.
It is also apparent that the "convenience" rule is not appropriate in today's modern
and developing judicial philosophy. The fact that the number and complexity of
lawsuits may increase is not persuasive if one is mindful that the overriding purpose
of our judicial system is to discover the truth and see that justice is done. The
existence of difficulties and complexities should not deter this pursuit and we reject
any doctrine or presumption that so provides.
Lastly, we address the premise that the equality of the various branches of
government requires that we shut our eyes to constitutional failing and other errors of
our copartners in government. We simply do not agree. Section 26 of the Kentucky
Constitution provides that any law contrary to the constitution is "void." The proper
exercise of judicial authority requires us to recognize any law which is
unconstitutional and to declare it void. Without elaborating the point, we believe that
under section 228 of the Kentucky Constitution it is our obligation to "support . . . the
Constitution of the commonwealth." We are sworn to see that violations of the
constitution by any person, corporation, state agency or branch or government
are brought to light and corrected. To countenance an artificial rule of law that
silences our voices when confronted with violations of our constitution is not
acceptable to this court.
We believe that a more reasonable rule is the one which Professor Sutherland
describes as the "extrinsic evidence." . . . . Under this approach there is a prima facie
presumption that an enrolled bill is valid, but such presumption may be overcome by
clear, satisfactory and convincing evidence establishing that constitutional
requirements have not been met.
We therefore overrule Lafferty v. Huffman and all other cases following the so-called
enrolled bill doctrine, to the extent that there is no longer a conclusive presumption
that an enrolled bill is valid. . . .
Clearly, the enrolled bill doctrine no longer enjoys its once unassailable respectability in
United States. Sutherland reveals that starting in the 1940's,
". . . the tendency seems to be toward the abandonment of the conclusive presumption rule
and the adoption of the third rule leaving only a prima facie presumption of validity which
may be attacked by any authoritative source of information." 19
It is high time we re-examine our preference for the enrolled bill doctrine. It was in the 1947
case of Mabanag v. Lopez Vito, 20 that this Court, with three (3) justices dissenting, first
embraced the rule that a duly authenticated bill or resolution imports absolute verity and is
binding on the courts. In 1963, we firmed up this ruling in Casco Philippine Chemical Co. v.
Gimenez, 21 thus:
xxx xxx xxx

Page 25 of 557

Hence, "urea formaldehyde" is clearly a finished product which is patently distinct

and different from "urea" and "formaldehyde," as separate articles used in the
manufacture of the synthetic resin known as "urea formaldehyde." Petitioner
contends, however, that the bill approved in Congress contained the copulative
conjunction "and" between the term "urea" and "formaldehyde," and that the
members of Congress intended to exempt "urea" and "formaldehyde" separately as
essential elements in the manufacture of the synthetic resin glue called "urea
formaldehyde," not the latter as a finished product, citing in support of this view the
statements made on the floor of the Senate, during the consideration of the bill
before said House, by members thereof. But said individual statements do not
necessarily reflect the view of the Senate. Much less do they indicate the intent of the
House of Representatives (see Song Kiat Chocolate Factory vs. Central Bank, 54 Off
Gaz. 615; Mayor Motors Inc. vs. Acting Commissioner of Internal Revenue, L-15000
[March 29, 1961]; Manila Jockey Club, Inc. vs. Games and Amusement Board, L12727 [February 19, 1960]). Furthermore, it is well settled that enrolled bill which
uses the term "urea formaldehyde" instead of "urea and formaldehyde" conclusive
upon the courts as regards the tenor of the measure passed by Congress and
approved by the President (Primicias vs. Paredes, 61 Phil. 118, 120; Mabanag vs.
Lopez Vito, 78 Phil. 1; Macias vs. Comm. on Elections, L-18684, Sept. 14, 1961). If
there has been any mistake in the printing of the bill before it was certified by the
officers of Congress and approved by the Executive on which we cannot
speculate without jeopardizing the principle of separation of powers and undermining
one of the cornerstones of our democratic system the remedy is by amendment or
curative legislation, not by judicial decree.
In the 1969 case of Morales v. Subido, 22 we reiterated our fidelity to the enrolled bill
doctrine, viz:
. . . . We cannot go behind the enrolled Act to discover what really happened. The
respect due to the other branches of the Government demands that we act upon the
faith and credit of what the officers of the said branches attest to as the official acts of
their respective departments. Otherwise we would be cast in the unenviable and
unwanted role of a sleuth trying to determine what actually did happen in the
labyrinth of law-making, with consequent impairment of the integrity of the legislative
process. The investigation which the petitioner would like this Court to make can be
better done in Congress. After all, House cleaning the immediate and imperative
need for which seems to be suggested by the petitioner can best be effected by
the occupants thereof. Expressed elsewise, this is a matter worthy of the attention
not of an Oliver Wendell Holmes but of a Sherlock Holmes.
Significantly, however, Morales diluted the conclusiveness rule of the enrolled bill doctrine.
The ponencia stressed:
By what we have essayed above we are not of course to be understood as holding
that in all cases the journals must yield to the enrolled bill. To be sure there are
certain matters which the Constitution expressly requires must be entered on the
journal of each house. To what extent the validity of a legislative act may be affected
by a failure to have such matters entered on the journal, is a question which we do
not now decide. All we hold is that with respect to matters not expressly required to
be entered on the journal, the enrolled bill prevails in the event of any discrepancy.

Page 26 of 557

In the 1974 case of Astorga v. Villegas, 23 we further diluted the enrolled bill doctrine when
we refused to apply it after the Senate President declared his signature on the bill as invalid.
We ruled:
xxx xxx xxx
Petitioner's argument that the attestation of the presiding offices of Congress is
conclusive proof of a bill's due enactment, required, it is said, by the respect due to a
co-equal department of the government, is neutralized in this case by the fact that
the Senate President declared his signature on the bill to be invalid and issued a
subsequent clarification that the invalidation for his signature meant that the bill he
had signed had never been approved by the Senate. Obviously this declaration
should be accorded even greater respect than the attestation it invalidated, which it
did for a reason that is undisputed in fact and indisputable in logic.
As far as Congress itself is concerned, there is nothing sacrosanct in the certification
made by the presiding officers. It is merely a mode of authentication. The law-making
process in Congress ends when the bill is approved by both Houses, and the
certification does not add to the validity of the bill or cure any defect already present
upon its passage. In other words it is the approval by Congress and not the
signatures of the presiding officers that is essential. Thus the (1935) Constitution
says that "[e]very bill passed by the Congress shall, before it becomes law, be
presented to the President." In Brown vs. Morris, supra, the Supreme Court of
Missouri, interpreting a similar provision in the State Constitution, said that the same
"makes it clear that the indispensable step is the final passage and it follows that if a
bill, otherwise fully enacted as a law, is not attested by the presiding officer, the proof
that it has 'passed both houses' will satisfy the constitutional requirement.
Petitioner agrees that the attestation in the bill is not mandatory but argues that the
disclaimer thereof by the Senate President, granting it to have been validly made,
would only mean that there was no attestation at all, but would not affect the validity
of the statute. Hence, it is pointed out, Republic Act No. 4065 would remain valid and
binding. This argument begs the issue. It would limit the court's inquiry to the
presence or absence of the attestation and to the effect of its absence upon the
validity of the statute. The inquiry, however, goes farther. Absent such attestation as
a result of the disclaimer, and consequently there being no enrolled bill to speak of,
what evidence is there to determine whether or not the bill had been duly enacted. In
such a case the entries in the journal should be consulted.
The journal of the proceedings of each House of Congress is no ordinary record. The
Constitution requires it. While it is true that the journal is not authenticated and is
subject to the risk of misprinting and other errors, the point is irrelevant in this case.
This Court is merely asked to inquire whether the text of House Bill No. 9266 signed
by the Chief Executive was the same text passed by both Houses of Congress.
Under the specific facts and circumstances of this case, this Court can do this and
resort to the Senate journal for the purpose. The journal discloses that substantial
and lengthy amendments were introduced on the floor and approved by the Senate
but were not incorporated in the printed text sent to the President and signed by him.
This Court is not asked to incorporate such amendments into the alleged law, which
admittedly is a risky undertaking, but to declare that the bill was not duly enacted and
therefore did not become law. This We do, as indeed both the President of the
Senate and the Chief Executive did, when they withdrew their signatures therein. In
Page 27 of 557

the face of the manifest error committed and subsequently rectified by the President
of the Senate and by the Chief Executive, for this Court to perpetuate that error by
disregarding such rectification and holding that the erroneous bill has become law
would be to sacrifice truth to fiction and bring about mischievous consequences not
intended by the law-making body.
In 1993, the enrolled bill doctrine was again used as a secondary rationale in the case of
Philippine Judges Association v. Prado, 24 In this case, the judges claimed that the pertinent
part of section 35 of R.A. No. 7354 repealing the franking privilege of the judiciary appeared
only in the Conference Committee Report. In rejecting this contention, this Court ruled:
While it is true that a conference committee is the mechanism for compromising
differences between the Senate and the House, it is not limited in its jurisdiction to
this question. Its broader function is described thus:
A conference committee may deal generally with the subject matter
or it may be limited to resolving the precise differences between the
two houses. Even where the conference committee is not by rule
limited in its jurisdiction, legislative custom severely limits the freedom
with which new subject matter can be inserted into the conference
bill. But occasionally a conference committee produces unexpected
results, results beyond its mandate. These excursions occur even
where the rules impose strict limitations on conference committee
jurisdiction. This is symptomatic of the authoritarian power of
conference committee (Davies, Legislative Law and Process: In a
Nutshell, 1986 Ed., p. 81).
It is a matter of record that the Conference Committee Report on the bill in question
was returned to and duly approved by both the Senate and the House of
Representatives. Thereafter, the bill was enrolled with its certification by Senate
President Neptali A. Gonzales and Speaker Ramon V. Mitra of the House of
Representatives as having been duly passed by both Houses of Congress. It was
then presented to and approved by President Corazon C. Aquino on April 3, 1992.
Under the doctrine of separation of powers, the Court may not inquire beyond the
certification of the approval of a bill from the presiding officers of Congress. Casco
Philippine Chemical Co. v. Gimenez laid down the rule that the enrolled bill is
conclusive upon the Judiciary (except in matters that have to be entered in the
journals like the yeas and nays on the final reading of the bill). The journals are
themselves also binding on the Supreme Court, as we held in the old (but stills valid)
case of U.S. vs. Pens, where we explained the reason thus:
To inquire into the veracity of the journals of the Philippine legislature
when they are, as we have said, clear and explicit, would be to violate
both the letter and spirit of the organic laws by which the Philippine
Government was brought into existence, to invade a coordinate and
independent department of the Government, and to interfere with the
legitimate powers and functions of the Legislature.
Applying these principles, we shall decline to look into the petitioners' charges that an
amendment was made upon the last reading of the bill that eventually became R.A.
No. 7354 and that copies thereof in its final form were not distributed among the
Page 28 of 557

members of each House. Both the enrolled bill and the legislative journals certify that
the measure was duly enacted i.e., in accordance with the Article VI, Sec. 26(2) of
the Constitution. We are bound by such official assurances from a coordinate
department of the government, to which we owe, at the very least, a becoming
courtesy.
Finally in 1994 came the case of Tolentino v. Secretary of Finance, et al and its companion
cases. 25 Involved in the case was the constitutionality of R.A. No. 7716, otherwise known as
the Expanded Value Added Tax Law. The majority 26 partly relied on the enrolled bill doctrine
in dismissing challenges to the constitutionality of R.A. No. 7716. It held:
xxx xxx xxx
Fourth. Whatever doubts there may be as to the formal validity of Republic Act No.
7716 must be resolved in its favor. Our cases manifest firm adherence to the rule
that an enrolled copy of a bill is conclusive not only of its provisions but also of its
due enactment. Not even claims that a proposed constitutional amendment was
invalid because the requisite votes for its approval had not been obtained or that
certain provisions of a statute had been "smuggled" in the printing of the bill have
moved or persuaded us to look behind the proceedings of a coequal branch of the
government. There is no reason now to depart from this rule.
No claim is here made that the "enrolled bill" rule is absolute. In fact in one case we
"went behind" an enrolled bill and consulted the Journal to determine whether certain
provisions of a statute had been approved by the Senate in view of the fad that the
President of the Senate himself, who had signed the enrolled bill, admitted a mistake
and withdrew his signature, so that in effect there was no longer an enrolled bill to
consider.
But where allegations that the constitutional procedures for the passage of bills have
not been observed have no more basis than another allegation that the Conference
Committee "surreptitiously" inserted provisions into a bill which it had prepared, we
should decline the invitation to go behind the enrolled copy of the bill. To disregard
the "enrolled bill" rule in such cases would be to disregard the respect due the other
two departments of our government.
These cases show that we have not blindly accepted the conclusiveness of the enrolled bill.
Even in Tolentino, Mr. Justice Mendoza was cautious enough to hold that "no claim is here
made that the enrolled bill is absolute." I respectfully submit that it is now time for the Court
to make a definitive pronouncement that we no longer give our unqualified support to the
enrolled bill doctrine. There are compelling reasons for this suggested change in stance. For
one, the enrolled bill is appropriate only in England where it originated because in England
there is no written Constitution and the Parliament is supreme. For another, many of the
courts in the United States have broken away from the rigidity and unrealism of the enrolled
bill in light of contemporary developments in lawmaking. 27 And more important, our uncritical
adherence to the enrolled bill is inconsistent with our Constitution, laws and rules. In
Mabanag, 28 we relied on section 313 of the Old Code of Civil Procedure as amended by Act
No. 2210 as a principal reason in embracing the enrolled bill. This section, however has long
been repealed by our Rules of Court. A half glance at our Rules will show that its section on
conclusive presumption does not carry the conclusive presumption we give to an enrolled
bill. But this is not all. The conclusiveness of an enrolled bill which all too often results in the
suppression of truth cannot be justified under the 1987 Constitution. The Preamble of our
Page 29 of 557

Constitution demands that we live not only under a rule of law but also under a regime of
truth. Our Constitution also adopted a national policy 29 requiring full public disclosure of all
state transactions involving public interest. Any rule which will defeat this policy on
transparency ought to be disfavored. And to implement these policies, this Court was given
the power to pry open and to strike down any act of any branch or instrumentality of
government if it amounts to grave abuse of discretion amounting to lack or excess of
jurisdiction. It is time to bury the enrolled bill for its fiction of conclusiveness shuts off truth in
many litigations. We cannot dispense justice based on fiction for the search for justice is the
search for truth. I submit that giving an enrolled bill a mere prima facie presumption of
correctness will facilitate our task of dispensing justice based on truth.
III
In sum, I respectfully submit that the Court has jurisdiction over the petition at bar and that
issues posed by petitioner are justiciable. Nonetheless, I do not find any grave abuse of
discretion committed by the public respondents to justify granting said petition. As the
ponencia points out, the petition merely involves the complaint that petitioner was prevented
from raising the question of quorum. The petition does not concern violation of any rule
mandated by the Constitution. Nor does it involve the right of a non-member of the House
which requires constitutional protection. The rules on how to question the existence of a
quorum are procedural in character. They are malleable by nature for they were drafted to
help the House enact laws. As well stated, these rules are servants, not masters of the
House. Their observance or non-observance is a matter of judgment call on the part of our
legislators and it is not the business of the Court to reverse this judgment when untainted by
grave abuse of discretion amounting to lack or excess of jurisdiction.
Davide, Jr., J., concurs.

Separate Opinions
VITUG, J., concurring:
When the 1987 Constitution has embodied, in its circumscription of judicial power under
Section 1, Article VIII, of the Constitution, the determination of whether or not there is grave
abuse of discretion on the part of any branch or instrumentality of government, the Supreme
Court, upon which that great burden has been imposed, could not have been thought of as
likewise being thereby tasked with the awesome responsibility of overseeing the entire
bureaucracy. The term grave abuse of discretion has long been understood in our
jurisprudence as, and confined to, a capricious and whimsical or despotic exercise of
judgment as amounting to lack or excess of jurisdiction.
I see nothing of that sort in the case at bar. Absent a clear case of grave abuse of discretion,
like the patent disregard of a Constitutional proscription, I would respect the judgment of
Congress under whose province the specific responsibility falls and the authority to act is
vested. To do otherwise would be an unwarranted intrusion into the internal affairs of a coequal, independent and coordinate branch of government. At no time, it would seem to me,
has it been intended by the framers of the fundamental law to cause a substantial deviation,
let alone departure, from the time-honored and accepted principle of separation, but
balanced, powers of the three branches of government. There is, of course, a basic variant
between the old rule and the new Charter on the understanding of the term "judicial power."
Page 30 of 557

Now, the Court is under mandate to assume jurisdiction over, and to undertake judicial
inquiry into, what may even be deemed to be political questions provided, however, that
grave abuse of discretion the sole test of justiciability on purely political issues is shown
to have attended the contested act.
All taken, I most humbly reiterate my separate opinion in Tolentino vs. Secretary of Finance
and companion cases (G.R. No. 115455, etc., 235 SCRA 630) and vote to deny the instant
petition.
ROMERO, J., separate opinion:
In filing this separate opinion for the dismissal of the instant petition, I am not backtracking
from the dissent which I expressed in Tolentino v. Secretary of Finance. 1 I am somewhat
bothered that if I do not elaborate, the vote which I cast today might be wrongly construed as
an implied abandonment of, and inconsistent with, my firm stance in Tolentino.
The landmark case of Tolentino, just like the one under consideration, involved a similar
challenge to the constitutionality of a significant tax measure namely, Republic Act No. 7716,
otherwise known as the Expanded Value-Added Tax (EVAT) Law. There, a number of
issues, both substantive and procedural, were posed by petitioners, each of which was
discussed by the majority opinion of Mr. Justice Vicente V. Mendoza who, incidentally, is
also the ponente of instant decision. At any rate, it is worth noting that I did not entirely
disagree with each and every argument of the opinion, most especially those touching upon
substantive issues. My main objection in Tolentino, it will be recalled, focused instead on
what I perceived was a substantial breach and disregard by the Legislature of vital
constitutional requirements ordaining the procedures to be followed in the passage of a bill
which, in my opinion, the majority seemed to have cavalierly put to rest by hiding under the
cloak of the enrolled bill theory 2 and the precept that the Court is not the proper forum for
the enforcement of internal legislative rules allegedly violated. 3 To me, the position then
taken by the majority exhibited blind adherence to otherwise sound principles of law which
did not, however, fit the facts as presented before the Court. Hence, I objected, not so much
because I found these principles unwise or obsolete, but rather because they were applied,
or misapplied, to a case which I believe did not call for their application.
When I differed from the majority opinion which applied the enrolled bill theory, I was very
careful to emphasize that reliance thereon is not to be discontinued but that its application
must be limited to minor matters relating more to form and factual issues which do not
materially alter the essence and substance of the law itself. Thus:
As applied to the instant petition, the issue posed is whether or not the procedural
irregularities that attended the passage of House Bill No. 11197 and Senate Bill No.
1630, outside of the reading and printing requirements which were exempted by the
Presidential certification, may no longer be impugned, having been "saved" by the
conclusiveness on us of the enrolled bill. I see no cogent reason why we cannot
continue to place reliance on the enrolled bill, but only with respect to matters
pertaining to the procedure followed in the enactment of bills in Congress and their
subsequent engrossment, printing errors, omission of words and phrases and similar
relatively minor matters relating more to form and factual issues which do not
materially alter the essence and substance of the law itself .
Certainly, courts cannot claim greater ability to judge procedural legitimacy, since
constitutional rules on legislative procedure are easily mastered. Procedural disputes
Page 31 of 557

are over facts whether or not the bill had enough votes, or three readings, or
whatever not over the meaning of the constitution. Legislators, as eyewitnesses,
are in a better position than a court to rule on the facts. The argument is also made
that legislatures would be offended if courts examined legislative procedure.
Such a rationale, however, cannot conceivably apply to substantive changes in a bill
introduced towards the end of its tortuous trip through Congress, catching both
legislators and the public unawares and altering the same beyond recognition even
by its sponsors.
This issue I wish to address forthwith. 4
As regards the principle that the Court is not the proper forum for the enforcement of internal
legislative rules, both the majority and I were actually of one mind such that I was quick to
qualify the extent of the Court's review power in respect of internal procedures in this wise:
I wish to consider this issue in light of Article VIII, Sec. 1 of the Constitution which
provides that "(j)udicial power includes the duty of the courts of justice . . . to
determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government." We are also guided by the principle that a court may interfere with the
internal procedures of its coordinate branch only to uphold the Constitution. 5
I differed, however, from the majority insofar as that principle was applied. In this respect, I
showed that the introduction of several provisions in the Bicameral Conference Committee
Report did not only violate the pertinent House and Senate Rules defining the limited power
of the conference committee but that the Constitutional proscription against any amendment
upon the last reading of a bill was likewise breached. Hence, in view of these lapses, I
thought that judicial review would have been proper in order to uphold the Constitution. This
the majority, however, disregarded invoking the same principle which should have justified
the Court in questioning the actuations of the legislative branch.
At this juncture, I wish to reiterate my continuing adherence to the aforesaid reasons I cited
in the Tolentino dissent. At the same time, I realize that the arguments I raised in my dissent
would not hold true in the instant petition.
For one thing, unlike in Tolentino, the rules of the House of Representatives allegedly
violated by respondents in the instant petition are purely internal rules designed for the
orderly conduct of the House's business. They have no direct or reasonable nexus to the
requirements and proscriptions of the Constitution in the passage of a bill which would
otherwise warrant the Court's intervention. Likewise, the petitioners are not in any way
complaining that substantial alterations have been introduced in Republic Act No. 8240. The
thrust of petitioners' arguments in attacking the validity of the law is merely with respect to
the fact that Rep. Joker Arroyo was effectively prevented from invoking the question of
quorum and not that the substance thereof offends constitutional standards. This being the
case, I do not now feel called upon to invoke my previous argument that the enrolled bill
theory should not be conclusive as regards "substantive changes in a bill introduced towards
the end of its tortuous trip through Congress," when it is palpably unwarranted under the
circumstances of instant petition.
PUNO, J., concurring and dissenting:

Page 32 of 557

I concur in the result. I do appreciate the fine legal disquisition of Mr. Justice Mendoza to
justify the dismissal of the case at bar. Nevertheless, I have to express my views on the
alleged non-justiciability of the issue posed by the petitioner as well as the applicability of the
archaic enroll bill doctrine in light of what I perceive as new wrinkles in our law brought about
by the 1987 Constitution and the winds of changing time.
I
With due respect, I do not agree that the issues posed by the petitioner are non-justiciable.
Nor do I agree that we will trivialize the principle of separation of power if we assume
jurisdiction over the case at bar. Even in the United States, the principle of separation of
power is no longer an impregnable impediment against the interposition of judicial power on
cases involving breach of rules of procedure by legislators.
Rightly, the ponencia uses the 1891 case of US v. Ballin, 1 as a window to view the issues
before the Court. It is in Ballin where the US Supreme Court first defined the boundaries of
the power of the judiciary to review congressional rules. 2 It held:
xxx xxx xxx
The Constitution, in the same section, provides, that "each house may determine the
rules of its proceedings." It appears that in pursuance of this authority the House had,
prior to that day, passed this as one of its rules:
Rule XV
3. On the demand of any member, or at the suggestion of the Speaker, the names of
members sufficient to make a quorum in the hall of the House who do not vote shall
be noted by the clerk and recorded in the journal, and reported to the Speaker with
the names of the members voting, and be counted and announced in determining the
presence of a quorum to do business. (House Journal, 230, Feb. 14, 1890)
The action taken was in direct compliance with this rule. The question, therefore, is
as to the validity of this rule, and not what methods the Speaker may of his own
motion resort to for determining the presence of a quorum, nor what matters the
Speaker or clerk may of their own volition place upon the journal. Neither do the
advantages or disadvantages, the wisdom or folly, of such a rule present any matters
for judicial consideration. With the courts the question is only one of power. The
Constitution empowers each house to determine its rules of proceedings. It may not
by its rules ignore constitutional restraints or violate fundamental rights, and there
should be a reasonable relation between the mode or method of proceedings
established by the rule and the result which is sought to be attained. But within these
limitations all matters of method are open to the determination of the House, and it is
no impeachment of the rule to say that some other way would be better, more
accurate, or even more just. It is no objection to the validity of a rule that a different
one has been prescribed and in force for a length of time. The power to make rules is
not one which once exercised is exhausted. It is a continuous power, always subject
to be exercised by the House, and within the limitations suggested, absolute and
beyond the challenge of any other body or tribunal.
Ballin, clearly confirmed the jurisdiction of courts to pass upon the validity of congressional
rules, i.e., whether they are constitutional. Rule XV was examined by the Court and it was
Page 33 of 557

found to satisfy the test: (1) that it did not ignore any constitutional restraint; (2) it did not
violate any fundamental right; and (3) its method has a reasonable relationship with the
result sought to be attained. By examining Rule XV, the Court did not allow its jurisdiction to
be defeated by the mere invocation of the principle of separation of powers.
Ballin was followed in 1932 by the case of US v. Smith. 3 In Smith, the meaning of sections 3
and 4 of Rule XXXVIII of the US Senate was in issue, viz:
xxx xxx xxx
3. When a nomination is confirmed or rejected, any Senator voting in the majority
may move for a reconsideration on the same day on which the vote was taken, or on
either of the next two days of actual executive session of the Senate; but if a
notification of the confirmation or rejection of a nomination shall have been sent to
the President before the expiration of the time within which a motion to reconsider
may be made, the motion to reconsider shall be accompanied by a motion to request
the President to return such notification to the Senate. Any motion to reconsider the
vote on a nomination may be laid on the table without prejudice to the nomination,
and shall be a final disposition of such motion.
4. Nominations confirmed or rejected by the Senate shall not be returned by the
Secretary to the President until the expiration of the time limited for making a motion
to reconsider the same, or while a motion to reconsider is pending, unless otherwise
ordered by the Senate.
It appears that the nomination of Mr. Smith as member of the Federal Power Commission
has been confirmed by the US Senate. The resolution of confirmation was sent to the US
President who then signed the appointment of Mr. Smith. The Senate, however,
reconsidered the confirmation of Mr. Smith and requested the President to return its
resolution of confirmation. The President refused. A petition for quo warranto was filed
against Mr. Smith. The Court, speaking thru Mr. Justice Brandeis, assumed jurisdiction over
the dispute relying on Ballin. It exercised jurisdiction although "the question primarily at issue
relates to the construction of the applicable rules, not to their constitutionality." Significantly,
the Court rejected the Senate interpretation of its own rules even while it held that it must be
accorded the most sympathetic consideration.
xxx xxx xxx
Sixth. To place upon the standing rules of the Senate a construction different from
that adopted by the Senate itself when the present case was under debate is a
serious and delicate exercise of judicial power. The Constitution commits to the
Senate the power to make its own rules; and it is not the function of the Court to say
that another rule would be better. A rule designed to ensure due deliberation in the
performance of the vital function of advising and consenting to nominations for public
office, moreover, should receive from the Court the most sympathetic consideration.
But the reasons, above stated, against the Senate's construction seem to us
compelling. We are confirmed in the view we have taken by the fact, since the
attempted reconsideration of Smith's confirmation, the Senate itself seems uniformly
to have treated the ordering of immediate notification to the President as tantamount
to authorizing him to proceed to perfect the appointment.

Page 34 of 557

Smith, of course, involves the right of a third person and its ruling falls within the test spelled
out in Ballin.
Smith was followed by the 1948 case of Christoffel v. United States. 4 Christoffel testified
before the Committee on Education and Labor of the House of Representatives. He denied
he was a communist and was charged with perjury in the regular court. He adduced
evidence during the trial that the committee had no quorum when the perjurious statement
was given. Nonetheless, he was convicted in view of the judge's charge to the members of
the jury that to find Christoffel guilty, they had to find beyond a reasonable doubt that
xxx xxx xxx
. . . the defendant Christoffel appeared before a quorum of at least thirteen members
of the said Committee, and that "at least that number must have been actually and
physically present . . . If such a Committee so met, that is, if thirteen members did
meet at the beginning of the afternoon session of March 1, 1947, and thereafter
during the progress of the hearing some of them left temporarily or otherwise and no
question was raised as to the lack of a quorum, then the fact that the majority did not
remain there would not affect, for the purposes of this case, the existence of that
Committee as a competent tribunal provided that before the oath was administered
and before the testimony of the defendant was given there were present as many as
13 members of that Committee at the beginning of the afternoon session . . . .
Christoffel objected to the charge on the ground that it allowed the jury to assume there was
a continuous quorum simply because it was present at the start of the meeting of the
Committee. Under the House rules, a quorum once established is presumed to continue until
the lack of quorum is raised. Again, the court assumed jurisdiction over the case. A majority
of the Court, with Mr. Justice Murphy, as ponente, defined the issue as "what rules the
House had established and whether they have been followed." It held:
xxx xxx xxx
Congressional practice in the transaction of ordinary legislative business is of course
none of our concern, and by the same token the considerations which may lead
Congress as a matter of legislative practice to treat as valid the conduct of its
committees do not control the issue before us. The question is neither what rules
Congress may establish for its own governance, nor whether presumptions of
continuity may protect the validity of its legislative conduct. The question is rather
what rules the House has established and whether they have been followed. It of
course has the power to define what tribunal is competent to exact testimony and the
conditions that establish its competency to do so. The heart of this case is that by the
charge that was given it the jury was allowed to assume that the conditions of
competency were satisfied even though the basis in fact was not established and in
face of a possible finding that the facts contradicted the assumption.
We are measuring a conviction of crime by the statute which defined it. As a
consequence of this conviction, petitioner was sentenced to imprisonment for a term
of from two to six years. An essential part of a procedure which can be said fairly to
inflict such a punishment is that all the elements of the crime charged shall be proved
beyond a reasonable doubt. An element of the crime charged in the instant
indictment is the presence of a competent tribunal, and the trial court properly so
instructed the jury. The House insists that to be such a tribunal a committee must
Page 35 of 557

consist of a quorum, and we agree with the trial court's charge that to convict, the
jury had to be satisfied beyond a reasonable doubt that there were "actually and
physically present" a majority of the committee.
Then to charge, however, that such requirement is satisfied by a finding that there
was a majority present two or three hours before the defendant offered his testimony,
in the face of evidence indicating the contrary, is to rule as a matter of law that a
quorum need not be present when the offense is committed. This not only seems to
us contrary to the rules and practice of the Congress but denies petitioner a
fundamental right. That right is that he be convicted of crime only on proof of all the
elements of the crime charged against him. A tribunal that is not competent is no
tribunal, and it is unthinkable that such a body can be the instrument of criminal
conviction.
The minority complained that the "House has adopted the rule and practice that a quorum
once established is presumed to continue unless and until a point of no quorum is raised. By
this decision, the Court, in effect, invalidates that rule . . . ." The minority view commanded
only the vote of three (3) justices.
The US Supreme Court pursued the same line in 1963 in deciding the case of Yellin v.
United States. 5 Yellin was indicted on five counts of willfully refusing to answer questions put
to him by a sub-committee of the House Committee on Un-American Activities. He was
convicted by the District Court of contempt of Congress on four counts. The conviction was
affirmed by the Court of Appeals for the 7th Circuit. On certiorari, he assailed his conviction
on the ground that the Committee illegally denied his request to be heard in executive
session. He alleged there was a violation of Committee Rule IV which provides that "if a
majority of the Committee or sub-committee, duly appointed as provided by the rules of the
House of Representatives, believes that the interrogation of a witness in a public hearing
might endanger national security or unjustly injure his reputation, or the reputation of other
individuals, the Committee shall interrogate such witness in an executive session for the
purpose of determining the necessity or admissibility of conducting such interrogation
thereafter in a public hearing." in a 5-4 decision, the Court, speaking thru Mr. Chief Justice
Warren, held:
xxx xxx xxx
Yellin should be permitted the same opportunity for judicial review when he discovers
at trial that his rights have been violated. This is especially so when the Committee's
practice leads witnesses to misplaced reliance upon its rules. When reading a copy
of the Committee's rules, which must be distributed to every witness under Rule XVII,
the witness' reasonable expectation is that the Committee actually does what it
purports to do, adhere to its own rules. To foreclose a defense based upon those
rules, simply because the witness was deceived by the Committee's appearance of
regularity, is not fair. The Committee prepared the groundwork for prosecution in
Yellin's case meticulously. It is not too exacting to require that the Committee be
equally meticulous in obeying its own rules.
It additionally bears stressing that in the United States, the judiciary has pruned the "political
thicket." In the benchmark case of Baker v. Carr, 6 the US Supreme Court assumed
jurisdiction to hear a petition for re-apportionment of the Tennessee legislature ruling that
"the political question doctrine, a tool for maintenance of government order, will not be so
applied as to promote only disorder" and that "the courts cannot reject as 'no law suit,' a
Page 36 of 557

bona fide controversy as to whether some action denominated 'political' exceeds

constitutional authority."
In the Philippine setting, there is a more compelling reason for courts to categorically reject
the political question defense when its interposition will cover up abuse of power. For section
1, Article VIII of our Constitution was intentionally cobbled to empower courts ". . . to
determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the government." This
power is new and was not granted to our courts in the 1935 and 1972 Constitutions. It was
not also xeroxed from the US Constitution or any foreign state constitution. The CONCOM
granted this enormous power to our courts in view of our experience under martial law where
abusive exercises of state power were shielded from judicial scrutiny by the misuse of the
political question doctrine. Led by the eminent former Chief Justice Roberto Concepcion, the
CONCOM expanded and sharpened the checking powers of the judiciary vis-a-vis the
Executive and the Legislative departments of government. In cases involving the
proclamation of martial law and suspension of the privilege of habeas corpus, it is now
beyond dubiety that the government can no longer invoke the political question defense.
Section 18 of Article VII completely eliminated this defense when it provided:
xxx xxx xxx
The Supreme Court may review, in an appropriate proceeding filed by any citizen,
the sufficiency of the factual basis of the proclamation of martial law or the
suspension of the privilege of the writ or the extension thereof, and must promulgate
its decision thereon within thirty days from its filing.
A state of martial law does not suspend the operation of the Constitution, nor
supplant the functioning of the civil courts or legislative assemblies, nor authorize the
conferment of jurisdiction on military courts and agencies over civilians where civil
courts are able to function, nor automatically suspend the privilege of the writ.
The CONCOM did not only outlaw the use of the political question defense in national
security cases. To a great degree, it diminished its use as a shield to protect other abuses of
government by allowing courts to penetrate the shield with the new power to review acts of
any branch or instrumentality of the government ". . . to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction." In Tolentino v.
Secretary of Finance, 7 I posited the following postulates:
xxx xxx xxx
Sec. 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government.
Former Chief Justice Roberto R. Concepcion, the sponsor of this provision in the
Constitutional Commission explained the sense and the reach of judicial power as
follows:

Page 37 of 557

xxx xxx xxx

. . . In other words, the judiciary is the final arbiter on the question of
whether or not a branch of government or any of its officials has
acted without jurisdiction or in excess of jurisdiction, or so
capriciously as to constitute an abuse of discretion amounting to
excess of jurisdiction. This is not only a judicial power but a duty to
pass judgment on matters of this nature.
This is the background of paragraph 2 of Section 1, which means that
the courts cannot hereafter evade the duty to settle matters of this
nature, by claiming that such matters constitute political question.
The Constitution cannot be any clearer. What it granted to this Court is not a mere
power which it can decline to exercise. Precisely to deter this disinclination, the
Constitution imposed it as a duty of this Court to strike down any act of a branch or
instrumentality of government or any of its officials done with grave abuse of
discretion amounting to lack or excess of jurisdiction. Rightly or wrongly, the
Constitution has elongated the checking powers of this Court against the other
branches of government despite their more democratic character, the President and
the legislators being elected by the people.
It is, however, theorized that this provision is nothing new. I beg to disagree for the
view misses the significant changes made in our constitutional canvass to cure the
legal deficiencies we discovered during martial law. One of the areas radically
changed by the framers of the 1987 Constitution is the imbalance of power between
and among the three great branches of our government the Executive, the
Legislative and the Judiciary. To upgrade the powers of the Judiciary, the
Constitutional Commission strengthened some more the independence of courts.
Thus, it further protected the security of tenure of the members of the Judiciary by
providing "No law shall be passed reorganizing the Judiciary when it undermines the
security of tenure of its Members." It also guaranteed fiscal autonomy to the
Judiciary.
More, it depoliticalized appointments in the judiciary by creating the Judicial and Bar
Council which was tasked with screening the list of prospective appointees to the
judiciary. The power of confirming appointments to the judiciary was also taken away
from Congress. The President was likewise given a specific time to fill up vacancies
in the judiciary ninety (90) days from the occurrence of the vacancy in case of the
Supreme Court and ninety (90) days from the submission of the list of
recommendees by the Judicial and Bar Council in case of vacancies in the lower
courts. To further insulate appointments in the judiciary from the virus of politics, the
Supreme Court was given the power to "appoint all officials and employees of the
Judiciary in accordance with the Civil Service Law." And to make the separation of
the judiciary from the other branches of government more watertight, it prohibited
members of the judiciary to be ". . . designated to any agency performing quasi
judicial or administrative functions." While the Constitution strengthened the sinews
of the Supreme Court, it reduced the powers of the two other branches of
government, especially the Executive. Notable of the powers of the President clipped
by the Constitution is his power to suspend the writ of habeas corpus and to proclaim
martial law. The exercise of this power is now subject to revocation by Congress.

Page 38 of 557

Likewise, the sufficiency of the factual basis for the exercise of said power may be
reviewed by this Court in an appropriate proceeding filed by any citizen.
The provision defining judicial power as including the "duty of the courts of justice . . .
to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government" constitutes the capstone of the efforts of the Constitutional Commission
to upgrade the powers of this court vis-a-vis the other branches of government. This
provision
was dictated by our experience under martial law which taught us that a stronger and
more independent judiciary is needed to abort abuses in government. . . .
xxx xxx xxx
In sum, I submit that in imposing to this Court the duty to annul acts of government
committed with grave abuse of discretion, the new Constitution transformed this
Court from passivity to activism. This transformation, dictated by our distinct
experience as a nation, is not merely evolutionary but revolutionary. Under the 1935
and 1973 Constitutions, this Court approached constitutional violations by initially
determining what it cannot do; under the 1987 Constitution, there is a shift in stress
this Court is mandated to approach constitutional violations not by finding out what
it should not do but what it must do. The Court must discharge this solemn duty by
not resuscitating a past that petrifies the present.
I urge my brethren in the Court to give due and serious consideration to this new
constitutional provision as the case at bar once more calls us to define the parameters of our
power to review violations of the rules of the House. We will not be true to our trust as the
last bulwark against government abuses if we refuse to exercise this new power or if we
wield it with timidity. To be sure, it is this exceeding timidity to unsheath the judicial sword
that has increasingly emboldened other branches of government to denigrate, if not defy,
orders of our courts. In Tolentino, 8 I endorsed the view of former Senator Salonga that this
novel provision stretching the latitude of judicial power is distinctly Filipino and its
interpretation should not be depreciated by undue reliance on inapplicable foreign
jurisprudence. In resolving the case at bar, the lessons of our own history should provide us
the light and not the experience of foreigners.
II
Again with due respect, I dissent from the majority insofar as it relied on the enrolled bill
doctrine to justify the dismissal of the petition at bar.
An enrolled bill is one which has been duly introduced, finally enacted by both Houses,
signed by the proper officers of each House and approved by the President. 9 It is a
declaration by the two Houses, through their presiding officers, to the President that a bill,
thus attested, has received in due the sanction of the legislative branch of the government,
and that it is delivered to him in obedience to the constitutional requirement that all bills
which pass Congress shall be presented to him.
The enrolled bill originated in England where there is no written Constitution controlling the
legislative branch of the government, and the acts of Parliament, being regarded in their
nature as judicial as emanating from the highest tribunal in the land are placed on the
same footing and regarded with the same veneration as the judgment of the courts which
Page 39 of 557

cannot be collaterally attacked. 10 In England, the conclusiveness of the bill was premised on
the rationale that "an ad of parliament thus made is the exercise of the highest authority that
this kingdom acknowledges upon earth. And it cannot be altered, amended, dispensed with,
suspended or repealed, but in the same forms and by the same authority of parliament; for it
is a maxim in law that it requires the same strength to dissolve as to create an obligation. 11
Over the years, the enrolled bill theory has undergone important mutations. Some
jurisdictions have adopted the modified entry or affirmative contradiction rule. Under this rule,
the presumption in favor of the enrolled bill is not conclusive. The rule concedes validity to
the enrolled bill unless there affirmatively appears in the journals of the legislature a
statement that there has not been compliance with one or more of the constitutional
requirements. 12 Other jurisdictions have adopted the Extrinsic Evidence Rule which holds
that an enrolled bill is only prima facie evidence that it has been regularly enacted. The prima
facie presumption, however, can be destroyed by clear, satisfactory and convincing evidence
that the constitutional requirements in enacting a law have been violated. For this purpose,
journals and other extrinsic evidence are allowed to be received. 13 Some limit the use of
extrinsic evidence to issues of fraud or mistakes. 14
These variants developed after a re-examination of the rationale of the enrolled bill. The
modern rationale for the enrolled bill theory was spelled out in Field v. Clark, 15 viz.:
xxx xxx xxx
The signing by the Speaker of the House of Representatives, and, by the President
of the Senate, in open session, of an enrolled bill, is an official attestation by the two
houses of such bill as one that has passed Congress. It is a declaration by the two
Houses, through their presiding officers, to the President, that a bill, thus attested,
has received, in due form, the sanction of the legislative branch of the government,
and that it is delivered to him in obedience to the constitutional requirement that all
bills which pass Congress shall be presented to him. And when a bill, thus attested,
receives his approval, and is deposited in the public archives, its authentication as a
bill that has passed Congress should be deemed complete and unimpeachable. As
the President has no authority to approve a bill not passed by Congress, an enrolled
Act in the custody of the Secretary of State, and having the official attestations of the
Speaker of the House of Representatives, of the President of the Senate, and of the
President of the United States, carries, on its face, a solemn assurance by the
legislative and executive departments of the government, charged, respectively, with
the duty of enacting and executing the laws, that it was passed by Congress. The
respect due to coequal and independent departments requires the judicial
department to act upon the assurance, and to accept, as having passed Congress,
all bills authenticated in the manner stated; leaving the courts to determine, when the
question properly arises, whether the Act, so authenticated, is in conformity with the
Constitution.
The principle of separation of powers is thus the principal prop of the enrolled bill doctrine.
The doctrine is also justified as a rule of convenience. Supposedly, it avoids difficult
questions of evidence. 16 It is also believed that it will prevent the filing of too many cases
which will cast a cloud of uncertainty on laws passed by the legislature. As explained in Ex
Pacte Wren 17 "if the validity of every act published as law is to be tested by examining its
history, as shown by the journals of the two houses of the legislature, there will be an amount
of litigation, difficulty, and painful uncertainty appalling in its contemplation, and multiplying a
hundredfold the alleged uncertainty of the law." The conclusiveness of the enrolled bill is also
Page 40 of 557

justified on the ground that journals and other extrinsic evidence are conducive to mistake, if
not fraud.
These justifications for the enrolled bill theory have been rejected in various jurisdictions in
the United States. In his Dissenting Opinion in Tolentino v. Secretary of Finance, and its
companion cases, 18 Mr. Justice Regalado cited some of the leading American cases which
discussed the reasons for the withering, if not demise of the enrolled bill theory, viz:
xxx xxx xxx
Even in the land of its source, the so-called conclusive presumption of validity
originally attributed to that doctrine has long been revisited and qualified, if not
altogether rejected. On the competency of judicial inquiry, it has been held that
"(u)nder the "enrolled bill rule" by which an enrolled bill is sole expository of its
contents and conclusive evidence of its existence and valid enactment, it is
nevertheless competent for courts to inquire as to what prerequisites are fixed by the
Constitution of which journals of respective houses of Legislature are required to
furnish the evidence.
In fact, in Gwynn vs. Hardee, etc., et al., the Supreme Court of Florida declared
(1) While the presumption is that the enrolled bill, as signed by the legislative offices
and filed with the secretary of state, is the bill as it passed, yet this presumption is not
conclusive, and when it is shown from the legislative journals that a bill though
engrossed and enrolled, and signed by the legislative officers, contains provisions
that have not passed both houses, such provisions will be held spurious and not a
part of the law. As was said by Mr. Justice Cockrell in the case of Wade vs. Atlantic
Lumber Co., 51 Fla. 628, text 633, 41 So. 72, 73:
This Court is firmly committed to the holding that when the journals
speak they control, and against such proof the enrolled bill is not
conclusive.
More enlightening and apropos to the present controversy is the decision
promulgated on May 13, 1980 by the Supreme Court of Kentucky in D & W Auto
Supply, et al. vs. Department of Revenue, et al., pertinent excerpts wherefrom are
extensively reproduced hereunder.
. . . In arriving at our decision we must, perforce, reconsider the validity of a long line
of decisions of this court which created and nurtured the so-called "enrolled bill"
doctrine.
xxx xxx xxx
[1] Section 46 of the Kentucky Constitution sets out certain procedures that the
legislature must follow before a bill can be considered for final passage. . . .
xxx xxx xxx

Page 41 of 557

. . . Under the enrolled bill doctrine as it now exists in Kentucky, a court may not look
behind such a bill, enrolled and certified by the appropriate officers, to determine if
there are any defects.
xxx xxx xxx
. . . In Lafferty, passage of the law in question violated this provision, yet the bill was
properly enrolled and approved by the governor. In declining to look behind the law
to determine the propriety of its enactment, the court enunciated three reasons for
adopting the enrolled bill rule. First, the court was reluctant to scrutinize the
processes of the legislature, an equal branch of government. Second, reasons of
convenience prevailed, which discouraged requiring the legislature to preserve its
records and anticipated considerable complex litigation if the court ruled otherwise.
Third, the court acknowledged the poor record-keeping abilities of the General
Assembly and expressed a preference for accepting the final bill as enrolled, rather
than opening up the records of the legislature. . . .
xxx xxx xxx
Nowhere has the rule been adopted without reason, or as a result of judicial whim.
There are four historical bases for the doctrine. (1) An enrolled bill was a "record"
and, as such, was not subject to attack at common law. (2) Since the legislature is
one of the three branches of government, the courts, being coequal, must indulge in
every presumption that legislative acts are valid. (3) When the rule was originally
formulated, record-keeping of the legislatures was so inadequate that a balancing of
equities required that the final act, the enrolled bill, be given efficacy. (4) There were
theories of convenience as expressed by the Kentucky court in Lafferty.
The rule is not unanimous in the several states, however and it has not been without
its critics. From an examination of cases and treaties, we can summarize the
criticism as follows: (1) Artificial presumptions, especially conclusive ones, are not
favored. (2) Such a rule frequently (as in the present case) produces results which do
not accord with facts or constitutional provisions. (3) The rule is conducive to fraud,
forgery, corruption and other wrongdoings. (4) Modern automatic and electronic
record-keeping devices now used by legislatures remove one of the original reasons
for the rule. (5) The rule disregards the primary obligation of the courts to seek the
truth and to provide a remedy for a wrong committed by any branch of government.
In light of these considerations, we are convinced that the time has come to reexamine the enrolled bill doctrine.
[2] This court is not unmindful of the admonition of the doctrine of stare decisis. The
maxim is "Stare decisis et non quieta movere," which simply suggests that we stand
by precedents and to disturb settled points of law. Yet, this rule is not inflexible, nor is
it of such a nature as to require perpetuation of error or logic. As we stated in
Daniel's Adm'r v. Hoofnel, 287 Ky 834, 155 S.W.2d 469, 471-72 (1941).
The force of the rule depends upon the nature of the question to be
decided and the extent of the disturbance of rights and practices
which a change in the interpretation of the law or the course of
judicial opinions may create. Cogent considerations are whether
there is clear error and urgent reasons "for neither justice nor wisdom
requires a court to go from one doubtful rule to another," and whether
Page 42 of 557

or not the evils of the principle that has been followed will be more
injurious than can possibly result from a change.
Certainly, when a theory supporting a rule of law is not grounded on facts, or upon
sound logic, or is unjust, or has been discredited by actual experience, it should be
discarded, and with it the rule it supports.
[3] It is clear to us that the major premise of the Lafferty decision, the poor recordkeeping of the legislature, has disappeared. Modern equipment and technology are
the rule in record-keeping by our General Assembly. Tape recorders, electric
typewriters, duplicating machines, recording equipment, printing presses, computers,
electronic voting machines, and the like remove all doubts and fears as to the ability
of the General Assembly to keep accurate and readily accessible records.
It is also apparent that the "convenience" rule is not appropriate in today's modern
and developing judicial philosophy. The fact that the number and complexity of
lawsuits may increase is not persuasive if one is mindful that the overriding purpose
of our judicial system is to discover the truth and see that justice is done. The
existence of difficulties and complexities should not deter this pursuit and we reject
any doctrine or presumption that so provides.
Lastly, we address the premise that the equality of the various branches of
government requires that we shut our eyes to constitutional failing and other errors of
our copartners in government. We simply do not agree. Section 26 of the Kentucky
Constitution provides that any law contrary to the constitution is "void." The proper
exercise of judicial authority requires us to recognize any law which is
unconstitutional and to declare it void. Without elaborating the point, we believe that
under section 228 of the Kentucky Constitution it is our obligation to "support . . . the
Constitution of the commonwealth." We are sworn to see that violations of the
constitution by any person, corporation, state agency or branch or government
are brought to light and corrected. To countenance an artificial rule of law that
silences our voices when confronted with violations of our constitution is not
acceptable to this court.
We believe that a more reasonable rule is the one which Professor Sutherland
describes as the "extrinsic evidence." . . . . Under this approach there is a prima facie
presumption that an enrolled bill is valid, but such presumption may be overcome by
clear, satisfactory and convincing evidence establishing that constitutional
requirements have not been met.
We therefore overrule Lafferty v. Huffman and all other cases following the so-called
enrolled bill doctrine, to the extent that there is no longer a conclusive presumption
that an enrolled bill is valid. . . .
Clearly, the enrolled bill doctrine no longer enjoys its once unassailable respectability in
United States. Sutherland reveals that starting in the 1940's,
". . . the tendency seems to be toward the abandonment of the conclusive presumption rule
and the adoption of the third rule leaving only a prima facie presumption of validity which
may be attacked by any authoritative source of information." 19
It is high time we re-examine our preference for the enrolled bill doctrine. It was in the 1947
case of Mabanag v. Lopez Vito, 20 that this Court, with three (3) justices dissenting, first
Page 43 of 557

embraced the rule that a duly authenticated bill or resolution imports absolute verity and is
binding on the courts. In 1963, we firmed up this ruling in Casco Philippine Chemical Co. v.
Gimenez, 21 thus:
xxx xxx xxx
Hence, "urea formaldehyde" is clearly a finished product which is patently distinct
and different from "urea" and "formaldehyde," as separate articles used in the
manufacture of the synthetic resin known as "urea formaldehyde." Petitioner
contends, however, that the bill approved in Congress contained the copulative
conjunction "and" between the term "urea" and "formaldehyde," and that the
members of Congress intended to exempt "urea" and "formaldehyde" separately as
essential elements in the manufacture of the synthetic resin glue called "urea
formaldehyde," not the latter as a finished product, citing in support of this view the
statements made on the floor of the Senate, during the consideration of the bill
before said House, by members thereof. But said individual statements do not
necessarily reflect the view of the Senate. Much less do they indicate the intent of the
House of Representatives (see Song Kiat Chocolate Factory vs. Central Bank, 54 Off
Gaz. 615; Mayor Motors Inc. vs. Acting Commissioner of Internal Revenue, L-15000
[March 29, 1961]; Manila Jockey Club, Inc. vs. Games and Amusement Board, L12727 [February 19, 1960]). Furthermore, it is well settled that enrolled bill which
uses the term "urea formaldehyde" instead of "urea and formaldehyde" conclusive
upon the courts as regards the tenor of the measure passed by Congress and
approved by the President (Primicias vs. Paredes, 61 Phil. 118, 120; Mabanag vs.
Lopez Vito, 78 Phil. 1; Macias vs. Comm. on Elections, L-18684, Sept. 14, 1961). If
there has been any mistake in the printing of the bill before it was certified by the
officers of Congress and approved by the Executive on which we cannot
speculate without jeopardizing the principle of separation of powers and undermining
one of the cornerstones of our democratic system the remedy is by amendment or
curative legislation, not by judicial decree.
In the 1969 case of Morales v. Subido, 22 we reiterated our fidelity to the enrolled bill
doctrine, viz:
. . . . We cannot go behind the enrolled Act to discover what really happened. The
respect due to the other branches of the Government demands that we act upon the
faith and credit of what the officers of the said branches attest to as the official acts of
their respective departments. Otherwise we would be cast in the unenviable and
unwanted role of a sleuth trying to determine what actually did happen in the
labyrinth of law-making, with consequent impairment of the integrity of the legislative
process. The investigation which the petitioner would like this Court to make can be
better done in Congress. After all, House cleaning the immediate and imperative
need for which seems to be suggested by the petitioner can best be effected by
the occupants thereof. Expressed elsewise, this is a matter worthy of the attention
not of an Oliver Wendell Holmes but of a Sherlock Holmes.
Significantly, however, Morales diluted the conclusiveness rule of the enrolled bill doctrine.
The ponencia stressed:
By what we have essayed above we are not of course to be understood as holding
that in all cases the journals must yield to the enrolled bill. To be sure there are
certain matters which the Constitution expressly requires must be entered on the
Page 44 of 557

journal of each house. To what extent the validity of a legislative act may be affected
by a failure to have such matters entered on the journal, is a question which we do
not now decide. All we hold is that with respect to matters not expressly required to
be entered on the journal, the enrolled bill prevails in the event of any discrepancy.
In the 1974 case of Astorga v. Villegas, 23 we further diluted the enrolled bill doctrine when
we refused to apply it after the Senate President declared his signature on the bill as invalid.
We ruled:
xxx xxx xxx
Petitioner's argument that the attestation of the presiding offices of Congress is
conclusive proof of a bill's due enactment, required, it is said, by the respect due to a
co-equal department of the government, is neutralized in this case by the fact that
the Senate President declared his signature on the bill to be invalid and issued a
subsequent clarification that the invalidation for his signature meant that the bill he
had signed had never been approved by the Senate. Obviously this declaration
should be accorded even greater respect than the attestation it invalidated, which it
did for a reason that is undisputed in fact and indisputable in logic.
As far as Congress itself is concerned, there is nothing sacrosanct in the certification
made by the presiding officers. It is merely a mode of authentication. The law-making
process in Congress ends when the bill is approved by both Houses, and the
certification does not add to the validity of the bill or cure any defect already present
upon its passage. In other words it is the approval by Congress and not the
signatures of the presiding officers that is essential. Thus the (1935) Constitution
says that "[e]very bill passed by the Congress shall, before it becomes law, be
presented to the President." In Brown vs. Morris, supra, the Supreme Court of
Missouri, interpreting a similar provision in the State Constitution, said that the same
"makes it clear that the indispensable step is the final passage and it follows that if a
bill, otherwise fully enacted as a law, is not attested by the presiding officer, the proof
that it has 'passed both houses' will satisfy the constitutional requirement.
Petitioner agrees that the attestation in the bill is not mandatory but argues that the
disclaimer thereof by the Senate President, granting it to have been validly made,
would only mean that there was no attestation at all, but would not affect the validity
of the statute. Hence, it is pointed out, Republic Act No. 4065 would remain valid and
binding. This argument begs the issue. It would limit the court's inquiry to the
presence or absence of the attestation and to the effect of its absence upon the
validity of the statute. The inquiry, however, goes farther. Absent such attestation as
a result of the disclaimer, and consequently there being no enrolled bill to speak of,
what evidence is there to determine whether or not the bill had been duly enacted. In
such a case the entries in the journal should be consulted.
The journal of the proceedings of each House of Congress is no ordinary record. The
Constitution requires it. While it is true that the journal is not authenticated and is
subject to the risk of misprinting and other errors, the point is irrelevant in this case.
This Court is merely asked to inquire whether the text of House Bill No. 9266 signed
by the Chief Executive was the same text passed by both Houses of Congress.
Under the specific facts and circumstances of this case, this Court can do this and
resort to the Senate journal for the purpose. The journal discloses that substantial
and lengthy amendments were introduced on the floor and approved by the Senate
Page 45 of 557

but were not incorporated in the printed text sent to the President and signed by him.
This Court is not asked to incorporate such amendments into the alleged law, which
admittedly is a risky undertaking, but to declare that the bill was not duly enacted and
therefore did not become law. This We do, as indeed both the President of the
Senate and the Chief Executive did, when they withdrew their signatures therein. In
the face of the manifest error committed and subsequently rectified by the President
of the Senate and by the Chief Executive, for this Court to perpetuate that error by
disregarding such rectification and holding that the erroneous bill has become law
would be to sacrifice truth to fiction and bring about mischievous consequences not
intended by the law-making body.
In 1993, the enrolled bill doctrine was again used as a secondary rationale in the case of
Philippine Judges Association v. Prado, 24 In this case, the judges claimed that the pertinent
part of section 35 of R.A. No. 7354 repealing the franking privilege of the judiciary appeared
only in the Conference Committee Report. In rejecting this contention, this Court ruled:
While it is true that a conference committee is the mechanism for compromising
differences between the Senate and the House, it is not limited in its jurisdiction to
this question. Its broader function is described thus:
A conference committee may deal generally with the subject matter
or it may be limited to resolving the precise differences between the
two houses. Even where the conference committee is not by rule
limited in its jurisdiction, legislative custom severely limits the freedom
with which new subject matter can be inserted into the conference
bill. But occasionally a conference committee produces unexpected
results, results beyond its mandate. These excursions occur even
where the rules impose strict limitations on conference committee
jurisdiction. This is symptomatic of the authoritarian power of
conference committee (Davies, Legislative Law and Process: In a
Nutshell, 1986 Ed., p. 81).
It is a matter of record that the Conference Committee Report on the bill in question
was returned to and duly approved by both the Senate and the House of
Representatives. Thereafter, the bill was enrolled with its certification by Senate
President Neptali A. Gonzales and Speaker Ramon V. Mitra of the House of
Representatives as having been duly passed by both Houses of Congress. It was
then presented to and approved by President Corazon C. Aquino on April 3, 1992.
Under the doctrine of separation of powers, the Court may not inquire beyond the
certification of the approval of a bill from the presiding officers of Congress. Casco
Philippine Chemical Co. v. Gimenez laid down the rule that the enrolled bill is
conclusive upon the Judiciary (except in matters that have to be entered in the
journals like the yeas and nays on the final reading of the bill). The journals are
themselves also binding on the Supreme Court, as we held in the old (but stills valid)
case of U.S. vs. Pens, where we explained the reason thus:
To inquire into the veracity of the journals of the Philippine legislature
when they are, as we have said, clear and explicit, would be to violate
both the letter and spirit of the organic laws by which the Philippine
Government was brought into existence, to invade a coordinate and

Page 46 of 557

independent department of the Government, and to interfere with the

legitimate powers and functions of the Legislature.
Applying these principles, we shall decline to look into the petitioners' charges that an
amendment was made upon the last reading of the bill that eventually became R.A.
No. 7354 and that copies thereof in its final form were not distributed among the
members of each House. Both the enrolled bill and the legislative journals certify that
the measure was duly enacted i.e., in accordance with the Article VI, Sec. 26(2) of
the Constitution. We are bound by such official assurances from a coordinate
department of the government, to which we owe, at the very least, a becoming
courtesy.
Finally in 1994 came the case of Tolentino v. Secretary of Finance, et al and its companion
cases. 25 Involved in the case was the constitutionality of R.A. No. 7716, otherwise known
as the Expanded Value Added Tax Law. The majority 26 partly relied on the enrolled bill
doctrine in dismissing challenges to the constitutionality of R.A. No. 7716. It held:
xxx xxx xxx Fourth. Whatever doubts there may be as to the formal validity of
Republic Act No. 7716 must be resolved in its favor. Our cases manifest firm
adherence to the rule that an enrolled copy of a bill is conclusive not only of its
provisions but also of its due enactment. Not even claims that a proposed
constitutional amendment was invalid because the requisite votes for its approval
had not been obtained or that certain provisions of a statute had been "smuggled" in
the printing of the bill have moved or persuaded us to look behind the proceedings of
a coequal branch of the government. There is no reason now to depart from this rule.
No claim is here made that the "enrolled bill" rule is absolute. In fact in one case we
"went behind" an enrolled bill and consulted the Journal to determine whether certain
provisions of a statute had been approved by the Senate in view of the fad that the
President of the Senate himself, who had signed the enrolled bill, admitted a mistake
and withdrew his signature, so that in effect there was no longer an enrolled bill to
consider. But where allegations that the constitutional procedures for the passage of
bills have not been observed have no more basis than another allegation that the
Conference Committee "surreptitiously" inserted provisions into a bill which it had
prepared, we should decline the invitation to go behind the enrolled copy of the bill.
To disregard the "enrolled bill" rule in such cases would be to disregard the respect
due the other two departments of our government.
These cases show that we have not blindly accepted the conclusiveness of the enrolled bill.
Even in Tolentino, Mr. Justice Mendoza was cautious enough to hold that "no claim is here
made that the enrolled bill is absolute." I respectfully submit that it is now time for the Court
to make a definitive pronouncement that we no longer give our unqualified support to the
enrolled bill doctrine. There are compelling reasons for this suggested change in stance. For
one, the enrolled bill is appropriate only in England where it originated because in England
there is no written Constitution and the Parliament is supreme. For another, many of the
courts in the United States have broken away from the rigidity and unrealism of the enrolled
bill in light of contemporary developments in lawmaking. 27 And more important, our
uncritical adherence to the enrolled bill is inconsistent with our Constitution, laws and rules.
In Mabanag, 28 we relied on section 313 of the Old Code of Civil Procedure as amended by
Act No. 2210 as a principal reason in embracing the enrolled bill. This section, however has
long been repealed by our Rules of Court. A half glance at our Rules will show that its
section on conclusive presumption does not carry the conclusive presumption we give to an
enrolled bill. But this is not all. The conclusiveness of an enrolled bill which all too often
results in the suppression of truth cannot be justified under the 1987 Constitution. The
Preamble of our Constitution demands that we live not only under a rule of law but also
Page 47 of 557

under a regime of truth. Our Constitution also adopted a national policy 29 requiring full
public disclosure of all state transactions involving public interest. Any rule which will defeat
this policy on transparency ought to be disfavored. And to implement these policies, this
Court was given the power to pry open and to strike down any act of any branch or
instrumentality of government if it amounts to grave abuse of discretion amounting to lack or
excess of jurisdiction. It is time to bury the enrolled bill for its fiction of conclusiveness shuts
off truth in many litigations. We cannot dispense justice based on fiction for the search for
justice is the search for truth. I submit that giving an enrolled bill a mere prima facie
presumption of correctness will facilitate our task of dispensing justice based on truth. III In
sum, I respectfully submit that the Court has jurisdiction over the petition at bar and that
issues posed by petitioner are justiciable. Nonetheless, I do not find any grave abuse of
discretion committed by the public respondents to justify granting said petition. As the
ponencia points out, the petition merely involves the complaint that petitioner was prevented
from raising the question of quorum. The petition does not concern violation of any rule
mandated by the Constitution. Nor does it involve the right of a non-member of the House
which requires constitutional protection. The rules on how to question the existence of a
quorum are procedural in character. They are malleable by nature for they were drafted to
help the House enact laws. As well stated, these rules are servants, not masters of the
House. Their observance or non-observance is a matter of judgment call on the part of our
legislators and it is not the business of the Court to reverse this judgment when untainted by
grave abuse of discretion amounting to lack or excess of jurisdiction.
Davide, Jr., J., concurs.
Footnotes
1 JOURNAL No. 39, pp. 66, 68; Rollo, pp. 210, 212: Transcript of November 21,
1996 session, pp. 39-52; Rollo, pp. 368-381; Petition, p. 6 par. 10; Rollo, p. 8.
2 Rule VIII, 35. Voting. Every member present in the session shall vote on every
question put unless he inhibits himself on account of personal pecuniary interest
therein.
Rule XVII, 103. Manner of Voting. The Speaker shall rise to put a question
saying "As many as are in favor of (as the question may be), say Aye" and, after the
affirmative vote is counted, "As many as are opposed, say Nay. . . ."
3 Rule XIX, 112. Reading and Withdrawal of Motions. The Speaker shall state
the motion or, if in writing shall cause it to be read by the Secretary General before
being debated. A motion may be withdrawn any time before its approval.
4 Rule XVI, 97. Recognition of Member. When two or more members rise at the
same time, the Speaker shall recognize the Member who is to speak first.
5 Rule XX, 121. Definition. Questions of privilege are those affecting the duties,
conduct, rights, privileges, dignity, integrity or reputation of the House or of its
members, collectively or individually.
122. Precedence. Subject to the ten-minute rule, questions of privilege shall
have precedence over all other question, except a motion to adjourn and a point of
order.

Page 48 of 557

Rule XXI, 123. Definition and Precedence. A privileged motion pertains to a

subject matter which, under the rules, takes precedence over others.
The order of precedence of privileged motions is determined in each case by the
rules.
Rule XVIII, 109. Who May Vote; Procedure; Exceptions. When a bill, report or
motion is adopted or lost a member who voted with the majority may move for its
reconsideration on the same or succeeding session day. The motion shall take
precedence over all other questions except a motion to adjourn a question of
privilege, and a point of order.
6 235 SCRA 630 (1994).
7 Rollo, p. 228.
8 Id., p. 229.
9 Art. VI, 16(3).
10 E.g., United States v. Ballin, Joseph & Co., 144 U.S. 1, 36 L.ED. 321 (1862);
Exxon Corp. v. FTC, 589 F. 2d 582 (1978); Murray v. Buchanan, 674 F. 2d 14
(1982); Metzenbaum v. Federal Energy Regulatory Com'n. 675 F. 2d 1282 (1982).
See also Osmea v. Pendatun, 109 Phil. 863 (1960).
11 109 Phil. at 870-71. See also EVAT cases [Tolentino v. Secretary of Finance],
235 SCRA 630.
12 144 U.S. at 5, 36 L.Ed. at 324-25 (emphasis added).
13 64 Fla. 41; 59 So. 963, 968 (1912) (emphasis added).
14 124 Ohio St. 256, 177 N.E. 910, 911 (1931) (emphasis added).
15 79 Conn. 141, 64 Atl. 5, 9-10 (1906) (emphasis added).
16 80 Wis. 407, 50 N.W. 185, 186 (1891 ) (emphasis added).
17 5 Okl. 297, 47 Pac. 1094 (1897) (emphasis added).
18 ENRIQUE M. FERNANDO, CONSTITUTION OF THE PHILIPPINES
ANNOTATED 188-189 (1977); Pacete v. Secretary of the Commission on
Appointments, 40 SCRA 58 (1971).
19 Petition, p. 25, quoting the sponsorship speech of former Chief Justice Roberto
Concepcion, chairman of the Committee on Judiciary of the Constitutional
Commission, in 1 RECORDS OF THE CONSTITUTIONAL COMMISSION 436
(Session of July 10, 1986).

Page 49 of 557

20 Gonzales v. Macaraig, 191 SCRA 452 (1990); See Marcos v. Manglapus, 177
SCRA 668, 695 (1989); Lansang v. Garcia, 42 SCRA 448 (1971).
21 Co. v. Electoral Tribunal of the House of Representatives, 199 SCRA 692, 701
(1991); Llamas v. Orbos, 202 SCRA 849, 857 (1991); Lansang v. Garcia, 42 SCRA
at 480-481 (emphasis added).
22 4 CONG. REC. 413-414 (Feb. 15, 1957).
23 United States v. Ballin , Joseph & Co., 144 U.S. at 5, 36 L.Ed. at 324-25; State v.
Lewis, 186 S.E. 625, 630 (1936).
24 United States v. Smith, 286 U.S. 6, 76 L.Ed. 954 (1931).
25 Gregg v. Barrett, 771 F. 2d 539, 549 (1985).
26 Art. VI, 26(2).
27 Id., 16(4).
28 Id., 27(1).
29 Id., p. 17; id., p. 19.
30 INOCENCIO PAREJA, RULES OF THE HOUSE OF REPRESENTATIVES
COMMENTED AND ANNOTATED 331 (1963); REYNALDO FAJARDO,
PRINCIPLES OF PARLIAMENTARY PROCEDURE 157-158, 172-173 (1963).
31 Rule XIX, 13.
32 I RECORDS OF THE CONSTITUTIONAL COMMISSION 436 (Session of July 10,
1986).
33 ALICE STURGIS, STANDARD CODE OF PARLIAMENTARY PROCEDURE, 17
(1950).
34 PAUL MASON, MANUAL OF LEGISLATIVE PROCEDURE 335 (1953).
35 Conference Committee Report, Rollo, p. 36; Petition, p. 14; Rollo, p. 16.
36 Ibid.
37 Petition, p. 14; Rollo. p. 16.
38 Astorga v. Villegas, 56 SCRA 714 (1974).
39 Mabanag v. Lopez Vito, 78 Phil. 1, 12 (1947).
40 Id. at 17, quoting 4 JOHN WIGMORE TREATISE ON THE LAW ON EVIDENCE
1350 at 702 (1940). This excerpt is preserved in the Chadbourne edition of this
Page 50 of 557

locus classicus. See 4 WIGMORE ON EVIDENCE 1350 at 834 (James

Chadbourne, ed. 1972).
41 EVAT cases [Tolentino v. Secretary of Finance], 235 SCRA at 672, Cf. Morales v.
Subido, 27 SCRA 131 (1969).
42 Philippine Judges Ass'n v. Prado, 227 SCRA 703, 710 (1993); Morales v. Subido,
27 SCRA 131.
43 Casco Philippine Chemical Co., Inc. v. Gimenez, 7 SCRA 347 (1963); Resins, Inc.
v. Auditor General, 25 SCRA 754 (1968).
44 4 WIGMORE ON EVIDENCE 1350 (James H. Chadbourne, ed. 1972); 6
MANUEL V. MORAN, COMMENTS ON THE RULES OF COURT 115 (1980); 7
VICENTE J. FRANCISCO, THE REVISED RULES OF COURT (Pt. II) 454 (1973).
45 Marshall Field & Co. v. Clark, 143 U.S. 649, 672, 36 L.Ed. 249, 303 (1891).
46 The following are required to be entered on the Journal: (1) The yeas and nays on
the third and final reading of a bill (Art. VI, 26(2)); (2) the yeas and nays on any
question, at the request of one-fifth of the members present (Id., 16(4)); (3) the yeas
and nays upon repassing a bill over the President's veto (Id., 27(1); and (4) the
President's objection to a bill which he has vetoed. (Id.)
47 34 Phil. 729, 735 (1916), quoting State ex rel. Herron v. Smith, 44 Ohio 348
(1886).
48 Gregg v. Barrett, 771 F.2d 529.
49 Metzenbaum v. Federal Energy Regulatory Com'n. 675 F.2d 1282.
ROMERO, J., concurring:
1 235 SCRA 630.
2 Id., at p. 672: "Fourth. Whatever doubts there may be as to the formal validity of
Republic Act No. 7716 must be resolved in its favor. Our cases manifest firm
adherence to the rule that an enrolled copy of a bill is conclusive not only of its
provisions but also of its due enactment. Not even claims that a proposed
constitutional amendment was invalid because the requisite votes for its approval
had not been obtained or that certain provisions of a state had been "smuggled" in
the printing of the bill have moved or persuaded us to look behind the proceedings of
a coequal branch of the government. There is no reason now to depart from this rule.
No claim is here made that the "enrolled bill" rule is absolute. In fact in one case we
"went behind" an enrolled bill and consulted the Journal to determine whether certain
provisions of a statute had been approved by the Senate in view of the fact that the
President of the Senate himself, who had signed the enrolled bill, admitted a mistake
and withdrew his signature, so that in effect there was no longer an enrolled bill to
consider.

Page 51 of 557

But where allegations that the constitutional procedures for the passage of bills have
not been observed have no more basis than another allegation that the Conference
Committee "surreptitiously" inserted provisions into a bill which it had prepared, we
should decline the invitation to go behind the enrolled copy of the bill. To disregard
the "enrolled bill" rule in such cases would be to disregard the respect due the other
two departments of our government."
3 Id., at p. 675: "Moreover, this Court is not the proper forum for the enforcement of
these internal Rules. To the contrary, as we have already ruled, "parliamentary rules
are merely procedural and with their observance the courts have no concern." Our
concern is with the procedural requirements of the Constitution for the enactment of
laws. As far as these requirements are concerned, we are satisfied that they have
been faithfully observed in these cases."
4 Id., pp. 778-779; emphasis supplied.
5 Id., p. 780; emphasis supplied; compare to note 3, supra.
PUNO, J., concurring and dissenting:
1 144 US 1 (1891).
2 The case involved the validity of a law which allegedly was passed in violation of
House Rule XV which provided that members present in the chamber but not voting
would be "counted and announced in determining the presence of a quorum to do
business."
3 286 US 6 (1932).
4 338 US 89 (1948).
5 374 US 109 (1963).
6 369 US 186 (1962); see also Bond vs. Floyd, 385 US 116 (1966).
7 235 SCRA 630.
8 Supra.
9 Black's Law Dictionary, 4th Rev. ed., p. 624.
10 Price v. Moundsville, 64 Am. St. Rep. 878, 879; 43 W. Virginia 523 [1897].
11 Carr v. Coke, 47 Am. St. Rep. 801, 803 [1895]; see also Note on ex rel. Reed v.
Jones, 23 L.R.A. 211 [1893]. The rule of conclusiveness is similar to the common law
rule of the inviolability of the Sheriff's return. The Sheriff is considered as an officer of
the King just as a parliamentary act is deemed as a regal act and no official can
dispute the King's word. Dallas, Sutherland Statutes and Statutory Construction, Vol.
1, 4th ed., pp. 408-418 (1972).
12 Sutherland, op cit., p. 410.
Page 52 of 557

13 Sutherland, Vol. I, Section 1405 (3rd ed., 1943).

14 See e.g., Mogilner v. Metropolitan Plan Communication, 236 Ind. 298, 140 N.E.
2d 220 [1957].
15 Op. cit, footnote No. 2.
16 50 Am. Jur. Statutes, S. 150 (1938) 4 J. Wigmore Evidence, S. 1350 (3rd ed.
1940).
17 63 Miss 512 (1886).
18 Op cit, pp. 729-732 (1994).
19 Sutherland, op. cit., pp. 224-225.
20 78 Phil. 1 (1947).
21 7 SCRA 374.
22 27 SCRA 131, 134-135.
23 56 SCRA 714.
24 227 SCRA 703.
25 Supra.
26 Justices Cruz, Regalado, Davide, Jr., Romero, Bellosillo and Puno dissented.
27 See writer's dissenting opinion in Tolentino, supra, p. 818.
28 Op cit.
29 Section 28 of Article II of the Constitution.

Page 53 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 115455 October 30, 1995

ARTURO M. TOLENTINO, petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE,
respondents.
G.R. No. 115525 October 30, 1995
JUAN T. DAVID, petitioner,
vs.
TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE OCAMPO, as Secretary
of Finance; LIWAYWAY VINZONS-CHATO, as Commissioner of Internal Revenue; and their
AUTHORIZED AGENTS OR REPRESENTATIVES, respondents.
G.R. No. 115543 October 30, 1995
RAUL S. ROCO and the INTEGRATED BAR OF THE PHILIPPINES, petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE COMMISSIONERS OF THE
BUREAU OF INTERNAL REVENUE AND BUREAU OF CUSTOMS, respondents.
G.R. No. 115544 October 30, 1995
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; KAMAHALAN PUBLISHING
CORPORATION; PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L.
DIMALANTA, petitioners,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal Revenue; HON.
TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B.
DE OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115754 October 30, 1995
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner,
vs.
THE COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 115781 October 30, 1995
KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C.
CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE
ABCEDE, CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V.
Page 54 of 557

VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR

BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. ("MABINI"), FREEDOM FROM DEBT
COALITION, INC., and PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO TAADA, petitioners,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE COMMISSIONER OF
INTERNAL REVENUE and THE COMMISSIONER OF CUSTOMS, respondents.
G.R. No. 115852 October 30, 1995
PHILIPPINE AIRLINES, INC., petitioner,
vs.
THE SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 115873 October 30, 1995
COOPERATIVE UNION OF THE PHILIPPINES, petitioner,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of Internal Revenue, HON.
TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, and HON. ROBERTO B.
DE OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115931 October 30, 1995
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and ASSOCIATION OF
PHILIPPINE BOOK SELLERS, petitioners,
vs.
HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON. LIWAYWAY V. CHATO,
as the Commissioner of Internal Revenue; and HON. GUILLERMO PARAYNO, JR., in his
capacity as the Commissioner of Customs, respondents.
RESOLUTION

MENDOZA, J.:
These are motions seeking reconsideration of our decision dismissing the petitions filed in these
cases for the declaration of unconstitutionality of R.A. No. 7716, otherwise known as the Expanded
Value-Added Tax Law. The motions, of which there are 10 in all, have been filed by the several
petitioners in these cases, with the exception of the Philippine Educational Publishers Association,
Inc. and the Association of Philippine Booksellers, petitioners in G.R. No. 115931.
The Solicitor General, representing the respondents, filed a consolidated comment, to which the
Philippine Airlines, Inc., petitioner in G.R. No. 115852, and the Philippine Press Institute, Inc.,
petitioner in G.R. No. 115544, and Juan T. David, petitioner in G.R. No. 115525, each filed a reply.
In turn the Solicitor General filed on June 1, 1995 a rejoinder to the PPI's reply.
On June 27, 1995 the matter was submitted for resolution.
I. Power of the Senate to propose amendments to revenue bills. Some of the petitioners (Tolentino,
Kilosbayan, Inc., Philippine Airlines (PAL), Roco, and Chamber of Real Estate and Builders
Page 55 of 557

Association (CREBA)) reiterate previous claims made by them that R.A. No. 7716 did not "originate
exclusively" in the House of Representatives as required by Art. VI, 24 of the Constitution. Although
they admit that H. No. 11197 was filed in the House of Representatives where it passed three
readings and that afterward it was sent to the Senate where after first reading it was referred to the
Senate Ways and Means Committee, they complain that the Senate did not pass it on second and
third readings. Instead what the Senate did was to pass its own version (S. No. 1630) which it
approved on May 24, 1994. Petitioner Tolentino adds that what the Senate committee should have
done was to amend H. No. 11197 by striking out the text of the bill and substituting it with the text of
S. No. 1630. That way, it is said, "the bill remains a House bill and the Senate version just becomes
the text (only the text) of the House bill."
The contention has no merit.
The enactment of S. No. 1630 is not the only instance in which the Senate proposed an amendment
to a House revenue bill by enacting its own version of a revenue bill. On at least two occasions
during the Eighth Congress, the Senate passed its own version of revenue bills, which, in
consolidation with House bills earlier passed, became the enrolled bills. These were:
R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE OF 1987 BY
EXTENDING FROM FIVE (5) YEARS TO TEN YEARS THE PERIOD FOR TAX AND DUTY
EXEMPTION AND TAX CREDIT ON CAPITAL EQUIPMENT) which was approved by the President
on April 10, 1992. This Act is actually a consolidation of H. No. 34254, which was approved by the
House on January 29, 1992, and S. No. 1920, which was approved by the Senate on February 3,
1992.
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL GIVE REWARD
TO ANY FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC GAMES) which was approved by
the President on May 22, 1992. This Act is a consolidation of H. No. 22232, which was approved by
the House of Representatives on August 2, 1989, and S. No. 807, which was approved by the
Senate on October 21, 1991.
On the other hand, the Ninth Congress passed revenue laws which were also the result of the
consolidation of House and Senate bills. These are the following, with indications of the dates on
which the laws were approved by the President and dates the separate bills of the two chambers of
Congress were respectively passed:
1. R.A. NO. 7642
AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING FOR
THIS PURPOSE THE PERTINENT SECTIONS OF THE NATIONAL INTERNAL
REVENUE CODE (December 28, 1992).
House Bill No. 2165, October 5, 1992
Senate Bill No. 32, December 7, 1992
2. R.A. NO. 7643
AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO
REQUIRE THE PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH AND TO
ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN VAT REVENUE,
Page 56 of 557

AMENDING FOR THIS PURPOSE CERTAIN SECTIONS OF THE NATIONAL

INTERNAL REVENUE CODE (December 28, 1992)
House Bill No. 1503, September 3, 1992
Senate Bill No. 968, December 7, 1992
3. R.A. NO. 7646
AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO
PRESCRIBE THE PLACE FOR PAYMENT OF INTERNAL REVENUE TAXES BY
LARGE TAXPAYERS, AMENDING FOR THIS PURPOSE CERTAIN PROVISIONS
OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED (February 24,
1993)
House Bill No. 1470, October 20, 1992
Senate Bill No. 35, November 19, 1992
4. R.A. NO. 7649
AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL
SUBDIVISIONS, INSTRUMENTALITIES OR AGENCIES INCLUDING
GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCS) TO
DEDUCT AND WITHHOLD THE VALUE-ADDED TAX DUE AT THE RATE OF
THREE PERCENT (3%) ON GROSS PAYMENT FOR THE PURCHASE OF
GOODS AND SIX PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES
RENDERED BY CONTRACTORS (April 6, 1993)
House Bill No. 5260, January 26, 1993
Senate Bill No. 1141, March 30, 1993
5. R.A. NO. 7656
AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS TO DECLARE DIVIDENDS UNDER CERTAIN CONDITIONS TO
THE NATIONAL GOVERNMENT, AND FOR OTHER PURPOSES (November 9,
1993)
House Bill No. 11024, November 3, 1993
Senate Bill No. 1168, November 3, 1993
6. R.A. NO. 7660
AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION
OF THE DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE
CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED, ALLOCATING FUNDS FOR SPECIFIC PROGRAMS, AND FOR
OTHER PURPOSES (December 23, 1993)
Page 57 of 557

House Bill No. 7789, May 31, 1993

Senate Bill No. 1330, November 18, 1993
7. R.A. NO. 7717
AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES
OF STOCK LISTED AND TRADED THROUGH THE LOCAL STOCK EXCHANGE
OR THROUGH INITIAL PUBLIC OFFERING, AMENDING FOR THE PURPOSE
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, BY INSERTING A
NEW SECTION AND REPEALING CERTAIN SUBSECTIONS THEREOF (May 5,
1994)
House Bill No. 9187, November 3, 1993
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which the Senate, in the exercise of
its power to propose amendments to bills required to originate in the House, passed its own version
of a House revenue measure. It is noteworthy that, in the particular case of S. No. 1630, petitioners
Tolentino and Roco, as members of the Senate, voted to approve it on second and third readings.
On the other hand, amendment by substitution, in the manner urged by petitioner Tolentino,
concerns a mere matter of form. Petitioner has not shown what substantial difference it would make
if, as the Senate actually did in this case, a separate bill like S. No. 1630 is instead enacted as a
substitute measure, "taking into Consideration . . . H.B. 11197."
Indeed, so far as pertinent, the Rules of the Senate only provide:
RULE XXIX
AMENDMENTS
xxx xxx xxx
68. Not more than one amendment to the original amendment shall be considered.
No amendment by substitution shall be entertained unless the text thereof is
submitted in writing.
Any of said amendments may be withdrawn before a vote is taken thereon.
69. No amendment which seeks the inclusion of a legislative provision foreign to the
subject matter of a bill (rider) shall be entertained.
xxx xxx xxx
70-A. A bill or resolution shall not be amended by substituting it with another which
covers a subject distinct from that proposed in the original bill or resolution.
(emphasis added).
Page 58 of 557

Nor is there merit in petitioners' contention that, with regard to revenue bills, the Philippine Senate
possesses less power than the U.S. Senate because of textual differences between constitutional
provisions giving them the power to propose or concur with amendments.
Art. I, 7, cl. 1 of the U.S. Constitution reads:
All Bills for raising Revenue shall originate in the House of Representatives; but the
Senate may propose or concur with amendments as on other Bills.
Art. VI, 24 of our Constitution reads:
All appropriation, revenue or tariff bills, bills authorizing increase of the public debt,
bills of local application, and private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments.
The addition of the word "exclusively" in the Philippine Constitution and the decision to drop the
phrase "as on other Bills" in the American version, according to petitioners, shows the intention of
the framers of our Constitution to restrict the Senate's power to propose amendments to revenue
bills. Petitioner Tolentino contends that the word "exclusively" was inserted to modify "originate" and
"the words 'as in any other bills' (sic) were eliminated so as to show that these bills were not to be
like other bills but must be treated as a special kind."
The history of this provision does not support this contention. The supposed indicia of constitutional
intent are nothing but the relics of an unsuccessful attempt to limit the power of the Senate. It will be
recalled that the 1935 Constitution originally provided for a unicameral National Assembly. When it
was decided in 1939 to change to a bicameral legislature, it became necessary to provide for the
procedure for lawmaking by the Senate and the House of Representatives. The work of proposing
amendments to the Constitution was done by the National Assembly, acting as a constituent
assembly, some of whose members, jealous of preserving the Assembly's lawmaking powers,
sought to curtail the powers of the proposed Senate. Accordingly they proposed the following
provision:
All bills appropriating public funds, revenue or tariff bills, bills of local application, and
private bills shall originate exclusively in the Assembly, but the Senate may propose
or concur with amendments. In case of disapproval by the Senate of any such bills,
the Assembly may repass the same by a two-thirds vote of all its members, and
thereupon, the bill so repassed shall be deemed enacted and may be submitted to
the President for corresponding action. In the event that the Senate should fail to
finally act on any such bills, the Assembly may, after thirty days from the opening of
the next regular session of the same legislative term, reapprove the same with a vote
of two-thirds of all the members of the Assembly. And upon such reapproval, the bill
shall be deemed enacted and may be submitted to the President for corresponding
action.
The special committee on the revision of laws of the Second National Assembly vetoed the proposal.
It deleted everything after the first sentence. As rewritten, the proposal was approved by the National
Assembly and embodied in Resolution No. 38, as amended by Resolution No. 73. (J. ARUEGO,
KNOW YOUR CONSTITUTION 65-66 (1950)). The proposed amendment was submitted to the
people and ratified by them in the elections held on June 18, 1940.
This is the history of Art. VI, 18 (2) of the 1935 Constitution, from which Art. VI, 24 of the present
Constitution was derived. It explains why the word "exclusively" was added to the American text from
Page 59 of 557

which the framers of the Philippine Constitution borrowed and why the phrase "as on other Bills" was
not copied. Considering the defeat of the proposal, the power of the Senate to propose amendments
must be understood to be full, plenary and complete "as on other Bills." Thus, because revenue bills
are required to originate exclusively in the House of Representatives, the Senate cannot enact
revenue measures of its own without such bills. After a revenue bill is passed and sent over to it by
the House, however, the Senate certainly can pass its own version on the same subject matter. This
follows from the coequality of the two chambers of Congress.
That this is also the understanding of book authors of the scope of the Senate's power to concur is
clear from the following commentaries:
The power of the Senate to propose or concur with amendments is apparently
without restriction. It would seem that by virtue of this power, the Senate can
practically re-write a bill required to come from the House and leave only a trace of
the original bill. For example, a general revenue bill passed by the lower house of the
United States Congress contained provisions for the imposition of an inheritance tax .
This was changed by the Senate into a corporation tax. The amending authority of
the Senate was declared by the United States Supreme Court to be sufficiently broad
to enable it to make the alteration. [Flint v. Stone Tracy Company, 220 U.S. 107, 55
L. ed. 389].
(L. TAADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES 247
(1961))
The above-mentioned bills are supposed to be initiated by the House of
Representatives because it is more numerous in membership and therefore also
more representative of the people. Moreover, its members are presumed to be more
familiar with the needs of the country in regard to the enactment of the legislation
involved.
The Senate is, however, allowed much leeway in the exercise of its power to propose
or concur with amendments to the bills initiated by the House of Representatives.
Thus, in one case, a bill introduced in the U.S. House of Representatives was
changed by the Senate to make a proposed inheritance tax a corporation tax. It is
also accepted practice for the Senate to introduce what is known as an amendment
by substitution, which may entirely replace the bill initiated in the House of
Representatives.
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).
In sum, while Art. VI, 24 provides that all appropriation, revenue or tariff bills, bills authorizing
increase of the public debt, bills of local application, and private bills must "originate exclusively in
the House of Representatives," it also adds, "but the Senate may propose or concur with
amendments." In the exercise of this power, the Senate may propose an entirely new bill as a
substitute measure. As petitioner Tolentino states in a high school text, a committee to which a bill is
referred may do any of the following:
(1) to endorse the bill without changes; (2) to make changes in the bill omitting or
adding sections or altering its language; (3) to make and endorse an entirely new bill
as a substitute, in which case it will be known as a committee bill; or (4) to make no
report at all.

Page 60 of 557

(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950))

To except from this procedure the amendment of bills which are required to originate in the House
by prescribing that the number of the House bill and its other parts up to the enacting clause must be
preserved although the text of the Senate amendment may be incorporated in place of the original
body of the bill is to insist on a mere technicality. At any rate there is no rule prescribing this form. S.
No. 1630, as a substitute measure, is therefore as much an amendment of H. No. 11197 as any
which the Senate could have made.
II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error is that they assume that
S. No. 1630 is an independent and distinct bill. Hence their repeated references to its certification
that it was passed by the Senate "in substitution of S.B. No. 1129, taking into consideration P.S.
Res. No. 734 and H.B. No. 11197," implying that there is something substantially different between
the reference to S. No. 1129 and the reference to H. No. 11197. From this premise, they conclude
that R.A. No. 7716 originated both in the House and in the Senate and that it is the product of two
"half-baked bills because neither H. No. 11197 nor S. No. 1630 was passed by both houses of
Congress."
In point of fact, in several instances the provisions of S. No. 1630, clearly appear to be mere
amendments of the corresponding provisions of H. No. 11197. The very tabular comparison of the
provisions of H. No. 11197 and S. No. 1630 attached as Supplement A to the basic petition of
petitioner Tolentino, while showing differences between the two bills, at the same time indicates that
the provisions of the Senate bill were precisely intended to be amendments to the House bill.
Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the Senate bill was
a mere amendment of the House bill, H. No. 11197 in its original form did not have to pass the
Senate on second and three readings. It was enough that after it was passed on first reading it was
referred to the Senate Committee on Ways and Means. Neither was it required that S. No. 1630 be
passed by the House of Representatives before the two bills could be referred to the Conference
Committee.
There is legislative precedent for what was done in the case of H. No. 11197 and S. No. 1630. When
the House bill and Senate bill, which became R.A. No. 1405 (Act prohibiting the disclosure of bank
deposits), were referred to a conference committee, the question was raised whether the two bills
could be the subject of such conference, considering that the bill from one house had not been
passed by the other and vice versa. As Congressman Duran put the question:
MR. DURAN. Therefore, I raise this question of order as to procedure: If a House bill
is passed by the House but not passed by the Senate, and a Senate bill of a similar
nature is passed in the Senate but never passed in the House, can the two bills be
the subject of a conference, and can a law be enacted from these two bills? I
understand that the Senate bill in this particular instance does not refer to
investments in government securities, whereas the bill in the House, which was
introduced by the Speaker, covers two subject matters: not only investigation of
deposits in banks but also investigation of investments in government securities.
Now, since the two bills differ in their subject matter, I believe that no law can be
enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.) said:
THE SPEAKER. The report of the conference committee is in order. It is precisely in
cases like this where a conference should be had. If the House bill had been
Page 61 of 557

approved by the Senate, there would have been no need of a conference; but
precisely because the Senate passed another bill on the same subject matter, the
conference committee had to be created, and we are now considering the report of
that committee.
(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))
III. The President's certification. The fallacy in thinking that H. No. 11197 and S. No. 1630 are distinct
and unrelated measures also accounts for the petitioners' (Kilosbayan's and PAL's) contention that
because the President separately certified to the need for the immediate enactment of these
measures, his certification was ineffectual and void. The certification had to be made of the version
of the same revenue bill which at the moment was being considered. Otherwise, to follow petitioners'
theory, it would be necessary for the President to certify as many bills as are presented in a house of
Congress even though the bills are merely versions of the bill he has already certified. It is enough
that he certifies the bill which, at the time he makes the certification, is under consideration. Since on
March 22, 1994 the Senate was considering S. No. 1630, it was that bill which had to be certified.
For that matter on June 1, 1993 the President had earlier certified H. No. 9210 for immediate
enactment because it was the one which at that time was being considered by the House. This bill
was later substituted, together with other bills, by H. No. 11197.
As to what Presidential certification can accomplish, we have already explained in the main decision
that the phrase "except when the President certifies to the necessity of its immediate enactment,
etc." in Art. VI, 26 (2) qualifies not only the requirement that "printed copies [of a bill] in its final form
[must be] distributed to the members three days before its passage" but also the requirement that
before a bill can become a law it must have passed "three readings on separate days." There is not
only textual support for such construction but historical basis as well.
Art. VI, 21 (2) of the 1935 Constitution originally provided:
(2) No bill shall be passed by either House unless it shall have been printed and
copies thereof in its final form furnished its Members at least three calendar days
prior to its passage, except when the President shall have certified to the necessity of
its immediate enactment. Upon the last reading of a bill, no amendment thereof shall
be allowed and the question upon its passage shall be taken immediately thereafter,
and the yeas and nays entered on the Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII, 19 (2):
(2) No bill shall become a law unless it has passed three readings on separate days,
and printed copies thereof in its final form have been distributed to the Members
three days before its passage, except when the Prime Minister certifies to the
necessity of its immediate enactment to meet a public calamity or emergency. Upon
the last reading of a bill, no amendment thereto shall be allowed, and the vote
thereon shall be taken immediately thereafter, and the yeas and nays entered in the
Journal.
This provision of the 1973 document, with slight modification, was adopted in Art. VI, 26 (2) of the
present Constitution, thus:
(2) No bill passed by either House shall become a law unless it has passed three
readings on separate days, and printed copies thereof in its final form have been
distributed to its Members three days before its passage, except when the President
Page 62 of 557

certifies to the necessity of its immediate enactment to meet a public calamity or

emergency. Upon the last reading of a bill, no amendment thereto shall be allowed,
and the vote thereon shall be taken immediately thereafter, and the yeas and nays
entered in the Journal.
The exception is based on the prudential consideration that if in all cases three readings on separate
days are required and a bill has to be printed in final form before it can be passed, the need for a law
may be rendered academic by the occurrence of the very emergency or public calamity which it is
meant to address.
Petitioners further contend that a "growing budget deficit" is not an emergency, especially in a
country like the Philippines where budget deficit is a chronic condition. Even if this were the case, an
enormous budget deficit does not make the need for R.A. No. 7716 any less urgent or the situation
calling for its enactment any less an emergency.
Apparently, the members of the Senate (including some of the petitioners in these cases) believed
that there was an urgent need for consideration of S. No. 1630, because they responded to the call
of the President by voting on the bill on second and third readings on the same day. While the
judicial department is not bound by the Senate's acceptance of the President's certification, the
respect due coequal departments of the government in matters committed to them by the
Constitution and the absence of a clear showing of grave abuse of discretion caution a stay of the
judicial hand.
At any rate, we are satisfied that S. No. 1630 received thorough consideration in the Senate where it
was discussed for six days. Only its distribution in advance in its final printed form was actually
dispensed with by holding the voting on second and third readings on the same day (March 24,
1994). Otherwise, sufficient time between the submission of the bill on February 8, 1994 on second
reading and its approval on March 24, 1994 elapsed before it was finally voted on by the Senate on
third reading.
The purpose for which three readings on separate days is required is said to be two-fold: (1) to
inform the members of Congress of what they must vote on and (2) to give them notice that a
measure is progressing through the enacting process, thus enabling them and others interested in
the measure to prepare their positions with reference to it. (1 J. G. SUTHERLAND, STATUTES AND
STATUTORY CONSTRUCTION 10.04, p. 282 (1972)). These purposes were substantially
achieved in the case of R.A. No. 7716.
IV. Power of Conference Committee. It is contended (principally by Kilosbayan, Inc. and the
Movement of Attorneys for Brotherhood, Integrity and Nationalism, Inc. (MABINI)) that in violation of
the constitutional policy of full public disclosure and the people's right to know (Art. II, 28 and Art.
III, 7) the Conference Committee met for two days in executive session with only the conferees
present.
As pointed out in our main decision, even in the United States it was customary to hold such
sessions with only the conferees and their staffs in attendance and it was only in 1975 when a new
rule was adopted requiring open sessions. Unlike its American counterpart, the Philippine Congress
has not adopted a rule prescribing open hearings for conference committees.
It is nevertheless claimed that in the United States, before the adoption of the rule in 1975, at least
staff members were present. These were staff members of the Senators and Congressmen,
however, who may be presumed to be their confidential men, not stenographers as in this case who
on the last two days of the conference were excluded. There is no showing that the conferees
Page 63 of 557

themselves did not take notes of their proceedings so as to give petitioner Kilosbayan basis for
claiming that even in secret diplomatic negotiations involving state interests, conferees keep notes of
their meetings. Above all, the public's right to know was fully served because the Conference
Committee in this case submitted a report showing the changes made on the differing versions of
the House and the Senate.
Petitioners cite the rules of both houses which provide that conference committee reports must
contain "a detailed, sufficiently explicit statement of the changes in or other amendments." These
changes are shown in the bill attached to the Conference Committee Report. The members of both
houses could thus ascertain what changes had been made in the original bills without the need of a
statement detailing the changes.
The same question now presented was raised when the bill which became R.A. No. 1400 (Land
Reform Act of 1955) was reported by the Conference Committee. Congressman Bengzon raised a
point of order. He said:
MR. BENGZON. My point of order is that it is out of order to consider the report of
the conference committee regarding House Bill No. 2557 by reason of the provision
of Section 11, Article XII, of the Rules of this House which provides specifically that
the conference report must be accompanied by a detailed statement of the effects of
the amendment on the bill of the House. This conference committee report is not
accompanied by that detailed statement, Mr. Speaker. Therefore it is out of order to
consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:
MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in connection
with the point of order raised by the gentleman from Pangasinan.
There is no question about the provision of the Rule cited by the gentleman from
Pangasinan, but this provision applies to those cases where only portions of the bill
have been amended. In this case before us an entire bill is presented; therefore, it
can be easily seen from the reading of the bill what the provisions are. Besides, this
procedure has been an established practice.
After some interruption, he continued:
MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into the reason for
the provisions of the Rules, and the reason for the requirement in the provision cited
by the gentleman from Pangasinan is when there are only certain words or phrases
inserted in or deleted from the provisions of the bill included in the conference report,
and we cannot understand what those words and phrases mean and their relation to
the bill. In that case, it is necessary to make a detailed statement on how those
words and phrases will affect the bill as a whole; but when the entire bill itself is
copied verbatim in the conference report, that is not necessary. So when the reason
for the Rule does not exist, the Rule does not exist.
(2 CONG. REC. NO. 2, p. 4056. (emphasis added))
Congressman Tolentino was sustained by the chair. The record shows that when the ruling was
appealed, it was upheld by viva voce and when a division of the House was called, it was sustained

Page 64 of 557

by a vote of 48 to 5. (Id.,
p. 4058)
Nor is there any doubt about the power of a conference committee to insert new provisions as long
as these are germane to the subject of the conference. As this Court held in Philippine Judges
Association v. Prado, 227 SCRA 703 (1993), in an opinion written by then Justice Cruz, the
jurisdiction of the conference committee is not limited to resolving differences between the Senate
and the House. It may propose an entirely new provision. What is important is that its report is
subsequently approved by the respective houses of Congress. This Court ruled that it would not
entertain allegations that, because new provisions had been added by the conference committee,
there was thereby a violation of the constitutional injunction that "upon the last reading of a bill, no
amendment thereto shall be allowed."
Applying these principles, we shall decline to look into the petitioners' charges that an
amendment was made upon the last reading of the bill that eventually became R.A.
No. 7354 and that copies thereof in its final form were not distributed among the
members of each House. Both the enrolled bill and the legislative journals certify that
the measure was duly enacted i.e., in accordance with Article VI, Sec. 26 (2) of the
Constitution. We are bound by such official assurances from a coordinate
department of the government, to which we owe, at the very least, a becoming
courtesy.
(Id. at 710. (emphasis added))
It is interesting to note the following description of conference committees in the Philippines in a
1979 study:
Conference committees may be of two types: free or instructed. These committees
may be given instructions by their parent bodies or they may be left without
instructions. Normally the conference committees are without instructions, and this is
why they are often critically referred to as "the little legislatures." Once bills have
been sent to them, the conferees have almost unlimited authority to change the
clauses of the bills and in fact sometimes introduce new measures that were not in
the original legislation. No minutes are kept, and members' activities on conference
committees are difficult to determine. One congressman known for his idealism put it
this way: "I killed a bill on export incentives for my interest group [copra] in the
conference committee but I could not have done so anywhere else." The conference
committee submits a report to both houses, and usually it is accepted. If the report is
not accepted, then the committee is discharged and new members are appointed.
(R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND
LEGISLATURES: A COMPARATIVE ANALYSIS 163 (J. D. LEES AND M. SHAW,
eds.)).
In citing this study, we pass no judgment on the methods of conference committees. We cite it only
to say that conference committees here are no different from their counterparts in the United States
whose vast powers we noted in Philippine Judges Association v. Prado, supra. At all events, under
Art. VI, 16(3) each house has the power "to determine the rules of its proceedings," including those
of its committees. Any meaningful change in the method and procedures of Congress or its
committees must therefore be sought in that body itself.

Page 65 of 557

V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No. 7716 violates Art. VI, 26
(1) of the Constitution which provides that "Every bill passed by Congress shall embrace only one
subject which shall be expressed in the title thereof." PAL contends that the amendment of its
franchise by the withdrawal of its exemption from the VAT is not expressed in the title of the law.
Pursuant to 13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in lieu of all
other taxes, duties, royalties, registration, license and other fees and charges of any kind, nature, or
description, imposed, levied, established, assessed or collected by any municipal, city, provincial or
national authority or government agency, now or in the future."
PAL was exempted from the payment of the VAT along with other entities by 103 of the National
Internal Revenue Code, which provides as follows:
103. Exempt transactions. The following shall be exempt from the value-added
tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws or international agreements to
which the Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL, by amending
103, as follows:
103. Exempt transactions. The following shall be exempt from the value-added
tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws, except those granted under
Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . .
The amendment of 103 is expressed in the title of R.A. No. 7716 which reads:
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING
ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE
PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-ADDED TAX (VAT)
SYSTEM [BY] WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR
THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES,"
Congress thereby clearly expresses its intention to amend any provision of the NIRC which stands in
the way of accomplishing the purpose of the law.
PAL asserts that the amendment of its franchise must be reflected in the title of the law by specific
reference to P.D. No. 1590. It is unnecessary to do this in order to comply with the constitutional
requirement, since it is already stated in the title that the law seeks to amend the pertinent provisions
of the NIRC, among which is 103(q), in order to widen the base of the VAT. Actually, it is the bill
Page 66 of 557

which becomes a law that is required to express in its title the subject of legislation. The titles of H.
No. 11197 and S. No. 1630 in fact specifically referred to 103 of the NIRC as among the provisions
sought to be amended. We are satisfied that sufficient notice had been given of the pendency of
these bills in Congress before they were enacted into what is now R.A.
No. 7716.
In Philippine Judges Association v. Prado, supra, a similar argument as that now made by PAL was
rejected. R.A. No. 7354 is entitled AN ACT CREATING THE PHILIPPINE POSTAL CORPORATION,
DEFINING ITS POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR
REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES CONNECTED THEREWITH. It
contained a provision repealing all franking privileges. It was contended that the withdrawal of
franking privileges was not expressed in the title of the law. In holding that there was sufficient
description of the subject of the law in its title, including the repeal of franking privileges, this Court
held:
To require every end and means necessary for the accomplishment of the general
objectives of the statute to be expressed in its title would not only be unreasonable
but would actually render legislation impossible. [Cooley, Constitutional Limitations,
8th Ed., p. 297] As has been correctly explained:
The details of a legislative act need not be specifically stated in its
title, but matter germane to the subject as expressed in the title, and
adopted to the accomplishment of the object in view, may properly be
included in the act. Thus, it is proper to create in the same act the
machinery by which the act is to be enforced, to prescribe the
penalties for its infraction, and to remove obstacles in the way of its
execution. If such matters are properly connected with the subject as
expressed in the title, it is unnecessary that they should also have
special mention in the title. (Southern Pac. Co. v. Bartine, 170 Fed.
725)
(227 SCRA at 707-708)
VI. Claims of press freedom and religious liberty. We have held that, as a general proposition, the
press is not exempt from the taxing power of the State and that what the constitutional guarantee of
free press prohibits are laws which single out the press or target a group belonging to the press for
special treatment or which in any way discriminate against the press on the basis of the content of
the publication, and R.A. No. 7716 is none of these.
Now it is contended by the PPI that by removing the exemption of the press from the VAT while
maintaining those granted to others, the law discriminates against the press. At any rate, it is
averred, "even nondiscriminatory taxation of constitutionally guaranteed freedom is unconstitutional."
With respect to the first contention, it would suffice to say that since the law granted the press a
privilege, the law could take back the privilege anytime without offense to the Constitution. The
reason is simple: by granting exemptions, the State does not forever waive the exercise of its
sovereign prerogative.
Indeed, in withdrawing the exemption, the law merely subjects the press to the same tax burden to
which other businesses have long ago been subject. It is thus different from the tax involved in the
cases invoked by the PPI. The license tax in Grosjean v. American Press Co., 297 U.S. 233, 80 L.
Ed. 660 (1936) was found to be discriminatory because it was laid on the gross advertising receipts
Page 67 of 557

only of newspapers whose weekly circulation was over 20,000, with the result that the tax applied
only to 13 out of 124 publishers in Louisiana. These large papers were critical of Senator Huey Long
who controlled the state legislature which enacted the license tax. The censorial motivation for the
law was thus evident.
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S.
575, 75 L. Ed. 2d 295 (1983), the tax was found to be discriminatory because although it could have
been made liable for the sales tax or, in lieu thereof, for the use tax on the privilege of using, storing
or consuming tangible goods, the press was not. Instead, the press was exempted from both taxes.
It was, however, later made to pay a special use tax on the cost of paper and ink which made these
items "the only items subject to the use tax that were component of goods to be sold at retail." The
U.S. Supreme Court held that the differential treatment of the press "suggests that the goal of
regulation is not related to suppression of expression, and such goal is presumptively
unconstitutional." It would therefore appear that even a law that favors the press is constitutionally
suspect. (See the dissent of Rehnquist, J. in that case)
Nor is it true that only two exemptions previously granted by E.O. No. 273 are withdrawn "absolutely
and unqualifiedly" by R.A. No. 7716. Other exemptions from the VAT, such as those previously
granted to PAL, petroleum concessionaires, enterprises registered with the Export Processing Zone
Authority, and many more are likewise totally withdrawn, in addition to exemptions which are partially
withdrawn, in an effort to broaden the base of the tax.
The PPI says that the discriminatory treatment of the press is highlighted by the fact that
transactions, which are profit oriented, continue to enjoy exemption under R.A. No. 7716. An
enumeration of some of these transactions will suffice to show that by and large this is not so and
that the exemptions are granted for a purpose. As the Solicitor General says, such exemptions are
granted, in some cases, to encourage agricultural production and, in other cases, for the personal
benefit of the end-user rather than for profit. The exempt transactions are:
(a) Goods for consumption or use which are in their original state (agricultural,
marine and forest products, cotton seeds in their original state, fertilizers, seeds,
seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services
to enhance agriculture (milling of palay, corn, sugar cane and raw sugar, livestock,
poultry feeds, fertilizer, ingredients used for the manufacture of feeds).
(b) Goods used for personal consumption or use (household and personal effects of
citizens returning to the Philippines) or for professional use, like professional
instruments and implements, by persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be used for
manufacture of petroleum products subject to excise tax and services subject to
percentage tax.
(d) Educational services, medical, dental, hospital and veterinary services, and
services rendered under employer-employee relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international agreements.
(g) Export-sales by persons not VAT-registered.

Page 68 of 557

(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 5860)
The PPI asserts that it does not really matter that the law does not discriminate against the press
because "even nondiscriminatory taxation on constitutionally guaranteed freedom is
unconstitutional." PPI cites in support of this assertion the following statement in Murdock v.
Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):
The fact that the ordinance is "nondiscriminatory" is immaterial. The protection
afforded by the First Amendment is not so restricted. A license tax certainly does not
acquire constitutional validity because it classifies the privileges protected by the
First Amendment along with the wares and merchandise of hucksters and peddlers
and treats them all alike. Such equality in treatment does not save the ordinance.
Freedom of press, freedom of speech, freedom of religion are in preferred position.
The Court was speaking in that case of a license tax, which, unlike an ordinary tax, is mainly for
regulation. Its imposition on the press is unconstitutional because it lays a prior restraint on the
exercise of its right. Hence, although its application to others, such those selling goods, is valid, its
application to the press or to religious groups, such as the Jehovah's Witnesses, in connection with
the latter's sale of religious books and pamphlets, is unconstitutional. As the U.S. Supreme Court put
it, "it is one thing to impose a tax on income or property of a preacher. It is quite another thing to
exact a tax on him for delivering a sermon."
A similar ruling was made by this Court in American Bible Society v. City of Manila, 101 Phil. 386
(1957) which invalidated a city ordinance requiring a business license fee on those engaged in the
sale of general merchandise. It was held that the tax could not be imposed on the sale of bibles by
the American Bible Society without restraining the free exercise of its right to propagate.
The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege,
much less a constitutional right. It is imposed on the sale, barter, lease or exchange of goods or
properties or the sale or exchange of services and the lease of properties purely for revenue
purposes. To subject the press to its payment is not to burden the exercise of its right any more than
to make the press pay income tax or subject it to general regulation is not to violate its freedom
under the Constitution.
Additionally, the Philippine Bible Society, Inc. claims that although it sells bibles, the proceeds
derived from the sales are used to subsidize the cost of printing copies which are given free to those
who cannot afford to pay so that to tax the sales would be to increase the price, while reducing the
volume of sale. Granting that to be the case, the resulting burden on the exercise of religious
freedom is so incidental as to make it difficult to differentiate it from any other economic imposition
that might make the right to disseminate religious doctrines costly. Otherwise, to follow the
petitioner's argument, to increase the tax on the sale of vestments would be to lay an impermissible
burden on the right of the preacher to make a sermon.
On the other hand the registration fee of P1,000.00 imposed by 107 of the NIRC, as amended by
7 of R.A. No. 7716, although fixed in amount, is really just to pay for the expenses of registration
and enforcement of provisions such as those relating to accounting in 108 of the NIRC. That the
PBS distributes free bibles and therefore is not liable to pay the VAT does not excuse it from the
payment of this fee because it also sells some copies. At any rate whether the PBS is liable for the

Page 69 of 557

VAT must be decided in concrete cases, in the event it is assessed this tax by the Commissioner of
Internal Revenue.
VII. Alleged violations of the due process, equal protection and contract clauses and the rule on
taxation. CREBA asserts that R.A. No. 7716 (1) impairs the obligations of contracts, (2) classifies
transactions as covered or exempt without reasonable basis and (3) violates the rule that taxes
should be uniform and equitable and that Congress shall "evolve a progressive system of taxation."
With respect to the first contention, it is claimed that the application of the tax to existing contracts of
the sale of real property by installment or on deferred payment basis would result in substantial
increases in the monthly amortizations to be paid because of the 10% VAT. The additional amount, it
is pointed out, is something that the buyer did not anticipate at the time he entered into the contract.
The short answer to this is the one given by this Court in an early case: "Authorities from numerous
sources are cited by the plaintiffs, but none of them show that a lawful tax on a new subject, or an
increased tax on an old one, interferes with a contract or impairs its obligation, within the meaning of
the Constitution. Even though such taxation may affect particular contracts, as it may increase the
debt of one person and lessen the security of another, or may impose additional burdens upon one
class and release the burdens of another, still the tax must be paid unless prohibited by the
Constitution, nor can it be said that it impairs the obligation of any existing contract in its true legal
sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)). Indeed not
only existing laws but also "the reservation of the essential attributes of sovereignty, is . . . read into
contracts as a postulate of the legal order." (Philippine-American Life Ins. Co. v. Auditor General, 22
SCRA 135, 147 (1968)) Contracts must be understood as having been made in reference to the
possible exercise of the rightful authority of the government and no obligation of contract can extend
to the defeat of that authority. (Norman v. Baltimore and Ohio R.R., 79 L. Ed. 885 (1935)).
It is next pointed out that while 4 of R.A. No. 7716 exempts such transactions as the sale of
agricultural products, food items, petroleum, and medical and veterinary services, it grants no
exemption on the sale of real property which is equally essential. The sale of real property for
socialized and low-cost housing is exempted from the tax, but CREBA claims that real estate
transactions of "the less poor," i.e., the middle class, who are equally homeless, should likewise be
exempted.
The sale of food items, petroleum, medical and veterinary services, etc., which are essential goods
and services was already exempt under 103, pars. (b) (d) (1) of the NIRC before the enactment of
R.A. No. 7716. Petitioner is in error in claiming that R.A. No. 7716 granted exemption to these
transactions, while subjecting those of petitioner to the payment of the VAT. Moreover, there is a
difference between the "homeless poor" and the "homeless less poor" in the example given by
petitioner, because the second group or middle class can afford to rent houses in the meantime that
they cannot yet buy their own homes. The two social classes are thus differently situated in life. "It is
inherent in the power to tax that the State be free to select the subjects of taxation, and it has been
repeatedly held that 'inequalities which result from a singling out of one particular class for taxation,
or exemption infringe no constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153 (1955). Accord,
City of Baguio v. De Leon, 134 Phil. 912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984);
Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 371 (1988)).
Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also violates Art. VI, 28(1)
which provides that "The rule of taxation shall be uniform and equitable. The Congress shall evolve a
progressive system of taxation."

Page 70 of 557

Equality and uniformity of taxation means that all taxable articles or kinds of property of the same
class be taxed at the same rate. The taxing power has the authority to make reasonable and natural
classifications for purposes of taxation. To satisfy this requirement it is enough that the statute or
ordinance applies equally to all persons, forms and corporations placed in similar situation. (City of
Baguio v. De Leon, supra; Sison, Jr. v. Ancheta, supra)
Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No. 7716 was enacted. R.A.
No. 7716 merely expands the base of the tax. The validity of the original VAT Law was questioned in
Kapatiran ng Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 383 (1988) on
grounds similar to those made in these cases, namely, that the law was "oppressive, discriminatory,
unjust and regressive in violation of Art. VI, 28(1) of the Constitution." (At 382) Rejecting the
challenge to the law, this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid tax. It is uniform.
...
The sales tax adopted in EO 273 is applied similarly on all goods and services sold
to the public, which are not exempt, at the constant rate of 0% or 10%.
The disputed sales tax is also equitable. It is imposed only on sales of goods or
services by persons engaged in business with an aggregate gross annual sales
exceeding P200,000.00. Small corner sari-sari stores are consequently exempt from
its application. Likewise exempt from the tax are sales of farm and marine products,
so that the costs of basic food and other necessities, spared as they are from the
incidence of the VAT, are expected to be relatively lower and within the reach of the
general public.
(At 382-383)
The CREBA claims that the VAT is regressive. A similar claim is made by the Cooperative Union of
the Philippines, Inc. (CUP), while petitioner Juan T. David argues that the law contravenes the
mandate of Congress to provide for a progressive system of taxation because the law imposes a flat
rate of 10% and thus places the tax burden on all taxpayers without regard to their ability to pay.
The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are
regressive. What it simply provides is that Congress shall "evolve a progressive system of taxation."
The constitutional provision has been interpreted to mean simply that "direct taxes are . . . to be
preferred [and] as much as possible, indirect taxes should be minimized." (E. FERNANDO, THE
CONSTITUTION OF THE PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to Congress
is not to prescribe, but to evolve, a progressive tax system. Otherwise, sales taxes, which perhaps
are the oldest form of indirect taxes, would have been prohibited with the proclamation of Art. VIII,
17(1) of the 1973 Constitution from which the present Art. VI, 28(1) was taken. Sales taxes are
also regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not
impossible, to avoid them by imposing such taxes according to the taxpayers' ability to pay. In the
case of the VAT, the law minimizes the regressive effects of this imposition by providing for zero
rating of certain transactions (R.A. No. 7716, 3, amending 102 (b) of the NIRC), while granting
exemptions to other transactions. (R.A. No. 7716, 4, amending 103 of the NIRC).
Thus, the following transactions involving basic and essential goods and services are exempted from
the VAT:
Page 71 of 557

(a) Goods for consumption or use which are in their original state (agricultural,
marine and forest products, cotton seeds in their original state, fertilizers, seeds,
seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services
to enhance agriculture (milling of palay, corn sugar cane and raw sugar, livestock,
poultry feeds, fertilizer, ingredients used for the manufacture of feeds).
(b) Goods used for personal consumption or use (household and personal effects of
citizens returning to the Philippines) and or professional use, like professional
instruments and implements, by persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be used for
manufacture of petroleum products subject to excise tax and services subject to
percentage tax.
(d) Educational services, medical, dental, hospital and veterinary services, and
services rendered under employer-employee relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 5860)
On the other hand, the transactions which are subject to the VAT are those which involve goods and
services which are used or availed of mainly by higher income groups. These include real properties
held primarily for sale to customers or for lease in the ordinary course of trade or business, the right
or privilege to use patent, copyright, and other similar property or right, the right or privilege to use
industrial, commercial or scientific equipment, motion picture films, tapes and discs, radio, television,
satellite transmission and cable television time, hotels, restaurants and similar places, securities,
lending investments, taxicabs, utility cars for rent, tourist buses, and other common carriers, services
of franchise grantees of telephone and telegraph.
The problem with CREBA's petition is that it presents broad claims of constitutional violations by
tendering issues not at retail but at wholesale and in the abstract. There is no fully developed record
which can impart to adjudication the impact of actuality. There is no factual foundation to show in the
concrete the application of the law to actual contracts and exemplify its effect on property rights. For
the fact is that petitioner's members have not even been assessed the VAT. Petitioner's case is not
made concrete by a series of hypothetical questions asked which are no different from those dealt
with in advisory opinions.
The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere
allegation, as here, does not suffice. There must be a factual foundation of such
unconstitutional taint. Considering that petitioner here would condemn such a
provision as void on its face, he has not made out a case. This is merely to adhere to
the authoritative doctrine that where the due process and equal protection clauses
are invoked, considering that they are not fixed rules but rather broad standards,
Page 72 of 557

there is a need for proof of such persuasive character as would lead to such a
conclusion. Absent such a showing, the presumption of validity must prevail.
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a concrete case. It may be that
postponement of adjudication would result in a multiplicity of suits. This need not be the case,
however. Enforcement of the law may give rise to such a case. A test case, provided it is an actual
case and not an abstract or hypothetical one, may thus be presented.
Nor is hardship to taxpayers alone an adequate justification for adjudicating abstract issues.
Otherwise, adjudication would be no different from the giving of advisory opinion that does not really
settle legal issues.
We are told that it is our duty under Art. VIII, 1, 2 to decide whenever a claim is made that "there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the government." This duty can only arise if an actual case or
controversy is before us. Under Art . VIII, 5 our jurisdiction is defined in terms of "cases" and all that
Art. VIII, 1, 2 can plausibly mean is that in the exercise of that jurisdiction we have the judicial
power to determine questions of grave abuse of discretion by any branch or instrumentality of the
government.
Put in another way, what is granted in Art. VIII, 1, 2 is "judicial power," which is "the power of a
court to hear and decide cases pending between parties who have the right to sue and be sued in
the courts of law and equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as distinguished from
legislative and executive power. This power cannot be directly appropriated until it is apportioned
among several courts either by the Constitution, as in the case of Art. VIII, 5, or by statute, as in the
case of the Judiciary Act of 1948 (R.A. No. 296) and the Judiciary Reorganization Act of 1980 (B.P.
Blg. 129). The power thus apportioned constitutes the court's "jurisdiction," defined as "the power
conferred by law upon a court or judge to take cognizance of a case, to the exclusion of all others."
(United States v. Arceo, 6 Phil. 29 (1906)) Without an actual case coming within its jurisdiction, this
Court cannot inquire into any allegation of grave abuse of discretion by the other departments of the
government.
VIII. Alleged violation of policy towards cooperatives. On the other hand, the Cooperative Union of
the Philippines (CUP), after briefly surveying the course of legislation, argues that it was to adopt a
definite policy of granting tax exemption to cooperatives that the present Constitution embodies
provisions on cooperatives. To subject cooperatives to the VAT would therefore be to infringe a
constitutional policy. Petitioner claims that in 1973, P.D. No. 175 was promulgated exempting
cooperatives from the payment of income taxes and sales taxes but in 1984, because of the crisis
which menaced the national economy, this exemption was withdrawn by P.D. No. 1955; that in 1986,
P.D. No. 2008 again granted cooperatives exemption from income and sales taxes until December
31, 1991, but, in the same year, E.O. No. 93 revoked the exemption; and that finally in 1987 the
framers of the Constitution "repudiated the previous actions of the government adverse to the
interests of the cooperatives, that is, the repeated revocation of the tax exemption to cooperatives
and instead upheld the policy of strengthening the cooperatives by way of the grant of tax
exemptions," by providing the following in Art. XII:
1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding

Page 73 of 557

productivity as the key to raising the quality of life for all, especially the
underprivileged.
The State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect Filipino enterprises
against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country
shall be given optimum opportunity to develop. Private enterprises, including
corporations, cooperatives, and similar collective organizations, shall be encouraged
to broaden the base of their ownership.
15. The Congress shall create an agency to promote the viability and growth of
cooperatives as instruments for social justice and economic development.
Petitioner's contention has no merit. In the first place, it is not true that P.D. No. 1955 singled out
cooperatives by withdrawing their exemption from income and sales taxes under P.D. No. 175, 5.
What P.D. No. 1955, 1 did was to withdraw the exemptions and preferential treatments theretofore
granted to private business enterprises in general, in view of the economic crisis which then beset
the nation. It is true that after P.D. No. 2008, 2 had restored the tax exemptions of cooperatives in
1986, the exemption was again repealed by E.O. No. 93, 1, but then again cooperatives were not
the only ones whose exemptions were withdrawn. The withdrawal of tax incentives applied to all,
including government and private entities. In the second place, the Constitution does not really
require that cooperatives be granted tax exemptions in order to promote their growth and viability.
Hence, there is no basis for petitioner's assertion that the government's policy toward cooperatives
had been one of vacillation, as far as the grant of tax privileges was concerned, and that it was to put
an end to this indecision that the constitutional provisions cited were adopted. Perhaps as a matter
of policy cooperatives should be granted tax exemptions, but that is left to the discretion of
Congress. If Congress does not grant exemption and there is no discrimination to cooperatives, no
violation of any constitutional policy can be charged.
Indeed, petitioner's theory amounts to saying that under the Constitution cooperatives are exempt
from taxation. Such theory is contrary to the Constitution under which only the following are exempt
from taxation: charitable institutions, churches and parsonages, by reason of Art. VI, 28 (3), and
non-stock, non-profit educational institutions by reason of Art. XIV, 4 (3).
CUP's further ground for seeking the invalidation of R.A. No. 7716 is that it denies cooperatives the
equal protection of the law because electric cooperatives are exempted from the VAT. The
classification between electric and other cooperatives (farmers cooperatives, producers
cooperatives, marketing cooperatives, etc.) apparently rests on a congressional determination that
there is greater need to provide cheaper electric power to as many people as possible, especially
those living in the rural areas, than there is to provide them with other necessities in life. We cannot
say that such classification is unreasonable.
We have carefully read the various arguments raised against the constitutional validity of R.A. No.
7716. We have in fact taken the extraordinary step of enjoining its enforcement pending resolution of
these cases. We have now come to the conclusion that the law suffers from none of the infirmities
attributed to it by petitioners and that its enactment by the other branches of the government does
not constitute a grave abuse of discretion. Any question as to its necessity, desirability or expediency
must be addressed to Congress as the body which is electorally responsible, remembering that, as
Page 74 of 557

Justice Holmes has said, "legislators are the ultimate guardians of the liberties and welfare of the
people in quite as great a degree as are the courts." (Missouri, Kansas & Texas Ry. Co. v. May, 194
U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in G.R. No. 115543 does in
arguing that we should enforce the public accountability of legislators, that those who took part in
passing the law in question by voting for it in Congress should later thrust to the courts the burden of
reviewing measures in the flush of enactment. This Court does not sit as a third branch of the
legislature, much less exercise a veto power over legislation.
WHEREFORE, the motions for reconsideration are denied with finality and the temporary restraining
order previously issued is hereby lifted.
SO ORDERED.
Narvasa, C.J., Feliciano, Melo, Kapunan, Francisco and Hermosisima, Jr., JJ., concur.
Padilla and Vitug, JJ., maintained their separate opinion.
Regalado, Davide, Jr., Romero, Bellosillo and Puno, JJ, maintained their dissenting opinion.
Panganiban, J., took no part.

Page 75 of 557

Republic of the Philippines

SUPREME COURT
EN BANC
G.R. No. 168056 September 1, 2005
ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S. ALCANTARA and ED
VINCENT S. ALBANO, Petitioners,
vs.
THE HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE
SECRETARY OF THE DEPARTMENT OF FINANCE CESAR PURISIMA; and HONORABLE
COMMISSIONER OF INTERNAL REVENUE GUILLERMO PARAYNO, JR., Respondent.
x-------------------------x
G.R. No. 168207
AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY E. ESTRADA, PANFILO M.
LACSON, ALFREDO S. LIM, JAMBY A.S. MADRIGAL, AND SERGIO R. OSMEA III, Petitioners,
vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, CESAR V. PURISIMA, SECRETARY OF
FINANCE, GUILLERMO L. PARAYNO, JR., COMMISSIONER OF THE BUREAU OF INTERNAL
REVENUE, Respondent.
x-------------------------x
G.R. No. 168461
ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its President, ROSARIO
ANTONIO; PETRON DEALERS ASSOCIATION represented by its President, RUTH E. BARBIBI;
ASSOCIATION OF CALTEX DEALERS OF THE PHILIPPINES represented by its President,
MERCEDITAS A. GARCIA; ROSARIO ANTONIO doing business under the name and style of "ANB
NORTH SHELL SERVICE STATION"; LOURDES MARTINEZ doing business under the name and style of
"SHELL GATE N. DOMINGO"; BETHZAIDA TAN doing business under the name and style of
"ADVANCE SHELL STATION"; REYNALDO P. MONTOYA doing business under the name and style of
"NEW LAMUAN SHELL SERVICE STATION"; EFREN SOTTO doing business under the name and style
of "RED FIELD SHELL SERVICE STATION"; DONICA CORPORATION represented by its President,
DESI TOMACRUZ; RUTH E. MARBIBI doing business under the name and style of "R&R PETRON
STATION"; PETER M. UNGSON doing business under the name and style of "CLASSIC STAR GASOLINE
SERVICE STATION"; MARIAN SHEILA A. LEE doing business under the name and style of "NTE
GASOLINE & SERVICE STATION"; JULIAN CESAR P. POSADAS doing business under the name and
style of "STARCARGA ENTERPRISES"; ADORACION MAEBO doing business under the name and style
of "CMA MOTORISTS CENTER"; SUSAN M. ENTRATA doing business under the name and style of
"LEONAS GASOLINE STATION and SERVICE CENTER"; CARMELITA BALDONADO doing business
under the name and style of "FIRST CHOICE SERVICE CENTER"; MERCEDITAS A. GARCIA doing
business under the name and style of "LORPED SERVICE CENTER"; RHEAMAR A. RAMOS doing
business under the name and style of "RJRAM PTT GAS STATION"; MA. ISABEL VIOLAGO doing
business under the name and style of "VIOLAGO-PTT SERVICE CENTER"; MOTORISTS HEART
CORPORATION represented by its Vice-President for Operations, JOSELITO F. FLORDELIZA;
MOTORISTS HARVARD CORPORATION represented by its Vice-President for Operations, JOSELITO F.
FLORDELIZA; MOTORISTS HERITAGE CORPORATION represented by its Vice-President for
Page 76 of 557

Operations, JOSELITO F. FLORDELIZA; PHILIPPINE STANDARD OIL CORPORATION represented by

its Vice-President for Operations, JOSELITO F. FLORDELIZA; ROMEO MANUEL doing business under the
name and style of "ROMMAN GASOLINE STATION"; ANTHONY ALBERT CRUZ III doing business
under the name and style of "TRUE SERVICE STATION", Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of the Department of Finance and GUILLERMO L.
PARAYNO, JR., in his capacity as Commissioner of Internal Revenue, Respondent.
x-------------------------x
G.R. No. 168463
FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL JOEL J. VILLANUEVA,
RODOLFO G. PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G. MALAPITAN, BENJAMIN C.
AGARAO, JR. JUAN EDGARDO M. ANGARA, JUSTIN MARC SB. CHIPECO, FLORENCIO G. NOEL,
MUJIV S. HATAMAN, RENATO B. MAGTUBO, JOSEPH A. SANTIAGO, TEOFISTO DL. GUINGONA
III, RUY ELIAS C. LOPEZ, RODOLFO Q. AGBAYANI and TEODORO A. CASIO, Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of Finance, GUILLERMO L. PARAYNO, JR., in
his capacity as Commissioner of Internal Revenue, and EDUARDO R. ERMITA, in his capacity as
Executive Secretary, Respondent.
x-------------------------x
G.R. No. 168730
BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. Petitioner,
vs.
HON. EDUARDO R. ERMITA, in his capacity as the Executive Secretary; HON. MARGARITO TEVES, in
his capacity as Secretary of Finance; HON. JOSE MARIO BUNAG, in his capacity as the OIC Commissioner
of the Bureau of Internal Revenue; and HON. ALEXANDER AREVALO, in his capacity as the OIC
Commissioner of the Bureau of Customs, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The expenses of government, having for their object the interest of all, should be borne by everyone, and the
more man enjoys the advantages of society, the more he ought to hold himself honored in contributing to those
expenses.
-Anne Robert Jacques Turgot (1727-1781)
French statesman and economist
Mounting budget deficit, revenue generation, inadequate fiscal allocation for education, increased emoluments
for health workers, and wider coverage for full value-added tax benefits these are the reasons why Republic
Act No. 9337 (R.A. No. 9337)1 was enacted. Reasons, the wisdom of which, the Court even with its extensive
constitutional power of review, cannot probe. The petitioners in these cases, however, question not only the
wisdom of the law, but also perceived constitutional infirmities in its passage.

Page 77 of 557

Every law enjoys in its favor the presumption of constitutionality. Their arguments notwithstanding,
petitioners failed to justify their call for the invalidity of the law. Hence, R.A. No. 9337 is not unconstitutional.
LEGISLATIVE HISTORY
R.A. No. 9337 is a consolidation of three legislative bills namely, House Bill Nos. 3555 and 3705, and Senate
Bill No. 1950.
House Bill No. 35552 was introduced on first reading on January 7, 2005. The House Committee on Ways and
Means approved the bill, in substitution of House Bill No. 1468, which Representative (Rep.) Eric D. Singson
introduced on August 8, 2004. The President certified the bill on January 7, 2005 for immediate enactment. On
January 27, 2005, the House of Representatives approved the bill on second and third reading.
House Bill No. 37053 on the other hand, substituted House Bill No. 3105 introduced by Rep. Salacnib F.
Baterina, and House Bill No. 3381 introduced by Rep. Jacinto V. Paras. Its "mother bill" is House Bill No.
3555. The House Committee on Ways and Means approved the bill on February 2, 2005. The President also
certified it as urgent on February 8, 2005. The House of Representatives approved the bill on second and third
reading on February 28, 2005.
Meanwhile, the Senate Committee on Ways and Means approved Senate Bill No. 19504 on March 7, 2005, "in
substitution of Senate Bill Nos. 1337, 1838 and 1873, taking into consideration House Bill Nos. 3555 and
3705." Senator Ralph G. Recto sponsored Senate Bill No. 1337, while Senate Bill Nos. 1838 and 1873 were
both sponsored by Sens. Franklin M. Drilon, Juan M. Flavier and Francis N. Pangilinan. The President
certified the bill on March 11, 2005, and was approved by the Senate on second and third reading on April 13,
2005.
On the same date, April 13, 2005, the Senate agreed to the request of the House of Representatives for a
committee conference on the disagreeing provisions of the proposed bills.
Before long, the Conference Committee on the Disagreeing Provisions of House Bill No. 3555, House Bill No.
3705, and Senate Bill No. 1950, "after having met and discussed in full free and conference," recommended
the approval of its report, which the Senate did on May 10, 2005, and with the House of Representatives
agreeing thereto the next day, May 11, 2005.
On May 23, 2005, the enrolled copy of the consolidated House and Senate version was transmitted to the
President, who signed the same into law on May 24, 2005. Thus, came R.A. No. 9337.
July 1, 2005 is the effectivity date of R.A. No. 9337.5 When said date came, the Court issued a temporary
restraining order, effective immediately and continuing until further orders, enjoining respondents from
enforcing and implementing the law.
Oral arguments were held on July 14, 2005. Significantly, during the hearing, the Court speaking through Mr.
Justice Artemio V. Panganiban, voiced the rationale for its issuance of the temporary restraining order on July
1, 2005, to wit:
J. PANGANIBAN : . . . But before I go into the details of your presentation, let me just tell you a little
background. You know when the law took effect on July 1, 2005, the Court issued a TRO at about 5 oclock in
the afternoon. But before that, there was a lot of complaints aired on television and on radio. Some people in a
gas station were complaining that the gas prices went up by 10%. Some people were complaining that their
electric bill will go up by 10%. Other times people riding in domestic air carrier were complaining that the
prices that theyll have to pay would have to go up by 10%. While all that was being aired, per your
Page 78 of 557

presentation and per our own understanding of the law, thats not true. Its not true that the e-vat law
necessarily increased prices by 10% uniformly isnt it?
ATTY. BANIQUED : No, Your Honor.
J. PANGANIBAN : It is not?
ATTY. BANIQUED : Its not, because, Your Honor, there is an Executive Order that granted the Petroleum
companies some subsidy . . . interrupted
J. PANGANIBAN : Thats correct . . .
ATTY. BANIQUED : . . . and therefore that was meant to temper the impact . . . interrupted
J. PANGANIBAN : . . . mitigating measures . . .
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : As a matter of fact a part of the mitigating measures would be the elimination of the
Excise Tax and the import duties. That is why, it is not correct to say that the VAT as to petroleum dealers
increased prices by 10%.
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : And therefore, there is no justification for increasing the retail price by 10% to cover the
E-Vat tax. If you consider the excise tax and the import duties, the Net Tax would probably be in the
neighborhood of 7%? We are not going into exact figures I am just trying to deliver a point that different
industries, different products, different services are hit differently. So its not correct to say that all prices must
go up by 10%.
ATTY. BANIQUED : Youre right, Your Honor.
J. PANGANIBAN : Now. For instance, Domestic Airline companies, Mr. Counsel, are at present imposed a
Sales Tax of 3%. When this E-Vat law took effect the Sales Tax was also removed as a mitigating measure.
So, therefore, there is no justification to increase the fares by 10% at best 7%, correct?
ATTY. BANIQUED : I guess so, Your Honor, yes.
J. PANGANIBAN : There are other products that the people were complaining on that first day, were being
increased arbitrarily by 10%. And thats one reason among many others this Court had to issue TRO because
of the confusion in the implementation. Thats why we added as an issue in this case, even if its tangentially
taken up by the pleadings of the parties, the confusion in the implementation of the E-vat. Our people were
subjected to the mercy of that confusion of an across the board increase of 10%, which you yourself now admit
and I think even the Government will admit is incorrect. In some cases, it should be 3% only, in some cases it
should be 6% depending on these mitigating measures and the location and situation of each product, of each
service, of each company, isnt it?
ATTY. BANIQUED : Yes, Your Honor.

Page 79 of 557

J. PANGANIBAN : Alright. So thats one reason why we had to issue a TRO pending the clarification of all
these and we wish the government will take time to clarify all these by means of a more detailed implementing
rules, in case the law is upheld by this Court. . . .6
The Court also directed the parties to file their respective Memoranda.
G.R. No. 168056
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al., filed a petition for
prohibition on May 27, 2005. They question the constitutionality of Sections 4, 5 and 6 of R.A. No. 9337,
amending Sections 106, 107 and 108, respectively, of the National Internal Revenue Code (NIRC). Section 4
imposes a 10% VAT on sale of goods and properties, Section 5 imposes a 10% VAT on importation of goods,
and Section 6 imposes a 10% VAT on sale of services and use or lease of properties. These questioned
provisions contain a uniform proviso authorizing the President, upon recommendation of the Secretary of
Finance, to raise the VAT rate to 12%, effective January 1, 2006, after any of the following conditions have
been satisfied, to wit:
. . . That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006,
raise the rate of value-added tax to twelve percent (12%), after any of the following conditions has been
satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %).
Petitioners argue that the law is unconstitutional, as it constitutes abandonment by Congress of its exclusive
authority to fix the rate of taxes under Article VI, Section 28(2) of the 1987 Philippine Constitution.
G.R. No. 168207
On June 9, 2005, Sen. Aquilino Q. Pimentel, Jr., et al., filed a petition for certiorari likewise assailing the
constitutionality of Sections 4, 5 and 6 of R.A. No. 9337.
Aside from questioning the so-called stand-by authority of the President to increase the VAT rate to 12%, on
the ground that it amounts to an undue delegation of legislative power, petitioners also contend that the
increase in the VAT rate to 12% contingent on any of the two conditions being satisfied violates the due
process clause embodied in Article III, Section 1 of the Constitution, as it imposes an unfair and additional tax
burden on the people, in that: (1) the 12% increase is ambiguous because it does not state if the rate would be
returned to the original 10% if the conditions are no longer satisfied; (2) the rate is unfair and unreasonable, as
the people are unsure of the applicable VAT rate from year to year; and (3) the increase in the VAT rate, which
is supposed to be an incentive to the President to raise the VAT collection to at least 2 4/5 of the GDP of the
previous year, should only be based on fiscal adequacy.
Petitioners further claim that the inclusion of a stand-by authority granted to the President by the Bicameral
Conference Committee is a violation of the "no-amendment rule" upon last reading of a bill laid down in
Article VI, Section 26(2) of the Constitution.
G.R. No. 168461

Page 80 of 557

Thereafter, a petition for prohibition was filed on June 29, 2005, by the Association of Pilipinas Shell Dealers,
Inc., et al., assailing the following provisions of R.A. No. 9337:
1) Section 8, amending Section 110 (A)(2) of the NIRC, requiring that the input tax on depreciable goods shall
be amortized over a 60-month period, if the acquisition, excluding the VAT components, exceeds One Million
Pesos (P1, 000,000.00);
2) Section 8, amending Section 110 (B) of the NIRC, imposing a 70% limit on the amount of input tax to be
credited against the output tax; and
3) Section 12, amending Section 114 (c) of the NIRC, authorizing the Government or any of its political
subdivisions, instrumentalities or agencies, including GOCCs, to deduct a 5% final withholding tax on gross
payments of goods and services, which are subject to 10% VAT under Sections 106 (sale of goods and
properties) and 108 (sale of services and use or lease of properties) of the NIRC.
Petitioners contend that these provisions are unconstitutional for being arbitrary, oppressive, excessive, and
confiscatory.
Petitioners argument is premised on the constitutional right of non-deprivation of life, liberty or property
without due process of law under Article III, Section 1 of the Constitution. According to petitioners, the
contested sections impose limitations on the amount of input tax that may be claimed. Petitioners also argue
that the input tax partakes the nature of a property that may not be confiscated, appropriated, or limited without
due process of law. Petitioners further contend that like any other property or property right, the input tax
credit may be transferred or disposed of, and that by limiting the same, the government gets to tax a profit or
value-added even if there is no profit or value-added.
Petitioners also believe that these provisions violate the constitutional guarantee of equal protection of the law
under Article III, Section 1 of the Constitution, as the limitation on the creditable input tax if: (1) the entity has
a high ratio of input tax; or (2) invests in capital equipment; or (3) has several transactions with the
government, is not based on real and substantial differences to meet a valid classification.
Lastly, petitioners contend that the 70% limit is anything but progressive, violative of Article VI, Section 28(1)
of the Constitution, and that it is the smaller businesses with higher input tax to output tax ratio that will suffer
the consequences thereof for it wipes out whatever meager margins the petitioners make.
G.R. No. 168463
Several members of the House of Representatives led by Rep. Francis Joseph G. Escudero filed this petition
for certiorari on June 30, 2005. They question the constitutionality of R.A. No. 9337 on the following
grounds:
1) Sections 4, 5, and 6 of R.A. No. 9337 constitute an undue delegation of legislative power, in violation of
Article VI, Section 28(2) of the Constitution;
2) The Bicameral Conference Committee acted without jurisdiction in deleting the no pass on provisions
present in Senate Bill No. 1950 and House Bill No. 3705; and
3) Insertion by the Bicameral Conference Committee of Sections 27, 28, 34, 116, 117, 119, 121, 125,7 148,
151, 236, 237 and 288, which were present in Senate Bill No. 1950, violates Article VI, Section 24(1) of the
Constitution, which provides that all appropriation, revenue or tariff bills shall originate exclusively in the
House of Representatives
Page 81 of 557

G.R. No. 168730

On the eleventh hour, Governor Enrique T. Garcia filed a petition for certiorari and prohibition on July 20,
2005, alleging unconstitutionality of the law on the ground that the limitation on the creditable input tax in
effect allows VAT-registered establishments to retain a portion of the taxes they collect, thus violating the
principle that tax collection and revenue should be solely allocated for public purposes and expenditures.
Petitioner Garcia further claims that allowing these establishments to pass on the tax to the consumers is
inequitable, in violation of Article VI, Section 28(1) of the Constitution.
RESPONDENTS COMMENT
The Office of the Solicitor General (OSG) filed a Comment in behalf of respondents. Preliminarily,
respondents contend that R.A. No. 9337 enjoys the presumption of constitutionality and petitioners failed to
cast doubt on its validity.
Relying on the case of Tolentino vs. Secretary of Finance, 235 SCRA
630 (1994), respondents argue that the procedural issues raised by petitioners, i.e., legality of the bicameral
proceedings, exclusive origination of revenue measures and the power of the Senate concomitant thereto, have
already been settled. With regard to the issue of undue delegation of legislative power to the President,
respondents contend that the law is complete and leaves no discretion to the President but to increase the rate
to 12% once any of the two conditions provided therein arise.
Respondents also refute petitioners argument that the increase to 12%, as well as the 70% limitation on the
creditable input tax, the 60-month amortization on the purchase or importation of capital goods exceeding
P1,000,000.00, and the 5% final withholding tax by government agencies, is arbitrary, oppressive, and
confiscatory, and that it violates the constitutional principle on progressive taxation, among others.
Finally, respondents manifest that R.A. No. 9337 is the anchor of the governments fiscal reform agenda. A
reform in the value-added system of taxation is the core revenue measure that will tilt the balance towards a
sustainable macroeconomic environment necessary for economic growth.
ISSUES
The Court defined the issues, as follows:
PROCEDURAL ISSUE
Whether R.A. No. 9337 violates the following provisions of the Constitution:
a. Article VI, Section 24, and
b. Article VI, Section 26(2)
SUBSTANTIVE ISSUES
1. Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of the NIRC, violate
the following provisions of the Constitution:
a. Article VI, Section 28(1), and

Page 82 of 557

b. Article VI, Section 28(2)

2. Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the NIRC; and Section 12
of R.A. No. 9337, amending Section 114(C) of the NIRC, violate the following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
RULING OF THE COURT
As a prelude, the Court deems it apt to restate the general principles and concepts of value-added tax (VAT), as
the confusion and inevitably, litigation, breeds from a fallacious notion of its nature.
The VAT is a tax on spending or consumption. It is levied on the sale, barter, exchange or lease of goods or
properties and services.8 Being an indirect tax on expenditure, the seller of goods or services may pass on the
amount of tax paid to the buyer,9 with the seller acting merely as a tax collector.10 The burden of VAT is
intended to fall on the immediate buyers and ultimately, the end-consumers.
In contrast, a direct tax is a tax for which a taxpayer is directly liable on the transaction or business it engages
in, without transferring the burden to someone else.11 Examples are individual and corporate income taxes,
transfer taxes, and residence taxes.12
In the Philippines, the value-added system of sales taxation has long been in existence, albeit in a different
mode. Prior to 1978, the system was a single-stage tax computed under the "cost deduction method" and was
payable only by the original sellers. The single-stage system was subsequently modified, and a mixture of the
"cost deduction method" and "tax credit method" was used to determine the value-added tax payable.13 Under
the "tax credit method," an entity can credit against or subtract from the VAT charged on its sales or outputs
the VAT paid on its purchases, inputs and imports.14
It was only in 1987, when President Corazon C. Aquino issued Executive Order No. 273, that the VAT system
was rationalized by imposing a multi-stage tax rate of 0% or 10% on all sales using the "tax credit method."15
E.O. No. 273 was followed by R.A. No. 7716 or the Expanded VAT Law,16 R.A. No. 8241 or the Improved
VAT Law,17 R.A. No. 8424 or the Tax Reform Act of 1997,18 and finally, the presently beleaguered R.A. No.
9337, also referred to by respondents as the VAT Reform Act.
The Court will now discuss the issues in logical sequence.
PROCEDURAL ISSUE
I.
Whether R.A. No. 9337 violates the following provisions of the Constitution:
a. Article VI, Section 24, and
b. Article VI, Section 26(2)
A. The Bicameral Conference Committee
Page 83 of 557

Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral Conference Committee exceeded its
authority by:
1) Inserting the stand-by authority in favor of the President in Sections 4, 5, and 6 of R.A. No. 9337;
2) Deleting entirely the no pass-on provisions found in both the House and Senate bills;
3) Inserting the provision imposing a 70% limit on the amount of input tax to be credited against the output
tax; and
4) Including the amendments introduced only by Senate Bill No. 1950 regarding other kinds of taxes in
addition to the value-added tax.
Petitioners now beseech the Court to define the powers of the Bicameral Conference Committee.
It should be borne in mind that the power of internal regulation and discipline are intrinsic in any legislative
body for, as unerringly elucidated by Justice Story, "[i]f the power did not exist, it would be utterly
impracticable to transact the business of the nation, either at all, or at least with decency, deliberation,
and order."19 Thus, Article VI, Section 16 (3) of the Constitution provides that "each House may determine
the rules of its proceedings." Pursuant to this inherent constitutional power to promulgate and implement its
own rules of procedure, the respective rules of each house of Congress provided for the creation of a Bicameral
Conference Committee.
Thus, Rule XIV, Sections 88 and 89 of the Rules of House of Representatives provides as follows:
Sec. 88. Conference Committee. In the event that the House does not agree with the Senate on the
amendment to any bill or joint resolution, the differences may be settled by the conference committees of both
chambers.
In resolving the differences with the Senate, the House panel shall, as much as possible, adhere to and support
the House Bill. If the differences with the Senate are so substantial that they materially impair the House Bill,
the panel shall report such fact to the House for the latters appropriate action.
Sec. 89. Conference Committee Reports. . . . Each report shall contain a detailed, sufficiently explicit
statement of the changes in or amendments to the subject measure.
...
The Chairman of the House panel may be interpellated on the Conference Committee Report prior to the
voting thereon. The House shall vote on the Conference Committee Report in the same manner and procedure
as it votes on a bill on third and final reading.
Rule XII, Section 35 of the Rules of the Senate states:
Sec. 35. In the event that the Senate does not agree with the House of Representatives on the provision of any
bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall
meet within ten (10) days after their composition. The President shall designate the members of the Senate
Panel in the conference committee with the approval of the Senate.

Page 84 of 557

Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes
in, or amendments to the subject measure, and shall be signed by a majority of the members of each House
panel, voting separately.
A comparative presentation of the conflicting House and Senate provisions and a reconciled version thereof
with the explanatory statement of the conference committee shall be attached to the report.
...
The creation of such conference committee was apparently in response to a problem, not addressed by any
constitutional provision, where the two houses of Congress find themselves in disagreement over changes or
amendments introduced by the other house in a legislative bill. Given that one of the most basic powers of the
legislative branch is to formulate and implement its own rules of proceedings and to discipline its members,
may the Court then delve into the details of how Congress complies with its internal rules or how it conducts
its business of passing legislation? Note that in the present petitions, the issue is not whether provisions of the
rules of both houses creating the bicameral conference committee are unconstitutional, but whether the
bicameral conference committee has strictly complied with the rules of both houses, thereby remaining
within the jurisdiction conferred upon it by Congress.
In the recent case of Farias vs. The Executive Secretary,20 the Court En Banc, unanimously reiterated and
emphasized its adherence to the "enrolled bill doctrine," thus, declining therein petitioners plea for the Court
to go behind the enrolled copy of the bill. Assailed in said case was Congresss creation of two sets of
bicameral conference committees, the lack of records of said committees proceedings, the alleged violation of
said committees of the rules of both houses, and the disappearance or deletion of one of the provisions in the
compromise bill submitted by the bicameral conference committee. It was argued that such irregularities in the
passage of the law nullified R.A. No. 9006, or the Fair Election Act.
Striking down such argument, the Court held thus:
Under the "enrolled bill doctrine," the signing of a bill by the Speaker of the House and the Senate President
and the certification of the Secretaries of both Houses of Congress that it was passed are conclusive of its due
enactment. A review of cases reveals the Courts consistent adherence to the rule. The Court finds no reason
to deviate from the salutary rule in this case where the irregularities alleged by the petitioners mostly
involved the internal rules of Congress, e.g., creation of the 2nd or 3rd Bicameral Conference Committee
by the House. This Court is not the proper forum for the enforcement of these internal rules of
Congress, whether House or Senate. Parliamentary rules are merely procedural and with their
observance the courts have no concern. Whatever doubts there may be as to the formal validity of Rep.
Act No. 9006 must be resolved in its favor. The Court reiterates its ruling in Arroyo vs. De Venecia, viz.:
But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power to
inquire into allegations that, in enacting a law, a House of Congress failed to comply with its own rules,
in the absence of showing that there was a violation of a constitutional provision or the rights of private
individuals. In Osmea v. Pendatun, it was held: "At any rate, courts have declared that the rules adopted by
deliberative bodies are subject to revocation, modification or waiver at the pleasure of the body adopting
them. And it has been said that "Parliamentary rules are merely procedural, and with their observance,
the courts have no concern. They may be waived or disregarded by the legislative body." Consequently,
"mere failure to conform to parliamentary usage will not invalidate the action (taken by a deliberative
body) when the requisite number of members have agreed to a particular measure."21 (Emphasis
supplied)
The foregoing declaration is exactly in point with the present cases, where petitioners allege irregularities
committed by the conference committee in introducing changes or deleting provisions in the House and Senate
Page 85 of 557

bills. Akin to the Farias case,22 the present petitions also raise an issue regarding the actions taken by the
conference committee on matters regarding Congress compliance with its own internal rules. As stated earlier,
one of the most basic and inherent power of the legislature is the power to formulate rules for its proceedings
and the discipline of its members. Congress is the best judge of how it should conduct its own business
expeditiously and in the most orderly manner. It is also the sole
concern of Congress to instill discipline among the members of its conference committee if it believes that said
members violated any of its rules of proceedings. Even the expanded jurisdiction of this Court cannot apply to
questions regarding only the internal operation of Congress, thus, the Court is wont to deny a review of the
internal proceedings of a co-equal branch of government.
Moreover, as far back as 1994 or more than ten years ago, in the case of Tolentino vs. Secretary of Finance,23
the Court already made the pronouncement that "[i]f a change is desired in the practice [of the Bicameral
Conference Committee] it must be sought in Congress since this question is not covered by any
constitutional provision but is only an internal rule of each house." 24 To date, Congress has not seen it fit
to make such changes adverted to by the Court. It seems, therefore, that Congress finds the practices of the
bicameral conference committee to be very useful for purposes of prompt and efficient legislative action.
Nevertheless, just to put minds at ease that no blatant irregularities tainted the proceedings of the bicameral
conference committees, the Court deems it necessary to dwell on the issue. The Court observes that there was a
necessity for a conference committee because a comparison of the provisions of House Bill Nos. 3555 and
3705 on one hand, and Senate Bill No. 1950 on the other, reveals that there were indeed disagreements. As
pointed out in the petitions, said disagreements were as follows:
House Bill No. 3555
House Bill No.3705
Senate Bill No. 1950
With regard to "Stand-By Authority" in favor of President
Provides for 12% VAT on
Provides for 12% VAT in general
Provides for a single rate of 10%
every sale of goods or
on sales of goods or properties and
VAT on sale of goods or
properties (amending Sec. 106
reduced rates for sale of certain
properties (amending Sec. 106
of NIRC); 12% VAT on
locally manufactured goods and
of NIRC), 10% VAT on sale of
importation of goods
petroleum products and raw
services including sale of
(amending Sec. 107 of NIRC);
materials to be used in the
electricity by generation
and 12% VAT on sale of
manufacture thereof (amending Sec.
companies, transmission and
services and use or lease of
106 of NIRC); 12% VAT on
distribution companies, and use
properties (amending Sec. 108
importation of goods and reduced
or lease of properties (amending
of NIRC)
rates for certain imported products
Sec. 108 of NIRC)
including petroleum products
(amending Sec. 107 of NIRC); and
12% VAT on sale of services and
use or lease of properties and a
reduced rate for certain services
including power generation
(amending Sec. 108 of NIRC)
With regard to the "no pass-on" provision
No similar provision
Provides that the VAT imposed on
Provides that the VAT imposed
power generation and on the sale of
on sales of electricity by
petroleum products shall be
generation companies and
absorbed by generation companies
services of transmission
or sellers, respectively, and shall not
companies and distribution
be passed on to consumers
companies, as well as those of
franchise grantees of electric
utilities shall not apply to
Page 86 of 557

residential
end-users. VAT shall be
absorbed by generation,
transmission, and distribution
companies.
With regard to 70% limit on input tax credit
Provides that the input tax
No similar provision
Provides that the input tax credit
credit for capital goods on
for capital goods on which a
which a VAT has been paid
VAT has been paid shall be
shall be equally distributed
equally distributed over 5 years
over 5 years or the depreciable
or the depreciable life of such
life of such capital goods; the
capital goods; the input tax
input tax credit for goods and
credit for goods and services
services other than capital
other than capital goods shall not
goods shall not exceed 5% of
exceed 90% of the output VAT.
the total amount of such goods
and services; and for persons
engaged in retail trading of
goods, the allowable input tax
credit shall not exceed 11% of
the total amount of goods
purchased.
With regard to amendments to be made to NIRC provisions regarding income and excise taxes
No similar provision
No similar provision
Provided for amendments to
several NIRC provisions
regarding corporate income,
percentage, franchise and excise
taxes
The disagreements between the provisions in the House bills and the Senate bill were with regard to (1) what
rate of VAT is to be imposed; (2) whether only the VAT imposed on electricity generation, transmission and
distribution companies should not be passed on to consumers, as proposed in the Senate bill, or both the VAT
imposed on electricity generation, transmission and distribution companies and the VAT imposed on sale of
petroleum products should not be passed on to consumers, as proposed in the House bill; (3) in what manner
input tax credits should be limited; (4) and whether the NIRC provisions on corporate income taxes,
percentage, franchise and excise taxes should be amended.
There being differences and/or disagreements on the foregoing provisions of the House and Senate bills, the
Bicameral Conference Committee was mandated by the rules of both houses of Congress to act on the same by
settling said differences and/or disagreements. The Bicameral Conference Committee acted on the disagreeing
provisions by making the following changes:
1. With regard to the disagreement on the rate of VAT to be imposed, it would appear from the Conference
Committee Report that the Bicameral Conference Committee tried to bridge the gap in the difference between
the 10% VAT rate proposed by the Senate, and the various rates with 12% as the highest VAT rate proposed
by the House, by striking a compromise whereby the present 10% VAT rate would be retained until certain
conditions arise, i.e., the value-added tax collection as a percentage of gross domestic product (GDP) of the
previous year exceeds 2 4/5%, or National Government deficit as a percentage of GDP of the previous year
exceeds 1%, when the President, upon recommendation of the Secretary of Finance shall raise the rate of
VAT to 12% effective January 1, 2006.

Page 87 of 557

2. With regard to the disagreement on whether only the VAT imposed on electricity generation, transmission
and distribution companies should not be passed on to consumers or whether both the VAT imposed on
electricity generation, transmission and distribution companies and the VAT imposed on sale of petroleum
products may be passed on to consumers, the Bicameral Conference Committee chose to settle such
disagreement by altogether deleting from its Report any no pass-on provision.
3. With regard to the disagreement on whether input tax credits should be limited or not, the Bicameral
Conference Committee decided to adopt the position of the House by putting a limitation on the amount of
input tax that may be credited against the output tax, although it crafted its own language as to the amount of
the limitation on input tax credits and the manner of computing the same by providing thus:
(A) Creditable Input Tax. . . .
...
Provided, The input tax on goods purchased or imported in a calendar month for use in trade or business for
which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of
acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods,
excluding the VAT component thereof, exceeds one million Pesos (P1,000,000.00): PROVIDED, however,
that if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes,
then the input VAT shall be spread over such shorter period: . . .
(B) Excess Output or Input Tax. If at the end of any taxable quarter the output tax exceeds the input tax, the
excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be
carried over to the succeeding quarter or quarters: PROVIDED that the input tax inclusive of input VAT
carried over from the previous quarter that may be credited in every quarter shall not exceed seventy percent
(70%) of the output VAT: PROVIDED, HOWEVER, THAT any input tax attributable to zero-rated sales by a
VAT-registered person may at his option be refunded or credited against other internal revenue taxes, . . .
4. With regard to the amendments to other provisions of the NIRC on corporate income tax, franchise,
percentage and excise taxes, the conference committee decided to include such amendments and basically
adopted the provisions found in Senate Bill No. 1950, with some changes as to the rate of the tax to be
imposed.
Under the provisions of both the Rules of the House of Representatives and Senate Rules, the Bicameral
Conference Committee is mandated to settle the differences between the disagreeing provisions in the House
bill and the Senate bill. The term "settle" is synonymous to "reconcile" and "harmonize."25 To reconcile or
harmonize disagreeing provisions, the Bicameral Conference Committee may then (a) adopt the specific
provisions of either the House bill or Senate bill, (b) decide that neither provisions in the House bill or the
provisions in the Senate bill would
be carried into the final form of the bill, and/or (c) try to arrive at a compromise between the disagreeing
provisions.
In the present case, the changes introduced by the Bicameral Conference Committee on disagreeing provisions
were meant only to reconcile and harmonize the disagreeing provisions for it did not inject any idea or intent
that is wholly foreign to the subject embraced by the original provisions.
The so-called stand-by authority in favor of the President, whereby the rate of 10% VAT wanted by the Senate
is retained until such time that certain conditions arise when the 12% VAT wanted by the House shall be
imposed, appears to be a compromise to try to bridge the difference in the rate of VAT proposed by the two

Page 88 of 557

houses of Congress. Nevertheless, such compromise is still totally within the subject of what rate of VAT
should be imposed on taxpayers.
The no pass-on provision was deleted altogether. In the transcripts of the proceedings of the Bicameral
Conference Committee held on May 10, 2005, Sen. Ralph Recto, Chairman of the Senate Panel, explained the
reason for deleting the no pass-on provision in this wise:
. . . the thinking was just to keep the VAT law or the VAT bill simple. And we were thinking that no sector
should be a beneficiary of legislative grace, neither should any sector be discriminated on. The VAT is an
indirect tax. It is a pass on-tax. And lets keep it plain and simple. Lets not confuse the bill and put a no passon provision. Two-thirds of the world have a VAT system and in this two-thirds of the globe, I have yet to see
a VAT with a no pass-though provision. So, the thinking of the Senate is basically simple, lets keep the VAT
simple.26 (Emphasis supplied)
Rep. Teodoro Locsin further made the manifestation that the no pass-on provision "never really enjoyed the
support of either House."27
With regard to the amount of input tax to be credited against output tax, the Bicameral Conference Committee
came to a compromise on the percentage rate of the limitation or cap on such input tax credit, but again, the
change introduced by the Bicameral Conference Committee was totally within the intent of both houses to put
a cap on input tax that may be
credited against the output tax. From the inception of the subject revenue bill in the House of Representatives,
one of the major objectives was to "plug a glaring loophole in the tax policy and administration by creating
vital restrictions on the claiming of input VAT tax credits . . ." and "[b]y introducing limitations on the
claiming of tax credit, we are capping a major leakage that has placed our collection efforts at an apparent
disadvantage."28
As to the amendments to NIRC provisions on taxes other than the value-added tax proposed in Senate Bill No.
1950, since said provisions were among those referred to it, the conference committee had to act on the same
and it basically adopted the version of the Senate.
Thus, all the changes or modifications made by the Bicameral Conference Committee were germane to
subjects of the provisions referred
to it for reconciliation. Such being the case, the Court does not see any grave abuse of discretion amounting to
lack or excess of jurisdiction committed by the Bicameral Conference Committee. In the earlier cases of
Philippine Judges Association vs. Prado29 and Tolentino vs. Secretary of Finance,30 the Court recognized the
long-standing legislative practice of giving said conference committee ample latitude for compromising
differences between the Senate and the House. Thus, in the Tolentino case, it was held that:
. . . it is within the power of a conference committee to include in its report an entirely new provision that is
not found either in the House bill or in the Senate bill. If the committee can propose an amendment consisting
of one or two provisions, there is no reason why it cannot propose several provisions, collectively considered
as an "amendment in the nature of a substitute," so long as such amendment is germane to the subject of the
bills before the committee. After all, its report was not final but needed the approval of both houses of
Congress to become valid as an act of the legislative department. The charge that in this case the
Conference Committee acted as a third legislative chamber is thus without any basis.31 (Emphasis
supplied)
B. R.A. No. 9337 Does Not Violate Article VI, Section 26(2) of the Constitution on the "No-Amendment Rule"

Page 89 of 557

Article VI, Sec. 26 (2) of the Constitution, states:

No bill passed by either House shall become a law unless it has passed three readings on separate days, and
printed copies thereof in its final form have been distributed to its Members three days before its passage,
except when the President certifies to the necessity of its immediate enactment to meet a public calamity or
emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall
be taken immediately thereafter, and the yeas and nays entered in the Journal.
Petitioners argument that the practice where a bicameral conference committee is allowed to add or delete
provisions in the House bill and the Senate bill after these had passed three readings is in effect a
circumvention of the "no amendment rule" (Sec. 26 (2), Art. VI of the 1987 Constitution), fails to convince the
Court to deviate from its ruling in the Tolentino case that:
Nor is there any reason for requiring that the Committees Report in these cases must have undergone three
readings in each of the two houses. If that be the case, there would be no end to negotiation since each house
may seek modification of the compromise bill. . . .
Art. VI. 26 (2) must, therefore, be construed as referring only to bills introduced for the first time in
either house of Congress, not to the conference committee report.32 (Emphasis supplied)
The Court reiterates here that the "no-amendment rule" refers only to the procedure to be followed by
each house of Congress with regard to bills initiated in each of said respective houses, before said bill is
transmitted to the other house for its concurrence or amendment. Verily, to construe said provision in a
way as to proscribe any further changes to a bill after one house has voted on it would lead to absurdity as this
would mean that the other house of Congress would be deprived of its constitutional power to amend or
introduce changes to said bill. Thus, Art. VI, Sec. 26 (2) of the Constitution cannot be taken to mean that the
introduction by the Bicameral Conference Committee of amendments and modifications to disagreeing
provisions in bills that have been acted upon by both houses of Congress is prohibited.
C. R.A. No. 9337 Does Not Violate Article VI, Section 24 of the Constitution on Exclusive Origination of
Revenue Bills
Coming to the issue of the validity of the amendments made regarding the NIRC provisions on corporate
income taxes and percentage, excise taxes. Petitioners refer to the following provisions, to wit:
Section 27
28(A)(1)
28(B)(1)
34(B)(1)
116
117
119
121
148
151
236
237
288

Rates of Income Tax on Domestic Corporation

Tax on Resident Foreign Corporation
Inter-corporate Dividends
Inter-corporate Dividends
Tax on Persons Exempt from VAT
Percentage Tax on domestic carriers and keepers of Garage
Tax on franchises
Tax on banks and Non-Bank Financial Intermediaries
Excise Tax on manufactured oils and other fuels
Excise Tax on mineral products
Registration requirements
Issuance of receipts or sales or commercial invoices
Disposition of Incremental Revenue

Page 90 of 557

Petitioners claim that the amendments to these provisions of the NIRC did not at all originate from the House.
They aver that House Bill No. 3555 proposed amendments only regarding Sections 106, 107, 108, 110 and 114
of the NIRC, while House Bill No. 3705 proposed amendments only to Sections 106, 107,108, 109, 110 and
111 of the NIRC; thus, the other sections of the NIRC which the Senate amended but which amendments were
not found in the House bills are not intended to be amended by the House of Representatives. Hence, they
argue that since the proposed amendments did not originate from the House, such amendments are a violation
of Article VI, Section 24 of the Constitution.
The argument does not hold water.
Article VI, Section 24 of the Constitution reads:
Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives but the Senate may
propose or concur with amendments.
In the present cases, petitioners admit that it was indeed House Bill Nos. 3555 and 3705 that initiated the move
for amending provisions of the NIRC dealing mainly with the value-added tax. Upon transmittal of said House
bills to the Senate, the Senate came out with Senate Bill No. 1950 proposing amendments not only to NIRC
provisions on the value-added tax but also amendments to NIRC provisions on other kinds of taxes. Is the
introduction by the Senate of provisions not dealing directly with the value- added tax, which is the only kind
of tax being amended in the House bills, still within the purview of the constitutional provision authorizing the
Senate to propose or concur with amendments to a revenue bill that originated from the House?
The foregoing question had been squarely answered in the Tolentino case, wherein the Court held, thus:
. . . To begin with, it is not the law but the revenue bill which is required by the Constitution to "originate
exclusively" in the House of Representatives. It is important to emphasize this, because a bill originating in the
House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole. . . .
At this point, what is important to note is that, as a result of the Senate action, a distinct bill may be produced.
To insist that a revenue statute and not only the bill which initiated the legislative process culminating
in the enactment of the law must substantially be the same as the House bill would be to deny the
Senates power not only to "concur with amendments" but also to "propose amendments." It would be to
violate the coequality of legislative power of the two houses of Congress and in fact make the House superior
to the Senate.

Given, then, the power of the Senate to propose amendments, the Senate can propose its own version
even with respect to bills which are required by the Constitution to originate in the House.
...
Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff or tax bills, bills
authorizing an increase of the public debt, private bills and bills of local application must come from the House
of Representatives on the theory that, elected as they are from the districts, the members of the House can be
expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are
elected at large, are expected to approach the same problems from the national perspective. Both views
are thereby made to bear on the enactment of such laws.33 (Emphasis supplied)

Page 91 of 557

Since there is no question that the revenue bill exclusively originated in the House of Representatives, the
Senate was acting within its
constitutional power to introduce amendments to the House bill when it included provisions in Senate Bill No.
1950 amending corporate income taxes, percentage, excise and franchise taxes. Verily, Article VI, Section 24
of the Constitution does not contain any prohibition or limitation on the extent of the amendments that may be
introduced by the Senate to the House revenue bill.
Furthermore, the amendments introduced by the Senate to the NIRC provisions that had not been touched in
the House bills are still in furtherance of the intent of the House in initiating the subject revenue bills. The
Explanatory Note of House Bill No. 1468, the very first House bill introduced on the floor, which was later
substituted by House Bill No. 3555, stated:
One of the challenges faced by the present administration is the urgent and daunting task of solving the
countrys serious financial problems. To do this, government expenditures must be strictly monitored and
controlled and revenues must be significantly increased. This may be easier said than done, but our fiscal
authorities are still optimistic the government will be operating on a balanced budget by the year 2009. In fact,
several measures that will result to significant expenditure savings have been identified by the administration.
It is supported with a credible package of revenue measures that include measures to improve tax
administration and control the leakages in revenues from income taxes and the value-added tax (VAT).
(Emphasis supplied)
Rep. Eric D. Singson, in his sponsorship speech for House Bill No. 3555, declared that:
In the budget message of our President in the year 2005, she reiterated that we all acknowledged that on top of
our agenda must be the restoration of the health of our fiscal system.
In order to considerably lower the consolidated public sector deficit and eventually achieve a balanced budget
by the year 2009, we need to seize windows of opportunities which might seem poignant in the beginning,
but in the long run prove effective and beneficial to the overall status of our economy. One such
opportunity is a review of existing tax rates, evaluating the relevance given our present conditions.34
(Emphasis supplied)
Notably therefore, the main purpose of the bills emanating from the House of Representatives is to bring in
sizeable revenues for the government
to supplement our countrys serious financial problems, and improve tax administration and control of the
leakages in revenues from income taxes and value-added taxes. As these house bills were transmitted to the
Senate, the latter, approaching the measures from the point of national perspective, can introduce amendments
within the purposes of those bills. It can provide for ways that would soften the impact of the VAT measure on
the consumer, i.e., by distributing the burden across all sectors instead of putting it entirely on the shoulders of
the consumers. The sponsorship speech of Sen. Ralph Recto on why the provisions on income tax on
corporation were included is worth quoting:
All in all, the proposal of the Senate Committee on Ways and Means will raise P64.3 billion in additional
revenues annually even while by mitigating prices of power, services and petroleum products.
However, not all of this will be wrung out of VAT. In fact, only P48.7 billion amount is from the VAT on
twelve goods and services. The rest of the tab P10.5 billion- will be picked by corporations.

Page 92 of 557

What we therefore prescribe is a burden sharing between corporate Philippines and the consumer. Why should
the latter bear all the pain? Why should the fiscal salvation be only on the burden of the consumer?
The corporate worlds equity is in form of the increase in the corporate income tax from 32 to 35 percent, but
up to 2008 only. This will raise P10.5 billion a year. After that, the rate will slide back, not to its old rate of 32
percent, but two notches lower, to 30 percent.
Clearly, we are telling those with the capacity to pay, corporations, to bear with this emergency provision that
will be in effect for 1,200 days, while we put our fiscal house in order. This fiscal medicine will have an expiry
date.
For their assistance, a reward of tax reduction awaits them. We intend to keep the length of their sacrifice brief.
We would like to assure them that not because there is a light at the end of the tunnel, this government will
keep on making the tunnel long.
The responsibility will not rest solely on the weary shoulders of the small man. Big business will be there to
share the burden.35
As the Court has said, the Senate can propose amendments and in fact, the amendments made on provisions in
the tax on income of corporations are germane to the purpose of the house bills which is to raise revenues for
the government.
Likewise, the Court finds the sections referring to other percentage and excise taxes germane to the reforms to
the VAT system, as these sections would cushion the effects of VAT on consumers. Considering that certain
goods and services which were subject to percentage tax and excise tax would no longer be VAT-exempt, the
consumer would be burdened more as they would be paying the VAT in addition to these taxes. Thus, there is
a need to amend these sections to soften the impact of VAT. Again, in his sponsorship speech, Sen. Recto said:
However, for power plants that run on oil, we will reduce to zero the present excise tax on bunker fuel, to
lessen the effect of a VAT on this product.
For electric utilities like Meralco, we will wipe out the franchise tax in exchange for a VAT.
And in the case of petroleum, while we will levy the VAT on oil products, so as not to destroy the VAT chain,
we will however bring down the excise tax on socially sensitive products such as diesel, bunker, fuel and
kerosene.
...
What do all these exercises point to? These are not contortions of giving to the left hand what was taken from
the right. Rather, these sprang from our concern of softening the impact of VAT, so that the people can
cushion the blow of higher prices they will have to pay as a result of VAT.36
The other sections amended by the Senate pertained to matters of tax administration which are necessary for
the implementation of the changes in the VAT system.
To reiterate, the sections introduced by the Senate are germane to the subject matter and purposes of the house
bills, which is to supplement our countrys fiscal deficit, among others. Thus, the Senate acted within its power
to propose those amendments.
SUBSTANTIVE ISSUES
Page 93 of 557

I.
Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of the NIRC, violate the
following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article VI, Section 28(2)
A. No Undue Delegation of Legislative Power
Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and Escudero, et al. contend in common
that Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the NIRC
giving the President the stand-by authority to raise the VAT rate from 10% to 12% when a certain condition is
met, constitutes undue delegation of the legislative power to tax.
The assailed provisions read as follows:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 106. Value-Added Tax on Sale of Goods or Properties.
(A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale, barter or exchange of
goods or properties, a value-added tax equivalent to ten percent (10%) of the gross selling price or gross value
in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor:
provided, that the President, upon the recommendation of the Secretary of Finance, shall, effective
January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the following
conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 %).
SEC. 5. Section 107 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 107. Value-Added Tax on Importation of Goods.
(A) In General. There shall be levied, assessed and collected on every importation of goods a value-added
tax equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining
tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by
the importer prior to the release of such goods from customs custody: Provided, That where the customs duties
are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the
landed cost plus excise taxes, if any: provided, further, that the President, upon the recommendation of
the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve
percent (12%) after any of the following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%) or

Page 94 of 557

(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 %).
SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties
(A) Rate and Base of Tax. There shall be levied, assessed and collected, a value-added tax equivalent to ten
percent (10%) of gross receipts derived from the sale or exchange of services: provided, that the President,
upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of
value-added tax to twelve percent (12%), after any of the following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 %). (Emphasis supplied)
Petitioners allege that the grant of the stand-by authority to the President to increase the VAT rate is a virtual
abdication by Congress of its exclusive power to tax because such delegation is not within the purview of
Section 28 (2), Article VI of the Constitution, which provides:
The Congress may, by law, authorize the President to fix within specified limits, and may impose, tariff rates,
import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the
national development program of the government.
They argue that the VAT is a tax levied on the sale, barter or exchange of goods and properties as well as on
the sale or exchange of services, which cannot be included within the purview of tariffs under the exempted
delegation as the latter refers to customs duties, tolls or tribute payable upon merchandise to the government
and usually imposed on goods or merchandise imported or exported.
Petitioners ABAKADA GURO Party List, et al., further contend that delegating to the President the legislative
power to tax is contrary to republicanism. They insist that accountability, responsibility and transparency
should dictate the actions of Congress and they should not pass to the President the decision to impose taxes.
They also argue that the law also effectively nullified the Presidents power of control, which includes the
authority to set aside and nullify the acts of her subordinates like the Secretary of Finance, by mandating the
fixing of the tax rate by the President upon the recommendation of the Secretary of Finance.
Petitioners Pimentel, et al. aver that the President has ample powers to cause, influence or create the conditions
provided by the law to bring about either or both the conditions precedent.
On the other hand, petitioners Escudero, et al. find bizarre and revolting the situation that the imposition of the
12% rate would be subject to the whim of the Secretary of Finance, an unelected bureaucrat, contrary to the
principle of no taxation without representation. They submit that the Secretary of Finance is not mandated to
give a favorable recommendation and he may not even give his recommendation. Moreover, they allege that
no guiding standards are provided in the law on what basis and as to how he will make his recommendation.
They claim, nonetheless, that any recommendation of the Secretary of Finance can easily be brushed aside by
the President since the former is a mere alter ego of the latter, such that, ultimately, it is the President who
decides whether to impose the increased tax rate or not.
A brief discourse on the principle of non-delegation of powers is instructive.
Page 95 of 557

The principle of separation of powers ordains that each of the three great branches of government has
exclusive cognizance of and is supreme in matters falling within its own constitutionally allocated sphere.37 A
logical
corollary to the doctrine of separation of powers is the principle of non-delegation of powers, as expressed in
the Latin maxim: potestas delegata non delegari potest which means "what has been delegated, cannot be
delegated."38 This doctrine is based on the ethical principle that such as delegated power constitutes not only a
right but a duty to be performed by the delegate through the instrumentality of his own judgment and not
through the intervening mind of another.39
With respect to the Legislature, Section 1 of Article VI of the Constitution provides that "the Legislative power
shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of
Representatives." The powers which Congress is prohibited from delegating are those which are strictly, or
inherently and exclusively, legislative. Purely legislative power, which can never be delegated, has been
described as the authority to make a complete law complete as to the time when it shall take effect and
as to whom it shall be applicable and to determine the expediency of its enactment.40 Thus, the rule is
that in order that a court may be justified in holding a statute unconstitutional as a delegation of legislative
power, it must appear that the power involved is purely legislative in nature that is, one appertaining
exclusively to the legislative department. It is the nature of the power, and not the liability of its use or the
manner of its exercise, which determines the validity of its delegation.
Nonetheless, the general rule barring delegation of legislative powers is subject to the following recognized
limitations or exceptions:
(1) Delegation of tariff powers to the President under Section 28 (2) of Article VI of the Constitution;
(2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of the Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies.
In every case of permissible delegation, there must be a showing that the delegation itself is valid. It is valid
only if the law (a) is complete in itself, setting forth therein the policy to be executed, carried out, or
implemented by the delegate;41 and (b) fixes a standard the limits of which are sufficiently determinate and
determinable to which the delegate must conform in the performance of his functions.42 A sufficient
standard is one which defines legislative policy, marks its limits, maps out its boundaries and specifies the
public agency to apply it. It indicates the circumstances under which the legislative command is to be
effected.43 Both tests are intended to prevent a total transference of legislative authority to the delegate, who is
not allowed to step into the shoes of the legislature and exercise a power essentially legislative.44
In People vs. Vera,45 the Court, through eminent Justice Jose P. Laurel, expounded on the concept and extent
of delegation of power in this wise:
In testing whether a statute constitutes an undue delegation of legislative power or not, it is usual to inquire
whether the statute was complete in all its terms and provisions when it left the hands of the legislature so that
nothing was left to the judgment of any other appointee or delegate of the legislature.
...
Page 96 of 557

The true distinction, says Judge Ranney, is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no
valid objection can be made.
...
It is contended, however, that a legislative act may be made to the effect as law after it leaves the hands of the
legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the
executive or the adoption by the people of a particular community. In Wayman vs. Southard, the Supreme
Court of the United States ruled that the legislature may delegate a power not legislative which it may itself
rightfully exercise. The power to ascertain facts is such a power which may be delegated. There is
nothing essentially legislative in ascertaining the existence of facts or conditions as the basis of the taking
into effect of a law. That is a mental process common to all branches of the government. Notwithstanding
the apparent tendency, however, to relax the rule prohibiting delegation of legislative authority on account of
the complexity arising from social and economic forces at work in this modern industrial age, the orthodox
pronouncement of Judge Cooley in his work on Constitutional Limitations finds restatement in Prof.
Willoughby's treatise on the Constitution of the United States in the following language speaking of
declaration of legislative power to administrative agencies: The principle which permits the legislature to
provide that the administrative agent may determine when the circumstances are such as require the
application of a law is defended upon the ground that at the time this authority is granted, the rule of
public policy, which is the essence of the legislative act, is determined by the legislature. In other words,
the legislature, as it is its duty to do, determines that, under given circumstances, certain executive or
administrative action is to be taken, and that, under other circumstances, different or no action at all is
to be taken. What is thus left to the administrative official is not the legislative determination of what
public policy demands, but simply the ascertainment of what the facts of the case require to be done
according to the terms of the law by which he is governed. The efficiency of an Act as a declaration of
legislative will must, of course, come from Congress, but the ascertainment of the contingency upon
which the Act shall take effect may be left to such agencies as it may designate. The legislature, then,
may provide that a law shall take effect upon the happening of future specified contingencies leaving to
some other person or body the power to determine when the specified contingency has arisen. (Emphasis
supplied).46
In Edu vs. Ericta,47 the Court reiterated:
What cannot be delegated is the authority under the Constitution to make laws and to alter and repeal them; the
test is the completeness of the statute in all its terms and provisions when it leaves the hands of the legislature.
To determine whether or not there is an undue delegation of legislative power, the inquiry must be directed to
the scope and definiteness of the measure enacted. The legislative does not abdicate its functions when it
describes what job must be done, who is to do it, and what is the scope of his authority. For a complex
economy, that may be the only way in which the legislative process can go forward. A distinction has
rightfully been made between delegation of power to make the laws which necessarily involves a
discretion as to what it shall be, which constitutionally may not be done, and delegation of authority or
discretion as to its execution to be exercised under and in pursuance of the law, to which no valid
objection can be made. The Constitution is thus not to be regarded as denying the legislature the necessary
resources of flexibility and practicability. (Emphasis supplied).48
Clearly, the legislature may delegate to executive officers or bodies the power to determine certain facts or
conditions, or the happening of contingencies, on which the operation of a statute is, by its terms, made to
depend, but the legislature must prescribe sufficient standards, policies or limitations on their authority.49
While the power to tax cannot be delegated to executive agencies, details as to the enforcement and

Page 97 of 557

administration of an exercise of such power may be left to them, including the power to determine the
existence of facts on which its operation depends.50
The rationale for this is that the preliminary ascertainment of facts as basis for the enactment of legislation is
not of itself a legislative function, but is simply ancillary to legislation. Thus, the duty of correlating
information and making recommendations is the kind of subsidiary activity which the legislature may perform
through its members, or which it may delegate to others to perform. Intelligent legislation on the complicated
problems of modern society is impossible in the absence of accurate information on the part of the legislators,
and any reasonable method of securing such information is proper.51 The Constitution as a continuously
operative charter of government does not require that Congress find for itself
every fact upon which it desires to base legislative action or that it make for itself detailed determinations
which it has declared to be prerequisite to application of legislative policy to particular facts and circumstances
impossible for Congress itself properly to investigate.52
In the present case, the challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and 6
which reads as follows:
That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006,
raise the rate of value-added tax to twelve percent (12%), after any of the following conditions has been
satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %).
The case before the Court is not a delegation of legislative power. It is simply a delegation of ascertainment of
facts upon which enforcement and administration of the increase rate under the law is contingent. The
legislature has made the operation of the 12% rate effective January 1, 2006, contingent upon a specified fact
or condition. It leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the
control of the executive.
No discretion would be exercised by the President. Highlighting the absence of discretion is the fact that the
word shall is used in the common proviso. The use of the word shall connotes a mandatory order. Its use in a
statute denotes an imperative obligation and is inconsistent with the idea of discretion.53 Where the law is clear
and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that
the mandate is obeyed.54
Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any
of the conditions specified by Congress. This is a duty which cannot be evaded by the President. Inasmuch as
the law specifically uses the word shall, the exercise of discretion by the President does not come into play. It
is a clear directive to impose the 12% VAT rate when the specified conditions are present. The time of taking
into effect of the 12% VAT rate is based on the happening of a certain specified contingency, or upon the
ascertainment of certain facts or conditions by a person or body other than the legislature itself.
The Court finds no merit to the contention of petitioners ABAKADA GURO Party List, et al. that the law
effectively nullified the Presidents power of control over the Secretary of Finance by mandating the fixing of
the tax rate by the President upon the recommendation of the Secretary of Finance. The Court cannot also
subscribe to the position of petitioners

Page 98 of 557

Pimentel, et al. that the word shall should be interpreted to mean may in view of the phrase "upon the
recommendation of the Secretary of Finance." Neither does the Court find persuasive the submission of
petitioners Escudero, et al. that any recommendation by the Secretary of Finance can easily be brushed aside
by the President since the former is a mere alter ego of the latter.
When one speaks of the Secretary of Finance as the alter ego of the President, it simply means that as head of
the Department of Finance he is the assistant and agent of the Chief Executive. The multifarious executive and
administrative functions of the Chief Executive are performed by and through the executive departments, and
the acts of the secretaries of such departments, such as the Department of Finance, performed and promulgated
in the regular course of business, are, unless disapproved or reprobated by the Chief Executive, presumptively
the acts of the Chief Executive. The Secretary of Finance, as such, occupies a political position and holds
office in an advisory capacity, and, in the language of Thomas Jefferson, "should be of the President's bosom
confidence" and, in the language of Attorney-General Cushing, is "subject to the direction of the President."55
In the present case, in making his recommendation to the President on the existence of either of the two
conditions, the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. In
such instance, he is not subject to the power of control and direction of the President. He is acting as the agent
of the legislative department, to determine and declare the event upon which its expressed will is to take
effect.56 The Secretary of Finance becomes the means or tool by which legislative policy is determined and
implemented, considering that he possesses all the facilities to gather data and information and has a much
broader perspective to properly evaluate them. His function is to gather and collate statistical data and other
pertinent information and verify if any of the two conditions laid out by Congress is present. His personality in
such instance is in reality but a projection of that of Congress. Thus, being the agent of Congress and not of the
President, the President cannot alter or modify or nullify, or set aside the findings of the Secretary of Finance
and to substitute the judgment of the former for that of the latter.
Congress simply granted the Secretary of Finance the authority to ascertain the existence of a fact, namely,
whether by December 31, 2005, the value-added tax collection as a percentage of Gross Domestic Product
(GDP) of the previous year exceeds two and four-fifth percent (24/5%) or the national government deficit as a
percentage of GDP of the previous year exceeds one and one-half percent (1%). If either of these two
instances has occurred, the Secretary of Finance, by legislative mandate, must submit such information to the
President. Then the 12% VAT rate must be imposed by the President effective January 1, 2006. There is no
undue delegation of legislative power but only of the discretion as to the execution of a law. This is
constitutionally permissible.57 Congress does not abdicate its functions or unduly delegate power when it
describes what job must be done, who must do it, and what is the scope of his authority; in our complex
economy that is frequently the only way in which the legislative process can go forward.58
As to the argument of petitioners ABAKADA GURO Party List, et al. that delegating to the President the
legislative power to tax is contrary to the principle of republicanism, the same deserves scant consideration.
Congress did not delegate the power to tax but the mere implementation of the law. The intent and will to
increase the VAT rate to 12% came from Congress and the task of the President is to simply execute the
legislative policy. That Congress chose to do so in such a manner is not within the province of the Court to
inquire into, its task being to interpret the law.59
The insinuation by petitioners Pimentel, et al. that the President has ample powers to cause, influence or create
the conditions to bring about either or both the conditions precedent does not deserve any merit as this
argument is highly speculative. The Court does not rule on allegations which are manifestly conjectural, as
these may not exist at all. The Court deals with facts, not fancies; on realities, not appearances. When the Court
acts on appearances instead of realities, justice and law will be short-lived.
B. The 12% Increase VAT Rate Does Not Impose an Unfair and Unnecessary Additional Tax Burden

Page 99 of 557

Petitioners Pimentel, et al. argue that the 12% increase in the VAT rate imposes an unfair and additional tax
burden on the people. Petitioners also argue that the 12% increase, dependent on any of the 2 conditions set
forth in the contested provisions, is ambiguous because it does not state if the VAT rate would be returned to
the original 10% if the rates are no longer satisfied. Petitioners also argue that such rate is unfair and
unreasonable, as the people are unsure of the applicable VAT rate from year to year.
Under the common provisos of Sections 4, 5 and 6 of R.A. No. 9337, if any of the two conditions set forth
therein are satisfied, the President shall increase the VAT rate to 12%. The provisions of the law are clear. It
does not provide for a return to the 10% rate nor does it empower the President to so revert if, after the rate is
increased to 12%, the VAT collection goes below the 24/5 of the GDP of the previous year or that the national
government deficit as a percentage of GDP of the previous year does not exceed 1%.
Therefore, no statutory construction or interpretation is needed. Neither can conditions or limitations be
introduced where none is provided for. Rewriting the law is a forbidden ground that only Congress may tread
upon.60
Thus, in the absence of any provision providing for a return to the 10% rate, which in this case the Court finds
none, petitioners argument is, at best, purely speculative. There is no basis for petitioners fear of a fluctuating
VAT rate because the law itself does not provide that the rate should go back to 10% if the conditions provided
in Sections 4, 5 and 6 are no longer present. The rule is that where the provision of the law is clear and
unambiguous, so that there is no occasion for the court's seeking the legislative intent, the law must be taken as
it is, devoid of judicial addition or subtraction.61
Petitioners also contend that the increase in the VAT rate, which was allegedly an incentive to the President to
raise the VAT collection to at least 2 4/5 of the GDP of the previous year, should be based on fiscal adequacy.
Petitioners obviously overlooked that increase in VAT collection is not the only condition. There is another
condition, i.e., the national government deficit as a percentage of GDP of the previous year exceeds one and
one-half percent (1 %).
Respondents explained the philosophy behind these alternative conditions:
1. VAT/GDP Ratio > 2.8%
The condition set for increasing VAT rate to 12% have economic or fiscal meaning. If VAT/GDP is less than
2.8%, it means that government has weak or no capability of implementing the VAT or that VAT is not
effective in the function of the tax collection. Therefore, there is no value to increase it to 12% because such
action will also be ineffectual.
2. Natl Govt Deficit/GDP >1.5%
The condition set for increasing VAT when deficit/GDP is 1.5% or less means the fiscal condition of
government has reached a relatively sound position or is towards the direction of a balanced budget position.
Therefore, there is no need to increase the VAT rate since the fiscal house is in a relatively healthy position.
Otherwise stated, if the ratio is more than 1.5%, there is indeed a need to increase the VAT rate.62
That the first condition amounts to an incentive to the President to increase the VAT collection does not render
it unconstitutional so long as there is a public purpose for which the law was passed, which in this case, is
mainly to raise revenue. In fact, fiscal adequacy dictated the need for a raise in revenue.

Page 100 of 557

The principle of fiscal adequacy as a characteristic of a sound tax system was originally stated by Adam Smith
in his Canons of Taxation (1776), as:
IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little
as possible over and above what it brings into the public treasury of the state.63
It simply means that sources of revenues must be adequate to meet government expenditures and their
variations.64
The dire need for revenue cannot be ignored. Our country is in a quagmire of financial woe. During the
Bicameral Conference Committee hearing, then Finance Secretary Purisima bluntly depicted the countrys
gloomy state of economic affairs, thus:
First, let me explain the position that the Philippines finds itself in right now. We are in a position where 90
percent of our revenue is used for debt service. So, for every peso of revenue that we currently raise, 90 goes to
debt service. Thats interest plus amortization of our debt. So clearly, this is not a sustainable situation. Thats
the first fact.
The second fact is that our debt to GDP level is way out of line compared to other peer countries that borrow
money from that international financial markets. Our debt to GDP is approximately equal to our GDP. Again,
that shows you that this is not a sustainable situation.
The third thing that Id like to point out is the environment that we are presently operating in is not as benign
as what it used to be the past five years.
What do I mean by that?
In the past five years, weve been lucky because we were operating in a period of basically global growth and
low interest rates. The past few months, we have seen an inching up, in fact, a rapid increase in the interest
rates in the leading economies of the world. And, therefore, our ability to borrow at reasonable prices is going
to be challenged. In fact, ultimately, the question is our ability to access the financial markets.
When the President made her speech in July last year, the environment was not as bad as it is now, at least
based on the forecast of most financial institutions. So, we were assuming that raising 80 billion would put us
in a position where we can then convince them to improve our ability to borrow at lower rates. But conditions
have changed on us because the interest rates have gone up. In fact, just within this room, we tried to access
the market for a billion dollars because for this year alone, the Philippines will have to borrow 4 billion dollars.
Of that amount, we have borrowed 1.5 billion. We issued last January a 25-year bond at 9.7 percent cost. We
were trying to access last week and the market was not as favorable and up to now we have not accessed and
we might pull back because the conditions are not very good.
So given this situation, we at the Department of Finance believe that we really need to front-end our deficit
reduction. Because it is deficit that is causing the increase of the debt and we are in what we call a debt spiral.
The more debt you have, the more deficit you have because interest and debt service eats and eats more of your
revenue. We need to get out of this debt spiral. And the only way, I think, we can get out of this debt spiral is
really have a front-end adjustment in our revenue base.65
The image portrayed is chilling. Congress passed the law hoping for rescue from an inevitable catastrophe.
Whether the law is indeed sufficient to answer the states economic dilemma is not for the Court to judge. In
the Farias case, the Court refused to consider the various arguments raised therein that dwelt on the wisdom
of Section 14 of R.A. No. 9006 (The Fair Election Act), pronouncing that:
Page 101 of 557

. . . policy matters are not the concern of the Court. Government policy is within the exclusive dominion of the
political branches of the government. It is not for this Court to look into the wisdom or propriety of legislative
determination. Indeed, whether an enactment is wise or unwise, whether it is based on sound economic theory,
whether it is the best means to achieve the desired results, whether, in short, the legislative discretion within its
prescribed limits should be exercised in a particular manner are matters for the judgment of the legislature, and
the serious conflict of opinions does not suffice to bring them within the range of judicial cognizance.66
In the same vein, the Court in this case will not dawdle on the purpose of Congress or the executive policy,
given that it is not for the judiciary to "pass upon questions of wisdom, justice or expediency of legislation."67
II.
Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the NIRC; and Section 12 of
R.A. No. 9337, amending Section 114(C) of the NIRC, violate the following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
A. Due Process and Equal Protection Clauses
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. argue that Section 8 of R.A. No. 9337, amending
Sections 110 (A)(2), 110 (B), and Section 12 of R.A. No. 9337, amending Section 114 (C) of the NIRC are
arbitrary, oppressive, excessive and confiscatory. Their argument is premised on the constitutional right
against deprivation of life, liberty of property without due process of law, as embodied in Article III, Section 1
of the Constitution.
Petitioners also contend that these provisions violate the constitutional guarantee of equal protection of the
law.
The doctrine is that where the due process and equal protection clauses are invoked, considering that they are
not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead
to such a conclusion. Absent such a showing, the presumption of validity must prevail.68
Section 8 of R.A. No. 9337, amending Section 110(B) of the NIRC imposes a limitation on the amount of
input tax that may be credited against the output tax. It states, in part: "[P]rovided, that the input tax inclusive
of the input VAT carried over from the previous quarter that may be credited in every quarter shall not exceed
seventy percent (70%) of the output VAT: "
Input Tax is defined under Section 110(A) of the NIRC, as amended, as the value-added tax due from or paid
by a VAT-registered person on the importation of goods or local purchase of good and services, including
lease or use of property, in the course of trade or business, from a VAT-registered person, and Output Tax is
the value-added tax due on the sale or lease of taxable goods or properties or services by any person registered
or required to register under the law.
Petitioners claim that the contested sections impose limitations on the amount of input tax that may be claimed.
In effect, a portion of the input tax that has already been paid cannot now be credited against the output tax.
Petitioners argument is not absolute. It assumes that the input tax exceeds 70% of the output tax, and
therefore, the input tax in excess of 70% remains uncredited. However, to the extent that the input tax is less
than 70% of the output tax, then 100% of such input tax is still creditable.
Page 102 of 557

More importantly, the excess input tax, if any, is retained in a businesss books of accounts and remains
creditable in the succeeding quarter/s. This is explicitly allowed by Section 110(B), which provides that "if the
input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters." In
addition, Section 112(B) allows a VAT-registered person to apply for the issuance of a tax credit certificate or
refund for any unused input taxes, to the extent that such input taxes have not been applied against the output
taxes. Such unused input tax may be used in payment of his other internal revenue taxes.
The non-application of the unutilized input tax in a given quarter is not ad infinitum, as petitioners
exaggeratedly contend. Their analysis of the effect of the 70% limitation is incomplete and one-sided. It ends
at the net effect that there will be unapplied/unutilized inputs VAT for a given quarter. It does not proceed
further to the fact that such unapplied/unutilized input tax may be credited in the subsequent periods as allowed
by the carry-over provision of Section 110(B) or that it may later on be refunded through a tax credit certificate
under Section 112(B).
Therefore, petitioners argument must be rejected.
On the other hand, it appears that petitioner Garcia failed to comprehend the operation of the 70% limitation on
the input tax. According to petitioner, the limitation on the creditable input tax in effect allows VAT-registered
establishments to retain a portion of the taxes they collect, which violates the principle that tax collection and
revenue should be for public purposes and expenditures
As earlier stated, the input tax is the tax paid by a person, passed on to him by the seller, when he buys goods.
Output tax meanwhile is the tax due to the person when he sells goods. In computing the VAT payable, three
possible scenarios may arise:
First, if at the end of a taxable quarter the output taxes charged by the seller are equal to the input taxes that he
paid and passed on by the suppliers, then no payment is required;
Second, when the output taxes exceed the input taxes, the person shall be liable for the excess, which has to be
paid to the Bureau of Internal Revenue (BIR);69 and
Third, if the input taxes exceed the output taxes, the excess shall be carried over to the succeeding quarter or
quarters. Should the input taxes result from zero-rated or effectively zero-rated transactions, any excess over
the output taxes shall instead be refunded to the taxpayer or credited against other internal revenue taxes, at the
taxpayers option.70
Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the input tax. Thus, a person can credit his
input tax only up to the extent of 70% of the output tax. In laymans term, the value-added taxes that a
person/taxpayer paid and passed on to him by a seller can only be credited up to 70% of the value-added taxes
that is due to him on a taxable transaction. There is no retention of any tax collection because the
person/taxpayer has already previously paid the input tax to a seller, and the seller will subsequently remit such
input tax to the BIR. The party directly liable for the payment of the tax is the seller.71 What only needs to be
done is for the person/taxpayer to apply or credit these input taxes, as evidenced by receipts, against his output
taxes.
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue that the input tax partakes the nature of
a property that may not be confiscated, appropriated, or limited without due process of law.
The input tax is not a property or a property right within the constitutional purview of the due process clause.
A VAT-registered persons entitlement to the creditable input tax is a mere statutory privilege.

Page 103 of 557

The distinction between statutory privileges and vested rights must be borne in mind for persons have no
vested rights in statutory privileges. The state may change or take away rights, which were created by the law
of the state, although it may not take away property, which was vested by virtue of such rights.72
Under the previous system of single-stage taxation, taxes paid at every level of distribution are not recoverable
from the taxes payable, although it becomes part of the cost, which is deductible from the gross revenue. When
Pres. Aquino issued E.O. No. 273 imposing a 10% multi-stage tax on all sales, it was then that the crediting of
the input tax paid on purchase or importation of goods and services by VAT-registered persons against the
output tax was introduced.73 This was adopted by the Expanded VAT Law (R.A. No. 7716),74 and The Tax
Reform Act of 1997 (R.A. No. 8424).75 The right to credit input tax as against the output tax is clearly a
privilege created by law, a privilege that also the law can remove, or in this case, limit.
Petitioners also contest as arbitrary, oppressive, excessive and confiscatory, Section 8 of R.A. No. 9337,
amending Section 110(A) of the NIRC, which provides:
SEC. 110. Tax Credits.
(A) Creditable Input Tax.
Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business
for which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of
acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods,
excluding the VAT component thereof, exceeds One million pesos (P1,000,000.00): Provided, however, That
if the estimated useful life of the capital goods is less than five (5) years, as used for depreciation purposes,
then the input VAT shall be spread over such a shorter period: Provided, finally, That in the case of purchase
of services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or license upon
payment of the compensation, rental, royalty or fee.
The foregoing section imposes a 60-month period within which to amortize the creditable input tax on
purchase or importation of capital goods with acquisition cost of P1 Million pesos, exclusive of the VAT
component. Such spread out only poses a delay in the crediting of the input tax. Petitioners argument is
without basis because the taxpayer is not permanently deprived of his privilege to credit the input tax.
It is worth mentioning that Congress admitted that the spread-out of the creditable input tax in this case
amounts to a 4-year interest-free loan to the government.76 In the same breath, Congress also justified its move
by saying that the provision was designed to raise an annual revenue of 22.6 billion.77 The legislature also
dispelled the fear that the provision will fend off foreign investments, saying that foreign investors have other
tax incentives provided by law, and citing the case of China, where despite a 17.5% non-creditable VAT,
foreign investments were not deterred.78 Again, for whatever is the purpose of the 60-month amortization, this
involves executive economic policy and legislative wisdom in which the Court cannot intervene.
With regard to the 5% creditable withholding tax imposed on payments made by the government for taxable
transactions, Section 12 of R.A. No. 9337, which amended Section 114 of the NIRC, reads:
SEC. 114. Return and Payment of Value-added Tax.
(C) Withholding of Value-added Tax. The Government or any of its political subdivisions, instrumentalities
or agencies, including government-owned or controlled corporations (GOCCs) shall, before making payment
on account of each purchase of goods and services which are subject to the value-added tax imposed in
Sections 106 and 108 of this Code, deduct and withhold a final value-added tax at the rate of five percent (5%)
of the gross payment thereof: Provided, That the payment for lease or use of properties or property rights to

Page 104 of 557

nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For purposes
of this Section, the payor or person in control of the payment shall be considered as the withholding agent.
The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the
month the withholding was made.
Section 114(C) merely provides a method of collection, or as stated by respondents, a more simplified VAT
withholding system. The government in this case is constituted as a withholding agent with respect to their
payments for goods and services.
Prior to its amendment, Section 114(C) provided for different rates of value-added taxes to be withheld -- 3%
on gross payments for purchases of goods; 6% on gross payments for services supplied by contractors other
than by public works contractors; 8.5% on gross payments for services supplied by public work contractors; or
10% on payment for the lease or use of properties or property rights to nonresident owners. Under the present
Section 114(C), these different rates, except for the 10% on lease or property rights payment to nonresidents,
were deleted, and a uniform rate of 5% is applied.
The Court observes, however, that the law the used the word final. In tax usage, final, as opposed to creditable,
means full. Thus, it is provided in Section 114(C): "final value-added tax at the rate of five percent (5%)."
In Revenue Regulations No. 02-98, implementing R.A. No. 8424 (The Tax Reform Act of 1997), the concept
of final withholding tax on income was explained, to wit:
SECTION 2.57. Withholding of Tax at Source
(A) Final Withholding Tax. Under the final withholding tax system the amount of income tax withheld by
the withholding agent is constituted as full and final payment of the income tax due from the payee on the
said income. The liability for payment of the tax rests primarily on the payor as a withholding agent. Thus, in
case of his failure to withhold the tax or in case of underwithholding, the deficiency tax shall be collected from
the payor/withholding agent.
(B) Creditable Withholding Tax. Under the creditable withholding tax system, taxes withheld on certain
income payments are intended to equal or at least approximate the tax due of the payee on said income.
Taxes withheld on income payments covered by the expanded withholding tax (referred to in Sec. 2.57.2 of
these regulations) and compensation income (referred to in Sec. 2.78 also of these regulations) are creditable in
nature.
As applied to value-added tax, this means that taxable transactions with the government are subject to a 5%
rate, which constitutes as full payment of the tax payable on the transaction. This represents the net VAT
payable of the seller. The other 5% effectively accounts for the standard input VAT (deemed input VAT), in
lieu of the actual input VAT directly or attributable to the taxable transaction.79
The Court need not explore the rationale behind the provision. It is clear that Congress intended to treat
differently taxable transactions with the government.80 This is supported by the fact that under the old
provision, the 5% tax withheld by the government remains creditable against the tax liability of the seller or
contractor, to wit:
SEC. 114. Return and Payment of Value-added Tax.
(C) Withholding of Creditable Value-added Tax. The Government or any of its political subdivisions,
instrumentalities or agencies, including government-owned or controlled corporations (GOCCs) shall, before
Page 105 of 557

making payment on account of each purchase of goods from sellers and services rendered by contractors which
are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold the
value-added tax due at the rate of three percent (3%) of the gross payment for the purchase of goods and six
percent (6%) on gross receipts for services rendered by contractors on every sale or installment payment which
shall be creditable against the value-added tax liability of the seller or contractor: Provided, however,
That in the case of government public works contractors, the withholding rate shall be eight and one-half
percent (8.5%): Provided, further, That the payment for lease or use of properties or property rights to
nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For this
purpose, the payor or person in control of the payment shall be considered as the withholding agent.
The valued-added tax withheld under this Section shall be remitted within ten (10) days following the end of
the month the withholding was made. (Emphasis supplied)
As amended, the use of the word final and the deletion of the word creditable exhibits Congresss intention to
treat transactions with the government differently. Since it has not been shown that the class subject to the 5%
final withholding tax has been unreasonably narrowed, there is no reason to invalidate the provision.
Petitioners, as petroleum dealers, are not the only ones subjected to the 5% final withholding tax. It applies to
all those who deal with the government.
Moreover, the actual input tax is not totally lost or uncreditable, as petitioners believe. Revenue Regulations
No. 14-2005 or the Consolidated Value-Added Tax Regulations 2005 issued by the BIR, provides that should
the actual input tax exceed 5% of gross payments, the excess may form part of the cost. Equally, should the
actual input tax be less than 5%, the difference is treated as income.81
Petitioners also argue that by imposing a limitation on the creditable input tax, the government gets to tax a
profit or value-added even if there is no profit or value-added.
Petitioners stance is purely hypothetical, argumentative, and again, one-sided. The Court will not engage in a
legal joust where premises are what ifs, arguments, theoretical and facts, uncertain. Any disquisition by the
Court on this point will only be, as Shakespeare describes life in Macbeth,82 "full of sound and fury, signifying
nothing."
Whats more, petitioners contention assumes the proposition that there is no profit or value-added. It need not
take an astute businessman to know that it is a matter of exception that a business will sell goods or services
without profit or value-added. It cannot be overstressed that a business is created precisely for profit.
The equal protection clause under the Constitution means that "no person or class of persons shall be deprived
of the same protection of laws which is enjoyed by other persons or other classes in the same place and in like
circumstances."83
The power of the State to make reasonable and natural classifications for the purposes of taxation has long
been established. Whether it relates to the subject of taxation, the kind of property, the rates to be levied, or the
amounts to be raised, the methods of assessment, valuation and collection, the States power is entitled to
presumption of validity. As a rule, the judiciary will not interfere with such power absent a clear showing of
unreasonableness, discrimination, or arbitrariness.84
Petitioners point out that the limitation on the creditable input tax if the entity has a high ratio of input tax, or
invests in capital equipment, or has several transactions with the government, is not based on real and
substantial differences to meet a valid classification.
The argument is pedantic, if not outright baseless. The law does not make any classification in the subject of
taxation, the kind of property, the rates to be levied or the amounts to be raised, the methods of assessment,
Page 106 of 557

valuation and collection. Petitioners alleged distinctions are based on variables that bear different
consequences. While the implementation of the law may yield varying end results depending on ones profit
margin and value-added, the Court cannot go beyond what the legislature has laid down and interfere with the
affairs of business.
The equal protection clause does not require the universal application of the laws on all persons or things
without distinction. This might in fact sometimes result in unequal protection. What the clause requires is
equality among equals as determined according to a valid classification. By classification is meant the
grouping of persons or things similar to each other in certain particulars and different from all others in these
same particulars.85
Petitioners brought to the Courts attention the introduction of Senate Bill No. 2038 by Sens. S.R. Osmea III
and Ma. Ana Consuelo A.S. Madrigal on June 6, 2005, and House Bill No. 4493 by Rep. Eric D. Singson.
The proposed legislation seeks to amend the 70% limitation by increasing the same to 90%. This, according to
petitioners, supports their stance that the 70% limitation is arbitrary and confiscatory. On this score, suffice it
to say that these are still proposed legislations. Until Congress amends the law, and absent any unequivocal
basis for its unconstitutionality, the 70% limitation stays.
B. Uniformity and Equitability of Taxation
Article VI, Section 28(1) of the Constitution reads:
The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of
taxation.
Uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the
same rate. Different articles may be taxed at different amounts provided that the rate is uniform on the same
class everywhere with all people at all times.86
In this case, the tax law is uniform as it provides a standard rate of 0% or 10% (or 12%) on all goods and
services. Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the
NIRC, provide for a rate of 10% (or 12%) on sale of goods and properties, importation of goods, and sale of
services and use or lease of properties. These same sections also provide for a 0% rate on certain sales and
transaction.
Neither does the law make any distinction as to the type of industry or trade that will bear the 70% limitation
on the creditable input tax, 5-year amortization of input tax paid on purchase of capital goods or the 5% final
withholding tax by the government. It must be stressed that the rule of uniform taxation does not deprive
Congress of the power to classify subjects of taxation, and only demands uniformity within the particular
class.87
R.A. No. 9337 is also equitable. The law is equipped with a threshold margin. The VAT rate of 0% or 10% (or
12%) does not apply to sales of goods or services with gross annual sales or receipts not exceeding
P1,500,000.00.88 Also, basic marine and agricultural food products in their original state are still not subject to
the tax,89 thus ensuring that prices at the grassroots level will remain accessible. As was stated in Kapatiran ng
mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan:90
The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons engaged in
business with an aggregate gross annual sales exceeding P200,000.00. Small corner sari-sari stores are
consequently exempt from its application. Likewise exempt from the tax are sales of farm and marine
products, so that the costs of basic food and other necessities, spared as they are from the incidence of the
VAT, are expected to be relatively lower and within the reach of the general public.
Page 107 of 557

It is admitted that R.A. No. 9337 puts a premium on businesses with low profit margins, and unduly favors
those with high profit margins. Congress was not oblivious to this. Thus, to equalize the weighty burden the
law entails, the law, under Section 116, imposed a 3% percentage tax on VAT-exempt persons under Section
109(v), i.e., transactions with gross annual sales and/or receipts not exceeding P1.5 Million. This acts as a
equalizer because in effect, bigger businesses that qualify for VAT coverage and VAT-exempt taxpayers stand
on equal-footing.
Moreover, Congress provided mitigating measures to cushion the impact of the imposition of the tax on those
previously exempt. Excise taxes on petroleum products91 and natural gas92 were reduced. Percentage tax on
domestic carriers was removed.93 Power producers are now exempt from paying franchise tax.94
Aside from these, Congress also increased the income tax rates of corporations, in order to distribute the
burden of taxation. Domestic, foreign, and non-resident corporations are now subject to a 35% income tax rate,
from a previous 32%.95 Intercorporate dividends of non-resident foreign corporations are still subject to 15%
final withholding tax but the tax credit allowed on the corporations domicile was increased to 20%.96 The
Philippine Amusement and Gaming Corporation (PAGCOR) is not exempt from income taxes anymore.97
Even the sale by an artist of his works or services performed for the production of such works was not spared.
All these were designed to ease, as well as spread out, the burden of taxation, which would otherwise rest
largely on the consumers. It cannot therefore be gainsaid that R.A. No. 9337 is equitable.
C. Progressivity of Taxation
Lastly, petitioners contend that the limitation on the creditable input tax is anything but regressive. It is the
smaller business with higher input tax-output tax ratio that will suffer the consequences.
Progressive taxation is built on the principle of the taxpayers ability to pay. This principle was also lifted from
Adam Smiths Canons of Taxation, and it states:
I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible,
in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy
under the protection of the state.
Taxation is progressive when its rate goes up depending on the resources of the person affected.98
The VAT is an antithesis of progressive taxation. By its very nature, it is regressive. The principle of
progressive taxation has no relation with the VAT system inasmuch as the VAT paid by the consumer or
business for every goods bought or services enjoyed is the same regardless of income. In
other words, the VAT paid eats the same portion of an income, whether big or small. The disparity lies in the
income earned by a person or profit margin marked by a business, such that the higher the income or profit
margin, the smaller the portion of the income or profit that is eaten by VAT. A converso, the lower the income
or profit margin, the bigger the part that the VAT eats away. At the end of the day, it is really the lower income
group or businesses with low-profit margins that is always hardest hit.
Nevertheless, the Constitution does not really prohibit the imposition of indirect taxes, like the VAT. What it
simply provides is that Congress shall "evolve a progressive system of taxation." The Court stated in the
Tolentino case, thus:
The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive.
What it simply provides is that Congress shall evolve a progressive system of taxation. The constitutional
Page 108 of 557

provision has been interpreted to mean simply that direct taxes are . . . to be preferred [and] as much as
possible, indirect taxes should be minimized. (E. FERNANDO, THE CONSTITUTION OF THE
PHILIPPINES 221 (Second ed. 1977)) Indeed, the mandate to Congress is not to prescribe, but to evolve, a
progressive tax system. Otherwise, sales taxes, which perhaps are the oldest form of indirect taxes, would have
been prohibited with the proclamation of Art. VIII, 17 (1) of the 1973 Constitution from which the present
Art. VI, 28 (1) was taken. Sales taxes are also regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not impossible,
to avoid them by imposing such taxes according to the taxpayers' ability to pay. In the case of the VAT, the
law minimizes the regressive effects of this imposition by providing for zero rating of certain transactions
(R.A. No. 7716, 3, amending 102 (b) of the NIRC), while granting exemptions to other transactions. (R.A.
No. 7716, 4 amending 103 of the NIRC)99
CONCLUSION
It has been said that taxes are the lifeblood of the government. In this case, it is just an enema, a first-aid
measure to resuscitate an economy in distress. The Court is neither blind nor is it turning a deaf ear on the
plight of the masses. But it does not have the panacea for the malady that the law seeks to remedy. As in other
cases, the Court cannot strike down a law as unconstitutional simply because of its yokes.
Let us not be overly influenced by the plea that for every wrong there is a remedy, and that the judiciary should
stand ready to afford relief. There are undoubtedly many wrongs the judicature may not correct, for instance,
those involving political questions. . . .
Let us likewise disabuse our minds from the notion that the judiciary is the repository of remedies for all
political or social ills; We should not forget that the Constitution has judiciously allocated the powers of
government to three distinct and separate compartments; and that judicial interpretation has tended to the
preservation of the independence of the three, and a zealous regard of the prerogatives of each, knowing full
well that one is not the guardian of the others and that, for official wrong-doing, each may be brought to
account, either by impeachment, trial or by the ballot box.100
The words of the Court in Vera vs. Avelino101 holds true then, as it still holds true now. All things considered,
there is no raison d'tre for the unconstitutionality of R.A. No. 9337.
WHEREFORE, Republic Act No. 9337 not being unconstitutional, the petitions in G.R. Nos. 168056, 168207,
168461, 168463, and 168730, are hereby DISMISSED.
There being no constitutional impediment to the full enforcement and implementation of R.A. No. 9337, the
temporary restraining order issued by the Court on July 1, 2005 is LIFTED upon finality of herein decision.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
WE CONCUR:
HILARIO G. DAVIDE, JR.
Chief Justice
Page 109 of 557

REYNATO S. PUNO

ARTEMIO V. PANGANIBAN

Associate Justice
LEONARDO A. QUISUMBING

Associate Justice
CONSUELO YNARES-SANTIAGO

Associate Justice
ANGELINA SANDOVAL-GUTIERREZ

Associate Justice
ANTONIO T. CARPIO
Associate Justice

Associate Justice
RENATO C. CORONA
Associate Justice
ROMEO J. CALLEJO, SR.
Associate Justice
DANTE O. TINGA

CONCHITA CARPIO-MORALES
Associate Justice
ADOLFO S. AZCUNA
Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice

Associate Justice
CANCIO C. GARCIA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
HILARIO G. DAVIDE, JR.
Chief Justice

Footnotes
1

Entitled "An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116,
117, 119, 121, 148, 151, 236, 237, and 288 of the National Internal Revenue Code of 1997, As
Amended and For Other Purposes."
2

Entitled, "An Act Restructuring the Value-Added Tax, Amending for the Purpose Sections 106, 107,
108, 110 and 114 of the National Internal Revenue Code of 1997, As Amended, and For Other
Purposes."
3

Entitled, "An Act Amending Sections 106, 107, 108, 109, 110 and 111 of the National Internal
Revenue Code of 1997, As Amended, and For Other Purposes."
4

Entitled, "An Act Amending Sections 27, 28, 34, 106, 108, 109, 110, 112, 113, 114, 116, 117, 119,
121, 125, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 1997, As Amended,
and For Other Purposes."
Page 110 of 557

Section 26, R.A. No. 9337.

TSN, July 14, 2005.

Section 125 of the National Internal Revenue Code, as amended, was not amended by R.A. No.
9337, as can be gleaned from the title and body of the law.
8

Section 105, National Internal Revenue of the Philippines, as amended.

Ibid.

10

Deoferio, Jr., V.A. and Mamalateo, V.C., The Value Added Tax in the Philippines (First Edition
2000).
11

Maceda vs. Macaraig, Jr., G.R. No. 88291, May 31, 1991, 197 SCRA 771.

12

Maceda vs. Macaraig, Jr., G.R. No. 88291, June 8, 1993, 223 SCRA, 217.

13

Id., Deoferio, Jr., V.A. and Mamalateo, V.C., The Value Added Tax in the Philippines (First Edition
2000).
14

Commissioner of Internal Revenue vs. Seagate, G.R. No. 153866, February 11, 2005.

15

Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan, G.R. Nos. L-81311, L81820, L-81921, L-82152, June 30, 1988, 163 SCRA 371.
16

Entitled, "An Act Restructuring the Value-Added Tax (VAT) System, Widening its Tax Base and
Enhancing its Administration, And for these Purposes Amending and Repealing the Relevant
Provisions of the National Internal Revenue Code, as amended, and for other Purposes."
17

Entitled, "An Act Amending Republic Act No. 7716, otherwise known as the Value-Added Tax
Law and Other Pertinent Provisions of the National Internal Revenue Code, as Amended."
18

Entitled, "An Act Amending the National Internal Revenue Code, as Amended, and for other
Purposes."
19

Story, Commentaries 835 (1833).

20

G.R. No. 147387, December 10, 2003, 417 SCRA 503.

21

Id., pp. 529-530.

22

Supra., Note 20.

23

G.R. No. 115455, August 25, 1994, 235 SCRA 630.

24

Id., p. 670.

25

Westers Third New International Dictionary, p. 1897.

Page 111 of 557

26

TSN, Bicameral Conference Committee on the Disagreeing Provisions of Senate Bill No. 1950 and
House Bill Nos. 3705 and 3555, May 10, 2005, p. 4.
27

Id., p. 3.

28

Sponsorship Speech of Representative Teves, in behalf of Representative Jesli Lapus, TSN, January
7, 2005, pp. 34-35.
29

G.R. No. 105371, November 11, 1993, 227 SCRA 703.

30

Supra, Note 23.

31

Id., p. 668.

32

Id., p. 671.

33

Id., pp. 661-663.

34

Transcript of Session Proceedings, January 7, 2005, pp. 19-20.

35

Journal of the Senate, Session No. 67, March 7, 2005, pp. 727-728.

36

Id., p. 726.

37

See Angara vs. Electoral Commission, No. 45081, July 15, 1936, 63 Phil. 139, 156.

38

Defensor-Santiago vs. Commission on Elections, G.R. No. 127325, March 19, 1997, 270 SCRA
106, 153; People vs. Rosenthal, Nos. 46076 & 46077, June 12, 1939, 68 Phil. 328; ISAGANI A.
CRUZ, Philippine Political Law 86 (1996). Judge Cooley enunciates the doctrine in the following oftquoted language: "One of the settled maxims in constitutional law is, that the power conferred upon
the legislature to make laws cannot be delegated by that department to any other body or authority.
Where the sovereign power of the state has located the authority, there it must remain; and by the
constitutional agency alone the laws must be made until the Constitution itself is changed. The power
to whose judgment, wisdom, and patriotism this high prerogative has been intrusted cannot
relieve itself of the responsibility by choosing other agencies upon which the power shall be
devolved, nor can it substitute the judgment, wisdom, and patriotism of any other body for those
to which alone the people have seen fit to confide this sovereign trust." (Cooley on Constitutional
Limitations, 8th ed., Vol. I, p. 224)
39

United States vs. Barrias, No. 4349, September 24, 1908, 11 Phil. 327, 330.

40

16 Am Jur 2d, Constitutional Law, 337.

41

Pelaez vs. Auditor General, No. L-23825, December 24, 1965, 122 Phil. 965, 974 citing Calalang
vs. Williams, No. 47800, December 2, 1940, 70 Phil. 726; Pangasinan Transp. Co. vs. Public Service
Commission, No. 47065, June 26, 1940, 70 Phil. 221; Cruz vs. Youngberg, No. 34674, October 26,
1931, 56 Phil. 234; Alegre vs. Collector of Customs, No. 30783, August 27, 1929, 53 Phil. 394 et seq.
42

Pelaez vs. Auditor General, supra, citing People vs. Lim Ho, No. L-12091-2, January 28, 1960, 106
Phil. 887; People vs. Jolliffee, No. L-9553, May 13, 1959, 105 Phil 677; People vs. Vera, No. 45685,
November 16, 1937, 65 Phil. 56; U.S. vs. Nag Tang Ho, No. L-17122, February 27, 1922, 43 Phil. 1;
Page 112 of 557

Compaia General de Tabacos vs. Board of Public Utility, No. 11216, March 6, 1916, 34 Phil. 136 et
seq.
43

Edu vs. Ericta, No. L-32096, October 24, 1970, 35 SCRA 481, 497.

44

Eastern Shipping Lines, Inc. vs. POEA, No. L-76633, October 18, 1988, 166 SCRA 533, 543-544.

45

No. 45685, November 16, 1937, 65 Phil. 56.

46

Id., pp. 115-120.

47

Supra, note 43.

48

Id., pp. 496-497.

49

16 C.J.S., Constitutional Law, 138.

50

Ibid.

51

16 Am Jur 2d, Constitutional Law 340.

52

Yajus vs. United States, 321 US 414, 88 L Ed 834, 64 S Ct. 660, 28 Ohio Ops 220.

53

Province of Batangas vs. Romulo, G.R. No. 152774, May 27, 2004; Enriquez vs. Court of Appeals,
G.R. No. 140473, January 28, 2003, 396 SCRA 377; Codoy vs. Calugay, G.R. No. 123486, August
12, 1999, 312 SCRA 333.
54

Province of Batangas vs. Romulo, supra; Quisumbing vs. Meralco, G.R. No. 142943, April 3, 2002,
380 SCRA 195; Agpalo, Statutory Construction, 1990 ed., p. 45.
55

Villena vs. Secretary of Interior, No. 46570, April 21, 1939, 67 Phil 451, 463-464.

56

Alunan vs. Mirasol, G.R. No. 108399, July 31, 1997, 276 SCRA 501, 513-514, citing Panama
Refining Co. vs. Ryan, 293 U.S. 388, 79 L.Ed. 469 (1935).
57

Compaia General de Tabacos de Filipinas vs. The Board of Public Utility Commissioners, No.
11216, 34 Phil. 136; Cruz vs. Youngberg, No. 34674, October 26, 1931, 56 Phil. 234; People vs. Vera,
No. 45685, November 16, 1937, 65 Phil. 56, 113; Edu vs. Ericta, No. L-32096, October 24, 1970, 35
SCRA 481; Tatad vs. Secretary of the Department of Energy, G.R. No. 124360, November 5, 1997,
281 SCRA 330; Alunan vs. Mirasol, supra.
58

Bowles vs. Willinghan, 321 US 503, 88 l Ed 892, 64 S Ct 641, 28 Ohio Ops 180.

59

United Residents of Dominican Hill, Inc. vs. Commission on the Settlement of Land Problems, G.R.
No. 135945, March 7, 2001, 353 SCRA 782; Commissioner of Internal Revenue vs. Santos, G.R. No.
119252, August 18, 1997, 277 SCRA 617, 630.
60

Commission on Internal Revenue vs. American Express International, Inc. (Philippine Branch),
G.R. No. 152609, June 29, 2005.

Page 113 of 557

61

Acting Commissioner of Customs vs. MERALCO, No. L-23623, June 30, 1977, 77 SCRA 469,
473.
62

Respondents Memorandum, pp. 168-169.

63

The Wealth of Nations, Book V, Chapter II.

64

Chavez vs. Ongpin, G.R. No. 76778, June 6, 1990, 186 SCRA 331, 338.

65

TSN, Bicameral Conference Committee on the Disagreeing Provisions of Senate Bill No. 1950 and
House Bill Nos. 3705 and 3555, April 25, 2005, pp. 5-6.
66

G.R. No. 147387, December 10, 2003, 417 SCRA 503, 524.

67

National Housing Authority vs. Reyes, G.R. No. L-49439, June 29, 1983, 123 SCRA 245, 249.

68

Sison vs. Ancheta, G.R. No. L-59431, July 25, 1984, 130 SCRA 654, 661.

69

Section 8, R.A. No. 9337, amending Section 110(A)(B),NIRC.

70

Ibid.

71

Commissioner of Internal Revenue vs. Benguet Corp., G.R. Nos. 134587 & 134588, July 8, 2005.

72

United Paracale Mining Co. vs. Dela Rosa, G.R. Nos. 63786-87, April 7, 1993, 221 SCRA 108,
115.
73

E.O. No. 273, Section 1.

74

Section 5.

75

Section 110(B).

76

Journal of the Senate, Session No. 71, March 15, 2005, p. 803.

77

Id., Session No. 67, March 7, 2005, p. 726.

78

Id., Session No. 71, March 15, 2005, p. 803.

79

Revenue Regulations No. 14-2005, 4.114-2(a).

80

Commissioner of Internal Revenue vs. Philam, G.R. No. 141658, March 18, 2005.

81

Revenue Regulations No. 14-2005, Sec. 4. 114-2.

82

Act V, Scene V.

83

Philippine Rural Electric Cooperatives Association, Inc. vs. DILG, G.R. No. 143076, June 10, 2003,
403 SCRA 558, 565.

Page 114 of 557

84

Aban, Benjamin, Law of Basic Taxation in the Philippines (First Edition 1994).

85

Philippine Judges Association case, supra., note 29.

86

Commissioner of Internal Revenue vs. Court of Appeals, G.R. No. 119761, August 29, 1996, 261
SCRA 236, 249.
87

Kee vs. Court of Tax Appeals, No. L-18080, April 22, 1963, 117 Phil 682, 688.

88

Section 7, R.A. No. 9337.

89

Ibid.

90

No. L-81311, June 30, 1988, 163 SCRA 371, 383.

91

Section 17, R.A. No. 9337, amending Section 148, NIRC.

92

Section 18, amending Section 151, NIRC.

93

Section 14, amending Section 117, NIRC.

94

Section 15, amending Section 119, NIRC.

95

Sections 1 and 2, amending Sections 27 and 28, NIRC.

96

Section 2, amending Section 28, NIRC.

97

Section 1, amending Section 27(C), NIRC.

98

Reyes vs. Almanzor, G.R. Nos. 49839-46, April 26, 1991, 196 SCRA 322, 327.

99

Tolentino vs. Secretary of Finance, G.R. No. 115455, October 30, 1995, 249 SCRA 628, 659.

100

Vera vs. Avelino, G.R. No. L-543, August 31, 1946, 77 Phil. 365.

101

Ibid.

The Lawphil Project - Arellano Law Foundation

EN BANC
G.R. No. 168056 - ABAKADA GURO PARTY LIST, ET AL. V. EXECUTIVE SECRETARY
EDUARDO R. ERMITA, ET AL.
G.R. No. 168207 - AQUILINO PIMENTEL, JR., ET AL. V. EXECUTIVE SECRETARY EDUARDO
ERMITA, ET AL.

Page 115 of 557

G.R. No. 168461 - ASSOCIATION OF PILIPINAS SHELL DEALERS, INC, ET AL. V. CESAR V.
PURISIMA, ET AL.
G.R. No. 168463 - FRANCIS JOSEPH G. ESCUDERO, ET AL. V. CESAR V. PURISIMA, ET AL.
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X
SEPARATE CONCURRING
AND DISSENTING OPINION
DAVIDE, JR., C.J.:
While I still hold on to my position expressed in my dissenting opinion in the first VAT cases,1 I partly yield to
the application to the cases at bar of the rule on "germaneness" therein enunciated. Thus, I concur with the
ponencia of my highly-esteemed colleague Mme. Justice Ma. Alicia Austria-Martinez except as regards its
ruling on the issue of whether Republic Act No. 9337 violates Section 24, Article VI of the Constitution.
R.A. No. 9337 primarily aims to restructure the value-added tax (VAT) system by broadening its base and
raising the rate so as to generate more revenues for the government that can assuage the economic predicament
that our country is now facing. This recently enacted law stemmed from three legislative bills: House Bill (HB)
No. 3555, HB No. 3705, and Senate Bill (SB) 1950. The first (HB No. 3555) called for the amendment of
Sections 106, 107, 108, 109, 110, and 111 of the National Internal Revenue Code (NIRC) as amended; while
the second (HB No. 3705) proposed amendments to Sections 106, 107, 108, 110, and 114 of the NIRC, as
amended. It is significant to note that all these Sections specifically deal with VAT. And indubitably, these
bills are revenue bills in that they are intended to levy taxes and raise funds for the government.2
On the other hand, SB No. 1950 introduced amendments to "Sections 27, 28, 34, 106, 108, 109, 110, 111, 112,
113, 114, 116, 117, 118, 119, 125, 148, 236, 237, and 288" of the NIRC, as amended. Among the provisions
sought to be amended, only Sections 106, 108, 109, 110, 111, 112, 113, 114, and 116 pertain to VAT. And
while Sections 236, 237, and 288 are administrative provisions pertaining to registration requirements and
issuance of receipts commercial invoices, the proposed amendments thereto are related to VAT. Hence, the
proposed amendments to these Sections were validly taken cognizance of and properly considered by the
Bicameral Conference Committee (BCC).
However, I am of the opinion that the inclusion into the law of the amendments proposed in SB No. 1950 to
the following provisions (with modifications on the rates of taxes) is invalid.
Provision Subject matter
Section 27 Rate of income tax on domestic corporations
Section 28(A)(1) Rate of income tax on resident foreign corporation
Section 28(B)(1) Rate of income tax on non-resident foreign corporation
Section 28(B)(5-b) Rate of income tax on intra-corporate dividends received by non-resident foreign
corporation
Section 34(B)(1) Deductions from gross income

Page 116 of 557

Section 117 Percentage tax on domestic carriers and keepers of garages

Section 119 Tax on franchises
Section 148 Excise tax on manufactured oils and other fuels
Obviously, these provisions do not deal with VAT. It must be noted that the House Bills initiated amendments
to provisions pertaining to VAT only. Doubtless, the Senate has the constitutional power to concur with the
amendments to the VAT provisions introduced in the House Bills or even to propose its own version of VAT
measure. But that power does not extend to initiation of other tax measures, such as introducing amendments
to provisions on corporate income taxes, percentage taxes, franchise taxes, and excise taxes like what the
Senate did in these cases. It was beyond the ambit of the authority of the Senate to propose amendments to
provisions not covered by the House Bills or not related to the subject matter of the House Bills, which is
VAT. To allow the Senate to do so would be tantamount to vesting in it the power to initiate revenue bills -- a
power that exclusively pertains to the House of Representatives under Section 24, Article VI of the
Constitution, which provides:
Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives but the Senate may
propose or concur with amendments.
Moreover, Sections 121 (Percentage Tax on Banks and Non-Bank Financial Intermediaries) and 151 (Excise
Tax on Mineral Products) of the NIRC, as amended, have been included by the BCC in R.A. N0. 9337 even
though they were not found in the Senate and House Bills.
In Philippine Judges Association v. Prado,3 the Court described the function of a conference committee in this
wise: "A conference committee may deal generally with the subject matter or it may be limited to resolving the
precise differences between the two houses. Even where the conference committee is not by rule limited in its
jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted
into the conference bill."
The limitation on the power of a conference committee to insert new provisions was laid down in Tolentino v.
Secretary of Finance.4 There, the Court, while recognizing the power of a conference committee to include in
its report an entirely new provision that is not found either in the House bill or in the Senate bill, held that the
exercise of that power is subject to the condition that the said provision is "germane to the subject of the
House and Senate bills."
As pointed out by the petitioners, Tolentino differs from the present cases in the sense that in that case the
amendments introduced in the Senate bill were on the same subject matter treated in the House bill, which
was VAT, and the new provision inserted by the conference committee had relation to that subject matter.
Specifically, HB No. 11197 called for the (1) amendment of Sections 99,100,102,103,104,105,106,107, 108,
110, 112,115, 116, 236,237, and 238 of the NIRC, as amended; and (2) repeal of Sections 113 and 114 of the
NIRC, as amended. SB No. 1630, on the other hand, proposed the (1) amendment of Sections
99,100,102,103,104,105,107, 108, 110, 112, 236, 237, and 238 of the NIRC, as amended; and (2) repeal of
Sections 113, 114, and 116 of the NIRC, as amended. In short, all the provisions sought to be changed in the
Senate bill were covered in the House bill. Although the new provisions inserted by the conference committee
were not found in either the House or Senate bills, they were germane to the general subject of the bills.
In the present cases, the provisions inserted by the BCC, namely, Sections 121 (Percentage Tax on Banks and
Non-Bank Financial Intermediaries) and 151 (Excise Tax on Mineral Products) of the NIRC, as amended, are
undoubtedly germane to SB No. 1950, which introduced amendments to the provisions on percentage and
excise taxes -- but foreign to HB Nos. 3555 and 3705, which dealt with VAT only. Since the proposed
Page 117 of 557

amendments in the Senate bill relating to percentage and excise taxes cannot themselves be sustained because
they did not take their root from, or are not related to the subject of, HB Nos. 3705 and 3555, in violation of
Section 24, Article VI of the Constitution, the new provisions inserted by the BCC on percentage and excise
taxes would have no leg to stand on.
I understand very well that the amendments of the Senate and the BCC relating to corporate income,
percentage, franchise, and excise taxes were designed to "soften the impact of VAT measure on the consumer,
i.e., by distributing the burden across all sectors instead of putting it entirely on the shoulders of the
consumers" and to alleviate the countrys financial problems by bringing more revenues for the government.
However, these commendable intentions do not justify a deviation from the Constitution, which mandates that
the initiative for filing revenue bills should come from the House of Representatives, not from the Senate.
After all, these aims may still be realized by means of another bill that may later be initiated by the House of
Representatives.
Therefore, I vote to declare R.A. No. 9337 as constitutional insofar as it amends provisions pertaining to
VAT. However, I vote to declare as unconstitutional Sections 1, 2, 3, 14, 15, 16, 17, and 18 thereof which,
respectively, amend Sections 27, 28, 34, 117, 119, 121, 148, and 151 of the NIRC, as amended because these
amendments deal with subject matters which were not touched or covered by the bills emanating from the
House of Representatives, thereby violating Section 24 of Article VI of the Constitution.
HILARIO G. DAVIDE, JR.

Footnotes
1

Tolentino v. Secretary of Finance, G.R. No. 115455, 25 August 1994, 235 SCRA 630, and
companion cases.
2

ISAGANI A. CRUZ, POLITICAL LAW 154 (2002 ed.) citing U.S. v. Nortorn, 91 U.S. 566.

G.R. No. 105371, 11 November 1993, 27 SCRA 703, 708, citing Davies, Legislative Law and
Process: In a Nutshell 81 (1986 ed.)
4

Supra note 1.

The Lawphil Project - Arellano Law Foundation

G.R. No. 168056 ABAKADA GURO PARTY LIST, ET AL. VS. EXECUTIVE SECRETARY
EDUARDO ERMITA, ET AL.
G.R. No. 168207 AQUILINO PIMENTEL, JR., ET AL. VS. EXECUTIVE SECRETARY EDUARDO
ERMITA, ET AL.
G.R. No. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., ET AL. VS. CESAR V.
PURISIMA, ET AL.
G.R. No. 168463 FRANCIS JOSEPH G. ESCUDERO, ET AL. VS. CESAR V. PURISIMA, ET AL.
Page 118 of 557

Promulgated: September 1, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
CONCURRING AND
DISSENTING OPINION
PUNO, J.:
The main opinion of Madam Justice Martinez exhaustively discusses the numerous constitutional and legal
issues raised by the petitioners. Be that as it may, I wish to raise the following points, viz:
First. Petitioners assail sections 4 to 6 of Republic Act No. 9337 as violative of the principle of non-delegation
of legislative power. These sections authorize the President, upon recommendation of the Secretary of Finance,
to raise the value-added tax (VAT) rate to 12% effective January 1, 2006, upon satisfaction of the following
conditions: viz:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %).
The power of judicial review under Article VIII, section 5(2) of the 1987 Constitution is limited to the review
of "actual cases and controversies."1 As rightly stressed by retired Justice Vicente V. Mendoza, this
requirement gives the judiciary "the opportunity, denied to the legislature, of seeing the actual operation of the
statute as it is applied to actual facts and thus enables it to reach sounder judgment" and "enhances public
acceptance of its role in our system of government."2 It also assures that the judiciary does not intrude on areas
committed to the other branches of government and is confined to its role as defined by the Constitution.3
Apposite thereto is the doctrine of ripeness whose basic rationale is "to prevent the courts, through premature
adjudication, from entangling themselves in abstract disagreements."4 Central to the doctrine is the
determination of "whether the case involves uncertain or contingent future events that may not occur as
anticipated, or indeed may not occur at all."5 The ripeness requirement must be satisfied for each challenged
legal provision and parts of a statute so that those which are "not immediately involved are not thereby
thrown open for a judicial determination of constitutionality."6
It is manifest that the constitutional challenge to sections 4 to 6 of R.A. No. 9337 cannot hurdle the
requirement of ripeness. These sections give the President the power to raise the VAT rate to 12% on
January 1, 2006 upon satisfaction of certain fact-based conditions. We are not endowed with the infallible
gift of prophesy to know whether these conditions are certain to happen. The power to adjust the tax rate given
to the President is futuristic and may or may not be exercised. The Court is therefore beseeched to render a
conjectural judgment based on hypothetical facts. Such a supplication has to be rejected.
Second. With due respect, I submit that the most important constitutional issue posed by the petitions at bar
relates to the parameters of power of a Bicameral Conference Committee. Most of the issues in the
petitions at bar arose because the Bicameral Conference Committee concerned exercised powers that went
beyond reconciling the differences between Senate Bill No. 1950 and House Bill Nos. 3705 and 3555. In
Tolentino v. Secretary of Finance,7 I ventured the view that a Bicameral Conference Committee has limited
powers and cannot be allowed to act as if it were a "third house" of Congress. I further warned that unless its
roving powers are reigned in, a Bicameral Conference Committee can wreck the lawmaking process which is
Page 119 of 557

a cornerstone of the democratic, republican regime established in our Constitution. The passage of time
fortifies my faith that there ought to be no legal u-turn on this preeminent principle. I wish, therefore, to
reiterate my reasons for this unbending view, viz:8
Section 209, Rule XII of the Rules of the Senate provides:
In the event that the Senate does not agree with the House of Representatives on the provision of any bill or
joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet
within ten days after their composition.
Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes
in or amendments to the subject measure, and shall be signed by the conferees. (Emphasis supplied)
The counterpart rule of the House of Representatives is cast in near identical language. Section 85 of the Rules
of the House of Representatives pertinently provides:
In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution,
the differences may be settled by a conference committee of both chambers.
x x x. Each report shall contain a detailed, sufficiently explicit statement of the changes in or amendments to
the subject measure. (Emphasis supplied)
The Jeffersons Manual has been adopted as a supplement to our parliamentary rules and practice. Section 456
of Jeffersons Manual similarly confines the powers of a conference committee, viz:
The managers of a conference must confine themselves to the differences committed to them and may not
include subjects not within the disagreements, even though germane to a question in issue.
This rule of antiquity has been honed and honored in practice by the Congress of the United States. Thus, it is
chronicled by Floyd Biddick, Parliamentarian Emeritus of the United States Senate, viz:
Committees of conference are appointed for the sole purpose of compromising and adjusting the differing and
conflicting opinions of the two Houses and the committees of conference alone can grant compromises and
modify propositions of either Houses within the limits of the disagreement. Conferees are limited to the
consideration of differences between the two Houses.
Congress shall not insert in their report matters not committed to them by either House, nor shall they strike
from the bill matters agreed to by both Houses. No matter on which there is nothing in either the Senate or
House passed versions of a bill may be included in the conference report and actions to the contrary would
subject the report to a point of order. (Emphasis ours)
In fine, there is neither a sound nor a syllable in the Rules of the Senate and the House of Representatives to
support the thesis of the respondents that a bicameral conference committee is clothed with an ex post veto
power.
But the thesis that a Bicameral Conference Committee can wield ex post veto power does not only contravene
the rules of both the Senate and the House. It wages war against our settled ideals of representative democracy.
For the inevitable, catastrophic effect of the thesis is to install a Bicameral Conference Committee as the Third
Chamber of our Congress, similarly vested with the power to make laws but with the dissimilarity that its laws
are not the subject of a free and full discussion of both Houses of Congress. With such a vagrant power, a
Bicameral Conference Committee acting as a Third Chamber will be a constitutional monstrosity.
Page 120 of 557

It needs no omniscience to perceive that our Constitution did not provide for a Congress composed of three
chambers. On the contrary, section 1, Article VI of the Constitution provides in clear and certain language:
"The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a
House of Representatives " Note that in vesting legislative power exclusively to the Senate and the House,
the Constitution used the word "shall." Its command for a Congress of two houses is mandatory. It is not
mandatory sometimes.
In vesting legislative power to the Senate, the Constitution means the Senate " composed of twenty-four
Senators xxx elected at large by the qualified voters of the Philippines " Similarly, when the Constitution
vested the legislative power to the House, it means the House " composed of not more than two hundred and
fifty members xxx who shall be elected from legislative districts xxx and those who xxx shall be elected
through a party-list system of registered national, regional, and sectoral parties or organizations." The
Constitution thus, did not vest on a Bicameral Conference Committee with an ad hoc membership the power to
legislate for it exclusively vested legislative power to the Senate and the House as co-equal bodies. To be sure,
the Constitution does not mention the Bicameral Conference Committees of Congress. No constitutional status
is accorded to them. They are not even statutory creations. They owe their existence from the internal rules of
the two Houses of Congress. Yet, respondents peddle the disconcerting idea that they should be recognized as
a Third Chamber of Congress and with ex post veto power at that.
The thesis that a Bicameral Conference Committee can exercise law making power with ex post veto power is
freighted with mischief. Law making is a power that can be used for good or for ill, hence, our Constitution
carefully laid out a plan and a procedure for its exercise. Firstly, it vouchsafed that the power to make laws
should be exercised by no other body except the Senate and the House. It ought to be indubitable that what is
contemplated is the Senate acting as a full Senate and the House acting as a full House. It is only when the
Senate and the House act as whole bodies that they truly represent the people. And it is only when they
represent the people that they can legitimately pass laws. Laws that are not enacted by the peoples rightful
representatives subvert the peoples sovereignty. Bicameral Conference Committees, with their ad hoc
character and limited membership, cannot pass laws for they do not represent the people. The Constitution
does not allow the tyranny of the majority. Yet, the respondents will impose the worst kind of tyranny the
tyranny of the minority over the majority. Secondly, the Constitution delineated in deft strokes the steps to be
followed in making laws. The overriding purpose of these procedural rules is to assure that only bills that
successfully survive the searching scrutiny of the proper committees of Congress and the full and unfettered
deliberations of both Houses can become laws. For this reason, a bill has to undergo three (3) mandatory
separate readings in each House. In the case at bench, the additions and deletions made by the Bicameral
Conference Committee did not enjoy the enlightened studies of appropriate committees. It is meet to note that
the complexities of modern day legislations have made our committee system a significant part of the
legislative process. Thomas Reed called the committee system as "the eye, the ear, the hand, and very often the
brain of the house." President Woodrow Wilson of the United States once referred to the government of the
United States as "a government by the Chairmen of the Standing Committees of Congress " Neither did
these additions and deletions of the Bicameral Conference Committee pass through the coils of collective
deliberation of the members of the two Houses acting separately. Due to this shortcircuiting of the
constitutional procedure of making laws, confusion shrouds the enactment of R.A. No. 7716. Who inserted the
additions and deletions remains a mystery. Why they were inserted is a riddle. To use a Churchillian phrase,
lawmaking should not be a riddle wrapped in an enigma. It cannot be, for Article II, section 28 of the
Constitution mandates the State to adopt and implement a "policy of full public disclosure of all its
transactions involving public interest." The Constitution could not have contemplated a Congress of invisible
and unaccountable John and Mary Does. A law whose rationale is a riddle and whose authorship is obscure
cannot bind the people.
All these notwithstanding, respondents resort to the legal cosmetology that these additions and deletions
should govern the people as laws because the Bicameral Conference Committee Report was anyway submitted
to and approved by the Senate and the House of Representatives. The submission may have some merit with
respect to provisions agreed upon by the Committee in the process of reconciling conflicts between S.B. No.
Page 121 of 557

1630 and H.B. No. 11197. In these instances, the conflicting provisions had been previously screened by the
proper committees, deliberated upon by both Houses and approved by them. It is, however, a different matter
with respect to additions and deletions which were entirely new and which were made not to reconcile
inconsistencies between S.B. No. 1630 and H.B. No. 11197. The members of the Bicameral Conference
Committee did not have any authority to add new provisions or delete provisions already approved by both
Houses as it was not necessary to discharge their limited task of reconciling differences in bills. At that late
stage of law making, the Conference Committee cannot add/delete provisions which can become laws without
undergoing the study and deliberation of both chambers given to bills on 1st, 2nd, and 3rd readings. Even the
Senate and the House cannot enact a law which will not undergo these mandatory three (3) readings required
by the Constitution. If the Senate and the House cannot enact such a law, neither can the lesser Bicameral
Conference Committee.
Moreover, the so-called choice given to the members of both Houses to either approve or disapprove the said
additions and deletions is more of an optical illusion. These additions and deletions are not submitted
separately for approval. They are tucked to the entire bill. The vote is on the bill as a package, i.e., together
with the insertions and deletions. And the vote is either "aye" or "nay," without any further debate and
deliberation. Quite often, legislators vote "yes" because they approve of the bill as a whole although they may
object to its amendments by the Conference Committee. This lack of real choice is well observed by Robert
Luce:
Their power lies chiefly in the fact that reports of conference committees must be accepted without amendment
or else rejected in toto. The impulse is to get done with the matter and so the motion to accept has undue
advantage, for some members are sure to prefer swallowing unpalatable provisions rather than prolong
controversy. This is the more likely if the report comes in the rush of business toward the end of a session,
when to seek further conference might result in the loss of the measure altogether. At any time in the session
there is some risk of such a result following the rejection of a conference report, for it may not be possible to
secure a second conference, or delay may give opposition to the main proposal chance to develop more
strength.
In a similar vein, Prof. Jack Davies commented that "conference reports are returned to assembly and Senate
on a take-it or leave-it-basis, and the bodies are generally placed in the position that to leave-it is a practical
impossibility." Thus, he concludes that "conference committee action is the most undemocratic procedure in
the legislative process."
The respondents also contend that the additions and deletions made by the Bicameral Conference Committee
were in accord with legislative customs and usages. The argument does not persuade for it misappreciates the
value of customs and usages in the hierarchy of sources of legislative rules of procedure. To be sure, every
legislative assembly has the inherent right to promulgate its own internal rules. In our jurisdiction, Article VI,
section 16(3) of the Constitution provides that "Each House may determine the rules of its proceedings x x x."
But it is hornbook law that the sources of Rules of Procedure are many and hierarchical in character. Mason
laid them down as follows:
xxx
1. Rules of Procedure are derived from several sources. The principal sources are as follows:
a. Constitutional rules.
b. Statutory rules or charter provisions.
c. Adopted rules.

Page 122 of 557

d. Judicial decisions.
e. Adopted parliamentary authority.
f. Parliamentary law.
g. Customs and usages.
2. The rules from the different sources take precedence in the order listed above except that judicial decisions,
since they are interpretations of rules from one of the other sources, take the same precedence as the source
interpreted. Thus, for example, an interpretation of a constitutional provision takes precedence over a statute.
3. Whenever there is conflict between rules from these sources the rule from the source listed earlier prevails
over the rule from the source listed later. Thus, where the Constitution requires three readings of bills, this
provision controls over any provision of statute, adopted rules, adopted manual, or of parliamentary law, and a
rule of parliamentary law controls over a local usage but must give way to any rule from a higher source of
authority. (Emphasis ours)
As discussed above, the unauthorized additions and deletions made by the Bicameral Conference Committee
violated the procedure fixed by the Constitution in the making of laws. It is reasonless for respondents
therefore to justify these insertions as sanctioned by customs and usages.
Finally, respondents seek sanctuary in the conclusiveness of an enrolled bill to bar any judicial inquiry on
whether Congress observed our constitutional procedure in the passage of R.A. No. 7716. The enrolled bill
theory is a historical relic that should not continuously rule us from the fossilized past. It should be
immediately emphasized that the enrolled bill theory originated in England where there is no written
constitution and where Parliament is supreme. In this jurisdiction, we have a written constitution and the
legislature is a body of limited powers. Likewise, it must be pointed out that starting from the decade of the
40s, even American courts have veered away from the rigidity and unrealism of the conclusiveness of an
enrolled bill. Prof. Sutherland observed:
xxx
Where the failure of constitutional compliance in the enactment of statutes is not discoverable from the face of
the act itself but may be demonstrated by recourse to the legislative journals, debates, committee reports or
papers of the governor, courts have used several conflicting theories with which to dispose of the issue. They
have held: (1) that the enrolled bill is conclusive and like the sheriffs return cannot be attacked; (2) that the
enrolled bill is prima facie correct and only in case the legislative journal shows affirmative contradiction of
the constitutional requirement will the bill be held invalid; (3) that although the enrolled bill is prima facie
correct, evidence from the journals, or other extrinsic sources is admissible to strike the bill down; (4) that the
legislative journal is conclusive and the enrolled bills is valid only if it accords with the recital in the journal
and the constitutional procedure.
Various jurisdictions have adopted these alternative approaches in view of strong dissent and dissatisfaction
against the philosophical underpinnings of the conclusiveness of an enrolled bill. Prof. Sutherland further
observed:
x x x. Numerous reasons have been given for this rule. Traditionally, an enrolled bill was "a record" and as
such was not subject to attack at common law. Likewise, the rule of conclusiveness was similar to the common
law rule of the inviolability of the sheriffs return. Indeed, they had the same origin, that is, the sheriff was an
officer of the king and likewise the parliamentary act was a regal act and no official might dispute the kings
Page 123 of 557

word. Transposed to our democratic system of government, courts held that as the legislature was an official
branch of government the court must indulge every presumption that the legislative act was valid. The doctrine
of separation of powers was advanced as a strong reason why the court should treat the acts of a co-ordinate
branch of government with the same respect as it treats the action of its own officers; indeed, it was thought
that it was entitled to even greater respect, else the court might be in the position of reviewing the work of a
supposedly equal branch of government. When these arguments failed, as they frequently did, the doctrine of
convenience was advanced, that is, that it was not only an undue burden upon the legislature to preserve its
records to meet the attack of persons not affected by the procedure of enactment, but also that it unnecessarily
complicated litigation and confused the trial of substantive issues.
Although many of these arguments are persuasive and are indeed the basis for the rule in many states today,
they are not invulnerable to attack. The rule most relied on the sheriffs return or sworn official rule did not
in civil litigation deprive the injured party of an action, for always he could sue the sheriff upon his official
bond. Likewise, although collateral attack was not permitted, direct attack permitted raising the issue of fraud,
and at a later date attack in equity was also available; and that the evidence of the sheriff was not of unusual
weight was demonstrated by the fact that in an action against the sheriff no presumption of its authenticity
prevailed.
The argument that the enrolled bill is a "record" and therefore unimpeachable is likewise misleading, for the
correction of records is a matter of established judicial procedure. Apparently, the justification is either the
historical one that the kings word could not be questioned or the separation of powers principle that one
branch of the government must treat as valid the acts of another.
Persuasive as these arguments are, the tendency today is to avoid reaching results by artificial presumptions
and thus it would seem desirable to insist that the enrolled bill stand or fall on the basis of the relevant
evidence which may be submitted for or against it. (Emphasis ours)
Thus, as far back as the 1940s, Prof. Sutherland confirmed that "x x x the tendency seems to be toward the
abandonment of the conclusive presumption rule and the adoption of the third rule leaving only a prima facie
presumption of validity which may be attacked by any authoritative source of information.
Third. I respectfully submit that it is only by strictly following the contours of powers of a Bicameral
Conference Committee, as delineated by the rules of the House and the Senate, that we can prevent said
Committee from acting as a "third" chamber of Congress. Under the clear rules of both the Senate and
House, its power can go no further than settling differences in their bills or joint resolutions. Sections 88 and
89, Rule XIV of the Rules of the House of Representatives provide as follows:
Sec. 88. Conference Committee. In the event that the House does not agree with the Senate on the
amendment to any bill or joint resolution, the differences may be settled by the conference committees of both
chambers.
In resolving the differences with the Senate, the House panel shall, as much as possible, adhere to and support
the House Bill. If the differences with the Senate are so substantial that they materially impair the House Bill,
the panel shall report such fact to the House for the latters appropriate action.
Sec. 89. Conference Committee Reports. - . . . Each report shall contain a detailed, sufficiently explicit
statement of the changes in or amendments to the subject measure.
...

Page 124 of 557

The Chairman of the House panel may be interpellated on the Conference Committee Report prior to the
voting thereon. The House shall vote on the Conference Committee Report in the same manner and procedure
as it votes a bill on third and final reading.
Section 35, Rule XII of the Rules of the Senate states:
Sec. 35. In the event that the Senate does not agree with the House of Representatives on the provision of any
bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall
meet within ten (10) days after their composition. The President shall designate the members of the Senate
Panel in the conference committee with the approval of the Senate.
Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes
in, or amendments to the subject measure, and shall be signed by a majority of the members of each House
panel, voting separately.
The House rule brightlines the following: (1) the power of the Conference Committee is limited . . . it is only
to settle differences with the Senate; (2) if the differences are substantial, the Committee must report to the
House for the latters appropriate action; and (3) the Committee report has to be voted upon in the same
manner and procedure as a bill on third and final reading. Similarly, the Senate rule underscores in crimson
that (1) the power of the Committee is limited - - - to settle differences with the House; (2) it can make
changes or amendments only in the discharge of this limited power to settle differences with the House; and
(3) the changes or amendments are merely recommendatory for they still have to be approved by the Senate.
Under both rules, it is obvious that a Bicameral Conference Committee is a mere agent of the House or the
Senate with limited powers. The House contingent in the Committee cannot, on its own, settle differences
which are substantial in character. If it is confronted with substantial differences, it has to go back to the
chamber that created it "for the latters appropriate action." In other words, it must take the proper
instructions from the chambers that created it. It cannot exercise its unbridled discretion. Where there is no
difference between the bills, it cannot make any change. Where the difference is substantial, it has to return
to the chamber of its origin and ask for appropriate instructions. It ought to be indubitable that it cannot create
a new law, i.e., that which has never been discussed in either chamber of Congress. Its parameters of power
are not porous, for they are hedged by the clear limitation that its only power is to settle differences in bills
and joint resolutions of the two chambers of Congress.
Fourth. Prescinding from these premises, I respectfully submit that the following acts of the Bicameral
Conference Committee constitute grave abuse of discretion amounting to lack or excess of jurisdiction and
should be struck down as unconstitutional nullities, viz:
a. Its deletion of the pro poor "no pass on provision" which is common in both Senate Bill No. 1950 and
House Bill No. 3705.
Sec. 1 of House Bill No. 37059 provides:
Section 106 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as
follows:
SEC. 106. Value-added Tax on Sale of Goods or Properties.
xxx

Page 125 of 557

Provided, further, that notwithstanding the provision of the second paragraph of Section 105 of this Code, the
Value-added Tax herein levied on the sale of petroleum products under Subparagraph (1) hereof shall be paid
and absorbed by the sellers of petroleum products who shall be prohibited from passing on the cost of
such tax payments, either directly or indirectly[,] to any consumer in whatever form or manner, it being
the express intent of this act that the Value-added Tax shall be borne and absorbed exclusively by the sellers of
petroleum products x x x.
Sec. 3 of the same House bill provides:
Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as
follows:
Sec. 108. Value-added Tax on Sale of Goods or Properties.
Provided, further, that notwithstanding the provision of the second paragraph of Section 105 of this Code, the
Value-added Tax imposed under this paragraph shall be paid and absorbed by the subject generation
companies who shall be prohibited from passing on the cost of such tax payments, either directly or
indirectly[,] to any consumer in whatever form or manner, it being the express intent of this act that the
Value-added Tax shall be borne and absorbed exclusively [by] the power-generating companies.
In contrast and comparison, Sec. 5 of Senate Bill No. 1950 provides:
Value-added Tax on sale of Services and Use or Lease of Properties.
x x x Provided, that the VAT on sales of electricity by generation companies, and services of transmission
companies and distribution companies, as well as those of franchise grantees of electrical utilities shall not
apply to residential end-users: Provided, that the Value-added Tax herein levied shall be absorbed and paid by
the generation, transmission and distribution companies concerned. The said companies shall not pass on
such tax payments to NAPOCOR or ultimately to the consumers, including but not limited to residential
end users, either as costs or in any other form whatsoever, directly or indirectly. x x x.
Even the faintest eye contact with the above provisions will reveal that: (a) both the House bill and the Senate
bill prohibited the passing on to consumers of the VAT on sales of electricity and (b) the House bill
prohibited the passing on to consumers of the VAT on sales of petroleum products while the Senate bill is
silent on the prohibition.
In the guise of reconciling disagreeing provisions of the House and the Senate bills on the matter, the
Bicameral Conference Committee deleted the "no pass on provision" on both the sales of electricity and
petroleum products. This action by the Committee is not warranted by the rules of either the Senate or the
House. As aforediscussed, the only power of a Bicameral Conference Committee is to reconcile disagreeing
provisions in the bills or joint resolutions of the two houses of Congress. The House and the Senate bills both
prohibited the passing on to consumers of the VAT on sales of electricity. The Bicameral Conference
Committee cannot override this unequivocal decision of the Senate and the House. Nor is it clear that
there is a conflict between the House and Senate versions on the "no pass on provisions" of the VAT on sales
of petroleum products. The House version contained a "no pass on provision" but the Senate had none.
Elementary logic will tell us that while there may be a difference in the two versions, it does not
necessarily mean that there is a disagreement or conflict between the Senate and the House. The silence
of the Senate on the issue cannot be interpreted as an outright opposition to the House decision prohibiting
the passing on of the VAT to the consumers on sales of petroleum products. Silence can even be conformity,
albeit implicit in nature. But granting for the nonce that there is conflict between the two versions, the conflict
cannot escape the characterization as a substantial difference. The seismic consequence of the deletion of the
"no pass on provision" of the VAT on sales of petroleum products on the ability of our consumers, especially
Page 126 of 557

on the roofless and the shirtless of our society, to survive the onslaught of spiraling prices ought to be beyond
quibble. The rules require that the Bicameral Conference Committee should not, on its own, act on this
substantial conflict. It has to seek guidance from the chamber that created it. It must receive proper instructions
from its principal, for it is the law of nature that no spring can rise higher than its source. The records of both
the Senate and the House do not reveal that this step was taken by the members of the Bicameral Conference
Committee. They bypassed their principal and ran riot with the exercise of powers that the rules never
bestowed on them.
b. Even more constitutionally obnoxious are the added restrictions on local governments use of
incremental revenue from the VAT in Section 21 of R.A. No. 9337 which were not present in the Senate
or House Bills. Section 21 of R.A. No. 9337 provides:
Fifty percent of the local government units share from VAT shall be allocated and used exclusively for the
following purposes:
1. Fifteen percent (15%) for public elementary and secondary education to finance the construction of
buildings, purchases of school furniture and in-service teacher trainings;
2. Ten percent (10%) for health insurance premiums of enrolled indigents as a counterpart contribution of the
local government to sustain the universal coverage of the national health insurance program;
3. Fifteen percent (15%) for environmental conservation to fully implement a comprehensive national
reforestation program; and
4. Ten percent (10%) for agricultural modernization to finance the construction of farm-to-market roads and
irrigation facilities.
Such allocations shall be segregated as separate trust funds by the national treasury and shall be over and
above the annual appropriation for similar purposes.
These amendments did not harmonize conflicting provisions between the constituent bills of R.A. No. 9337
but are entirely new and extraneous concepts which fall beyond the median thereof. They transgress the
limits of the Bicameral Conference Committees authority and must be struck down.
I cannot therefore subscribe to the thesis of the majority that "the changes introduced by the Bicameral
Conference Committee on disagreeing provisions were meant only to reconcile and harmonize the disagreeing
provisions for it did not inject any idea or intent that is wholly foreign to the subject embraced by the
original provisions."
Fifth. The majority further defends the constitutionality of the above provisions by holding that "all the
changes or modifications were germane to subjects of the provisions referred to it for reconciliation."
With due respect, it is high time to re-examine the test of germaneness proffered in Tolentino.
The test of germaneness is overly broad and is the fountainhead of mischief for it allows the Bicameral
Conference Committee to change provisions in the bills of the House and the Senate when they are not even in
disagreement. Worse still, it enables the Committee to introduce amendments which are entirely new and have
not previously passed through the coils of scrutiny of the members of both houses. The Constitution did not
establish a Bicameral Conference Committee that can act as a "third house" of Congress with super veto
power over bills passed by the Senate and the House. We cannot concede that super veto power without
wrecking the delicate architecture of legislative power so carefully laid down in our Constitution. The clear
Page 127 of 557

intent of our fundamental law is to install a lawmaking structure composed only of two houses whose
members would thoroughly debate proposed legislations in representation of the will of their respective
constituents. The institution of this lawmaking structure is unmistakable from the following provisions: (1)
requiring that legislative power shall be vested in a bicameral legislature;10 (2) providing for quorum
requirements;11 (3) requiring that appropriation, revenue or tariff bills, bills authorizing increase of public debt,
bills of local application, and private bills originate exclusively in the House of Representatives;12 (4) requiring
that bills embrace one subject expressed in the title thereof;13 and (5) mandating that bills undergo three
readings on separate days in each House prior to passage into law and prohibiting amendments on the last
reading thereof.14 A Bicameral Conference Committee with untrammeled powers will destroy this lawmaking
structure. At the very least, it will diminish the free and open debate of proposed legislations and facilitate the
smuggling of what purports to be laws.
On this point, Mr. Robert Luces disconcerting observations are apropos:
"Their power lies chiefly in the fact that reports of conference committees must be accepted without
amendment or else rejected in toto. The impulse is to get done with the matters and so the motion to accept
has undue advantage, for some members are sure to prefer swallowing unpalatable provisions rather
than prolong controversy. This is more likely if the report comes in the rush of business toward the end of
the session, when to seek further conference might result in the loss of the measure altogether. At any time in
the session there is some risk of such a result following the rejection of a conference report, for it may not be
possible to secure a second conference, or delay may give opposition to the main proposal chance to develop
more strength.
xxx xxx xxx
Entangled in a network of rule and custom, the Representative who resents and would resist this theft of his
rights, finds himself helpless. Rarely can be vote, rarely can he voice his mind, in the matter of any fraction of
the bill. Usually he cannot even record himself as protesting against some one feature while accepting the
measure as whole. Worst of all, he cannot by argument or suggested change, try to improve what the other
branch has done.
This means more than the subversion of individual rights. It means to a degree the abandonment of
whatever advantage the bicameral system may have. By so much it in effect transfers the lawmaking
power to small group of members who work out in private a decision that almost always prevails. What
is worse, these men are not chosen in a way to ensure the wisest choice. It has become the practice to name as
conferees the ranking members of the committee, so that the accident of seniority determines. Exceptions are
made, but in general it is not a question of who are most competent to serve. Chance governs, sometimes
giving way to favor, rarely to merit.
xxx xxx xxx
Speaking broadly, the system of legislating by conference committee is unscientific and therefore defective.
Usually it forfeits the benefit of scrutiny and judgment by all the wisdom available. Uncontrolled, it is
inferior to that process by which every amendment is secured independent discussion and vote. . . ."15
It cannot be overemphasized that in a republican form of government, laws can only be enacted by all the duly
elected representatives of the people. It cuts against conventional wisdom in democracy to lodge this
power in the hands of a few or in the claws of a committee. It is for these reasons that the argument that we
should overlook the excesses of the Bicameral Conference Committee because its report is anyway approved
by both houses is a futile attempt to square the circle for an unconstitutional act is void and cannot be
redeemed by any subsequent ratification.

Page 128 of 557

Neither can we shut our eyes to the unconstitutional acts of the Bicameral Conference Committee by holding
that the Court cannot interpose its checking powers over mere violations of the internal rules of Congress. In
Arroyo, et al. v. de Venecia, et al.,16 we ruled that when the violations affect private rights or impair the
Constitution, the Court has all the power, nay, the duty to strike them down.
In conclusion, I wish to stress that this is not the first time nor will it be last that arguments will be foisted for
the Court to merely wink at assaults
on the Constitution on the ground of some national interest, sometimes clear and at other times inchoate. To be
sure, it cannot be gainsaid that the country is in the vortex of a financial crisis. The broadsheets scream the
disconcerting news that our debt payments for the year 2006 will exceed Pph1 billion daily for interest alone.
Experts underscore some factors that will further drive up the debt service expenses such as the devaluation of
the peso, credit downgrades and a spike in interest rates.17 But no doomsday scenario will ever justify the
thrashing of the Constitution. The Constitution is meant to be our rule both in good times as in bad times. It is
the Courts uncompromising obligation to defend the Constitution at all times lest it be condemned as an
irrelevant relic.
WHEREFORE, I concur with the majority but dissent on the following points:
a) I vote to withhold judgment on the constitutionality of the "standby authority" in Sections 4 to 6 of Republic
Act No. 9337 as this issue is not ripe for adjudication.;
b) I vote to declare unconstitutional the deletion by the Bicameral Conference Committee of the pro poor "no
pass on provision" on electricity to residential consumers as it contravened the unequivocal intent of both
Houses of Congress; and
c) I vote to declare Section 21 of Republic Act No. 9337 as unconstitutional as it contains extraneous
provisions not found in its constituent bills.
REYNATO S. PUNO
Associate Justice

Footnotes
1

Angara v. Electoral Commission, 63 Phil. 139 (1936); See also Tribe, American Constitutional Law,
pp. 311-314 (3rd ed.).
2

Mendoza, Judicial Review of Constitutional Questions: Cases and Materials, p. 86 (2004).

Id. at 87.

Abbott Laboratories v. Gardner, 387 U.S. 136 (1967); I Tribe, American Constitutional Law, p. 334
(3rd ed.).
5

Texas v. United States, 523 U.S. 296 (1998); Thomas v. Union Carbide Agricultural Products Co.,
473 U.S. 568 (1985); I Tribe, American Constitutional Law, pp. 335-336 (3rd ed.).

Page 129 of 557

Communist Party of the United States v. Subversive Activities Control Bd., 367 U.S. 1, 71 (1961); I
Tribe, American Constitutional Law, p. 336 (3rd ed.); See also concurring opinion of Justice Brandeis
in Ashwander v. Tennessee Valley Authority, 297 U.S. 288 (1936).
7

235 SCRA 630 (1994).

See Opinion in 235 SCRA 630, 805-825.

H.B. No. 3555 has no "no pass on provision." House Bill No. 3705 expresses the latest intent of the
House on the matter.
10

1 Sutherland Statutory Construction 6:2 (6th ed.): The provision requiring that legislative power
shall be vested in a bicameral legislature seeks to "assure sound judgment that comes from separate
deliberations and actions in the respective bodies that check and balance each other."
11

Const., Article VI, Section 16(2) (1987): "(2) A majority of each House shall constitute a quorum to
do business, but a smaller number may adjourn from day to day and may compel the attendance of
absent Members in such manner, and under such penalties, as such House may provide."
12

Const., Article VI, Section 24 (1987); 1 Sutherland Statutory Construction 9:6 (6th ed.): The
provision helps guarantee that the exercise of the taxing power is well studied as the lower house is
"presumably more representative in character."
13

Const., Article VI, Section 26(1) (1987); I Cooley, A Treatise on Constitutional Limitations, p. 143;
Central Capiz v. Ramirez, 40 Phil. 883 (1920): "In the construction and application of this
constitutional restriction the courts have kept steadily in view the correction of the mischief against
which it was aimed. The object is to prevent the practice, which was common in all legislative bodies
where no such restrictions existed of embracing in the same bill incongruous matters having no
relation to each other or to the subject specified in the title, by which measures were often adopted
without attracting attention. Such distinct subjects represented diverse interests, and were combined in
order to unite the members of the legislature who favor either in support of all. These combinations
were corruptive of the legislature and dangerous to the State. Such omnibus bills sometimes included
more than a hundred sections on as many different subjects, with a title appropriate to the first section,
and for other purposes."
"The failure to indicate in the title of the bill the object intended to be accomplished by the legislation
often resulted in members voting ignorantly for measures which they would not knowingly have
approved; and not only were legislators thus misled, but the public also; so that legislative provisions
were steadily pushed through in the closing hours of a session, which, having no merit to commend
them, would have been made odious by popular discussion and remonstrance if their pendency had
been seasonably announced. The constitutional clause under discussion is intended to correct these
evils; to prevent such corrupting aggregations of incongruous measures, by confining each act to one
subject or object; to prevent surprise and inadvertence by requiring that subject or object to be
expressed in the title."
14

Const., Article VI, Section 26(2) (1987); 1 Sutherland Statutory Construction 10:4 (6th ed.); See
also IV Laurel, Journal of the (1935) Constitutional Convention, pp. 436-437, 440-441 where the
1934 Constitutional Convention noted the anomalous legislative practice of railroading bills on the
last day of the legislative year when members of Congress were eager to go home. By this irregular
procedure, legislators were able to successfully insert matters into bills which would not otherwise
stand scrutiny in leisurely debate; I Cooley, A Treatise on the Constitutional Limitations, pp. 286287(8th ed.); Smith v. Mitchell, 69 W.Va 481, 72 S.E. 755 (1911): "The purpose of this provision of
Page 130 of 557

the Constitution is to inform legislators and people of legislation proposed by a bill, and to prevent
hasty legislation."
15

235 SCRA 630, 783-784 citing Luce, Legislative Procedure, pp. 404-405, 407 (1922); See also
Davies, Legislative Law and Process, p. 81 (2nd ed.): "conference reports are returned to assembly
and Senate on a take-it or leave-it-basis, and the bodies are generally placed in the position that to
leave-it is a practical impossibility." Thus, he concludes that "conference committee action is the most
undemocratic procedure in the legislative process."
16

268 SCRA 269, 289 (1997).

17

The Manila Standard Today, August 26, 2005, p. 1.

EN BANC
GR No. 168056 -- ABAKADA GURO PARTY LIST, etc. et al. v. HON. EXECUTIVE SECRETARY
EDUARDO R. ERMITA et al.
GR No. 168207 -- AQUILINO Q. PIMENTEL JR. et al. v. EXECUTIVE SECRETARY EDUARDO R.
ERMITA et al.
GR No. 168461 -- ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., etc. et al. v. CESAR V.
PURISIMA, etc. et al.
GR No. 168463 -- FRANCIS JOSEPH G. ESCUDERO et al. v. CESAR V. PURISIMA etc., et al.
GR No. 168730 -- BATAAN GOVERNOR ENRIQUE T. GARCIA JR. v. HON. EDUARDO R.
ERMITA, etc. et al.
Promulgated: September 1, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x
SEPARATE OPINION
PANGANIBAN, J.:
The ponencia written by the esteemed Madame Justice Ma. Alicia Austria-Martinez declares that the enrolled
bill doctrine has been historically and uniformly upheld in our country. Cited as recent reiterations of this
doctrine are the two Tolentino v. Secretary of Finance judgments1 and Farias v. Executive Secretary.2
Precedence of Mandatory
Constitutional Provisions
Over the Enrolled Bill Doctrine

Page 131 of 557

I believe, however, that the enrolled bill doctrine3 is not absolute. It may be all-encompassing in some
countries like Great Britain,4 but as applied to our jurisdiction, it must yield to mandatory provisions of our
1987 Constitution. The Court can take judicial notice of the form of government5 in Great Britain.6 It is unlike
that in our country and, therefore, the doctrine from which it originated7 could be modified accordingly by our
Constitution.
In fine, the enrolled bill doctrine applies mainly to the internal rules and processes followed by Congress in its
principal duty of lawmaking. However, when the Constitution imposes certain conditions, restrictions or
limitations on the exercise of congressional prerogatives, the judiciary has both the power and the duty to
strike down congressional actions that are done in plain contravention of such conditions, restrictions or
limitations.8 Insofar as the present case is concerned, the three most important restrictions or limitations to the
enrolled bill doctrine are the "origination," "no-amendment" and "three-reading" rules which I will discuss
later.
Verily, these restrictions or limitations to the enrolled bill doctrine are safeguarded by the expanded9
constitutional mandate of the judiciary "to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government."10
Even the ponente of Tolentino,11 the learned Mr. Justice Vicente V. Mendoza, concedes in another decision
that each house "may not by its rules ignore constitutional restraints or violate fundamental rights, and there
should be a reasonable relation between the mode or method of proceeding established by the rule and the
result which is sought to be attained."12
The Bicameral Conference Committee (BCC) created by Congress to iron out differences between the Senate
and the House of Representatives versions of the E-VAT bills13 is one such "branch or instrumentality of the
government," over which this Court may exercise certiorari review to determine whether or not grave abuse of
discretion has been committed; and, specifically, to find out whether the constitutional conditions, restrictions
and limitations on law-making have been violated.
In general, the BCC has at least five options in performing its functions: (1) adopt the House version in part or
in toto, (2) adopt the Senate version in part or in toto, (3) consolidate the two versions, (4) reject nonconflicting provisions, and (5) adopt completely new provisions not found in either version. This, therefore, is
the simple question: In the performance of its function of reconciling conflicting provisions, has the
Committee blatantly violated the Constitution?
My short answer is: No, except those relating to income taxes referred to in Sections 1, 2 and 3 of Republic
Act (RA) No. 9337. Let me explain.
Adopting the House
Version in Part or in Toto
First, the BCC had the option of adopting the House bills either in part or in toto, endorsing them without
changes. Since these bills had passed the three-reading requirement14 under the Constitution,15 it readily
becomes apparent that no procedural impediment would arise. There would also be no question as to their
origination,16 because the bills originated exclusively from the House of Representatives itself.
In the present case, the BCC did not ignore the Senate and adopt any of the House bills in part or in toto.
Therefore, this option was not taken by the BCC.
Adopting the Senate

Page 132 of 557

Version in Part or in Toto

Second, the BCC may choose to adopt the Senate version either
in part or in toto, endorsing it also without changes. In so doing, the question of origination arises. Under the
1987 Constitution, all "revenue x x x bills x x x shall originate exclusively in the House of Representatives, but
the Senate may propose or concur with amendments."17
If the revenue bill originates exclusively from the Senate, then obviously the origination provision18 of the
Constitution would be violated. If, however, it originates exclusively from the House and presumably passes
the three-reading requirement there, then the question to contend with is whether the Senate amendments
complied with the "germane" principle.
While in the Senate, the House version may, per Tolentino, undergo extensive changes, such that the Senate
may rewrite not only portions of it but even all of it.19 I believe that such rewriting is limited by the "germane"
principle: although "relevant"20 or "related"21 to the general subject of taxation, the Senate version is not
necessarily "germane" all the time. The "germane" principle requires a legal -- not necessarily an economic22
or political -- interpretation. There must be an "inherent logical connection."23 What may be germane in an
economic or political sense is not necessarily germane in the legal sense. Otherwise, any provision in the
Senate version that is entirely new and extraneous, or that is remotely or even slightly connected, to the vast
and perplexing subject of taxation, would always be germane. Under this interpretation, the origination
principle would surely be rendered inutile.
To repeat, in Tolentino, the Court said that the Senate may even write its own version, which in effect would
be an amendment by substitution.24 The Court went further by saying that "the Constitution does not prohibit
the filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House, so long as
action by the Senate as a body is withheld pending receipt of the House bill."25 After all, the initiative for filing
a revenue bill must come from the House26 on the theory that, elected as its members are from their respective
districts, the House is more sensitive to local needs and problems. By contrast, the Senate whose members are
elected at large approaches the matter from a national perspective,27 with a broader and more circumspect
outlook.28
Even if I have some reservations on the foregoing sweeping pronouncements in Tolentino, I shall not comment
any further, because the BCC, in reconciling conflicting provisions, also did not take the second option of
ignoring the House bills completely and of adopting only the Senate version in part or in toto. Instead, the
BCC used or applied the third option as will be discussed below.
Compromising
by Consolidating
As a third option, the BCC may reach a compromise by
consolidating both the Senate and the House versions. It can adopt some parts and reject other parts of both
bills, and craft new provisions or even a substitute bill. I believe this option is viable, provided that there is no
violation of the origination and germane principles, as well as the three-reading rule. After all, the report
generated by the BCC will not become a final valid act of the Legislative Department until the BCC obtains
the approval of both houses of Congress.29
Standby Authority. I believe that the BCC did not exceed its authority when it crafted the so-called "standby
authority" of the President. The originating bills from the House imposed a 12 percent VAT rate,30 while the
bill from the Senate retained the
original 10 percent.31 The BCC opted to initially use the 10 percent Senate provision and to increase this rate to

Page 133 of 557

the 12 percent House provision, effective January 1, 2006, upon the occurrence of a predetermined factual
scenario as follows:
"(i) [VAT] collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and
four-fifth percent (2 4/5%) or
(ii) National Government Deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 1/2%)."32
In the computation of the percentage requirements in the alternative conditions under the law, the amounts of
the VAT collection, National Deficit,33 and GDP34 -- as well as the interrelationship among them -- can easily
be derived by the finance secretary from the proper government bodies charged with their determination. The
law is complete and standards have been fixed.35 Only the fact-finding mathematical computation for its
implementation on January 1, 2006, is necessary.
Once either of the factual and mathematical events provided in the law takes place, the President has no choice
but to implement the increase of the VAT rate to 12 percent.36 This eventuality has been predetermined by
Congress.37
The taxing power has not been delegated by Congress to either or both the President and the finance secretary.
What was delegated
was only the power to ascertain the facts in order to bring the law into operation. In fact, there was really no
"delegation to speak of;
__________________
Culled from the same record, the following excerpts show the position of public respondents:
"Justice Panganiban: It will be based on actual figures?
"Usec. Bonoan: It will be based on actual figures.
"Justice Panganiban: That creates a problem[,] because where do you get the actual figures[?]
"Usec. Bonoan: I understand that[,] traditionally[,] we can come in March, but there is no impediment to
speeding up the gathering.
"Justice Panganiban: Speed it up. February 15?
"Usec. Bonoan: Even within January, Your Honor, I think this can be.
"Justice Panganiban: Alright at the end of January, its just estimate to get the figures in January.
"Usec. Bonoan: Yes, Your Honor (pp. 661-662); and
xxx

Page 134 of 557

"Justice Panganiban: My only point is, I raised this earlier and I promised counsel for the petitioner whom I
was questionin[g] that I will raise it with you, whether the date January 1, 2006 would present an
impossibility of a condition happening.
"Usec. Bonoan: It will not, Your Honor.
"Justice Panganiban: So, your position [is] it will not present an impossibility. Elaborate on it in your
memorandum.
"Usec. Bonoan: Yes, Your Honor.
"Justice Panganiban: Because it is important. The administrative regulations are important[,] because they
clarify the law and it will guide taxpayers. So[,] by January 1[,] [taxpayers] would not be wondering. Do we
charge the end consumers 10 [percent] or 12 [percent]? The regulations should be able to spell that out [i]n the
same manner that even now the various consumers of various products and services must be able to get from
your
there was merely a declaration of an administrative, not a legislative, function.38
I concur with the ponencia in that there was no undue delegation of legislative power in the increase from 10
percent to 12 percent of the VAT rate. I respectfully disagree, however, with the statements therein that, first,
the secretary of finance is "acting as the agent of the legislative department" or an "agent of Congress" in
determining and declaring the event upon which its expressed will is to take effect; and, second, that the
secretarys personality "is in reality but a projection of that of Congress."

The secretary of finance is not an alter ego of Congress, but of the President. The mandate given by RA 9337
to the secretary is not equipollent to an authority to make laws. In passing this law, Congress did not restrict or
curtail the constitutional power of the President to retain control and supervision over the entire Executive
Department. The law should be construed to be merely asking the President, with a recommendation from the
Presidents alter ego in finance matters, to determine the factual bases for making the increase in VAT rate
operative.39 Indeed, as I have mentioned earlier, the fact-finding condition is a mere administrative, not
legislative, function.
The ponencia states that Congress merely delegates the implementation of the law to the secretary of finance.
How then can the latter be its agent? Making a law is different from implementing it. While the first (the
making of laws) may be delegated under certain conditions and only in specific instances provided under the
Constitution, the second (the implementation of laws) may not be done by Congress. After all, the legislature
does not have the power to implement laws. Therefore, congressional agency arises only in the first, not in the
second. The first is a legislative function; the second, an executive one.
Petitioners argument is that because the GDP does not account for the economic effects of so-called
underground businesses, it is an inaccurate indicator of either economic growth or slowdown in transitional
economies.40 Clearly, this matter is within the confines of lawmaking. This Court is neither a substitute for the
wisdom, or lack of it, in Congress,41 nor an arbiter of flaws within the latters internal rules.42 Policy matters
lie within the domain of the political branches of government,43 outside the range of judicial cognizance.44
"[T]he right to select the measure and objects of taxation devolves upon the Congress, and not upon the courts,
and such selections are valid unless constitutional limitations are overstepped."45 Moreover, each house of
Congress has the power and authority to determine the rules of its proceedings.46 The contention that this case
is not ripe for determination because there is no violation yet of the Constitution regarding the exercise of the
Presidents standby authority has no basis. The question raised is whether the BCC, in passing the law,
Page 135 of 557

committed grave abuse of discretion, not whether the provision in question had been violated. Hence, this case
is not premature and is, in fact, subject to judicial determination.
Amendments on Income Taxes. I respectfully submit that the amendments made by the BCC (that were culled
from the Senate version) regarding income taxes47 are not legally germane to the subject matter of the House
bills. Revising the income tax rates on domestic, resident foreign and nonresident foreign corporations;
increasing the tax credit against taxes due from nonresident foreign corporations on intercorporate dividends;
and reducing the allowable deduction for interest expense are legally unrelated and not germane to the subject
matter contained in the House bills; they violate the origination principle.48 The reasons are as follows:
One, an income tax is a direct tax imposed on actual or presumed income -- gross or net -- realized by a
taxpayer during a given taxable year,49 while a VAT is an indirect tax not in the context of who is directly and
legally liable for its payment, but in terms of its nature as "a tax on consumption."50 The former cannot be
passed on to the consumer, but the latter can.51 It is too wide a stretch of the imagination to even relate one
concept with the other. In like manner, it is inconceivable how the provisions that increase corporate income
taxes can be considered as mitigating measures for increasing the VAT and, as I will explain later, for
effectively imposing a maximum of 3 percent tax on gross sales or revenues because of the 70 percent cap.
Even the argument that the corporate income tax rates will be reduced to 30 percent does not hold water. This
reduction will take effect only in 2009, not 2006 when the 12 percent VAT rate will have been implemented.
Two, taxes on intercorporate dividends are final, but the input VAT is generally creditable. Under a final
withholding tax system, the amount of income tax that is withheld by a withholding agent is constituted as a
full and final payment of the income tax due from the payee on said income.52 The liability for the tax
primarily rests upon the payor as a withholding agent.53 Under a creditable withholding tax system, taxes
withheld on certain payments are meant to approximate the tax that is due of the payee on said payments.54
The liability for the tax rests upon the payee who is mandated by law to still file a tax return, report the tax
base, and pay the difference between the tax withheld and the tax due.55
From this observation alone, it can already be seen that not only are dividends alien to the tax base upon which
the VAT is imposed, but their respective methods of withholding are totally different. VAT-registered persons
may not always be nonresident foreign corporations that declare and pay dividends, while intercorporate
dividends are certainly not goods or properties for sale, barter, exchange, lease or importation. Certainly, input
VAT credits are different from tax credits on dividends received by nonresident foreign corporations.
Three, itemized deductions from gross income partake of the nature of a tax exemption.56 Interest -- which is
among such deductions -- refers to the amount paid by a debtor to a creditor for the use or forbearance of
money.57 It is an expense item that is paid or incurred within a given taxable year on indebtedness in
connection with a taxpayers trade, business or exercise of profession.58 In order to reduce revenue losses,
Congress enacted RA 842459 which reduces the amount of interest expense deductible by a taxpayer from
gross income, equal to the applicable percentage of interest income subject to final tax.60 To assert that
reducing the allowable deduction in interest expense is a matter that is legally related to the proposed VAT
amendments is too far-fetched. Interest expenses are not allowed as credits against output VAT. Neither are
VAT-registered persons always liable for interest.
Having argued on the unconstitutionality (non-germaneness) of the BCC insertions on income taxes, let me
now proceed to the other provisions that were attacked by petitioners.
No Pass-on Provisions. I agree with the ponencia that the BCC did not exceed its authority when it deleted the
no pass-on provisions found in the congressional bills. Its authority to make amendments not only implies the
power to make insertions, but also deletions, in order to resolve conflicting provisions.

Page 136 of 557

The no pass-on provision in House Bill (HB) No. 3705 referred to the petroleum products subject to excise tax
(and the raw materials used in the manufacture of such products), the sellers of petroleum products, and the
generation companies.61 The analogous provision in Senate Bill (SB) No. 1950 dealt with electricity,
businesses other than generation companies, and services of franchise grantees of electric utilities.62 In
contrast, there was a marked absence of the no pass-on provision in HB 3555. Faced with such variances, the
BCC had the option of retaining or modifying the no pass-on provisions and determining their extent, or of
deleting them altogether. In opting for deletion to resolve the variances, it was merely acting within its
discretion. No grave abuse may be imputed to the BCC.
The 70 Percent Cap on Input Tax and the 5 Percent Final Withholding VAT. Deciding on the 70 percent cap
and the 5 percent final withholding VAT in the consolidated bill is also within the power of the BCC. While
HB 3555 included limits of 5 percent and 11 percent on input tax,63 SB 1950 proposed an even spread over 60
months.64 The decision to put a cap and fix its rate, so as to harmonize or to find a compromise in settling the
apparent differences in these versions,65 was within the sound discretion of the BCC.
In like manner, HB 3555 contained provisions on the withholding of creditable VAT at the rates of 5 percent, 8
percent, 10.5 percent, and 12 percent.66 HB 3705 had no such equivalent amendment, and SB 1950 pegged the
rates at only 5 percent and 10 percent.67 I believe that the decision to impose a final (not creditable) VAT and
to fix the rates at 5 percent and 10 percent, so as to harmonize the apparent differences in all three versions,
was also within the sound discretion of the BCC.
Indeed, the tax credit method under our VAT system is not only practical, but also principally used in almost
all taxing jurisdictions. This does not mean, however, that in the eyes of Congress through the BCC, our
country can neither deviate from this method nor modify its application to suit our fiscal requirements. The
VAT is usually collected through the tax credit method (and in the past, even through the cost deduction
method or a mixture of these two methods),68 but there is no hard and fast rule that 100 percent of the input
taxes will always be allowed as a tax credit.
In fact, it was Maurice Laur, a French engineer,69 who invented the VAT. In 1954, he had the idea of
imposing an indirect tax on consumption, called taxe sur la valeur ajoute,70 which was quickly adopted by the
Direction Gnrale des Impost, the new French tax authority of which he became joint director. Consequently,
taxpayers at all levels in the production process, rather than retailers or tax authorities, were forced to
administer and account for the tax themselves.71
Since the unutilized input VAT can be carried over to succeeding quarters, there is no undue deprivation of
property. Alternatively, it can be passed on to the consumers;72 there is no law prohibiting that. Merely
speculative and unproven, therefore, is the contention that the law is arbitrary and oppressive.73 Laws that
impose taxes are necessarily burdensome, compulsory, and involuntary.
The deferred input tax account -- which accumulates the unutilized input VAT -- remains an asset in the
accounting records of a business. It is not at all confiscated by the government. By deleting Section 112(B) of
the Tax Code,74 Congress no longer made available tax credit certificates for such asset account until
retirement from or cessation of business, or changes in or cessation of VAT-registered status.75 This is a matter
of policy, not legality. The Court cannot step beyond the confines of its constitutional power, if there is
absolutely no clear showing of grave abuse of discretion in the enactment of the law.
That the unutilized input VAT would be rendered useless is merely speculative.76 Although it is recorded as a
deferred asset in the books of a company, it remains to be a mere privilege. It may be written off or expensed
outright; it may also be denied as a tax credit.
There is no vested right in a deferred input tax account; it is a mere statutory privilege.77 The State may modify
or withdraw such privilege, which is merely an asset granted by operation of law.78 Moreover, there is no
Page 137 of 557

vested right in generally accepted accounting principles.79 These refer to accounting concepts, measurement
techniques, and standards of presentation in a companys financial statements, and are not rooted in laws of
nature, as are the laws of physical science, for these are merely developed and continually modified by local
and international regulatory accounting bodies.80 To state otherwise and recognize such asset account as a
vested right is to limit the taxing power of the State. Unlimited, plenary, comprehensive and supreme, this
power cannot be unduly restricted by mere creations of the State.
That the unutilized input VAT would also have an unequal effect on businesses -- some with low, others with
high, input-output ratio -- is not a legal ground for invalidating the law. Profit margins are a variable of sound
business judgment, not of legal doctrine. The law applies equally to all businesses; it is up to each of them to
determine the best formula for selling their goods or services in the face of stiffer competition. There is, thus,
no violation of the equal protection clause. If the implementation of the 70 percent cap would cause an ad
infinitum deferment of input taxes or an unequal effect upon different types of businesses with varying profit
margins and capital requirements, then the remedy would be an amendment of the law -- not an unwarranted
and outright declaration of unconstitutionality.
The matter of business establishments shouldering 30 percent of output tax and remitting the amount, as
computed, to the government is in effect imposing a tax that is equivalent to a maximum of 3 percent of gross
sales or revenues.81 This imposition is arguably another tax on gross -- not net -- income and thus a deviation
from the concept of VAT as a tax on consumption; it also assumes that sales or revenues are on cash basis or,
if on credit, given credit terms shorter than a quarter of a year. However, such additional imposition and
assumption are also arguably within the power of Congress to make. The State may in fact choose to impose
an additional 3 percent tax on gross income, in lieu of the 70 percent cap, and thus subject the income of
businesses to two types of taxes -- one on gross, the other on net. These impositions may constitute double
taxation,82 which is not constitutionally proscribed.83
Besides, prior to the amendments introduced by the BCC, already extant in the Tax Code was a 3 percent
percentage tax on the gross quarterly sales or receipts of persons who were not VAT-registered, and whose
sales or receipts were exempt from VAT.84 This is another type of tax imposed by the Tax Code, in addition to
the tax on their respective incomes. No question as to its validity was raised before; none is being brought
now. More important, there is a presumption in favor of constitutionality,85 "rooted in the doctrine of
separation of powers which enjoins upon the three coordinate departments of the Government a becoming
courtesy for each others acts."86
As to the argument that Section 8 of RA 9337 contravenes Section 1 of Article III and Section 20 of Article II
of the 1987 Constitution, I respectfully disagree.
One, petitioners have not been denied due process or, as I have illustrated earlier, equal protection. In the
exercise of its inherent power to tax, the State validly interferes with the right to property of persons, natural or
artificial. Those similarly situated are affected in the same way and treated alike, "both as to privileges
conferred and liabilities enforced."87
RA 9337 was enacted precisely to achieve the objective of raising revenues to defray the necessary expenses of
government.88 The means that this law employs are reasonably related to the accomplishment of such
objective, and not unduly oppressive. The reduction of tax credits is a question of economic policy, not of legal
perlustration. Its determination is vested in Congress, not in this Court. Since the purpose of the law is to raise
revenues, it cannot be denied that the means employed is reasonably related to the achievement of that
purpose. Moreover, the proper congressional procedure for its enactment was followed;89 neither public notice
nor public hearings were denied.
Two, private enterprises are not discouraged. Tax burdens are never delightful, but with the imposition of the
70 percent cap, there will be an assurance of a steady cash flow to the government, which can be translated to
Page 138 of 557

the production of improved goods, rendition of better services, and construction of better facilities for the
people, including all private enterprises. Perhaps, Congress deems it best to make our economy depend more
on businesses that are easier to monitor, so there will be a more efficient collection of taxes. Whatever is
expected of the outcome of the law, or its wisdom, should be the sole responsibility of the representatives
chosen by the electorate.
The profit margin rates of various industries generally do not change. However, the profit margin figures do,
because these are obviously monetary variables that affect business, along with the level of competition, the
quality of goods and services offered, and the cost of their production. And there will inevitably be a conscious
desire on the part of those who engage in business and those who consume their output to adapt or adjust
accordingly to any congressional modification of the VAT system.
In addition, it is contended that the VAT should be proportional in nature. I submit that this proportionality
pertains to the rate imposable, not the credit allowable. Private enterprises are subjected to a proportional VAT
rate, but VAT credits need not be. The VAT is, after all, a human concept that is neither immutable nor
invariable. In fact, it has changed after it was adopted as a system of indirect taxation by other countries. Again
unlike the laws of physical science, the VAT system can always be modified to suit modern fiscal demands.
The State, through the Legislative Department, may even choose to do away with it and revert to our previous
system of turnover taxes, sales taxes and compensating taxes, in which credits may be disallowed altogether.
Not expensed, but amortized over its useful life, is capital equipment, which is purchased or treated as capital
leases by private enterprises. Aimed at achieving the twin objectives of profitability and solvency, such
purchase or lease is a matter of prudence in business decision-making.
Hence, business judgments, sales volume, and their effect on competition are for businesses to determine and
for Congress to regulate -- not for this Court to interfere with, absent a clear showing that constitutional
provisions have been violated. Tax collection and administrative feasibility are for the executive branch to
focus on, again not for this Court to dwell upon.
The Transcript of the Oral Arguments on July 14, 2005 clearly point out in a long line of relevant questioning
that, absent a violation of constitutional provisions, the Court cannot interfere with the 70 percent cap, the 5
percent final withholding tax, and the 60-month amortization, there being other extra-judicial remedies
available to petitioners, thus:
"Atty. Baniqued: But if your profit margin is low as i[n] the case of the petroleum dealers, x x x then we would
have a serious problem, Your Honor.
"Justice Panganiban: Isnt the solution to increase the price then?
"Atty. Baniqued: If you increase the price which you can very well do, Your Honor, then that [will] be
deflationary and it [will] have a cascading effect on all other basic commodities[, especially] because what is
involved here is petroleum, Your Honor.
"Justice Panganiban: That may be true[,] but its not unconstitutional?
"Atty. Baniqued: That may be true, Your Honor, but the very limitation of the [seventy percent] input [VAT],
when applied to the case of the petroleum dealers[,] is oppressive[.] [I]ts unjust and its unreasonable, Your
Honor.
"Justice Panganiban: But it can be passed as a part of sales, sales costs rather.

Page 139 of 557

"Atty. Baniqued: But the petroleum dealers here themselves interrupted

"Justice Panganiban: In your [b]alance [s]heet, it could be reflected as Cost of Sales and therefore the price
will go up?
"Atty. Baniqued: Even if it were to be reflected as part of the Cost of Sales, Your Honor, the [input VAT] that
you cannot claim, the benefit to you is only to the extent of the corporate tax rate which is 32 now 35 [percent].
"Justice Panganiban: Yes.
"Atty. Baniqued: Its not 100 [percent] credi[ta]bility[,] unlike if it were applied against your [output VAT],
you get to claim 100 [percent] of it, Your Honor.
"Justice Panganiban: That might be true, but we are talking about whether that particular provision would be
unconstitutional. You say its oppressive, but you have a remedy, you just pass it on to the customer. I am
not sayin[g] its good[.] [N]either am I saying its wise[.] [A]ll Im talking about is, whether its constitutional
or not.
"Atty. Baniqued: Yes, in fact we acknowledge, Your Honor, that that is a remedy available to the petroleum
dealers, but considering the impact of that limitation[,] and were just talking of the 70 [percent cap] on [input
VAT] in the level of the petroleum dealers. Were not even talking yet of the limitation on the [input VAT]
available to the manufacturers, so, what if they pass that on as well?
"Justice Panganiban: Yes.
"Atty. Baniqued: Then, it would complicate interrupted
"Justice Panganiban: What I am saying is, there is a remedy, which is business in character. The mere fact that
the government is imposing that [seventy percent] cap does not make the law unconstitutional, isnt it?
"Atty. Baniqued: It does, Your Honor, if it can be shown. And as we have shown, it is oppressive and
unreasonable, it is excessive, Your Honor interrupted
"Justice Panganiban: If you have no way of recouping it. If you have no way of recouping that amount, then it
will be oppressive, but you have a business way of recouping it[.] I am saying that, not advising that its good.
All I am saying is, is it constitutional or not[?] Were not here to determine the wisdom of the law, thats up for
Congress. As pointed out earlier, if the law is not wise, the law makers will be changed by the people[.] [T]hat
is their solution t[o] the lack of wisdom of a law. If the law is unconstitutional[,] then the Supreme Court will
declare it unconstitutional and void it, but[,] in this case[,] there seems to be a business remedy in the same
manner that Congress may just impose that tax straight without saying its [VAT]. If Congress will just say all
petroleum will pay 3 [percent] of their Gross Sales, but you dont bear that, you pass that on, isnt it?
"Atty. Baniqued: We acknowledge your concern, Your Honor, but we should not forget that when the
petroleum dealers pass these financial burden or this tax differential to the consumers, they themselves are
consumers in their own right. As a matter of fact, they filed this case both as petroleum dealer[s] and as
taxpayers. If they pass if on, they themselves would ultimately bear the burden[, especially] in increase[d] cost
of electricity, land transport, food, everything, Your Honor.
"Justice Panganiban: Yes, but the issue here in this Court, is whether that act of Congress is unconstitutional.
"Atty. Baniqued: Yes, we believe it is unconstitutional, Your Honor.
Page 140 of 557

"Justice Panganiban: You have a right to complain that it is oppressive, it is excessive, it burdens the people
too much, but is it unconstitutional?
"Atty. Baniqued: Besides, passing it on, Your Honor, may not be as simple as it may seem. As a matter of fact,
at the strike of midnight on June 30, when petroleum prices were being changed upward, the [s]ecretary of
[the] Department of Energy was going around[.] [H]e was seen on TV going around just to check that prices
dont go up. And as a matter of fact, he had pronouncements that, the increase in petroleum price should only
be limited to the effect of 10 [percent] E-VAT.
"Justice Panganiban: Its becaus[e] the implementing rules were not clear and were not extensive enough to
cover how much really should be the increase for various oil products, refined oil products. Its up for the
dealers to guess, and the dealers were guessing to their advantage by saying plus 10 [percent] anyway, right?
"Atty. Baniqued: In fact, the petroleum dealers, Your Honors, are not only faced with constitutional issues
before this Court. They are also faced with a possibility of the Department of Energy not allowing them to pass
it on[,] because this would be an unreasonable price increase. And so, they are being hit from both
sidesinterrupted
"Justice Panganiban: Thats why I say, that there is need to refine the implementing rules so that everyone will
know, the customers will know how much to pay for gasoline, not only gasoline, gasoline, and so on, diesel
and all kinds of products, so therell be no confusion and therell be no undue taking advantage. There will be
a smooth implementation[,] if the law were to be upheld by the Court. In your case, as I said, it may be unwise
to pass that on to the customers, but definitely, the dealers will not bear that [--] to suffer the loss that you
mentioned in your consolidated balance sheets. Certainly, the dealers will not bear that [cost], isnt it?
"Atty. Baniqued: It will be a very hard decision to make, Your Honor.
"Justice Panganiban: Why, you will not pass it on?
"Atty. Baniqued: I cannot speak for the dealers. interrupted.
"Justice Panganiban: As a consumer, I will thank you if you dont pass it on[;] but you or your clients as
businessm[e]n, I know, will pass it on.
"Atty. Baniqued: As I have said, Your Honor, there are many constraints on their ability to do that[,] and that is
why the first step that we are seeking is to seek redress from this Honorable Court[,] because we feel that the
imposition is excessive and oppressive.. interrupted
"Justice Panganiban: You can find redress here, only if you can show that the law is unconstitutional.
"Atty. Baniqued: We realized that, Your Honor.
"Justice Panganiban: Alright. Lets talk about the 5 [percent] [d]epreciation rate, but that applies only to the
capital equipment worth over a million?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: And that doesnt apply at all times, isnt it?
"Atty. Baniqued: Well

Page 141 of 557

"Justice Panganiban: That doesnt at all times?

"Atty. Baniqued: For capital goods costing less than 1 million, Your Honor, then.
"Justice Panganiban: That will not apply?
"Atty. Baniqued: That will not apply, but you will have the 70 [percent] cap on input [VAT], Your Honor.
"Justice Panganiban: Yes, but we talked already about the 70 [percent].
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: When you made your presentation on the balance sheet, it is as if every capital
expenditure you made is subject to the 5 [percent,] rather the [five year] depreciation schedule[.] [T]hats not
so. So, the presentation you made is a little inaccurate and misleading.
"Atty. Baniqued: At the start of our presentation, Your Honor[,] we stated clearly that this applies only to
capital goods costing more than one [million].
"Justice Panganiban: Yes, but you combined it later on with the 70 [percent] cap to show that the dealers are so
disadvantaged. But you didnt tell us that that will apply only when capital equipment or goods is one million
or more. And in your case, what kind of capital goods will be worth one million or more in your existing gas
stations?
"Atty. Baniqued: Well, you would have petroleum dealers, Your Honor, who would have[,] aside from sale of
petroleum[,] they would have their service centers[,] like[] to service cars and they would have those
equipments, they are, Your Honor.
"Justice Panganiban: But thats a different profit center, thats not from the sale of
"Atty. Baniqued: No, they would form part of their [VATable] sale, Your Honor.
Justice Panganiban: Its a different profit center[;] its not in the sale of petroleum products. In fact the mode
now is to put up super stores in huge gas stations. I do not begrudge the gas station[.] [A]ll I am saying is it
should be presented to us in perspective. Neither am I siding with the government. All I am saying is, when I
saw your complicated balance sheet and mathematics, I saw that you were to put in all the time the
depreciation that should be spread over [five] years. But we have agreed that that applies only to capital
equipment [-- ]not to any kind of goods [--] but to capital equipment costing over 1 million pesos.
"Atty. Baniqued: Yes, Your Honor, we apologize if it has caused a little confusion.
"Justice Panganiban: Again the solution could b[e] to pass that on, because thats an added cost, isnt it?
"Atty. Baniqued: Well, yes, you can pass it on.
"Justice Panganiban: I am not teaching you, I am just saying that you have a remedy I am not saying either
that the remedy is wise or should be done, because[,] as a consumer[,] I wouldnt want that to be done to me.

Page 142 of 557

"Atty. Baniqued: We realiz[e] that, Your Honor, but the fact remain[s] that whether it is in the hands of the
petroleum dealers or in the hands of the consumers[,] if this imposition is unreasonable and oppressive, it will
remain so, even after it is passed on, Your Honor.
"Justice Panganiban: Alright. Lets go to the third. The 5 [percent] withholding tax, [f]inal [w]ithholding [t]ax,
but this applies to sales to government?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: So, you can pass on this 5 [percent] to the [g]overnment. After all, that 5 [percent] will
still go back to the government.
"Atty. Baniqued: Then it will come back to haunt us, Your Honor..
"Justice Panganiban: Why?
"Atty. Baniqued: By way of, for example sales to NAPOCOR or NTC. interrupted
"Justice Panganiban: Sales of petroleum products.
"Atty. Baniqued: in the case of NTC, Your Honor, it would come back to us by way of increase[d]
cost, Your Honor.
"Justice Panganiban: Okay, lets see. You sell, lets say[,] your petroleum products to the Supreme Court, as a
gas station that sells gasoline to us here. Under this law, the 5 [percent] withholding tax will have to be
charged, right?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: You will charge that[.] [T]herefore[,] the sales to the Supreme Court by that gas station
will effectively be higher?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: So, the Supreme Court will pay more, you will not [be] going to [absorb] that 5 [percent],
will you?
"Atty. Baniqued; If it is passed on, Your Honor, thats of course we agree. Interrupted.
"Justice Panganiban: Not if, you can pass it on.
"Atty. Baniqued: Yes, we can. interrupted
"Justice Panganiban: There is no prohibition to passing it on[.] [P]robably the gas station will simply pass it on
to the Supreme Court and say[,] well[,] there is this 5 [percent] final VAT on you so[,] therefore, for every tank
full you buy[,] well just have to [charge] you 5 [percent] more. Well, the Supreme Court will probably say,
well, anyway, that 5 [percent] that we will pay the gas dealer, will be paid back to the government, isnt it[?]
So, how [will] you be affected?

Page 143 of 557

"Atty. Baniqued: I hope the passing on of the burden, Your Honor, doesnt come back to party litigants by way
of increase in docket fees, Your Honor.
"Justice Panganiban: But thats quite another m[a]tter, though(laughs) [W]hat I am saying, Mr. [C]ounsel is,
you still have to show to us that your remedy is to declare the law unconstitutional[,] and its not business in
character.
"Atty. Baniqued: Yes, Your Honor, it is our submission that this limitation in the input [VAT] credit as well as
the amortization.
"Justice Panganiban: All you talk about is equal protection clause, about due process, depreciation of property
without observance of due process[,] could really be a remedy than a business way.
"Atty. Baniqued: Business in the level of the petroleum dealers, Your Honor, or in the level of Congress, Your
Honor.
"Justice Panganiban: Yes, you can pass them on to customers[,] in other words. Its the customers who should
[complain].
"Atty. Baniqued: Yes, Your Honor interrupted
"Justice Panganiban: And perhaps will not elect their representatives anymore[.]
"Atty. Baniqued: Yes, Your Honor..
"Justice Panganiban: For agreeing to it, because the wisdom of a law is not for the Supreme Court to pass
upon.
"Atty. Baniqued: It just so happens, Your Honor, that what is [involved] here is a commodity that when it goes
up, it affects everybody.
"Justice Panganiban: Yes, inflationary and inflammatory.
"Atty. Baniqued: just like what Justice Puno says it shakes the entire economic foundation, Your Honor.
"Justice Panganiban: Yes, its inflationary[,] brings up the prices of everything
"Atty. Baniqued: And it is our submission that[,] if the petroleum dealers cannot absorb it and they pass it on to
the customers, a lot of consumers would neither be in a position to absorb it too and that[s] why we patronize,
Your Honor.
"Justice Panganiban: There might be wisdom in what youre saying, but is that unconstitutional?
"Atty. Baniqued: Yes, because as I said, Your Honor, there are even constraints in the petroleum dealers to
pass it on, and we[]re not even sure whether.interrupted
"Justice Panganiban: Are these constraints [--] legal constraints?
"Atty. Baniqued: Well, it would be a different story, Your Honor[.] [T]hats something we probably have to
take up with the Department of Energy, lest [we may] be accused of ..
Page 144 of 557

"Justice Panganiban: In other words, thats your remedy

[--] to take it up with the Department of Energy
"Atty. Baniqued: ..unreasonable price increases, Your Honor.
"Justice Panganiban: Not for us to declare those provisions unconstitutional.
"Atty. Baniqued: We, again, wish to stress that the petroleum dealers went to this Court[,] both as businessmen
and as consumers. And as consumers, [were] also going to bear the burden of whatever they themselves pass
on.
"Justice Panganiban: You know[,] as a consumer, I wish you can really show that the laws are unconstitutional,
so I dont have to pay it. But as a magistrate of this Court, I will have to pass upon judgment on the basis of [-] whether the law is unconstitutional or not. And I hope you can in your memorandum show that.
"Atty. Baniqued: We recognized that, Your Honor." (boldface supplied, pp. 386-410).
Amendments on Other Taxes and Administrative Matters. Finally, the BCCs amendments regarding other
taxes90 are both germane in a legal sense and reasonably necessary in an economic sense. This fact is evident,
considering that the proposed changes in the VAT law will have inevitable implications and repercussions on
such taxes, as well as on the procedural requirements and the disposition of incremental revenues, in the Tax
Code. Either mitigating measures91 have to be put in place or increased rates imposed, in order to achieve the
purpose of the law, cushion the impact of increased taxation, and still maintain the equitability desired of any
other revenue law.92 Directly related to the proposed VAT changes, these amendments are expected also to
have a salutary effect on the national economy.
The no-amendment rule93 in the Constitution was not violated by the BCC, because no completely new
provision was inserted in the approved bill. The amendments may be unpopular or even work hardship upon
everyone (this writer included). If so, the remedy cannot be prescribed by this Court, but by Congress.
Rejecting Non-Conflicting
Provisions
Fourth, the BCC may choose neither to adopt nor to consolidate the versions presented to it by both houses of
Congress, but instead to reject non-conflicting provisions in those versions. In other words, despite the lack of
conflict in them, such provisions are still eliminated entirely from the consolidated bill. There may be a
constitutional problem here.
The no pass-on provisions in the congressional bills are the only item raised by petitioners concerning
deletion.94 As I have already mentioned earlier, these provisions were in conflict. Thus, the BCC exercised its
prerogative to remove them. In fact, congressional rules give the BCC the power to reconcile disagreeing
provisions, and in the process of reconciliation, to delete them. No other non-conflicting provision was deleted.
At this point, and after the extensive discussion above, it can readily be seen no non-conflicting provisions of
the E-VAT bills were rejected indiscriminately by the BCC.
Approving and Inserting
Completely New Provisions
Page 145 of 557

Fifth, the BCC had the option of inserting completely new provisions not found in any of the provisions of the
bills of either house of Congress, or make and endorse an entirely new bill as a substitute. Taking this option
may be a blatant violation of the Constitution, for not only will the surreptitious insertion or unwarranted
creation contravene the "origination" principle; it may likewise desecrate the three-reading requirement and the
no-amendment rule.95
Fortunately, however, the BCC did not approve or insert completely new provisions. Thus, no violation of the
Constitution was committed in this regard.
Summary
The enrolled bill doctrine is said to be conclusive not only as to the provisions of a law, but also to its due
enactment. It is not absolute, however, and must yield to mandatory provisions of the 1987 Constitution.
Specifically, this Court has the duty of striking down provisions of a law that in their enactment violate
conditions, restrictions or limitations imposed by the Constitution.96 The Bicameral Conference Committee
(BCC) is a mere creation of Congress. Hence, the BCC may resolve differences only in conflicting provisions
of congressional bills that are referred to it; and it may do so only on the condition that such resolution does
not violate the origination, the three-reading, and the no-amendment rules of the Constitution.
In crafting RA 9337, the BCC opted to reconcile the conflicting provisions of the Senate and House bills,
particularly those on the 70 percent cap on input tax; the 5 percent final withholding tax; percentage taxes on
domestic carriers, keepers of garages and international carriers; franchise taxes; amusement taxes; excise taxes
on manufactured oils and other fuels; registration requirements; issuance of receipts or sales or commercial
invoices; and disposition of incremental revenues. To my mind, these changes do not violate the origination or
the germaneness principles.
Neither is there undue delegation of legislative power in the standby authority given by Congress to the
President. The law is complete, and the standards are fixed. While I concur with the ponencias view that the
President was given merely the power to ascertain the facts to bring the law into operation -- clearly an
administrative, not a legislative, function -- I stress that the finance secretary remains the Chief Executives
alter ego, not an agent of Congress.
The BCC exercised its prerogative to delete the no pass-on provisions, because these were in conflict. I
believe, however, that it blatantly violated the origination and the germaneness principles when it inserted
provisions not found in the House versions of the E-VAT Law: (1) increasing the tax rates on domestic,
resident foreign and nonresident foreign corporations; (2) increasing the tax credit against taxes due from
nonresident foreign corporations on intercorporate dividends; and (3) reducing the allowable deduction for
interest expense. Hence, I find these insertions unconstitutional.
Some have criticized the E-VAT Law as oppressive to our already suffering people. On the other hand,
respondents have justified it by comparing it to bitter medicine that patients must endure to be healed
eventually of their maladies. The advantages and disadvantages of the E-VAT Law, as well as its long-term
effects on the economy, are beyond the reach of judicial review. The economic repercussions of the statute are
policy in nature and are beyond the power of the courts to pass upon.
I have combed through the specific points raised in the Petitions. Other than the three items on income taxes
that I respectfully submit are unconstitutional, I cannot otherwise attribute grave abuse of discretion to the
BCC, or Congress for that matter, for passing the law.
"[T]he Court -- as a rule -- is deferential to the actions taken by the other branches of government that have
primary responsibility for the economic development of our country."97 Thus, in upholding the Philippine
ratification of the treaty establishing the World Trade Organization (WTO), Taada v. Angara held that "this
Page 146 of 557

Court never forgets that the Senate, whose act is under review, is one of two sovereign houses of Congress and
is thus entitled to great respect in its actions. It is itself a constitutional body, independent and coordinate, and
thus its actions are presumed regular and done in good faith. Unless convincing proof and persuasive
arguments are presented to overthrow such presumption, this Court will resolve every doubt in its favor."98 As
pointed our in Cawaling Jr. v. Comelec, the grounds for nullity of the law "must be beyond reasonable doubt,
for to doubt is to sustain."99 Indeed, "there must be clear and unequivocal showing that what the Constitutions
prohibits, the statute permits."100
WHEREFORE, I vote to GRANT the Petitions in part and to declare Sections 1, 2, and 3 of Republic Act No.
9337 unconstitutional, insofar as these sections (a) amend the rates of income tax on domestic, resident
foreign, and nonresident foreign corporations; (b) amend the tax credit against taxes due from nonresident
foreign corporations on intercorporate dividends; and (c) reduce the allowable deduction for interest expense.
The other provisions are constitutional, and as to these I vote to DISMISS the Petitions.
ARTEMIO V. PANGANIBAN
Associate Justice

Footnotes
1

235 SCRA 630, August 25, 1994; and 249 SCRA 628, October 30, 1995. The second case is an en
banc Resolution on the Motions for Reconsideration of the first case.
2

417 SCRA 503, December 10, 2003.

"[I]t is well settled that the enrolled bill doctrine is conclusive upon the courts as regards the tenor of
the measure passed by Congress and approved by the President." Resins Inc. v. Auditor General, 134
Phil. 697, 700, October 29, 1968, per Fernando, J., later CJ.; (citing Casco Philippine Chemical Co.,
Inc. v. Gimenez, 117 Phil. 363, 366, February 28, 1963, per Concepcin, J., later CJ.). It is a doctrine
that flows as a corollary to the separation of powers, and by which due respect is given by one branch
of government to the actions of the others. See Morales v. Subido, 136 Phil. 405, 412, February 27,
1969.
Following Field v. Clark (143 US 649, 12 S.Ct. 495, February 29, 1892), such conclusiveness refers
not only to the provisions of the law, but also to its due enactment. Mabanag v. Lopez Vito, 78 Phil. 1,
13-18, March 5, 1947.
"[T]he signing of a bill by the Speaker of the House and the Senate President and the certification of
the Secretaries of both [h]ouses of Congress that it was passed are conclusive of its due enactment."
Farias v. Executive Secretary, supra, p. 529, per Callejo Sr., J.
4

Mabanag v. Lopez Vito, supra, p. 12.

1 of Rule 129 of the Rules of Court.

The United Kingdom has an uncodified Constitution, consisting of both written and unwritten
sources, capable of evolving to be responsive to political and social change, and found partly in
conventions and customs and partly in statute. Its Parliament has the power to change or abolish any
written or unwritten element of the Constitution. There is neither separation of powers nor formal
Page 147 of 557

checks and balances. Every bill drafted has to be approved by both the House of Commons and the
House of Lords, before it receives the Royal Assent and becomes an Act of Parliament. The House of
Lords is the second chamber that complements the work of the Commons, whose members are elected
to represent their constituents. The first is the House of Commons that alone may start bills to raise
taxes or authorize expenditures. Each bill goes through several stages in each House. The first stage,
called the first reading, is a mere formality. The second -- the second reading -- is when general
principles of the bill are debated upon. At the second reading, the House may vote to reject the bill.
Once the House considers the bill, the third reading follows. In the House of Commons, no further
amendments may be made, and the passage of the motion amounts to passage of the whole bill. The
House of Lords, however, may not amend a bill so as to insert a provision relating to taxation.
http://en.wikipedia.org/wiki/Constitution_of_the_United_Kingdom; http://
www.oefre.unibe.ch/law/icl/uk00000_.html; www.parliament.uk; and
http://encyclopedia.thefreedictionary.com/British+Parliament (Last visited August 4, 2005, 11:30am
PST).
7

See Dissenting Opinion of Puno, J. in Tolentino v. Secretary of Finance, supra, p. 818.

Cf. Francisco Jr. v. House of Representatives, 415 SCRA 44, November 10, 2003.

Tolentino v. Secretary of Finance, supra.

10

2nd paragraph, 1 of Article VIII of the 1987 Constitution.

11

Tolentino v. Secretary of Finance, supra.

12

Arroyo v. De Venecia, 343 Phil. 42, 61-62, August 14, 1997, per Mendoza, J.

13

These refer to House Bill Nos. 3555 & 3705; and Senate Bill No. 1950.

14

26(2) of Article VI of the 1987 Constitution.

15

"The purpose for which three readings on separate days is required is said to be two-fold: (1) to
inform the members of Congress of what they must vote on and (2) to give them notice that a measure
is progressing through the enacting process, thus enabling them and others interested in the measure to
prepare their positions with reference to it." Tolentino v. Secretary of Finance, supra, p. 647, October
30, 1995, per Mendoza, J.
16

24 of Article VI of the 1987 Constitution.

17

24 of Article VI of the 1987 Constitution.

The power of the Senate to propose or concur with amendments is, apparently, without restriction. By
virtue of this power, the Senate can practically rewrite a bill that is required to come from the House
and leave only a trace of the original bill. See Flint v. Stone Tracy Co., 220 US 107, 31 S.Ct. 342,
March 13, 1911.
18

24 of Article VI of the 1987 Constitution.

19

Tolentino v. Secretary of Finance, supra, p. 661, August 25, 1994.

20

Garner (ed. in chief), Blacks Law Dictionary (8th ed., 2004), p. 708.
Page 148 of 557

21

Statsky, Wests Legal Thesaurus/Dictionary (1986), p. 348.

22

To argue that the raising of revenues makes the non-VAT provisions of a VAT bill automatically
germane is to bring legal analysis within the penumbra of economic scrutiny. The burden or impact of
any tax depends on the relative elasticities of supply and demand and is chiefly a matter of policy
confined within the august halls of Congress. See Pindyck and Rubinfeld, Microeconomics (5th ed.,
2003), pp. 314-317.
23

Exxon Mobil Corp. v. Allapattah Services, Inc., 125 S.Ct. 2611, 2622, June 23, 2005, per Kennedy,

J.
24

Tolentino v. Secretary of Finance, supra, p. 663, August 25, 1994. See Cruz, Philippine Political
Law (2002), p. 154.
25

Tolentino v. Secretary of Finance, supra, August 25, 1994, per Mendoza, J.

26

Cruz, Philippine Political Law (2002), p. 155.

27

Tolentino v. Secretary of Finance, supra, August 25, 1994.

28

Cruz, Philippine Political Law (2002), p. 111.

29

Tolentino v. Secretary of Finance, supra, p. 668, August 25, 1994.

There is no allegation in any of the memoranda submitted to this Court that the consolidated bill was
not approved. In fact, both houses of Congress voted separately and majority of each house approved
it.
30

On the one hand, 1-3 of House Bill (HB) No. 3555 seek to amend 106, 107 & 108 the Tax
Code by increasing the VAT rate to 12% on every sale, barter or exchange of goods or properties;
importation of goods; and sale or exchange of services, including the use or lease of properties.
1-3 of HB 3705, on the other, seek to amend 106, 107 & 108 the Tax Code by also increasing the
VAT rate to 12% on every sale, barter or exchange of goods or properties; importation of goods; and
sale or exchange of services, including the use or lease of properties, but decreasing such rate to 8%
on every importation of certain goods; 6% on the sale, barter or exchange of certain locally
manufactured goods; and 4% on the sale, barter or exchange, as well as importation, of petroleum
products subject to excise tax and raw materials to be used in their manufacture (subject to subsequent
increases of such reduced rates), and on the gross receipts derived from services rendered on the sale
of generated power.
The Tax Code referred to in this case is RA 8424, otherwise known as the "Tax Reform Act of 1997."
31

4-5 of Senate Bill (SB) No. 1950 seek to amend 106 & 108 of the Tax Code by retaining the
VAT rate of 10% on every sale, barter or exchange of goods or properties; and on the sale or exchange
of services, including the use or lease of properties, and the sale of electricity by generation,
transmission, and distribution companies.
32

4-6 of the consolidated bill amending 106-108 of the Tax Code, respectively. Conference
Committee Report on HBs 3555 & 3705, and SB 1950, pp. 4-7.

Page 149 of 557

The predetermined factual scenario in the above-cited sections of the consolidated bill also appears in
4-6 of Republic Act (RA) No. 9337, amending the same provisions of the Tax Code.
Mathematically, it is expressed as follows:
VAT Collection > 2.8%
GDP
or
National Government Deficit > 1.5%
GDP
33

A negative budget surplus, or an excess of expenditure over revenues, is a budget deficit.

Dornbusch, Fischer, and Startz, Macroeconomics (9th ed., 2005), p. 231.
34

GDP refers to the value of all goods and services produced domestically; the sum of gross value
added of all resident institutional units engaged in production (plus any taxes, and minus any
subsidies, on products not included in the values of their outputs). www.nscb.gov.ph/sna/default.asp
(Last visited July 14, 2005 10am PST).
35

See Pelaez v. Auditor General, 122 Phil. 965, 974, December 24, 1965.

36

The acts of retroactively implementing the 12 percent VAT rate, should the finance secretary be
able to make recommendation only weeks or months after the end of fiscal year 2005, or reverting to
10 percent if both conditions are not met, are best addressed to the political branches of government.
The following excerpts from the Transcript of the Oral Arguments in GR Nos. 168461, 168463,
168056, and 168207, held on July 14, 2005 at the Supreme Court Session Hall, are instructive on the
position of petitioners:
"Atty. Gorospe: [Its] supposed to be 2005, Your Honor, but apparently, it [will] be impossible to
determine GDP the first day of 2006, Your Honor." (p. 57);
xxx
"Justice Panganiban: Now [lets see] when it is possible then to determine this formula. It cannot be
on the first day of January 2006, because the year [2005] ended just the midnight before, isnt it?
"Atty. Gorospe: Yes, Your Honor.
"Justice Panganiban: x x x if its only determined on March 1[,] then how can the law become
effective January 1[.] In other words, how will the [people be] able to pay the tax if ever that formula
is exceeded x x x?" (pp. 59-60);
xxx

Page 150 of 557

"Atty. Gana: Well, x x x it would take a grace period of 6 to 8 months[,] because obviously,
determination could not be made on January 1, 2006. Yes, they were under the impression that at
the earliest it would take 30 days.
"Justice Panganiban: Historically, when [will] these figures [be] available[:] the GDP, [VAT]
collection?" (p. 192);
xxx
"Justice Panganiban: But certainly not on January 1. Therefore, by January 1, people would not
know whether the rate would be increased or not, even if there is no discretion?
"Atty. Gana: Thats true, Your Honor, even if there is no discretion.
"Justice Panganiban: It will take weeks, or months to be able to determine that?
"Atty. Gana: Well, they anticipated it, would take at most by March." (p. 193); and
xxx
"Justice Panganiban: March, I will ask the government later on when they argue.
"Atty. Gana: As early as January but not later than 60 to 90 days." (boldface supplied; p. 194).
37

38

regulations how much they [would] be charged, how much should gasoline stations charge in
addition to their correct prices, how much carriers should charge[,] so there [would] be no confusion.
"Usec. Bonoan: Yes, Your Honor." (boldface supplied; pp. 665-666).
37 Using available statistics, it is approximated that the 24/5 percent has been reached. VAT collection
(in million pesos) for the first quarter alone of 2004 is 83,542.83, or 83 percent of revenue collections
amounting to 100,654.01. Divided into GDP of 13,053, the quotient is already 6.4 percent.
http://www.nscb.gov.ph/sna/2005/1stQ2005/2005per1.asp; and the 2003 Bureau of Internal Revenue
(BIR) Annual Report found on www.bir.gov.ph (Last visited July 14, 2005, 10:45am PST).
[38] Besides, the use of the word "shall" in 106(A), 107(A) & 108(A) of the Tax Code, as amended
respectively by 4, 5 & 6 of RA 9337, is mandatory, imperative and compulsory. See Agpalo,
Statutory Construction (4th ed., 1998), p. 333.
39

See Separate Opinion (Concurring and Dissenting) of Panganiban, J., in Southern Cross Cement
Corp. v. Philippine Cement Manufacturers Corp., GR No. 158540, August 3, 2005, p. 31.
40

Escudero Memorandum, pp. 38-39.

GDP data are far from perfect measures of either economic output or welfare. There are three major
problems: (1) some outputs are poorly measured because they are not traded in the market, and
government services are not directly priced by such market; (2) some activities measured as additions
to GDP in fact only represent the use of resources in order to avoid crime or risks to national security;
Page 151 of 557

and (3) it is difficult to account correctly for improvements in the quality of goods. Dornbusch,
Fischer, and Startz, Macroeconomics (9th ed., 2005), pp. 35-36.
41

Farias v. Executive Secretary, 417 SCRA, 503, 530, December 10, 2003.

42

"Any meaningful change in the method and procedures of Congress or its committees must x x x be
sought in that body itself." Tolentino v. Secretary of Finance, supra, p. 650, October 30, 1995, per
Mendoza, J.
43

The necessity, desirability or expediency of a law must be addressed to Congress as the body that is
responsible to the electorate, for "legislators are the ultimate guardians of the liberties and welfare of
the people in quite as great a degree [as the] courts." Tolentino v. Secretary of Finance, supra, p. 650,
October 30, 1995, per Mendoza, J.; (citing Missouri, K. & T. Ry. Co. v. May, 194 US 267, 270, 24
S.Ct. 638, 639, May 2, 1904, per Holmes, J.)
44

Farias v. Executive Secretary, 417 SCRA, 503, 524, December 10, 2003.

45

Flint v. Stone Tracy Co., 220 US 107, 167, 31 S.Ct. 342, 355, March 13, 1911, per Day, J.

46

16(3) of Article VI of the 1987 Constitution.

"Parliamentary rules are merely procedural, and with their observance, the courts have no concern.
They may be waived or disregarded by the legislative body." Arroyo v. De Venecia, supra, p. 61,
August 14, 1997, per Mendoza, J.; (citing Osmea Jr. v. Pendatun, 109 Phil 863, 870-871, October
28, 1960, per Bengzon, J.).
47

HBs 3555 & 3705 do not contain any provision that seeks to revise non-VAT provisions of the Tax
Code, but SB 1950 has 1-3 that seek to amend the rates of income tax on domestic, resident foreign
and nonresident foreign corporations at 35% (30% in 2009), with a tax credit on intercorporate
dividends at 20% (15% in 2009); and to reduce the allowable deductions for interest expense by 42%
(33% in 2009) of the interest income subject to final tax.
48

The amendments to income taxes also partake of the nature of taxation without representation. As I
will discuss in the succeeding paragraphs of this Opinion, they did not emanate from the House of
Representatives that, under 24 of Article VI of the 1987 Constitution, is the only body from which
revenue bills should exclusively originate.
49

Mamalateo, Philippine Income Tax (2004), p. 1.

50

Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), GR

No. 152609, p. 20, June 29, 2005, per Panganiban, J. See Deoferio Jr. & Mamalateo, The Value Added
Tax in the Philippines (2000), p. 36.
51

De Leon, The Fundamentals of Taxation (12th ed., 1998), pp. 92 & 132.

52

Mamalateo, Philippine Income Tax (2004), p. 379.

53

Vitug, Tax Law and Jurisprudence (2nd ed., 2000), p. 188.

54

Mamalateo, Philippine Income Tax (2004), p. 380.

Page 152 of 557

55

De Leon, The Law on Transfer and Business Taxation with Illustrations, Problems, and Solutions
(1998), pp. 195-196 & 222-224.
56

Mamalateo, Philippine Income Tax (2004), p. 173.

57

See 78 of Revenue Regulations No. 2-1940, recommended by Bibiano L. Meer, then Collector of
Internal Revenue, and promulgated by Manuel Roxas, then Secretary of Finance, later President of the
Republic of the Philippines, on February 11, 1941, XXXIX OG 18, 325.
58

Mamalateo, Philippine Income Tax (2004), p. 196.

59

RA 8424 refers to the Tax Reform Act of 1997.

60

The 42 percent reduction rate under 3 of RA 9337, amending 34(B)(1) of the Tax Code, is
derived by first subtracting the 20 percent tax on interest income from the increased tax rate of 35
percent imposed on domestic, resident foreign, and nonresident foreign corporations, and then
dividing the difference obtained by the increased rate. Hence, it is computed as follows:
35% - 20% = 15%
15% : 35% = 42%, the amount of reduction.
61

1-3 of HB 3705.

62

5 of SB 1950. There seems to be a discrepancy between the Conference Committee Report and the
various pleadings before this Court. While such report, attaching a copy of the bill as reconciled and
approved by its conferees, as well as the report submitted by the Senates Committee on Ways &
Means to the Senate President on March 7, 2005, show that SB 1950 does not contain a no-pass on
provision, the petitioners and respondents show that it does (Pimentel Memorandum, Annex A
showing a "Matrix on the Disagreeing Provisions of the [VAT] Bills," pp. 9-11; Escudero
Memorandum, p. 42; and Respondents Memorandum, pp. 109-110). Notably, the qualified dissent of
Senator Joker Arroyo to the Bicameral Conference Report states that the Senate version prohibits the
power companies from passing on the VAT that they will pay.
63

4 of HB 3555 seeks to amend 110(A) of the Tax Code by limiting to 5% and 11% of their
respective total amounts the claim for input tax credit of capital goods, through equal distribution of
the amount of such claim over their depreciable lives; and of goods and services other than capital
goods, and goods purchased by persons engaged in retail trade.
64

7 of SB 1950 seeks to amend 110 of the Tax Code by also limiting the claim for input tax credit
of goods purchased or imported for use in trade or business, through an even depreciation or
amortization over the month of acquisition and the 59 succeeding months, if the aggregate acquisition
cost of such goods exceeds P 660,000.
The depreciation or amortization in the amendments is referred to as a "spread-out" in an unnumbered
Revenue Memorandum Circular dated July 12, 2005, submitted to this Court by public respondents in
their Compliance dated August 16, 2005. Such spread-out recognizes industries where capital assets
are constructed or assembled.
65

No cap is found in HB 3705.

Page 153 of 557

66

5 of HB 3555 seeks to amend 114 of the Tax Code by requiring that the VAT be deducted and
withheld by the government or by any of its political subdivisions, instrumentalities or agencies -including government-owned-and-controlled corporations (GOCCs) -- before making any payment on
account of each purchase of goods from sellers and services rendered by contractors. The VAT
deducted and withheld shall be at the rates of 5% of the gross payment for the purchase of goods and
8% of the gross receipts for services rendered by contractors on every sale or installment payment.
The VAT that is deducted and withheld shall be creditable against their respective VAT liabilities -10.5%, in case of government public works contractors; and 12% of the payments for the lease or use
of properties or property rights to nonresident owners.
67

11 of SB 1950 seeks to amend 114 of the Tax Code by requiring that the VAT be deducted and
withheld by the government or by any of its political subdivisions, instrumentalities or agencies -including government-owned or -controlled corporations (GOCCs) -- before making any payment on
account of each purchase of goods from sellers and services rendered by contractors. The VAT
deducted and withheld shall be at the rates of 5% of the gross payment for the purchase of goods and
on the gross receipts for services rendered by contractors, including public works contractors. The
VAT that is deducted and withheld shall be creditable against the VAT liability of the seller; and 10%
of the gross payment for the lease or use of properties or property rights to nonresident owners.
68

Deoferio Jr. & Mamalateo, The Value Added Tax in the Philippines (2000), pp. 34-35 & 44.

69

http://explanation-guide.info/meaning/Maurice-Laur.html (Last visited August 23, 2005,

3:25pm PST).
70

This refers to a "tax on value added" -- TVA in French and VAT in English.

71

http://en.wikipedia.org/wiki/ Maurice-Laur (Last visited August 23, 2005, 3:20pm PST).

72

The Transcript of the Oral Arguments in GR Nos. 168461, 168463, 168056, and 168207, held on
July 14, 2005 at the Supreme Court Session Hall, show that the act of passing on to consumers is a
mere cash flow problem, as agreed to by counsel for petitioners in GR No. 168461:
"Justice Panganiban: So, the final consumer pays the tax?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: The trade people in between the middlemen just take it as an input and then
[collect] it as output, isnt it?
Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: Its just a cash flow problem for them, essentially?
"Atty. Baniqued: Yes x x x." (p. 375).
73

The 5 percent final withholding tax may also be charged as part of a suppliers Cost of Sales.

74

This refers to RA 8424, as amended.

75

In fact, 112(B) of the Tax Code, prior to and after its amendment by 10 of RA 9337, does not at
all prohibit the application of unused input taxes against other internal revenue taxes. The manner of
Page 154 of 557

application is determined though by the BIR through 4.112-1(b) of Revenue Regulations No. 142005, otherwise known as the "Consolidated VAT Regulations of 2005," dated June 22, 2005.
76

That the unutilized input VAT can be considered an ordinary and necessary expense for which a
corresponding deduction will be allowed against gross income under 34(A)(1) of the Tax Code -instead of a deferred asset -- is another matter to be adjudicated upon in proper cases.
77

See United Paracale Mining Co. v. De la Rosa, 221 SCRA 108, 115, April 7, 1993.

78

The law referred to is not only the Tax Code, but also RA 9298, otherwise known as the "Philippine
Accountancy Act of 2004."
79

These are based on pronouncements of recognized bodies involved in setting accounting principles.
Greatest weight shall be given to their pronouncements in the order listed below:
1. Securities and Exchange Commission (SEC);
2. Accounting Standards Council;
3. Standards issued by the International Accounting Standards Board (now Committee); and
4. Accounting principles and practices for which there has been a long history of acceptance and
usage.
If there appears to be a conflict between any of the bodies listed above, the pronouncements of the
first listed body shall be applied. SEC Securities Regulation Code Rule 68(1)(b)(iv) as amended, cited
in Appendix C of Morales, The Philippine Securities Regulation Code (Annotated), [2005], p. 578.
Recommended by the World Bank and the Asian Development Bank, and increasingly recognized
worldwide, international accounting standards (IAS) have been merely adopted by Philippine
regulatory bodies and accredited professional organizations. The SEC, for instance, complies with the
agreement among co-members of the International Organization of Securities Commissions to adopt
IAS in order to ensure high-quality and transparent financial reporting, with full disclosure as a means
to promote credibility and efficiency in the capital markets. In implementing the General Agreement
on Trade in Services, the Professional Regulatory Board of Accountancy (PRBOA) of the
Professional Regulatory Commission supports the adoption of IAS. The Philippine Institute of
Certified Public Accountants, a member of the International Accounting Standards Committee
(IASC), also has the commitment to support the work of the IASC and uses best endeavors to foster
compliance with IAS. http://www.picpa.com.ph/adb/index.htm (Last visited August 23, 2005, 3:15pm
PST).
80

Meigs & Meigs, Accounting: The Basis for Business Decisions (1981), pp. 28 & 515.

Under 9(b) & (g) of RA 9298, the PRBOA shall supervise the practice of accountancy in the
Philippines and adopt measures -- such as the promulgation of accounting and auditing standards,
rules and regulations, and best practices -- that may be deemed proper for the enhancement and
maintenance of high professional, ethical, accounting, and auditing standards that include international
accounting and auditing standards and generally accepted best practices.
81

The VAT is collected on each sale of goods or properties or upon the actual or constructive receipt
of consideration for services, starting from the production stage, followed by the intermediate stages
Page 155 of 557

in the distribution process, and culminating with the sale to the final consumer. This is the essence of a
VAT; it is a tax on the value added, that is, on the excess of sales over purchases. See Deoferio Jr. &
Mamalateo, The Value Added Tax in the Philippines (2000), pp. 33-34. With the 70 percent cap on
output tax that is allowable as an input tax credit, the remaining 30 percent becomes an outright
expense that is, however, immediately payable and remitted by the business establishment to the
government. This amount can never be recovered or passed on to the consumer, but it can be an
allowable deduction from gross income under 34(A)(1) of the Tax Code. In effect, it is a tax
computed by multiplying 30 percent to the 10 percent VAT that is imposed on gross sales, receipts or
revenues. It is not a tax on tax and, mathematically, it is derived as follows:
30% x 10% = 3% of gross sales, receipts or revenues.
82

"Double taxation means taxing the same property [or subject matter] twice when it should be taxed
only once; that is, taxing the same person twice by the same jurisdiction for the same thing."
Commissioner of Internal Revenue v. Solidbank Corp., 416 SCRA 436, November 25, 2003, per
Panganiban, J.; (citing Afisco Insurance Corp. v. CA, 361 Phil. 671, 687, January 25, 1999, per
Panganiban, J.). See Commissioner of Internal Revenue v. Bank of Commerce, GR No. 149636, pp.
17-18, June 8, 2005.
83

"The rule x x x is well settled that there is no constitutional prohibition against double taxation."
China Banking Corp. v. CA, 403 SCRA 634, 664, June 10, 2003, per Carpio, J. Cruz, Constitutional
Law (1998), p. 89.
84

116 of the Tax Code as amended.

85

"[C]ourts accord the presumption of constitutionality to legislative enactments, not only because the
legislature is presumed to abide by the Constitution[,] but also because the judiciary[,] in the
determination of actual cases and controversies[,] must reflect the wisdom and justice of the people as
expressed through their representatives in the executive and legislative departments of the
government." Angara v. Electoral Commission, 63 Phil. 139, 158-159, July 15, 1936, per Laurel, J.;
(cited in Francisco Jr. v. House of Representatives, supra, pp. 121-122.)
86

Cawaling Jr. v. COMELEC, 420 Phil. 524, 530, October 26, 2001, per Sandoval-Gutierrez, J.

87

Ichong v. Hernandez, 101 Phil. 1155, 1164, May 31, 1957, per Labrador, J.

88

De Leon, The Fundamentals of Taxation (12th ed., 1998), p. 1.

89

Except, as earlier discussed, for Sections 1, 2 and 3 of the law.

90

13-20 of SB 1950 seek to amend Tax Code provisions on percentage taxes on domestic carriers
and keepers of garages in 117, and on international carriers in 118; franchise taxes in 119;
amusement taxes in 125; excise taxes on manufactured oils and other fuels in 148; registration
requirements in 236; issuance of receipts or sales or commercial invoices in 237; and disposition of
incremental revenues in 288.
91

"[T]he removal of the excise tax on diesel x x x and other socially sensitive products such as
kerosene and fuel oil substantially lessened the impact of VAT. The reduction in import duty x x x
also eased the impact of VAT." Manila Bulletin, "Impact of VAT on prices of oil products should be
less than 10%, says DoE," by James A. Loyola, Business Bulletin B-3, Friday, July 1, 2005, attached
as Annex A to the Memorandum filed by the Association of Pilipinas Shell Dealers, Inc.
Page 156 of 557

The Transcript of the Oral Arguments in GR Nos. 168461, 168463, 168056, and 168207 on July 14,
2005 also reveals the effect of mitigating measures upon petitioners in GR No. 168461:
"Justice Panganiban: As a matter of fact[,] a part of the mitigating measures would be the elimination
of the [e]xcise [t]ax and the import duties. That is [why] it is not correct to say that the [VAT] as to
petroleum dealers increase to 10 [percent].
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: And[,] therefore, there is no justification for increasing the retail price by 10
[percent] to cover the E-[VAT.] [I]f you consider the excise tax and the import duties, the [n]et [t]ax
would probably be in the neighborhood of 7 [percent]? We are not going into exact figures[.] I am just
trying to deliver a point that different industries, different products, different services are hit
differently. So its not correct to say that all prices must go up by 10 [percent].
"Atty. Baniqued: Youre right, Your Honor.
"Justice Panganiban: Now. For instance, [d]omestic [a]irline companies, Mr. Counsel, are at present
imposed a [s]ales [t]ax of 3 [percent]. When this E-[VAT] law took effect[,] the [s]ales [t]ax was also
removed as a mitigating measure. So, therefore, there is no justification to increase the fares by 10
[percent;] at best 7 [percent], correct?
"Atty. Baniqued: I guess so, Your Honor, yes." (pp. 367-368).
92

28(1) of Article VI of the 1987 Constitution.

93

26(2) of Article VI of the 1987 Constitution.

94

These bills refer to HB 3705 and SB 1950.

95

26(2), supra.

96

"Each house may not by its rules ignore constitutional restraints or violate fundamental rights, and
there should be a reasonable relation between the mode or method of proceeding established by the
rule and the result which is sought to be attained." US v. Ballin, 144 US 1, 5, 12 S.Ct. 507, 509,
February 29, 1892, per Brewer, J.
97

Panganiban, Leveling the Playing Field (2004), PRINTTOWN Group of Companies, pp. 46-47.

98

338 Phil. 546, 604-605, May 2, 1997, per Panganiban, J.

99

420 Phil. 525, 531, October 26, 2001, per Sandoval-Gutierrez, J.; (citing The Philippine Judges
Association v. Prado, 227 SCRA 703, 706, November 11, 1993, per Cruz, J.).
100

Veterans Federation Party v. COMELEC, 396 Phil. 419, 452-453, October 6, 2000, per
Panganiban, J.; (citing Garcia v. COMELEC, 227 SCRA 100, 107-108, October 5, 1993).

Page 157 of 557

EN BANC
G.R. No. 168056 --- ABAKADA Guro Party List (Formerly AASJAS) Officers Samson S. Alcantara and
Ed Vincent S. Albano, Petitioners, versus The Honorable Executive Secretary Eduardo Ermita, et al.,
Respondents.
G.R. No. 168207 --- Aquilino Q. Pimentel, Jr., et al., Petitioners, versus Executive Secretary Eduardo R.
Ermita, et al., Respondents.
G.R. No. 168461 --- Association of Pilipinas Shell Dealers, Inc., et al., Petitioners, versus Cesar V.
Purisima, et al., Respondents.
G.R. No. 168463 --- Francis Joseph G. Escudero, et al., Petitioners, versus Cesar V. Purisima, et al.,
Respondents.
G.R. No. 168730 --- Bataan Governor Enrique T. Garcia, Jr., et al., Petitioners, versus Hon. Eduardo R.
Ermita, et al., Respondents.
Promulgated:
September 1, 2005
x ---------------------------------------------------------------------------------------- x
CONCURRING AND DISSENTING OPINION
YNARES-SANTIAGO, J.:
The ponencia states that under the provisions of the Rules of the House of Representatives and the Senate
Rules, the Bicameral Conference Committee is mandated to settle differences between the disagreeing
provisions in the House bill and Senate bill. However, the ponencia construed the term "settle" as synonymous
to "reconcile" and "harmonize," and as such, the Bicameral Conference Committee may either (a) adopt the
specific provisions of either the House bill or Senate bill, (b) decide that neither provisions in the House bill or
the provisions in the Senate bill would be carried into the final form of the bill, and/or (c) try to arrive at a
compromise between the disagreeing provisions.
I beg to differ on the third proposition.
Indeed, Section 16(3), Article VI of the 1987 Constitution explicitly allows each House to determine the rules
of its proceedings. However, the rules must not contravene constitutional provisions. The rule-making power
of Congress should take its bearings from the Constitution. If in the exercise of this rule-making power,
Congress failed to set parameters in the functions of the committee and allowed the latter unbridled authority
to perform acts which Congress itself is prohibited, like the passage of a law without undergoing the requisite
three-reading and the so-called no-amendment rule, then the same amount to grave abuse of discretion which
this Court is empowered to correct under its expanded certiorari jurisdiction. Notwithstanding the doctrine of
separation of powers, therefore, it is the duty of the Court to declare as void a legislative enactment, either
from want of constitutional power to enact or because the constitutional forms or conditions have not
been observed.1 When the Court declares as unconstitutional a law or a specific provision thereof because
procedural requirements for its passage were not complied, the Court is by no means asserting its ascendancy
over the Legislature, but simply affirming the supremacy of the Constitution as repository of the sovereign
will.2 The judicial branch must ensure that constitutional norms for the exercise of powers vested upon the two
Page 158 of 557

other branches are properly observed. This is the very essence of judicial authority conferred upon the Court
under Section 1, Article VII of the 1987 Constitution.
The Rules of the House of Representatives and the Rules of the Senate provide that in the event there is
disagreement between the provisions of the House and Senate bills, the differences shall be settled by a
bicameral conference committee.
By this, I fully subscribe to the theory advanced in the Dissenting Opinion of Chief Justice Hilario G. Davide,
Jr. in Tolentino v. Secretary of Finance3 that the authority of the bicameral conference committee was limited
to the reconciliation of disagreeing provisions or the resolution of differences or inconsistencies. Thus, it could
only either (a) restore, wholly or partly, the specific provisions of the House bill amended by the Senate
bill, (b) sustain, wholly or partly, the Senates amendments, or (c) by way of a compromise, to agree that
neither provisions in the House bill amended by the Senate nor the latters amendments thereto be
carried into the final form of the former.
Otherwise stated, the Bicameral Conference Committee is authorized only to adopt either the version of the
House bill or the Senate bill, or adopt neither. It cannot, as the ponencia proposed, "try to arrive at a
compromise", such as introducing provisions not included in either the House or Senate bill, as it would allow
a mere ad hoc committee to substitute the will of the entire Congress and without undergoing the requisite
three-reading, which are both constitutionally proscribed. To allow the committee unbridled discretion to
overturn the collective will of the whole Congress defies logic considering that the bills are passed presumably
after study, deliberation and debate in both houses. A lesser body like the Bicameral Conference Committee
should not be allowed to substitute its judgment for that of the entire Congress, whose will is expressed
collectively through the passed bills.
When the Bicameral Conference Committee goes beyond its limited function by substituting its own judgment
for that of either of the two houses, it violates the internal rules of Congress and contravenes material
restrictions imposed by the Constitution, particularly on the passage of law. While concededly, the internal
rules of both Houses do not explicitly limit the Bicameral Conference Committee to a consideration only of
conflicting provisions, it is understood that the provisions of the Constitution should be read into these rules as
imposing limits on what the committee can or cannot do. As such, it cannot perform its delegated function in
violation of the three-reading requirement and the no-amendment rule.
Section 26(2) of Article VI of the 1987 Constitution provides that:
(2) No bill shall be passed by either House shall become a law unless it has passed three readings on separate
days, and printed copies thereof in its final form have been distributed to its Members three days before its
passage, except when the President certifies to the necessity of its immediate enactment to meet a public
calamity or emergency. Upon the last reading of a bill, no amendment hereto shall be allowed, and the vote
thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal.
Thus, before a bill becomes a law, it must pass three readings. Hence, the ponencias submission that despite
its limited authority, the Bicameral Conference Committee could "compromise the disagreeing provisions" by
substituting it with its own version clearly violate the three-reading requirement, as the committees version
would no longer undergo the same since it would be immediately put into vote by the respective houses. In
effect, it is not a bill that was passed by the entire Congress but by the members of the ad hoc committee only,
which of course is constitutionally infirm.
I disagree that the no-amendment rule referred only to "the procedure to be followed by each house of
Congress with regard to bills initiated in each of said respective houses" because it would relegate the noamendment rule to a mere rule of procedure. To my mind, the no-amendment rule should be construed as
prohibiting the Bicameral Conference Committee from introducing amendments and modifications to nonPage 159 of 557

disagreeing provisions of the House and Senate bills. In sum, the committee could only either adopt the
version of the House bill or the Senate bill, or adopt neither. As Justice Reynato S. Puno said in his Dissenting
Opinion in Tolentino v. Secretary of Finance,4 there is absolutely no legal warrant for the bold submission that
a Bicameral Conference Committee possesses the power to add/delete provisions in bills already approved on
third reading by both Houses or an ex post veto power.
In view thereof, it is my submission that the amendments introduced by the Bicameral Conference Committee
which are not found either in the House or Senate versions of the VAT reform bills, but are inserted merely by
the Bicameral Conference Committee and thereafter included in Republic Act No. 9337, should be declared
unconstitutional. The insertions and deletions made do not merely settle conflicting provisions but materially
altered the bill, thus giving rise to the instant petitions.
I, therefore, join the concurring and dissenting opinion of Mr. Justice Reynato S. Puno.
CONSUELO YNARES-SANTIAGO
Associate Justice

Footnotes
1

Cooley on Constitutional Limitations, 8th Ed., Vol. I, p. 332.

Angara v. Electoral Commission, 63 Phil. 139, 158 [1936].

G.R. Nos. 115455, 115525, 115543, 115544, 115754, 115781, 115852, 115873, 115931, 25 August
1994, 235 SCRA 630, 750.
4

Supra, p. 811.

G.R. NO. 168056 ABAKADA GURO PARTY LIST (FORMERLY AASJAS) OFFICERS SAMSON S.
ALCANTARA AND ED VINCENT S. ALBANO, petitioners versus THE HONORABLE EXECUTIVE
SECRETARY EDUARDO ERMITA, ET AL., respondents.
G.R. NO. 168207 AQUILINO Q. PIMENTEL, JR., ET AL., petitioners versus THE HONORABLE
EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL., respondents.
G.R. NO. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., ET AL., petitioners versus
CESAR V. PURISIMA, ET AL., respondents.
G.R. NO. 168463 FRANCIS JOSEPH G. ESCUDERO, ET AL., petitioners versus CESAR V.
PURISIMA, ET AL., respondents.
G.R. NO. 168730 BATAAN GOVERNOR ENRIQUE T. GARCIA, JR., ET AL., petitioners versus
HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL., respondents.
Promulgated:
Page 160 of 557

September 1, 2005
x----------------------------------------------------------------------------------------------x
CONCURRING AND DISSENTING OPINION
SANDOVAL GUTIERREZ, J.:
Adam Smith, the great 18th century political economist, enunciated the dictum that "the subjects of every
state ought to contribute to the support of government, as nearly as possible, in proportion to their respective
abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state."1
At no other time this dictum becomes more urgent and obligatory as in the present time, when the Philippines
is in its most precarious fiscal position.
At this juncture, may I state that I join Mr. Senior Justice Reynato S. Puno in his Opinion, specifically on the
following points:
1. It is "high time to re-examine the test of germaneness proffered in Tolentino;"
2. The Bicameral Conference Committee "cannot exercise its unbridled discretion," "it cannot create a new
law," and its deletion of the "no pass on provision" common in both Senate Bill No. 1950 and House Bill No.
3705 is "unconstitutional."
In addition to the above points raised by Mr. Senior Justice Puno, may I expound on the issues specified
hereunder:
There is no reason to rush and stamp the imprimatur of validity to a tax law, R.A. 9337, that contains patently
unconstitutional provisions. I refer to Sections 4 to 6 which violate the principle of non-delegation of
legislative power. These Sections authorize the President, upon recommendation of the Secretary of Finance,
to raise the VAT rate from
10% to 12% effective January 1, 2006, if the conditions specified therein are met, thus:
. . . That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006,
raise the rate of value-added tax to twelve percent (12%) after any of the following conditions has been
satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 %).
This proviso on the authority of the President is uniformly appended to Sections 4, 5 and 6 of R.A. No. 9337,
provisions amending Sections 106, 107 and 108 of the NIRC, respectively. Section 4 imposes a 10% VAT on
sales of goods and properties, Section 5 imposes a 10% VAT on importation of goods, and Section 6 imposes a
10% VAT on sale of services and use or lease of properties.
Petitioners in G.R. Nos. 168056,2 1682073 and 1684634 assail the constitutionality of the above provisions on
the ground that such stand-by authority granted to the President constitutes: (1) undue delegation of legislative
power; (2) violation of due process; and (3) violation of the principle of "exclusive origination." They cited as
their basis Article VI, Section 28 (2); Article III, Section 1; and Article VI, Section 24 of the Constitution.
Page 161 of 557

I
Undue Delegation of Legislative Power
Taxation is an inherent attribute of sovereignty.5 It is a power that is purely legislative and which the central
legislative body cannot delegate either to the executive or judicial department of government without
infringing upon the theory of separation of powers.6 The rationale of this doctrine may be traced from the
democratic principle of "no taxation without representation." The power of taxation being so pervasive, it is in
the best interest of the people that such power be lodged only in the Legislature. Composed of the peoples
representatives, it is "closer to the pulse of the people and are therefore in a better position to determine both
the extent of the legal burden the people are capable of bearing and the benefits they need."7 Also, this set-up
provides security against the abuse of power. As Chief Justice Marshall said: "In imposing a tax, the legislature
acts upon its constituents. The power may be abused; but the interest, wisdom, and justice of the representative
body, and its relations with its constituents, furnish a sufficient security."
Consequently, Section 24, Article VI of our Constitution enshrined the principle of "no taxation without
representation" by providing that "all revenue bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments." This provision generally confines
the power of taxation to the Legislature.
R.A. No. 9337, in granting to the President the stand-by authority to increase the VAT rate from 10% to 12%,
the Legislature abdicated its power by delegating it to the President. This is constitutionally impermissible.
The Legislature may not escape its duties and responsibilities by delegating its power to any other body or
authority. Any attempt to abdicate the power is unconstitutional and void, on the principle that potestas
delegata non delegare potest.8 As Judge Cooley enunciated:
"One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws
cannot be delegated by that department to any other body or authority. Where the sovereign power of the
state has located the authority, there it must remain; and by the constitutional agency alone the laws
must be made until the Constitution itself is changed. The power to whose judgment, wisdom, and
patriotism this high prerogative has been entrusted cannot relieve itself of the responsibility by choosing other
agencies upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and patriotism
of any other body for those to which alone the people have seen fit to confide this sovereign trust."9
Of course, the rule which forbids the delegation of the power of taxation is not absolute and inflexible. It
admits of exceptions. Retired Justice Jose C. Vitug enumerated such exceptions, to wit: (1) delegations to local
governments (to be exercised by the local legislative bodies thereof) or political subdivisions; (2) delegations
allowed by the Constitution; and (3) delegations relating merely to administrative implementation that may call
for some degree of discretionary powers under a set of sufficient standards expressed by law.10
Patently, the act of the Legislature in delegating its power to tax does not fall under any of the exceptions.
First, it does not involve a delegation of taxing power to the local government. It is a delegation to the
President.
Second, it is not allowed by the Constitution. Section 28 (2), Article VI of the Constitution enumerates the
charges or duties, the rates of which may be fixed by the President pursuant to a law passed by Congress, thus:
The Congress may, by law, authorize the President to fix within specified limits, and subject to such
limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts within the framework of the national development program of the
Government.
Page 162 of 557

Noteworthy is the absence of tax rates or VAT rates in the enumeration. If the intention of the Framers of the
Constitution is to permit the delegation of the power to fix tax rates or VAT rates to the President, such could
have been easily achieved by the mere inclusion of the term "tax rates" or "VAT rates" in the enumeration. It
is a dictum in statutory construction that what is expressed puts an end to what is implied. Expressium facit
cessare tacitum.11 This is a derivative of the more familiar maxim express mention is implied exclusion or
expressio unius est exclusio alterius. Considering that Section 28 (2), Article VI expressly speaks only of
"tariff rates,12 import13 and export
quotas,14 tonnage15 and wharfage dues16 and other duties and imposts,17" by no stretch of imagination can this
enumeration be extended to include the VAT.
And third, it does not relate merely to the administrative implementation of R.A. No. 9337.
In testing whether a statute constitutes an undue delegation of legislative power or not, it is usual to inquire
whether the statute was complete in all its terms and provisions when it left the hands of the Legislature so that
nothing was left to the judgment of any other appointee or delegate of the legislature.18
In the present case, the President is the delegate of the Legislature, endowed with the power to raise the VAT
rate from 10 % to 12% if any of the following conditions, to reiterate, has been satisfied: (i) value-added tax
collection as a percentage of gross domestic product (GDP) of the previous year exceeds two and four-fifths
percent (2 4/5%) or (ii) National Government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).
At first glance, the two conditions may appear to be definite standards sufficient to guide the President.
However, to my mind, they are ineffectual and malleable as they give the President ample opportunity to
exercise her authority in arbitrary and discretionary fashion.
The two conditions set forth by law would have been sufficient had it not been for the fact that the President,
being at the helm of the entire officialdom, has more than enough power of control to bring about the existence
of such conditions. Obviously, R.A. No. 9337 allows the President to determine for herself whether the VAT
rate shall be increased or not at all. The fulfillment of the conditions is entirely placed in her hands. If she
wishes to increase the VAT rate, all she has to do is to strictly enforce the VAT collection so as to exceed the 2
4/5% ceiling. The same holds true with the national government deficit. She will just limit government
expenses so as not to exceed the 1 % ceiling. On the other hand, if she does not wish to increase the VAT
rate, she may discourage the Secretary of Finance from making the recommendation.
That the Presidents exercise of an authority is practically within her control is tantamount to giving no
conditions at all. I believe this amounts to a virtual surrender of legislative power to her. It must be stressed
that the validity of a law is not tested by what has been done but by what may be done under its provisions.19
II
Violation of Due Process
The constitutional safeguard of due process is briefly worded in Section 1, Article III of the Constitution which
states that, "no person shall be deprived of life, liberty or property without due process of law."20
Substantive due process requires the intrinsic validity of the law in interfering with the rights of the person to
his property. The inquiry in this regard is not whether or not the law is being enforced in accordance with the
prescribed manner but whether or not, to begin with, it is a proper exercise of legislative power.

Page 163 of 557

To be so, the law must have a valid governmental objective, i.e., the interest of the public as distinguished
from those of a particular class, requires the intervention of the State. This objective must be pursued in a
lawful manner, or in other words, the means employed must be reasonably related to the accomplishment of
the purpose and not unduly oppressive.
There is no doubt that R.A. No. 9337 was enacted pursuant to a valid governmental objective, i.e. to raise
revenues for the government. However, with respect to the means employed to accomplish such objective, I
am convinced that R.A. No. 9337, particularly Sections 4, 5 and 6 thereof, are arbitrary and unduly oppressive.
A reading of the Senate deliberation reveals that the first condition constitutes a reward to the President for her
effective collection of VAT. Thus, the President may increase the VAT rate from 10% to 12% if her VAT
collection during the previous year exceeds 2 4/5% of the Gross Domestic Product. I quote the deliberation:
Senator Lacson. Thank you, Mr. President. Now, I will go back to my original question, my first question.
Who are we threatening to punish on the imposed condition No. 1 the public or the President?
Senator Recto. That is not a punishment, that is supposed to be a reward system.
Senator Lacson. Yes, an incentive. So we are offering an incentive to the Chief Executive.
Senator Recto. That is right.
Senator Lacson. in order for her to be able to raise the VAT to 12 %.
Senator Recto. That is right. That is the intention, yes.
xxxxxx
Senator Osmena. All right. Therefore, with the lifting of exemptions it stands to reason that Valueadded tax collections as a percentage of GDP will be much higher than Now, if it is higher than 2.5%,
in other words, because they collected more, we will allow them to even tax more. Is that the meaning of
this particular phrase?
Senator Recto. Yes, Mr. President, that is why it is as low as 2.8%. It is like if a person has a son and his
son asks him for an allowance, I do not think that he would immediately give his son an increase in
allowance unless he tells his son, You better improve your grades and I will give you an allowance. That
is the analogy of this.
xxxxxx
Senator Osmena. So the gentleman is telling the President, If you collect more than 138 billion, I will
give you additional powers to tax the people.
Senator Recto. x x x We are saying, kung mataas and grade mo, dadagdagan ko an allowance mo.
Katulad ng sinabi natin ditto. What we are saying here is you prove to me that you can collect it, then
we will increase your rate, you can raise your rate. It is an incentive.21
Why authorize the President to increase the VAT rate on the premise alone that she deserves an "incentive" or
"reward"? Indeed, why should she be rewarded for performing a duty reposed upon her by law?

Page 164 of 557

The rationale stated by Senator Recto is flawed. One of the principles of sound taxation is fiscal adequacy. The
proceeds of tax revenue should coincide with, and approximate the needs of, government expenditures.
Neither an excess nor a deficiency of revenue vis--vis the needs of government would be in keeping with
the principle.22
Equating the grant of authority to the President to increase the VAT rate with the grant of additional allowance
to a studious son is highly inappropriate. Our Senators must have forgotten that for every increase of taxes, the
burden always redounds to the people. Unlike the additional allowance given to a studious son that comes from
the pocket of the granting parent alone, the increase in the VAT rate would be shouldered by the masses.
Indeed, mandating them to pay the increased rate as an award to the President is arbitrary and unduly
oppressive. Taxation is not a power to be exercised at ones whim.
III
Exclusive Origination from the
House of Representatives
Section 24, Article VI of the Constitution provides:
SEC. 24. All appropriations, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments.
In Tolentino vs. Secretary of Finance,23 this Court expounded on the foregoing provision by holding that:
"x x x To begin with, it is not the law but the revenue bill which is required by the Constitution to
originate exclusively in the House of Representatives. It is important to emphasize this, because a bill
originating the in the House may undergo such extensive changes in the Senate that the result may be a
rewriting of the whole x x x. At this point, what is important to note is that, as a result of the Senate action, a
distinct bill may be produced. To insist that a revenue statute -- and not only the bill which initiated the
legislative process culminating in the enactment of the law must substantially be the same as the House Bill
would be to deny the Senates power not only to concur with amendments: but also to propose amendments.
It would be to violate the co-equality of the legislative power of the two houses of Congress and in fact, make
the House superior to the Senate."
The case at bar gives us an opportunity to take a second hard look at the efficacy of the foregoing
jurisprudence.
Section 25, Article VI is a verbatim re-enactment of Section 18, Article VI of the 1935 Constitution. The latter
provision was modeled from Section 7 (1), Article I of the United States Constitution, which states:
"All bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or
concur with amendments, as on other bills."
The American people, in entrusting what James Madison termed "the power of the purse" to their elected
representatives, drew inspiration from the British practice and experience with the House of Commons. As one
commentator puts it:
"They knew the inestimable value of the House of Commons, as a component branch of the British parliament;
and they believed that it had at all times furnished the best security against the oppression of the crown and the
Page 165 of 557

aristocracy. While the power of taxation, of revenue, and of supplies remained in the hands of a popular
branch, it was difficult for usurpation to exist for any length of time without check, and prerogative
must yield of that necessity which controlled at once the sword and the purse."
But while the fundamental principle underlying the vesting of the power to propose revenue bills solely in the
House of Representatives is present in both the Philippines and US Constitutions, stress must be laid on the
differences between the two quoted provisions. For one, the word "exclusively" appearing in Section 24,
Article VI of our Constitution is nowhere to be found in Section 7 (1), Article I of the US Constitution. For
another, the phrase "as on other bills," present in the same provision of the US Constitution, is not written in
our Constitution.
The adverb "exclusively" means "in an exclusive manner."24 The term "exclusive" is defined as "excluding or
having power to exclude; limiting to or limited to; single, sole, undivided, whole."25 In one case, this Court
define the term "exclusive" as "possessed to the exclusion of others; appertaining to the subject alone, not
including, admitting, or pertaining to another or others."26
As for the term "originate," its meaning are "to cause the beginning of; to give rise to; to initiate; to start
on a course or journey; to take or have origin; to be deprived; arise; begin or start."27
With the foregoing definitions in mind, it can be reasonably concluded that when Section 24, Article VI
provides that revenue bills shall originate exclusively from the House of Representatives, what the
Constitution mandates is that any revenue statute must begin or start solely and only in the House. Not the
Senate. Not both Chambers of Congress. But there is more to it than that. It also means that "an act for
taxation must pass the House first." It is no consequence what amendments the Senate adds.28
A perusal of the legislative history of R.A. No. 9337 shows that it did not "exclusively originate" from the
House of Representatives.
The House of Representatives approved House Bill Nos. 355529 and 370530. These Bills intended to amend
Sections 106, 107, 108, 109, 110, 111 and 114 of the NIRC. For its part, the Senate approved Senate Bill No.
1950,31 taking into consideration House Bill Nos. 3555 and 3705. It intended to amend Sections 27, 28, 34,
106, 108, 109, 110, 112, 113, 114, 116, 117, 119, 121, 125, 148, 151, 236, 237 and 288 of the NIRC.
Thereafter, on April 13, 2005, a Committee Conference was created to thresh out the disagreeing provisions of
the three proposed bills.
In less than a month, the Conference Committee "after having met and discussed in full free and conference,"
came up with a report and recommended the approval of the consolidated version of the bills. The Senate and
the House of Representatives approved it.
On May 23, 2005, the enrolled copy of the consolidated version of the bills was transmitted to President
Arroyo, who signed it into law. Thus, the enactment of R.A. No. 9337, entitled "An Act Amending Sections 27,
28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288 of the
National Internal Revenue Code of 1997, As Amended and For Other Purposes."
Clearly, Senate Bill No. 1950 is not based on any bill passed by the House of Representatives. It has a
legislative identity and existence separate and apart from House Bills No. 3555 and 3705. Instead of
concurring or proposing amendments, Senate Bill No. 1950 merely "takes into consideration" the two House
Bills. To take into consideration means "to take into account." Consideration, in this sense, means
"deliberation, attention, observation or contemplation.32 Simply put, the Senate in passing Senate Bill No.
1950, a tax measure, merely took into account House Bills No. 3555 and 3705, but did not concur with or

Page 166 of 557

amend either or both bills. As a matter of fact, it did not even take these two House Bills as a frame of
reference.
In Tolentino, the majority subscribed to the view that Senate may amend the House revenue bill by substitution
or by presenting its own version of the bill. In either case, the result is "two bills on the same subject."33 This
is the source of the "germaneness" rule which states that the Senate bill must be germane to the bill originally
passed by the House of Representatives. In Tolentino, this was not really an issue as both the House and Senate
Bills in question had one subject the VAT.
The facts obtaining here is very much different from Tolentino. It is very apparent that House Bills No. 3555
and 3705 merely intended to amend Sections 106, 107, 108, 109, 110, 111 and 114 of the NIRC of 1997,
pertaining to the VAT provisions. On the other hand, Senate Bill No. 1950 intended to amend Sections 27, 28,
34, 106, 108, 109, 110, 112, 113, 114, 116, 117, 119, 121, 125, 148, 151, 236, 237 and 288 of the NIRC,
pertaining to matters outside of VAT, such as income tax, percentage tax, franchise tax, taxes on banks and
other financial intermediaries, excise taxes, etc.
Thus, I am of the position that the Senate could not, without violating the germaneness rule and the principle
of "exclusive origination," propose tax matters not included in the House Bills.
WHEREFORE, I vote to CONCUR with the majority opinion except with respect to the points abovementioned.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

Footnotes
1

Book V of The Wealth of Nations.

ABAKADA GURO Party List (Formerly AASJAS), Officers Samson S. Alcantara and Ed Vincent
S. Albano.
3

Aquilino Q. Pimentel, Jr., Luisa P. Ejercito-Estrada, Jinggoy E. Estrada, Panfilo M. Lacson, Alfredo
S. Lim, Jamby A.S. Madrigal and Sergio R. Osmena III.
4

Francis Joseph G. Escudero, Vincent Crisologo, Emmanuel Joel J. Villanueva, Rodolfo G. Plaza,
Darlene Antonino-Custodio, Oscar G. Malapitan, Benjamin C. Agarao, Jr., Juan Edgardo M. Angara,
Justin Marc SB. Chipeco, Florencio G. Noel, Mujiv S. Hataman, Renato B. Magtubo, Joseph A.
Santiago, Teofisto DL. Guingona III, Ruy Elias C. Lopez, Rodolfo Q. Agbayani and Teodoro A.
Casino.
5

Luzon Stevedoring Co. vs. Court of Tax Appeals, L-302332, July 29, 1998, 163 SCRA 647 cited in
Vitug, Acosta, Tax Law and Jurisprudence, Second Edition, at 7.
6

Pepsi Cola Bottling Company of the Philippines vs. Municipality of Tanauan, Leyte, G.R. No. L31156, February 27, 1976, 69 SCRA 460. See also National Power Corporation vs. Albay, G.R. No.
87479, June 4, 1990, 186 SCRA 198.

Page 167 of 557

Bernas, SJ, The 1987 Constitution of the Republic of the Philippines, A Commentary, 1996 Edition,
at 687.
8

People vs. Vera, 65 Phil. 56 (1937).

Cooley on Constitutional Limitations, 8th ed., Vol. I, p. 224.

10

Vitug, Acosta, Tax Law and Jurisprudence, Second Edition, at 8-9.

11

Espiritu vs. Cipriano, G.R. No. 32743, February 15, 1974, 55 SCRA 533, 538, citing Sutherlands
Statutory Construction, Vol. 2, Section 4945, p. 412.
12

A tariff is a list or schedule of articles on which a duty is imposed upon their importation, with the
rates at which they are severally taxed, it is also the custom or duty payable on such articles. (Blacks
Law Dictionary [6th Edition], 1990, at 1456).
13

An import quota is a quantitative restriction on the importation of an article into a country, and is a
remedy available to the executive department upon its determination that an imported article threatens
serious injury to a domestic industry. (Id. at 755).
14

An export quota is an amount of specific goods which may be exported and are set by the
government for purposes of national defense, economic stability and price support. (Id. at 579).
15

Tonnage dues are duties laid upon vessels according to their tonnage or cubical capacity. (Id. at
1488).
16

Wharfage dues are generally understood to be the fees paid for landing goods upon or loading them
from a wharf. It is a charge for the use of the wharf and may be treated either as rent or compensation.
(Marine Lighterage Corp. vs. Luckenbach S.S. Co., 119 Misc. 612, 248 NYS 71).
17

A duty is generally understood to be a tax on the importation or exportation of goods, merchandise

and other commodities, while imposts are duties or impositions levied for various reasons. (Crew
Levick Co. vs. Commonwealth of Pennsylvania, 245 US 292, 62 L. Ed. 295, 38 S. Ct. 126).
18

People vs. Vera, supra.

19

Walter E. Olsen & Co. vs. Aldanese and Trinidad (1922), 43 Phil., 259; 12 C. J., p. 786.

20

Cruz, Constitutional Law, 1987 Edition, at 101.

21

TSN, May 10, 2005, Annex E" of the Petition in G.R. No. 168056.

22

Vitug, Acosta, Tax Law and Jurisprudence, Second Edition, at 3.

23

G.R. No. 115455, August 25, 1994, 235 SCRA 630.

24

Merriam-Websters Third New International Dictionary (1993 Ed.), at 793.

25

Id.

Page 168 of 557

26

City Mayor vs. The Chief of Philippine Constabulary, G.R. No. 20346, October 31, 1967, 21 SCRA
665, 673.
27

Merriam-Websters Third New International Dictionary (1993 Ed.), at 1592.

28

Davies, Legislative Law and Process, (2d. Ed. 1986), at 89.

29

Entitled "An Act Restructuring the Value-Added Tax, Amending for the Purpose Sections 106, 107,
108, 110 and 114 of the National Internal Revenue Code of 1997, As amended, and For Other
Purposes." Approved on January 27, 2005.
30

Entitled "An Act Amending Sections 106, 107, 108, 109, 110 and 111 of the National Internal
Revenue Code of 1997, As Amended, and For Other Purposes." Approved on February 28, 2005.
31

Entitled "An Act Amending Sections 27, 28, 34, 106,108, 109,110, 112, 113, 114, 116, 117, 119,
121, 125, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 1997, As Amended,
and For Other Purposes." Approved on April1 3, 2005.
32

Merriam-Websters Third New International Dictionary (1993 Ed.), at 484.

33

Supra.

G.R. No. 168056 (Abakada Guro Party List [Formerly AASJAS] Officers Samson S. Alcantara and Ed
Vincent S. Albano v. The Hon. Executive Secretary Eduardo Ermita, et al.)
G.R. No. 168207 (Aquilino Q. Pimentel, Jr., et al. v. Executive Secretary Eduardo R. Ermita, et al.)
G.R. No. 168461 (Association of Filipinas Shell Dealers, Inc., et al. v. Cesar V. Purisima, et al.)
G.R. No. 168463 (Francis Joseph G. Escudero, et al. v. Cesar V. Purisima, et al.)
G.R. No. 168730 (Bataan Governor Enrique T. Garcia, Jr. v. Hon. Eduardo R. Ermita, et al.)
Promulgated:
September 1, 2005
X--------------------------------------------------X
CONCURRING AND DISSENTING OPINION
CALLEJO, SR., J.:
I join the concurring and dissenting opinion of Mr. Justice Reynato S. Puno as I concur with the majority
opinion but vote to declare as unconstitutional the deletion of the "no-pass on provision" contained in Senate
Bill No. 1950 and House Bill No. 3705 (the constituent bills of Republic Act No. 9337).
Page 169 of 557

The present petitions provide an opportune

occasion for the Court to re-examine
Tolentino v. Secretary of Finance
In ruling that Congress, in enacting R.A. No. 9337, complied with the formal requirements of the Constitution,
the ponencia relies mainly on the Courts rulings in Tolentino v. Secretary of Finance.1 To recall, Tolentino
involved Republic Act No. 7716, which similarly amended the NIRC by widening the tax base of the VAT
system. The procedural attacks against R.A. No. 9337 are substantially the same as those leveled against R.A.
No. 7716, e.g., violation of the "Origination Clause" (Article VI, Section 24) and the "Three-Reading Rule"
and the "No-Amendment Rule" (Article VI, Section 26[2]) of the Constitution.
The present petitions provide an opportune occasion for the Court to re-examine its rulings in Tolentino
particularly with respect to the scope of the powers of the Bicameral Conference Committee vis--vis Article
VI, Section 26(2) of the Constitution.
The crucial issue posed by the present petitions is whether the Bicameral Conference Committee may validly
introduce amendments that were not contained in the respective bills of the Senate and the House of
Representatives. As a corollary, whether it may validly delete provisions uniformly contained in the respective
bills of the Senate and the House of Representatives.
In Tolentino, the Court declared as valid amendments introduced by the Bicameral Conference Committee
even if these were not contained in the Senate and House bills. The majority opinion therein held:
As to the possibility of an entirely new bill emerging out of a Conference Committee, it has been explained:
Under congressional rules of procedures, conference committees are not expected to make any material change
in the measure at issue, either by deleting provisions to which both houses have already agreed or by inserting
new provisions. But this is a difficult provision to enforce. Note the problem when one house amends a
proposal originating in either house by striking out everything following the enacting clause and substituting
provisions which make it an entirely new bill. The versions are now altogether different, permitting a
conference committee to draft essentially a new bill
The result is a third version, which is considered an "amendment in the nature of a substitute," the only
requirement for which being that the third version be germane to the subject of the House and Senate bills.
Indeed, this Court recently held that it is within the power of a conference committee to include in its report an
entirely new provision that is not found either in the House bill or in the Senate Bill. If the committee can
propose an amendment consisting of one or two provisions, collectively considered as an "amendment in the
nature of a substitute," so long as such an amendment is germane to the subject of the bills before the
committee. After all, its report was not final but needed the approval of both houses of Congress to become
valid as an act of the legislative department. The charge that in this case the Conference Committee acted a
third legislative chamber is thus without any basis.2
The majority opinion in Tolentino relied mainly on the practice of the United States legislature in making the
foregoing disquisition. It was held, in effect, that following the US Congress practice where a conference
committee is permitted to draft a bill that is entirely different from the bills of either the House of
Representatives or Senate, the Bicameral Conference Committee is similarly empowered to make amendments
not found in either the House or Senate bills.

Page 170 of 557

The ponencia upholds the acts of the Bicameral Conference Committee with respect to R.A. No. 9337,
following the said ruling in Tolentino.
To my mind, this unqualified adherence by the majority opinion in Tolentino, and now by the ponencia, to the
practice of the US Congress and its conference committee system ought to be re-examined. There are
significant textual differences between the US Federal Constitutions and our Constitutions prescribed
congressional procedure for enacting laws. Accordingly, the degree of freedom accorded by the US Federal
Constitution to the US Congress markedly differ from that accorded by our Constitution to the Philippine
Congress.
Section 7, Article I of the US Federal Constitution reads:
[1] All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or
concur with Amendments as on other Bills.
[2] Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a
Law, be presented to the President of the United States; If he approve he shall it, but if not he shall return it,
with his Objections to the House in which it shall have originated, who shall enter the Objections at large on
their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to
pass the Bill, it shall be sent together with the Objections, to the other House, by which it shall, likewise, be
reconsidered, and if approved by two thirds of that House, it shall become a Law. But in all such Cases the
Votes of both Houses shall be determined by yeas and Nays, and the Names of the Persons voting for and
against the Bill shall be entered on the Journal of each House respectively. If any Bill shall not be returned by
the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a
Law, in like Manner as if he had signed it, unless the Congress by their Adjournment prevent its return in
which Case it shall not be a Law.
[3] Every Order, Resolution, or Vote to Which the Concurrence of the Senate and House of Representatives
may be necessary (except on a question of Adjournment) shall be presented to the President of the United
States; and before the Same shall take Effect, shall be approved by him, or being disapproved by him, shall be
repassed by two thirds of the Senate and House of Representatives, according to the Rules and Limitations
prescribed in the Case of a Bill.
On the other hand, Article VI of our Constitution prescribes for the following procedure for enacting a law:
Sec. 26. (1) Every bill passed by Congress shall embrace only one subject which shall be expressed in the title
thereof.
(2) No bill passed by either House shall become a law unless it has passed three readings on separate days, and
printed copies thereof in its final form have been distributed to its Members three days before its passage,
except when the President certifies to the necessity of its immediate enactment to meet a public calamity or
emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall
be taken immediately thereafter, and the yeas and nays entered in the Journal.
Sec. 27. (1) Every bill passed by Congress shall, before it becomes a law, be presented to the President. If he
approves the same, he shall sign it; otherwise, he shall veto it and return the same with his objections to the
House where it originated, which shall enter the objections at large in its Journal and proceed to reconsider it.
If, after such reconsideration, two-thirds of all the Members of such House shall agree to pass the bill, it shall
be sent, together with the objections, to the other House by which it shall likewise be reconsidered, and if
approved by two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of
each House shall be determined by yeas and nays, and the names of the Members voting for or against shall be

Page 171 of 557

entered in its Journal. The President shall communicate his veto of any bill to the House where it originated
within thirty days after the date of receipt thereof; otherwise, it shall become a law as if he had signed it.
(2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or
tariff bill, but the veto shall not affect the item or items to which he does not object.
Two distinctions are readily apparent between the two procedures:
1. Unlike the US Federal Constitution, our Constitution prescribes the "three-reading" rule or that no bill shall
become a law unless it shall have been read on three separate days in each house except when its urgency is
certified by the President; and
2. Unlike the US Federal Constitution, our Constitution prescribes the "no-amendment" rule or that no
amendments shall be allowed upon the last reading of the bill.
American constitutional experts have lamented that certain congressional procedures have not been entrenched
in the US Federal Constitution. According to a noted constitutional law professor, the absence of the "threereading" requirement as well as similar legislative-procedure rules from the US Federal Constitution is a
"cause for regret."3
In this connection, it is interesting to note that the conference committee system in the US Congress has been
described in this wise:
Conference Committees
Another main mechanism of joint House and Senate action is the conference committee. Inherited from the
English Constitution, the conference committee system is an evolutionary product whose principal threads
were woven on the loom of congressional practice into a unified pattern by the middle of the nineteenth
century. "By 1852," writes Ada McCown, historian of the origin and development of the conference
committee, "the customs of presenting identical reports from the committees of conference in both houses, of
granting high privilege to these conference reports, of voting upon the conference report as a whole and
permitting no amendment of it, of keeping secret the discussions carried on in the meetings of the conference
committee, had become established in American parliamentary practice."
Conference committees are composed of Senators and Representatives, usually three each, appointed by the
presiding officers of both houses, for the purpose of adjusting differences between bills they have passed. This
device has been extensively used by every Congress since 1789. Of the 1157 laws enacted by the 78th
Congress, for example, 107 went through conference and, of these, 36 were appropriation bills on which the
House had disagreed to Senate amendments. In practice, most important legislation goes through the
conference closet and is there revised, sometimes beyond recognition, by the all-powerful conferees or
managers, as they are styled. A large body of law and practice has been built up over the years governing
conference procedure and reports.
Suffice it to say here that serious evils have marked the development of the conference committee system. In
the first place, it is highly prodigal of members time. McConachie calculated that the average time consumed
in conference was 33 days per bill. Bills are sent to conference without reading the amendments of the other
chamber. Despite rules to the contrary, conferees do not confine themselves to matters in dispute, but often
initiate entirely new legislation and even strike out identical provisions previously approved by both houses.
This happened during the 78th Congress, for instance, when an important amendment to the surplus property
bill, which had been approved by both houses, was deleted in conference.

Page 172 of 557

Conference committees, moreover, suffer like other committees from the seniority rule. The senior members of
the committees concerned, who are customarily appointed as managers on the part of the House and Senate,
are not always the best informed on the questions at issue, nor do they always reflect the majority sentiment of
their houses. Furthermore, conference reports must be accepted or rejected in toto without amendment and they
are often so complex and obscure that they are voted upon without knowledge of their contents. What happens
in practice is that Congress surrenders its legislative function to irresponsible committees of conference. The
standing rules against including new and extraneous matter in conference reports have been gradually whittled
away in recent years by the decisions of presiding officers. Senate riders attached to appropriation bills enable
conference committees to legislate and the House usually accepts them rather than withhold supply, thus
putting it, as Senator Hoar once declared, under a degrading duress.
It is also alleged that under this secret system lobbyist are able to kill legislation they dislike and that "jokers"
designed to defeat the will of Congress can be inserted without detection. Senator George W. Norris once
characterized the conference committee as a third house of Congress. "The members of this house, he said,
"are not elected by the people. The people have no voice as to who these members shall be ... This conference
committee is many times, in very important matters of legislation, the most important branch of our legislature.
There is no record kept of the workings of the conference committee. Its work is performed, in the main, in
secret. No constituent has any definite knowledge as to how members of this conference committee vote, and
there is no record to prove the attitude of any member of the conference committee ... As a practical
proposition we have legislation, then, not by the voice of the members of the Senate, not by the members of
the House of Representatives, but we have legislation by the voice of five or six men. And for practical
purposes, in most cases, it is impossible to defeat the legislation proposed by this conference committee. Every
experienced legislator knows that it is the hardest thing in the world to defeat a conference report."
Despite these admitted evils, impartial students of the conference committee system defend it on net balance as
an essential part of the legislative process. Some mechanism for reconciling differences under bicameral
system is obviously indispensable. The remedy for the defects of the device is not to abolish it, but to keep it
under congressional control. This can be done by enforcing the rules which prohibit the inclusion in conference
reports of matter not committed to them by either house and forbid the deletion of items approved by both
bodies; by permitting conference managers to report necessary new matter separately and the houses to
consider it apart from the conference report; by fixing a deadline toward the close of a session after which no
bills could be sent to conference, so as to eliminate congestion at the end of the session a suggestion made by
the elder Senator La Follete in 1919; by holding conferences in sessions open to the public, letting conference
reports lie over longer, and printing them in bill form (with conference changes in italics) so as to allow
members more time to examine them and discover "jokers."4
The "three-reading" and "no-amendment" rules, absent in the US Federal Constitution, but expressly mandated
by Article VI, Section 26(2) of our Constitution are mechanisms instituted to remedy the "evils" inherent in a
bicameral system of legislature, including the conference committee system.
Sadly, the ponencias refusal to apply Article VI, Section 26(2) of the Constitution on the Bicameral
Conference Committee and the amendments it introduced to R.A. No. 9337 has "effectively dismantled" the
"three-reading rule" and "no-amendment rule." As posited by Fr. Joaquin Bernas, a member of the
Constitutional Commission:
In a bicameral system, bills are independently processed by both House of Congress. It is not unusual that the
final version approved by one House differs from what has been approved by the other. The "conference
committee," consisting of members nominated from both Houses, is an extra-constitutional creation of
Congress whose function is to propose to Congress ways of reconciling conflicting provisions found in the
Senate version and in the House version of a bill. It performs a necessary function in a bicameral system.
However, since conference committees have merely delegated authority from Congress, they should not

Page 173 of 557

perform functions that Congress itself may not do. Moreover, their proposals need confirmation by both
Houses of Congress.
In Tolentino v. Secretary of Finance, the Court had the opportunity to delve into the limits of what conference
committees may do. The petitioners contended that the consolidation of the House and Senate bills made by
the conference committee contained provisions which neither the Senate bill nor the House bill had. In her
dissenting opinion, Justice Romero laid out in great detail the provisions that had been inserted by the
conference committee. These provisions, according to the petitioners had been introduced "surreptitiously"
during a closed door meeting of the committee.
The Courts answer to this was that in United States practice conference committees could be held in executive
sessions and amendments germane to the purpose of the bill could be introduced even if these were not in
either original bill. But the Court did not bother to check whether perhaps the American practice was based on
a constitutional text different from that of the Philippine Constitution.
There are as a matter of fact significant differences in the degree of freedom American and Philippine
legislators have. The only rule that binds the Federal Congress is that it may formulate its own rules of
procedure. For this reason, the Federal Congress is master of its own procedures. It is different with the
Philippine Congress. Our Congress indeed is also authorized to formulate its own rules of procedure but
within limits not found in American law. For instance, there is the "three readings on separate days" rule.
Another important rule is that no amendments may be introduced by either house during third reading. These
limitations were introduced by the 1935 and 1973 Constitutions and confirmed by the 1987 Constitution as a
defense against the inventiveness of the stealthy and surreptitious. These, however, were disregarded by the
Court in Tolentino in favor of contrary American practice.
This is not to say that conference committees should not be allowed. But an effort should be made to lay out
the scope of what conference committees may do according to the requirements and the reasons of the
Philippine Constitution and not according to the practice of the American Congress. For instance, if the two
Houses are not allowed to introduce and debate amendments on third reading, can they circumvent this rule by
coursing new provisions through the instrumentality of a conference committee created by Congress and
meeting in secret? The effect of the Courts uncritical embrace of the practice of the American Congress and
its conference committees is to dismantle the no-amendment rule.5
The task at hand for the Court, but which the ponencia eschews, is to circumscribe the powers of the Bicameral
Conference Committee in light of the "three-reading" and "no-amendment" rules in Article VI, Section 26(2)
of the Constitution.
The Bicameral Conference Committee, in
deleting the "no pass on provision" contained in
Senate Bill No. 1950 and House Bill No. 3705,
violated Article VI , Section 26(2) of the Constitution
Pertinently, in his dissenting opinion in Tolentino, Justice Davide (now Chief Justice) opined that the duty of
the Bicameral Conference Committee was limited to the reconciliation of disagreeing provisions or the
resolution of differences or inconsistencies. This proposition still applies as can be gleaned from the following
text of Sections 88 and 89, Rule XIV of the Rules of the House of Representatives:

Page 174 of 557

Sec. 88. Conference Committee. In the event that the House does not agree with the Senate on the
amendments to any bill or joint resolution, the differences may be settled by the conference committees of both
chambers.
In resolving the differences with the Senate, the House panel shall, as much as possible, adhere to and support
the House Bill. If the differences with the Senate are so substantial that they materially impair the House Bill,
the panel shall report such fact to the House for the latters appropriate action.
Sec. 89. Conference Committee Reports. - Each report shall contain a detailed, sufficiently explicit statement
of the changes in or amendments to the subject measure.

The Chairman of the House panel may be interpellated on the Conference Committee Report prior to the
voting thereon. The House shall vote on the Conference Committee report in the same manner and procedure
as it votes on a bill on third and final reading.
and Rule XII, Section 35 of the Rules of the Senate:
Sec. 35. In the event that the Senate does not agree with the House of Representatives on the provision of any
bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall
meet within ten (10) days after their composition. The President shall designate the members of the Senate
Panel in the conference committee with the approval of the Senate.
Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes
in, or amendments to the subject measure, and shall be signed by a majority of the members of each House
panel, voting separately.
Justice Davide further explained that under its limited authority, the Bicameral Conference Committee could
only (a) restore, wholly or partly, the specific provisions of the House Bill amended by the Senate Bill; (b)
sustain, wholly or partly, the Senates amendments, or (c) by way of compromise, to agree that neither
provisions in the House Bill amended by the Senate nor the latters amendments thereto be carried into the
final form of the former. Justice Romero, who also dissented in Tolentino, added that the conference
committee is not authorized to initiate or propose completely new matters although under certain legislative
rules like the Jeffersons Manual, a conference committee may introduce germane matters in a particular bill.
However, such matters should be circumscribed by the committees sole authority and function to reconcile
differences.
In the case of R.A. No. 9337, the Bicameral Conference Committee made an "amendment by deletion" with
respect to the "no pass on provision" contained in both House Bill (HB) No. 3705 and Senate Bill (SB) No.
1950. HB 3705 proposed to amend Sections 106 and 108 of the NIRC by expressly stating therein that sellers
of petroleum products and power generation companies selling electricity are prohibited from passing on the
VAT to the consumers. SB 1950 proposed to amend Section 108 by likewise prohibiting power generation
companies from passing on the VAT to the consumers. However, these "no pass on provisions" were
altogether deleted by the Bicameral Conference Committee. At the least, since there was no disagreement
between HB 3705 and SB 1950 with respect to the "no pass on provision" on the sale of electricity, the
Bicameral Conference Committee acted beyond the scope of its authority in deleting the pertinent proviso.
At this point, it is well to recall the rationale for the "no-amendment rule" and the "three-reading rule" in
Article VI, Section 26(2) of the Constitution. The proscription on amendments upon the last reading is
intended to subject all bills and their amendments to intensive deliberation by the legislators and the ample
ventilation of issues to afford the public an opportunity to express their opinions or objections thereon.6
Page 175 of 557

Analogously, it is said that the "three-reading rule" operates "as a self-binding mechanism that allows the
legislature to guard against the consequences of its own future passions, myopia, or herd behavior. By
requiring that bills be read and debated on successive days, legislature may anticipate and forestall future
occasions on which it will be seized by deliberative pathologies."7 As Jeremy Bentham, a noted political
analyst, put it: "[t]he more susceptible a people are of excitement and being led astray, so much the more ought
they to place themselves under the protection of forms which impose the necessity of reflection, and prevent
surprises."8
Reports of the Bicameral Conference Committee, especially in cases where substantial amendments, or in this
case deletions, have been made to the respective bills of either house of Congress, ought to undergo the "threereading" requirement in order to give effect to the letter and spirit of Article VI, Section 26(2) of the
Constitution.
The Bicameral Conference Committee Report that eventually became R.A. No. 9337, in fact, bolsters the
argument for the strict compliance by Congress of the legislative procedure prescribed by the Constitution. As
can be gleaned from the said Report, of the 9 Senators-Conferees,9 only 5 Senators10 unqualifiedly approved it.
Senator Joker P. Arroyo expressed his qualified dissent while Senators Sergio R. Osmea III and Juan Ponce
Enrile approved it with reservations. On the other hand, of the twenty-eight (28) Members of the House of
Representatives-Conferees,11 fourteen (14)12 approved the same with reservations while three13 voted no. All
the reservations expressed by the conferees relate to the deletion of the "no pass on provision." Only eleven
(11) unqualifiedly approved it. In other words, even among themselves, the conferees were not unanimous on
their Report. Nonetheless, Congress approved it without even thoroughly discussing the reservations or
qualifications expressed by the conferees therein.
This "take it or leave it" stance vis--vis conference committee reports opens the possibility of amendments,
which are substantial and not even germane to the original bills of either house, being introduced by the
conference committees and voted upon by the legislators without knowledge of their contents. This practice
cannot be countenanced as it patently runs afoul of the essence of Article VI, Section 26(2) of the Constitution.
Worse, it is tantamount to Congress surrendering its legislative functions to the conference committees.
Ratification by Congress did not cure the
unconstitutional act of the Bicameral Conference
Committee of deleting the "no pass on provision"
That both the Senate and the House of Representatives approved the Bicameral Conference Committee Report
which deleted the "no pass on provision" did not cure the unconstitutional act of the said committee. As
succinctly put by Chief Justice Davide in his dissent in Tolentino, "[t]his doctrine of ratification may apply to
minor procedural flaws or tolerable breaches of the parameters of the bicameral conference committees
limited powers but never to violations of the Constitution. Congress is not above the Constitution."14
Enrolled Bill Doctrine is not applicable where, as in
this case, there is grave violation of the Constitution
As expected, the ponencia invokes the enrolled bill doctrine to buttress its refusal to pass upon the validity of
the assailed acts of the Bicameral Conference Committee. Under the "enrolled bill doctrine," the signing of a
bill by the Speaker of the House and the Senate President and the certification of the Secretaries of both houses
of Congress that it was passed are conclusive of its due enactment. In addition to Tolentino, the ponencia cites
Farias v. Executive Secretary15 where the Court declined to go behind the enrolled bill vis--vis the

Page 176 of 557

allegations of the petitioners therein that irregularities attended the passage of Republic Act No. 9006,
otherwise known as the Fair Election Act.
Reliance by the ponencia on Farias is quite misplaced. The Courts adherence to the enrolled bill doctrine in
the said case was justified for the following reasons:
The Court finds no reason to deviate from the salutary in this case where the irregularities alleged by the
petitioners mostly involved the internal rules of Congress, whether House or Senate. Parliamentary rules are
merely procedural and with their observance the courts have no concern. Whatever doubts there may be as to
the formal validity of Rep. Act No. 9006 must be resolved in its favor. The Court reiterates its ruling in Arroyo
v. De Venecia, viz.:
But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power to inquire
into the allegations that, in enacting a law, a House of Congress failed to comply with its own rules, in the
absence of showing that there was a violation of a constitutional provision or the rights of private individuals.
In Osmea v. Pendatun, it was held: "At any rate, courts have declared that the rules adopted by deliberative
bodies are subject to revocation, modification or waiver at the pleasure of the body adopting them. And it has
been said that Parliamentary rules are merely procedural, and with their observance, the courts have no
concern. They may be waived or disregarded by the legislative body. Consequently, mere failure to conform
to parliamentary usage will not invalidate the action (taken by a deliberative body) when the requisite number
of members have agreed to a particular measure.16
Thus, in Farias, the Courts refusal to go behind the enrolled bill was based on the fact that the alleged
irregularities that attended the passage of R.A. No. 9006 merely involved the internal rules of both houses of
Congress. The procedural irregularities allegedly committed by the conference committee therein did not
amount to a violation of a provision of the Constitution.17
In contrast, the act of the Bicameral Conference Committee of deleting the "no pass on provision" of SB 1950
and HB 3705 infringe Article VI, Section 26(2) of the Constitution. The violation of this constitutional
provision warrants the exercise by the Court of its constitutionally-ordained power to strike down any act of a
branch or instrumentality of government or any of its officials done with grave abuse of discretion amounting
to lack or excess of jurisdiction.18
ACCORDINGLY, I join the concurring and dissenting opinion of Mr. Justice Reynato S. Puno and vote to
dismiss the petitions with respect to Sections 4, 5 and 6 of Republic Act No. 9337 for being premature.
Further, I vote to declare as unconstitutional Section 21 thereof and the deletion of the "no pass on provision"
contained in the constituent bills of Republic Act No. 9337.
ROMEO J. CALLEJO, SR.
Associate Justice

Footnotes
1

G.R. No. 115455, 25 August 1994, 235 SCRA 630.

Tolentino v. Secretary of Finance, supra, at 667-668.

Page 177 of 557

See, for example, Vermuele, A., The Constitutional Law of Congressional Procedure, 71 U. Chi. L.
Rev. 361 (Spring 2004).
4

Galloway, G., Congress at the Crossroads, pp. 98-100.

Bernas SJ, J., The 1987 Constitution of the Republic of the Philippines, A Commentary, pp. 702-703
(1996 Ed.).
6

Dissenting Opinion of Justice Romero in Tolentino, supra.

Vermuele, supra.

Id. citing Bentham, J., Political Tactics.

Senators Ralph G. Recto, Joker P. Arroyo, Manuel B. Villar, Richard J. Gordon, Rodolfo G. Biazon,
Edgardo G. Angara, M.A. Madrigal, Sergio R. Osmena III, Juan Ponce Enrile.
10

Senators Recto, Villar, Gordon, Biazon.

11

Representatives Jesli A. Lapus, Danilo E. Suarez, Arnulfo P. Fuentebella, Eric D. Singson, Junie E.
Cua, Teodoro L. Locsin, Jr., Salacnib Baterina, Edcel C. Lagman, Luis R. Villafuerte, Herminio G.
Teves, Eduardo G. Gullas, Joey Sarte Salceda, Prospero C. Nograles, Exequiel B. Javier, Rolando G.
Andaya, Jr., Guillermo P. Cua, Arthur D. Defensor, Raul V. Del Mar, Ronaldo B. Zamora, Rolex P.
Suplico, Jacinto V. Paras, Vincent P. Crisologo, Alan Peter S. Cayetano, Joseph Santiago, Oscar G.
Malapitan, Catalino Figueroa, Antonino P. Roman and Imee R. Marcos.
12

Representatives Suarez, Fuentebella, Cua, Locsin, Jr., Teves, Gullas, Javier, Cua, Defensor,
Crisologo, Cayetano, Santiago, Malapitan and Marcos.
13

Representatives Del Mar, Suplico and Paras.

14

Dissenting Opinion in Tolentino, supra.

15

G.R. No. 147387, 10 December 2003, 417 SCRA 503.

16

Id., pp. 529-530. (Emphases mine.)

17

By way of explanation, the constitutional issues raised in Farias were (1) whether Section 14 of
R.A. No. 9006 was a rider or that it violated Article VI, Section 26(1) of the Constitution requiring
that "[e]very bill passed by Congress shall embrace only one subject which shall be expressed in the
title thereof;" and (2) whether Section 14 of R.A. No. 9006 violated the equal protection clause of the
Constitution. On both issues the Court ruled in the negative. To reiterate, unlike in the present cases,
the acts of the conference committee with respect to R.A. No. 9006 in Farias allegedly violated the
internal rules of either house of Congress, but it was not alleged therein that they amounted to a
violation of any constitutional provision on legislative procedure.
18

Article VIII, Section 1, CONSTITUTION.

The Lawphil Project - Arellano Law Foundation

Page 178 of 557

EN BANC
G.R. No. 168056 (ABAKADA Guro Party List [formerly ASSJS] Officers Samson S. Alcantara, et al. v.
Hon. Executive Secretary Eduardo Ermita, et al.);
G.R. No. 168207 (Aquilino Q. Pimentel, Jr., et al. v. Executive Secretary Eduardo R. Ermita, et al.);
G.R. No. 168461 (Association of Pilipinas Shell Dealers, Inc., etc., et al. v. Cesar V. Purisima, etc., et al.);
G.R. No. 168463 (Francis Joseph G. Escudero, et al. v. Cesar V. Purisima, etc., et al.); and
G.R. No. 168730 (Bataan Governor Enrique T. Garcia, Jr. v. Hon. Eduardo R. Ermita, etc., et al.)
Promulgated:
September 1, 2005
X----------------------------------------------------------------------------------------X
CONCURRING AND DISSENTING OPINION
AZCUNA, J.:
Republic Act No. 9337, the E-VAT law, is assailed as an unconstitutional abdication of Congress of its power
to tax through its delegation to the President of the decision to increase the rate of the tax from 10% to 12%,
effective January 1, 2006, after any of two conditions has been satisfied.1
The two conditions are:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %).2
A scrutiny of these "conditions" shows that one of them is certain to happen on January 1, 2006.
The first condition is that the collection from the E-VAT exceeds 2 4/5% of the Gross Domestic Product (GDP)
of the previous year, a ratio that is known as the tax effort.
The second condition is that the national government deficit exceeds 1 % of the GDP of the previous year.
Note that the law says that the rate shall be increased if any of the two conditions happens, i.e., if condition (i)
or condition (ii) occurs.
Now, in realistic terms, considering the short time-frame given, the only practicable way that the present
deficit of the national government can be reduced to 1 % or lower, thus preventing condition (ii) from
happening, is to increase the tax effort, which mainly has to come from the E-VAT. But increasing the tax
Page 179 of 557

effort through the E-VAT, to the extent needed to reduce the national deficit to 1 % or less, will trigger the
happening of condition (i) under the law. Thus, the happening of condition (i) or condition (ii) is in reality
certain and unavoidable, as of January 1, 2006.
This becomes all the more clear when we consider the figures provided during the oral arguments.
The Gross Domestic Product for 2005 is estimated at P5.3 Trillion pesos.
The tax effort of the present VAT is now at 1.5%.
The national budgetary deficit against the GDP is now at 3%.
So to reduce the deficit to 1.5% from 3%, one has to increase the tax effort from VAT, now at 1.5%, to at least
3%, thereby exceeding the 2 4/5 percent ceiling in condition (i), making condition (i) happen.
If, on the other hand, this is not done, then condition (ii) happens the budget deficit remains over 1.5%.
What is the result of this? The result is that in reality, the law does not impose any condition, or the rate
increase thereunder, from 10% to 12%, effective January 1, 2006, is unconditional. For a condition is an event
that may or may not happen, or one whose occurrence is uncertain.3 Now while condition (i) is indeed
uncertain and condition (ii) is likewise uncertain, the combination of both makes the occurrence of one of them
certain.
Accordingly, there is here no abdication by Congress of its power to fix the rate of the tax since the rate
increase provided under the law, from 10% to 12%, is definite and certain to occur, effective January 1, 2006.
All that the President will do is state which of the two conditions occurred and thereupon implement the rate
increase.
At first glance, therefore, it would appear that the decision to increase the rate is to be made by the President,
or that the increase is still uncertain, as it is subject to the happening of any of two conditions.
Nevertheless, the contrary is true and thus it would be best in these difficult and critical times to let our people
know precisely what burdens they are being asked to bear as the necessary means to recover from a crisis that
calls for a heroic sacrifice by all.
It is for this reason that the Court required respondents to submit a copy of the rules to implement the E-VAT,
particularly as to the impact of the tax on prices of affected commodities, specially oil and electricity. For the
onset of the law last July 1, 2005 was confusing, resulting in across-the-board increases of 10% in the prices of
commodities. This is not supposed to be the effect of the law, as was made clear during the oral arguments,
because the law also contains provisions that mitigate the impact of the E-VAT through reduction of other
kinds of taxes and duties, and other similar measures, specially as to goods that go into the supply chain of the
affected products. A proper implementation of the E-VAT, therefore, should cause only the appropriate
incremental increase in prices, reflecting the net incremental effect of the tax, which is not necessarily 10%,
but possibly less, depending on the products involved.
The introduction of the mitigating or cushioning measures through the Senate or through the Bicameral
Conference Committee, is also being questioned by petitioners as unconstitutional for violating the rule against
amendments after third reading and the rule that tax measures must originate exclusively in the House of
Representatives (Art. VI, Secs. 24 and 26 [2], Constitution). For my part, I would rather give the necessary
leeway to Congress, as long as the changes are germane to the bill being changed, the bill which

Page 180 of 557

originated from the House of Representatives, and these are so, since these were precisely the mitigating
measures that go hand-on-hand with the E-VAT, and are, therefore, essential -- and hopefully sufficient -means to enable our people to bear the sacrifices they are being asked to make. Such an approach is in
accordance with the Enrolled Bill Doctrine that is the prevailing rule in this jurisdiction. (Tolentino v.
Secretary of Finance, 249 SCRA 628 [1994]). The exceptions I find are the provisions on corporate income
taxes, which are not germane to the E-VAT law, and are not found in the Senate and House bills.
I thus agree with Chief Justice Hilario G. Davide, Jr. in his separate opinion that the following are not germane
to the E-VAT legislation:
Amended TAX
CODE Provision Subject Matter
Section 27 Rate of income tax on domestic corporations
Section 28(A)(1) Rate of income tax on resident foreign corporations
Section 28(B)(1) Rate of income tax on non-resident foreign corporations
Section 28(B)(5-b) Rate of income tax on intercorporate dividends received by non-resident foreign
corporations
Section 34(B)(1) Deduction from gross income
Similarly, I agree with Justice Artemio V. Panganiban in his separate opinion that the following are not
germane to the E-VAT law:
"Sections 1, 2, and 3 of the Republic Act No. 9337, in so far as these sections (a) amend the rates of income
tax on domestic, resident foreign, and nonresident foreign corporations; (b) amend the tax credit against taxes
due from nonresident foreign corporations on the intercorporate dividends; and (c) reduce the allowable
deduction from interest expense."
Respondents should, in any case, now be able to implement the E-VAT law without confusion and thereby
achieve its purpose.4
I vote to GRANT the petitions to the extent of declaring unconstitutional the provisions in Republic Act. No.
9337 that are not germane to the subject matter and DENY said petitions as to the rest of the law, which are
constitutional.
ADOLFO S. AZCUNA
Associate Justice

Footnotes

Page 181 of 557

The Constitution states that "Congress may, by law, allow the President to fix within specified limits,
and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties as imposts within the framework of the national
development program of the Government." (Art. VI, Sec. 28 [2], emphasis supplied.)
Petitioners claim that the power does not extend to fixing the rates of taxes, since taxes are not tariffs,
import and export quotas, tonnage and wharfage dues, or other duties or imposts.
2

Section 4, Republic Act No. 9337. The pertinent portion of the provision states:

SEC. 4. Section 106 of the same Code, as amended, is hereby further amended to read as follows:
"SEC. 106. Value-added Tax on Sale of Goods or Properties.
"(A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale, barter or
exchange of goods or properties, a value-added tax equivalent to ten percent (10%) of the gross selling
price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be
paid by the seller or transferor: Provided, That the President, upon the recommendation of the
Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve
percent (12%), after any of the following conditions has been satisfied:
"(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%); or
"(ii) National government deficit as a percentage of GDP of the previous year exceeds one and onehalf percent (1 %)."
3

Condition has been defined by Escriche as "every future and uncertain event upon which an
obligation or provision is made to depend." It is a future and uncertain event upon which the
acquisition or resolution of rights is made to depend by those who execute the juridical act. Futurity
and uncertainty must concur as characteristics of the event.
...
An event which is not uncertain but must necessarily happen cannot be a condition; the obligation will
be considered as one with a term. (IV TOLENTINO, COMMENTARIES AND JURISPRUDENCE
ON THE CIVIL CODE OF THE PHILIPPINES, 144).
4

I voted for the issuance of the temporary restraining order to prevent the disorderly implementation
of the law that would have defeated its very purpose and disrupted the entire VAT system, resulting in
less revenues. The rationale, therefore, of the rule against enjoining the collection of taxes, that taxes
are the lifeblood of Government, leaned in favor of the temporary restraining order.

The Lawphil Project - Arellano Law Foundation

GR No. 168056 - (ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S.
ALCANTARA and ED VINCENT S. ALBANO v. THE HONORABLE EXECUTIVE SECRETARY
EDUARDO ERMITA; HONORABLE SECRETARY OF THE DEPARTMENT OF FINANCE CESAR
Page 182 of 557

PURISIMA; and HONORABLE COMMISSIONER OF INTERNAL REVENUE GUILLERMO

PARAYNO, JR.)
GR No. 168207 (AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY E.
ESTRADA, PANFILO M. LACSON, ALFREDO S. LIM, JAMBY A.S. MADRIGAL, and SERGIO R.
OSMEA III v. EXECUTIVE SECRETARY EDUARDO R. ERMITA, CESAR V. PURISIMA,
SECRETARY OF FINANCE, GUILLERMO L. PARAYNO, JR., COMMISSIONER OF THE BUREAU
OF INTERNAL REVENUE)
GR No. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its President,
ROSARIO ANTONIO; PETRON DEALERS ASSOCIATION represented by its President, RUTH E.
BARBIBI; ASSOCIATION OF CALTEX DEALERS OF THE PHILIPPINES represented by its
President, MERCEDITAS A. GARCIA; ROSARIO ANTONIO doing business under the name and style of
"ANB NORTH SHELL SERVICE STATION"; LOURDES MARTINEZ doing business under the name
and style of "SHELL GATE N. DOMINGO"; BETHZAIDA TAN doing business under the name and
style of "ADVANCED SHELL STATION"; REYNALDO P. MONTOYA doing business under the name
and style of "NEW LAMUAN SHELL SERVICE STATION"; EFREN SOTTO doing business under the
name and style of "REDFIELD SHELL SERVICE STATION"; DONICA CORPORATION represented by
its President, DESI TOMACRUZ; RUTH E. MARBIBI doing business under the name and style of "R&R
PETRO STATION"; PETER M. UNGSON doing business under the name and style of "CLASSIC STAR
GASOLINE SERVICE STATION"; MARIAN SHEILA A. LEE doing business under the name and style
"NTE GASOLINE & SERVICE STATION"; JULIAN CESAR P. POSADAS doing business under the
name and style of "STARCARGA ENTERPRISES"; ADORACION MAEBO doing business under the
name and style of "CMA MOTORISTS CENTER"; SUSAN M. ENTRATA doing business under the name
and style of "LEONAS GASOLINE STATION and SERVICE CENTER"; CARMELITA BALDONADO
doing business under the name and style of "FIRST CHOICE SERVICE CENTER: RHEAMAR A.
RAMOS doing business under the name and style of "RJAM PTT GAS STATION"; MA. ISABEL
VIOLAGO doing business under the name and style of "VIOLAGO-PTT SERVICE CENTER";
MOTORISTS HEART CORPORATON represented by its Vice-President for Operations, JOSELITO F.
FLORDELIZA; MOTORISTS HARVARD CORPORATION represented by its Vice-President for
Operations, JOSELITO F. FLORDELIZA; MOTORISTS HERITAGE CORPORATION represented by its
Vice-President for Operations, JOSELITO F. FLORDELIZA; PHILIPPINE STANDARD OIL
CORPORATION represented by its Vice-President for Operations, JOSELITO F. FLORDELIZA; ROMEO
MANUEL doing business under the name and style of "ROMMAN GASOLINE STATION"; ANTHONY
ALBERT CRUZ III doing business under the name and style of "TRUE SERVICE STATION" v. CESAR
V. PURISIMA, in his capacity as Secretary of the Department of Finance and GUILLERMO L.
PARAYNO, JR., in his capacity as Commissioner of Internal Revenue.
GR No. 168463 FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL JOSEL J.
VILLANUEVA, RODOLFO G. PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G. MALAPITAN,
BENJAMIN C. AGARAO, JR., JUAN EDGARDO M. ANGARA, JUSTIN MARC SB. CHIPECO,
FLORENCIOI G. NOEL, MUJIV S. HATAMAN, RENATO B. MAGTUBO, JOSEPH A. SANTIAGO,
TEOFISTO DL. GUINGONA III, RUY ELIAS C. LOPEZ, RODOLFO Q. AGBAYANI and TEODORO A.
CASIO, v. CESAR V. PURISIMA, in his capacity as Secretary of Finance, GUILLERMO L. PARAYNO,
JR., in his capacity as Commissioner of Internal Revenue, and EDUARDO R. ERMITA, in his capacity as
Executive Secretary.
GR. No. 168730 BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. v. HON. EDUARDO R. ERMITA,
in his capacity as the Executive Secretary; HON. MARGARITO TEVES, in his capacity as Secretary of
Finance; HON. JOSE MARIO BUNAG, in his capacity as the OIC Commissioner of the Bureau of
Customs.

Page 183 of 557

x-------------------------------------------------------------------x
DISSENTING OPINION
Tinga, J.:
The E-VAT Law,1 as it stands, will exterminate our countrys small to medium enterprises. This will be
the net effect of affirming Section 8 of the law, which amends Sections 110 of the National Internal Revenue
Code (NIRC) by imposing a seventy percent (70%) cap on the creditable input tax a VAT-registered person
may apply every quarter and a mandatory sixty (60) -month amortization period on the input tax on goods
purchased or imported in a calendar month if the acquisition cost of such goods exceeds One Million Pesos
(P1,000,000.00).
Taxes may be inherently punitive, but when the fine line between damage and destruction is crossed, the
courts must step forth and cut the hangmans noose. Justice Holmes once confidently asserted that "the
power to tax is not the power to destroy while this Court sits", and we should very well live up to this
expectation not only of the revered Holmes, but of the Filipino people who rely on this Court as the guardian
of their rights. At stake is the right to exist and subsist despite taxes, which is encompassed in the due
process clause.
I respectfully submit these views while maintaining the deepest respect for the prerogative of the legislature to
impose taxes, and of the national government to chart economic policy. Such respect impels me to vote to deny
the petitions in G.R. Nos. 168056, 168207, 168463,2 and 168730, even as I acknowledge certain merit in the
challenges against the E-VAT law that are asserted in those petitions. In the final analysis, petitioners therein
are unable to convincingly demonstrate the constitutional infirmity of the provisions they seek to assail. The
only exception is Section 21 of the law, which I consider unconstitutional, for reasons I shall later elaborate.
However, I see the petition in G.R. No. 168461 as meritorious and would vote to grant it. Accordingly, I
dissent and hold as unconstitutional Section 8 of Republic Act No. 9337, insofar as it amends Section 110(A)
and (B) of the National Internal Revenue Code (NIRC) as well as Section 12 of the same law, with respect to
its amendment of Section 114(C) of the NIRC.
The first part of my discussion pertains to the petitions in G.R. Nos. 168056, 168207, 168463, and 168730,
while the second part is devoted to what I deem the most crucial issue before the Court, the petition in G.R.
No. 168461.
I.
Undue Delegation and the Increase
Of the VAT Rate
My first point pertains to whether or not Sections 4, 5 and 6 of the E-VAT Law constitutes an undue
delegation of legislative power. In appreciating the aspect of undue delegation as regards taxation statutes, the
fundamental point remains that the power of taxation is inherently legislative,3 and may be imposed or revoked
only by the legislature.4 In tandem with Section 1, Article VI of the Constitution which institutionalizes the
law-making power of Congress, Section 24 under the same Article crystallizes this principle, as it provides that
"[a]ll appropriation, revenue or tariff bills shall originate exclusively in the House of Representatives."5

Page 184 of 557

Consequently, neither the executive nor judicial branches of government may originate tax measures. Even if
the President desires to levy new taxes, the imposition cannot be done by mere executive fiat. In such an
instance, the President would have to rely on Congress to enact tax laws.
Moreover, this plenary power of taxation cannot be delegated by Congress to any other branch of government
or private persons, unless its delegation is authorized by the Constitution itself.6 In this regard, the situation
stands different from that in the recent case Southern Cross v. PHILCEMCOR,7 wherein I noted in my
ponencia that the Tariff Commission and the DTI Secretary may be regarded as agents of Congress for the
purpose of imposing safeguard measures. That pronouncement was made in light of Section 28(2) Article VI,
which allows Congress to delegate to the President through law the power to impose tariffs and imposts,
subject to limitations and restrictions as may be ordained by Congress. In the case of taxes, no such
constitutional authorization exists, and the discretion to ascertain the rates, subjects, and conditions of taxation
may not be delegated away by Congress.
However, as the majority correctly points out, the power to ascertain the facts or conditions as the basis of the
taking into effect of a law may be delegated by Congress,8 and that the details as to the enforcement and
administration of an exercise of taxing power may be delegated to executive agencies, including the power to
determine the existence of facts on which its operation depends.9
Proceeding from these principles, Sections 4, 5, and 6 of the E-VAT Law warrant examination. The provisions
read:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 106. Value-Added Tax on Sale of Goods or Properties.
(A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale, barter or exchange of
goods or properties, a value-added tax equivalent to ten percent (10%) of the gross selling price or gross value
in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor;
provided, that the President, upon the recommendation of the Secretary of Finance, shall, effective
January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the following
conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent 1 %).
Sec. 5. Section 107 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 107. Value-Added Tax on Importation of Goods.
(a) In General. There shall be levied, assessed and collected on every importation of goods a value-added tax
equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining tariff
and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the
importer prior to the release of such goods from customs custody: Provided, That where the customs duties are
determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the
landed cost plus excise taxes, if any: provided, further, that the President, upon the recommendation of
the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve
percent (12%) after any of the following conditions has been satisfied.
Page 185 of 557

(i) national value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous
year exceeds two and four-fifth percent (2 4/5%) or
(ii) government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1
%).
SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 108. Value-added Tax on Sale of Services and Use of Lease of Properties(A) Rate and Base of Tax. There shall be levied, assessed and collected, a value-added tax equivalent to
ten percent (10%) of gross receipts derived from the sale or exchange of services; provided, that the
President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate
of value-added tax to twelve percent (12%), after any of the following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceed same and on-half percent
(1 %).
The petitioners deem as noxious the proviso common to these provisions that "the President, upon the
recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax
to twelve percent (12%)," after the satisfaction of the twin conditions that value-added tax collection as a
percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2
4/5%); or that the national government deficit as a percentage of GDP of the previous year exceed same and
on-half percent (1 %).
At first blush, it does seem that the assailed provisions are constitutionally deficient. It is Congress, and not the
President, which is authorized to raise the rate of VAT from 10% to 12%, no matter the circumstance. Yet a
closer analysis of the proviso reveals that this is not exactly the operative effect of the law. The qualifier
"shall" denotes a mandatory, rather than discretionary function on the part of the President to raise the rate of
VAT to 12% upon the existence of any of the two listed conditions.
Since the President is not given any discretion in refusing to raise the VAT rate to 12%, there is clearly no
delegation of the legislative power to tax by Congress to the executive branch. The use of the word "shall"
obviates any logical construction that would allow the President leeway in not raising the tax rate. More so, it
is accepted that the principle of constitutional construction that every presumption should be indulged in favor
of constitutionality and the court in considering the validity of the 'statute in question should give it such
reasonable construction as can be reached to bring it within the fundamental law.10 While all reasonable doubts
should be resolved in favor, of the constitutionality of a statute,11 it should necessarily follow that the
construction upheld should be one that is not itself noxious to the Constitution.
Congress should be taken to task for imperfect draftsmanship at least. Much trouble would have been avoided
had the provisos instead read: "that effective January 1, 2006, the rate of value-added tax shall be raised to
twelve percent (12%), after any of the following conditions has been satisfied xxx." This, after all is the
operative effect of the provision as it stands. In relation to the operation of the tax increase, the denominated
role of the President and the Secretary of Finance may be regarded as a superfluity, as their imprimatur as a
precondition to the increase of the VAT rate must have no bearing.

Page 186 of 557

Nonetheless, I cannot ignore the fact that both the President and the Secretary of Finance have designated roles
in the implementation of the tax increase. Considering that it is Congress, and not these officials, which
properly have imposed the increase in the VAT rate, how should these roles be construed?
The enactment of a law should be distinguished from its implementation. Even if it is Congress which
exercises the plenary power of taxation, it is not the body that administers the implementation of the tax. Under
Section 2 of the National Internal Revenue Code (NIRC), the assessment and collection of all national internal
revenue taxes, and the enforcement of all forefeitures, penalties and fines connected therewith had been
previously delegated to the Bureau of Internal Revenue, under the supervision and control of the Department
of Finance.12
Moreover, as intimated earlier, Congress may delegate to other components of the government the power to
ascertain the facts or conditions as the basis of the taking into effect of a law. It follows that ascertainment of
the existence of the two conditions precedent for the increase as stated in the law could very well be delegated
to the President or the Secretary of Finance.13
Nonetheless, the apprehensions arise that the process of ascertainment of the listed conditions delegated to the
Secretary of Finance and the President effectively vest discretionary authority to raise the VAT rate on the
President, through the subterfuges that may be employed to delay the determination, or even to manipulate the
factual premises. Assuming arguendo that these feared abuses may arise, I think it possible to seek judicial
enforcement of the increased VAT rate, even without the participation or consent of the President or Secretary
of Finance, upon indubitable showing that any of the two listed conditions do exist. After all, the Court is
ruling that the increase in the VAT rate is mandatory and beyond the discretion of the President to impose or
delay.
The majority states that in making the recommendation to the President on the existence of either of the two
conditions, the Secretary of Finance is acting as the agent of the legislative branch, to determine and declare
the event upon which its expressed will is to take effect.14 This recognition of agency must be qualified. I do
not doubt the ability of Congress to delegate to the Secretary of Finance administrative functions in the
implementation of tax laws, as it does under Section 2 of the NIRC. Yet it would be impermissible for
Congress to delegate to the Secretary of Finance the plenary function of enacting a tax law. As stated earlier,
the situation stands different from that in Southern Cross wherein the Constitution itself authorizes the
delegation by Congress through a law to the President of the discretion to impose tariff measures, subject to
restrictions and limitations provided in the law.15 Herein, Congress cannot delegate to either the President or
the Secretary of Finance the discretion to raise the tax, as such power belongs exclusively to the legislative
branch.
Perhaps the term "agency" is not most suitable in describing the delegation exercised by Congress in this case,
for agency implies that the agent takes on attributes of the principal by reason of representative capacity. In
this case, whatever "agency" that can be appreciated would be of severely limited capacity, encompassing as it
only could the administration, not enactment, of the tax measure.
I do not doubt the impression left by the provisions that it is the President, and not Congress, which is
authorized to raise the VAT rate. On paper at least, these imperfect provisions could be multiple sources of
mischief. On the political front, whatever blame or scorn that may be attended with the increase of the VAT
rate would fall on the President, and not on Congress which actually increased the tax rate. On the legal front, a
President averse to increasing the VAT rate despite the existence of the two listed conditions may take refuge
in the infelicities of the provision, and refuse to do so on the ground that the law, as written, implies some form
of discretion on the part of the President who was, after all, "authorized" to increase the tax rate. It is critical
for the Court to disabuse this notion right now.
The Continued Viability of
Page 187 of 557

Tolentino v. Secretary of Finance

One of the more crucial issues now before us, one that has seriously divided the Court, pertains to the ability of
the Bicameral Conference Committee to introduce amendments to the final bill which were not contained in
the House bill from which the E-VAT Law originated. Most of the points addressed by the petitioners have
been settled in our ruling in Tolentino v. Secretary of Finance,16 yet a revisit of that precedent is urged upon
this Court. On this score, I offer my qualified concurrence with the ponencia.
Two key provisions of the Constitution come into play: Sections 24 and 26(2), Article VI of the Constitution.
They read:
Section 24: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments.
Section 26(2): No bill passed by either House shall become a law unless it has passed three readings on
separate days, and printed copies thereof in its final form have been distributed to its Members three days
before its passage, except when the President certifies to the necessity of its immediate enactment to meet a
public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the
vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal.
Section 24 is also known as the origination clause, which derives origin from British practice. From the
assertion that the power to tax the public at large must reside in the representatives of the people, the principle
evolved that money bills must originate in the House of Commons and may not be amended by the House of
Lords.17 The principle was adopted across the shores in the United States, and was famously described by
James Madison in The Federalist Papers as follows:
This power over the purse, may in fact be regarded as the most compleat and effectual weapon with which any
constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance,
and for carrying into effect every just and salutary measure.18
There is an eminent difference from the British system from which the principle emerged, and from our own
polity. To this day, only members of the British House of Commons are directly elected by the people, with the
members of the House of Lords deriving their seats from hereditary peerage. Even in the United States,
members of the Senate were not directly elected by the people, but chosen by state legislatures, until the
adoption of the Seventeenth Amendment in 1913. Hence, the rule assured the British and American people that
tax legislation arises with the consent of the sovereign people, through their directly elected representatives. In
our country though, both members of the House and Senate are directly elected by the people, hence the
vitality of the original conception of the rule has somewhat lost luster.
Still, the origination clause deserves obeisance in this jurisdiction, simply because it is provided in the
Constitution. At the same time, its proper interpretation is settled precedent, as enunciated in Tolentino:
To begin with, it is not the law but the revenue bill which is required by the Constitution to "originate
exclusively" in the House of Representatives. It is important to emphasize this, because a bill originating in the
House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole. The
possibility of a third version by the conference committee will be discussed later. At this point, what is
important to note is that, as a result of the Senate action, a distinct bill may be produced. To insist that a
revenue statute and not only the bill which initiated the legislative process culminating in the enactment of
the law must substantially be the same as the House bill would be to deny the Senate's power not only to
"concur with amendments" but also to " propose amendments." It would be to violate the coequality of
legislative power of the two houses of Congress and in fact make the House superior to the Senate.19
Page 188 of 557

The vested power of the Senate to " propose or concur with amendments" necessarily implies the ability to
adduce transformations from the original House bill into the final law. Since the House and Senate sit
separately in sessions, the only opportunity for the Senate to introduce its amendments would be in the
Bicameral Conference Committee, which emerges only after both the House and the Senate have approved
their respective bills.
In the present petitions, Tolentino comes under fire on two fronts. The first controversy arises from the
adoption in Tolentino of American legislative practices relating to bicameral committees despite the difference
in constitutional frameworks, particularly the limitation under Section 26(2), Article VI which does not exist in
the American Constitution.
The majority points out that the "no amendment rule" refers only to the procedure to be followed by each
house of Congress with regard to bills initiated in the house concerned, before said bills are transmitted to the
other house for its concurrence or amendment. I agree with this statement. Clearly, the procedure under
Section 26(2), Article VI only relates to the passage of a bill before the House and Senate, and not the process
undertaken afterwards in the Bicameral Conference Committee.
Indeed, Sections 26 and 27 of Article VI, which detail the procedure how a bill becomes a law, are silent as to
what occurs between the passage by both houses of their respective bills, and the presentation to the President
of
"every bill passed by the Congress".20 Evidently, "Congress" means both Houses, such that a bill approved by
the Senate but not by the House is not presented to the President for approval. There is obviously a need for
joint concurrence by the House and Senate of a bill before it is transmitted to the President, but the
Constitution does not provide how such concurrence is acquired. This lacuna has to be filled, otherwise no bill
may be transmitted to the President.
Even if the Bicameral Conference Committee is not a constitutionally organized body, it has existed as the
necessary conclave for both chambers of Congress to reconcile their respective versions of a prospective law.
The members of the Bicameral Conference Committee may possess in them the capacity to represent their
particular chamber, yet the collective is neither the House nor the Senate. Hence, the procedure contained in
Section 26(2), Article VI cannot apply to the Bicameral Conference Committee.
Tellingly, the version approved by the Bicameral Conference Committee still undergoes deliberation and
approval by both Houses. Only one vote is taken to approve the reconciled bill, just as only one vote is taken in
order to approve the original bill. Certainly, it could not be contended that this final version surreptitiously
evades approval of either the House or Senate.
The second front concerns the scope and limitations of the Bicameral Conference Committee to amend, delete,
or otherwise modify the bills as approved by the House and the Senate.
Tolentino adduced the principle, adopted from American practice, that the version as approved by the
Bicameral Conference Committee need only be germane to the subject of the House and Senate bills in order
to be valid.21 The majority, in applying the test of germaneness, upholds the contested provisions of the EVAT Law. Even the members of the Court who prepared to strike down provisions of the law applying
germaneness nonetheless accept the basic premise that such test is controlling.
I agree that any amendment made by the Bicameral Conference Committee that is not germane to the subject
matter of the House or Senate Bills is not valid. It is the only valid ground by which an amendment introduced
by the Bicameral Conference Committee may be judicially stricken.

Page 189 of 557

The germaneness standard which should guide Congress or the Bicameral Conference Committee should be
appreciated in its normal but total sense. In that regard, my views contrast with that of Justice Panganiban,
who asserts that provisions that are not "legally germane" should be stricken down. The legal notion of
germaneness is just but one component, along with other factors such as economics and politics, which
guides the Bicameral Conference Committee, or the legislature for that matter, in the enactment of laws.
After all, factors such as economics or politics are expected to cast a pervasive influence on the legislative
process in the first place, and it is essential as well to allow such "non-legal" elements to be considered in
ascertaining whether Congress has complied with the criteria of germaneness.
Congress is a political body, and its rationale for legislating may be guided by factors other than
established legal standards. I deem it unduly restrictive on the plenary powers of Congress to legislate,
to coerce the body to adhere to judge-made standards, such as a standard of "legal germaneness". The
Constitution is the only legal standard that Congress is required to abide by in its enactment of laws.
Following these views, I cannot agree with the position maintained by the Chief Justice, Justices Panganiban
and Azcuna that the provisions of the law that do not pertain to VAT should be stricken as unconstitutional.
These would include, for example, the provisions raising corporate income taxes. The Bicameral Conference
Committee, in evaluating the proposed amendments, necessarily takes into account not just the provisions
relating to the VAT, but the entire revenue generating mechanism in place. If, for example, amendments to
non-VAT related provisions of the NIRC were intended to offset the expanded coverage for the VAT, then
such amendments are germane to the purpose of the House and Senate Bills.
Moreover, it would be myopic to consider that the subject matter of the House Bill is solely the VAT system,
rather than the generation of revenue. The majority has sufficiently demonstrated that the legislative intent
behind the bills that led to the E-VAT Law was the generation of revenue to counter the countrys dire fiscal
situation.
The mere fact that the law is popularly known as the E-VAT Law, or that most of its provisions pertain to the
VAT, or indirect taxes, does not mean that any and all amendments which are introduced by the Bicameral
Conference Committee must pertain to the VAT system. As the Court noted in Tatad v. Secretary of Energy:22
[I]t is contended that section 5(b) of R.A. No. 8180 on tariff differential violates the provision 17 of the
Constitution requiring every law to have only one subject which should be expressed in its title. We do not
concur with this contention. As a policy, this Court has adopted a liberal construction of the one title - one
subject rule. We have consistently ruled that the title need not mirror, fully index or catalogue all
contents and minute details of a law. A law having a single general subject indicated in the title may
contain any number of provisions, no matter how diverse they may be, so long as they are not
inconsistent with or foreign to the general subject, and may be considered in furtherance of such subject
by providing for the method and means of carrying out the general subject. We hold that section 5(b)
providing for tariff differential is germane to the subject of R.A. No. 8180 which is the deregulation of the
downstream oil industry. The section is supposed to sway prospective investors to put up refineries in our
country and make them rely less on imported petroleum.23
I submit that if the amendments are attuned to the goal of revenue generation, the stated purpose of the original
House Bills, then the test of germaneness is satisfied. It might seem that the goal of revenue generation, which
is stated in virtually all tax or tariff bills, is so encompassing in scope as to justify the inclusion by the
Bicameral Conference Committee of just about any revenue generation measure. This may be so, but it does
not mean that the test of germaneness would be rendered inutile when it comes to revenue laws.
I do believe that the test of germaneness was violated by the E-VAT Law in one regard. Section 21 of the law,
which was not contained in either the House or Senate Bills, imposes restrictions on the use by local
government units of their incremental revenue from the VAT. These restrictions are alien to the principal
Page 190 of 557

purposes of revenue generation, or the purposes of restructuring the VAT system. I could not see how the
provision, which relates to budgetary allocations, is germane to the E-VAT Law. Since it was introduced only
in the Bicameral Conference Committee, the test of germaneness is essential, and the provision does not pass
muster. I join Justice Puno and the Chief Justice in voting to declare Section 21 as unconstitutional.
I also offer this brief comment regarding the deletion of the so-called "no pass on" provisions, which several of
my colleagues deem unconstitutional. Both the House and Senate Bills contained these provisions that would
prohibit the seller/producer from passing on the cost of the VAT payments to the consumers. However, an
examination of the said bills reveal that the "no pass on" provisions in the House Bill affects a different subject
of taxation from that of the Senate Bill. In the House Bill No. 3705, the taxpayers who are prohibited from
passing on the VAT payments are the sellers of petroleum products and electricity/power generation
companies. In Senate Bill No. 1950, no prohibition was adopted as to sellers of petroleum products, but
enjoined therein are electricity/power generation companies but also transmission and distribution companies.
I consider such deletions as valid, for the same reason that I deem the amendments valid. The deletion of the
two disparate "no pass on" provisions which were approved by the House in one instance, and only by the
Senate in the other, remains in the sphere of compromise that ultimately guides the approval of the final
version. Again, I point out that even while the two provisions may have been originally approved by the House
and Senate respectively, their subsequent deletion by the Bicameral Conference Committee is still subject to
approval by both chambers of Congress when the final version is submitted for deliberation and voting.
Moreover, the fact that the nature of the "no pass on" provisions adopted by the House essentially differs from
that of the Senate necessarily required the corrective relief from the Bicameral Conference Committee. The
Committee could have either insisted on the House version, the Senate version, or both versions, and it is not
difficult to divine that any of these steps would have obtained easy approval. Hence, the deletion altogether of
the "no pass on" provisions existed as a tangible solution to the possible impasse, and the Committee should be
accorded leeway to implement such a compromise, especially considering that the deletion would have
remained germane to the law, and would not be constitutionally prohibited since the prohibition on
amendments under Section 26(2), Article VI does not apply to the Committee.
An outright declaration that the deletion of the two elementally different "no-pass on" provisions is
unconstitutional, is of dubious efficacy in this case. Had such pronouncement gained endorsement of a
majority of the Court, it could not result in the ipso facto restoration of the provision, the omission of which
was ultimately approved in both the House and Senate. Moreover, since the House version of the "no pass on"
is quite different from that of the Senate, there would be a question as to whether the House version, the Senate
version, or both versions would be reinstated. And of course, if it were the Court which would be called upon
to choose, such would be way beyond the bounds of judicial power.
Indeed, to intimate that the Court may require Congress to reinstate a provision that failed to meet legislative
approval would result in a blatant violation of the principle of separation of powers, with the Court effectively
dictating to Congress the content of its legislation. The Court cannot simply decree to Congress what laws or
provisions to enact, but is limited to reviewing those enactments which are actually ratified by the legislature.
II.
My earlier views, as are the submissions I am about to offer, are rooted in nothing more than constitutional
interpretation. Perhaps my preceding discussion may lead to an impression that I whole-heartedly welcome the
passage of the E-VAT Law. Yet whatever relief I may have over the enactment of a law designed to relieve our
countrys financial woes are sadly obviated with the realization that a key amendment introduced in the law is
not only unconstitutional, but of fatal consequences. The clarion call of judicial review is most critical when it
stands as the sole barrier against the deprivation of life, liberty and property without due process of law. It

Page 191 of 557

becomes even more impelling now as we are faced with provisions of the E-VAT Law which, though in bland
disguise, would operate as the most destructive of tax measures enacted in generations.
Tax Statutes and the Due Process Clause
It is the duty of the courts to nullify laws that contravene the due process clause of the Bill of Rights. This task
is at the heart not only of judicial review, but of the democratic system, for the fundamental guarantees in the
Bill of Rights become merely hortatory if their judicial enforcement is unavailing. Even if the void law in
question is a tax statute, or one that encompasses national economic policy, the courts should not shirk from
striking it down notwithstanding any notion of deference to the executive or legislative branch on questions of
policy. Neither Congress nor the President has the right to enact or enforce unconstitutional laws.
The Bill of Rights is by no means the only constitutional yardstick by which the validity of a tax law can be
measured. Nonetheless, it stands as the most unyielding of constitutional standards, given its position of
primacy in the fundamental law way above the articles on governmental power.24 If the question lodged, for
example, hinges on the proper exercise of legislative powers in the enactment of the tax law, leeway can be
appreciated in favor of affirming the legislatures inherent power to levy taxes. On the other hand, no quarter
can be ceded, no concession yielded, on the peoples fundamental rights as enshrined in the Bill of Rights,
even if the sacrifice is ostensibly made "in the national interest." It is my understanding that "the national
interests," however comported, always subsumes in the first place recognition and enforcement of the Bill of
Rights, which manifests where we stand as a democratic society.
The constitutional safeguard of due process is embodied in the fiat "No person shall be deprived of life, liberty
or property without due process of law".25 The purpose of the guaranty is to prevent governmental
encroachment against the life, liberty and property of individuals; to secure the individual from the arbitrary
exercise of the powers of the government, unrestrained by the established principles of private rights and
distributive justice; to protect property from confiscation by legislative enactments, from seizure, forfeiture,
and destruction without a trial and conviction by the ordinary mode of judicial procedure; and to secure to all
persons equal and impartial justice and the benefit of the general law.26
In Magnano Co. v. Hamilton,27 the U.S. Supreme Court recognized that the due process clause may be utilized
to strike down a taxation statute, "if the act be so arbitrary as to compel the conclusion that it does not involve
an exertion of the taxing power, but constitutes, in substance and effect, the direct exertion of a different and
forbidden power, as, for example, the confiscation of property."28 Locally, Sison v. Ancheta29 has long
provided sanctuary for persons assailing the constitutionality of taxing statutes. The oft-quoted pronouncement
of Justice Fernando follows:
2. The power to tax moreover, to borrow from Justice Malcolm, "is an attribute of sovereignty. It is the
strongest of all the powers of government." It is, of course, to be admitted that for all its plenitude, the
power to tax is not unconfined. There are restrictions. The Constitution sets forth such limits. Adversely
affecting as it does property rights, both the due process and equal protection clauses may properly be
invoked, as petitioner does, to invalidate in appropriate cases a revenue measure. If it were otherwise,
there would be truth to the 1803 dictum of Chief Justice Marshall that "the power to tax involves the power to
destroy." In a separate opinion in Graves v. New York, Justice Frankfurter, after referring to it as an
"unfortunate remark," characterized it as "a flourish of rhetoric [attributable to] the intellectual fashion of the
times [allowing] a free use of absolutes." This is merely to emphasize that it is not and there cannot be such a
constitutional mandate. Justice Frankfurter could rightfully conclude: "The web of unreality spun from
Marshall's famous dictum was brushed away by one stroke of Mr. Justice Holmes's pen: 'The power to tax is
not the power to destroy while this Court sits.'" So it is in the Philippines.
3. This Court then is left with no choice. The Constitution as the fundamental law overrides any legislative
or executive act that runs counter to it. In any case therefore where it can be demonstrated that the
Page 192 of 557

challenged statutory provision as petitioner here alleges fails to abide by its command, then this
Court must so declared and adjudge it null. The inquiry thus is centered on the question of whether the
imposition of a higher tax rate on taxable net income derived from business or profession than on
compensation is constitutionally infirm.
4. The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as here,
does not suffice. There must be a factual foundation of such unconstitutional taint. Considering that petitioner
here would condemn such a provision as void on its face, he has not made out a case. This is merely to adhere
to the authoritative doctrine that where the due process and equal protection clauses are invoked, considering
that they are not fixed rules but rather broad standards, there is a need for proof of such persuasive character as
would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail.
5. It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that
it finds no support in the Constitution. An obvious example is where it can be shown to amount to the
confiscation of property. That would be a clear abuse of power. It then becomes the duty of this Court to
say that such an arbitrary act amounted to the exercise of an authority not conferred. That properly
calls for the application of the Holmes dictum. It has also been held that where the assailed tax measure
is beyond the jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is
so harsh and unreasonable, it is subject to attack on due process grounds.30
Sison pronounces more concretely how a tax statute may contravene the due process clause. Arbitrariness,
confiscation, overstepping the states jurisdiction, and lack of a public purpose are all grounds for nullity
encompassed under the due process invocation.
Yet even these more particular standards as enunciated in Sison are quite exacting, and difficult to reach. Even
the constitutional challenge posed in Sison failed to pass muster. The majority cites Sison in asserting that due
process and equal protection are broad standards which need proof of such persuasive character to lead to such
a conclusion.
It is difficult though to put into quantifiable terms how onerous a taxation statute must be before it contravenes
the due process clause.31 After all, the inherent nature of taxation is to cause pain and injury to the taxpayer,
albeit for the greater good of society. Perhaps whatever collective notion there may be of what constitutes an
arbitrary, confiscatory, and unreasonable tax might draw more from the fairy tale/legend traditions of absolute
monarchs and the oppressed peasants they tax. Indeed, it is easier to jump to the conclusion that a tax is
oppressive and unfair if it is imposed by a tyrant or an authoritarian state.
But could an arbitrary, confiscatory or unreasonable tax actually be enacted by a democratic state such as ours?
Of course it could, but these would exist in more palatable guises. In a democratic society wherein statutes are
enacted by a representative legislature only after debate and deliberation, tax statutes will most likely, on their
face, seem fair and even-handed. After all, if Congress passes a tax law that on facial examination is obviously
harsh and unfair, it faces the wrath of the voting public, to say nothing of the media.
In testing the validity of a tax statute as against the due process clause, I think that the Court should go beyond
a facial examination of the statute, and seek to understand how exactly it would operate. The express terms of a
statute, especially tax laws, are usually inadequate in spelling out the practical effects of its implementation.
The devil is usually in the details.
Admittedly, the degree of difficulty involved of judicial review of tax laws has increased with the growing
complexities of business, economic and accounting practices. These are sciences which laymen are not
normally equipped by their general education to fully grasp, hence the possible insecurity on their part when
confronted with such questions on these fields.

Page 193 of 557

However, we should not cede ground to those transgressions of the peoples fundamental rights simply
because the mechanism employed to violate constitutional guarantees is steeped in disciplines not normally
associated with the legal profession. Venality cannot be allowed to triumph simply due to its sophistication.
This petition imputes in the E-VAT Law unconstitutional oppression of the fatal variety, but in order to
comprehend exactly how and why that is so, one has to delve into the complex milieu of the VAT system. The
party alleging the laws unconstitutionality of course has the burden to demonstrate the violations in
understandable terms, but if such proof is presented, the Courts duty is to engage accordingly.
The Viability of the Clear and Present
Danger Doctrine as Counterweight
To the Shibboleths of Speculation
and Wisdom
I do not see as an impediment to the annulment of a tax law the fact that it has yet to be implemented, or the
fear that doing so constitutes an undue attack on the wisdom, rather than the legality of a statute. However, my
position in this petition has been challenged on those grounds, and I see it fit to refute these preemptive
allegations before delving into the operative aspect of the E-VAT Law.
If there is cause to characterize my arguments as speculative, it is only because the E-VAT Law has yet
to be implemented. No person as of yet can claim to have sustained actual injury by reason of the
implementation of the assailed provisions in G.R. No. 168461. Yet this should not mean that the Court is
impotent from declaring a provision of law as violative of the due process clause if it is clear that its
implementation will cause the illegal deprivation of life, liberty or property without due process of
law. This is especially so if, as in this case, the injury is of mathematical certainty, and the extent of the loss
quantifiable through easy reference to the most basic of business practices.
These arguments are conjectural for the same reason that the bare statement "firing a gunshot into the
head will cause a fatal wound" would be conjectural. Some people are lucky enough to survive gunshot
wounds to the head, while many others are not. Yet just because the fear of mortality would be merely
speculative, it does not mean that there should be less compulsion to avoid a situation of getting shot in the
head.
Indeed, the Court has long responded to strike down prospective actions, even if the injury has not yet even
occurred. One of the most significant legal principles of the last century, the "clear and present danger"
doctrine in free speech cases, in fact emanates from the prospectivity, and not the actuality of danger.
The Court has not been hesitant to nullify acts which might cause injury, owing to the presence of a clear and
present danger of a substantive evil which the State has the right to prevent. It has even extended the "clear and
present danger rule" beyond the confines of freedom of expression to the
realm of freedom of religion, as noted by Justice Puno in his ponencia in Estrada v. Escritor.32
Justice Teodoro Padilla goes further in his concurring opinion in Basco v. PAGCOR, and asserts that the clear
and present danger test squarely applies to the due process clause: "The courts, as the decision states, cannot
inquire into the wisdom, morality or expediency of policies adopted by the political departments of
government in areas which fall within their authority, except only when such policies pose a clear and
present danger to the life, liberty or property of the individual."

Page 194 of 557

I see no reason why the clear and present danger test cannot apply in this case, or any case wherein a
taxing statute poses a clear and present danger to the life, liberty or property of the individual. The
application of this standard frees the Court from inutility in the face of patently unconstitutional tax
laws that have been enacted but are yet to be fully operational.
If for example, Congress deems it wise to impose the most draconian of tax measures such as trebling the
income taxes of all persons over 40, raising the gross sales tax rate to 50%, or penalizing delinquent taxpayers
with 50 lashes of the whip there certainly would be a massive public outcry, and an expectation that the
Court would immediately nullify the offensive measures even before they are actually imposed. Applying the
clear and present danger test, the Court is empowered to strike down the noxious measures even before they
are implemented. Yet with this "bar on speculativeness" as argued by the majority, the Court could easily
refuse to pay heed to the prayers for injunctive relief, and instead demand that the taxing subjects must first
suffer before the Court can act.
In the same vein, the claim that my arguments strike at the wisdom, rather than the constitutionality of the law
are misplaced. Concededly, the assailed provisions of the E-VAT law are basically unwise. But any provision
of law that directly contradicts the Constitution, especially the Bill of Rights, are similarly unwise, as they run
inconsistent with the fundamental law of the land, the enunciated state policies and the elemental guarantees
assured by the State to its people. Not every unwise law is unconstitutional, but every unconstitutional law
is unwise, for an unconstitutional law contravenes a primordial principle or guarantee on which our
polity is founded.
If it can be shown that the E-VAT Law violates these provisions of the Constitution, especially the due process
clause, then the Court should accordingly act and nullify. Such is the essence of judicial review, which stands
as the sole barrier to the implementation of an unconstitutional law.
The Separate Opinion of Justice Panganiban notes that "[t]he Court cannot step beyond the confines of its
constitutional power, if there is absolutely no clear showing of grave abuse of discretion in the enactment of
the law"33. This, I feel, is an unduly narrow view of judicial review, implying that such merely encompasses
the procedural aspect by which a law is enacted. If the policy of the law, and/or the means by which such
policy is implemented run counter to the Constitution, then the Court is empowered to strike down the law,
even if the legislative and executive branches act within their discretion in legislating and signing the law.
It is also asserted that if the implementation of the 70% cap imposes an unequal effect on different types of
businesses with varying profit margins and capital requirements, then the remedy would be an amendment of
the law.34 Of course, the remedy of legislative amendment applies to even the most unconstitutional of laws.
But if our society can take cold comfort in the ability of the legislature to amend its enactments as the defense
against unconstitutional laws, what remains then as the function of judicial review? This legislative capacity to
amend unconstitutional laws runs concurrently with the judicial capacity to strike down unconstitutional laws.
In fact, the long-standing tradition has been reliance on the judicial branch, and not the legislative branch, for
salvation from unconstitutional laws.
I do recognize that the Separate Opinion of Justice Panganiban ultimately proceeds from the premise that the
assailed provisions of the E-VAT Law may be merely unwise, but not unconstitutional. Hence, its preference
to rely on Congress to amend the offending provisions rather than judicial nullification. But I maintain that the
assailed provisions of the E-VAT Law violate the due process clause of the Constitution and must be stricken
down.
The Nature of VAT
To understand why Sections 8 and 12 of the E-VAT law contravenes the due process clause, it is essential to
understand the nature of the value-added tax itself. Filipino consumers may comprehend VAT at its elemental
Page 195 of 557

form, having been accustomed for several years now in paying an extra 10% of the listed selling price for a
wide class of consumer goods. From the perspective of the end consumer, such as the patron who purchases a
meal from a fastfood restaurant, VAT is simply a tax on transactions involving the sale of goods. The tax is
shouldered by the buyer, and is based on a percentage of the purchase price. Since an excise or percentage tax
shares the same characteristics, there could be some confusion as between such taxes and the VAT.
However, VAT is distinguishable from the standard excise or percentage taxes in that it is imposable not only
on the final transaction involving the end user, but on previous stages as well so long as there was a sale
involved. Thus, VAT does not simply pertain to the extra percentage paid by the buyer of a fast-food meal, but
also that paid by restaurant itself to its suppliers of raw food products. This multi-stage system is more
acclimated to the vagaries of the modern industrial climate, which has long surpassed the stage when there was
only one level of transfer between the farmer who harvests the crop and the person who eats the crop. Indeed,
from the extraction or production of the raw material to its final consumption by a user, several transactions or
sales materialize. The VAT system assures that the government shall reap income for every transaction that is
had, and not just on the final sale or transfer.
The European Union, which has long required its member states to apply the VAT system, provided the
following definition of the tax which I deem clear and comprehensive:
The principle of the common system of value added tax involves the application to goods and services of a
general tax on consumption exactly proportional to the price of the goods and services, whatever the
number of transactions that take place in the production and distribution process before the stage at
which tax is charged.
On each transaction, value added tax, calculated on the price of the goods or services at the rate applicable to
such goods or services, shall be chargeable after deduction of the amount of value added tax borne
directly by the various cost components.35
The above definition alludes to a key characteristic of the VAT system, that the imposable tax remains
proportional to the price of goods and services no matter the number of transactions that takes place.
There is another key characteristic of the VAT that no matter how many the taxable transactions that
precede the final purchase or sale, it is the end-user, or the consumer, that ultimately shoulders the tax. Despite
its name, VAT is generally not intended to be a tax on value added, but rather as a tax on consumption. Hence,
there is a mechanism in the VAT system that enables firms to offset the tax they have paid on their own
purchases of goods and services against the tax they charge on their sales of goods and services.36 Section 105
of the NIRC assures that "the amount of tax may be shifted or passed on to the buyer, transferee or lessee of
the goods, properties or services." The assailed provisions of the E-VAT law strike at the heart of this accepted
principle.
And there is one final basic element of the VAT system integral to this disquisition: the mode by which the tax
is remitted to the government. In simple theory, the VAT payable can be remitted to the government
immediately upon the occurrence of the transaction, but such a demand proves excessively unwieldy. The
number of VAT covered transactions a modern enterprise may contract in a single day, plus the recognized
principle that it is the final end user who ultimately shoulders the tax; render the remittance of the tax on a per
transaction basis impossible.
Thus, the VAT is delivered by the purchaser not directly to the government but to the seller, who then collates
the VAT received and remits it to the government every quarter. The process may seem simple if cast in this
manner, but there is a wrinkle, due to the offsetting mechanism designed to ultimately make the end consumer
bear the cost of the VAT.

Page 196 of 557

The Concepts of Input and

Output VAT
This mechanism is employed through the introduction of two concepts, the input tax and the output tax.
Section 110(A) of the National Internal Revenue Code defines the input tax as the VAT due from or paid by a
VAT-registered person on the importation of goods or local purchase of goods and services in the course of
trade or business, from a VAT registered person.
Let us put this in operational terms. A VAT registered person, engaged in an enterprise, necessarily purchases
goods such as raw materials and machinery in order to produce consumer goods. The purchase of such raw
materials and machineries is subject to VAT, hence the enterprise pays an additional 10% of the purchase price
to the supplier as VAT. This extra amount paid by the enterprise constitutes its input VAT. The enterprise
likewise pays input VAT when it purchases services covered by the tax, or rentals of property.
Since VAT is a final tax that is supposed to be ultimately shouldered by the end consumer, the VAT system
allows for a mechanism by which the business is able to recover the input VAT that it paid. This comes into
play when the business, having transformed the raw materials into consumer goods, sells these goods to the
public. As widely known, the consumer pays to the business an additional amount of 10% of the purchase
price as VAT. As to the business, this VAT payments it collects from the consumer represents output VAT,
which is formally described under Section 110(A) of the NIRC as "the value-added tax due on the sale or lease
of taxable goods or properties or services by" by any VAT-registered person.
The output VAT collected by the business from the consumers accumulates, until the end of every quarter,
when the enterprise is obliged to remit the collected output VAT to the government. This is where the crediting
mechanism comes into play. Since the business is entitled to recover the prepaid input VAT, it does so in every
quarter by applying the amount of prepaid input VAT against the collected output VAT which is to be
remitted. If the output VAT collected exceeds the prepaid input VAT, then the amount of input VAT is
deducted from the output VAT, and it is entitled to remit only the remainder as output VAT to the government.
To illustrate, if Business X collects P1,000,000.00 as output VAT and incurs P500,000.00 as input VAT, the
P500,000.00 is deducted from the P1,000,000.00 output VAT, and X is required to remit only P500,000.00 of
the output VAT it collected from customers.
On the other hand, if the input VAT prepaid exceeds the output VAT collected, then the business need not
remit any amount as output VAT for the quarter. Moreover, the difference between the input VAT and the
output VAT may be credited as input VAT by the business in the succeeding quarter. Thus, if in the First
Quarter of a year, Business X prepays P1,000,000.00 as input VAT, and collects only P500,000.00 as output
VAT, it need not remit any amount of output VAT to the government. Moreover, in the Second Quarter,
Business X can credit the remaining P500,000.00 as part of its input VAT for that quarter. Hence, if in the
Second Quarter, X actually prepays P400,000.00 as input VAT, and collects P500,000.00 as output VAT, it
may add the P500,000.00 input VAT from the previous quarter to the P400,000.00 prepaid in the current
quarter, bringing the total input VAT it could claim to P900,000.00. Since the input VAT of P900,000.00 now
exceeds the output VAT collected of P500,000, then X need not remit any output VAT as well to the
government for the Second Quarter.
However, reality is far bleaker than that befaced by Business X. The VAT collected and remitted is not the
most relevant statistic evaluated by the business. The figure of primary concern of the enterprise would be the
profit margin, which is simply the excess of revenue less expenditures. Revenue is derived from the gross sales
of the business. Expenditures encompass all expenses incurred by the business including overhead expenses,
wages and purchases of capital goods. Crucially, expenditures would include the input VAT prepaid by the
business on its capital expenditures.

Page 197 of 557

Since a significant amount of the capital outlay incurred by a business is subjected to the prepayment of input
taxes, the necessity of recovering these losses through the output VAT collected becomes more impelling.
These output taxes are obviously proportional to the volume of gross sales the higher the gross sales, the
higher the output VAT collected. The output taxes collected on sales answer for not only those input taxes
paid on the purchase of the raw materials, but also for the input taxes paid on the multifarious overhead
expenses covered by VAT. The burden carried by the sales volume on the stability, if not survival of the
business thus just became more crucial. The maintenance of the proper equilibrium is not an easy matter.
Increasing the selling price of the goods sold does not necessarily increase the gross sales, as it could have the
counter-effect of repelling the consumer and diminishing the number of goods sold. At the same time, keeping
the selling price low may increase the volume of goods sold, but not necessarily the amount of gross sales.
Profit is a chancy matter, and in cases of small to medium enterprises, usually small if any. It is quite common
for retail and distribution enterprises to incur profits of less than 1% of their gross revenues. Low profitability
is not an automatic badge of poor business skills, but a reality dictated by the laws of the marketplace. The
probability of profit is lower than that of capital expenditures, and ultimately, many business establishments
end up with a higher input tax than output tax in a given quarter. This would be especially true for small to
medium enterprises who do not reap sufficient profits from its business in the first place, and for those firms
that opt to also invest in capital expenses in addition to the overhead. Whatever miniscule profit margins that
can be obtained usually spell the difference between life and death of the business.
The possibility of profit is further diminished by the fact that businesses have to shoulder the input VAT in the
purchase of their capital expenses. Yet the erstwhile VAT system was not tainted by the label of
oppressiveness and neither did it bear the confiscatory mode. This was because of the immediate relief
afforded from the input taxes paid by the crediting system. In theory, VAT is not supposed to affect the
profit margin. If such margin is affected, it is only because of the prepayment of the input taxes, and this
should be remedied by the immediate recovery through the crediting system of the settled input taxes.
The new E-VAT law changes all that, and puts in jeopardy the survival of small to medium enterprises.
The Effects of the 70% Cap on Creditable Input VAT
The first radical shift introduced by the E-VAT law to the creditable input system the 70% cap on the
creditable input tax that may be carried over into the next quarter is provided in Section 8 of the law, which
amends Section 110(A) of the NIRC, among others. Section 110(A) as amended would now read:
Sec. 110. Tax Credits.
(B) Excess Output or Input Tax. If at the end of any taxable quarter the output tax exceeds the input tax, the
excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be
carried over to the succeeding quarter or quarters. Provided, That the input tax inclusive of input VAT
carried over from the previous quarter that may be credited in every quarter shall not exceed seventy
percent (70%) of the output VAT: Provided, however, That any input tax attributable to zero rated sales by a
VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject
to the provisions of Section 112. (emphasis supplied)
All hope for entrepreneurial stability is dashed with the imposition of the 70% cap. Under the E-VAT Law, the
business, regardless of stability or financial capability, is obliged to remit to the government every quarter at
least 30% of the output VAT collected from customers, or roughly 3% of the amount of gross sales. Thus, if a
quarterly gross sales of Y Business totaled P1,000,000, and Y is prudent enough to keep its capital expenses
down to P980,000, it would then appear on paper that Y incurred a profit of P20,000. However, with the 70%
cap, Y would be obliged to remit to the government P30,000, thus wiping out the profit margin for the quarter.
Y would be entitled to credit the excess input VAT it prepaid for the next quarter, but the continuous operation
Page 198 of 557

of the 70% cap obviates whatever benefits this may give, and cause the accumulation of the unutilized
creditable input VAT which should be returned to the business.
The difference is even more dramatic if seen how the unutilized creditable input VAT accumulates over a one
year period. To illustrate, Business Y prepays the following amounts of input VAT over a one-year period:
P100,000.00 - First Quarter; P100,000.00 2nd Quarter; P34,000.00 3rd Quarter; and P50,000.00 4th
Quarter. On the other hand, Y collects the following amounts of output VAT from consumers: P60,000.00 First Quarter; P60,000.00 2nd Quarter; P100,000.00 3rd Quarter; and P50,000.00 4th Quarter. Applying
the 70% cap, which would limit the amount of the declarable input VAT to 70% in a quarter, the following
results obtain, as presented in tabular form:
Particulars
Output VAT
Input VAT
(Actual) + Carry
Over

1st Quarter
60,000
100,000

2nd Quarter
60,000
100,000 [input]
+58,000

3rd Quarter
100,000
34,000

4th Quarter
50,000
50,000

[input]

[input]

+116,000

+80,000

[excess
creditable]

[excess
creditable]

150,000
(60,000x70%) (100,000x70%)

130,000
(50,000x70%)

[excess creditable]
158,000

Declarable
Input VAT (70%
of output VAT)
Lower of actual
and 70% cap
allowable

(60,000x70%)
42,000
(60,000 -42,000)
18,000

42,000
70,000
35,000
(60,000 -42,000) (100,000-70,000) (50,000- 35,000)
18,000

30,000

15,000

(158,000 42,000)

(150,000-

(130,00035,000)

116,000

70,000)

VAT
Payable
Creditable Input (100,000 42,000)
VAT
58,000

95,000
80,000
This stands in contrast to same business VAT accountability under the present system, using the same
variables of output VAT and input VAT. The need to distinguish a declarable input VAT is obviated with the
elimination of the 70% cap.
Particulars 1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Output VAT
60,000
60,000
100,000
50,000
Input VAT
100,000 100,000 [input]
34,000
50,000
(Actual) + Carry
Over
+40,000
[input]
[input]

Page 199 of 557

[excess creditable]

VAT Payable
Creditable

0
40,000

+80,000

+ 14,000

140,000 [excess creditable]

(excess

114,000

creditable)

0
14,000

50,000
0
14,000

0
80,000

Input VAT
The difference is dramatic, as is the impact on the businesss profit margin and available cash on hand. Under
normal conditions, small to medium enterprises are already encumbered with the likelihood of obtaining only a
minimal profit margin. Without the 70% cap, those businesses would nonetheless be able to expect an
immediate return on its input taxes earlier advanced, taxes which under the VAT system it is not supposed to
shoulder in the first place. However, with the 70% cap in place, the unutilized input taxes would continue to
accumulate, and the enterprise precluded from immediate recovery thereof. The inability to utilize these
input taxes, which could spell the difference between profit and loss, solvency and insolvency, will
eventually impair, if not kill off the enterprise.
The majority fails to consider one of the most important concepts in finance, time value for money.37 Simply
put, the value of one peso is worth more today than in 2006. Money that you hold today is worth more because
you can invest it and earn interest.38 By reason of the 70% cap, the amount of input VAT credit that remains
unutilized would continue accumulate for months and years. The longer the amount remains unutilized, the
higher the degree of its depreciation in value, in accordance with the concept of time value of money. Even
assuming that the business eventually recovers the input VAT credit, the sum recovered would have decreased
in practical value.
It would be sad, but fair, if a business ceases because of its inability to compete with other businesses. It
would be utter malevolence to condemn an enterprise to death solely through the employment of a
deceptive accounting wizardry. For the raison detre of this 70% cap is to make it appear on paper that
the government is more solvent than it actually is. Conceding for the nonce, there is a temporary advantage
gained by the government by this 70% cap, as the steady remittance by businesses of the 30% output VAT
would assure a cash flow. Such collection may only momentarily resolve an endemic problem in our local tax
system, the problem of collection itself.
If the 70% cap was designed in order to enhance revenue collection, then I submit that the means employed
stand beyond reason. If sheer will proves insufficient in assuring that the State all taxes due it, there should be
allowable discretion for the government to formulate creative means to enhance collection. But to do so by
depriving low profit enterprises of whatever meager income earned and consequently assuring the death of
these industries goes beyond any valid State purpose.
Only stable businesses with substantial cash flows, or extraordinarily successful enterprises will be able to
remain in operation should the 70% cap be retained. The effect of the 70% cap is to effectively impose a tax
amounting to 3% of gross revenue. The amount may seem insignificant to those without working knowledge
of the ways of business, but anybody who is actually familiar with business would be well aware the profit
margins of the retailing and distribution sectors typically amount to less than 1% of the gross revenues. A
taxpayer has to earn a margin of at least 3% on gross revenue in order to recoup the losses sustained due to the
70% cap. But as stated earlier, profits are chancy, and the entrepreneur does not have full control of the
conditions that lead to profit.
Page 200 of 557

Even more galling is the fact that the 70% cap, oppressive as it already is to the business establishment, even
limits the options of the business to recover the unutilized input VAT credit. During the deliberations, the
argument was raised that the problem presented by the 70% cap was a business problem, which can only be
solved by business. Yet there is only one viable option for the enterprise to resolve the problem, and that is to
increase the selling price of goods.39 It would be incorrect to assume that increase the volume of the goods sold
could solve the problem, since for items with the same purchasing cost, the effect of the 70% cap remains
constant regardless of an increase in volume.
But the additional burden is not limited to the increase of prices by the retailer to the end consumer. Since
VAT is a transaction tax, every level of distribution becomes subject not only to the VAT, but also to the 70%
cap. The problem increases due to a cascading effect as the number of distribution levels increases since it will
result in the collection of an effective 3% percentage tax at every distribution level.
In analyzing the effects of the 70% cap, and appreciating how it violates the due process clause, we should not
focus solely on the end consumers. Undoubtedly, consumers will face hardships due to the increased prices,
but their threshold of physical survival, as individual people, is significantly less than that of enterprises.
Somehow, I do not think the new E-VAT would generally deprive consumers of the bare necessities such as
food, water, shelter and clothing. There may be significant deprivation of comfort as a result, but not of life.
The same does not hold true for businesses. The standard of "deprivation of life" of juridical persons employs
different variables than that of natural persons. What food and water may be for persons, profit is for an
enterprise the bare necessity for survival. For businesses, the implementation of the same law, with the
70% cap and 60-month amortization period, would mean the deprivation of profit, which is the determinative
necessity for the survival of a business.
It is easy to admonish both the consumer and the enterprise to cut back on expenditures to survive the new EVAT Law. However, this can be realistically expected only of the consumer. The small/medium enterprise
cannot just cut back easily on expenditures in order to survive the implementation of the E-VAT Law. For
such businesses, expenditures do not normally contemplate unnecessary expenses such as executive perks
which can be dispensed with without injury to the enterprises. These expenditures pertain to expenses
necessary for the survival of the enterprise, such as wages, overhead and purchase of raw materials. Those
three basic items of expenditure cannot simply be reduced, as to do so with impair the ability of the business to
operate on a daily basis.
And reduction of expenditures is not the exclusive antidote to these impositions under the E-VAT Law, as
there must also be a corresponding increase in the amount of gross sales. To do so though, would require an
increase in the selling price, dampening consumer enthusiasm, and further impairing the ability of the
enterprise to recover from the E-VAT Law. This is your basic Catch-2240 situation no matter which means
the enterprise employs to recover from the E-VAT Law, it will still go down in flames.
Section 8 of the E-VAT law, while ostensibly even-handed in application, fails to appreciate valid substantial
distinctions between large scale enterprises and small and medium enterprises. The latter group, owing to the
limited capability for capital investment, subsists on modest profit margins, whereas the former expects, by
reason of its substantial capital investments, a high margin. In essentially prohibiting the recovery of small
profit margins, the E-VAT law effectively sends the message that only high margin businesses are
welcome to do business in the Philippines. It stifles any entrepreneurial ambitions of Filipinos
unfortunate enough to have been born poor yet seek a better life by sacrificing all to start a small
business.
Among the enunciated State policies in the Constitution, as stated in Section 20, Article II, is that "the State
recognizes the indispensable role of the private sector, encourages private enterprise, and provides
incentives to needed investments."41 The provision, as with other declared State policies in the Constitution,
Page 201 of 557

have sufficient import and consequence such that in assessing the constitutionality of the governmental action,
these provisions should be considered and weighed as against the rationale for the assailed State action.42 The
incompatibility of the 70% cap with this provision is patent.
Pilipinas Shell Dealers, on whom the burden to establish the violation of due process and equal protection lies,
offers the following chart of the income statement of a typical petroleum dealer:
QUARTERLY PROFIT AND LOSS STATEMENT
DEALER "A"

Sales/Output
Cost of Sales
Gross Margin
Operating Expenses Nonvatable items

Price
32,748,534
31,834,717
913,817
536,249

VAT (without 70% cap) VAT (with 70% cap)

3,274,853.40
3,274,853.40
3,183,471.70
31,758.40

317,584
Vatable Items
Total Cost
Net Profit
Total Input Tax
VAT Payable

853,833
59,984
3,215,230.10
59,623.30

2,292,397.38
982,456.02

Unutilized Input VAT 922,832.72

*computed by multiplying output VAT by 70% [3,274,853.40 x 70% = 2,292.397.38]
The presentation of the Pilipinas Shell Dealers more or less jibes with my own observations on the impact of
the 70% cap. The dealer whose income is illustrated above has to outlay a cash amount of P922,832.72 more
than what would have been shelled out if the 70% cap were not in place. Considering that the net profit of the
dealer is only P59,984.00, the consequences could very well be fatal, especially if these state of events persist
in succeeding quarters.
The burden of proof was on the Pilipinas Shell Dealers to prove their allegations, and accordingly, these
figures have been duly presented to the Court for appreciation and evaluation. Instead, the majority has
shunted aside these presentations as being merely theoretical, despite the fact that they present a clear and
present danger to the very life of our nations enterprises. The majoritys position would have been more
credible had it faced the issue squarely, and endeavored to demonstrate in like numerical fashion why the 70%
cap is not oppressive, confiscatory, or otherwise violative of the due process clause.
Sadly, the majority refuses to confront the figures or engage in a meaningful demonstration of how these
assailed provisions truly operate. Instead, it counters with platitudes and bromides that do not intellectually
satisfy. Considering that the very vitality, if not life of our domestic economy is at stake, I think it derelict to
our duty to block out these urgent concerns presented to the Court with blind faith tinged with irrational
Panglossian43 optimism.
The obligation of the majority to refute on the merits the arguments of the Petroleum Dealers becomes even
more grave considering that the respondents have abjectly failed to convincingly dispute the claims. During

Page 202 of 557

oral arguments, respondents attempted to counter the arguments that the 70% cap was oppressive and
confiscatory by presenting the following illustration, which I fear is severely misleading:
Slide 1
Item Cost VAT

Sales 1,000,000.00 100,000.00

Purchases 800,000.00 80,000.00

Due BIR without cap Due BIR with 70% cap

Output VAT 100,000.00 Output VAT 100,000.00
Actual Input VAT 80,000.00 Allowable Input VAT 70,000.00
Net VAT Payable 20,000.00 Net VAT Payable 30,000.00
Excess Input VAT 10,000.00
Carry-over to next quarter
Slide 2
___________________________________________
Item Cost VAT

Page 203 of 557

Sales 1,000,000.00 100,000.00

Purchases 600,000.00 60,000.00
Due BIR without cap Due BIR with 70% cap
Output VAT 100,000.00 Output VAT
100,000.00
Actual Input VAT (60% of
output VAT) 60,000.00
Allowable Input VAT
60,000.00

Net VAT Payable 40,000.00 Net VAT Payable 40,000.00

Excess Input VAT 0
Carry-over to next quarter
This presentation of the respondents is grossly deceptive, as it fails to account for the excess creditable input
VAT that remains unutilized due to the 70% cap. This excess or creditable input VAT is supposed to be carried
over for the computation of the input VAT of the next quarter. Instead, this excess or creditable input VAT
magically disappears from the table of the respondents. In their memorandum, the Pilipinas Shell Dealers
counter with their own presentation using the same variables as respondents, but taking into account the
excess creditable input VAT and extending the situation over a one-year period. I cite with approval the
following chart44 of the Pilipinas Shell Dealers:
Slide 1
Quarter 1
Item No. Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 70% cap
Output VAT 100,000.00
Allowable Input VAT 70,000.00
Net VAT Payable 30,000.00
Excess Input Vat
Page 204 of 557

Carry-over to next quarter 10,000.00

Quarter 2
Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 7-% cap
Output VAT 100,000.00
Less: Input VAT
Excess Input VAT fr. 1st Quarter 10,000.00
Input VAT-Current Qtr. 80,000.00
Total Available Input VAT 90,000.00
Allowable Input VAT (100,000 x 70%) 70,000.00 70,000.00
Net VAT Payable 30,000.00
=========
Total Available Input VAT 90,000.00
Allowable Input VAT 70,000.00
Excess Input VAT to be carried over to next
Quarter 20,000.00
=========
Quarter 3
Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 70% cap
Output VAT 100,000.00
Page 205 of 557

Less: Input VAT

Excess Input VAT fr. 2nd Qtr. 20,000.00
Input VAT-Current Qtr. 80,000.00
Total Available Input VAT 100,000.00
Allowable Input VAT (100,000 x 70%) 70,000.00 70,000.00
Net VAT Payable 30,000.00
=========
Total Available Input VAT 100,000.00
Allowable Input VAT 70,000.00
Excess Input VAT to be carried over to next quarter 30,000.00
==========
Quarter 4
Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 70% cap
Output VAT 100,000.00
Less: Input VAT
Excess Input VAT fr. 3rd Qtr. 30,000.00
Input VAT-Current Qtr. 80,000.00
Total Available Input VAT 110,000.00
Allowable Input VAT (100,000 x 70%) 70,000.00 70,000.00
Net VAT Payable 30,000.00
========
Total Available Input VAT 110,000.00
Page 206 of 557

Allowable Input VAT 70,000.00

Excess Input VAT to be carried over to next quarter 40,000.00
==========
The 70% cap is not merely an unwise imposition. It is a burden designed, either through sheer
heedlessness or cruel calculation, to kill off the small and medium enterprises that are the soul, if not the
heart, of our economy. It is not merely an undue taking of property, but constitutes an unjustified taking
of life as well.
And what legitimate, germane purposes does this lethal 70% cap serve? It certainly does not increase
the governments revenue since the unutilized creditable input VAT should be entered in the
government books as a debt payable as it is supposed to be eventually repaid to the taxpayer, and so on
the contrary it increases the governments debts. I do see that the 70% cap temporarily allows the
government to brag to the world of an increased cash flow. But this situation would be akin to the
provincial man who borrows from everybody in the barrio in order to show off money and maintain the
pretense of prosperity to visiting city relatives. The illusion of wealth is hardly a legitimate state
purpose, especially if projected at the expense of the very business life of the country.
The majority, in an effort to belittle these concerns, points out that that the excess input tax remains creditable
in succeeding quarters. However, as seen in the above illustration, the actual application of the excess input tax
will always be limited by the amount of output taxes collected in a quarter, as a result of the 70% cap. Thus, it
is entirely possible that a VAT-registered person, through the accumulation of unutilized input taxes, would
have in a quarter an express creditable input tax of P50,000,000, but would be allowed to actually credit only
P70,000 if the output tax collected for that quarter were only P100,000.
The burden of the VAT may fall at first to the immediate buyers, but it is supposed to be eventually shifted to
the end-consumer. The 70% cap effectively prevents this from happening, as it limits the ability of the business
to recover the prepaid input taxes. This is unconscionable, since in the first place, these intervening
players the manufacturers, producers, traders, retailers are not even supposed to sustain the losses incurred
by reason of the prepayment of the input taxes. Worse, they would be obliged every quarter to pay to the
government from out of their own pockets the equivalent of 30% of the output taxes, no matter their own
particular financial condition. Worst, this twin yoke on the taxpayer of having to sustain a debit equivalent to
30% of output taxes, and having to await forever in order to recover the prepaid taxes would impair the cash
flow and prove fatal for a shocking number of businesses which, as they now stand, have to make do with a
minimum profit that stands to be wiped out with the introduction of the 70% cap.
Nonetheless, the majority notes that the excess creditable input tax may be the subject of a tax credit
certificate, which then could be used in payment of internal revenue taxes, or a refund to the extent that such
input taxes have not been applied against output taxes.45 What the majority fails to mention is that under
Section 10 of the E-VAT Law, which amends Section 112 of the NIRC, such credit or refund may not be
done while the enterprise remains operational:
SEC. 10. Section 112 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 112. Refunds or Tax Credits of Input Tax.
xxx

Page 207 of 557

"(B) Cancellation of VAT Registration. A person whose registration has been cancelled due to
retirement from or cessation of business or due to changes or cessation of status under Section 106(C) of
this Code may, within two (2) years from the date of cancellation, apply for the issuance of a tax credit
certificate for any unused input tax which may be used in payment of his other internal revenue taxes.
xxx
This stands in marked contrast to Section 112(B) of the NIRC as it read prior to this amendment. Under the
previous rule, a VAT-registered person was entitled to apply for the tax credit certificate or refund paid on
capital goods even while it remained in operation:
SEC. 112. Refunds or Tax Credits of Input Tax.
xxx
"(B) Capital Goods . A VAT-registered person may apply for the issuance of a tax credit certificate or
refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes
have not been applied against output taxes. The application may be made only within two (2) years after the
close of the taxable quarter when the importation or purchase was made.
This provision, which could have provided foreseeable and useful relief to the VAT-registered person, was
deleted under the new E-VAT Law. At present, the refund or tax credit certificate may only be issued upon two
instances: on zero-rated or effectively zero-rated sales, and upon cancellation of VAT registration due to
retirement from or cessation of business.46 This is the cruelest cut of all. Only after the business ceases to
be may the State be compelled to repay the entire amount of the unutilized input tax. It is like a macabre
form of sweepstakes wherein the winner is to be paid his fortune only when he is already dead. Aanhin
pa ang damo kung patay na ang kabayo.
Moreover, the inability to immediately credit or otherwise recover the unutilized input VAT could cause such
prepaid amount to actually be recognized in the accounting books as a loss. Under international accounting
practices, the unutilized input VAT due to the 70% cap would not even be recognized as a deferred asset. The
same would not hold true if the 70% cap were eliminated. Under the International Accounting Standards47, the
unutilized input VAT credit is recognized as an asset "to the extent that it is probable that future taxable profit
will be available against which the unused tax losses and unused tax credits can be utili[z]ed"48 Thus, if the
immediate accreditation of the input VAT credit can be obtained, as it would without the 70% cap, the asset
could be recognized.
However, the same Standards hold that "[t]o the extent that it is not probable that taxable profit will be
available against which the unused tax losses or unused tax credits can be utilised, the deferred tax asset is not
recognised".49 As demonstrated, the continuous operation of the 70% cap precludes the recovery of input VAT
prepaid months or years prior. Moreover, the inability to claim a refund or tax credit certificate until after the
business has already ceased virtually renders it improbable for the input VAT to be recovered. As such, under
the International Accounting Standards, it is with all likelihood that the prepaid input VAT, ostensibly
creditable, would actually be reflected as a loss.50 What heretofore was recognized as an asset would now, with
the imposition of the 70% cap, be now considered as a loss, enhancing the view that the 70% cap is ultimately
confiscatory in nature.
This leads to my next point. The majority asserts that the input tax is not a property or property right within the
purview of the due process clause.51 I respectfully but strongly disagree.
Tellingly, the BIR itself has recognized that unutilized input VAT is one of those assets, corporate attributes or
property rights that, in the event of a merger, are transferred to the surviving corporation by operation of law.52
Page 208 of 557

Assets would fall under the purview of property under the due process clause, and if the taxing arm of the State
recognizes that such property belongs to the taxpayer and not to the State, then due respect should be given to
such expert opinion.
Even under the International Accounting Standards I adverted to above, the unutilized input VAT credit may
be recognized as an asset "to the extent that it is probable that future taxable profit will be available against
which the unused tax losses and unused tax credits can be utilised"53 If not probable, it would be recognized as
a loss.54 Since these international standards, duly recognized by the Securities and Exchange Commission as
controlling in this jurisdiction, attribute tangible gain or loss to the VAT credit, it necessarily follows that there
is proprietary value attached to such gain or loss.
Moreover, the prepaid input tax represents unutilized profit, which can only be utilized if it is refunded or
credited to output taxes. To assert that the input VAT is merely a privilege is to correspondingly claim that the
business profit is similarly a mere privilege. The Constitution itself recognizes the right to profit by private
enterprises. As I stated earlier, one of the enunciated State policies under the Constitution is the recognition of
the indispensable role of the private sector, the encouragement of private enterprise, and the provision of
incentives to needed investments.55 Moreover, the Constitution also requires the State to recognize the
right of enterprises to reasonable returns on investments, and to expansion and growth.56 This, I believe,
encompasses profit.
60-Month Amortization Period
Another portion of Section 8 of the E-VAT Law is unconstitutional, essentially for the same reasons as above.
The relevant portion reads:
SEC. 8. Section 110 of the same Code, as amended, is hereby further amended to read as follows:
"SEC. 110. Tax Credits.
(A) Creditable Input Tax.
....
Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or
business for which deduction for depreciation is allowed under this Code, shall be spread evenly over
the month of acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for
such goods, excluding the VAT component thereof, exceeds One million pesos (P1,000,000): Provided,
however, That if the estimated useful life of the capital good is less than five (5) years, as used for depreciation
purposes, then the input VAT shall be spread over such a shorter period: Provided, finally, that in the case of
purchase of services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or
licensee upon payment of the compensation, rental, royalty or fee.
Again, this provision unreasonably severely limits the ability of an enterprise to recover its prepaid input VAT.
On its face, it might appear injurious primarily to high margin enterprises, whose purchase of capital goods in
a given quarter would routinely exceed P1,000,000.00. The amortization over a five-year period of the input
VAT on these capital goods would definitely eat up into their profit margin. But it is still possible for such big
businesses to survive despite this new restriction, and their financial pain alone may not be sufficient to cause
the invalidity of a taxing statute.
However, this amortization plan will prove especially fatal to start-ups and other new businesses, which
need to purchase capital goods in order to start up their new businesses. It is a known fact in the financial
Page 209 of 557

community that a majority of businesses start earning profit only after the second or third year, and many
enterprises do not even get to survive that long. The first few years of a business are the most crucial to its
survival, and any financial benefits it can obtain in those years, no matter how miniscule, may spell the
difference between life and death. For such emerging businesses, it is already difficult under the present
system to recover the prepaid input VAT from the output VAT collected from customers because initial sales
volumes are usually low. With this further limitation, diminishing as it does any opportunity to have a
sustainable cash flow, the ability of new businesses to survive the first three years becomes even more
endangered.
Even existing small to medium enterprises are imperiled by this 60 month amortization restriction, especially
considering the application of the 70% cap. The additional purchase of capital goods bears as a means of
adding value to the consumer good, as a means to justify the increased selling price. However, the purchase of
capital goods in excess of P1,000,000.00 would impose another burden on the small to medium enterprise by
further restricting their ability to immediately recover the entire prepaid input VAT (which would exceed at
least P100,000.00), as they would be compelled to wait for at least five years before they can do so. Another
hurdle is imposed for such small to medium enterprise to obtain the profit margin critical to survival. For
some lucky enterprises who may be able to survive the injury brought about by the 70% cap, this 60
month amortization period might instead provide the mortal head wound.
Moreover, the increased administrative burden on the taxpayer should not be discounted, considering this
Courts previous recognition of the aims of the VAT system to "rationalize the system of taxes on goods and
services, [and] simplify tax administration".57 With the amortization requirement, the taxpayer would be forced
to segregate assets into several classes and strictly monitor the useful life of assets so that proper classification
can be made. The administrative requirements of the taxpayer in order to monitor the input VAT from the
purchase of capital assets thus has exponentially increased.
5% Withholding VAT on Sales
Pilipinas Shell Dealers argue that Section 12 of the E-VAT law, which amends Section 114(C) of the NIRC, is
also unconstitutional. The provision is supremely unwise, oppressive and confiscatory in nature, and
ruinous to private enterprise and even State development. The provision reads:
SEC. 12. Section 114 of the same Code, as amended, is hereby further amended to read as follows:
"SEC. 114. Return and Payment of Value-Added Tax.
xxx
"(C) Withholding of Value-added Tax. The Government or any of its political subdivisions, instrumentalities
or agencies, including government-owned or controlled corporations (GOCCs) shall, before making payment
on account of each purchase of goods and services which are subject to the value-added tax imposed in
Sections 106 and 108 of this Code, deduct and withhold a final value-added tax at the rate of five percent (5%)
of the gross payment thereof: Provided, That the payment for lease or use of properties or property rights to
nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For purposes
of this Section, the payor or person in control of the payment shall be considered as the withholding payment.
xxx
The principle that the Government and its subsidiaries may deduct and withhold a final value-added tax on its
purchase of goods and services is not new, as the NIRC had allowed such deduction and withholding at the
rate of 3% of the gross payment for the purchase of goods, and 6% of the gross receipts for services. However,
the NIRC had also provided that this tax withheld would also be creditable against the VAT liability of
the seller or contractor, a mechanism that was deleted by the E-VAT law. The deletion of this credit
Page 210 of 557

apparatus effectively compels the private enterprise transacting with the government to shoulder the
output VAT that should have been paid by the government in excess of 5% of the gross selling price, and
at the same time unduly burdens the private enterprise by precluding it from applying any creditable
input VAT on the same transaction.
Notably, the removal of the credit mechanism runs contrary to the essence of the VAT system, which
characteristically allows the crediting of input taxes against output taxes. Without such crediting mechanism,
which allows the shifting of the VAT to only the final end user, the tax becomes a straightforward tax on
business or income. The effect on the enterprise doing business with the government would be that two
taxes would be imposed on the income by the business derived on such transaction: the regular personal
or corporate income tax on such income, and this final withholding tax of 5%.
Granted that Congress is not bound to adopt with strict conformity the VAT system, and that it has to power to
impose new taxes on business income, this amendment to Section 114(C) of the NIRC still remains
unconstitutional. It unfairly discriminates against entities which contract with the government by
imposing an additional tax on the income derived from such transactions. The end result of such
discrimination is double taxation on income that is both oppressive and confiscatory.
It is a legitimate purpose of a tax law to devise a manner by which the government could save money on
its own transactions, but it is another matter if a private enterprise is punished for doing business with
the government. The erstwhile NIRC worked towards such advantage, by allowing the government to reduce
its cash outlay on purchases of goods and services by withholding the payment of a percentage thereof. While
the new E-VAT law retains this benefit to the government, at the same time it burdens the private enterprise
with an additional tax by refusing to allow the crediting of this tax withheld to the businesss input VAT.
This imposition would be grossly unfair for private entities that transact with the government, especially on a
regular basis. It might be argued that the provision, even if concededly unwise, nonetheless fails to meet the
standard of unconstitutionality, as it affects only those persons or establishments that choose to do business
with the government. However, it is an acknowledged fact that the government and its subsidiaries rely on
contracts with private enterprises in order to be able to carry out innumerable functions of the State. This
provision effectively discourages private enterprises to do business with the State, as it would impose on
the business a higher rate of tax if it were to transact with the State, as compared to transactions with
other private entities.
Established industries with track records of quality performance could very well be dissuaded from doing
further business with government entities as the higher tax rate would make no economic sense. Only those
enterprises which really need the money, such as those with substandard track records that have affected their
viability in the marketplace, would bother seeking out government contracts. The corresponding sacrifice in
quality would eventually prove detrimental to the State. Our society can ill afford shoddy infrastructures such
as roads, bridges and buildings that would unnecessarily pose danger to the public at large simply because the
government wanted to skimp on expenses.
The provision squarely contradicts Section 20, Article II of the Constitution as it vacuously discourages
private enterprise, and provides disincentives to needed investments such as those expected by the State
from private businesses. Whatever advantages may be gained by the temporary increase in the government
coffers would be overturned by the disadvantages of having a reduced pool of private enterprises willing to do
business with the government. Moreover, since government contracts with private enterprises will still remain
a necessary fact of life, the amendment to Section 114(C) of the NIRC introduced by the E-VAT Law.
Double taxation means taxing for the same tax period the same thing or activity twice, when it should be taxed
but once, for the same purpose and with the same kind of character of tax.58 Double taxation is not expressly
forbidden in our constitution, but the Court has recognized it as obnoxious "where the taxpayer is taxed twice
Page 211 of 557

for the benefit of the same governmental entity or by the same jurisdiction for the same purpose."59 Certainly,
both the 5% final tax withheld and the general corporate income tax are both paid for the benefit of the
national government, and for the same incidence of taxation, the sale/lease of goods and services to the
government.
The Court, in Re: Request of Atty. Bernardo Zialcita60 had cause to make the following observation I submit
apropos to the case at bar, on double taxation in a case involving the attempt of the BIR to tax the commuted
accumulated leave credits of a government lawyer upon his retirement:
Section 284 of the Revised Administrative Code grants to a government employee 15 days vacation leave and
15 days sick leave for every year of service. Hence, even if the government employee absents himself and
exhausts his leave credits, he is still deemed to have worked and to have rendered services. His leave benefits
are already imputed in, and form part of, his salary which in turn is subject to withholding tax on
income. He is taxed on the entirety of his salaries without any deductions for any leaves not utilized. It
follows then that the money values corresponding to these leave benefits both the used and unused have
already been taxed during the year that they were earned. To tax them again when the retiring
employee receives their money value as a form of government concern and appreciation plainly
constitutes an attempt to tax the employee a second time. This is tantamount to double taxation.61
Conclusions
The VAT system, in itself, is intelligently designed, and stands as a fair means to raise revenue. It has been
adopted worldwide by countries hoping to employ an efficient means of taxation. The concerns I have raised
do not detract from my general approval of the VAT system.
I do lament though that our governments wholehearted adoption of the VAT system is endemic of what I
deem a flaw in our national tax policy in the last few decades. The power of taxation, inherent in the State and
ever so powerful, has been generally employed by our financial planners for a solitary purpose: the raising of
revenue. Revenue generation is a legitimate purpose of taxation, but standing alone, it is a woefully
unsophisticated design. Intelligent tax policy should extend beyond the singular-minded goal of raising State
funds the old-time philosophy behind the taxing schemes of war-mongering monarchs and totalitarian states
and should sincerely explore the concept of taxation as a means of providing genuine incentives to private
enterprise to spur economic growth; of promoting egalitarian social justice that would allow everyone to their
fair share of the nations wealth.
Instead, we are condemned by a national policy driven by the monomania for State revenue. It may be beyond
my oath as a Justice to compel the government to adopt an economic policy in consonance with my personal
views, but I offer these observations since they lie at the very heart of the noxiousness of the assailed
provisions of the E-VAT law. The 70% cap, the 60-month amortization period and the 5% withholding tax on
government transactions were selfishly designed to increase government revenue at the expense of the survival
of local industries.
I am not insensitive to the concerns raised by the respondents as to the dire consequences to the economy
should the E-VAT law be struck down. I am aware that the granting of the petition in G.R. No. 168461 will
negatively affect the cash flow of the government. If that were the only relevant concern at stake, I would have
no problems denying the petition. Unfortunately, under the device employed in the E-VAT law, the price
to be paid for a more sustainable liquidity of the governments finances will be the death of local
business, and correspondingly, the demise of our society. It is a measure just as draconian as the
standard issue taxes of medieval tyrants.
I am not normally inclined towards the language of the overwrought, yet if the sky were indeed truly falling,
how else could that fact be communicated. The E-VAT Law is of multiple fatal consequences. How are we to
Page 212 of 557

survive as a nation without the bulwark of private industries? Perhaps the larger scale, established businesses
may ultimately remain standing, but they will be unable to sustain the void left by the demise of small to
medium enterprises. Or worse, domestic industry would be left in the absolute control of monopolies,
combines or cartels, whether dominated by foreigners or local oligarchs. The destruction of subsisting
industries would be bad enough, the destruction of opportunity and the entrepreneurial spirit would be even
more grievous and tragic, as it would mark as well the end of hope. Taxes may be the lifeblood of the state, but
never at the expense of the life of its subjects.
Accordingly, I VOTE to:
1) DENY the Petitions in G.R. Nos. 168056, 168207, and 168730 for lack of merit;
2) PARTIALLY GRANT the Petition in G.R. Nos. 168463 and declare Section 21 of the E-VAT Law as
unconstitutional;
3) GRANT the Petition in G.R. No. 168461 and declare as unconstitutional Section 8 of Republic Act No.
9337, insofar as it amends Section 110(A) and (B) of the National Internal Revenue Code (NIRC) as well as
Section 12 of the same law, with respect to its amendment of Section 114(C) of the NIRC.
DANTE O. TINGA
Associate Justice

Footnotes
1

Republic Act No. 9337. Referred to intext as "E-VAT Law."

Except insofar as it prays that Section 21 of the E-VAT Law be declared unconstitutional. Infra.

J. Vitug and E. Acosta, Tax Law and Jurisprudence (2nd ed., 2000), at 7-8.

See National Power Corporation v. Province of Albay, G.R. No. 87479, 4 June 1990, 186 SCRA 198,
203.
5

See Section 24, Article VI, Constitution.

The recognized exceptions, both expressly provided by the Constitution, being the tariff clause under
Section 28(2), Article VI, and the powers of taxation of local government units under Section 5,
Article X.
7

G.R. No. 158540, 8 July 2005, 434 SCRA 65.

See People v. Vera, 65 Phil. 56, 117 (1937).

Decision, infra.

10

Carpio v. Executive Secretary, GR No. 96409 February 14,1992, 206 SCRA 290, 298; citing In re
Guarina, 24 Phil. 37.
Page 213 of 557

11

People v. Vera, supra note 8.

12

See Section 2, National Internal Revenue Code.

13

There are two eminent tests for valid delegation, the "completeness test" and the "sufficient standard
test". The law must be complete in its essential terms and conditions when it leaves the legislature so
that there will be nothing left for the delegate to do when it reaches him except enforce it. U.S. v. Ang
Tang Ho, 43 Phil. 1, 6-7 (1922). On the other hand, a sufficient standard is intended to map out the
boundaries of the delegates authority by defining legislative policy and indicating the circumstances
under which it is to be pursued and effected; intended to prevent a total transference of legislative
power from the legislature to the delegate.
14

Decision, infra, citing Alunan v. Mirasol, G.R. No. 108399, 31 July 1997, 276 SCRA 501, 513-514.

15

Notwithstanding, the Court in Southern Cross did rule that Section 5 of the Safeguard Measures Act,
which required a positive final determination by the Tariff Commission before the DTI or Agriculture
Secretaries could impose general safeguard measures, operated as a valid restriction and limitation on
the exercise by the executive branch of government of its tariff powers.
16

G.R. No. 115455, 25 August 1994, 235 SCRA 630.

17

M. Evans, A Source of Frequent and Obstinate Altercations: The History and Application of the
Origination Clause.
18

The Federalist No. 58, at 394 (J. Madison) (J.Cooke ed. 1961), cited in J. M. Medina, The
Orignation Clause in the American Constitution: A Comparative Survey, 23 Tulsa Law Journal 2, at
165.
19

Tolentino v. Secretary of Finance, supra note 16 at 661.

20

See Section 27(1), Article VI, Constitution.

21

Tolentino v. Secretary of Finance, supra note 16 at 668.

22

G.R. No. 124360, 5 November 1997, 281 SCRA 330.

23

Id. at 349-350.

24

People v. Tudtud, G.R. No. 144037, 26 September 2003, 412 SCRA 142, 168.

25

See Section 1, Article III, Constitution. Private corporations and partnerships are persons within the
scope of the guaranty insofar as their property is concerned. Smith Bell & Co. v. Natividad, 40 Phil.
136, 145 (1919).
26

16 C.J.S., at 1150-1151.

27

292 U.S. 40 (1934).

28

Id. at 44.

Page 214 of 557

29

G.R. No. L-59431, 25 July 1984, 130 SCRA 654.

30

Id. at 660-662.

31

Justice Isagani Cruz offers the following examples of taxes that contravene the due process clause:
"A tax, for example, that would claim 80 percent of a persons net income would clearly be oppressive
and could unquestionably struck down as a deprivation of his property without due process of law. A
property tax retroacting to as long as fifty years back would by tyrannical and unrealistic, as the
property might not yet have been then in the possession of the taxpayer nor, presumably, would he
have acquired it had he known of the tax to be imposed on it." I. Cruz, Constitutional Law, p. 85.
32

"After defining religion, the Court, citing Tanada and Fernando, made this statement, viz:

The constitutional guaranty of the free exercise and enjoyment of religious profession and worship
carries with it the right to disseminate religious information. Any restraint of such right can only be
justified like other restraints of freedom of expression on the grounds that there is a clear and present
danger of any substantive evil which the State has the right to prevent. (Tanada and Fernando on the
Constitution of the Philippines, vol. 1, 4th ed., p. 297) (emphasis supplied)
This was the Court's maiden unequivocal affirmation of the "clear and present danger" rule in the
religious freedom area, and in Philippine jurisprudence, for that matter." Estrada v. Escritor, A.M. No.
P-02-1651, 4 August 2003, 408 SCRA 1.
33

Separate Opinion, infra.

34

Ibid.

35

Art. 2, European Commission First Council Directive 67/227 of 11 April 1967 on the Harmonization
of Legislation of Member States Concerning Turnover Taxes, 1971 O.J. (L 71) 1301.
36

Liam & Ebrill, The Modern VAT.

37

"The most basic law in finance!" Understand the Time Value of Money. http://www.free-financialadvice.net/time-value-of-money.html. Last visited, 30 August 2005.
38

Time Value of Money. http://www.jetobjects.com/components/finance/ TVM/concepts.html. Last

visited, 30 August 2005.
39

There is also the option for the business to go underground and avoid VAT registration, and
consequently avoid remitting VAT payments to the government. It would be facetious though for a
Justice of the Supreme Court to characterize this illegal option as "viable."
40

In Joseph Hellers Catch-22, Yossarian, a World War II pilot reasoned that if he feigned insanity, he
would be necessarily exempt from assignment to dangerous bombing runs in enemy territory.
However, his superiors reasoned that if he were truly insane, he then would be heedless enough to be
sent on those dangerous bombing runs he had sought to avoid in the first place.
41

Section 20, Article II, Constitution.

42

The due process clause alone is sufficient to invalidate any contravening taxing statute. On the other
hand, Section 20, Article II on its own might not be similarly sufficient. However, if the taxing statute
Page 215 of 557

violates both the due process clause and Section 20, Article II, then the impetus to strike down the
offending law becomes even more compelling, so as to defeat the generalist invocation of the States
inherent powers of taxation.
43

Pangloss was a famed character ridiculed in Voltaires Candide, renowned for his absolute blind
faith in optimism, no matter how dire the circumstances.
44

Id. at 29-30.

45

Decision, infra.

46

This is confirmed by the BIR in its draft Revenue Memorandum Circular dated 12 July 2005,
submitted by respondents in its Compliance dated 16 August 2005:
"[Q]: Is there a way by which such unapplied excess input tax credits can be claimed for refund or
issuance of TCC?
[A]: The only time application for refund/issuance of TCC is allowed for input taxes incurred on
the purchase of domestic goods/services is when the same are directly attributable to zero-rated
or effectively zero-rated sales (of goods/services). xxx
For those engaged purely in domestic transactions, the only time that unapplied input taxes may
be applied for the issuance of TCC is when the VAT registration of the taxpayer is cancelled due
to retirement or cessation of business or change in the status of the taxpayer as a VAT registered
taxpayer. As provided for in Section 112(B0, in case of cancellation of VAT registration due to
cessation of business or change in status of taxpayer, the only recourse given to such taxpayer is to
apply for the issuance of TCC on his excess input tax credits which may be used in payment of his
other internal revenue taxes, application for refund thereof is not an option."
See Annexes "18-N" and "18-O", Compliance dated 12 July 2005.
47

See SRC Rule 68(1)(b)(c), Implementing Rules and Regulations to the Securities and Regulations
Code.
48

Section 34, International Accounting Standards 12.

49

Section 36, id.

50

In his Separate Opinion, Justice Panganiban asserts that the deferred input tax credit is not really
confiscated by the government, as it remains an asset in the accounting records of a business. See
Separate Opinion, infra. By the same logic, a law requiring all businesses to surrender to the
government 100% of its gross sales subject to reimbursement only after a five year period, would pass
muster, since the amount is "not really confiscated by the government as it remains an asset in the
accounting records of a business."
51

Justice Panganiban cites United Paracale Mining Co. v. De la Rosa (cited as 221 SCRA 108, 115,
April 7, 1993) to bolster his stated position that ""[t]here is no vested right in a deferred input tax
account; it is a mere statutory privilege". Separate Opinion, infra. United Paracale does not pertain to
any deferred input taxes, but instead to "mining claims which according to [petitioners] is private
property would constitute impairment of vested rights since by shifting the forum of the petitioners
case from the courts to the Bureau of Mines[the] substantive rights to full protection of its property
Page 216 of 557

rights shall be greatly impaired." United Paracale Mining Co. v. Hon. Dela Rosa, G.R. Nos. 63786-87,
7 April 1993, 221 SCRA 108, `115. Clearly, United Paracale is not even a tax case, involving as it
does, questions of the jurisdiction of the Bureau of Mines.
52

See Part III, Paragraph 3, Revenue Memorandum Ruling No. 1-2002.

53

Section 32, International Accounting Standards 12.

54

Supra note 47.

55

Supra note 9.

56

Section 3, Article XIII, Constitution.

57

Kapatiran ng Mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. et al. v. Tan, G.R. No. L-81311, 30
June 1988.
58

J. Vitug and E. Acosta, supra note 3 at 41.

59

Pepsi-Cola Bottling Co. of the Philippines, Inc. v. Municipality of Tanauan, G.R. No. L-31156, 27
February 1976, 69 SCRA 460, 466-67; citing CIR v. Lednicky, L-18169, July 31, 1964, 11 SACRA
609 and SMB, Inc. v. City of Cebu, L-20312, February 26, 1972, 43 SCRA 280.
60

A.M. No. 90-6-015-SC, 18 October 1990, 190 SCRA 851.

61

Id. at 856.

The Lawphil Project - Arellano Law Foundation

EN BANC
G.R. No. 168056 ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S.
ALCANTARA and ED VINCENT S. ALBANO v. THE HONORABLE EXECUTIVE SECRETARY
EDUARDO ERMITA, ET AL.
G.R. No. 168207 AQUILINO Q. PIMENTEL, JR., ET AL. v. EXECUTIVE SECRETARY
EDUARDO R. ERMITA
G.R. No. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., ET AL. v. CESAR V.
PURISIMA, ET AL.
G.R. No. 168463 FRANCIS JOSEPH G. ESCUDERO, ET AL. v. CESAR V. PURISIMA, ET AL.
G.R. No. 168730 BATAAN GOVERNOR ENRIQUE T. GARCIA, JR., ET AL. v. HON. EDUARDO
R. ERMITA, ET AL.
Promulgated:
Page 217 of 557

September 1, 2005
x--------------------------------------------------x
CONCURRING OPINION
CHICO-NAZARIO, J.:
Five petitions were filed before this Court questioning the constitutionality of Republic Act No. 9337. Rep.
Act No. 9337, which amended certain provisions of the National Internal Revenue Code of 1997,1 by
essentially increasing the tax rates and expanding the coverage of the Value-Added Tax (VAT). Undoubtedly,
during these financially difficult times, more taxes would be additionally burdensome to the citizenry.
However, like a bitter pill, all Filipino citizens must bear the burden of these new taxes so as to raise the muchneeded revenue for the ailing Philippine economy. Taxation is the indispensable and inevitable price for a
civilized society, and without taxes, the government would be paralyzed.2 Without the tax reforms introduced
by Rep. Act No. 9337, the then Secretary of the Department of Finance, Cesar V. Purisima, assessed that "all
economic scenarios point to the National Governments inability to sustain its precarious fiscal position,
resulting in severe erosion of investor confidence and economic stagnation."3
Finding Rep. Act No. 9337 as not unconstitutional, both in its procedural enactment and in its substance, I
hereby concur in full in the foregoing majority opinion, penned by my esteemed colleague, Justice Ma. Alicia
Austria-Martinez.
According to petitioners, the enactment of Rep. Act No. 9337 by Congress was riddled with irregularities and
violations of the Constitution. In particular, they alleged that: (1) The Bicameral Conference Committee
exceeded its authority to merely settle or reconcile the differences among House Bills No. 3555 and 3705 and
Senate Bill No. 1950, by including in Rep. Act No. 9337 provisions not found in any of the said bills, or
deleting from Rep. Act No. 9337 or amending provisions therein even though they were not in conflict with
the provisions of the other bills; (2) The amendments introduced by the Bicameral Conference Committee
violated Article VI, Section 26(2), of the Constitution which forbids the amendment of a bill after it had passed
third reading; and (3) Rep. Act No. 9337 contravened Article VI, Section 24, of the Constitution which
prescribes that revenue bills should originate exclusively from the House of Representatives.
Invoking the expanded power of judicial review granted to it by the Constitution of 1987, petitioners are
calling upon this Court to look into the enactment of Rep. Act No. 9337 by Congress and, consequently, to
review the applicability of the enrolled bill doctrine in this jurisdiction. Under the said doctrine, the enrolled
bill, as signed by the Speaker of the House of Representatives and the Senate President, and certified by the
Secretaries of both Houses of Congress, shall be conclusive proof of its due enactment.4
Petitioners arguments failed to convince me of the wisdom of abandoning the enrolled bill doctrine. I believe
that it is more prudent for this Court to remain conservative and to continue its adherence to the enrolled bill
doctrine, for to abandon the said doctrine would be to open a Pandoras Box, giving rise to a situation more
fraught with evil and mischief. Statutes enacted by Congress may not attain finality or conclusiveness unless
declared so by this Court. This would undermine the authority of our statutes because despite having been
signed and certified by the designated officers of Congress, their validity would still be in doubt and their
implementation would be greatly hampered by allegations of irregularities in their passage by the Legislature.
Such an uncertainty in the statutes would indubitably result in confusion and disorder. In all probability, it is
the contemplation of such a scenario that led an American judge to proclaim, thus
. . . Better, far better, that a provision should occasionally find its way into the statute through mistake, or even
fraud, than, that every Act, state and national, should at any and all times be liable to put in issue and

Page 218 of 557

impeached by the journals, loose papers of the Legislature, and parol evidence. Such a state of uncertainty in
the statute laws of the land would lead to mischiefs absolutely intolerable. . . .5
Moreover, this Court must attribute good faith and accord utmost respect to the acts of a co-equal branch of
government. While it is true that its jurisdiction has been expanded by the Constitution, the exercise thereof
should not violate the basic principle of separation of powers. The expanded jurisdiction does not contemplate
judicial supremacy over the other branches of government. Thus, in resolving the procedural issues raised by
the petitioners, this Court should limit itself to a determination of compliance with, or conversely, the violation
of a specified procedure in the Constitution for the passage of laws by Congress, and not of a mere internal rule
of proceedings of its Houses.
It bears emphasis that most of the irregularities in the enactment of Rep. Act No. 9337 concern the
amendments introduced by the Bicameral Conference Committee. The Constitution is silent on such a
committee, it neither prescribes the creation thereof nor does it prohibit it. The creation of the Bicameral
Conference Committee is authorized by the Rules of both Houses of Congress. That the Rules of both Houses
of Congress provide for the creation of a Bicameral Conference Committee is within the prerogative of each
House under the Constitution to determine its own rules of proceedings.
The Bicameral Conference Committee is a creation of necessity and practicality considering that our Congress
is composed of two Houses, and it is highly improbable that their respective bills on the same subject matter
shall always be in accord and consistent with each other. Instead of all their members, only the appointed
representatives of both Houses shall meet to reconcile or settle the differences in their bills. The resulting bill
from their meetings, embodied in the Bicameral Conference Report, shall be subject to approval and
ratification by both Houses, voting separately.
It does perplex me that members of both Houses would again ask the Court to define and limit the powers of
the Bicameral Conference Committee when such committee is of their own creation. In a number of cases,6
this Court already made a determination of the extent of the powers of the Bicameral Conference Committee
after taking into account the existing Rules of both Houses of Congress. In gist, the power of the Bicameral
Conference Committee to reconcile or settle the differences in the two Houses respective bills is not limited to
the conflicting provisions of the bills; but may include matters not found in the original bills but germane to
the purpose thereof. If both Houses viewed the pronouncement made by this Court in such cases as extreme or
beyond what they intended, they had the power to amend their respective Rules to clarify or limit even further
the scope of the authority which they grant to the Bicameral Conference Committee. Petitioners grievance
that, unfortunately, they cannot bring about such an amendment of the Rules on the Bicameral Conference
Committee because they are members of the minority, deserves scant consideration. That the majority of the
members of both Houses refuses to amend the Rules on the Bicameral Conference Committee is an indication
that it is still satisfied therewith. At any rate, this is how democracy works the will of the majority shall be
controlling.
Worth reiterating herein is the concluding paragraph in Arroyo v. De Venecia,7 which reads
It would be unwarranted invasion of the prerogative of a coequal department for this Court either to set aside a
legislative action as void because the Court thinks the house has disregarded its own rules of procedure, or to
allow those defeated in the political arena to seek a rematch in the judicial forum when petitioners can find
remedy in that department. The Court has not been invested with a roving commission to inquire into
complaints, real or imagined, of legislative skullduggery. It would be acting in excess of its power and would
itself be guilty of grave abuse of its discretion were it to do so. . . .
Present jurisprudence allows the Bicameral Conference Committee to amend, add, and delete provisions of the
Bill under consideration, even in the absence of conflict thereon between the Senate and House versions, but
only so far as said provisions are germane to the purpose of the Bill.8 Now, there is a question as to whether
Page 219 of 557

the Bicameral Conference Committee, which produced Rep. Act No. 9337, exceeded its authority when it
included therein amendments of provisions of the National Internal Revenue Code of 1997 not related to VAT.
Although House Bills No. 3555 and 3705 were limited to the amendments of the provisions on VAT of the
National Internal Revenue Code of 1997, Senate Bill No. 1950 had a much wider scope and included
amendments of other provisions of the said Code, such as those on income, percentage, and excise taxes. It
should be borne in mind that the very purpose of these three Bills and, subsequently, of Rep. Act No. 9337,
was to raise additional revenues for the government to address the dire economic situation of the country. The
National Internal Revenue Code of 1997, as its title suggests, is the single Code that governs all our national
internal revenue taxes. While it does cover different taxes, all of them are imposed and collected by the
national government to raise revenues. If we have one Code for all our national internal revenue taxes, then
there is no reason why we cannot have a single statute amending provisions thereof even if they involve
different taxes under separate titles. I hereby submit that the amendments introduced by the Bicameral
Conference Committee to non-VAT provisions of the National Internal Revenue Code of 1997 are not
unconstitutional for they are germane to the purpose of House Bills No. 3555 and 3705 and Senate Bill No.
1950, which is to raise national revenues.
Furthermore, the procedural issues raised by the petitioners were already addressed and resolved by this Court
in Tolentino v. Executive Secretary.9 Since petitioners failed to proffer novel factual or legal argument in
support of their positions that were not previously considered by this Court in the same case, then I am not
compelled to depart from the conclusions made therein.
The majority opinion has already thoroughly discussed each of the substantial issues raised by the petitioners. I
would just wish to discuss additional matters pertaining to the petition of the petroleum dealers in G.R. No.
168461.
They claim that the provision of Rep. Act No. 9337 limiting their input VAT credit to only 70% of their output
VAT deprives them of their property without due process of law. They argue further that such 70% cap
violates the equal protection and uniformity of taxation clauses under Article III, Section 1, and Article VI,
Section 28(1), respectively, of the Constitution, because it will unduly prejudice taxpayers who have high input
VAT and who, because of the cap, cannot fully utilize their input VAT as credit.
I cannot sustain the petroleum dealers position for the following reasons
First, I adhere to the view that the input VAT is not a property to which the taxpayer has vested rights. Input
VAT consists of the VAT a VAT-registered person had paid on his purchases or importation of goods,
properties, and services from a VAT-registered supplier; more simply, it is VAT paid. It is not, as averred by
petitioner petroleum dealers, a property that the taxpayer acquired for valuable consideration.10 A VATregistered person incurs input VAT because he complied with the National Internal Revenue Code of 1997,
which imposed the VAT and made the payment thereof mandatory; and not because he paid for it or purchased
it for a price.
Generally, when one pays taxes to the government, he cannot expect any direct and concrete benefit to himself
for such payment. The benefit of payment of taxes shall redound to the society as a whole. However, by virtue
of Section 110(A) of the National Internal Revenue Code of 1997, prior to its amendment by Rep. Act No.
9337, a VAT-registered person is allowed, subject to certain substantiation requirements, to credit his input
VAT against his output VAT.
Output VAT is the VAT imposed by the VAT-registered person on his own sales of goods, properties, and
services or the VAT he passes on to his buyers. Hence, the VAT-registered person selling the goods,
properties, and services does not pay for the output VAT; said output VAT is paid for by his consumers and he
only collects and remits the same to the government.
Page 220 of 557

The crediting of the input VAT against the output VAT is a statutory privilege, granted by Section 110 of the
National Internal Revenue Code of 1997. It gives the VAT-registered person the opportunity to recover the
input VAT he had paid, so that, in effect, the input VAT does not constitute an additional cost for him. While it
is true that input VAT credits are reported as assets in a VAT-registered persons financial statements and
books of account, this accounting treatment is still based on the statutory provision recognizing the input VAT
as a credit. Without Section 110 of the National Internal Revenue Code of 1997, then the accounting treatment
of any input VAT will also change and may no longer be booked outright as an asset. Since the privilege of an
input VAT credit is granted by law, then an amendment of such law may limit the exercise of or may totally
withdraw the privilege.
The amendment of Section 110 of the National Internal Revenue Code of 1997 by Rep. Act No. 9337, which
imposed the 70% cap on input VAT credits, is a legitimate exercise by Congress of its law-making power. To
say that Congress may not trifle with Section 110 of the National Internal Revenue Code of 1997 would be to
violate a basic precept of constitutional law that no law is irrepealable.11 There can be no vested right to the
continued existence of a statute, which precludes its change or repeal.12
It bears to emphasize that Rep. Act No. 9337 does not totally remove the privilege of crediting the input VAT
against the output VAT. It merely limits the amount of input VAT one may credit against his output VAT per
quarter to an amount equivalent to 70% of the output VAT. What is more, any input VAT in excess of the 70%
cap may be carried-over to the next quarter.13 It is certainly a departure from the VAT crediting system under
Section 110 of the National Internal Revenue Code of 1997, but it is an innovation that Congress may very
well introduce, because
VAT will continue to evolve from its pioneering original structure. Dynamically, it will be subjected to
reforms that will make it conform to many factors, among which are: the changing requirements of
government revenue; the social, economic and political vicissitudes of the times; and the conflicting interests
in our society. In the course of its evolution, it will be injected with some oddities and inevitably transformed
into a structure which its revisionists believe will be an improvement overtime.14
Second, assuming for the sake of argument, that the input VAT credit is indeed a property, the petroleum
dealers right thereto has not vested. A right is deemed vested and subject to constitutional protection when
". . . [T]he right to enjoyment, present or prospective, has become the property of some particular person or
persons as a present interest. The right must be absolute, complete, and unconditional, independent of a
contingency, and a mere expectancy of future benefit, or a contingent interest in property founded on
anticipated continuance of existing laws, does not constitute a vested right. So, inchoate rights which have not
been acted on are not vested." (16 C. J. S. 214-215)15
Under the National Internal Revenue Code of 1997, before it was amended by Rep. Act No. 9337, the sale or
importation of petroleum products were exempt from VAT, and instead, were subject to excise tax.16
Petroleum dealers did not impose any output VAT on their sales to consumers. Since they had no output VAT
against which they could credit their input VAT, they shouldered the costs of the input VAT that they paid on
their purchases of goods, properties, and services. Their sales not being subject to VAT, the petroleum dealers
had no input VAT credits to speak of.
It is only under Rep. Act No. 9337 that the sales by the petroleum dealers have become subject to VAT and
only in its implementation may they use their input VAT as credit against their output VAT. While eager to
use their input VAT credit accorded to it by Rep. Act No. 9337, the petroleum dealers reject the limitation
imposed by the very same law on such use.
It should be remembered that prior to Rep. Act No. 9337, the petroleum dealers input VAT credits were
inexistent they were unrecognized and disallowed by law. The petroleum dealers had no such property called
Page 221 of 557

input VAT credits. It is only rational, therefore, that they cannot acquire vested rights to the use of such input
VAT credits when they were never entitled to such credits in the first place, at least, not until Rep. Act No.
9337.
My view, at this point, when Rep. Act No. 9337 has not yet even been implemented, is that petroleum dealers
right to use their input VAT as credit against their output VAT unlimitedly has not vested, being a mere
expectancy of a future benefit and being contingent on the continuance of Section 110 of the National Internal
Revenue Code of 1997, prior to its amendment by Rep. Act No. 9337.
Third, although the petroleum dealers presented figures and computations to support their contention that the
cap shall lead to the demise of their businesses, I remain unconvinced.
Rep. Act No. 9337, while imposing the 70% cap on input VAT credits, allows the taxpayer to carry-over to the
succeeding quarters any excess input VAT. The petroleum dealers presented a situation wherein their input
VAT would always exceed 70% of their output VAT, and thus, their excess input VAT will be perennially
carried-over and would remain unutilized. Even though they consistently questioned the 70% cap on their
input VAT credits, the petroleum dealers failed to establish what is the average ratio of their input VAT vis-vis their output VAT per quarter. Without such fact, I consider their objection to the 70% cap arbitrary because
there is no basis therefor.
On the other, I find that the 70% cap on input VAT credits was not imposed by Congress arbitrarily. Members
of the Bicameral Conference Committee settled on the said percentage so as to ensure that the government can
collect a minimum of 30% output VAT per taxpayer. This is to put a VAT-taxpayer, at least, on equal footing
with a VAT-exempt taxpayer under Section 109(V) of the National Internal Revenue Code, as amended by
Rep. Act No. 9337.17 The latter taxpayer is exempt from VAT on the basis that his sale or lease of goods or
properties or services do not exceed P1,500,000; instead, he is subject to pay a three percent (3%) tax on his
gross receipts in lieu of the VAT.18 If a taxpayer with presumably a smaller business is required to pay three
percent (3%) gross receipts tax, a type of tax which does not even allow for any crediting, a VAT-taxpayer
with a bigger business should be obligated, likewise, to pay a minimum of 30% output VAT (which should be
equivalent to 3% of the gross selling price per good or property or service sold). The cap assures the
government a collection of at least 30% output VAT, contributing to an improved cash flow for the
government.
Attention is further called to the fact that the output VAT is the VAT imposed on the sales by a VAT-taxpayer;
it is paid by the purchasers of the goods, properties, and services, and merely collected through the VATregistered seller. The latter, therefore, serves as a collecting agent for the government. The VAT-registered
seller is merely being required to remit to the government a minimum of 30% of his output VAT collection.
Fourth, I give no weight to the figures and computations presented before this Court by the petroleum dealers,
particularly the supposed quarterly profit and loss statement of a "typical dealer." How these data represent the
financial status of a typical dealer, I would not know when there was no effort to explain the manner by which
they were surveyed, collated, and averaged out. Without establishing their source therefor, the figures and
computations presented by the petroleum dealers are merely self-serving and unsubstantiated, deserving scant
consideration by this Court. Even assuming that these figures truly represent the financial standing of
petroleum dealers, the introduction and application thereto of the VAT factor, which forebode the collapse of
said petroleum dealers businesses, would be nothing more than an anticipated damage an injury that may or
may not happen. To resolve their petition on this basis would be premature and contrary to the established
tenet of ripeness of a cause of action before this Court could validly exercise its power of judicial review.
Fifth, in response to the contention of the petroleum dealers during oral arguments before this Court that they
cannot pass on to the consumers the VAT burden and increase the prices of their goods, it is worthy to quote
below this Courts ruling in Churchill v. Concepcion,19 to wit
Page 222 of 557

It will thus be seen that the contention that the rates charged for advertising cannot be raised is purely
hypothetical, based entirely upon the opinion of the plaintiffs, unsupported by actual test, and that the plaintiffs
themselves admit that a number of other persons have voluntarily and without protest paid the tax herein
complained of. Under these circumstances, can it be held as a matter of fact that the tax is confiscatory or that,
as a matter of law, the tax is unconstitutional? Is the exercise of the taxing power of the Legislature dependent
upon and restricted by the opinion of two interested witnesses? There can be but one answer to these questions,
especially in view of the fact that others are paying the tax and presumably making reasonable profit from their
business.
As a final observation, I perceive that what truly underlies the opposition to Rep. Act No. 9337 is not the
question of its constitutionality, but rather the wisdom of its enactment. Would it truly raise national revenue
and benefit the entire country, or would it only increase the burden of the Filipino people? Would it contribute
to a revival of our economy or only contribute to the difficulties and eventual closure of businesses? These are
issues that we cannot resolve as the Supreme Court. As this Court explained in Agustin v. Edu,20 to wit
It does appear clearly that petitioners objection to this Letter of Instruction is not premised on lack of power,
the justification for a finding of unconstitutionality, but on the pessimistic, not to say negative, view he
entertains as to its wisdom. That approach, it put it at its mildest, is distinguished, if that is the appropriate
word, by its unorthodoxy. It bears repeating "that this Court, in the language of Justice Laurel, does not pass
upon questions of wisdom, justice or expediency of legislation. As expressed by Justice Tuason: It is not the
province of the courts to supervise legislation and keep it within the bounds of propriety and common sense.
That is primarily and exclusively a legislative concern. There can be no possible objection then to the
observation of Justice Montemayor: As long as laws do not violate any Constitutional provision, the Courts
merely interpret and apply them regardless of whether or not they are wise or salutary. For they, according to
Justice Labrador, are not supposed to override legitimate policy and * * * never inquire into the wisdom of the
law. It is thus settled, to paraphrase Chief Justice Concepcion in Gonzales v. Commission on Elections, that
only congressional power or competence, not the wisdom of the action taken, may be the basis for declaring a
statute invalid. This is as it ought to be. The principle of separation of powers has in the main wisely allocated
the respective authority of each department and confined its jurisdiction to such sphere. There would then be
intrusion not allowable under the Constitution if on a matter left to the discretion of a coordinate branch, the
judiciary would substitute its own"21
To reiterate, we cannot substitute our discretion for Congress, and even though there are provisions in Rep. Act
No. 9337 which we may believe as unwise or iniquitous, but not unconstitutional, we cannot strike them off by
invoking our power of judicial review. In such a situation, the recourse of the people is not judicial, but rather
political. If they severely doubt the wisdom of the present Congress for passing a statute such as Rep. Act No.
9337, then they have the power to hold the members of said Congress accountable by using their voting power
in the next elections.
In view of the foregoing, I vote for the denial of the present petitions and the upholding of the constitutionality
of Rep. Act No. 9337 in its entirety.
MINITA V. CHICO-NAZARIO
Associate Justice

Footnotes
1

Presidential Decree No. 1158, as amended up to Rep. Act No. 8424.

Page 223 of 557

Commissioner of Internal Revenue v. Algue, Inc., G.R. No. L-28896, 17 February 1988, 158 SCRA
9.
3

Paragraph 3.3 of the Verification and Affidavit of Merit, executed by the then Secretary of the
Department of Finance, Cesar V. Purisima, dated 04 July 2005, attached as Annex A of the Very
Urgent Motion to Lift Temporary Restraining Order, filed by the Office of the Solicitor General on 04
July 2005.
4

Farias v. Executive Secretary, G.R. No. 147387, 10 December 2003, 417 SCRA 503, 529.

Justice Sawyer, in Sherman v. Story, 30 Cal. 253, 256, as quoted in Marshall Field & Co. v. Clark,
143 U.S. 294, 304.
6

Tolentino v. Secretary of Finance, G.R. No. 115544, 25 August 1994, 235 SCRA 630; Philippine
Judges Association v. Prado, G.R. No. 105371, 11 November 1993, 227 SCRA 703.
7

G.R. No. 127255, 14 August 1997, 277 SCRA 268, 299.

Supra, note 6.

Supra, note 3.

10

Petition for Prohibition (Under Rule 65 with Prayer for the Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction) in G.R. No. 168461 entitled, Association of Pilipinas
Shell Dealers, Inc., et al. v. Purisima, et al., p. 17, paragraph 52.
11

Asociacion de Agricultores de Talisay-Silay, Inc. v. Talisay-Silay Milling Co., Inc., G.R. No. L19937, 19 February 1979, 88 SCRA 294; Duarte v. Dade, 32 Phil. 36 (1915).
12

Traux v. Corrigan, 257 U.S. 312, 66 L. Ed. 254, as quoted in Asociacion de Agricultores de TalisaySilay, Inc. v. Talisay-Silay Milling Co., Inc., Id., p. 452.
13

Section 110(B) of the National Internal Revenue Code of 1997, as amended by Section 8 of Rep.
Act No. 9337.
14

Victorio A. Deoferio, Jr. and Victorino C. Mamalateo, The Value Added Tax in the Philippines 48
(2000).
15

Benguet Consolidated Mining Co. v. Pineda, 98 Phil 711, 722 (1956).

16

Section 109(e) of the National Internal Revenue Code of 1997.

17

TSN, 18 April 2005, IV-2, p. 5.

18

Section 116 of the National Internal Revenue Code, as amended by Rep. Act No. 9337.

19

34 Phil. 969, 973 (1916).

20

G.R. No. L-49112, 02 February 1979, 88 SCRA 195.

Page 224 of 557

21

Id., pp. 210-211.

Page 225 of 557

Republic of the Philippines

SUPREME COURT
EN BANC
G.R. No. 168056 October 18, 2005
Agenda for Item No. 45
G.R. No. 168056 (ABAKADA Guro Party List Officer Samson S. Alcantara, et al. vs. The Hon.
Executive Secretary Eduardo R. Ermita); G.R. No. 168207 (Aquilino Q. Pimentel, Jr., et al. vs.
Executive Secretary Eduardo R. Ermita, et al.); G.R. No. 168461 (Association of Pilipinas Shell Dealers,
Inc., et al. vs. Cesar V. Purisima, et al.); G.R. No. 168463 (Francis Joseph G. Escudero vs. Cesar V.
Purisima, et al); and G.R. No. 168730 (Bataan Governor Enrique T. Garcia, Jr. vs. Hon. Eduardo R.
Ermita, et al.)
RESOLUTION
For resolution are the following motions for reconsideration of the Courts Decision dated September 1, 2005
upholding the constitutionality of Republic Act No. 9337 or the VAT Reform Act1:
1) Motion for Reconsideration filed by petitioners in G.R. No. 168463, Escudero, et al., on the following
grounds:
A. THE DELETION OF THE "NO PASS ON PROVISIONS" FOR THE SALE OF PETROLEUM
PRODUCTS AND POWER GENERATION SERVICES CONSTITUTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION ON THE PART OF THE
BICAMERAL CONFERENCE COMMITTEE.
B. REPUBLIC ACT NO. 9337 GROSSLY VIOLATES THE CONSTITUTIONAL IMPERATIVE ON
EXCLUSIVE ORIGINATION OF REVENUE BILLS UNDER 24, ARTICLE VI, 1987 PHILIPPINE
CONSTITUTION.
C. REPUBLIC ACT NO. 9337S STAND-BY AUTHORITY TO THE EXECUTIVE TO INCREASE THE
VAT RATE, ESPECIALLY ON ACCOUNT OF THE EFFECTIVE RECOMMENDATORY POWER
GRANTED TO THE SECRETARY OF FINANCE, CONSTITUTES UNDUE DELEGATION OF
LEGISLATIVE AUTHORITY.
2) Motion for Reconsideration of petitioner in G.R. No. 168730, Bataan Governor Enrique T. Garcia, Jr., with
the argument that burdening the consumers with significantly higher prices under a VAT regime vis--vis a 3%
gross tax renders the law unconstitutional for being arbitrary, oppressive and inequitable.
and
3) Motion for Reconsideration by petitioners Association of Pilipinas Shell Dealers, Inc. in G.R. No. 168461,
on the grounds that:
I. This Honorable Court erred in upholding the constitutionality of Section 110(A)(2) and Section 110(B) of
the NIRC, as amended by the EVAT Law, imposing limitations on the amount of input VAT that may be
claimed as a credit against output VAT, as well as Section 114(C) of the NIRC, as amended by the EVAT

Page 226 of 557

Law, requiring the government or any of its instrumentalities to withhold a 5% final withholding VAT on their
gross payments on purchases of goods and services, and finding that the questioned provisions:
A. are not arbitrary, oppressive and consfiscatory as to amount to a deprivation of property without due process
of law in violation of Article III, Section 1 of the 1987 Philippine Constitution;
B. do not violate the equal protection clause prescribed under Article III, Section 1 of the 1987 Philippine
Constitution; and
C. apply uniformly to all those belonging to the same class and do not violate Article VI, Section 28(1) of the
1987 Philippine Constitution.
II. This Honorable Court erred in upholding the constitutionality of Section 110(B) of the NIRC, as amended
by the EVAT Law, imposing a limitation on the amount of input VAT that may be claimed as a credit against
output VAT notwithstanding the finding that the tax is not progressive as exhorted by Article VI, Section 28(1)
of the 1987 Philippine Constitution.
Respondents filed their Consolidated Comment. Petitioner Garcia filed his Reply.
Petitioners Escudero, et al., insist that the bicameral conference committee should not even have acted on the
no pass-on provisions since there is no disagreement between House Bill Nos. 3705 and 3555 on the one hand,
and Senate Bill No. 1950 on the other, with regard to the no pass-on provision for the sale of service for power
generation because both the Senate and the House were in agreement that the VAT burden for the sale of such
service shall not be passed on to the end-consumer. As to the no pass-on provision for sale of petroleum
products, petitioners argue that the fact that the presence of such a no pass-on provision in the House version
and the absence thereof in the Senate Bill means there is no conflict because "a House provision cannot be in
conflict with something that does not exist."
Such argument is flawed. Note that the rules of both houses of Congress provide that a conference committee
shall settle the "differences" in the respective bills of each house. Verily, the fact that a no pass-on provision is
present in one version but absent in the other, and one version intends two industries, i.e., power generation
companies and petroleum sellers, to bear the burden of the tax, while the other version intended only the
industry of power generation, transmission and distribution to be saddled with such burden, clearly shows that
there are indeed differences between the bills coming from each house, which differences should be acted upon
by the bicameral conference committee. It is incorrect to conclude that there is no clash between two opposing
forces with regard to the no pass-on provision for VAT on the sale of petroleum products merely because such
provision exists in the House version while it is absent in the Senate version. It is precisely the absence of such
provision in the Senate bill and the presence thereof in the House bills that causes the conflict. The absence of
the provision in the Senate bill shows the Senates disagreement to the intention of the House of
Representatives make the sellers of petroleum bear the burden of the VAT. Thus, there are indeed two
opposing forces: on one side, the House of Representatives which wants petroleum dealers to be saddled with
the burden of paying VAT and on the other, the Senate which does not see it proper to make that particular
industry bear said burden. Clearly, such conflicts and differences between the no pass-on provisions in the
Senate and House bills had to be acted upon by the bicameral conference committee as mandated by the rules
of both houses of Congress.
Moreover, the deletion of the no pass-on provision made the present VAT law more in consonance with the
very nature of VAT which, as stated in the Decision promulgated on September 1, 2005, is a tax on spending
or consumption, thus, the burden thereof is ultimately borne by the end-consumer.
Escudero, et al., then claim that there had been changes introduced in the Rules of the House of
Representatives regarding the conduct of the House panel in a bicameral conference committee, since the time
Page 227 of 557

of Tolentino vs. Secretary of Finance2 to act as safeguards against possible abuse of authority by the House
members of the bicameral conference committee. Even assuming that the rule requiring the House panel to
report back to the House if there are substantial differences in the House and Senate bills had indeed been
introduced after Tolentino, the Court stands by its ruling that the issue of whether or not the House panel in the
bicameral conference committee complied with said internal rule cannot be inquired into by the Court. To
reiterate, "mere failure to conform to parliamentary usage will not invalidate the action (taken by a deliberative
body) when the requisite number of members have agreed to a particular measure."3
Escudero, et. al., also contend that Republic Act No. 9337 grossly violates the constitutional imperative on
exclusive origination of revenue bills under Section 24 of Article VI of the Constitution when the Senate
introduced amendments not connected with VAT.
The Court is not persuaded.
Article VI, Section 24 of the Constitution provides:
Sec. 24 All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments.
Section 24 speaks of origination of certain bills from the House of Representatives which has been interpreted
in the Tolentino case as follows:
To begin with, it is not the law but the revenue bill which is required by the Constitution to "originate
exclusively" in the House of Representatives. It is important to emphasize this, because a bill originating in the
House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole At
this point, what is important to note is that, as a result of the Senate action, a distinct bill may be produced. To
insist that a revenue statute and not only the bill which initiated the legislative process culminating in the
enactment of the law must substantially be the same as the House bill would be to deny the Senate's power
not only to "concur with amendments" but also to " propose amendments." It would be to violate the
coequality of legislative power of the two houses of Congress and in fact make the House superior to the
Senate.
Given, then, the power of the Senate to propose amendments, the Senate can propose its own version even
with respect to bills which are required by the Constitution to originate in the House.
...
Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff, or tax bills, bills
authorizing an increase of the public debt, private bills and bills of local application must come from the House
of Representatives on the theory that, elected as they are from the districts, the members of the House can be
expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are elected
at large, are expected to approach the same problems from the national perspective. Both views are thereby
made to bear on the enactment of such laws.4
Clearly, after the House bills as approved on third reading are duly transmitted to the Senate, the Constitution
states that the latter can propose or concur with amendments. The Court finds that the subject provisions found
in the Senate bill are within the purview of such constitutional provision as declared in the Tolentino case.
The intent of the House of Representatives in initiating House Bill Nos. 3555 and 3705 was to solve the
countrys serious financial problems. It was stated in the respective explanatory notes that there is a need for
Page 228 of 557

the government to make significant expenditure savings and a credible package of revenue measures. These
measures include improvement of tax administration and control and leakages in revenues from income taxes
and value added tax. It is also stated that one opportunity that could be beneficial to the overall status of our
economy is to review existing tax rates, evaluating the relevance given our present conditions. Thus, with these
purposes in mind and to accomplish these purposes for which the house bills were filed, i.e., to raise revenues
for the government, the Senate introduced amendments on income taxes, which as admitted by Senator Ralph
Recto, would yield about P10.5 billion a year.
Moreover, since the objective of these house bills is to raise revenues, the increase in corporate income taxes
would be a great help and would also soften the impact of VAT measure on the consumers by distributing the
burden across all sectors instead of putting it entirely on the shoulders of the consumers.
As to the other National Internal Revenue Code (NIRC) provisions found in Senate Bill No. 1950, i.e.,
percentage taxes, franchise taxes, amusement and excise taxes, these provisions are needed so as to cushion the
effects of VAT on consumers. As we said in our decision, certain goods and services which were subject to
percentage tax and excise tax would no longer be VAT exempt, thus, the consumer would be burdened more as
they would be paying the VAT in addition to these taxes. Thus, there is a need to amend these sections to
soften the impact of VAT. The Court finds no reason to reverse the earlier ruling that the Senate introduced
amendments that are germane to the subject matter and purposes of the house bills.
Petitioners Escudero, et al., also reiterate that R.A. No. 9337s stand- by authority to the Executive to increase
the VAT rate, especially on account of the recommendatory power granted to the Secretary of Finance,
constitutes undue delegation of legislative power. They submit that the recommendatory power given to the
Secretary of Finance in regard to the occurrence of either of two events using the Gross Domestic Product
(GDP) as a benchmark necessarily and inherently required extended analysis and evaluation, as well as policy
making.
There is no merit in this contention. The Court reiterates that in making his recommendation to the President
on the existence of either of the two conditions, the Secretary of Finance is not acting as the alter ego of the
President or even her subordinate. He is acting as the agent of the legislative department, to determine and
declare the event upon which its expressed will is to take effect. The Secretary of Finance becomes the means
or tool by which legislative policy is determined and implemented, considering that he possesses all the
facilities to gather data and information and has a much broader perspective to properly evaluate them. His
function is to gather and collate statistical data and other pertinent information and verify if any of the two
conditions laid out by Congress is present. Congress granted the Secretary of Finance the authority to ascertain
the existence of a fact, namely, whether by December 31, 2005, the value-added tax collection as a percentage
of GDP of the previous year exceeds two and four-fifth percent (24/5%) or the national government deficit as a
percentage of GDP of the previous year exceeds one and one-half percent (1%). If either of these two
instances has occurred, the Secretary of Finance, by legislative mandate, must submit such information to the
President. Then the 12% VAT rate must be imposed by the President effective January 1, 2006. Congress does
not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it,
and what is the scope of his authority; in our complex economy that is frequently the only way in which the
legislative process can go forward. There is no undue delegation of legislative power but only of the discretion
as to the execution of a law. This is constitutionally permissible. Congress did not delegate the power to tax
but the mere implementation of the law. The intent and will to increase the VAT rate to 12% came from
Congress and the task of the President is to simply execute the legislative policy. That Congress chose to use
the GDP as a benchmark to determine economic growth is not within the province of the Court to inquire into,
its task being to interpret the law.
With regard to petitioner Garcias arguments, the Court also finds the same to be without merit. As stated in
the assailed Decision, the Court recognizes the burden that the consumers will be bearing with the passage of
R.A. No. 9337. But as was also stated by the Court, it cannot strike down the law as unconstitutional simply
Page 229 of 557

because of its yokes. The legislature has spoken and the only role that the Court plays in the picture is to
determine whether the law was passed with due regard to the mandates of the Constitution. Inasmuch as the
Court finds that there are no constitutional infirmities with its passage, the validity of the law must therefore be
upheld.
Finally, petitioners Association of Pilipinas Shell Dealers, Inc. reiterated their arguments in the petition, citing
this time, the dissertation of Associate Justice Dante O. Tinga in his Dissenting Opinion.
The glitch in petitioners arguments is that it presents figures based on an event that is yet to happen. Their
illustration of the possible effects of the 70% limitation, while seemingly concrete, still remains theoretical.
Theories have no place in this case as the Court must only deal with an existing case or controversy that is
appropriate or ripe for judicial determination, not one that is conjectural or merely anticipatory.5 The
Court will not intervene absent an actual and substantial controversy admitting of specific relief through a
decree conclusive in nature, as distinguished from an opinion advising what the law would be upon a
hypothetical state of facts.6
The impact of the 70% limitation on the creditable input tax will ultimately depend on how one manages and
operates its business. Market forces, strategy and acumen will dictate their moves. With or without these VAT
provisions, an entrepreneur who does not have the ken to adapt to economic variables will surely perish in the
competition. The arguments posed are within the realm of business, and the solution lies also in business.
Petitioners also reiterate their argument that the input tax is a property or a property right. In the same breath,
the Court reiterates its finding that it is not a property or a property right, and a VAT-registered persons
entitlement to the creditable input tax is a mere statutory privilege.
Petitioners also contend that even if the right to credit the input VAT is merely a statutory privilege, it has
already evolved into a vested right that the State cannot remove.
As the Court stated in its Decision, the right to credit the input tax is a mere creation of law. Prior to the
enactment of multi-stage sales taxation, the sales taxes paid at every level of distribution are not recoverable
from the taxes payable. With the advent of Executive Order No. 273 imposing a 10% multi-stage tax on all
sales, it was only then that the crediting of the input tax paid on purchase or importation of goods and services
by VAT-registered persons against the output tax was established. This continued with the Expanded VAT
Law (R.A. No. 7716), and The Tax Reform Act of 1997 (R.A. No. 8424). The right to credit input tax as
against the output tax is clearly a privilege created by law, a privilege that also the law can limit. It should be
stressed that a person has no vested right in statutory privileges.7
The concept of "vested right" is a consequence of the constitutional guaranty of due process that expresses a
present fixed interest which in right reason and natural justice is protected against arbitrary state action; it
includes not only legal or equitable title to the enforcement of a demand but also exemptions from new
obligations created after the right has become vested. Rights are considered vested when the right to enjoyment
is a present interest, absolute, unconditional, and perfect or fixed and irrefutable.8 As adeptly stated by
Associate Justice Minita V. Chico-Nazario in her Concurring Opinion, which the Court adopts, petitioners
right to the input VAT credits has not yet vested, thus
It should be remembered that prior to Rep. Act No. 9337, the petroleum dealers input VAT credits were
inexistent they were unrecognized and disallowed by law. The petroleum dealers had no such property called
input VAT credits. It is only rational, therefore, that they cannot acquire vested rights to the use of such input
VAT credits when they were never entitled to such credits in the first place, at least, not until Rep. Act No.
9337.

Page 230 of 557

My view, at this point, when Rep. Act No. 9337 has not yet even been implemented, is that petroleum dealers
right to use their input VAT as credit against their output VAT unlimitedly has not vested, being a mere
expectancy of a future benefit and being contingent on the continuance of Section 110 of the National Internal
Revenue Code of 1997, prior to its amendment by Rep. Act No. 9337.
The elucidation of Associate Justice Artemio V. Panganiban is likewise worthy of note, to wit:
Moreover, there is no vested right in generally accepted accounting principles. These refer to accounting
concepts, measurement techniques, and standards of presentation in a companys financial statements, and are
not rooted in laws of nature, as are the laws of physical science, for these are merely developed and continually
modified by local and international regulatory accounting bodies. To state otherwise and recognize such asset
account as a vested right is to limit the taxing power of the State. Unlimited, plenary, comprehensive and
supreme, this power cannot be unduly restricted by mere creations of the State.
More importantly, the assailed provisions of R.A. No. 9337 already involve legislative policy and wisdom. So
long as there is a public end for which R.A. No. 9337 was passed, the means through which such end shall be
accomplished is for the legislature to choose so long as it is within constitutional bounds. As stated in
Carmichael vs. Southern Coal & Coke Co.:
If the question were ours to decide, we could not say that the legislature, in adopting the present scheme rather
than another, had no basis for its choice, or was arbitrary or unreasonable in its action. But, as the state is free
to distribute the burden of a tax without regard to the particular purpose for which it is to be used, there is no
warrant in the Constitution for setting the tax aside because a court thinks that it could have distributed the
burden more wisely. Those are functions reserved for the legislature.9
WHEREFORE, the Motions for Reconsideration are hereby DENIED WITH FINALITY. The temporary
restraining order issued by the Court is LIFTED.
SO ORDERED.
(The Justices who filed their respective concurring and dissenting opinions maintain their respective positions.
Justice Dante O. Tinga filed a dissenting opinion to the present Resolution; while Justice Consuelo YnaresSantiago joins him in his dissenting opinion.)

Footnotes
1

Also referred to as the EVAT Law.

G.R. Nos. 115455, 115525, 115543, 115544, 115754, 115781, 115852, 115873 and 115931, August
25, 1994, 235 SCRA 630.
3

Farias vs. The Executive Secretary, G.R. No. 147387, December 10, 2003, 417 SCRA 503, 530.

Supra, note no. 2, pp. 661-663.

Velarde vs. Social Justice Society, G.R. No. 159357, April 28, 2004, 428 SCRA 283.

Information Technology Foundation of the Phils. vs. COMELEC, G.R. No. 159139, June 15, 2005.

Page 231 of 557

Lahom vs. Sibulo, G.R. No. 143989, July 14, 2003, 406 SCRA 135.

Ibid.

301 U.S. 495.

The Lawphil Project - Arellano Law Foundation

GR No. 168056 - (ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S. ALCANTARA
and ED VINCENT S. ALBANO v. THE HON. EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL.)
GR No. 168207 (AQUILINO Q. PIMENTEL, JR., ET. AL. v. EXECUTIVE SECRETARY EDUARDO R.
ERMITA, ET. AL.)
GR No. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its President,
ROSARIO ANTONIO, ET AL. v. CESAR V. PURISIMA, in his capacity as Secretary of the Department of
Finance and GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of Internal Revenue.
GR No. 168463 FRANCIS JOSEPH G. ESCUDERO, ET AL. v. CESAR V. PURISIMA, in his capacity as
Secretary of Finance, GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of Internal Revenue,
and EDUARDO R. ERMITA, in his capacity as Executive Secretary.
GR. No. 168730 BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. v. HON. EDUARDO R. ERMITA, in his
capacity as the Executive Secretary; HON. MARGARITO TEVES, in his capacity as Secretary of Finance;
HON. JOSE MARIO BUNAG, in his capacity as the OIC Commissioner of the Bureau of Customs.
x-------------------------------------------------------------------x
DISSENTING OPINION
Tinga, J.:
Once again, the majority has refused to engage and refute in any meaningful fashion the arguments raised by
the petitioners in G.R. No. 168461. The de minimis appreciation exhibited by the majority of the issues of 70%
cap, the 60-month amortization period, and 5% withholding VAT on transactions made with the national
government is regrettable, with ruinous consequences for the nation. I see no reason to turn back from any of
the views expressed in my Dissenting Opinion, and I accordingly dissent from the denial of the Motion for
Reconsideration filed by the petitioners in G.R. No. 168461.1
The reasons for my vote have been comprehensively discussed in my previous Dissenting Opinion, and I do
not see the need to replicate them herein. However, I wish to stress a few points.
Tax Statutes May Be Invalidated
If They Pose a Clear and Present Danger
To the Deprivation of Life, Liberty and

Page 232 of 557

Property Without Due Process of Law

The majority again dismisses the arguments of the petitioners as "theoretical", "conjectural" or merely
"anticipatory," notwithstanding that the injury to the taxpayers resulting from Section 8 and 12 of the E-VAT
Law is ascertainable with mathematical certainty. In support of this view, the majority cites the Courts
Resolution dated 15 June 2005 in Information Technology Foundation v. COMELEC,2 one of the rulings
issued in that case subsequent to the main Decision rendered on 13 January 2004. The reference is grievously
ironic, considering that in the 13 January 2004 Decision, the Court, over vigorous dissents, chose anyway to
intervene and grant the petition despite the fact that the petitioners therein did not allege any violation of any
constitutional provision or letter of statute.3 In this case, the petitioners have squarely invoked the violation of
the Bill of Rights of the Constitution, and yet the majority is suddenly timid, unlike in Infotech.
Still, the formulation of the majority unfortunately leaves the impression that any statute, taxing or otherwise,
is beyond judicial attack prior to its implementation. If the tax measure in question provided that the taxpayer
shall remit all income earned to the government beginning 1 January 2008, would this mean that the Court can
take cognizance of the legal challenge only starting 2 January 2008?
I do not share the majoritys penchant for awaiting the blood spurts before taking action even when the knifes
edge already dangles. As I maintained in my Dissenting Opinion, a tax measure may be validly challenged and
stricken down even before its implementation if it poses a clear and present danger to the deprivation of life,
liberty or property of the taxpayer without due process of law. This is the expectation of every citizen who
wishes to maintain trust in all the branches of government. In the enforcement of the constitutional rights of all
persons, the commonsense expectation is that the Court, as guardian of these rights, is empowered to step in
even before the prospective violation takes place. Hence, the evolution of the "clear and present danger"
doctrine and other analogous principles, without which, the Court would be seen as inutile in the face of
constitutional violation.
Of course, not every anticipatory threat to constitutional liberties can be assailed prior to implementation,
hence the employment of the "clear and present danger" standard to separate the wheat from the chaff. Still,
the Court should not be so readily dismissive of the petitioners posture herein merely because it is
anticipatory. There should have been a meaningful engagement by the majority of the facts and formulae
presented by the petitioners before the reasonable conclusion could have been reached on the maturity of the
claim. That the majority has not bothered to do so is ultimately of tragic consequence.
70% Input VAT Credit
An Impaired Asset
The ponencia, joined by Justices Panganiban and Chico-Nazario, express the belief that no property rights
attach to the input VAT paid by the taxpayer. This is a bizarre view that assumes that all income earned by
private persons preternaturally belongs to the government, and whatever is retained by the person after taxes is
acquired as a matter of privilege. This is the sort of thinking that has fermented revolutions throughout history,
such as the American Revolution of 1776.
I pointed out in my Dissenting Opinion that under current accepted international accounting standards, the
30% prepaid input VAT would be recorded as a loss in the accounting books, since the possibility of its
recovery is improbable, considering that the E-VAT Law allows its recovery only after the business has ceased
to exist. Even the Bureau of Internal Revenue itself has long recognized the unutilized input VAT as an asset.
The majority fails to realize that even under the new E-VAT Law, the State recognizes that the persons who
pre-pay that input VAT, usually the dealers or retailers, are not the persons who are liable to pay for the tax.
The VAT system, as implemented through the previous VAT law and the new E-VAT Law, squarely holds the
Page 233 of 557

end consumer as the taxpayer liable to shoulder the input VAT. Nonetheless, under the mechanism foisted in
the new E-VAT Law, the dealer or retailer who pre-pays the input VAT is virtually precluded from recovering
the pre-paid input VAT, since the law only allows such recovery upon the cessation of the business. Indeed,
the only way said class of taxpayers can recover this pre-paid input VAT was if it were to cease operations at
the end of every quarter.
The illusion that blinds the majority to this state of affairs is the claim that the pre-paid input VAT may
anyway be carried over into the succeeding quarter, a chimera enhanced by the grossly misleading presentation
of the Office of the Solicitor General. What this deception fosters, and what the majority fails to realize, is that
since the taxpayer is perpetually obliged to remit the 30% input VAT every quarter, there would be a
continuous accumulation of excess input VAT. It is not true then that the input VAT prepaid for the first
quarter can be recovered in the second, third or fourth quarter of that year, or at any time in the next year for
that matter since the amount of prepaid input VAT accumulates with every succeeding prepayment of input
VAT. Moreover, the accumulation of the prepaid input VAT diminishes the actual value of the refundable
amounts, considering the established principle of "time-value of money", as explained in my Dissenting
Opinion.
Thus, the pre-paid input VAT, for which the petitioners and other similarly situated taxpayers are not even
ultimately liable in the first place, represents in tangible terms an actual loss. To put it more succinctly, when
the taxpayer prepays the 30% input VAT, there is no chance for its recovery except until after the taxpayer
ceases to be such. This point is crucial, as it goes in the heart of the constitutional challenge raised by the
petitioners. A recognition that the input VAT is a property asset places it squarely in the ambit of the due
process clause.
The majority now stresses that prior to Executive Order No. 273 sales taxes paid by the retailer or dealers were
not recoverable. The nature of a sales tax precisely is that it is shouldered by the seller, not the consumer. In
that case, the clear legislative intent is to encumber the retailer with the end tax. Under the VAT system, as
enshrined under Rep. Act No. 9337, the new E-VAT Law, there is precisely a legislative recognition that it is
the end user, not the seller, who shoulders the E-VAT. The problem with the new E-VAT law is that it
correspondingly imposes a defeatist mechanism that obviates this entitlement of the seller by forcibly
withholding in perpetua this pre-paid input VAT.
The majority cites with approval Justice Chico-Nazarios argument, as expressed in her concurring opinion,
that prior to the new E-VAT Law, the petroleum dealers in particular had no input VAT credits to speak of,
and therefore, could not assert any property rights to the input VAT credits under the new law. Of course the
petroleum dealers had no input VAT credits prior to the E-VAT Law because precisely they were not covered
by the VAT system in the first place. What would now be classified as "input VAT credits" was, in real terms,
profit obtainable by the petroleum dealers prior to the new E-VAT Law. The E-VAT Law stands to diminish
such profit, not by outright taking perhaps, but by ad infinitum confiscation with the illusory promise of
eventual return. Obviously, there is a deprivation of property in such case; yet is it seriously contended that
such deprivation is ipso facto sheltered if it is not classified as a taking, but instead reclassified as a "credit"?
It is highly distressful that the Court, in its haste to decree petitioners as bereft of any vested property rights,
rejects the notion that a person has a vested right to the earnings and profits incurred in business. Before, no
legal basis could be found to prop up such a palpably outlandish claim; but the Decision, as affirmed by the
majoritys Resolution, now enshrines a temerarious proposition with doctrinal status.
In the Decision, and also in Justice Panganibans Separate Opinion therein, the case of United Paracale
Mining Co. v. De la Rosa4 was cited in support of the proposition that there is no vested right to the input VAT
credit. Justice Panganiban went as far as to cite that case to support the contention that "[t]here is no vested
right in a deferred input tax account; it is a mere statutory privilege." Reliance on the case is quite misplaced.
First, as pointed out in my Dissenting Opinion, it does not even pertain to tax credits involving as it does,
Page 234 of 557

questions on the jurisdiction of the Bureau of Mines.5 Second, the putative vested rights therein pertained to
mining claims, yet all mineral resources indisputably belong to the State. Herein, the rights pertain to profit
incurred by private enterprise, and certainly the majority cannot contend that such profits actually belong to the
State.
As stated in my Dissenting Opinion, the Constitution itself recognizes a right to income and profit when it
recognizes "the right of enterprises to reasonable returns on investments, and to expansion and growth."6
Section 20, Article II of the Constitution further mandates that the State recognize the indispensable role of the
private sector, the encouragement of private enterprise, and the provision of incentives to needed investments.7
Indeed, there is a fundamental recognition in any form of democratic government that recognizes a capitalist
economy that the enterprise has a right to its profits. Today, the Court instead affirms that there is no such
right. Should capital flight ensue, the phenomenom should not be blamed on investors in view of our judicial
systems rejection of capitalisms fundamental precept.
Mainstream Denunciation of 70% Cap
The fact that petitioners are dealers of petroleum products may have left the impression that the 70% cap
singularly affects the petroleum industry; or that other classes of dealers or retailers do not pose the same
objections to these "innovations" in the E-VAT law. This is far from the truth.
In fact, the clamor against the 70% cap has been widespread among the players and components in the
financial mainstream. Denunciations have been registered by the Philippine Chamber of Commerce and
Industry8, the Joint Foreign Chambers of the Philippines (comprising of the American Chamber of Commerce
in the Philippines, the Australian-New Zealand Chamber Commerce of the Philippines, Inc., the Canadian
Chamber of Commerce of the Philippines, Inc., the European Chamber of Commerce of the Philippines, Inc.,
the Japanese Chamber of Commerce of the Philippines, Inc., the Korean Chamber of Commerce and Industry
of the Philippines, and the Philippine Association of Multinational Companies Regional Headquarters, Inc.),9
the Filipino-Chinese Chamber of Commerce and Industry,10 the Federation of Philippine Industries,11 the
Consumer and Oil Price Watch,12 the Association of Certified Public Accountants in Public Practice,13 the
Philippine Tobacco Institute,14 and the auditing firm of PricewaterhouseCooper.15
Even newly installed Finance Secretary Margarito Teves has expressed concern that the 70% input VAT "may
not work across all industries because of varying profit margins".16 Other experts who have voiced concerns on
the 70% input VAT are former NEDA Directors Cielito Habito17 and Solita Monsod,18 Peter Wallace of the
Wallace Business Forum,19 and Paul R. Cooper, director of PricewaterhouseCooper.
In fact, Mr. Cooper published in the Philippine Daily Inquirer a lengthy disquisition on the problems
surrounding the 70% cap, portions of which I replicate below:
Policy concerns on the cap
When the idea of putting a cap was originally introduced on the floor of the Senate. The idea was to address to
some extent the under-reporting of output VAT by non-complaint taxpayers. The original suggestion was a 90
percent cap, or effectively a 1-percent minimum VAT. At that level, the rule should not impact adversely on
complaint taxpayers, but would result in non-complaint taxpayers having to account for closer to their true tax
liability.
As a general policy consideration, one should question why our legislators are penalizing complaint taxpayers
when the fundamental issue is at the apparent inability of the Bureau of Internal Revenue (BIR) to implement
tax law effectively.

Page 235 of 557

At a 90-percent cap, the measure might still have been defensible as a rough proxy for VAT. However,
somewhere in the bicameral process, the rule has become even more punitive with a 70-percent cap. As with
most amendments introduced at the bicameral stage, there is no public indication about what lawmakers were
thinking when they put the travesty in place.
xxx
One of the arguments in Senate debates for taxing the power and petroleum sectors was that if it was good
enough for mom-and-pop stores to have to account for the VAT, it was good enough for the biggest companies
in the country to do the same. A similar argument here is that if small businesses have to pay a minimum 3percent tax, why should larger VAT-registered persons get away with paying less?
The problem with this thinking is threefold:
The percentage tax applies to small businesses in the hard-to-tax sector and a few believe the BIR collects
close to what it should from this. Nor should we be overly concerned if this is the casethe revenues are
small, and the BIRs efforts would be a lot better focused on larger taxpayers where more significant revenues
will be at issue.
VAT-registered persons incur compliance costs. The 3-percent tax might be better conceived as a slightly
more expensive option to allow taxpayers to opt out of the VAT, rather than a punitive rule for small
businesses. (If the percentage tax is considered unduly punitive, why is it not just repealed?)
Ironically, one of the new measures in the Senate bill was to allow taxpayers with turnovers below, the
registration threshold to register voluntarily for VAT if they believe the 3-percent tax imposition to be
excessive. Without the minimum VAT, smaller taxpayers might have been encouraged to enter the more
formalized VAT sector.
Potential consequences of the cap
The minimum VAT will distort the way taxpayers conduct business. A 3-percent minimum VAT is more
likely to impact on sellers of goods than on sellers of services, as their proportion of taxable inputs are lower
(there is no VAT paid when using labor, but there is VAT on the purchase of goods). Consequently, there will
be a bias toward consuming services over goods. Businesses may have an incentive to obtain goods from the
informal (and potentially tax-evading) sector as there will be no input tax paid for the purchasein other
words, the bill may actively encourage less tax complaint behavior. Business structures may change; expect
buy-sell distributors to convent into commission agents, as this reduces the risk that they will need to pay more
than should be paid under a VAT system to cover the 3-percent minimum VAT.20
These objections are voiced by members of the sensible center, and not those reflexively against VAT or any
tax imposition of the current administration. These objections are raised by the people who stand to be directly
affected on a daily punitive basis by the imposition of the 70% cap, the 60-month amortization period and the
5% withholding VAT. Indeed, Justice Chico-Nazario has expressed her disbelief over, or at least has asserted
as unproven, the claimed impact of the input VAT on the petroleum dealers.21 Of course there can be no
tangible gauge as of yet on the impact of these changes in the VAT law, since they have yet to be
implemented. However, the prevalent adverse reaction within the business sector should be sufficiently
expressive of the actual fears of the people who should know better. It is sad that the majority, by maintaining
a blithely nave view of the input VAT, perpetuates the disconnect between the Court and the business sector,
unnecessarily considering that in this instance, the concerns of the financial community can be translated into a
viable constitutional challenge.
Reliance on Legislative Amendments
Page 236 of 557

An Abdication of the Courts Constitutional Duty

Justice Panganiban has already expressed the view that the remedy to the inequities caused by the new input
VAT system would be amending the law, and not an outright declaration of unconstitutionality. I can only
hazard a guess on how many members of the Court or the legal community are similarly reliant on that remedy
as a means of assuaging their fears on the impact of the input VAT innovations.
As I stated in my Dissenting Opinion, it is this Court, and not the legislature, which has the duty to strike down
unconstitutional laws. Congress may amend unconstitutional laws to remedy such legal infirmities, but it is
under no constitutional or legal obligation to do so. The same does not hold true with this Court. The essence
of judicial review mandates that the Court strike down unconstitutional laws.
Another corollary prospect has also arisen, that the Executive Department itself will mitigate the
implementation of the 70% cap by not fully implementing the law.
This prospect of course is speculative, the sort of speculation that is wholly dependent on the whim of the
officials of the executive branch and one that cannot be quantified by mathematical formula. This cannot be
the basis for any judicial action or vote. Moreover, such resort may actually be illegal.
For one, Article 239 of the Revised Penal Code imposes the penalty of prision correccional on public officers
"who shall encroach upon the powers of the legislative branch of the Government, either by making general
rules or regulations beyond the scope of his authority, or by attempting to repeal a law or suspending the
execution thereof." Certainly, the remedy to the inequities of the E-VAT Law cannot be left to administrative
pussy-footing, considering that these officials may be jailed for refusing to implement the law, or obfuscating
the legislative will.
Second, it is a cardinal rule that an administrative agency such as the Bureau of Internal Revenue or even the
Department of Finance cannot amend an act of Congress. Whatever administrative regulations they may adopt
under legislative authority must be in harmony with the provisions of the law they are intended to carry into
effect. They cannot widen or diminish its scope.22
Finally, it must be remembered that one of the central doctrines enforced in the disposition of the joint
petitions is that the power to tax belongs solely to the legislative branch of government. If the legislative will
were to be frustrated by haphazard implementation by the executive branch, all our disquisitions on this matter,
as well as the key constitutional principle on the inherent, non-delegable nature of the legislative power of
taxation, will be for naught.
Indeed, I truly fear the scenario when, after the deluge, the executive branch of government suspends the
implementation of the 70% cap, or increases the cap to a higher amount such as 90%. Any taxpayer will have
standing to attack such remedial measure, considering that the net effect would be to diminish the
governments collection of cash at hand. Following the law, the proper judicial action would be to uphold the
clear legislative intent over the reengineering of the taxing provisions by the executive branch of government.
Yet if the courts instead uphold the power of the executive branch of government to reinvent the tax statute,
then the end concession would be that the power to enact tax laws ultimately belongs to the executive branch
of government.
I hesitate to say this, but there will be confusion, instability, and multiple fatalities within the business sector
with the enforcement of the amendments of Section 8 and 12 of the E-VAT Law. It could have been stopped
through the allowance of the petition in G.R. No. 168461, but regrettably the Court did not act.
I respectfully dissent.

Page 237 of 557

DANTE O. TINGA
Associate Justice

Footnotes
1

I similarly maintain my earlier vote, explained in my previous Dissenting Opinion, that Section 21 of
the E-VAT law, assailed by the petitioners in G.R. No. 168463, is likewise unconstitutional.
2

G.R. No. 159139.

See J. Tinga, dissenting, Information Technology Foundation of the Phils. V. COMELEC, G.R. No.
159139, 13 January 2004.
4

G.R. Nos. 63786-87, 7 April 1993, 221 SCRA 108.

Id. at 115.

See Section 3, Article XII, Constitution.

See Section 20, Article II, Constitution.

See Manila Bulletin, 7 July 2005, pp. B-1 and B-2.

See Philippine Star, 23 June 2005, pp. B-1 and B-5.

10

See BusinessWorld, 28 July 2005, p. 2/S1.

11

See Philippine Star, 28 June 2005.

12

See Malaya, 21 September 2005, p. B-10.

13

See Manila Standard Today, 7 October 2005, p. B3.

14

Ibid.

15

Ibid.

16

See BusinessWorld, 14 July 2005, p. S1/9.

17

See Philippine Daily Inquirer, 11 July 2005, p. B6.

18

See Philippine Daily Inquirer, 16 July 2005.

19

Supra note 8.

20

See Philippine Daily Inquirer, 7 June 2005.

Page 238 of 557

21

Indeed, it is rather curious that while Justice Chico-Nazario would belittle the factual presentation of
the petroleum dealers as "unsubstantiated", she would seem to accept the counter-presentation made
by the Solicitor-General which is outright misleading, as pointed out in my Dissenting Opinion.
22

See Boie-Takeda Chemicals Inc. v. De la Serna, G.R. No. 92174. December 10, 1993.

Page 239 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-28089

October 25, 1967

BARA LIDASAN, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.
Suntay for petitioner.
Barrios and Fule for respondent.
SANCHEZ, J.:
The question initially presented to the Commission on Elections,1 is this: Is Republic Act 4790, which is
entitled "An Act Creating the Municipality of Dianaton in the Province of Lanao del Sur", but which includes
barrios located in another province Cotabato to be spared from attack planted upon the constitutional
mandate that "No bill which may be enacted into law shall embrace more than one subject which shall be
expressed in the title of the bill"? Comelec's answer is in the affirmative. Offshoot is the present original
petition for certiorari and prohibition.
On June 18, 1966, the Chief Executive signed into law House Bill 1247, known as Republic Act 4790, now in
dispute. The body of the statute, reproduced in haec verba, reads:
Sec. 1. Barrios Togaig, Madalum, Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo,
Tabangao, Tiongko, Colodan, Kabamakawan, Kapatagan, Bongabong, Aipang, Dagowan, Bakikis,
Bungabung, Losain, Matimos and Magolatung, in the Municipalities of Butig and Balabagan,
Province of Lanao del Sur, are separated from said municipalities and constituted into a distinct and
independent municipality of the same province to be known as the Municipality of Dianaton, Province
of Lanao del Sur. The seat of government of the municipality shall be in Togaig.
Sec. 2. The first mayor, vice-mayor and councilors of the new municipality shall be elected in the
nineteen hundred sixty-seven general elections for local officials.
Sec. 3. This Act shall take effect upon its approval.
It came to light later that barrios Togaig and Madalum just mentioned are within the municipality of Buldon,
Province of Cotabato, and that Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao,
Tiongko, Colodan and Kabamakawan are parts and parcel of another municipality, the municipality of Parang,
also in the Province of Cotabato and not of Lanao del Sur.
Prompted by the coming elections, Comelec adopted its resolution of August 15, 1967, the pertinent portions
of which are:
For purposes of establishment of precincts, registration of voters and for other election purposes, the
Commission RESOLVED that pursuant to RA 4790, the new municipality of Dianaton, Lanao del Sur
shall comprise the barrios of Kapatagan, Bongabong, Aipang, Dagowan, Bakikis, Bungabung, Losain,
Matimos, and Magolatung situated in the municipality of Balabagan, Lanao del Sur, the barrios of
Page 240 of 557

Togaig and Madalum situated in the municipality of Buldon, Cotabato, the barrios of Bayanga,
Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and Kabamakawan
situated in the municipality of Parang, also of Cotabato.
Doubtless, as the statute stands, twelve barrios in two municipalities in the province of Cotabato are
transferred to the province of Lanao del Sur. This brought about a change in the boundaries of the two
provinces.
Apprised of this development, on September 7, 1967, the Office of the President, through the Assistant
Executive Secretary, recommended to Comelec that the operation of the statute be suspended until "clarified
by correcting legislation."
Comelec, by resolution of September 20, 1967, stood by its own interpretation, declared that the statute
"should be implemented unless declared unconstitutional by the Supreme Court."
This triggered the present original action for certiorari and prohibition by Bara Lidasan, a resident and taxpayer
of the detached portion of Parang, Cotabato, and a qualified voter for the 1967 elections. He prays that
Republic Act 4790 be declared unconstitutional; and that Comelec's resolutions of August 15, 1967 and
September 20, 1967 implementing the same for electoral purposes, be nullified.
1. Petitioner relies upon the constitutional requirement aforestated, that "[n]o bill which may be enacted into
law shall embrace more than one subject which shall be expressed in the title of the bill."2
It may be well to state, right at the outset, that the constitutional provision contains dual limitations upon
legislative power. First. Congress is to refrain from conglomeration, under one statute, of heterogeneous
subjects. Second. The title of the bill is to be couched in a language sufficient to notify the legislators and the
public and those concerned of the import of the single subject thereof.
Of relevance here is the second directive. The subject of the statute must be "expressed in the title" of the bill.
This constitutional requirement "breathes the spirit of command."3 Compliance is imperative, given the fact
that the Constitution does not exact of Congress the obligation to read during its deliberations the entire text of
the bill. In fact, in the case of House Bill 1247, which became Republic Act 4790, only its title was read from
its introduction to its final approval in the House of Representatives4 where the bill, being of local application,
originated.5
Of course, the Constitution does not require Congress to employ in the title of an enactment, language of such
precision as to mirror, fully index or catalogue all the contents and the minute details therein. It suffices if the
title should serve the purpose of the constitutional demand that it inform the legislators, the persons interested
in the subject of the bill, and the public, of the nature, scope and consequences of the proposed law and its
operation. And this, to lead them to inquire into the body of the bill, study and discuss the same, take
appropriate action thereon, and, thus, prevent surprise or fraud upon the legislators.6
In our task of ascertaining whether or not the title of a statute conforms with the constitutional requirement, the
following, we believe, may be taken as guidelines:
The test of the sufficiency of a title is whether or not it is misleading; and, which technical accuracy is
not essential, and the subject need not be stated in express terms where it is clearly inferable from the
details set forth, a title which is so uncertain that the average person reading it would not be informed
of the purpose of the enactment or put on inquiry as to its contents, or which is misleading, either in
referring to or indicating one subject where another or different one is really embraced in the act, or
in omitting any expression or indication of the real subject or scope of the act, is bad.

Page 241 of 557

xxx

xxx

xxx

In determining sufficiency of particular title its substance rather than its form should be considered,
and the purpose of the constitutional requirement, of giving notice to all persons interested, should be
kept in mind by the court.7
With the foregoing principles at hand, we take a hard look at the disputed statute. The title "An Act
Creating the Municipality of Dianaton, in the Province of Lanao del Sur"8 projects the impression that
solely the province of Lanao del Sur is affected by the creation of Dianaton. Not the slightest intimation is
there that communities in the adjacent province of Cotabato are incorporated in this new Lanao del Sur town.
The phrase "in the Province of Lanao del Sur," read without subtlety or contortion, makes the title misleading,
deceptive. For, the known fact is that the legislation has a two-pronged purpose combined in one statute: (1) it
creates the municipality of Dianaton purportedly from twenty-one barrios in the towns of Butig and Balabagan,
both in the province of Lanao del Sur; and (2) it also dismembers two municipalities in Cotabato, a province
different from Lanao del Sur.
The baneful effect of the defective title here presented is not so difficult to perceive. Such title did not inform
the members of Congress as to the full impact of the law; it did not apprise the people in the towns of Buldon
and Parang in Cotabato and in the province of Cotabato itself that part of their territory is being taken away
from their towns and province and added to the adjacent Province of Lanao del Sur; it kept the public in the
dark as to what towns and provinces were actually affected by the bill. These are the pressures which heavily
weigh against the constitutionality of Republic Act 4790.
Respondent's stance is that the change in boundaries of the two provinces resulting in "the substantial
diminution of territorial limits" of Cotabato province is "merely the incidental legal results of the definition of
the boundary" of the municipality of Dianaton and that, therefore, reference to the fact that portions in
Cotabato are taken away "need not be expressed in the title of the law." This posture we must say but
emphasizes the error of constitutional dimensions in writing down the title of the bill. Transfer of a sizeable
portion of territory from one province to another of necessity involves reduction of area, population and
income of the first and the corresponding increase of those of the other. This is as important as the creation of a
municipality. And yet, the title did not reflect this fact.
Respondent asks us to read Felwa vs. Salas, L-16511, October 29, 1966, as controlling here. The Felwa case is
not in focus. For there, the title of the Act (Republic Act 4695) reads: "An Act Creating the Provinces of
Benguet, Mountain Province, Ifugao, and Kalinga-Apayao." That title was assailed as unconstitutional upon
the averment that the provisions of the law (Section, 8 thereof) in reference to the elective officials of the
provinces thus created, were not set forth in the title of the bill. We there ruled that this pretense is devoid of
merit "for, surely, an Act creating said provinces must be expected to provide for the officers who shall run the
affairs thereof" which is "manifestly germane to the subject" of the legislation, as set forth in its title. The
statute now before us stands altogether on a different footing. The lumping together of barrios in adjacent but
separate provinces under one statute is neither a natural nor logical consequence of the creation of the new
municipality of Dianaton. A change of boundaries of the two provinces may be made without necessarily
creating a new municipality and vice versa.
As we canvass the authorities on this point, our attention is drawn to Hume vs. Village of Fruitport, 219 NW
648, 649. There, the statute in controversy bears the title "An Act to Incorporate the Village of Fruitport, in the
County of Muskegon." The statute, however, in its section 1 reads: "The people of the state of Michigan enact,
that the following described territory in the counties of Muskegon and Ottawa Michigan, to wit: . . . be, and the
same is hereby constituted a village corporate, by the name of the Village of Fruitport." This statute was
challenged as void by plaintiff, a resident of Ottawa county, in an action to restraint the Village from
exercising jurisdiction and control, including taxing his lands. Plaintiff based his claim on Section 20, Article
IV of the Michigan State Constitution, which reads: "No law shall embrace more than one object, which shall
Page 242 of 557

be expressed in its title." The Circuit Court decree voided the statute and defendant appealed. The Supreme
Court of Michigan voted to uphold the decree of nullity. The following, said in Hume, may well apply to this
case:
It may be that words, "An act to incorporate the village of Fruitport," would have been a sufficient
title, and that the words, "in the county of Muskegon" were unnecessary; but we do not agree with
appellant that the words last quoted may, for that reason, be disregarded as surplusage.
. . . Under the guise of discarding surplusage, a court cannot reject a part of the title of an act for the
purpose of saving the act. Schmalz vs. Woody, 56 N.J. Eq. 649, 39 A. 539.
A purpose of the provision of the Constitution is to "challenge the attention of those affected by the act
to its provisions." Savings Bank vs. State of Michigan, 228 Mich. 316, 200 NW 262.
The title here is restrictive. It restricts the operation of the act of Muskegon county. The act goes
beyond the restriction. As was said in Schmalz vs. Wooly, supra: "The title is erroneous in the worst
degree, for it is misleading."9
Similar statutes aimed at changing boundaries of political subdivisions, which legislative purpose is not
expressed in the title, were likewise declared unconstitutional."10
We rule that Republic Act 4790 is null and void.
2. Suggestion was made that Republic Act 4790 may still be salvaged with reference to the nine barrios in the
municipalities of Butig and Balabagan in Lanao del Sur, with the mere nullification of the portion thereof
which took away the twelve barrios in the municipalities of Buldon and Parang in the other province of
Cotabato. The reasoning advocated is that the limited title of the Act still covers those barrios actually in the
province of Lanao del Sur.
We are not unmindful of the rule, buttressed on reason and of long standing, that where a portion of a statute is
rendered unconstitutional and the remainder valid, the parts will be separated, and the constitutional portion
upheld. Black, however, gives the exception to this rule, thus:
. . . But when the parts of the statute are so mutually dependent and connected, as conditions,
considerations, inducements, or compensations for each other, as to warrant a belief that the
legislature intended them as a whole, and that if all could not be carried into effect, the legislature
would not pass the residue independently, then, if some parts are unconstitutional, all the provisions
which are thus dependent, conditional, or connected, must fall with them,11
In substantially similar language, the same exception is recognized in the jurisprudence of this Court, thus:
The general rule is that where part of a statute is void, as repugnant to the Organic Law, while another
part is valid, the valid portion if separable from the invalid, may stand and be enforced. But in order to
do this, the valid portion must be so far independent of the invalid portion that it is fair to presume
that the Legislature would have enacted it by itself if they had supposed that they could not
constitutionally enact the other. . . Enough must remain to make a complete, intelligible, and valid
statute, which carries out the legislative intent. . . . The language used in the invalid part of the statute
can have no legal force or efficacy for any purpose whatever, and what remains must express the
legislative will independently of the void part, since the court has no power to legislate, . . . .12

Page 243 of 557

Could we indulge in the assumption that Congress still intended, by the Act, to create the restricted area of
nine barrios in the towns of Butig and Balabagan in Lanao del Sur into the town of Dianaton, if the twelve
barrios in the towns of Buldon and Parang, Cotabato were to be excluded therefrom? The answer must be in
the negative.
Municipal corporations perform twin functions. Firstly. They serve as an instrumentality of the State in
carrying out the functions of government. Secondly. They act as an agency of the community in the
administration of local affairs. It is in the latter character that they are a separate entity acting for their own
purposes and not a subdivision of the State.13
Consequently, several factors come to the fore in the consideration of whether a group of barrios is capable of
maintaining itself as an independent municipality. Amongst these are population, territory, and income. It was
apparently these same factors which induced the writing out of House Bill 1247 creating the town of Dianaton.
Speaking of the original twenty-one barrios which comprise the new municipality, the explanatory note to
House Bill 1247, now Republic Act 4790, reads:
The territory is now a progressive community; the aggregate population is large; and the collective
income is sufficient to maintain an independent municipality.
This bill, if enacted into law, will enable the inhabitants concerned to govern themselves and enjoy the
blessings of municipal autonomy.
When the foregoing bill was presented in Congress, unquestionably, the totality of the twenty-one barrios
not nine barrios was in the mind of the proponent thereof. That this is so, is plainly evident by the fact that
the bill itself, thereafter enacted into law, states that the seat of the government is in Togaig, which is a barrio
in the municipality of Buldon in Cotabato. And then the reduced area poses a number of questions, thus: Could
the observations as to progressive community, large aggregate population, collective income sufficient to
maintain an independent municipality, still apply to a motley group of only nine barrios out of the twenty-one?
Is it fair to assume that the inhabitants of the said remaining barrios would have agreed that they be formed
into a municipality, what with the consequent duties and liabilities of an independent municipal corporation?
Could they stand on their own feet with the income to be derived in their community? How about the peace
and order, sanitation, and other corporate obligations? This Court may not supply the answer to any of these
disturbing questions. And yet, to remain deaf to these problems, or to answer them in the negative and still
cling to the rule on separability, we are afraid, is to impute to Congress an undeclared will. With the known
premise that Dianaton was created upon the basic considerations of progressive community, large aggregate
population and sufficient income, we may not now say that Congress intended to create Dianaton with only
nine of the original twenty-one barrios, with a seat of government still left to be conjectured. For, this
unduly stretches judicial interpretation of congressional intent beyond credibility point. To do so, indeed, is to
pass the line which circumscribes the judiciary and tread on legislative premises. Paying due respect to the
traditional separation of powers, we may not now melt and recast Republic Act 4790 to read a Dianaton town
of nine instead of the originally intended twenty-one barrios. Really, if these nine barrios are to constitute a
town at all, it is the function of Congress, not of this Court, to spell out that congressional will.
Republic Act 4790 is thus indivisible, and it is accordingly null and void in its totality.14
3. There remains for consideration the issue raised by respondent, namely, that petitioner has no substantial
legal interest adversely affected by the implementation of Republic Act 4790. Stated differently, respondent's
pose is that petitioner is not the real party in interest.
Here the validity of a statute is challenged on the ground that it violates the constitutional requirement that the
subject of the bill be expressed in its title. Capacity to sue, therefore, hinges on whether petitioner's substantial

Page 244 of 557

rights or interests are impaired by lack of notification in the title that the barrio in Parang, Cotabato, where he
is residing has been transferred to a different provincial hegemony.
The right of every citizen, taxpayer and voter of a community affected by legislation creating a town to
ascertain that the law so created is not dismembering his place of residence "in accordance with the
Constitution" is recognized in this jurisdiction.15
Petitioner is a qualified voter. He expects to vote in the 1967 elections. His right to vote in his own barrio
before it was annexed to a new town is affected. He may not want, as is the case here, to vote in a town
different from his actual residence. He may not desire to be considered a part of hitherto different communities
which are fanned into the new town; he may prefer to remain in the place where he is and as it was constituted,
and continue to enjoy the rights and benefits he acquired therein. He may not even know the candidates of the
new town; he may express a lack of desire to vote for anyone of them; he may feel that his vote should be cast
for the officials in the town before dismemberment. Since by constitutional direction the purpose of a bill must
be shown in its title for the benefit, amongst others, of the community affected thereby,16 it stands to reason to
say that when the constitutional right to vote on the part of any citizen of that community is affected, he may
become a suitor to challenge the constitutionality of the Act as passed by Congress.
For the reasons given, we vote to declare Republic Act 4790 null and void, and to prohibit respondent
Commission from implementing the same for electoral purposes.
No costs allowed. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro and Angeles, JJ., concur.

Separate Opinions
FERNANDO, J., dissenting:
With regret and with due recognition of the merit of the opinion of the Court, I find myself unable to give my
assent. Hence these few words to express my stand.
Republic Act No. 4790 deals with one subject matter, the creation of the municipality of Dianaton in the
province of Lanao del Sur. The title makes evident what is the subject matter of such an enactment. The mere
fact that in the body of such statute barrios found in two other municipalities of another province were
included does not of itself suffice for a finding of nullity by virtue of the constitutional provision invoked. At
the most, the statute to be free from the insubstantial doubts about its validity must be construed as not
including the barrios, located not in the municipalities of Butig and Balabagan, Lanao del Sur, but in Parang
and Baldon, Cotabato.
The constitutional requirement is that no bill which may be enacted into law shall embrace more than one
subject which shall be expressed in the title of the bill.1 This provision is similar to those found in the
Constitution of many American States. It is aimed against the evils, of the so-called omnibus bills, and logrolling legislation, and against surreptitious or unconsidered enactments.2 Where the subject of a bill is limited
to a particular matter, the members of the legislature as well as the people should be informed of the subject of
proposed legislative measures. This constitutional provision thus precludes the insertion of riders in legislation,
a rider being a provision not germane to the subject matter of the bill.

Page 245 of 557

It is not to be narrowly construed though as to cripple or impede proper legislation. The construction must be
reasonable and not technical. It is sufficient if the title be comprehensive enough reasonably to include the
general object which the statute seeks to effect without expressing each and every end and means necessary for
the accomplishment of that object. Mere details need not be set forth. The legislature is not required to make
the title of the act a complete index of its contents. The constitutional provision is satisfied if all parts of an act
which relates to its subject find expression in its title.3
The first decision of this Court, after the establishment of the Commonwealth of the Philippines, in 1938,
construing a provision of this nature, Government v. Hongkong & Shanghai Bank,4 held that the inclusion of
Section 11 of Act No. 4007, the Reorganization Law, providing for the mode in which the total annual
expenses of the Bureau of Banking may be reimbursed through assessment levied upon all banking institutions
subject to inspection by the Bank Commissioner was not violative of such a requirement in the Jones Law, the
previous organic act. Justice Laurel, however, vigorously dissented, his view being that while the main subject
of the act was reorganization, the provision assailed did not deal with reorganization but with taxation. While
the case of Government vs. Hongkong & Shanghai Bank was decided by a bare majority of four justices
against three, the present trend seems to be that the constitutional requirement is to be given the liberal test as
indicated in the majority opinion penned by Justice Abad Santos, and not the strict test as desired by the
majority headed by Justice Laurel.
Such a trend has been reflected in subsequent decisions beginning with Sumulong v. Commission on
Elections,5 up to and including Felwa vs. Salas, a 1966 decision,6 the opinion coming from Justice
Concepcion.
It is true of course that in Philconsa v. Gimenez,7 one of the grounds on which the invalidity of Republic Act
No. 3836 was predicated was the violation of the above constitutional provision. This Retirement Act for
senators and representatives was entitled "AN ACT AMENDING SUB-SECTION (c), SECTION TWELVE
OF COMMONWEALTH ACT NUMBERED ONE HUNDRED EIGHTY-SIX, AS AMENDED BY
REPUBLIC ACT NUMBERED THIRTY HUNDRED NINETY-SIX." As we noted, the paragraph in
Republic Act No. 3836 deemed objectionable "refers to members of Congress and to elective officers thereof
who are not members of the Government Service Insurance System. To provide retirement benefits, therefore,
for these officials, would relate to a subject matter which is not germane to Commonwealth Act No. 186. In
other words, this portion of the amendment ( re retirement benefits for Members of Congress and appointive
officers, such as the Secretary and Sergeants-at-arms for each house) is not related in any manner to the subject
of Commonwealth Act No. 186 establishing the Government Service Insurance System and which provides for
both retirement and insurance benefits to its members." Nonetheless our opinion was careful to note that there
was no abandonment of the principle of liberality. Thus: "we are not unmindful of the fact that there has been a
general disposition in all courts to construe the constitutional provision with reference to the subject and title
of the Act, liberally."
It would follow therefore that the challenged legislation Republic Act No. 4790 is not susceptible to the
indictment that the constitutional requirement as to legislation having only one subject which should be
expressed in his title was not met. The subject was the creation of the municipality of Dianaton. That was
embodied in the title.
It is in the light of the aforementioned judicial decisions of this Court, some of the opinions coming from
jurists illustrious for their mastery of constitutional law and their acknowledged erudition, that, with all due
respect, I find the citation from Corpus Juris Secundum, unnecessary and far from persuasive. The State
decisions cited, I do not deem controlling, as the freedom of this Court to accept or reject doctrines therein
announced cannot be doubted.
Wherein does the weakness of the statute lie then? To repeat, several barrios of two municipalities outside
Lanao del Sur were included in the municipality of Dianaton of that province. That itself would not have given
Page 246 of 557

rise to a constitutional question considering the broad, well-high plenary powers possessed by Congress to
alter provincial and municipal boundaries. What justified resort to this Court was the congressional failure to
make explicit that such barrios in two municipalities located in Cotabato would thereafter form part of the
newly created municipality of Dianaton, Lanao del Sur.
To avoid any doubt as to the validity of such statute, it must be construed as to exclude from Dianaton all of
such barrios mentioned in Republic Act No. 4790 found in municipalities outside Lanao del Sur. As thus
interpreted, the statute can meet the test of the most rigid scrutiny. Nor is this to do violence to the legislative
intent. What was created was a new municipality from barrios named as found in Lanao del Sur. This
construction assures precisely that.
This mode of interpreting Republic Act No. 4790 finds support in basic principles underlying precedents,
which if not precisely controlling, have a persuasive ring. In Radiowealth v. Agregado,8 certain provisions of
the Administrative Code were interpreted and given a "construction which would be more in harmony with the
tenets of the fundamental law." In Sanchez v. Lyon Construction,9 this Court had a similar ruling: "Article 302
of the Code of Commerce must be applied in consonance with [the relevant] provisions of our Constitution."
The above principle gained acceptance at a much earlier period in our constitutional history. Thus in a 1913
decision, In re Guaria:10 "In construing a statute enacted by the Philippine Commission we deem it our duty
not to give it a construction which would be repugnant to an Act of Congress, if the language of the statute is
fairly susceptible of another construction not in conflict with the higher law. In doing so, we think we should
not hesitate to disregard contentions touching the apparent intention of the legislator which would lead to the
conclusion that the Commission intended to enact a law in violation of the Act of Congress. However specious
the argument may be in favor of one of two possible constructions, it must be disregarded if on examination it
is found to rest on the contention that the legislator designed an attempt to transcend the rightful limits of his
authority, and that his apparent intention was to enact an invalid law."
American Supreme Court decisions are equally explicit. The then Justice, later Chief Justice, Stone, construed
statutes "with an eye to possible constitutional limitations so as to avoid doubts as to [their] validity."11 From
the pen of the articulate jurist, Frankfurter:12 "Accordingly, the phrase "lobbying activities" in the resolution
must be given the meaning that may fairly be attributed to it, having special regard for the principle of
constitutional adjudication which makes it decisive in the choice of fair alternatives that one construction may
raise serious constitutional questions avoided by another." His opinion in the Rumely case continues with the
above pronouncement of Stone and two other former Chief Justices: "In the words of Mr. Chief Justice Taft,
'(i)t is our duty in the interpretation of federal statutes to reach conclusion which will avoid serious doubt of
their constitutionality', Richmond Screw Anchor Co. v. United States, 275 US 331, 346, 48 S. Ct. 194, 198, 72
L. ed. 303. . . . As phrased by Mr. Chief Justice Hughes, "if a serious doubt of constitutionality is raised, it is a
cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by
which the question may be avoided.' Crowell v. Benson, 285, 296, 76 L. ed. 598, and cases cited." The
prevailing doctrine then as set forth by Justice Clark in a 1963 decision,13 is that courts "have consistently
sought an interpretation which supports the constitutionality of legislation." Phrased differently by Justice
Douglas, the judiciary favors "that interpretation of legislation which gives it the greater change of surviving
the test of constitutionality."14
It would follow then that both Philippine and American decisions unite in the view that a legislative measure,
in the language of Van Devanter "should not be given a construction which will imperil its validity where it is
reasonably open to construction free from such peril."15 Republic Act No. 4790 as above construed incurs no
such risk and is free from the peril of nullity.
So I would view the matter, with all due acknowledgment of the practical considerations clearly brought to
light in the opinion of the Court.

Page 247 of 557

Footnotes
1

Hereinafter referred to as Comelec.

Article VI, Sec. 21(1), Philippine Constitution.

Stiglitz vs. Schiardien, 40 SW 2d 315, 317, 320.

Congressional Record, Vol. I, No. 40, p. 8; Vol. I, No. 50, pp. 40-41.

Section 18, Article VI of the Constitution, provides:

"Sec. 18. All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills, shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments."

Vidal de Roces vs. Posadas, 58 Phil. 108, 111-112; Ichong vs. Hernandez, 101 Phil. 1155, 11881190.
7

82 C.J.S. pp. 365, 370; emphasis supplied.

Emphasis ours.

Emphasis supplied.

10

Examples: Wilcox vs. Paddock, 31 NW 609, where the statute entitled "An act making an
appropriation of state swamp lands to aid the county of Gratiot in improving the channel of Maple
river . . ." but the body of the act affected another county other than Gratiot.
State vs. Burr, 238 P 585, the statute entitled "An act to amend Secs. 4318 and 4327 of the
Codes of Montana relating to changing the boundaries of Fergus and Judith Basin countries"
was rendered void because the body of the act included the boundaries of Petroleum county.
Atchison vs. Kearney County, 48 P 583, where the title of the act purported to attach Kearney
county to Finney county the body of the act attached it to Hamilton county.
State vs. Nelson, 98 So. 715, the title of the act purporting to alter or rearrange the boundaries
of Decatur city and the body of the act which actually diminished the boundary lines of the
city were considered by the court as dealing with incongruous matters. The reading of the
former would give no clear suggestion that the latter would follow and be made the subject of
the act. Jackson, Clerk vs. Sherrod, 92 So. 481; City of Ensley vs. Simpson, 52 So. 61, cited.
Fairview vs. City of Detroit, 113 NW 368, where the title gave notice that the entire village of
Fairview is annexed to Detroit when the body affected only a portion.
11

Black, Interpretation of Laws, 2d. ed., p. 116.

12

Barrameda vs. Moir, 25 Phil. 44, 47-48, quoted in Government vs. Springer (50 Phil. 259, 292;
emphasis supplied).

Page 248 of 557

13

McQuillin, Municipal Corporations, 3d ed., pp. 456-464.

14

In the case of Fuqua vs. City of Mobile, 121 So. 696, it was asserted that the portion of the statute
excluding a territory from Mobile which was not express in the title "An act to alter and rearrange the
boundary lines of the city of Mobile in the state of Alabama" should be the only portion invalidated.
The court, using the test whether or not after the objectionable feature is stricken off there would still
remain an act complete in itself, sensible, capable of being executed, ruled that there can be no
segregation of that portion dealing with the excluded territory from that dealing with additional
territory because these two matters are all embraced and intermingled in one section dealing with the
corporate limits of the city.
In the case of Engle vs. Bonnie, 204 SW 2d 963, the statute involved was entitled "An Act
relating to cities". Section 4 thereof "requires the creation of a municipality on petition of a
majority of voters or 500 voters." But some of the provisions were germane to the title of the
law. This statute was declared void in toto. The Court of Appeals of Kentucky ruled as
follows:
"The judgment declared only Section 4 [relative to the creation of a municipality on petition
of the voters] to be void and the remainder valid. While some of the provisions of the act are
germane to the title, since they deal with the classification of cities to be created, they seem
merely to harmonize other sections of the statute which they amend with a new creation of
cities other than sixth class towns. To remove only Section 4 would be like taking the motor
of an automobile which leaves the machine of no use. We are quite sure that these provisions
would not have been enacted without Section 4; hence, they too must fall."
15

Macias vs. The Commission on Elections, L-18684, September 14, 1961.

16

Brooks vs. Hydorn, 42 NW 1122, 1123-1124; Fairview vs. City of Detroit, 113 NW 368, 370.

FERNANDO, J., dissenting:

1

Art. VI, Sec. 21, par. 1, Constitution.

Government v. Hongkong & Shanghai Bank (1938), 66 Phil. 483.

People vs. Carlos (1947), 78 Phil. 535.

66 Phil. 483.

73 Phil. (1942) 228.

L-26511, October 29, 1960. The other cases that may be cited follows People v. Carlos (1947), 78
Phil. 535; Nuval v. de la Fuente (1953), 92 Phil. 1074; Ichong v. Hernandez (1951), 101 Phil. 1155;
Cordero v. Cabatuando, L-14542, Oct. 31, 1962; Municipality of Jose Panganiban v. Shell Company,
L-18349, July 30, 1966.
7

L-23326, December 18, 1965.

86 Phil. 429 (1950).

Page 249 of 557

87 Phil. 309 (1950), Cf . City of Manila v. Arellano Law Colleges, Inc. (1950), 85 Phil. 663.

10

24 Phil. 37. Justice Carson who penned the opinion cited Black on Interpretation of Laws to this
effect: "Hence it follows that the courts will not so construe the law as to make it conflict with the
constitution, but will rather put such an interpretation upon it as will avoid conflict with the
constitution and give it full force and effect, if this can be done without extravagance. If there is doubt,
or uncertainty as to the meaning of the legislature, if the words or provisions of the statute are obscure,
or if the enactment is fairly susceptible of two or more constructions, that interpretation will be
adopted which will avoid the effect of unconstitutionality, even though it may be necessary, for this
purpose, to disregard the more usual or apparent impact of the language employed."
11

Lucas v. Alexander (1928). 279 US 573, 577-578, citing United States ex rel. Atty. Gen. v.
Delaware & H. Co. 213 US 366, 407, 408, 53 L. ed. 836, 848, 849, 29 Sup. Ct. Rep. 527: United
States v. Standard Brewery, 251 US 210, 220, 64 L. ed. 229, 235, 40 Sup. Ct. Rep. 139; Texas v.
Eastern Texas R. Co. 258 US 204, 217, 66 L. ed. 566, 572, 42 Sup. Ct. Rep. 281; Bratton v. Chandler,
260 US 110, 114, 67 L. ed. 157, 161, 43 Sup. Ct. Rep. 43; Panama R. Co. v. Johnson, 264 US 375,
390, 68 L. ed. 748, 754, 44 Sup. Ct. Rep. 391.
12

United States v. Rumely (1953), 345 US 41, 45.

13

United States v. National Dairy Product Corp. 373 US 29, 32.

14

Ex parte Endo (1944), 323 US 283, 299-300.

15

Chippewa Indians v. United States (1937), 301 US 358, 376.

Page 250 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-48634

October 8, 1941

JUAN SUMULONG, in his capacity as President of the POPULAR FRONT, petitioner,

vs.
THE COMMISSION ON ELECTIONS, respondent.
Lorenzo Sumulong and Ruperto V. Suga for petitioner.
Office of the Solicitor-General de la Costa and Acting Assistant Solicitor-General Gianzon for the respondent.

MORAN, J.:
This is a petition for certiorari to review the resolution of the Commission on Elections granting the Popular
Front Party headed by the Pedro Abad Santos the exclusive right to propose the minority election inspector in
the second congressional district of Pampanga for the forthcoming national elections.
In the elections of 1938, the Popular Front Party, supporting the candidacies of Francisco Lazatin and Joaquin
Alejandrino for the first and second legislative districts of Pampanga, polled more than ten per centum of the
total votes cast in said legislative districts. It appears, however, that said Popular Front Party was then a mere
coalition of several minority groups among which are the Popular Front faction of Juan Sumulong and that of
Pedro Abad Santos. These two factions now stand out as separate and independent minority parties supporting
different sets of candidacies for the forthcoming national elections. On September 15, 1941, the Commission
on Elections granted to the Popular Front Party of Abad Santos the right to propose the minority inspector in
the second congressional district of said province. On September 26, 1941, on motion for reconsideration by
Francisco M. Ramos, candidate of the Popular Front of Abad Santos and that the Popular Front Party of
Sumulong has but a nominal existence in the province," modified its ruling of the 15th of September by
awarding the minority inspector to the Popular Front Party of Abad Santos. This resolution is the subject of
review in this petition for certiorari.
It is now a well-settled rule that where the minimum number of votes required by law (Commonwealth Act
No. 657, sec. 5) was polled by a mere coalition or alliance of minority parties, the right to minority
representation in the board of elections inspectors to which such coalition is entitled, cannot be claimed by any
of the component parties which have thereafter separated. (Sumulong vs. Commission on Elections, 40 Off.
Gaz. [9th Sup.], No. 13, pp. 226, 230-231; Vinzons vs. Commission on Elections et al., G.R. No. 48596,
October 1, 1941.) And where such situation obtains, the Commission shall have the discretion to choose the
minority inspector. (Commonwealth Act No. 657, sec. 5; Vinzons vs. Commission on Elections et al., supra;
Rimando vs. Commission on Elections et al., G.R. No. 48603, October 1, 1941.) The modification by the
Commission of its ruling of September 15th awarding the minority inspector to the Popular Front Party headed
by Abad Santos is a legal exercise of the discretion vested in it by law.lwphi1.nt
The resolution of the Commission is affirmed, with costs against petitioner.
Diaz, Laurel, and Horrilleno, MM., concur.

Page 251 of 557

Separate Opinions

OZAETA, J., dissenting:

I maintain here my dissent in the analogous cases of Vinzons and Rimando, G.R. Nos. 48596 and 48603,
respectively.
The Commission on Elections having found that neither the Sumulong nor the Abad Santos faction of the
Popular Front was entitled under the law to the minority inspector, it should have followed what the law to the
minority inspector, it should have followed what the law provides in such a case, namely, to choose such
inspector at its discretion (sec. 5, Commonwealth Act No. 657), and the person so chosen should be
nonpartisan (sec. 6, id.). When the Commission allowed the Abad Santos faction of the Popular Front to
choose the inspector for it, it abdicated the power and authority vested in it by law in favor of said faction, and
at the same time unconsciously laid itself bare to criticism of partiality from the Sumulong faction.
It must be borne in mind that the coming election is not for Representatives only but also for President, VicePresident , and Senators-at-large. With more reason, therefore, should the Commission on Elections have
appointed a person of its own choice for the second inspector in order better to safeguard the interests of all the
contending parties.
There is another reason why in my opinion the award by the Commission on Elections of the second inspector
to the Abad Santos faction is particularly unfortunate. It is a notorious fact that the party headed by Mr. Pedro
Abad Santos is the Communist Party of the Philippines. Before said party joined the Pagkakaisa ng Bayan,
which was organized by Mr. Juan Sumulong, in December, 1936, it was known as the Socialist Party of
Pampanga. After said party headed by Mr. Abad Santos has separated from the Pagkakaisa ng Bayan or
Popular Front, and has reverted to its former independent existence, the Commission on Elections now permits
it not only to parade as Popular Front and not as Communist Party but also to have the second inspector
to which it admittedly is not entitled. I cannot bring myself to sanction that result.

Page 252 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-10405

December 29, 1960

WENCESLAO PASCUAL, in his official capacity as Provincial Governor of Rizal, petitioner-appellant,

vs.
THE SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, ET AL., respondents-appellees.
Asst. Fiscal Noli M. Cortes and Jose P. Santos for appellant.
Office of the Asst. Solicitor General Jose G. Bautista and Solicitor A. A. Torres for appellee.

Page 253 of 557

CONCEPCION, J.:
Appeal, by petitioner Wenceslao Pascual, from a decision of the Court of First Instance of Rizal, dismissing
the above entitled case and dissolving the writ of preliminary injunction therein issued, without costs.
On August 31, 1954, petitioner Wenceslao Pascual, as Provincial Governor of Rizal, instituted this action for
declaratory relief, with injunction, upon the ground that Republic Act No. 920, entitled "An Act Appropriating
Funds for Public Works", approved on June 20, 1953, contained, in section 1-C (a) thereof, an item (43[h]) of
P85,000.00 "for the construction, reconstruction, repair, extension and improvement" of Pasig feeder road
terminals (Gen. Roxas Gen. Araneta Gen. Lucban Gen. Capinpin Gen. Segundo Gen. Delgado
Gen. Malvar Gen. Lim)"; that, at the time of the passage and approval of said Act, the aforementioned
feeder roads were "nothing but projected and planned subdivision roads, not yet constructed, . . . within the
Antonio Subdivision . . . situated at . . . Pasig, Rizal" (according to the tracings attached to the petition as
Annexes A and B, near Shaw Boulevard, not far away from the intersection between the latter and Highway
54), which projected feeder roads "do not connect any government property or any important premises to the
main highway"; that the aforementioned Antonio Subdivision (as well as the lands on which said feeder roads
were to be construed) were private properties of respondent Jose C. Zulueta, who, at the time of the passage
and approval of said Act, was a member of the Senate of the Philippines; that on May, 1953, respondent
Zulueta, addressed a letter to the Municipal Council of Pasig, Rizal, offering to donate said projected feeder
roads to the municipality of Pasig, Rizal; that, on June 13, 1953, the offer was accepted by the council, subject
to the condition "that the donor would submit a plan of the said roads and agree to change the names of two of
them"; that no deed of donation in favor of the municipality of Pasig was, however, executed; that on July 10,
1953, respondent Zulueta wrote another letter to said council, calling attention to the approval of Republic Act.
No. 920, and the sum of P85,000.00 appropriated therein for the construction of the projected feeder roads in
question; that the municipal council of Pasig endorsed said letter of respondent Zulueta to the District Engineer
of Rizal, who, up to the present "has not made any endorsement thereon" that inasmuch as the projected feeder
roads in question were private property at the time of the passage and approval of Republic Act No. 920, the
appropriation of P85,000.00 therein made, for the construction, reconstruction, repair, extension and
improvement of said projected feeder roads, was illegal and, therefore, void ab initio"; that said appropriation
of P85,000.00 was made by Congress because its members were made to believe that the projected feeder
roads in question were "public roads and not private streets of a private subdivision"'; that, "in order to give a
semblance of legality, when there is absolutely none, to the aforementioned appropriation", respondents
Zulueta executed on December 12, 1953, while he was a member of the Senate of the Philippines, an alleged
deed of donation copy of which is annexed to the petition of the four (4) parcels of land constituting said
projected feeder roads, in favor of the Government of the Republic of the Philippines; that said alleged deed of
donation was, on the same date, accepted by the then Executive Secretary; that being subject to an onerous
condition, said donation partook of the nature of a contract; that, such, said donation violated the provision of
our fundamental law prohibiting members of Congress from being directly or indirectly financially interested
in any contract with the Government, and, hence, is unconstitutional, as well as null and void ab initio, for the
construction of the projected feeder roads in question with public funds would greatly enhance or increase the
value of the aforementioned subdivision of respondent Zulueta, "aside from relieving him from the burden of
constructing his subdivision streets or roads at his own expense"; that the construction of said projected feeder
roads was then being undertaken by the Bureau of Public Highways; and that, unless restrained by the court,
the respondents would continue to execute, comply with, follow and implement the aforementioned illegal
provision of law, "to the irreparable damage, detriment and prejudice not only to the petitioner but to the
Filipino nation."
Petitioner prayed, therefore, that the contested item of Republic Act No. 920 be declared null and void; that the
alleged deed of donation of the feeder roads in question be "declared unconstitutional and, therefor, illegal";
that a writ of injunction be issued enjoining the Secretary of Public Works and Communications, the Director
of the Bureau of Public Works and Highways and Jose C. Zulueta from ordering or allowing the continuance
of the above-mentioned feeder roads project, and from making and securing any new and further releases on
the aforementioned item of Republic Act No. 920, and the disbursing officers of the Department of Public
Page 254 of 557

Works and Highways from making any further payments out of said funds provided for in Republic Act No.
920; and that pending final hearing on the merits, a writ of preliminary injunction be issued enjoining the
aforementioned parties respondent from making and securing any new and further releases on the aforesaid
item of Republic Act No. 920 and from making any further payments out of said illegally appropriated funds.
Respondents moved to dismiss the petition upon the ground that petitioner had "no legal capacity to sue", and
that the petition did "not state a cause of action". In support to this motion, respondent Zulueta alleged that the
Provincial Fiscal of Rizal, not its provincial governor, should represent the Province of Rizal, pursuant to
section 1683 of the Revised Administrative Code; that said respondent is " not aware of any law which makes
illegal the appropriation of public funds for the improvements of . . . private property"; and that, the
constitutional provision invoked by petitioner is inapplicable to the donation in question, the same being a pure
act of liberality, not a contract. The other respondents, in turn, maintained that petitioner could not assail the
appropriation in question because "there is no actual bona fide case . . . in which the validity of Republic Act
No. 920 is necessarily involved" and petitioner "has not shown that he has a personal and substantial interest"
in said Act "and that its enforcement has caused or will cause him a direct injury."
Acting upon said motions to dismiss, the lower court rendered the aforementioned decision, dated October 29,
1953, holding that, since public interest is involved in this case, the Provincial Governor of Rizal and the
provincial fiscal thereof who represents him therein, "have the requisite personalities" to question the
constitutionality of the disputed item of Republic Act No. 920; that "the legislature is without power
appropriate public revenues for anything but a public purpose", that the instructions and improvement of the
feeder roads in question, if such roads where private property, would not be a public purpose; that, being
subject to the following condition:
The within donation is hereby made upon the condition that the Government of the Republic of the
Philippines will use the parcels of land hereby donated for street purposes only and for no other
purposes whatsoever; it being expressly understood that should the Government of the Republic of the
Philippines violate the condition hereby imposed upon it, the title to the land hereby donated shall,
upon such violation, ipso facto revert to the DONOR, JOSE C. ZULUETA. (Emphasis supplied.)
which is onerous, the donation in question is a contract; that said donation or contract is "absolutely forbidden
by the Constitution" and consequently "illegal", for Article 1409 of the Civil Code of the Philippines, declares
in existence and void from the very beginning contracts "whose cause, objector purpose is contrary to law,
morals . . . or public policy"; that the legality of said donation may not be contested, however, by petitioner
herein, because his "interest are not directly affected" thereby; and that, accordingly, the appropriation in
question "should be upheld" and the case dismissed.
At the outset, it should be noted that we are concerned with a decision granting the aforementioned motions to
dismiss, which as much, are deemed to have admitted hypothetically the allegations of fact made in the petition
of appellant herein. According to said petition, respondent Zulueta is the owner of several parcels of residential
land situated in Pasig, Rizal, and known as the Antonio Subdivision, certain portions of which had been
reserved for the projected feeder roads aforementioned, which, admittedly, were private property of said
respondent when Republic Act No. 920, appropriating P85,000.00 for the "construction, reconstruction, repair,
extension and improvement" of said roads, was passed by Congress, as well as when it was approved by the
President on June 20, 1953. The petition further alleges that the construction of said roads, to be undertaken
with the aforementioned appropriation of P85,000.00, would have the effect of relieving respondent Zulueta of
the burden of constructing his subdivision streets or roads at his own expenses, 1and would "greatly enhance or
increase the value of the subdivision" of said respondent. The lower court held that under these circumstances,
the appropriation in question was "clearly for a private, not a public purpose."
Respondents do not deny the accuracy of this conclusion, which is self-evident. 2However, respondent Zulueta
contended, in his motion to dismiss that:
Page 255 of 557

A law passed by Congress and approved by the President can never be illegal because Congress is the
source of all laws . . . Aside from the fact that movant is not aware of any law which makes illegal the
appropriation of public funds for the improvement of what we, in the meantime, may assume as
private property . . . (Record on Appeal, p. 33.)
The first proposition must be rejected most emphatically, it being inconsistent with the nature of the
Government established under the Constitution of the Republic of the Philippines and the system of checks and
balances underlying our political structure. Moreover, it is refuted by the decisions of this Court invalidating
legislative enactments deemed violative of the Constitution or organic laws. 3
As regards the legal feasibility of appropriating public funds for a public purpose, the principle according to
Ruling Case Law, is this:
It is a general rule that the legislature is without power to appropriate public revenue for anything but
a public purpose. . . . It is the essential character of the direct object of the expenditure which must
determine its validity as justifying a tax, and not the magnitude of the interest to be affected nor the
degree to which the general advantage of the community, and thus the public welfare, may be
ultimately benefited by their promotion. Incidental to the public or to the state, which results from the
promotion of private interest and the prosperity of private enterprises or business, does not justify their
aid by the use public money. (25 R.L.C. pp. 398-400; Emphasis supplied.)
The rule is set forth in Corpus Juris Secundum in the following language:
In accordance with the rule that the taxing power must be exercised for public purposes only,
discussed supra sec. 14, money raised by taxation can be expended only for public purposes and not
for the advantage of private individuals. (85 C.J.S. pp. 645-646; emphasis supplied.)
Explaining the reason underlying said rule, Corpus Juris Secundum states:
Generally, under the express or implied provisions of the constitution, public funds may be used only
for public purpose. The right of the legislature to appropriate funds is correlative with its right to tax,
and, under constitutional provisions against taxation except for public purposes and prohibiting the
collection of a tax for one purpose and the devotion thereof to another purpose, no appropriation of
state funds can be made for other than for a public purpose.
xxx

xxx

xxx

The test of the constitutionality of a statute requiring the use of public funds is whether the statute is
designed to promote the public interest, as opposed to the furtherance of the advantage of individuals,
although each advantage to individuals might incidentally serve the public. (81 C.J.S. pp. 1147;
emphasis supplied.)
Needless to say, this Court is fully in accord with the foregoing views which, apart from being patently sound,
are a necessary corollary to our democratic system of government, which, as such, exists primarily for the
promotion of the general welfare. Besides, reflecting as they do, the established jurisprudence in the United
States, after whose constitutional system ours has been patterned, said views and jurisprudence are, likewise,
part and parcel of our own constitutional law.lawphil.net
This notwithstanding, the lower court felt constrained to uphold the appropriation in question, upon the ground
that petitioner may not contest the legality of the donation above referred to because the same does not affect
him directly. This conclusion is, presumably, based upon the following premises, namely: (1) that, if valid,
Page 256 of 557

said donation cured the constitutional infirmity of the aforementioned appropriation; (2) that the latter may not
be annulled without a previous declaration of unconstitutionality of the said donation; and (3) that the rule set
forth in Article 1421 of the Civil Code is absolute, and admits of no exception. We do not agree with these
premises.
The validity of a statute depends upon the powers of Congress at the time of its passage or approval, not upon
events occurring, or acts performed, subsequently thereto, unless the latter consists of an amendment of the
organic law, removing, with retrospective operation, the constitutional limitation infringed by said statute.
Referring to the P85,000.00 appropriation for the projected feeder roads in question, the legality thereof
depended upon whether said roads were public or private property when the bill, which, latter on, became
Republic Act 920, was passed by Congress, or, when said bill was approved by the President and the
disbursement of said sum became effective, or on June 20, 1953 (see section 13 of said Act). Inasmuch as the
land on which the projected feeder roads were to be constructed belonged then to respondent Zulueta, the
result is that said appropriation sought a private purpose, and hence, was null and void. 4 The donation to the
Government, over five (5) months after the approval and effectivity of said Act, made, according to the
petition, for the purpose of giving a "semblance of legality", or legalizing, the appropriation in question, did
not cure its aforementioned basic defect. Consequently, a judicial nullification of said donation need not
precede the declaration of unconstitutionality of said appropriation.
Again, Article 1421 of our Civil Code, like many other statutory enactments, is subject to exceptions. For
instance, the creditors of a party to an illegal contract may, under the conditions set forth in Article 1177 of
said Code, exercise the rights and actions of the latter, except only those which are inherent in his person,
including therefore, his right to the annulment of said contract, even though such creditors are not affected by
the same, except indirectly, in the manner indicated in said legal provision.
Again, it is well-stated that the validity of a statute may be contested only by one who will sustain a direct
injury in consequence of its enforcement. Yet, there are many decisions nullifying, at the instance of taxpayers,
laws providing for the disbursement of public funds, 5upon the theory that "the expenditure of public funds by
an officer of the State for the purpose of administering an unconstitutional act constitutes a misapplication of
such funds," which may be enjoined at the request of a taxpayer. 6Although there are some decisions to the
contrary, 7the prevailing view in the United States is stated in the American Jurisprudence as follows:
In the determination of the degree of interest essential to give the requisite standing to attack the
constitutionality of a statute, the general rule is that not only persons individually affected, but also
taxpayers, have sufficient interest in preventing the illegal expenditure of moneys raised by taxation
and may therefore question the constitutionality of statutes requiring expenditure of public moneys.
(11 Am. Jur. 761; emphasis supplied.)
However, this view was not favored by the Supreme Court of the U.S. in Frothingham vs. Mellon (262 U.S.
447), insofar as federal laws are concerned, upon the ground that the relationship of a taxpayer of the U.S. to
its Federal Government is different from that of a taxpayer of a municipal corporation to its government.
Indeed, under the composite system of government existing in the U.S., the states of the Union are integral part
of the Federation from an international viewpoint, but, each state enjoys internally a substantial measure of
sovereignty, subject to the limitations imposed by the Federal Constitution. In fact, the same was made by
representatives of each state of the Union, not of the people of the U.S., except insofar as the former
represented the people of the respective States, and the people of each State has, independently of that of the
others, ratified said Constitution. In other words, the Federal Constitution and the Federal statutes have become
binding upon the people of the U.S. in consequence of an act of, and, in this sense, through the respective
states of the Union of which they are citizens. The peculiar nature of the relation between said people and the
Federal Government of the U.S. is reflected in the election of its President, who is chosen directly, not by the
people of the U.S., but by electors chosen by each State, in such manner as the legislature thereof may direct
(Article II, section 2, of the Federal Constitution).lawphi1.net
Page 257 of 557

The relation between the people of the Philippines and its taxpayers, on the other hand, and the Republic of the
Philippines, on the other, is not identical to that obtaining between the people and taxpayers of the U.S. and its
Federal Government. It is closer, from a domestic viewpoint, to that existing between the people and taxpayers
of each state and the government thereof, except that the authority of the Republic of the Philippines over the
people of the Philippines is more fully direct than that of the states of the Union, insofar as the simple and
unitary type of our national government is not subject to limitations analogous to those imposed by the Federal
Constitution upon the states of the Union, and those imposed upon the Federal Government in the interest of
the Union. For this reason, the rule recognizing the right of taxpayers to assail the constitutionality of a
legislation appropriating local or state public funds which has been upheld by the Federal Supreme Court
(Crampton vs. Zabriskie, 101 U.S. 601) has greater application in the Philippines than that adopted with
respect to acts of Congress of the United States appropriating federal funds.
Indeed, in the Province of Tayabas vs. Perez (56 Phil., 257), involving the expropriation of a land by the
Province of Tayabas, two (2) taxpayers thereof were allowed to intervene for the purpose of contesting the
price being paid to the owner thereof, as unduly exorbitant. It is true that in Custodio vs. President of the
Senate (42 Off. Gaz., 1243), a taxpayer and employee of the Government was not permitted to question the
constitutionality of an appropriation for backpay of members of Congress. However, in Rodriguez vs.
Treasurer of the Philippines and Barredo vs. Commission on Elections (84 Phil., 368; 45 Off. Gaz., 4411), we
entertained the action of taxpayers impugning the validity of certain appropriations of public funds, and
invalidated the same. Moreover, the reason that impelled this Court to take such position in said two (2) cases
the importance of the issues therein raised is present in the case at bar. Again, like the petitioners in the
Rodriguez and Barredo cases, petitioner herein is not merely a taxpayer. The Province of Rizal, which he
represents officially as its Provincial Governor, is our most populated political subdivision, 8and, the taxpayers
therein bear a substantial portion of the burden of taxation, in the Philippines.
Hence, it is our considered opinion that the circumstances surrounding this case sufficiently justify petitioners
action in contesting the appropriation and donation in question; that this action should not have been dismissed
by the lower court; and that the writ of preliminary injunction should have been maintained.
Wherefore, the decision appealed from is hereby reversed, and the records are remanded to the lower court for
further proceedings not inconsistent with this decision, with the costs of this instance against respondent Jose
C. Zulueta. It is so ordered.
Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Gutierrez David, Paredes,
and Dizon, JJ., concur.

Footnotes
1 For, pursuant to section 19(h) of the existing rules and regulation of the Urban Planning
Commission, the owner of a subdivision is under obligation "to improve, repair and maintain all
streets, highways and other ways in his subdivision until their dedication to public use is accepted by
the government."
2 Ex parte Bagwell, 79 P. 2d. 395; Road District No. 4 Shelby County vs. Allred. 68 S.W 2d 164;
State ex rel. Thomson vs. Giessel, 53-N.W. 2d. 726, Attorney General vs. City of Eau Claire, 37 Wis.
400; State ex rel. Smith vs. Annuity Pension Board, 241 Wis. 625, 6 N.W. 2d. 676; State vs. Smith,
293 N.W. 161; State vs. Dammann 280 N.W. 698; Sjostrum vs. State Highway Commission 228 P. 2d.
238; Hutton vs. Webb, 126 N.C. 897, 36 S.E. 341; Michigan Sugar Co. vs. Auditor General, 124
Mich. 674, 83 N.W. 625; Oxnard Beet Sugar Co. vs. State, 105 N.W. 716.

Page 258 of 557

3 Casanovas vs. Hord. 8 Phil., McGirr vs. Hamilton, 30 Phil., 563; Compania General de Tabacos vs.
Board of Public Utility, 34 Phil., 136; Central Capiz vs. Ramirez, 40 Phil., 883; Concepcion vs.
Paredes, 42 Phil., 599; U.S. vs. Ang Tang Ho, 43 Phil., 6; McDaniel vs. Apacible, 44 Phil., 248;
People vs. Pomar, 46 Phil., 440; Agcaoili vs. Suguitan, 48 Phil., 676; Government of P.I. vs. Springer,
50 Phil., 259; Manila Electric Co. vs. Pasay Transp. Co., 57 Phil., 600; People vs. Linsangan, 62 Phil.,
464; People and Hongkong & Shanghai Banking Corp. vs. Jose O. Vera, 65 Phil., 56; People vs.
Carlos, 78 Phil., 535; 44 Off. Gaz. 428; In re Cunanan, 94 Phil., 534; 50 Off. Gaz., 1602; City of
Baguio vs. Nawasa, 106 Phil., 144; City of Cebu vs. Nawasa, 107 Phil., 1112; Rutter vs. Esteban, 93
Phil., 68; Off. Gaz., [5]1807.
4 In the language of the Supreme Court of Nebraska, "An unconstitutional statute is a legal still birth,
which neither moves, nor breathes, nor holds out any sign of life. It is a form without one vital spark.
It is wholly dead from the time of conception, and, no right, either legal or equitable, arises from such
inanimate thing." (Oxnard Beet Sugar Co. vs. State, 102 N.W. 80.).
5 See, among others, Livermore, vs. Waite, 102 Cal. 113, 25 L.R.A. 312,36 P. 424; Crawford vs.
Gilchrist, 64 Fla. 41, 59 So. 963; Lucas vs. American Hawaiian Engineering and Constr. Co., 16 Haw.
80; Castle vs. Capena, 5 Haw. 27; Littler vs. Jayne, 124 Ill. 123, 16 N.E. 374; Burke vs. Snively, 208
I11. 328, 70 N.E. 372; Ellingham vs. Dye, 178 Ind. 336, 99 N.E. 1; Christmas vs. Warfield, 105 Md.
536; Sears vs. Steel, 55 Or. 544, 107 Pac. 3; State ex rel. Taylor vs. Pennover, 26 Or. 205, 37 Pac. 906;
Carman vs. Woodruf, 10 Or. 123; MacKinley vs. Watson, 145 Pac. 266; Sears vs. James, 47 Or. 50, 82
Pac. 14; Mott vs. Pennsylvania R. Co., 30 Pa. 9, 72 Am. Dec. 664; Bradly vs. Power County, 37 Am.
Dec. 563; Frost vs. Thomas, 26 Colo. 227, 77 Am. St. Rep. 259, 56 Pac. 899; Martin vs. Ingham, 38
Kan. 641, 17 Pac. 162; Martin vs. Lacy, 39 Kan. 703, 18 Pac. 951; Smith vs. Maguerich, 44 Ga. 163;
Giddings vs. Blacker, 93 Mich. 1, 16 L.R.A. 402, 52 N.W. 944; Rippe vs. Becker, 56 Minn. 100, 57
N.W. 331; Auditor vs. Treasurer, 4 S.C. 311; McCullough vs. Brown, 31 S.C. 220, 19 S.E. 458; State
ex rel. Lamb vs. Cummingham, 83 Wis. 90, 53 N.W. 35; State ex rel. Rosenhian vs. Frear, 138 Wis.
173, 119 N.W. 894.
6 Rubs vs. Thompson, 56 N.E. 2d. 761; Reid vs. Smith, 375 Ill. 147, 30N. E. 2d. 908; Fergus vs.
Russel, 270 Ill. 304, 110 N.E. 130; Burke vs. Snively, 208 Ill. 328; Jones vs. Connell, 266 Ill. 443, 107
N.E. 731; Dudick vs. Baumann, 349 [PEPSI] Ill. 46, 181 N.E. 690.
7 Thompson vs. Canal Fund Comps., 2 Abb. Pr. 248; Shieffelin vs. Komfort, 212 N.Y. 520, 106 N.E.
675; Hutchison vs. Skinmer, 21 Misc. 729, 49N. Y. Supp. 360; Long vs. Johnson, 70 Misc. 308; 127
N.Y. Supp. 756; Whiteback vs. Hooker, 73 Misc. 573, 133 N.Y. Supp. 534; State ex rel. Cranmer vs.
Thorson, 9 S.D. 149, 68 N.W. 202; Davenport vs. Elrod, 20 S.D. 567, 107 N.W. 833; Indiana Jones vs.
Reed, 3 Wash. 57, 27 Pac. 1067; Birmingham vs. Cheetham, 19 Wash. 657, 54 Pac. 37; Tacoma vs.
Bridges, 25 Wash. 221, 65 Pac. 186; Hilger vs. State, 63 Wash. 457, 116 Pac. 19.
8 It has 1,463,530 inhabitants.

Page 259 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-33713 July 30, 1975

EUSEBIO B. GARCIA, petitioner-appellant,
vs.
HON. ERNESTO S. MATA, Secretary of National Defense, and GENERAL MANUEL T. YAN,
Chief of Staff, Armed Forces of the Philippines, respondents-appellees.
Emilio Purugganan for petitioner-appellant.
Office of the Solicitor General Estelito P. Mendoza, Assistant Solicitor General Rosalio A. de Leon
and Solicitor Eulogio Raquel-Santos for respondents-appellees.

CASTRO, J.:
This is a petition for certiorari to review the decision of the Court of First Instance of Quezon City,
Branch IX, in civil case Q-13466, entitled "Eusebio B. Garcia, petitioner, versus Hon. Ernesto Mata
(Juan Ponce Enrile), et al., respondents," declaring paragraph 11 of the "Special Provisions for the
Armed Forces of the Philippines" of Republic Act No. 1600 1 unconstitutional and therefore invalid
and inoperative.
We affirm the judgment a quo.
The facts material to this case are embodied in the following stipulation submitted jointly by both
parties to the lower court:
Petitioner was a reserve officer on active duty with the Armed Forces of the
Philippines until his reversion to inactive status on 15 November 1960, pursuant to
the provisions of Republic Act No. 2332. At the time of reversion, Petitioner held the
rank of Captain with a monthly emolument of P478.00, comprising his base and
longevity pay, quarters and subsistence allowances;
On June 18, 1955, the date when Republic Act No. 1382 took effect, petitioner had a
total of 9 years, 4 months and 12 days of accumulated active commissioned service
in the Armed Forces of the Philippines;
On July 11, 1956, the date when Republic Act 1600 took effect, petitioner had an
accumulated active commissioned service of 10 years, 5 months and 5 days in the
Armed Forces of the Philippines;

Page 260 of 557

Petitioner's reversion to inactive status on 15 November 1960 was pursuant to the

provisions of Republic Act 2334, and such reversion was neither for cause, at his
own request, nor after court-martial proceedings;
From 15 November 1960 up to the present, petitioner has been on inactive status
and as such, he has neither received any emoluments from the Armed Forces of the
Philippines, nor was he ever employed in the Government in any capacity;
As a consequence of his reversion to inactive status, petitioner filed the necessary
petitions with the offices of the AFP Chief of Staff, the Secretary of National Defense,
and the President, respectively, but received reply only from the Chief of Staff
through the AFP Adjutant General.
On September 17, 1969 the petitioner brought an action for "Mandamus and Recovery of a Sum of
Money" in the court a quo to compel the respondents Secretary of National Defense and Chief of
Staff of the Armed Forces of the Philippines 2 to reinstate him in the active commissioned service of
the Armed Forces of the Philippines, to readjust his rank, and to pay all the emoluments and
allowances due to him from the time of his reversion to inactive status. On December 2, 1970 the
trial court dismissed the petition. The court ruled that paragraph 11 of the "Special Provisions for the
Armed Forces of the Philippines" in Republic Act 1600 is "invalid, unconstitutional and inoperative."
The petitioner had a total of 9 years, 4 months and 12 days of accumulated active commissioned
service in the AFP when Republic Act 1382 took effect on June 18, 1955. Section I of this law
provided:
Reserve officers with at least ten years of active accumulated commissioned service
who are still on active duty at the time of the approval of this Act shall not be reverted
into inactive status except for cause after proper court-martial proceedings or upon
their own request: Provided, That for purposes of computing the length of service, six
months or more of active service shall be considered one year. (emphasis supplied)
The petitioner's accumulated active commissioned service was thus short of the minimum service
requirement prescribed in the aforequoted provision of R.A. 1382.
On July 11, 1956, 3 while the petitioner was yet in the active service, Republic Act 1600 was enacted
into law. Paragraph 11 of the SPECIAL PROVISIONS FOR THE ARMED FORCES OF THE
PHILIPPINES (on page 892 of the Act) provided as follows:
11. After the approval of this Act, and when there is no emergency, no reserve officer
of the Armed Forces of the Philippines may be called to a tour of active duty for more
than two years during any period of five consecutive years: PROVIDED, That
hereafter reserve officers of the Armed Forces of the Philippines on active duty for
more than two years on the date of the approval of this Act except those whose
military and educational training, experience and qualifications are deemed essential
to the needs of the service, shall be reverted to inactive status within one year from
the approval of this Act: PROVIDED, FURTHER, That reserve officers with at least
ten years of active accumulated commissioned service who are still on active duty at
the time of the approval of this Act shall not be reverted to inactive status except for
cause after proper court-martial proceedings or upon their request; PROVIDED,
FURTHER, That any such reserve officer reverted to inactive status who has at least
five of active commissioned service shall be entitled to a gratuity equivalent to one
month's authorized base and longevity pay in the rank held at the time of such
Page 261 of 557

reversion for every year of active commissioned service; PROVIDED, FURTHER,

That any reserve officer who receives a gratuity under the provisions of this Act shall
not except during a National emergency or mobilization, be called to a tour of active
duty within five years from the date of reversion: PROVIDED, FURTHER, That the
Secretary of National Defense is authorized to extend the tour of active duty of
reserve officers who are qualified military pilots and doctors; PROVIDED, FURTHER,
That any savings in the appropriations authorized in this Act for the Department of
National Defense notwithstanding any provision of this Act to the contrary and any
unexpended balance of certification to accounts payable since 1 July 1949
regardless of purpose of the appropriation shall be made available for the purpose of
this paragraph: AND PROVIDED, FINALLY, That the Secretary of National Defense
shall render a quarterly report to Congress as to the implementation of the provisions
of this paragraph. ( pp. 892-893, RA 1600) (emphasis supplied)
The petitioner consequently argues that his reversion to inactive status on November 15, 1960 was
in violation of the abovequoted provision which prohibits the reversion to inactive status of reserve
officers on active duty with at least ten years of accumulated active commissioned service.
On the other hand, the respondents contend that the said provision has no relevance or pertinence
whatsoever to the budget in question or to any appropriation item contained therein, and is therefore
proscribed by Art. VI, Sec. 19, par. 2 4 of the 1935 Constitution of the Philippines, which reads:
No provision or enactment shall be embraced in the general appropriation bill unless
it relates specifically to some particular appropriation therein; and any such provision
or enactment shall be limited in its operation to such appropriation.
A perusal of the challenged provision of R.A. 1600 fails to disclose its relevance or relation to any
appropriation item therein, or to the Appropriation Act as a whole. From the very first clause of
paragraph 11 itself, which reads,
After the approval of this Act, and when there is no emergency, no reserve officer of
the Armed Forces of the Philippines may be called to a tour of active duty for more
than two years during any period of five consecutive years:
the incongruity and irrelevancy are already evident. While R.A. 1600 appropriated money for the
operation of the Government for the fiscal year 1956-1957, the said paragraph 11 refers to the
fundamental government policy matters of the calling to active duty and the reversion to inactive
status of reserve officers in the AFP. The incongruity and irrelevancy continue throughout the entire
paragraph.
In the language of the respondents-appellees, "it was indeed a non-appropriation item inserted in an
appropriation measure in violation of the constitutional inhibition against "riders" to the general
appropriation act." It was indeed a new and completely unrelated provision attached to the
Appropriation Act.
The paragraph in question also violated Art. VI, Sec. 21, par. 1 5 of the 1935 Constitution of the
Philippines which provided that "No bill which may be enacted into law shall embrace more than one
subject which shall be expressed in the title of the bill." This constitutional requirement nullified and
rendered inoperative any provision contained in the body of an act that was not fairly included in the
subject expressed in the title or was not germane to or properly connected with that subject.

Page 262 of 557

In determining whether a provision contained in an act is embraced in the subject and is properly
connected therewith, the subject to be considered is the one expressed in the title of the act, and
every fair intendment and reasonable doubt should be indulged in favor of the validity of the
legislative enactment. But when an act contains provisions which are clearly not embraced in the
subject of the act, as expressed in the title, such provisions are inoperative and without effect.
We are mindful that the title of an act is not required to be an index to the body of the act. Thus, in
Sumulong vs. Comelec, 73 Phil. 288, 291, this Court held that it is "a sufficient compliance with such
requirement if the title expresses the general subject and all the provisions of the statute are
germane to that general subject." The constitutional provision was intended to preclude the insertion
of riders in legislation, a rider being a provision not germane to the subject-matter of the bill. 6
The subject of R.A. 1600, as expressed in its title, is restricted to "appropriating funds for the
operation of the government." Any provision contained in the body of the act that is fairly included in
this restricted subject or any matter properly connected therewith is valid and operative. But, if a
provision in the body of the act is not fairly included in this restricted subject, like the provision
relating to the policy matters of calling to active duty and reversion to inactive duty of reserve officers
of the AFP, such provision is inoperative and of no effect.
To quote the respondents-appellees on this point:
It is obvious that the statutory provision in question refers to security of reserve
officers from reversion to inactive status, whereas the subject or title of the statute
from which it derives its existence refers to appropriations. Verily, it runs contrary to
or is repugnant to the above-quoted injunctive provision of the Constitution. Where a
conflict arises between a statute and the Constitution, the latter prevails. It should be
emphasized that a Constitution is superior to a statute and is precisely called the
"supreme law of the land" because it is the fundamental or organic law which states
the general principles and builds the substantial foundation and general framework of
law and government, and for that reason a statute contrary to or in violation of the
Constitution is null and void (Talabon vs. Iloilo Provincial Warden, 78 Phil.
599).1wph1.t If a law, therefore, happens to infringe upon or violate the
fundamental law, courts of justice may step in to nullify its effectiveness (Mabanag
vs. Lopez Vito, 78 Phil. 1).
Upon the foregoing dissertation, we declare Paragraph 11 of the SPECIAL PROVISIONS FOR THE
ARMED FORCES OF THE PHILIPPINES as unconstitutional, invalid and inoperative. Being
unconstitutional, it confers no right and affords no protection. In legal contemplation it is as though it
has never been passed. 7
Verily, not having shown a clear legal right to the position to which he desires to be restored, the
petitioner cannot compel the respondents to reinstate and/or call him to active duty, promote or
readjust his rank, much less pay him back emoluments and allowances.
ACCORDINGLY, the instant petition is denied, and the decision of the lower court dismissing the
complaint is hereby affirmed. No pronouncement as to costs.
Makalintal, C.J., Fernando, Makasiar, Esquerra, Muoz Palma, Aquino, Concepcion, Jr. and Martin,
JJ., concur.
Antonio, J., took no part.

Page 263 of 557

Teehankee, J., is on leave.

Separate Opinions

BARREDO, J., concurring:

I cannot but concur in the able and scholarly opinion of Mr. Justice Castro. There is indeed constant
need to make it emphatically clear that the Constitution proscribes the insertion of riders in the
Budget, the pernicious implications of which are too plain and well-known to call for further
elucidation. I am adding a few words here, only to bolster, if I may, the conclusion that petitioner's
pose would still be unsustainable even if it could be assumed that the Special Provisions invoked by
him were constitutional.
According to the stipulation of facts submitted jointly by both parties to the lower court, "(p)etitioner's
reversion to inactive status on 15 November 1960 was pursuant to provisions of Republic Act 2334,
and such reversion was neither for cause, at his own request, nor after court martial proceedings"
and that "(o)n June 18, 1955, the date when Republic Act 1382 took effect, petitioner had a total of
(only) 9 years, 4 months and 12 days of accumulated active commission service in the Armed
Forces of the Philippines." In other words, indisputably petitioner is not in a position to invoke
Republic Act 1382 which provides as follows:
SECTION 1. Reserve Officers with at least ten years of active accumulated
commissioned service who are still on active duty at the time of the approval of this
Act shall not be reverted into inactive status except for cause after proper court
martial proceedings or upon their own request: Provided, That for purposes of
computing the length of service, six months or more of active service shall be
considered one year.
for the simple reason that he lacked, as of the date of the approval of this law, the 10-year
accumulated active commissioned service required thereby.
On June 19, 1959, Republic Act 2334 was enacted containing the following pertinent provisions:
SEC. 2. After the approval of this Act, and except in time of emergency, no reserve
officer shall be called to extended tours of active duty exceeding a total of two years
within any period of five consecutive years: Provided, That reserve officers on active
duty for more than two years on the date of approval of this Act, with the exception of
those covered by section three of this Act, shall be reverted to inactive status within
three years from the approval of this Act: Provided, further, That hereafter calls to
extended tours of active duty of reserve officers shall be in proportion to the officers
requirement of each major service in the reserve force build-up program of the
Armed Forces of the Philippines and the priority for selecting such reserve officers

Page 264 of 557

within each major service shall follow the order of age groupings for the reserve force
as defined in section fifty-two of the National Defense Act, as amended.
SEC. 3. The provisions of section two of this Act shall not apply to reserve officers
covered by the provisions of Republic Act Numbered Thirteen hundred eighty-two
nor to those possessing technical qualifications, skills, and competence which are
indispensable to the needs of the Armed Forces of the Philippines and for whom
there are no satisfactory replacements from among reserve officers in the inactive
status: Provided, That the selection of such officers shall be as determined by a
Board of Officers to be appointed by the Chief of Staff.
Having the foregoing provisions in mind, it is clear to me that in reverting petitioner to inactive status
on November 15, 1960, the Armed Forces authorities and original respondents herein, now
substituted respectively by the present incumbents, acted properly and were merely complying with
the injunction of Section 2 above that "(r)eserve officers on active duty for more than two years on
the date of the approval of this Act, with the exception of those covered by section three of this Act,
shall be reverted to inactive status within three years from the approval of this Act." As already
stated, it is definite that petitioner is not covered by the provisions of Republic Act 1382 and there is
no evidence here whatsoever that petitioner comes within the other exception of the Act. We have
not been shown that, if he possesses the indispensable technical qualifications, skills, etc.
mentioned in Section 3, he has been selected by the Board of Officers appointed by the Chief of
Staff for the purpose.
Now, under the Special Provision in question contained in the National Budget for the fiscal year
1955-56 (Republic Act 1600), reserve officers with at least ten years of active accumulated
commissioned service up to July 11, 1956, the date of its enactment, and who were still on active
duty on said date "shall not be reverted to inactive status except for cause after proper court martial
proceedings or upon their request." Upon the other hand, as already stated, under the subsequent
law, Republic Act 2334, "(r)eserve officers on active duty for more than two years on the date of the
approval of this Act" (June 19, 1959), with the exceptions already noted which do not apply to
petitioner, "shall be reverted to inactive status within three years from the approval of this Act." To
my mind, there is irreconcilable repugnance between these two legal provisions. The first prohibited
reversion while the second ordains it under practically identical circumstances. Accordingly, it is my
considered view that Republic Act 2334 has repealed the Special Provision relied upon by petitioner,
assuming its validity, notwithstanding the absence of any specific repealing clause in this later
legislation. As I see it, the inconsistency between the two is so clear and definite that one cannot
stand together with the other. What the first says should not be done (reversion), the later one
enjoins mandatorily to be accomplished.
As to the possible contention that petitioner had acquired a vested right to a permanent status under
the prior law, I believe it is plainly within the power of the legislature to adjust the rights and status of
reserve officers of the Armed Forces. No member of the army has a vested right in his employment,
status or rank therein. One can easily imagine the difficulties and complications, which can affect the
national security or the fiscal resources of the government, if the legislature were deprived of the
authority to adjust the tours of duty of reserve officers according to the demands of the prevailing
situation. After all, from the very nature of things, every member of the reserve force should be under
constant notice that this status as such member is subject to legislative control. Moreover, reversion
cannot be considered as depriving the, officer concerned totally of his employment and benefits, for
Section 4 of Republic Act 2334 provides in this connection as follows:
SEC. 4. Any reserve officer who is reverted to inactive duty under the provisions of
this Act after having completed an accumulated period of active commissioned
Page 265 of 557

service of between five years and twenty years shall, unless he is already entitled to
the retirement benefits under Republic Act Numbered Three hundred forty, as
amended, be entitled upon reversion to receive a gratuity equivalent to one month's
authorized base and longevity pay in the permanent rank held at the time of such
reversion multiplied by his years of active commissioned service: Provided, That
such reversion is not as a result of court martial action or due to the officer's gross
misconduct, the intemparate use of drugs or alcoholics, or inefficiency: Provided,
however, That if a reserve officer is reemployed in a civilian office of the government
or government owned or controlled corporation, he shall not be made to reimburse
the amounts received by him as gratuity under this Act: Provided, further, That if a
reserve officer who has received gratuity under this Act reenters the active service,
he shall not be eligible for a new gratuity until he has completed at least five years of
active commissioned service from the date of such reentry, and no subsequent
gratuity shall be paid covering any period of active commissioned service for which
he has already received gratuity under this Act: Provided, further, That in case a
reserve officer who has received gratuity under this Act subsequently reenters the
active service and is retired pursuant to Republic Act Numbered Three hundred forty,
such gratuity shall be deducted from his retirement gratuity or pensions: And
provided, finally, That for purposes of this section, any period of service amounting to
six months or more shall be counted as one year.
In conclusion, whether the Special Provision in question is constitutional or not, petitioner cannot
complain about his reversion to inactive duty, considering the provisions of Republic Act 2334 by
virtue of which, according to the stipulation of facts, it was ordered by respondents. Hence, the
herein petition should be dismissed.

Separate Opinions
BARREDO, J., concurring:
I cannot but concur in the able and scholarly opinion of Mr. Justice Castro. There is indeed constant
need to make it emphatically clear that the Constitution proscribes the insertion of riders in the
Budget, the pernicious implications of which are too plain and well-known to call for further
elucidation. I am adding a few words here, only to bolster, if I may, the conclusion that petitioner's
pose would still be unsustainable even if it could be assumed that the Special Provisions invoked by
him were constitutional.
According to the stipulation of facts submitted jointly by both parties to the lower court, "(p)etitioner's
reversion to inactive status on 15 November 1960 was pursuant to provisions of Republic Act 2334,
and such reversion was neither for cause, at his own request, nor after court martial proceedings"
and that "(o)n June 18, 1955, the date when Republic Act 1382 took effect, petitioner had a total of
(only) 9 years, 4 months and 12 days of accumulated active commission service in the Armed
Forces of the Philippines." In other words, indisputably petitioner is not in a position to invoke
Republic Act 1382 which provides as follows:
SECTION 1. Reserve Officers with at least ten years of active accumulated
commissioned service who are still on active duty at the time of the approval of this
Act shall not be reverted into inactive status except for cause after proper court
Page 266 of 557

martial proceedings or upon their own request: Provided, That for purposes of
computing the length of service, six months or more of active service shall be
considered one year.
for the simple reason that he lacked, as of the date of the approval of this law, the 10-year
accumulated active commissioned service required thereby.
On June 19, 1959, Republic Act 2334 was enacted containing the following pertinent provisions:
SEC. 2. After the approval of this Act, and except in time of emergency, no reserve
officer shall be called to extended tours of active duty exceeding a total of two years
within any period of five consecutive years: Provided, That reserve officers on active
duty for more than two years on the date of approval of this Act, with the exception of
those covered by section three of this Act, shall be reverted to inactive status within
three years from the approval of this Act: Provided, further, That hereafter calls to
extended tours of active duty of reserve officers shall be in proportion to the officers
requirement of each major service in the reserve force build-up program of the
Armed Forces of the Philippines and the priority for selecting such reserve officers
within each major service shall follow the order of age groupings for the reserve force
as defined in section fifty-two of the National Defense Act, as amended.
SEC. 3. The provisions of section two of this Act shall not apply to reserve officers
covered by the provisions of Republic Act Numbered Thirteen hundred eighty-two
nor to those possessing technical qualifications, skills, and competence which are
indispensable to the needs of the Armed Forces of the Philippines and for whom
there are no satisfactory replacements from among reserve officers in the inactive
status: Provided, That the selection of such officers shall be as determined by a
Board of Officers to be appointed by the Chief of Staff.
Having the foregoing provisions in mind, it is clear to me that in reverting petitioner to inactive status
on November 15, 1960, the Armed Forces authorities and original respondents herein, now
substituted respectively by the present incumbents, acted properly and were merely complying with
the injunction of Section 2 above that "(r)eserve officers on active duty for more than two years on
the date of the approval of this Act, with the exception of those covered by section three of this Act,
shall be reverted to inactive status within three years from the approval of this Act." As already
stated, it is definite that petitioner is not covered by the provisions of Republic Act 1382 and there is
no evidence here whatsoever that petitioner comes within the other exception of the Act. We have
not been shown that, if he possesses the indispensable technical qualifications, skills, etc.
mentioned in Section 3, he has been selected by the Board of Officers appointed by the Chief of
Staff for the purpose.
Now, under the Special Provision in question contained in the National Budget for the fiscal year
1955-56 (Republic Act 1600), reserve officers with at least ten years of active accumulated
commissioned service up to July 11, 1956, the date of its enactment, and who were still on active
duty on said date "shall not be reverted to inactive status except for cause after proper court martial
proceedings or upon their request." Upon the other hand, as already stated, under the subsequent
law, Republic Act 2334, "(r)eserve officers on active duty for more than two years on the date of the
approval of this Act" (June 19, 1959), with the exceptions already noted which do not apply to
petitioner, "shall be reverted to inactive status within three years from the approval of this Act." To
my mind, there is irreconcilable repugnance between these two legal provisions. The first prohibited
reversion while the second ordains it under practically identical circumstances. Accordingly, it is my
considered view that Republic Act 2334 has repealed the Special Provision relied upon by petitioner,
Page 267 of 557

assuming its validity, notwithstanding the absence of any specific repealing clause in this later
legislation. As I see it, the inconsistency between the two is so clear and definite that one cannot
stand together with the other. What the first says should not be done (reversion), the later one
enjoins mandatorily to be accomplished.
As to the possible contention that petitioner had acquired a vested right to a permanent status under
the prior law, I believe it is plainly within the power of the legislature to adjust the rights and status of
reserve officers of the Armed Forces. No member of the army has a vested right in his employment,
status or rank therein. One can easily imagine the difficulties and complications, which can affect the
national security or the fiscal resources of the government, if the legislature were deprived of the
authority to adjust the tours of duty of reserve officers according to the demands of the prevailing
situation. After all, from the very nature of things, every member of the reserve force should be under
constant notice that this status as such member is subject to legislative control. Moreover, reversion
cannot be considered as depriving the, officer concerned totally of his employment and benefits, for
Section 4 of Republic Act 2334 provides in this connection as follows:
SEC. 4. Any reserve officer who is reverted to inactive duty under the provisions of
this Act after having completed an accumulated period of active commissioned
service of between five years and twenty years shall, unless he is already entitled to
the retirement benefits under Republic Act Numbered Three hundred forty, as
amended, be entitled upon reversion to receive a gratuity equivalent to one month's
authorized base and longevity pay in the permanent rank held at the time of such
reversion multiplied by his years of active commissioned service: Provided, That
such reversion is not as a result of court martial action or due to the officer's gross
misconduct, the intemparate use of drugs or alcoholics, or inefficiency: Provided,
however, That if a reserve officer is reemployed in a civilian office of the government
or government owned or controlled corporation, he shall not be made to reimburse
the amounts received by him as gratuity under this Act: Provided, further, That if a
reserve officer who has received gratuity under this Act reenters the active service,
he shall not be eligible for a new gratuity until he has completed at least five years of
active commissioned service from the date of such reentry, and no subsequent
gratuity shall be paid covering any period of active commissioned service for which
he has already received gratuity under this Act: Provided, further, That in case a
reserve officer who has received gratuity under this Act subsequently reenters the
active service and is retired pursuant to Republic Act Numbered Three hundred forty,
such gratuity shall be deducted from his retirement gratuity or pensions: And
provided, finally, That for purposes of this section, any period of service amounting to
six months or more shall be counted as one year.
In conclusion, whether the Special Provision in question is constitutional or not, petitioner cannot
complain about his reversion to inactive duty, considering the provisions of Republic Act 2334 by
virtue of which, according to the stipulation of facts, it was ordered by respondents. Hence, the
herein petition should be dismissed.
Footnotes
1 Otherwise known as the Appropriation Act for the Fiscal Year 1956-1957.
2 Then incumbent were Hon. Ernesto S. Mata and General Manuel T. Yan. At
present Hon. Juan Ponce Enrile is the Secretary of National Defense, General
Romeo Espino is the Chief of Staff.

Page 268 of 557

3 As of this date, the petitioner had an accumulated active commissioned service of

10 years, 5 months and 5 days.
4 Art. VIII, Sec. 16, par. 2 of the 1973 Constitution of the Philippines.
5 Art. VIII, Sec. 19, par. 1 of the 1973 Constitution of the Philippines.
6 Alalayan, et al., vs. National Power Corporation and of Administrator Economic
Coordination,
L-24396, July 29, 1968, 24 SCRA 172, 179.
7 Municipality of Matabang, et al., vs. Benito, et al., L-28113, 27 SCRA 533, 539.

Page 269 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-6157

July 30, 19101

W. CAMERON FORBES, J. E. HARDING, and C. R. TROWBRIDGE, plaintiffs,

vs.
CHUOCO TIACO (alias CHOA TEA) and A. S. CROSSFIELD, defendants.
W. A. Kincaid, for plaintiffs.
O'Brien and DeWitt and Hartford Beaumont, for defendant Chuoco Tiaco.
JOHNSON, J.:
An original action commenced in this court to secure a writ of prohibition against the Hon. A. S. Crossfield, as
one of the judges of the Court of First Instance of the city of Manila, to prohibit him from taking or continuing
jurisdiction in a certain case commenced and pending before him, in which Chuoco Tiaco (alias Choa Tea)
(respondent herein) is plaintiff, and W. Cameron Forbes, J. E. Harding, and C. R. Trowbridge (petitioners
herein) are defendants.
Upon the filing of the petition in this court, Mr. Justice Trent granted a preliminary injunction restraining the
said lower court from proceeding in said cause until the question could be heard and passed upon by the
Supreme court.
The questions presented by this action are so important and the result of the conclusions may be so far reaching
that we deem it advisable to make a full statement of all of the facts presented here for consideration. These
facts may be more accurately gathered from the pleadings. They are as follows:
FACTS.
SECOND AMENDED COMPLAINT.
The plaintiffs set forth:
I. That all the parties in this case reside in the city of Manila, Philippine Islands.
II. That the plaintiff W. Cameron Forbes is the Governor-General of the Philippine Islands and that
the plaintiff J. E. Harding and C. R. Trowbridge are, respectively, chief of police and chief of the
secret service of the city of Manila.
III. That the defendant A. S. Crossfield is one of the judges of the Court of First Instance of the city of
Manila.
IV. That the defendant Chuoco Tiaco (alias Choa Tea) is a foreigner of Chinese nationality and a
subject of the Chinese Empire.
V. That on the 1st of April, 1910, the defendant Chuoco Tiaco (alias Choa Tea) filed a suit in the
Court of First Instance of the city of Manila against the plaintiffs in which substantially the following
Page 270 of 557

allegations and petition were made, alleging that on the 19th of August, 1909, under the orders of the
said W. Cameron Forbes, Governor-General of the Philippine Islands, he was deported therefrom and
sent to Amoy, China, by the aforesaid J. E. Harding and C. R. Trowbridge, chiefs, as above stated, of
the police and of the secret service, respectively, of the city of Manila, and that having been able to
return to these Islands he feared, as it was threatened, that he should be again deported by the said
defendants, concluding with a petition that a preliminary injunction should be issued against the
plaintiffs in this case prohibiting them from deporting the defendant, Chuoco Tiaco (alias Choa Tea),
and that they be sentenced to pay him P20,000 as an indemnity.
VI. It is true that the said defendant Chuoco Tiaco (alias Choa Tea), was, with eleven others or his
nationality, expelled from these Islands and returned to China by the plaintiffs J. E. Harding and C. R.
Trowbridge, under the orders of the plaintiff W. Cameron Forbes, on the date mentioned in Paragraph
V of this complaint, but the said expulsion was carried out in the public interest of the Government
and at the request of the proper representative of the Chinese Government in these Islands, to wit, the
consul-general of said country, the said W. Cameron Forbes acting in his official capacity as such
Governor-General, the act performed by this plaintiff being one of the Government itself and which
the said plaintiff immediately reported to the Secretary of War.
VII. The said complaint having been filed with the defendant A. S. Crossfield, he, granting the
petition, issued against the plaintiffs the injunction requested, prohibiting them from deporting the
defendant Chuoco Tiaco (alias Choa Tea).
VIII. The plaintiffs having been summoned in the matter of the said complaint, filed a demurrer
against the same and presented a motion asking that the injunction be dissolved, the grounds of the
demurrer being that the facts set out in the complaint did not constitute a motive of action, and that the
latter was one in which the court lacked jurisdiction to issue such an injunction against the plaintiffs
for the reasons set out in the complaint; notwithstanding which, the defendant A. S. Crossfield
overruled the demurrer and disallowed the motion, leaving the complaint and the injunction standing,
in proof of which the plaintiffs attach a certified copy by the clerk of the Court of First Instance of the
city of Manila of all the proceedings in said case, except the summons and notifications, marking said
copy "Exhibit A" of this complaint. (See below.)
IX. The Court of First Instance, according to the facts related in the complaint, lacks jurisdiction in the
matter, since the power to deport foreign subjects of the Chinese Empire is a private one of the
Governor-General of these Islands, and the defendant A. S. Crossfield exceeded these authority by
trying the case and issuing the injunction and refusing to allow the demurrer and motion for the
dismissal of the complaint and the dissolution of the injunction.
Therefore the plaintiffs pray the court:
(a) That an injunction immediately issue against the defendant A. S. Crossfield ordering him to
discontinue the trial of said cause until further orders from this court;
(b) That the defendants being the summoned in accordance with law, a prohibitive order issue against
the said defendant A. S. Crossfield, restraining him from assuming jurisdiction in said case and
ordering him to dismiss the same and cease from the trial thereof;
(c) Finally, that the plaintiffs be granted such other and further relief to which they may be entitled
according to the facts, and that they may be allowed the costs of the trial.
Manila, July 9, 1910.

Page 271 of 557

IGNACIO VILLAMOR,
Attorney-General.
W. A. KINCAID,
THOMAS L. HARTIGAN,
By W. A, KINCAID,
Attorneys for the plaintiffs.
UNITED STATES OF AMERICA,
Philippine Islands, city of Manila, ss:
W. A. Kincaid, being first duly sworn, states that he is one of the attorneys for the plaintiffs in the
preceding second amended complaint, and that all the facts alleged therein are true, to the best of his
knowledge and belief.
(Signed) W. A. KINCAID.
Subscribed and sworn to before me this 9th day of July, 1910. Cedula No. F. 1904, issued in Manila
on January 3, 1910.
(Signed) IGNACIO DE ICAZA,

Notary Public. (My appointment ends Dec. 31, 1910.)

We have received a copy of the above.

(Signed) O'BRIEN AND DEWITT,
HARTFORD BEAUMONT,
Attorneys for defendants.
EXHIBIT A.
[United States of America, Philippine Islands. In the Court of First Instance of the city of Manila. No.
7740. Chuoco Tiaco (alias Choa Tea), plaintiff, vs. W. Cameron Forbes, Charles R. Trowbridge, and
J. E. Harding, defendants.]
COMPLAINT.
Comes now the plaintiff, by his undersigned attorneys, and for the cause of action alleges:
First. That the plaintiff is and has been for the last thirty-five years a resident of the city of Manila,
Philippine Islands.
Second. That the defendant W. Cameron Forbes is the Governor-General of the Philippine islands and
resides in the municipality of Baguio, Province of Benguet, Philippine Islands; that the defendant
Page 272 of 557

Charles R. Trowbridge is chief of the secret service of the city of Manila, and that the defendant J. E.
Harding is chief of police of the city of Manila, and that both of said defendants reside in the said city
of Manila, Philippine Islands.
Third. That the said plaintiff is a Chinese person and is lawfully a resident of the Philippine Islands,
his right to be and remain therein having been duly established in accordance with law by the Insular
customs and immigration authorities.
Fourth. That on or about the 19th day of August, 1909, the defendants herein, Charles R. Trowbridge
and J. E. Harding, unlawfully and fraudulently conspiring and conniving with the other defendant
herein, the said W. Cameron Forbes, and acting under the direction of the said defendant, W. Charles
Forbes, did unlawfully seize and carry on board the steamer Yuensang the said plaintiff herein against
his will, with the intent by said force to unlawfully deport and expel the said plaintiff herein from the
Philippine Islands against the will of the said plaintiff herein.
Fifth. That the said defendants herein and each of them, after forcibly placing the said plaintiff herein
upon the said streamer Yuensang, as hereinbefore alleged, did cause the said steamer Yuensang to take
and carry away the plaintiff herein from the Philippine Islands to the port of Amoy, in the Empire of
China.
Sixth. That the said defendants herein, unlawfully conspiring and conniving together, the said Charles
R. Trowbridge and the said J. E. Harding, acting under the direction of the said defendant, W.
Cameron Forbes, did forcibly prevent the plaintiff herein from returning to these Philippine Islands
until the 29th day of March, 1910.
Seventh. That the defendants herein, by their unlawful acts hereinbefore alleged, have damaged the
plaintiff herein in the sum of twenty thousand pesos (P20,000) Philippine currency.
SECOND CAUSE OF ACTION.
As a second cause of action the plaintiff alleges:
First. He repeats and reiterates each and every allegation contained in the first (1st) and second (2nd)
paragraphs of the first cause of action, and hereby makes the said paragraphs a part of this cause of
action.
Second. That the said plaintiff herein is a Chinese person who is and has been a resident of the
Philippine Islands for the last twenty-nine years, he having duly established his right to be and remain
in the Philippine Islands since the American occupation thereof in accordance with law.
Third. That the said plaintiff herein, during his residence in these Islands, has acquired and is actually
the owner, or part owner, of property and business interests and enterprises of great value within the
Philippine Islands, and that said property and business interests and enterprises require the personal
presence of the plaintiff herein in the Philippine Islands for the proper management and supervision
and preservation thereof.
Fourth. That the plaintiff has a family in the Philippine Islands and that said family is dependent upon
the said plaintiff for support and that it is impossible for the said plaintiff to give the said family that
support unless he, the said plaintiff, is actually present within the Philippine Islands.

Page 273 of 557

Fifth. That on or about the 19th day of August, 1909, the defendants herein, Charles R. Trowbridge
and J. E. Harding, unlawfully and fraudulently conspiring and conniving with the other defendant
herein, the said W. Cameron Forbes, and acting under the direction of the said defendant, W. Cameron
Forbes, did unlawfully seize and carry on board the steamer Yuensang the said plaintiff herein with the
intent by said force to unlawfully deport and expel the said plaintiff herein from the Philippine Islands
against the will of the said plaintiff herein.
Sixth. That, notwithstanding the efforts of the said defendants herein to forcibly and unlawfully
prevent the said plaintiff herein from returning to the Philippine Islands, the said plaintiff here in
returned to the said city of Manila, Philippine Islands, on the 29th day of March, 1910, and was duly
landed by the customs and immigration authorities in accordance with law, after having duly
established his right to be and to remain herein.
Seventh. That since the arrival of the said plaintiff herein in the Philippine Islands on the 29th day of
March, 1910, as hereinbefore alleged, the said defendants herein unlawfully and fraudulently
conniving and conspiring together, the said J. E. harding and Charles R. Trowbridge, acting under the
orders and directions of the said defendant, W. Cameron Forbes, have threatened, unlawfully, forcibly,
and against the will of the plaintiff herein, to expel and deport plaintiff herein from the Philippine
Islands, and that the defendants herein, and each and every one of them are doing all that is in their
power to procure the unlawful, forcible, and involuntary expulsion of the plaintiff herein from the
Philippine Islands in violation of the right of the said plaintiff herein to be and to remain in the
Philippine Islands as established by law.
Eight. That the plaintiff herein has no adequate remedy other than that herein prayed for.
Wherefore, the plaintiff prays that a temporary writ of injunction issue out of this court enjoining the
said defendants and each of them and their and each of their agents, servants, employees, attorneys,
successors in office, subordinate officers, and every person in any way in privity with them, from
expelling or deporting or threatening to expel or deport or procure in any way the expulsion or
deportation in any way of the plaintiff herein during the continuance of this action.
And upon the final hearing of the cause of the said temporary writ of injunction be made perpetual,
and that the defendants and each of them be condemned to pay to the plaintiff herein the sum of
twenty thousand pesos (P20,000) damages and the costs of this action.
Manila, P. I., April 1, 1910.
(Signed) O'BRIEN AND DEWITT,
H. BEAUMONT,
Attorneys for plaintiff.
CITY OF MANILA, Philippine Islands, ss:
C. W. O'Brien, holding cedula No. 1095, dated at Manila, P. I., January 4, 1910, being duly sworn,
upon oath deposes and says that he is one of the attorneys for the plaintiff and has read the aboveentitled complaint and knows that the facts therein stated are true and correct, except such as are stated
upon information and belief, and as to those he believes them to be true.
(Signed) C. W. O'BRIEN.
Page 274 of 557

Subscribed and sworn to before me this 1st day of April, 1910, at Manila, P.I.
(Signed) J. McMICKING.
The Hon. A. S. Crossfield issued the following order:
ORDER.
To the defendants, W. Cameron Forbes, Charles R. Trowbridge, J. E. Harding, and all their
attorneys, agents, subordinates, servants, employees, successors in office, and all persons in
any way in privity with them, greeting:
The plaintiff having presented a complaint before this Court of First Instance of the city of Manila, in
the cause above entitled, against the defendants W. Cameron Forbes, Charles R. Trowbridge, and J. E.
Harding, above named, and having prayed likewise that a temporary injunction issue against the said
defendants restraining them from doing and continuing to do certain acts mentioned in the said
complaint and which are more particularly set forth hereinafter in this order; in view of the said
complaint and the verification thereof by this attorney, and it appearing satisfactorily to me because of
the facts alleged in said complaint that the case is one in which a preliminary injunction ought to issue,
and the required bond having been executed in the sum of P2,000.
It is hereby ordered by the undersigned, judge of this Court of First Instance of the city of Manila, that
the said defendants, W. Cameron Forbes, Charles R. Trowbridge, and J. E. Harding, and all of their
attorneys, agents, subordinates, servants, employees, successors in office, and all persons in any way
in privity with them, are, each of them is, hereby restrained and enjoined from spelling or deporting or
threatening to expel or deport, or procuring in any way the expulsion or deportation in any way of the
plaintiff herein during the continuance of this action.
Manila, P.I. , April 9, 1910.
(signed) A. S. CROSSFIELD,
Judge, Court of First Instance, city of Manila, P. I.
DEMURRER.
Comes the defendant, W. Cameron Forbes, Governor-General of the Philippine Islands, and
I. Demurs to the first count or cause of action in the complaint because the same does not state fact
sufficient to constitute a cause of action against the defendant.
II. He demurs to the second count or cause of action in the complaint because the same does not state
facts sufficient to constitute a cause of action against this defendant.
Wherefore he prays the judgment of the court upon the sufficiency of each of the pretended causes of
action set forth in the complaint.
(Signed) W. A. KINCAID,
THOMAS L. HARTIGAN.

Page 275 of 557

By W. A. KINCAID,
Attorneys for defendant W. Cameron Forbes.
Comes the defendant, W. Cameron Forbes, and moves the court to dissolve the temporary injunction
issued against him in this cause, without notice to this defendant, for the following reasons:
I. The complaint is insufficient to justify the issuance of the injunction.
II. The court is without jurisdiction to issue said injunction.
(Signed) W. A. KINCAID and THOMAS HARTIGAN,
By W. A. KINCAID,
Attorneys for defendant W. Cameron Forbes.
(Signed) IGNACIO VILLAMOR, Attorney-General.

DEMURRER.
Come the defendants, C. R. Trowbridge and J. E. Harding, and
I. Demur to the first count or cause of action in the complaint because the same does not state facts
sufficient to constitute a cause of action against these defendants.
II. They demur to the second count or cause of action in the complaint because the same does not state
facts sufficient to constitute a cause of action against these defendants.
(Signed) W. A. KINCAID,
THOMAS HARTIGAN,
By W. A. KINCAID,
Attorneys for defendants C. R. Trowbridge and J. E. Harding.
(Signed) IGNACIO VILLAMOR,

Attorney-General.

ORDER.
This case is now before the court for hearing the demurrer presented by the defendants to plaintiff's
complaint and defendants' motion to dissolve the injunction issued against the defendants upon
plaintiff's complaint.
Messrs. O'Brien and DeWitt appeared for the plaintiff; W. A. Kincaid, esq., for the defendants.

Page 276 of 557

The demurrer is based upon the ground that the complaint does not state the facts sufficient to
constitute a cause of action. The motion to dissolve the injunction is grounded upon an insufficiency
of the complaint and lack of jurisdiction in the court.
Counsel for both parties made exhaustive arguments, both apparently considering the primal issue to
be whether the defendant, W. Cameron Forbes, had authority at law, as Governor-General of the
Philippine Islands, to deport plaintiff, as alleged in the complaint, and whether the court had
jurisdiction to restrain him from making such deportation.
No question was raised as to the sufficiency of the complaint if all question as to the GovernorGeneral's authority was eliminated.
A reading of the complaint discloses that the Governor-General of the Philippine Islands, as such, is
not a party to the action.
The allegations of the second paragraph of the complaint, to the effect that W. Cameron Forbes is the
Governor-General of the Philippine Islands, that Charles R. Trowbridge is chief of the secret service
of Manila, are descriptive only, and there is no allegation in the complaint that any of the defendants
performed the acts complained of in his official capacity.
The court can not determine the authority or liability of an executive officer of the Government until
the pleadings disclose that his actions as such officer are brought in issue.
The complaint upon its faces a cause of action.
The complaint, stating a cause of action and alleging that the plaintiff is threatened with an injury by
the defendants, they may be properly restrained from committing the alleged injury until issues raised
have been tried and determined and the courts has jurisdiction to issue an injunction.
The demurrer is, therefore, overruled. The motion to dissolve the preliminary injunction is denied.
Manila, P. I., this 17th day of May, 1910.
(Signed) A. S. CROSSFIELD,
Judge.
Upon filing of the original complaint and after a due consideration of the facts stated therein, the Hon. Grant
Trent, acting as vacation justice, on the 24th day of May, 1910, issued the following order or injunction:
PRELIMINARY INJUNCTION.
Whereas, from the facts alleged in the complaint filed in the above-entitled case, it is found that the
plaintiffs are entitled to the preliminary injunction prayed for by them;
Therefore, the bond of P500 mentioned in the order of the 24th of May, 1910, having been filed, the
Hon. A. s. Crossfield, judge of the Court of First Instance of the city of Manila, is hereby notified that,
until he shall have received further orders from this court, he is prohibited from proceeding with the
trial of the case filed by the defendant Chuoco Tiaco, alias Choa Tea, in the Court of First Instance of
this city, against the within plaintiffs for indemnity as damages for the alleged deportation of the said
Chuoco alias Choa Tea.
Page 277 of 557

Given in Manila this 24th day of May, 1910.

(Signed) GRANT TRENT,
Associate Justice, Supreme Court, acting in vacation.
On the 2nd of June, 1910, the defendants presented the following demurrer to the original complaint:
And now come the defendants in the above-entitled cause, by their undersigned attorneys, and hereby
file their demurrer to the complaint upon the grounds that the facts alleged in the complaint do not
constitute a right of action.
Therefore the court is petitioned to dismiss the complaint, with the costs against the plaintiff.
Manila, June 2, 1910.
(Signed) O'BRIEN & DEWITT, and
defendants.

HARTFORD BEAUMONT,

Attorneys for

To the plaintiffs or their attorneys;

You are hereby notified that on Monday, the 15th inst., at nine o'clock in the morning, we shall ask the
court to hear and decide the preceding demurrer.
Manila, June 2, 1910.
(Signed) O'BRIEN & DEWITT, and

HARTFORD BEAUMONT,

Attorney for plaintiffs.

We have this day, June 2, 1910, received a copy of the above.
(Stamp) W. A. KINCAID and THOMAS L. HARTIGAN, By J. BORJA,
Attorneys for plaintiffs.
On the 2nd day of June, 1910, the defendants made a motion to dissolve the said injunction, which motion was
in the following language:
And now come the defendants in the above-entitled case and pray the court to dissolve the preliminary
injunction issued in the above-entitled case, on the 24th day of May, 1910, on the grounds:
(1) That the facts alleged in the complaint are not sufficient to justify the issuance of the said
preliminary investigation;
(2) That the facts alleged in the complaint do not constitute a right of action.
Manila, P.I., June 2, 1910.
(Signed) O'BRIEN & DEWITT, and HARTFORD BEAUMONT, Attorneys for defendants.
Page 278 of 557

To the plaintiffs and to their attorneys:

You are hereby notified that on Monday, the 13th inst., at nine o'clock a.m. we shall ask for a hearing
on the preceding motion.
Manila, June 2, 1910.
(Signed) O'BRIEN & DEWITT, and HARTFORD BEAUMONT, Attorneys for defendants.
We have this day received a copy of the foregoing.
(Stamp) W. A. KINCAID and THOMAS L. HARTIGAN, By J. BORJA,
Attorneys for plaintiffs.
Later the plaintiffs obtained permission to file the second amended complaint above quoted. By a stipulation
between the parties "the demurrer" and "motion to dissolve" were to be considered as relating to the said
second amended complaint.
By said "demurrer" and "motion to dissolve" the question is presented whether or not the facts stated in "the
second amended complaint" are sufficient upon which to issue the writ of prohibition prayed for. If it should
be determined that they are not, then, of course, the writ should be denied and the injunction should be
dissolved. If, on the other hand, it should be determined that the facts stated are sufficient to justify the
issuance of said writ, then it should be granted and the injunction should not be dissolved, but should not be
made perpetual.
From the allegations of the complaint (second amended complaint), including Exhibit A (which constituted the
pleadings in the court below), we find the following facts are admitted to be true:
First. That the plaintiff W. Cameron Forbes is the Governor-General of the Philippine Islands;
Second. That the plaintiff J. E. Harding is the chief of police of the city of Manila;
Third. That the plaintiff C. R. Trowbridge is the chief of the secret service of the city of Manila;
Fourth. That the defendant, A. S. Crossfield, is one of the judges of the Court of First Instance of the city of
Manila;
Fifth. That the defendant Chuoco Tiaco (alias Choa Tea) is a foreigner of Chinese nationality and a subject of
the Chinese Empire;
Sixth. That the plaintiff W. Cameron Forbes, acting in his official capacity as Governor-General of the
Philippine Islands, in the public interest of the Philippine Government and at the request of the proper
representative of the Imperial Government of China, to wit: the consul-general of the said Imperial
Government, did, on or about the 19th day of August, 1909, order the said defendant, together with eleven
others of Chinese nationality, to be deported from the Philippine Islands;
Seventh. That whatever the said plaintiffs J. E. Harding and C. R. Trowbridge did in connection with said
deportation was done by each of them, acting under the orders of the said Governor-General, as the chief of
police of the city of Manila and as the chief of the secret service of the city of Manila;

Page 279 of 557

Eight. That later, and on the 29th day of March, 1910, the said defendant Chouco Tiaco returned to the
Philippine Islands;
Ninth. That the plaintiff W. Cameron Forbes, acting through the said chief of police and the said chief of the
secret service, was threatening to again deport the said Chuoco Tiaco from the Philippine Islands;
Tenth. That upon the 1st day of April, 1910, the said Chuoco Tiaco commenced an action against the plaintiff
herein (the said W. Cameron Forbes, Governor-General) in the Court of said court over which the said A. S.
Crossfield was presiding as one of the judges of said court, for the purpose of
(a) Recovering a judgment against said defendants (plaintiffs herein) for P20,000 damages for said alleged
wrongful deportation; and
(b) To procure an injunction against said defendants (plaintiffs herein) to prevent them from again deporting
said plaintiff (defendant herein) from the Philippine Islands;
Eleventh. That upon the presentation or filing of the petition in the said action in the Court of First Instance
and on the 9th day of April, 1910, the said A. S. Crossfield issued a preliminary injunction against the
defendants, W. Cameron Forbes, J. E. Harding, and C. R. Trowbridge, and all their attorneys, agents,
subordinates, servants, employees, successors in office, and all persons in any way in privity with them,
forbidding them from expelling or deporting or threatening to expel or deport or procuring in any way the
expulsion or deportation of the plaintiff (chuoco Tiaco) during the continuance of the action;
Twelfth. Later, and on the .......... day of ........., 1910, the plaintiffs herein (defendants below) each presented

(1) A demurrer to the causes of action described in the petition filed; and
(2) A motion to dissolve the said preliminary injunction upon the general grounds
(a) That the facts alleged were not sufficient to constitute a cause of action or for the issuance of the
injunction; and
(b) Because the court was without jurisdiction.
Thirteenth. On the 17th day of May, 1910, A. S. Crossfield, after hearing the arguments of the respective
parties, found
(1) That the fact alleged in the petition did constitute a cause of action; and
(2 That the Court of First Instance did have jurisdiction to try the questions presented.
Fourteenth. On the 24th day of May, 1910, the plaintiffs herein, through their attorney, W. A. Kincaid,
presented a petition in the Supreme Court asking that
(a) An injunction be issued against the said A. S. Crossfield, restraining him from proceeding in said action
until further orders from this court; and
(b) That the writ of prohibition be granted against the said judge, forbidding him from taking jurisdiction of
said action and to dismiss the same.

Page 280 of 557

Fifteenth. On the 24th day of May, 1910, the Hon. Grant Trent, Associate Justice, acting in vacation, issued the
preliminary injunction prayed for.
On the 2nd day of June, 1910, the attorneys for the defendants (herein), Messrs. O'Brien and DeWitt, and
Hartforf Beaumont, filed:
(1) A demurrer to the petition; and
(2) A motion to dissolve said injunction, each based upon the general ground that the facts alleged in the
petition were insufficient to constitute a cause of action.
The said "demurrer" and "motion to dissolve" were brought on for hearing before the Supreme Court on the
11th day of July, 1910, and the questions presented were argued at length by the attorneys for the respective
parties.
One of the questions which is presented by the pleadings and by the arguments presented in the cause is
whether or not the action pending in the lower court is an action against the Governor-General, as such, as well
as against the other defendant in their official capacity. If it should be decided that the action is one against the
defendants in their official capacity, then the question will be presented for decision whether or not the courts
have jurisdiction over the Governor-General, for the purpose of reviewing his action in any case and with
especial reference to the facts presented.
The pleadings presented in this court affirmatively allege that the action in the lower court was against the
defendants (plaintiffs herein) in their official capacity. The pleadings here also allege positively that the acts
complained of in the lower court were done by the defendants in their official capacity; that the expulsion of
the defendant (plaintiff below) was in the public interest of the Government, at the request of the consulgeneral of the Imperial Government of China; that the said plaintiffs J. E. Harding and C. R. Trowbridge acted
under the orders of the plaintiff W. Cameron Forbes; that W. Cameron Forbes acted in his official capacity as
Governor-General, the act being an act of the Government itself, which action was immediately reported to the
Secretary of War.
The pleadings in the lower court simply described the defendants (plaintiffs herein) as W. Cameron Forbes, the
Governor-General; J. E. Harding, chief of police of the city of Manila, and C. R. Trowbridge, chief of the
secret service of the city of Manila. The lower court held that:
The allegations of the second paragraph of the complaint, to the effect that W. Cameron Forbes is the
Governor-General of the Philippine Islands, that Charles R. Trowbridge is the chief of the secret
service of Manila, and that J. E. Harding is the chief of police of Manila, are descriptive only, and
there is no allegation in the complaint that any of the defendants (plaintiffs herein) performed the acts
complained of in his official capacity.
The theory of the lower court evidently was that the defendants should have been described, for example, "W.
Cameron Forbes, as Governor-General," etc. In this theory the lower court has much authority in its support.
However, this failure of correct and technical description of the parties is an objection which the parties
themselves should present, but when all the parties treat the action as one based upon a particular theory, that
theory should be accepted. Upon this question the lower court, in his order, said:
Counsel for both parties made exhaustive arguments, both apparently considering the primal issue to
be whether the defendant, W. Cameron Forbes, had authority at law, as Governor-General of the
Philippine Islands, to deport plaintiff, as alleged in the complaint and whether the court had
jurisdiction to restrain him from making such deportation.

Page 281 of 557

It will be noted also that the prayer of the complaint in the lower court asked for relief against "his successors
in office." The injunction also ran against "his successors in office." Thus clearly it appears that the action was
against the defendants in their official capacity.
In this court there was no pretension by the attorney for the defendant (plaintiff below) that the action was not
against the Governor-General as Governor-General, and the others as well, in their official capacity. In fact,
when an inquiry was made of the attorney for the defense concerning his theory, his reply was simply that the
acts of the Governor-General, being illegal, were not performed in his official capacity.
The argument of the attorney for the defendant was directed to the proposition that the Governor-General, in
deporting or expelling the said Chinamen, did not act in accordance with that provision of the Philippine Bill
(sec. 5, Act of Congress, July 1, 1902), which provides that:
No law shall be enacted in said Islands which shall deprive any person of life, liberty, or property,
without due process of law; or deny to any person therein equal protection of the laws.
The attorney for the plaintiffs, in answering this argument, maintained:
First. That the act of the Governor-General was the act of the Philippine Government and that he had a right,
inherent in him as the representative of the Government and acting for the Government, to deport or expel the
defendant; and
Second. In the absence of express rules and regulations for carrying such power into operation, he (the
Governor-General) had a right to use his own official judgment and discretion in the exercise of such power.
In order to arrive at a correct solution of the questions presented by the foregoing facts, we shall discuss the
following propositions:
I.
WHAT ARE THE POWERS OF THE PHILIPPINE GOVERNMENT TO DEPORT OR EXPEL
OBJECTIONABLE ALIENS?
The Government of the United States in the Philippine Islands is a government with such delegated, implied,
inherent, and necessary military, civil, political, and police powers as are necessary to maintain itself,
subjected to such restrictions and limitations as the people of the United States, acting through Congress and
the President, may deem advisable, from time to time, to interpose. (Instructions of the President McKinley to
the Taft Commission; executive order of President McKinley dated June 21, 1910, appointing Mr. Taft Civil
Governor of the Philippine Islands; that part of the Act of Congress of March 2, 1901, known as the Spooner
Amendment; Barcelon vs. Baker, 5 Phil. Rep., 87; U. S. vs. Bull, 15 Phil. Rep., 7, 8 Off. Gaz., 271.)
The Spooner Amendment provided that
All military, civil, and judicial powers necessary to govern the Philippine Islands . . . shall, until
otherwise provided by Congress, be vested in such person and persons, and shall be exercised in such
manner, as the President of the United States shall direct, for the establishment of civil governments
and for maintaining and protecting the inhabitants of said Islands in the free enjoyment of their liberty,
property, and religion.

Page 282 of 557

By this Act of Congress a system of government was established in the Philippine Islands which carried with it
the right and duty on the part of such government to perform all acts that might be necessary or expedient for
the security, safety, and welfare of the people of the Islands.
In the case of United States vs. Bull, this court, speaking through Mr. Justice Elliot, said:
Within the limits of its authority the Government of the Philippine Islands is a complete governmental
organisms, with executive, legislative, and judicial departments exercising the functions commonly
assigned to such departments. The separation of powers is as complete as in most governments.
Having reached the conclusion that the Government of the United States in the Philippine Islands is a
government with all the necessary powers of a government, subject to certain control in the exercise thereof,
we are of the opinion and so hold, that it has impliedly or inherently itself in conformity with the will of the
Congress of the United States and the President thereof, and to this end it may prevent the entrance into or
eliminate from its borders all such aliens whose presence is found to be detrimental or injurious to its public
interest, peace, and domestic tranquility. Every government having the dignity of a government possesses this
power. Every author who has written upon the subject of international law and who has discussed this question
has reached the same conclusion. Among these authors may be mentioned such noted men and statemen as
Vattel, Ortolan, Blackstone, Chitty, Phillimore, Puffendorf, Fiore, Martens, Lorimer, Torres, Castro, Bello,
Heffer, Marshall, Cooley, Wharton, Story, Moore, Taylor, Oppenheim, Westlake, Holland, Scott, Haycroft,
Craies, Pollock, Campbell, and others.
Not only have all noted authors upon this question of international law reached this conclusion, but all the
courts before which this particular question has been involved have also held that every government has the
inherent power to expel from its borders aliens whose presence has been found detrimental to the public
interest.
This court, speaking through its Chief Justice, in the case of In re Patterson (i Phil. Rep., 93), said:
Unquestionably every State has a fundamental right to its existence and development, and also to the
integrity of its territory and the exclusive and peaceable possession of its dominions, which it may
guard and defend by all possible means against any attack. . . . We believe it is a doctrine generally
professed by virtue of that fundamental right to which we have referred that under no aspect of the
case does this right of intercourse give rise to any obligation on the part of the State to admit
foreigners under all circumstances into its territory. The international community, as Martens says,
leaves States at liberty to fix the conditions under which foreigners should be allowed to enter their
territory. These conditions may be more or less convenient to foreigners, but they are a legitimate
manifestation of territorial power and not contrary to law. In the same way a State may possess the
right to expel from its territory any foreigner who does not conform to the provisions of the local law.
(Marten's Treatise on International Law, vol. 1, p. 381.) Superior to the law which protest personal
liberty, and the agreements which exist for their own interests and for the benefit of their respective
subjects, is the supreme and fundamental right of each State to self-preservation and the integrity of its
dominion and its sovereignty. Therefore it is not strange that this right should be exercised in a
sovereign manner by the executive power, to which is especially entrusted, in the very nature of
things, the preservation of so essential a right, without interference on the part of the judicial power.
If it can not be denied that under normal circumstances when foreigners are present in the country the
sovereign power has the right to take all necessary precautions to prevent such foreigners from
imperiling the public safety and to apply repressive measures in case they should abuse the hospitality
extended to them, neither can we shut our eyes to the fact that there may be danger to personal liberty
and international liberty if to the executive branch of the government there should be conceded
absolutely the power to order the expulsion of foreigners by means of summary and discretional
proceedings; nevertheless, the greater part of modern laws, notwithstanding these objections, have
Page 283 of 557

sanctioned the maxim that the expulsion of foreigners is a political measure and that the executive
power may expel, without appeal, any person whose presence tends to disturb the public peace.
The Supreme Court of the United States, speaking through Mr. Justice Field, in the case of Chao Chan Ping
vs. United States (130 U. S., 581) (A. D. 1888) said:
These laborers are not citizens of the United States; they are aliens. That the Government of the
United States, through the action of the legislative department, can exclude aliens from its territory is
a proposition which we do not think open to controversy. Jurisdiction over its own territory to that
extent is an incident of every independent nation. It is a part of its independence, subject to the control
of another power. The United States in their relation to foreign countries and their subjects or citizens
are one nation invested with powers which belong to independent nations, the exercise of which can
be invoked for the maintenance of its absolute independence and security throughout its entire
territory. . . .
. . . The power of exclusion of foreigners being an incident of sovereignty, belonging to the
Government of the United States as a part of those sovereign powers delegated by the Constitution,
the right to its exercise at nay time when, in the judgment of the Governments, the interests of the
country require it, can not be granted away or restrained on behalf of anyone. The powers of the
Government are delegated in trust to the United States and are incapable of transfer to any other
parties. They (the incidents of sovereignty),can not be abandoned or surrendered nor can their exercise
be hampered when needed for the public, by any consideration of private interests.
In the case of Ekiu vs. United States (142 U. S., 651, 659) (A. D. 1891) the Supreme Court of the United
States, speaking through Mr. Justice Gray, said:
It is an accepted maxim of international law that every sovereign nation has the power, as inherent in
sovereignty, and essential to self-preservation, to forbid the entrance of foreigners within its
dominions or to admit them only in such cases and upon such conditions as it may see fit to prescribe.
In the United States this power is vested in the National Government, to which the Constitution has
committed the entire control of international relations, in peace as well as in war. It belongs to the
political department of the Government and may be exercised either through treaties made by the
President and Senate or through statutes enacted by Congress.
Later, The Supreme Court of the United States, in the case of Fong Yue Ting vs. United States (149 U. S., 698)
(A. D. 1892), speaking through Mr. Justice Gray, again said:
The right of a nation to expel or deport foreigners who have not been naturalized or taken any steps
toward becoming citizens of the country, rests upon the same grounds and is as absolute and
unqualified as the right to prohibit and prevent their entrance into the country.
The power to exclude or expel aliens being a power affecting international relations is vested in the political
department of the Government. The power to exclude aliens and the power to expel them rest upon one
foundation, are derived from one source, are supported by the same reasons, and are, in truth, but the exercise
of one and the same power.
In a very recent case The Attorney-General of Canada vs. Cain (House of Lords Reports, Appeal Cases,
1906), Lord Atkinson, speaking for the court said (p. 545):
In 1763 Canada and all its dependencies, with the sovereignty, property, and possession, and all other
rights which had at ant time been held or acquired by the Crown of France, were ceded to Great
Britain (St. Catherine's Milling and Lumber Company vs. Reg., 145 Appeal cases, 46, 53). Upon that
Page 284 of 557

event the Crown of England became possessed of all legislative and executive powers within the
country so ceded to it and save so far as it has since parted with these powers by legislation, royal
proclamation, or voluntary grant, it is still possessed of them.
One of the rights possessed by the supreme power in every State is the right to refuse to permit an
alien to enter that State, to annex what conditions it pleases to the permission to enter it, and to expel
or deport from the State, at pleasure, even a friendly alien, especially if it considers his presence in the
State opposed to its peace, order, and good government, or to its social or material interests. (Citing
Vattel's Law of Nations in support of his proposition.)
In the case of Hodge vs. Reg. (9 Appeal Cases, 117) it was decided that a colonial legislature, under the British
Government, has, within the limits prescribed by the statute which created it, an authority as plenary and as
ample as the imperial parliament in the plenitude of its power possessed and could bestow.
See also In re Adams, 1 Moore's Privy Council, 460, 472-476 (A. D. 1837); Donegani vs. Donegani, 3 Knapp,
63, 68 (A. D. 1835); Cameron vs. Kyte, 3 Knapp, 332, 343 (A. D. 1835); Mustgrave vs. Pulido, Law Reports, 5
Appeal Cases, 102 (A. D. 1879); Nudtgrave vs. Chun Teong Toy, Law Reports, Appeal cases, 272 (a. D.
1891); Hill vs. Bigge, 3 Moore's Privy Council, 465; The Nabob of Carnatic vs. The East Indian Company, 1
Vese, Jr., 388; Fabrigas vs. Mostyn, 1 Cowpoer, 161.
Mr. Vattel, writing as early as 1797, in discussing the question of the right of nation or government to prevent
foreigners from entering its territory or to expel them, said:
Every nation has the right to refuse to admit a foreigner into the country when he can not enter without putting
the nation in evident danger or doing it manifest injury. What it (the nation) owes to itself, the care of its own
safety, gives to it this right; and in virtue of its national liberty, it belongs to the nation to judge whether its
circumstances will or will not justify the admission of the foreigner. Thus, also, it has a right to send them
elsewhere it if has just cause to fear that they will corrupt the manners of the citizens; that they will create
religious disturbances or occasion any other disorder contrary to the public safety. In a word, it has a right, and
is even obliged in this respect, to follow the rules which prudence dictates." (Vattel's Law of Nations, book 1,
Chapter 19, secs. 230, 231.)
Mr. Ortolan said:
The Government of each State has always the right to compel foreigners who are found within its
territory to go away, by having them taken to the frontier, not making a part of the nation, his
individual reception into the territory is a matter of pure permission and simple tolerance and creates
no obligation. The exercise of this right may be subject, doubtless, to certain forms prescribed by the
domestic laws of each country; but the right exists, none the less, universally recognized and put in
force. In France, no special form is now prescribed in this matter; the exercise of this right of
expulsion is wholly left to the executive power. (Ortolan, Diplomatie de la Mer, book 2, chapter 14,
edition, p. 297.)
Mr. Phillimore said:
It is a received maxim of international law that the government of the State may prohibit the entrance
of strangers into the country and may, therefore, regulate the conditions under which they shall be
allowed to remain in it or may require or compel their deportation from it. (1 Phillimore's International
Law, 3d edition, chapter 10, sec. 220.)
Mr. Taylor said:

Page 285 of 557

Every independent State possesses the right to grant or refuse hospitality. Undoubtedly such a State
possesses the power to close the door to all foreigners who, for social, political or economical reasons,
it deems expedient to exclude; and for like reasons it may subject a resident foreigner or a group of
them to expulsion, subject, of course, to such retaliatory measures as an abuse of the excluding or
expelling power may provoke. (Tayloy, International Public Law, p. 231.)
Mr. Oppenheim said:
Just as a State is competent to refuse admission to foreigners, so it is in conformity with its territorial
supremacy competent to expel at any moment a foreigner who has been admitted into its territory.
And it matter not whether the respective individual is only on a temporary visit or has settled down
professional or business purposes on that territory, having taken his domicile thereon.
It has also been held that a State may expel a foreigner who has been residing within its territory for
some length of time and has established a business there, and that his only remedy is to have his home
State, by virtue of the right of protection of a State over its citizens abroad, to make diplomatic
representations to the expelling State and ask for the reasons for such expulsion; but the right being
inherent in the sovereignty or State, it can expel or deport even domiciled foreigners without so much
as giving the reasons therefor. The expulsion of aliens from a State may be an unfriendly act to the
State of the individual expelled, but that does not constitute the expulsion an illegal act, the law
nations permitting such expulsions. (Oppenheim, International Law, sec. 323.)
Mr. Marthens said:
The Government of each State has always a right to compel foreigners who live within its territory to
go away, having them conveyed to the frontier. This right has its cause in the fact that as a stranger
does not form a part of a nation, his individual admission into the country is merely discretional, a
mere act of tolerance, in no way obligatory. The practice of this right might be subject to certain forms
prescribed by the international laws of each country, but the right is always universally acknowledged
and put into practice. (Marten's Droit des Gens, book 3, p. 91.)
This implied or inherent right in the Government to prevent aliens from entering its territory or to deport or
expel them after entrance, has not only been recognized by the courts and eminent writers of international law,
but has also been recognized many times by the executive and legislative branches of the Government. Acts of
the Congress of the United States, of the Parliament of Great Britain, as well as the British colonial
parliaments, and royal decrees might be cited in support of this doctrine.
One of the very early Acts of Congress of the United States (A. D. 1798) authorized the President of the
United States to order all such aliens as he should judge to be dangerous to the peace and safety of the country,
or that he should have reasonable grounds to suspect of being concerned in any treasonable machinations
against the Government, to deport out of the territory of the United States within such time as he should
express in his order. And it was further provided that if any such aliens, so sent out, should return without the
permission of the President, they should be imprisoned so long as, in the opinion of the President, the public
safety might require.
Mr. Frelinghuysen, as Secretary of State of the United States (1882), said:
This Government (United States) can not contest the right of foreign governments to exclude, on
policy or other grounds, American citizens from their shores.
Mr. Gresham, Secretary of State of the United States, in speaking of the right of Hayti to expel from its borders
American citizens from their shores.
Page 286 of 557

This government does not propose to controvert the principle of international law which authorizes
every independent State to expel objectionable foreigners or class of foreigners from its territory. The
right of expulsion or exclusion of foreigners is one which the United States, as well as many other
countries, has, upon occasions, exercised when deemed necessary in the interest of the Government or
its citizens. . . .
Every State is authorized, for reasons of public order, to expel foreigners who are temporarily residing
in its territory, but when a Government expels foreigners without cause and in an injurious manner,
the State of which the foreigner is a citizen has a right to prefer a claim for this violation of
international law and to demand satisfaction, if there is occasion for it.
Many other cases might be cited showing the arbitrary manner in which aliens have, from time to time, been
deported.
Expulsion is a police measure, having for its object the purging of the State of obnoxious foreigners. It is a
preventive, not a penal process, and it can not be substituted for criminal prosecution and punishment by
judicial procedure.
The right of deportation or expulsion is generally exercised by the executive head of the Government,
sometimes with and sometimes without express legislation. Sometimes it is delegated in particular instances to
the heads of some departments of the Government. (Act No. 265, U. S. Philippine Commission.)
In Canada the right was given by statute to the attorney-general of Canada. (Dominion Act, 60th and 61st
Victoria, chap. 11, sec. 6, as amended by 1st Edward 7th, Chap. 13.)
It having been established that every government has the implied or inherent right to deport or expel from its
territory objectionable aliens, whenever it is deemed necessary for the public good, we deem it pertinent to
inquire:
II
IN WHAT DEPARTMENT OR DEPARTMENTS OF THE INDEPENDENT DEPARTMENTS OF
A GOVERNMENT DOES THIS INHERENT POWER EXISTS?
The rule of law permitting nations to deport or expel objectionable aliens, while international in its character is
yet, nevertheless, in its application, executed by the ]particular nation desiring to rid itself of such aliens and
must, therefore, be carried into operation by that departments of the government charged with the execution of
the nation's laws. Its enforcement belongs peculiarly to the political department of the government. The right is
inherent in the government and, as Mr. Justice Field said, "can not be granted away or restrained on behalf of
anyone." It being inherent in the political department of the government, it need not be defined by express
legislation, although in some States the legislative department of the government has prescribed the condition
and the method under which and by which it shall be carried into operation. The mere absence of legislation
regulating this inherent right to deport or expel aliens is not sufficient to prevent the chief executive head of the
government, acting in his own sphere and in accordance with his official duty, to deport or expel objectionable
aliens, when he deems such] action necessary for the peace and domestic tranquility of the nation. One of the
principal duties of the chief executive of a nation is to preserve peace and order within the territory. To do this
he is possessed of certain powers. It is believed and asserted to be sound doctrine of political law that if in a
particular case he finds that there are aliens within its territory whose continued presence is injurious to the
public interest, he may, even in the absence of express law, deport them. The legislative department of the
government is not always in session. It may require days and even months for that department to assemble.
Sudden and unexpected conditions may arise, growing out of the presence of obnoxious and untrustworthy
foreigners, which demand immediate action. Their continued presence in the country may jeopardize even the
Page 287 of 557

very life of the government. To hold that, in view of the inherent power of the government, the chief executive
authority was without power to expel such foreigners, would be to hold that at times, at least, the very
existence and life of the government might be subjected to the will of designing and obnoxious foreigners, who
were entirely out of sympathy with the existing government, and whose continued presence in the territory
might be for the purpose of destroying such government.
Suppose for example, that some of the inhabitants of the thickly populated countries situated near the
Philippine Archipelago, should suddenly decide to enter the Philippine Islands and should, without warning
appear in one of the remote harbors and at once land, for the purpose of stirring up the inhabitants and inciting
dissensions against the present Government. And suppose, for example, that the Legislature was not in session;
could it be denied that the Governor-General, under his general political powers to protect the very existence
of the Government, has the power to take such steps as he may deem wise and necessary for the purpose of
ridding the country of such obnoxious and dangerous foreigners? To admit such a doctrine would be to admit
that every government was without the power to protect its own life, and at times might be subjected to the
control of people who were out of sympathy with the spirit of the Government and who owe no allegiance
whatever to it, and are under no obligation to assist in its perpetuity.
It has never been denied, in a government of separate and independent departments, executive, legislative, and
judicial, that the legislature may prescribe the methods or conditions for the exercise of his power, but the mere
absence of such rules neither proves that the power does not exist nor that the executive head of the
government may not adopt himself such methods as he may deem advisable for the public good and the public
safety. He can only be controlled in the conditions and methods as to when and have the powers shall be
exercised. The right itself can not be destroyed or bartered away. When the power is once created and no rules
are adopted for its enforcement, the person or authority who has to exercise such power has the right to adopt
such sane methods for carrying the power into operation as prudence, good judgment and the exigencies of the
case may demand; and whatever rules and regulations may be adopted by the person or department possessing
this power for carrying into operation this inherent power of the government, whether they are prescribed or
not, will constitute due process of law. (See speech delivered by John Marshall in the House of
Representatives of the United States, Annals of the Sixth Congress, 595; United States vs. Robins, Fed. Cas.
No. 16,175, 27 Fed. Cas., 825; Moyer vs. Peabody, 212 U. S., 78; Murray vs. Hoboken Land and Improvement
Co., 18 How., 272; U. s., vs. Ju Toy, 198 U. S., 253, 263.)
We have said that the power to deport or expel foreigners pertains to the political department of the
government. Even in those jurisdictions where the conditions under which persons may be deported are left to
the courts to decide, even then the actual deportations must be carried into operation by the executive
department of the government. The courts have no machinery for carrying into operation their orders except
through the executive department.
In the present case the fact is charged and admitted that the defendant was deported by W. Cameron Forbes as
Governor-General of the Philippine Islands, acting for the Government. Mr. Forbes is "the chief executive
authority in all civil affairs of the Government of the Philippine Islands" as such it is his duty to enforce the
laws. It is out opinion and we so hold that as such "executive authority" he had full power, being responsible to
his superiors only, to deport the defendant by whatever methods his conscience and good judgment might
dictate. But even though we are wrong in our conclusions that he is the possessor of the inherent right to deport
aliens, and it is true that the power belongs to the legislative department to prescribe rules and regulations for
such deportation, yet, in the present case, the legislative department expressly recognized his authority and
approved his acts by a resolution adopted by it on the 19th of April, 1910. This power of the legislature to
expressly ratify acts alleged to be illegal by the executive department, has been expressly recognized by the
Supreme court of the United States in the case of United States vs. Heinszen & Co., (206 U. S., 370); O'Reilly
de Camara vs. Brooke, Major-General (142 Fed. Rep., 859). An act done by an agent of the Government,
though in excess of his authority, being ratified and adopted by the Government, is held to be equivalent to
previous authority. (142 Federal Reporter, supra; Phillips vs. Eyre, Law Reports, 6 Queen's Bench Cases, 1;
Page 288 of 557

Secretary of State vs. Kamachee Baye Sahaba, 13 Moore's Privy Council, 22; O'Reilly de Camara vs. Brooke,
Major-General, 209 U. S., 54.)
It is also admitted that the act of the Governor-General in deporting the defendant was in compliance with a
request made by the official representative of the Imperial Government of China. It would seem, therefore, that
said request, in the absence of any other power, would be sufficient justification of his act. The mere fact that a
citizen or subject is out of the territory of his country does not relieve him from that allegiance which he owes
to his government, and his government may, under certain conditions, properly and legally request his return.
This power is expressly recognized by the Congress of the United States. (See Act of Congress of January 30,
1799, 1 Statutes at large, 613; sec. 5533, Revised Statutes of United States; sec. 5, United States Penal Code,
adopted March 4, 1909.)
It was strenuously argued at the hearings of this cause that the defendant was deported without due process of
law, in fact, that was the burden of the argument of attorney for the defendant.
Due process of law, in any particular case, means such an exercise of the powers of the government as
the settled maxims of law permit and sanction and under such safeguards for the protection of
individual rights as those maxims prescribe for the class of cases to which the one in questions
belongs. (U. S. vs. Ling Su Fan, 10 Phil. Rep., 104, 111; Moyer vs. Peabody, 212 U. S., 78; Murray vs.
Hoboken Land and Improvement Co., 18 How., 272; U. S. vs. Ju Toy, 198 U. S., 253, 263.)
An examination of the methods by which the defendant was deported, as stated by the attorney for the
defendant, as compared with the numerous cases of deportation by the various governments of the world,
shows that the method adopted in the present case was in accordance with the methods adopted by
governments generally and the method sanctioned by international law. (See Moore's International Law
Digest, vol. 4.)
It has been repeatedly decided when a government is dealing with the political rights of aliens that it is not
governed by that "due process of law" which governs in dealing with the civil rights of aliens. For instance, the
courts of the United States have decided that in the deportation of an alien he is not entitled to right of trial by
jury, the right of trial by jury being one of the steps in the "due process of law" in dealing with civil rights.
(Fong Yue Ting vs. U. S., 149 U. S. 698; U. S. vs. Wong Dep Ken, 57 Fed. Rep., 206; U. S. vs. Wong Sing, 51
Fed. Rep., 79; In re Ng Loy Hoe, 53 Fed. Rep., 914.)
In the case of Moyer vs. Peabody, Governor of Colorado (212 U. S. , 78), Mr. Justice Holmes, speaking for the
court upon the question of what is "due process of law," said:
But it is familiar that what is due process of law depends on circumstances. It varies with the subjectmatter and the necessities of the situation. Thus, summary proceedings suffice for taxes and executive
decisions for exclusion from the country.
Neither will the fact that an alien residing in the territory holds a certificate of admission justify his right to
remain within such territory as against an act of the executive department of the Government which attempts to
deport him. (Chae Chan Ping vs. U. S. 581, 36 Fed. Rep., 431.) The certificate is a mere license and may be
revoked at any time. An alien's right to remain in the territory of a foreign government is purely a political one
and may be terminated at the will of such government. No cases have been found, and it is confidently asserted
that there are none, which establish a contrary doctrine.
Having established, as we believe:
(a) That a government has the inherent right to deport aliens whenever the government believes it necessary
for the public good; and
Page 289 of 557

(b) That the power belongs to the political department of the government and in the Philippine Islands to the
Governor-General, who is "the chief executive authority in all civil affairs" in the Government of the
Philippine Islands:
We deem it pertinent to inquire:
III.
WHETHER OR NOT THE COURTS CAN TAKE JURISDICTION IN ANY CASE RELATING TO
THE EXERCISE OF THIS INHERENT POWER IN THE DEPORTATION OF ALIENS, FOR THE
PURPOSE OF CONTROLLING THIS POWER VESTED IN THE POLITICAL DEPARTMENT OF
THE GOVERNMENT.
The question whether or not the courts will ever intervene or take jurisdiction in any case against the chief
executive head of the government is one which has been discussed by many eminent courts and learned
authors. They have been unable to agree. They have not been able to agree even as to what is the weight of
authority, but they all agree, when the intervention of the courts is prayed for, for the purpose of controlling or
attempting to control the chief executive head of the government in any matter pertaining to either his political
or discretionary duties, that the courts will never take jurisdiction of such case. The jurisdiction is denied by
the courts themselves on the broad ground that the executive department of the government is separate and
independent department, with its duties and obligations, the responsibility for the compliance with which is
wholly upon that department. In the exercise of those duties the chief executive is alone accountable to his
country in his political character and to his own conscience. For the judiciary to interfere for the purpose of
questioning the manner of exercising the legal, political, inherent duties of the chief executive head of the
government would, in effect, destroy the independence of the departments of the government and would make
all the departments subject to the judicial. Such a conclusion or condition was never contemplated by the
organizers of the government. Each department should be sovereign and supreme in the performance of his
duties within its own sphere, and should be left without interference in the full and free exercise of all such
powers, rights, and duties which rightfully, under the genius of the government belong to it. Each department
should be left to interpret and apply, without interference, the rules and regulations governing it in the
performance of what may be termed its political duties. Then for one department to assume to interpret or to
apply or to attempt to indicate how such political duties shall be performed would be an unwarranted, gross,
and palpable violation of the duties shall be performed would be an unwarranted, gross, and palpable violation
of the duties which were intended by the creation of the separate and distinct departments of the government.
It is no answer to this conclusion to say that the chief executive authority may violate his duties and the
constitutional guaranties of the people, or that injustice may be done, or that great and irreparable damage may
be occasioned without a remedy. The judicial is not the only department of the government which can do
justice or perpetually conserve the rights of the people. The executive department of the government is daily
applying laws and deciding questions which have to do with the most vital interest of the people. (Marbury vs.
Madison, 1 Cranch, U. S., 152; State of Miss. vs. Johnson, 4 Wall., 475, 497; Hawkins vs. The Governor, 1
Ark., 570 (33 Am. Dec., 346); Sutherland vs. The Governor, 29 Mich., 320; People vs. Bissell, 19 Ill., 229 (68
Am. Dec., 591); State vs. Warmoth, 22 La. An., 1.)
In the case of State vs. Warmoth (22 La. An., 10 Mr. Justice Taliaferro said (pp. 3,4):
He [the governor] must be presumed to have this discretion, and the right of deciding what acts his
duties require him to perform; otherwise his functions would be trammeled, and the executive branch
of the government made subservient, in an important feature, to the judiciary.
When the official acts to be performed by the executive branch of the government are divided into
ministerial and political, and courts assume the right to enforce the performance of the former, it
Page 290 of 557

opens a wide margin for the exercise of judicial power. The judge may say what acts are ministerial an
what political. Circumstances may arise and conditions may exist which would require the Governor
of a State, in the proper exercise of his duty, and with regard to the interests of the State, not to
perform a ministerial act. Is the judge to determine his duty in such case, and compel him to perform
it? The reasons of the executive for the nonperformance of an act, the judge may never know, or, if
brought to his knowledge, he may review and overrule them, and, in doing, assume political functions.
He would determine, in such a case, the policy of doing the act. The legislator himself, who prescribed
the act might hold the executive harmless while the judge condemned him.
We believe that there are certain inherent powers vested in the chief executive authority of the State which are
universally denominated political, which are not defined either by the constitution or by the laws. We believe
that those inherent powers would continue to exist for the preservation of the life and integrity of the State and
the peace and quietude of its people, even though the constitution were destroyed and every letter of the
statutes were repealed. This must necessarily be true, or, otherwise, the hands of the chief executive authority
of the government might, at times, be paralyzed in his efforts to maintain the existence of the government. The
United States Government never intended to create in the Philippine Islands a government without giving it
adequate power to preserve itself and to protect the highest interests of the people of the Archipelago.
These inherent, inalienable, and uncontrollable powers which must necessarily exists in the absence of express
law in the chief executive authority of a nation have been clearly demonstrated by the action of the President of
the United States, notably in putting down what is known as the "Whisky Rebellion" in the State of
Pennsylvania, in the case of the protection of a judge of the United States (In re Neagle, 135 U. S., 1, 64), as
well as in the case of the uprising of labor organizations in the city of Chicago under the direction and control
of Mr. Debbs (In re Debbs, 158 U. S., 568).
These powers and the right to exercise them according to his own good judgment and the conscience and his
acts in pursuance of them are purely political and are not subject to control by any other department of the
government. It is believed that even the Legislature can not deprive him of the right to exercise them.
Upon the question of the right of the courts to interfere with the executive, this court has already pronounced,
in the case of In re Patterson (1 Phil. Rep., 93) that:
Superior to the law which protects personal liberty and the agreements which exist between nations
for their own interests and the benefit of their respective subjects is the supreme and fundamental right
of each state to self-preservation and the integrity of its dominion and its sovereignty. Therefore it is
not strange that this right should be exercised in a sovereign manner by the executive power to which
is entrusted, in the very nature of things, the preservation of so essential a right, without interference
on the part of the judicial power.
This court has also announced the doctrine, in the case of Barcelon vs. Baker et al (5 Phil. Rep., 87) that:
Under the form of the government established in the Philippine Islands one department of the
Government has no power or authority to interfere in the acts of another, which acts are performed
within the discretion of the other department.
In the case of Martin vs. Mott it was decided by the Supreme Court of the United States, whenever the
performance of a political duty developed upon the chief executive authority of a nation and when he had
decided as to the method of performing that duty, that no court could question his decision. We are of the
opinion and so hold, whenever the authority to decide a political question devolves upon any separate and
distinct department of the Government, which authority impose upon that department the right to decide
whether the exigencies for its exercise have arisen, and when that department had decided, that decision is
conclusive upon all other persons or departments.
Page 291 of 557

This doctrine has been further recognized by this court in the case of Merchant vs. Del Rosario (4 Phil. Rep.,
316) as well as in the case of Debrunner vs. Jaramillo (12 Phil. Rep., 316).
Under the system of government established in the Philippine Islands the Governor-General is "the chief
executive authority," one of the coordinate branches of the Government, each of which, within the sphere of its
governmental powers, is independent of the others. Within these limits the legislative branch can not control
the judicial nor the judicial the legislative branch, nor either the executive department. In the exercise of his
political duties the Governor-General is, by the laws in force in the Philippine Islands, invested with certain
important governmental and political powers and duties belonging to the executive branch of the Government,
the due performance of which is entrusted to his official honesty, judgment, and discretion. So far as these
governmental or political or discretionary powers and duties which adhere and belong to the Chief Executive,
as such, are concerned, it is universally agreed that the courts possess no power to supervise or control him in
the manner or mode of their discharge or exercise. (Hawkins vs. The Governor, supra; People vs. The
Governor, supra; Marbury vs. Madison, supra; Meecham on Public Officers, sec. 954; In re Patterson, supra;
Barcelon vs. Baker, supra.)
It may be argued, however, that the present action is one to recover damages against the Governor and the
others mentioned in the cause, for the illegal acts performed by them, and not an action for the purpose of in
any way controlling or restraining or interfering with their political or discretionary duties. No one can be held
legally responsible in damages or otherwise for doing in a legal manner what he had authority, under the law,
to do. Therefore, if the Governor-General had authority, under the law, to deport or expel the defendants, and
the circumstances justifying the deportation and the method of carrying it out are left to him, then he can not be
held liable for damages for the exercise of this power. Moreover, if the courts are without authority to interfere
in any manner, for the purpose of controlling or interfering with the exercise of the political powers vested in
the chief executive authority of the Government, then it must follow that the courts can not intervene for the
purpose of declaring that he is liable in damages for the exercise of this authority. Happily we are not without
authority upon this question. This precise question has come before the English courts on several different
occasions.
In the cases of The Lord-Lieutenant of Ireland (Governor of Ireland), Tandy vs. Earl of Westmoreland (27
State Trials, 1246), and Luby vs. Lord Wodehouse (17 Iredell, Common Law Reports, 618) the courts held that
the acts complained of were political acts dine by the lord-Lieutenant in his official capacity and were assumed
to be within the limits of the authority delegated to him by the Crown. the courts if England held that, under
the circumstances, no action would lie against the lord-lieutenant, in Ireland or elsewhere.
In the case of Chun Teeong Toy vs. Musgrave (Law Reports, Appeal Cases 1891, p. 272) the plaintiff, a
Chinese subject, brought an action for damages against the defendant as collector of customs of the State of
Victoria in Australia, basing his action upon the refusal of the Victorian government to permit him to enter that
State. Upon a full consideration the Privy Council said:
Their Lordships can not assent to the proposition that an alien refused permission to enter British
territory can, in an action against the British Crown, compel the decision of such matters as these,
involving delicate and difficult constitutional questions affecting the respective rights of the Crown
and Parliament and the relation of this country to her self-governing colonies. When once it is
admitted that there is no absolute and unqualified right of action on the behalf of an alien refused
permission to enter British territory, their Lordships are of opinion that it would be impossible, upon
the facts which the demurrer admits, for an alien to maintain an action.
If it be true that the Government of the Philippine Islands is a government invested with "all the military,. civil,
and judicial powers necessary to govern the Philippine Islands until otherwise provided by Congress" and that
the Governor-General is invested with certain important political duties and powers, in the exercise of which
he may use his own discretion, and is accountable only to his superiors in his political character and to his own
Page 292 of 557

conscience, and without authority to interfere in the control of such powers, for any purpose, then it must
follow that the courts can not take jurisdiction in any case against him which has for its purpose the declaration
that such acts are illegal and that he is, in consequence, liable for damages. To allow such an action would, in
the lost effective way possible, subject the executive and political departments of the Government to the
absolute control of the judiciary. Of course, it will be observed that we are here treating only with the political
and purely executive duties in dealing with the political rights of aliens. The conclusions herein reached
should not be extended to cases where vested rights are involved. That question must be left for future
consideration.
From all the foregoing facts and authorities, we reach the following conclusions:
First. That the Government of the United States in the Philippine Islands is a government possessed with "all
the military, civil, and judicial powers necessary to govern the Philippine Islands" and as such has the power
and duty, through its political department, to deport aliens whose presence in the territory is found to be
injurious to the public good and domestic tranquility of the people.
Second. That the Governor-General, acting in his political and executive capacity, is invested with plenary
power to deport obnoxious aliens, whose continued presence in the territory is found by him to be injurious
presence to the public interest, and in the method of deporting or expelling them, he may use such method as
his official judgment and good conscience may dictate.
Third. That this power to deport or expel obnoxious aliens being invested in the political department of the
Government, the judicial department will not, in the absence of express legislative authority, intervene for the
purpose of controlling such power, nor the purpose of inquiring whether or not he is liable in damages for the
exercise thereof.
Therefore the lower court was without jurisdiction to consider the particular questions presented in the cause,
and it is hereby ordered and decreed that the writ of prohibition shall be issued, directed to the defendant, the
Hon. A. S. Crossfield, perpetually prohibiting him from proceeding in the cause in which Chuoco Tiaco (alias
Choa Tea) is plaintiff and W. Cameron Forbes, Charles R. Trowbridge, and J.E. Harding are defendants, and to
dismiss said action, as well as to enter an order dissolving the injunction granted by him in said cause against
the said defendants.
It is further ordered that a decree be entered overruling the demurrer presented in this cause, and ordering that
said action be dismissed, as well as a decree making perpetual the injunction heretofore granted by Mr. Justice
Trent.
It is so ordered, without any finding as to costs.
Arellano, C.J., and Torres, J., concur.

Separate Opinions
MORELAND, J., concurring:
The nature of this action has been fully set forth, by way of quoting the entire proceedings, in the opinion of
Mr. Justice Johnson. It is unnecessary again to present the facts. I differ, however, from that portion of the
relation of the facts in that opinion, and the conclusion drawn therefrom, which touches the form of action
commenced by Chuoco Tiaco against the Governor-General, and in which it is asserted that "thus clearly it
Page 293 of 557

appears that the action was against the defendants in their official capacity." In my judgment, the contrary,
namely, that the action was against the Governor-General personally for acts which he sought to perform in his
official capacity, clearly appears. The words "successors in office," as used in the complaint, refer only to the
remedy by injunction and not to the damages prayed for by reason of the expulsion. The action no less
certainly is directed against the other defendants personally.
When the case was decided in this court upon the merits, Mr. Justice Trent and myself signed the following
opinion:
I concur in so much of the opinion o f Mr. Justice Johnson, as holds that the action in the Court of
First Instance from which this controversy arises can not be maintained against the Governor-General.
With the reasons given and the arguments advanced in that opinion for the support of that conclusion I
disagree. I can not assent to the theory upon which the opinion is framed nor to the reasons and
arguments advanced in support thereof. I understand that the action in the court below, as appears
from the records of that court and the concession of all parties interested, is one against the GovernorGeneral personally for acts which he assumed to perform in his official capacity. That the GovernorGeneral acted in the honest belief that he had the power to perform the acts complained of is nowhere
questioned. This being so, whether or not he actually had such powers is, as I view this case,
immaterial. I base my concurrence in the result solely upon the theory that the Governor-General, in
his official capacity, being one of the coordinate branches of the Government (U. S. vs. Bull, 8 Off.
Gaz., 271)1, is entitled to the same protection against personal actions for damages by those who feel
themselves aggrieved by acts which he performs in carrying out what he honestly deems to be the
duties of his office as are the other coordinate branches of the Government. It is undoubted that
neither the Legislature, nor a member thereof is liable in damages for any act which it performs,
believing that it had the power so to act, even though it ultimately appears that such act is entirely
outside of its powers and jurisdiction and is wholly and utterly void. It is equally undoubted, in my
judgment, that neither the courts, constituting another coordinate branch of the Government, nor
members thereof, are, under similar circumstances, liable in damages. (Bradley vs. Fisher, 80 U. S.
335; Spalding vs. Villas, 161 U. S., 481, 493, 494.) If the want of jurisdiction was known to the court
at the time it acted, another question might be presented.
There comes to my mind no good reason why the same principles of nonliability should not be applied
to the Chief Executive of the Government. Indeed the reasons and arguments of the courts and text
writers advanced to support the principle of nonliability of legislatures and courts apply with even
greater force to the Executive.
The Governor-General, in determining whether or not he has the power or jurisdiction to perform a
certain act, should be protected against personal actions against him for damages as completely and
effectively as he unquestionably is when, jurisdiction being conceded, he honestly acts in excess
thereof. There is no dissimilarity in the quality of the mental process employed or the judgment
brought to bear and exercised in arriving at a conclusion in the two cases.
This theory does not in any way weaken the power of this court, in a proper action, to determine the
legality of all official acts once performed and the legal consequences flowing therefrom. The
necessity for such determination does not, however, arise, in this case.
To that opinion we still adhere. A thorough reexamination of the questions involved and of the principles of
law which, we believe, must be applied in their solution adds to our conviction that the conclusions therein
reached are sound and should guide the court in the disposition of the case before it. The principles enunciated
in that opinion were not, however, presented or discussed by the attorneys, or either of them, in the extended
and elaborate arguments which they made, both orally and in writing, to this court. A motion for a rehearing
having been made and the objections and arguments of counsel having been particularly directed against the
Page 294 of 557

conclusions presented in our former opinion, we deem it advisable to present here, with some elaborations and
detail, the reasons which impelled us to the conclusions reached therein.
In this opinion we discuss the subject, largely speaking, in two aspects.
First, the nature and quality of the functions exercised by the Governor-General in arriving at the conclusion
that he had the right to expel Chuoco Tiaco. Our conclusion upon this branch of the subject is that the act was
in the nature of a judicial act, the functions exercised were judicial in their quality, and that he should have the
same protection against civil liability in exercising this function that would be accorded to a court under
similar circumstances.
Second, the fundamental nature and attributes of the office of Governor-General, and whether or not the public
policy requires that there be applied to him and by his acts the same principles which govern the liability of the
members of the Legislature and of the judiciary. Our conclusion upon this branch of the case is that the
Government here is one of three departments executive, legislative, and judicial that the office of
Governor-General is one of the coordinate branches of the Government, and that the same public policy which
relieves a member of the Legislature or a member of the judiciary from personal liability for their official acts
also relieves the Governor-General in like cases.
It has been settled by previous decisions of this court that the Government established in the Philippine Islands
is one of three departments legislative, executive, and judicial. In the case of the U. S. vs. Bull2 (8 Off. Gaz.,
271, 276), it is said:
Within the limits of its authority the Government of the Philippines is a complete governmental
organism with executive, legislative, and judicial departments exercising the functions commonly
assigned to such departments. The separation of powers is as complete as in most governments. In
neither Federal nor State governments is this separation such as is implied in the abstract statement of
the doctrine. For instance, in the Federal Government the Senate exercises executive powers, and the
President to some extent controls legislation through the veto power. In a State the governor is not a
member of the legislative body, but the veto power enable him to exercise much control over
legislation. The Governor-General, the head of the executive department in the Philippine
Government, is a member of the Philippine Commission, but as executive he has no veto power. The
President and Congress framed the Government on the models with which Americans are familiar,
and which has proved best adapted for the advancement of the public interest and the protection of
individual rights and privileges. (Lope Severino vs. The Governor-General and Provincial Board of
Occidental Negros, 8 Off. Gaz., 1171.)3
The instructions of the President of the United States to the Philippine Commission, dated April 7, 1900,
contain this statement:
Until the complete transfer of control (from the military to the civil authorities) the Military Governor
will remain the chief executive head of the Government of the Islands, and will exercise the executive
authority now possessed by him and not herein expressly assigned to the Commission, subject,
however, to the rules and orders enacted by the Commission in the exercise of the legislative powers
conferred upon them.
Said instructions also include the following:
Beginning with the 1st day of September, 1990, the authority to exercise, subject to my approval,
through the Secretary of War, that part of the power of government in the Philippine Islands which is
of a legislative nature is to be transferred from the Military Governor of the Islands to this
Commission, to be thereafter exercised by them in the place and stead of the Military Governor, under
Page 295 of 557

such rules and regulations as you shall prescribe, until the establishment of the civil central
government for the Islands contemplated in the last foregoing paragraph, or until Congress shall
otherwise provide. Exercise of this legislative authority will include the making of rules and orders,
having the effect of law, for the raising of revenue by taxes, customs duties, and imposts; the
appropriation and expenditure of public funds of the Islands; the establishment of an educational
system throughout the Islands; the establishment of a system to secure an efficient civil service; the
organization and establishment of courts; the organization and establishment of municipal and
departmental governments, and all other matter of a civil nature for which the Military Governor is
now competent to provide by rules or orders of a legislative character.
The powers conferred upon the Military Governor are contained in the following order of the President to
General Merritt, dated May 19, 1998:
Though the powers of military occupant are absolute and supreme, and immediately operate upon the
political condition of the inhabitants, the municipal laws of the conquered territory, such as effect
private rights of person and property, and provide for the punishment of crime, are considered as
continuing in force, so force, so far as they are compatible with the new order of things, until they are
suspended or superseded by the occupying belligerent; and in practice they are not usually abrogated,
but are allowed to remain in force, and to be administered by the ordinary tribunals, substantially as
they were before the occupation. This enlightened practice is, so far as possible, to be adhered to on
the present occasion.
The Spooner amendment to the Army appropriation bill, passed March 2, 1901, provided that
All military, civil, and judicial powers necessary to govern the Philippine Islands . . . shall until
otherwise provided by Congress be vested in such person and the persons, and shall be exercised in
such manner, as the president of the United States shall direct, for the establishment of civil
government, and for maintaining and protecting the inhabitants of said Islands in the in the free
enjoyment of their liberty, property, and religion.
On the 21st day of June, 1901, the President, in an order appointing a Civil Governor, said:
On and after the 4th day if July, 1901, until it shall be otherwise ordered, the President of the
Philippine Commission will exercise the executive authority in all civil affairs in the government of
the Philippine Islands heretofore exercised in such affairs by the Military Governor of the Philippines,
and to that end the Hon. William H. Taft, President of the said Commission, is hereby appointed Civil
Governor of the Philippine Islands. Such executive authority will be exercised under, and in
conformity to, the instructions to the Philippine Commissioners, dated April 7, 1900, and subject to
the approval and control of the Secretary of War of the United States. The municipal and provincial
civil governments, which have been, or shall hereafter be, established in said Islands, and all persons
performing duties appertaining to the offices of civil government in said Islands, will, in respect of
such duties, report to the said Civil Governor.
The power to appoint civil officers, heretofore vested in the Philippine Commission, or in the Military
Governor, will be exercised by the Civil Governor with the advice and consent of the Commission.
The Military Governor of the Philippines is hereby relieved from the performance, on and after the
said 4th day of July, of the civil duties hereinbefore described, but his authority will continue to be
exercised as heretofore in those districts in which insurrection against the authority of the United
States continues to exist, or in which public order is not sufficiently restored to enable provincial civil
governments to be established under the instructions to the Commission dated April 7, 1900.

Page 296 of 557

On the 1st day of July, 1902, Congress passed an Act containing the following:
That the action of the President of the United States in creating the Philippine Commission and
authorizing said Commission to exercise the powers of government to the extent and in manner and
form and subject to the regulations and control set forth, in the instructions of the President to the
Philippine Commission, dated April seventh, nineteen hundred, and in creating the offices of
Governor-General and Vice-Governor-General of the Philippine Islands, and authorizing said
Governor-General and Vice-Governor-General to exercise the powers of government to the extent and
in manner and form set forth in the Executive Order dated June twenty-first, nineteen hundred and
one, . . . is hereby approved, ratified, and confirmed, and until otherwise provided by law the said
Islands shall continue to be governed as thereby and herein provided.
From these citations it will be seen that the Governor-General is the executive head of the Government; that he
has full, plenary, and perfect powers to execute the laws. Obviously, therefore, the primal necessity laid upon
him, when in a given case, he believes himself called upon to act, is to determine whether there is a law under
which he may act whether, in other words, he is authorized to act in that particular case. One occupying that
high position owes a heavy obligation to the State. A careful and conscientious man, intensely anxious to meet
the full requirements of this obligation, will inevitably dedicate his first consideration to the determination of
what that obligation is. From the viewpoint of the governors of the American States, this is not, generally
speaking, a difficult question. There conditions are settled. Society is old. Questions wholly new rarely arise.
The constitutions confer the powers generally. The statutes specify them. The source power is the constitution.
The guide is the statutes. Both are written. They constitute the governor's text-book of power and procedure
specific, definite, certain. In the Philippine Islands the situation is different. Here, while the sources of the
Governor-General's power are known, the extent and character of the power drawn from those sources are not
so clear. Many times they are extremely difficult of ascertainment. The Government here is a new one .Its
establishment is a step in ways heretofore untrodden by the American Republic. Its history furnished no
example, its law no precedent. Her statemanships had, up to the moment, framed no model from which a
colony government might be fashioned; the philosophy of her institutions presents no theories along which
action may unhesitatingly proceed. There is no experience to guide the feet; no settled principles of colonial
government and administration to which men may turn to justify their action or dissipate their doubts.
Therefore, when, seeing, as he believed, certain Chinese aliens outraging the public conscience and seriously
threatening public security, the Governor-General, believing that the only procedure adequate to protect the
public interests was the expulsion of the offenders, began an investigation to determine whether or not he had
the power of expulsion, he was confronted with a question of very serious intricacy and doubt. It was of the
very greatest importance also. It is undoubted that he was thoroughly convinced that he was required, by the
obligation of his office, to act if the law authorized it. He knew the strength and the justice of the proposition
that a public official may not sit supinely by and see outraged the very things that he is bound by his oath to
protect without exhausting every atom of his power and every resource of his office in an attempt to meet the
situation as it ought to be met. His primal duty, under such circumstances, would be to determine what were
his powers. The situation would imperatively demand that he ascertain what he could do. This involves, as
already said, a determination upon which even a court, learned in the law and experienced in its constructions,
would enter with hesitation and misgivings. The question to be resolved is so many sided, its relations so
intricate and numerous, the result of its determination so far-reaching, politically as well as legally, as to
require the most careful consideration, the must exhaustive forethought. It involves not only the discussion and
resolution of judicial as well as administrative questions of the most highly important kind, but also whether
this Government has any power of expulsion whatever.
He has, then, as his initiatory resolution, to determine whether the Government of the Philippine Islands has
the power of expulsion at all. As a condition precedent to the decision of that question he must adjudge (a)
whether the Government here is in any sense a sovereign government; for the power to expel a domiciled
foreigner is distinctively an attribute of sovereignty, to be exercised, under the uniform practice of the
Government of the United States, only in exceptional cases and then under recognized methods of procedure.

Page 297 of 557

If he resolve that question in the negative, he must then decide (b) whether the Government of the United
States has conferred upon the Government here those powers of sovereignty necessary to authorize such act.
It is needless to say that the very gravest questions are involved in these determinations. I do not stop to
enumerate them or to present the serious difficulties which must be met in making them. It suffices to say that,
when he has fully resolved those questions, he is then only on the threshold of his inquiry. Inasmuch as it
might appear to one investigating the subject for the first time that the power of expulsion might be an inherent
attribute of the Executive, as in some countries it is alleged to be, he must determine, first the fundamental
nature of his executive powers. He must decide whether, under the form of the government of which his office
is the executive part, the power of expulsion belongs to the executive exclusively, or solely to the legislative,
or whether it belongs to both, in combination with the judicial. This requires that he distinguish his executive
functions from those which are legislative, upon the one hand, and those which are judicial, upon the other
a determination most difficult in many instances, not only by reason of the considerations above set forth, not
only by reason that, while the broad distinction is clear, nevertheless, frequently, the nature of one verges so
closely upon that of the other as to render the difference between them subtle, uncertain, and elusive.
He must, second, judge whether that power, whatever it is and whatever its extent, came untrammeled to the
Military Governor from the hands of the President, or whether he received it modified and restricted. This
determination is necessary for the reason already pointed out that the Governor-General has only such
executive power as had the Military Governor. This involves an interpretation of the order of the President
above quoted a very real judicial construction of its legal signification.
He must decide, third, whether the acts or orders by which executive power was given to the Military
Governor and those by which that power was transferred to him do or do not, by their terms, define that power
itself, its character and extent, or specify with more or less certainty the acts which he may perform under it.
This again brings into play functions which approach the judicial so closely as to render them practically
indistinguishable.
After all these investigations, interpretations, and constructions have been completed, there still remains to the
Governor-General for solution one of the most difficult problems of all, that of determining whether or not,
irrespective of the foregoing considerations, there exists in force and vigor, under the American regime, a law
of Spanish origin with which he may adequately meet the situation that faces him. As we have already seen,
the instructions of the President of the United States to General Merritt, dated May 19, 1898, provide that
The municipal laws of the conquered territory, such as affect, private rights of person and property,
and provide for the punishment of crime, are considered as continuing in force, so far as they are
compatible with the new order of things, until they are suspended or supercede by the occupying
belligerent; and in practice they are not usually abrogated, but are allowed to remain in force, . . . .
We have also seen that the proclamation of General Merritt on the capitulation of the Spanish forces in Manila
also provides that
The municipal laws such as affect private rights of persons and property, regulate local institutions,
and provide for the punishment of crime shall be considered as continuing in force, as compatible with
the purposes of military government, and that they be administered through the ordinary tribunals
substantially as before occupation, but by officials appointed by the government of occupation.
It is evident that the character and contents of these two instruments necessitate that the GovernorGeneral consider and decide when the laws and institutions of the United States are so incompatible
with those Spain in the Philippine Islands as to render the latter inoperative. This involves the
consideration of the broad question of when the laws, customs, and institutions of a conquering nation
are so incompatible with those of the conquered as to render them inoperative and ineffective by the
Page 298 of 557

mere change of sovereignty. This is a theme upon which writers have differed and concerning which
the courts have not been free from uncertainties and even contradictions. The field opened by this
necessity is so wide, the subject-matter so uncertain and elusive, and the principles involved so
dependent for their application upon the personal equation of the one dealing with the subject that it is
extremely easy for two men, equally honest and able, to differ widely on a result. Much depends upon
the atmosphere in which one is placed and the point of view from which the subject is seen. The
Supreme court of the United States has just held unconstitutional and void the law relating to the
falsification of an official document by a public official, a law of Spanish origin, which had generally
been supposed, and had repeatedly been held by the Supreme Court of the Islands, to have survived
the change of sovereignty. The great body of our laws is of Spanish origin and comes to us and is
enforced by us upon the theory that it has survived. As a result, this court is continually called upon to
adjudicate the question whether a given Spanish law is still in existence. Parties are unceasingly
asserting rights of property and of person based upon such laws. These assertions are as frequently
denied. It is subject over which uncertainty continually holds sway. It was a question, however, which
had to be met and solved by the Governor-General. It could not be avoided. It confronted him squarely
and insistently, because a condition and not a theory was thrust in his face. It appears that, prior to the
conquest and occupation of the Islands by the Americans, there was in force here a royal decree giving
the Spanish Governor-General power, when certain conditions conjoined, to expel domiciled
foreigners. That decree reads:
OFFICE OF THE COLONIAL SECRETARY.
No. 607.
EXCELLENCY: In view of the proceedings relative to the consultation had by the Audiencia de
Manila with the government, through the supreme court, the latter having rendered a report on the
subject-matter thereof, which refers to deportations, the case was forwarded for report to the political
division of this office, and His majesty the King (whom may God preserve), and in his name the
Queen Regent, passing upon the report, has been pleased to decide that:
1. According to the laws 18, 19 and 20, title 8, book 7; 35, title 15, book 2, title 4, book 3; 61, title 3,
book 3, the royal cedula of May 19, 1819, and the special royal order of April 20, 1881, GovernorGeneral of the Philippine have power to determine the legal expediency of the deportations which they
may deem necessary for the preservation of public order.
2. The record in any such cause commenced by the Governor-General must be transmitted to the
supreme government of the nation, in the form and manner provided by the Laws of the Indies, in
order that it may take cognizance of the reasons which he may have for ordering the deportation.
3. The kind and form of justification which should appear in the record is left to the reasonable
discretion of the Governor-General.
4. The Governor-General may deport any person who, had he been prosecuted in the courts of justice
under a criminal charge, would have been pardoned, as expressed in law 2, title 8, book 7, of the
Recompilacion of the Laws of the Indies.
5. With respect to such persons as we tried and acquitted by the courts of justice, if the charges, the
reason for the deportation, were the subject-matter of the prosecution, then, bearing in mind the
sanctity of a matter which has become res adjudicata, deportation by the Governor-General is
improper.

Page 299 of 557

6. These deportations must be decreed by the Governor-General in person, and not by his tenientes
and auxiliares (lieutenants and assistants), in accordance with law 19, title 8, book 7, of the
Recompilation of the Indies.
7. The laws in force in the Philippines relative to deportations are those of the Indies before
mentioned, so that the lack of a faithful and exact compliance with requisites prescribed therein for the
exercise of such power constitutes the crime defined in articles 211 and 212 of the Penal Code in force
in the Philippines.
8. The right to appeal to the audiencias, granted by royal order of May 25, 1847, from the action taken
by the Governor-General, was abolished by the decree of November 28 of the same year, which
provided in article 7 that orders issued by the Governor-General in matters pertaining to government
or to the exercise of his discretional powers. can only be revoked by the Supreme Government.
The foregoing by this royal order is communicated to you for your information and the consequent
effects. May God preserve Your Excellency many years, Madrid, August 2, 1888. (Signed) Ruiz
y Capdepon.
To the Governor-General of the Philippine Islands:
Comply with and observe the above royal order and issue to the provincial chiefs the necessary orders
thereunto pertaining. (Signed) Weyler.
The question was thus squarely up. Did that law survive the American occupation? An answer must be given
by the Governor-General, if he believed his duty to the State required him to act if he had the power. Once
more he must interpret, construe, and determine; and in doing so he must tread legal mazes as intricate and
bewildering as ever were trodden by a judge at court.
Having so far considered the processes which the mind of the Governor-General must pass through and the
determinations which he must make in arriving at a conclusion as to whether he may or may not act in the case
given, it is now necessary to inquire what is the nature of those processes and determinations. Evidently they
involve the element of discretion of judgment as a result of investigations a conclusion as to the
existence of a law, an authority, a power, which lies at the very doorway of his activities. His judgment
operates in a field over which he has general and exclusive jurisdiction and embraces a subject concerning
which he must judge alone. It includes also a determination as to the character, quality, and extent of the
person against or in reference to whom that power is to operate. Every act of enforcement of whatever law, real
or imaginary, must necessarily an inevitably be preceded by two determination. First, is there a law at all; and,
second, if there is, what is meaning of it; what is its interpretation? These determinations must always be
made. They were laid upon the Governor-General by the very nature of his functions an executor of law. It
is evident, therefore, in view of these considerations, that such functions involve much that is judicial. The
executive and judicial functions here merge and overlap each other to a conspicuous extent; and it becomes at
once apparent that the functions exercised by the Governor-General in reaching a conclusion to act in given
case, and especially in the case before us, were, in their nature, essentially judicial. If a judge had done the
things which the Governor-General did in arriving at this conclusion, his act and determination would
unquestionably have been judicial. Are they any the less so, in their essential nature, because a GovernorGeneral and not a judge was the ]actor? The methods pursued by the two, Governor-General and judge, are not
all different. The subject-matter is precisely the same. The mental processes involved are identical. The
discretion used is the same. The objects in view are wholly similar the application of a public law to
personal misconduct; the protection of the public against the malicious activities of a corrupt individual.
It now becomes necessary to determine what would be the civil responsibility of a judge acting upon the same
questions and making the same determinations involved in the activities of the Governor-General complained
Page 300 of 557

of in this suit. The reason for this necessity is found in the analogy which I suppose to assert between the civil
liability of a judge performing judicial functions and of the Governor-General exercising essentially the same
attributes. The result of that analogy is that if a judge, performing the acts complained of, would not be civilly
liable, then the Governor-General is not.
I, therefore, proceed to discuss the civil liability of judges. I deal with it in three aspects: First, where the judge
acts within the limits of his jurisdiction, and, second, where he acts in wholly without jurisdiction, and third,
where he acts in "excess of jurisdiction." This discussion of the subject in such threefold aspect is rendered
necessary by reason of the claim made in this case that the Governor-General, in whatever he did or brought
about in the expulsion of the complainant and his companions, was wholly without authority, power, or
jurisdiction and for that reason he is civilly responsible for whatever damages such illegal acts may have
caused.
My position in the discussion of the question is that a judge may, in reality, act wholly without power,
authority, or jurisdiction and still not be civilly liable; that jurisdiction ought not to be, and can not be, a vital
a controlling element in determining his liability; and that, if the question resolved by the judge be one
whose determination required the exercise of the judicial functions, he is not civilly liable for damages caused
by an act performed in pursuance of such determination even though he acts wholly without jurisdiction. I
further contend that the doctrine making jurisdiction the test of liability is illogical and unsound, and that the
doctrine of excess of jurisdiction, carried to its logical conclusion, is a complete refutation of the original
theory.
It is a universal statement of text writers that "no person is liable civilly for what he may do as judge while
acting within the limits of his jurisdiction." This is also a settled principle of law as applied by the courts. This
doctrine is so thoroughly established that no authority need be cited to sustain it. It is also universally asserted
by the text writers, and maintained by many courts, that jurisdiction is the sole and exclusive test of judicial
liability, and it is affirmed that a judge is always civilly liable if he act without jurisdiction. Mr. Cooley in his
work on Torts (2nd ed., p. 486) says:
Every judicial officer, whether the grade be high or low, must take care, before acting, to inform
himself whether the circumstances justify his exercise of the judicial function. A judge is not such at
all times and for all purposes; when he acts he must be clothed with jurisdiction; and acting without
this, he is but the individual falsely assuming an authority he does no possess. The officer is judge in
the cases in which the law has empowered him to act, and in respect to persons lawfully brought
before him; but he is not judge when he assumes to decide cases of a class which the law withholds
from his cognizance, or cases between persons who are not, either actually or constructively, before
him for the purpose. Neither is he exercising the judicial function when, being empowered to enter
one judgment or make one order, he enters or makes one wholly different in nature. When he enters or
makes one wholly different in nature. When he does this he steps over the boundary of his judicial
authority, and is as much out of the protection of the law in respect to the particular act as if he held no
office at all. This is a general rule.
This same rule, it is alleged, is laid down by many authorities, among them being: Marshalsea case (10 Coke,
68b; 2 Adol. and E (N. S.) 978); Piper vs. Pearson (2 Gray, 120); Van Ky., 27); Bradley vs. Fisher (13 Wall.,
335); McCall vs. Cohen (16 S. C., 445); Bigelow vs. Stearns (19 Johns., 39); Vosburg vs. Welch (11 Johns.,
175); Terry vs. Wright (9 Colo. App., 11); Lange vs. Benedict (73 N. Y., 12); Austin vs. Vrooman (128 N. Y.,
229).
When, however, it became necessary to put this rule into practical operation, to apply it to a particular matter,
it was found that it did not meet the necessities of the case. Its application did not work justice. It was found
imperfect and inadequate. It was seen to be lame and halt. It condemned in one cases and relieved in another
when there existed no real distinction between them, either in logic or justice. While this was not admitted,
Page 301 of 557

perhaps, in words by the courts, it was, nevertheless, seen and felt. Accordingly, laboring under the pressure of
these conditions and to avoid the anomalous results flowing from a rigid application of the theory, they
announced the doctrine of "excess of jurisdiction."
This doctrine holds "that judges of superior and general jurisdiction are not liable to civil actions for their
judicial acts when such acts are in excess of their jurisdiction." (Ross vs. Griffin, 53 Mich., 5 ; Grove vs. Van
Duyn, 44 N. J. L., 654; Randall vs. Brigham, 7 Wall., 523; Jones vs. Brown, 54 Ia., 74; Lange vs. Benedict, 73
N. Y., 12: Yates vs. Lansing, 5 Johns., 282; Robertson vs. Parker, 99 Wis., 652; Willcox vs. Williams, 61
Miss., 310; Calhoun vs. Little, 106 Ga., 336; Miller vs. Seare, 2 W. Bil., 1141; Ackerly vs. Parkinson, 3 M. and
S., 411; Austin vs. Vrooman, 128 N. Y., 229; root vs. Rose, 6 N. D., 575; Webb vs. Fisher, 109 Tenn., 701; U.
S. vs. Bell., 135 Fed., 336; English vs. Ralston, 112 Fed., 272; 85 Fed., 139 Bradley vs. Fisher, 13 Wall., 335.)
As before stated, the courts, in laying down the doctrine that a judge is exempt from civil liability if he acts
within his jurisdiction, also assert at the same time that he is liable if he act without jurisdiction. In the same
way, strange to say, the courts who lay down the doctrine that a judge is not liable civilly even if he act in
excess of jurisdiction, also assert that he is liable if he act without jurisdiction. In other words, whether it be a
court which asserts the doctrine of nonliability with jurisdiction or whether it be one who asserts the doctrine
of nonliability with excess of jurisdiction, they all concur in asserting liability in case the court acts with lack
of jurisdiction. T o put it in a different way: The decisions make no distinction between cases where the court
acts with jurisdiction and those where he acts in excess of jurisdiction; but they do make a crucial distinction
between those cases where he acts in excess of jurisdiction and those in which there is a lack or want of
jurisdiction. It is accordingly evident, under this judicial conception, that, so far as the civil liability of the
judge is concerned, acting completely with jurisdiction and acting completely in excess of jurisdiction mean
exactly the same thing; while acting completely in excess of jurisdiction and acting completely without
jurisdiction mean exactly opposite things. This inference is the inevitable one because the judge is entirely
exempt if he act within his jurisdiction, and he is wholly immune if he act in excess of jurisdiction; but if he act
without jurisdiction, he is fully liable.
I confess my inability to see how two conditions so different in their nature and characteristics as acting with
jurisdiction and acting in excess of jurisdiction can be held to produce the same result having in mind
always the proposition universally asserted by the courts to be the basis of that difference in liability, that the
nature of the judge's act, i.e., whether it makes him civilly liable or not, depends entirely on jurisdiction. That
the jurisdiction and excess of jurisdiction are conceptions are wholly different is perfectly evident from the
standpoint of language alone. That their legal nature is entirely different will appear when we discuss want of
jurisdiction and compare it with excess of jurisdiction.
If "excess of jurisdiction" means anything different from "want of jurisdiction," under the doctrine of excess of
jurisdiction as it is asserted, it lies not at all in the essential nature of those conditions but, rather, in the
accidental circumstance stated in the decisions, that the court, having once acquired jurisdiction of the subjectmatter and the parties, any act of his during the proceedings which is beyond or outside of real powers is in
"excess of jurisdiction merely, and has a different quality from that which the same act would have if there had
been no jurisdiction in the first instance. In other words, jurisdiction having once been present in the cause, it
continues to shed its beneficent influence over the court and his acts, no matter where he goes or what he does.
This is the distinctive feature of the doctrine of excess of jurisdiction as that doctrine is laid down. Jurisdiction
once present is, under that doctrine, the touchstone of nonliability. As a necessary consequence, the court who
lacks this protective genius of jurisdiction may lose his fortune and perhaps his liberty, although he may
perform exactly the same acts as he who is wholly excused because he exceeds his jurisdiction. It becomes
necessary to inquire, therefore, in what way of excess of jurisdiction differs essentially from lack of
jurisdiction, for, if they produce results so violently in opposition, there must be a wide and essential difference
between them a difference wholly unlike that set forth in the decisions.
And first, as to excess of jurisdiction:
Page 302 of 557

To exceed jurisdiction is to go outside of it; to pass beyond its limits. To exceed is "to go beyond; to go too far;
to pass the proper bounds or measure." "Forty stripes he may give him and not exceed." Excess is "the state of
going beyond limits." Excess of jurisdiction is the state of being beyond, i.e., outside the limits, of jurisdiction.
This is the only definition of excess of jurisdiction which the term will permit. This is precisely the definition
given in the very decisions which lay down the doctrine, One of the first cases of in the United States to
present the doctrine of excess of jurisdiction was that of Lange vs. Benedict (73 N. Y., 12). In that case it
appeared that the defendant presided as judge at a regular session of the United States Circuit Court, before
which plaintiff was tried and convicted of a statutory offense punishable by a fine or imprisonment. He was
sentenced by the defendant to pay a fine and to be imprisoned. Plaintiff paid the amount of the fine to the clerk
of the court, who paid it into the United States Treasury. The plaintiff was also imprisoned. A writ of habeas
corpus was granted by and returned into said court during the same term, and, on such return, defendant,
holding the court and as judge thereof, vacated and set aside the sentence, and resentenced the plaintiff to be
imprisoned for the term one year. Under this sentence the plaintiff was imprisoned. Such proceedings were
subsequently had that the Supreme Court of the United States (Ex parte Lange, 18 Wall., 163, 176) adjudged
the resentence to have been without authority and void. In deciding the case on the proceedings mentioned the
Supreme Court of the United States said (Ex parte Lange, supra):
We are of the of the opinion that when the prisoner, as in this case, by reason of a valid judgment, had
fully suffered one of the alternative punishments to which alone the law subjected him, the power of
the court to punish father was gone. That the principle we have discussed then interposed its shield,
and forbid that he should be punished again for that offense. The record of the court's proceedings, at
the moment the second sentence was rendered, showed that in that very case, and for that very
offense, the prisoner had fully performed, completed, and endured one of the alternative punishments
which the law prescribed for that offense, and had suffered five days' imprisonment on account of the
other. It thus showed the court that its power to punish for that offense was at an end. Unless the
whole doctrine if our system of jurisprudence, both of the Constitution and the common law, for the
protection of personal rights in that regard, are a nullity, the authority of the court to punish the
prisoner was gone. The power was exhausted; its further exercise was prohibited. It was error, but it
was error because the power to render any further judgment did not exist.
Commenting on this same case the Supreme Court of the United States in the case of Ex parte parks (93 U. S.,
23) said:
But after the thorough investigation which has been given to this subject in previous cases,
particularly those of Ex parte Yager (8 Wall., 85( and Ex parte Lange (187 id., 163), it is unnecessary
to pursue the subject further at this time. The last-mentioned case is confidently relied on as a
precedent for allowing the writ in this case. But the two are totally unlike. In Ex parte Lange we
proceeded on the ground that, when the court rendered it second judgment, the case was entirely out of
his hands. It was functus officio in regard to it. The judgment first rendered had been executed and
satisfied. The subsequent proceedings were, therefore, according to our view, void.
In spite, however, of the fact that the act of the Supreme Court of the United States had held that the act of the
court in resentencing plaintiff was absolutely without jurisdiction and void, nevertheless, the court of appeals
of the State of New York, deciding the action against the judge for damages (Lange vs. Benedict, supra) after
the rendition of the judgment of the Supreme Court of the United States on the question of the resentence, said,
in giving a definition of the phrase "excess of jurisdiction:" "The act of the defendant was then one in excess of
or beyond the jurisdiction of the court." "He had jurisdiction of the cause originally. That jurisdiction had
ceased. His further acts were beyond or in excess of his jurisdiction." "If it be admitted that at the instant of the
utterance of that order, jurisdiction ceased, as is claimed by the plaintiff, on the strength of the opinion in Ex
parte Lange (supra), as commented upon in Ex parte Parks (93 U. S., 18), and that all subsequent to that was

Page 303 of 557

coram non judice, and void; still it was so, not that the court never had jurisdiction, but that the last act was in
excess of jurisdiction.
If the intention of the New York in that case was to use the phrase "excess of jurisdiction" in the sense that
there was an essential and vital distinction between it and "want of jurisdiction," a distinction so essential and
vital as to warrant liability in the one case and nonliability in the other, I am in entire disagreement with its
conclusion. If I were unsupported in my disagreement, I should hesitate long and doubt much before I differed
with authority so eminent. But the Supreme Court of the United States, as shown by the quotation given, has
held in that very case that the district court, in resentencing Lange, acted with complete and utter absence of
jurisdiction. I am in perfect accord with the use of the phrase "excess of jurisdiction" when it describes a
particular legal condition which, in some of its colorings, some of its accidental or incidental features, is
somewhat different from the legal condition "absence of jurisdiction." But I am not in accord with its use if it
is meant to describe something which is essentially different in quality, that is, a different thing, from excess of
jurisdiction. If the difference meant to be shown is, in its nature, the same difference which is indicated
between two horses when it is said that one is black and the other bay, I agree. But if it is meant thereby to
indicate that one is a horse and the other a cow, I disagree. The two legal conditions are essentially and really
identical. Their coloring may be different but they are the same animal. The question before us is not whether
there is such a difference in markings that the two conditions ought to be given different names as a matter of
convenience, but, rather, is there a difference so important, so essential, so vital that we may established upon
that difference as an eternal foundations a just principle of law which wholly saves in the one case and utterly
destroys in the other. The real and practical question for us "What does that difference amount to? What results
may it justly produce to the parties and to the court? What results must it necessarily produce.
In the case of Clarke vs. May (2 Gray, 410) a justice of the peace, having jurisdiction of the cause, summoned
a person to appear before him as a witness therein. The person disobeyed. The case was tried and ended.
Thereafter, the justice issued process to punish for contempt the person who had disobeyed his subpoena. He
was arrested, fined, and not paying, was committed. It was held and jurisdiction of magistrates in such cases
was only incidental and auxiliary to the trial of the cause in which the witnesses were summoned; and could
not be legally exercised, except during the pendency of such cause; that after its final disposition by a
judgment, the authority to punish such contempt ceased, and that Clarke was therefore illegally committed. . . .
Although he had jurisdiction of the subject-matter, he was empowered by law to exercise it only in a particular
mode, and under certain limitations. having disregarded these limitations, and exercised his authority in a
manner not sanctioned by law, he has been guilty of an excess of jurisdiction, which renders him liable as a
trespasser to the injured party.
In the case of Gordon vs. Longest (16 Peters, 97), where the defendant took the proper steps, under a statute
which required a State court under certain conditions to transmit the cause to the United States courts, to
remove an action brought against him in the State court to the United States court, and, where the State court
persisted notwithstanding such steps, in trying the cause, the court said:
This being clear in the language of the above act, it was the duty of the State court to proceed no further in the
cause. And every step consequently taken, in the exercise of a jurisdiction in the case, whether in the same
court or in the Court of Appeals, was coram non judice.
The case of Austin vs. Vrooman (128 N. Y., 229) is one very similar to the one last mentioned. There the
defendant, a justice of the peace, caused the plaintiff to be arrested on a charge of supplying diluted milk to a
butter factory. Plaintiff, on being arraigned, pleaded not guilty, waived preliminary examination and offered
bail for his appearance before the next grand jury. The offer was overruled by the defendant. Her was tried,
found guilty, and sentenced to pay a fine and to be imprisoned until paid, not to exceed ninety days. Pursuant
to such sentence he was confined in the county jail. The statute making the act of plaintiff a crime provided
that when a person charged with a violation of the Act should be brought before a justice of the peace, he
should have the right to elect to be tried by a jury after indictment, and on such election the justice could not
Page 304 of 557

proceed to try him but could only hold him to a court having authority to inquire, by intervention of a grand
jury, into offenses triable in the county. In this case the court said, after referring to the case of Gordon vs.
Longest (supra), in which it was held that, in a case very similar in principle to the one under consideration,
any action taken by the State court after refusing to transmit the cause before it to the United States court was
wholly void:
Here in the course of proceedings which he was forced to entertain, and in the case of one over whose
person he has properly acquired jurisdiction, the justice is confronted with the necessity of deciding a
question depending upon the construction to be given to a statute, and that question must be decided
by him one way or the other before he can take another step in those proceedings which, up to that
moment, have been legally and property pending before him and over which he has had full and
complete jurisdiction. It seems plain that his decision upon the question is one in the course of a
proper exercise of the jurisdiction first committed to him, and that his error in deciding that he had
jurisdiction to proceed was an error of judgment upon a question of law, and that he is therefore, not
responsible for such error in a civil action. It is unlike the case where a justice of the peace proceeded
to try a civil action for assault and battery. (Woodhard vs. Paine, 15 John., 492). The justice never had
in such case obtained jurisdiction over the subject-matter and he could not obtain it by deciding that he
had it. The case falls under the principle of law that where a judge never has had jurisdiction over the
subject-matter, he acts as a trespasser from the beginning in assuming it, and his decision that he has it
is no protection to him. I know it was stated in Gordon vs. Longest (16 Peters, 97), in a case where the
defendant took the proper steps to remove an action brought against him in the State court to the
United States court and where the judge of the State court persisted, notwithstanding those steps, in
trying the case, that every step subsequently taken by the State court in the exercise of jurisdiction was
coram non judice. Yet in such a case the question is put whether the State judge would be liable for
proceeding with the case in the honest exercise of his judgment.
Being thus informed of the judicial meaning of the phrase "excess of jurisdiction," it becomes necessary,
second, to determine what is meant judicially by the expression "lack of jurisdiction." An example frequently
given by the courts to express what is meant by lack of failure of jurisdiction is that of a justice of the peace
taking cognizance of and trying a civil action for assault and battery. Over such actions jurisdiction of the
peace. In fact, the law expressly prohibits them from taking cognizance of such actions. In such case, the
justice never obtains jurisdiction over the subject-matter. He acts wholly without any authority or jurisdiction.
A case illustrating want of jurisdiction is that of Piper vs. Pearson (2 Gray, 120). There a justice of the peace
of the county of Middlesex tried an individual named Russ for an offense committed within the district of
Lowell. By statute said justice had no power or authority to take cognizance of offenses committed "within the
district of Lowell." The court said: "In the case at bar, the defendant had no more power to entertain
jurisdiction of the complaint against Russ any other individual in the community." If a magistrate acts beyond
the limits of his jurisdiction, his proceedings are deemed to be coram non judice and void." "If he has no
jurisdiction of a cause, he can not sit as a magistrate to try it, and is entitled to no protection while acting
beyond the sphere of his judicial power. His action is thus extrajudicial and void."
This case, however, is not one which ought fairly to be taken as generally illustrative of that class wherein the
court acts wholly without jurisdiction, inasmuch as here whether or not the court had jurisdiction was a
question] of fact. Whether or not the crime was committed "within the district of Lowell" was not a question of
law. Nevertheless, the same principle would have been involved if there had been a dispute as to the district
within the crime was actually committed and the court had decided that question upon conflicting evidence.
In the case of Bradley vs. Fisher (13 Wall., 335), the court gave the following as illustrating a condition of
complete lack of jurisdiction.
Thus, if a probate court, invested only with authority over wills and the settlement of estates of
deceased persons, should proceed to try parties for public offenses, jurisdiction over the subject of
Page 305 of 557

offenses being entirely wanting in the court, and this being necessarily known to its judge, his
commission would afford no protection to him in the exercise of the usurped authority.
Having seen from the adjudicated cases the meaning given to the phrases "excess of jurisdiction" and "want of
jurisdiction," it remains to note what has been judicially declared to be the difference between them. The case
last cited contains a statement of that difference. Immediately following the quotation taken from that case and
set forth above appear these words:
But if on the other hand a judge of a criminal court, invested with general criminal jurisdiction over offenses
committed within a certain district, should hold a particular act to be a public offense, which is not by the law
made an offense, and proceed to the arrest and trial of a party charged with such act, or should sentence a party
convicted to a greater punishment than that authorized by the law upon its proper construction, no personal
liability to civil action for such acts would attach to the judge, although those acts would be in excess of his
jurisdiction, or of the jurisdiction of the court held by him, for these are particulars for his judicial
consideration, whenever his general jurisdiction over the subject-matter is invoked. Indeed some of the most
difficult and embarrassing questions which a judicial officer is called upon to consider and determine relate to
his jurisdiction, or that of the court held by him, or the manner in which the jurisdiction from liability which
obtains for errors committed in the ordinary prosecution of a suit where there is jurisdiction of both subject and
person, applies in cases of this kind, and for the same reasons.
This excerpt illustrates the difference between excess of jurisdiction and lack of jurisdiction as it is universally
presented by text writers as well as by courts.
The suggestions made after the discussion of the case of Lange vs. Benedict are, in principle and in effect,
applicable to the cases just presented. Nothing could be clearer than that the court in Clarke vs. May, acted
wholly without jurisdiction. It is of no consequence what it is called, whether excess of jurisdiction or failure
of jurisdiction; it still remains the same thing. The court itself said so when it used the words "after its final
disposition by a judgment, the authority to punish such contempt ceased, and that Clarke was therefore
illegally committed." The case of Austin vs. Vrooman is very like that of Gordon vs. Longest, wherein the
Supreme Court of the United States held that the lower court acted wholly without jurisdiction in retaining the
cause before it and proceeding to its disposition.
Being now fully informed of the meaning of the two legal conditions, "excess of jurisdiction" and "lack of
jurisdiction," and also of the difference between them as presented in the decisions of the courts, I now desire
to consider whether this difference is worthy in any manner of effecting the exactly opposite legal results
which it is alleged they produce. If they produce results so unlike, they should be so different in their essential
natures as to be plainly and easily distinguishable. Yet in spite of that, after a careful consideration of every
adjudicated case upon the subject within my reach, I have been forced irresistibly to the conclusion that there is
not, really and intrinsically, the slightest difference between them. The alleged difference is a fiction of law,
pure and simple, born of the necessity to escape the logical but wholly unjust and indefensible consequences of
a rule of liability based on no sound principle of law and incapable of defense upon any theory of logic or
justice.
While we have seen from the cases cited the different circumstances which attended the courts up to the time
when they performed the acts complained of, namely, that the one never had jurisdiction at all and the other
had it at first but abandoned it later, we have nowhere seen in those authorities nor why they should produce
results so violently in opposition. We have also seen from those cases that excess of jurisdiction is the estate of
being beyond the limits of jurisdiction, i.e., outside of the power and authority conferred so far outside
indeed that the act of the court is coram non judice and void. (Gordon vs. Longest, 16 Peters, 97; Ex parte
Lange, 18 Wall., 163; Clarke vs. May, 2 Gray, 410; Ex parte Park, 93 U. S., 23.) We have also noted from
those decisions that the only characteristic of excess of jurisdiction, the quality and the only quality which
distinguished it from lack of jurisdiction, that which gave it its peculiar and distinctive virtue, was that, in
Page 306 of 557

excess of jurisdiction the court had jurisdiction at the beginning of the cause, but lost it later; whereas in lack
of jurisdiction the court never had jurisdiction at all.
Now, if a court is really outside of the limits of his jurisdiction, what difference does it make, as to his liability
for subsequent acts, when he arrived there? Ought the time when he finds himself outside to have any
significance whatever? Should the fact that he was outside at the beginning of the cause, instead of when it had
run half of its course or more, have any force or effect? Is the judge who was never inside the jurisdictional
inclosure any more outside of it than he who, having once been within, voluntarily steps wholly outside? Both
being completely outside, is one in worse position, legally or morally, than the other? Does the mere fact that
the one had never been inside necessarily make him a greater malefactor than the other who comes as
completely out, having once been in ? Ought the legal consequences of their acts to be different when both are
acting from exactly the same basis, viz, outside of their authority? One who steps from his house into the street
is as much outside the structure as though he had never entered it; and while there, he is as unprotected from
the elements as though he had never had a roof over his head. Although he may return to his house and enjoy
again its shelters and comforts, still he can never change the fact that he once stood unprotected in the street,
that the changing wind had once buffeted him as it willed, that the storms had once drenched him to the skin,
and that the frost had once bitten him to the bone. He who owns a million of money and throws it into the sea
remains in as penniless a poverty as he who never owed a dollar in all his life. The court who, having once
been clothes in the garment of jurisdiction, divests that garments, stands forth as judicially naked as he who
had never robed with the vestments of authority. So, the court that once had jurisdiction of a cause and divests
that power by his own act stands thereafter as bereft of judicial authority as though he had never acted under
sanction of the law. As a matter of language, that is the only meaning;" as a matter of fact, that is the only
definition claimed for it.
I am fully aware that a judge of a court which acts wholly without jurisdiction is, in a sense, a usurper. I know
that a judge who proceeds in complete absence of jurisdiction, really and effectually by such act, makes a law
to fit the case. In other words, he legislates. I admit that to permit a judge thus to make a law and then to
adjudicate it also is to permit a approach to tyranny. I am fully aware that this is the essence of the argument
against the immunity of the judge who thus acts. It must not be forgotten, however, that we are discussing
whether there is an essential difference between lack of jurisdiction and excess of jurisdiction. If therefore, we
find that there is fully as much tyranny in the one as in the other , what matters it how much tyranny there may
be in lack of jurisdiction? The cry of tyranny there may be in lack of jurisdiction will be effectually stopped if
it appears that acting in excess of jurisdiction, the thing which is permitted by the courts wholly to excuse
effects the same result. That the one is as tyrannical as the other can not be doubted. A judge, having by law
general jurisdiction criminally, who declares a state of facts presented to him to be a crime within the
provisions of that law, when in reality it is not a crime at all, creates a law as distinctively and completely as
does the judge who decided that there is a law giving his jurisdiction criminally, when in fact no such law
exists. In such case, he declares a crime to exist when it really does not. To enable a court to declare an act a
crime, there must be a law making it a crime. To declare an act a crime when there is no law making it such, is,
so far as that particular case and all others like it are concerned, to make a law by judicial fiat. What signifies it
that the court has jurisdiction of all larcenies if he declares an act a lacerny which in truth and reality is not?
The fact that he has jurisdiction of all lacernies none the less makes his erroneous act the creation of a new
law. What does it signify that hr once had jurisdiction when he thus, by his naked fiat, makes criminal a act
otherwise legal and moral, and thereby convicts and imprisons an innocent man in violation of the law of the
land. He could go no farther, could do no more if he acted wholly without jurisdiction from the beginning, Of
what significance is it that in the one case he acts in excess of jurisdiction and in the other without jurisdiction
when he does exactly the same thing and produces exactly the same result in both cases?
We have already seen that the only difference which any court or text writer has been able to point out between
the two cases is the fact that in case of excess of jurisdiction the court had jurisdiction of the subject-matter at
the beginning whereas in the other case jurisdiction was never present at all. The only use which courts and
text writers have made of that difference, the only use in fact that could possibly be made of it, is that, having
jurisdiction of the subject-matter, the court then has the power to determine whether or not a given set of facts
Page 307 of 557

presented to him to induce his action falls within his jurisdiction; whereas, in the case of failure of jurisdiction
there being in fact no law conferring powers, the court had no power or authority to determine anything
whatever. It is urged also than an indispensable prerequisite of the effective administration of justice is that a
judge, having jurisdiction, be allowed to decide whether a given set of facts is within the law by which his
jurisdiction is conferred. But is it any more necessary and essential that he be allowed to decide that question
than it is that he be allowed to determine whether he has any power at all in the premises? Is it more essential
for him to be allowed to decide whether a certain set of facts is or is not within his powers than it is to allow
him to determine whether or not he has powers? Is it any more an inevitable prerequisite that he be permitted
to determine the extent of his powers than that he be allowed to decide whether he has powers? If he is a court,
that very fact makes it necessary to determine what his powers are. To do that he must not only determine what
the laws are and what they mean, but he must also determine whether there is a law. It is sometimes a very
much more difficult question to determine whether there is any law at all than it is to decide what the law
means when its existence is admitted. But, comes the suggestion, the court in such cases having once had
jurisdiction of the subject-matter "no personal liability to civil action for such acts(in excess of jurisdiction)
would attach to the judge, although those acts would be in excess of his jurisdiction or of the jurisdiction of the
court held by him, for these are particulars for his judicial consideration, . . . (Bradley vs. Fisher, supra.) This
suggestion may be answered in two ways:
It means nothing to say that the law required the lower court to act upon the question before it, it having
jurisdiction of the cause at the time and it already having proceeded therewith to the point where it was
confronted with the question concerning which it erred. Exactly the same thing, in effect and in principle, may
be said of the court which proceeded to take cognizance of a cause in entire absence of authority to do so. For,
the law also requires a court to act whenever a question is presented to it, no mear if it be one over which it has
no power or authority whatever. Law and necessity alike compel to him. If he have no jurisdiction or authority,
he must, nevertheless, act. He must declare he has not and refuse to proceed. But the point is, he must act, he
must decide, he must adjudicate; and he must do so whether the question of his jurisdiction be clear or
doubtful. In both cases, excess of jurisdiction and failure of jurisdiction, the courts are confronted with exactly
the same necessity, each must act. The question confronting one court, viz, whether it has jurisdiction or not,
may be much more doubtful and far more difficult of solution than that which faces the other. Yet one is liable
and the other not. I have looked in vain for a valid or convincing reason why, both being in error, the judge of
one court should be destroyed and the other saved.
This suggestion also contains an admission rather than an argument an admission which destroys absolutely
the theory that the crucial test in determining the civil liability of a judge is that of jurisdiction. This suggestion
admits that the thing which excuses is not jurisdiction, but judicial action; not jurisdiction, but the exercise of
the judicial function; not jurisdiction, but judicial consideration;" and that the only reason why the one excuses
and the other does not is the opportunity which the former furnishes for the use of the judicial faculty. We
must conclude, therefore, since it is not jurisdiction, but judicial action, which excuses, that whenever and
wherever a court exercises the judicial function, he will not be personally liable civilly for the result of his
action, and this utterly regardless of whether he ever had jurisdiction or not. and that is precisely what i am
contending for. I regard the doctrine of jurisdiction as counter to that public policy which lies at the base of and
is the sole and whole reason for the immunity of judges from civil liability. That public policy demands that a
judge shall be protected when he is a judge, not when he has jurisdiction. He is a judge when he acts like a
judge; that is, when he acts judicially. All that public policy requires in order to extend its perfect protection
over the judge is that the question in which the error is made shall be a judicial question. In other words, it is
the nature of the question involved which is transcendentally important, and not the position in which the judge
finds himself legally, before, at the time of, or after his error. The question is "What kind of question were you
deciding when you made that error?" not "what was your position before or after you made it?" It is, it can be
of no consequence whatever whether there be a failure of jurisdiction or excess of jurisdiction. Is the question
for determination one which requires the exercise of judicial functions for its resolution? If it is then that is an
end of the matter of liability, utterly irrespective of jurisdiction. An error by which a court induces itself to act
wholly without jurisdiction is an error of law, an error of judgment after consideration, of exactly the same
nature as that which induces a court to act in excess of jurisdiction. It is an error of judgment as to whether he
Page 308 of 557

has any power at all in the premises. It is an erroneous determination of a question which, by virtue of the
fundamental constitution of his office, is inexorably forced upon him for determination as his very first act in
every case. Public policy, indeed, public necessity, demands that he act, if he is judge. The safety, stability, and
perpetuity of the State and its institutions imperatively require him to act. Therefore, being thus driven to act,
and his first act being necessarily and inevitably to determine whether his authority comprehends the subjectmatter presented to him, can it possibly be true that public policy, the very force that drove him to act, will
punish him for such action if he has exercised the very functions with which that public policy had endowed
him? I am aware that it may be said that public policy does not protect those who act wholly without authority.
But my contention is that he has authority. The fact that he is a judge means nothing else. That one has been
named a judge is no idle thing. It is to be presumed that he has some powers, that some authority attaches to
the office, or it would not have been created. As a judge he has responsibility of the most solemn and
important character. He has duties correspondingly solemn and important. By far the greatest and most
important of these is to determine what those powers are. But this is simply the determination of the question
of jurisdiction. This is, as we have seen already, a judicial determination of the purest character. If he
determines that question wrongly and proceeds thereafter to act, he acts wholly without jurisdiction. But is he
more guilty or culpable than the judge who, with equal error, determined a similar question of jurisdiction but
at a different period of the cause? Is it possible that one can be appointed to one of the highest and most august
positions in the gift of man, and still not be able to determine what he may do without subjecting himself to the
risk of financial ruin, and may happen, of imprisonment? If so, his office is not only a monstrous farce, but is
also a thing which deserves, as it certainly will receive, the contempt and the jeers of mankind. I repeat that a
judge acts judicially as purely and perfectly when he is determining, at the very inception of the proceeding,
the question of whether or not he has any jurisdiction whatever in the premises as he does when, later in the
case, he decides what the extent of that jurisdiction is. That is a judicial determination as clearly and
unmistakably as would be his decision that A was entitled to a judgment against B only of a very much
more fundamental character. So that, if it is the use of the judicial function which absolves, why should the one
be excused with the respect of the community and the other condemned with ruin and disgrace? But, comes the
reply, a judge id not a judge if he have no jurisdiction; and he can not exercise judicial functions unless he is a
judge. Therefore, if he have no jurisdiction he can not exercise judicial functions. Not being able to exercise
judicial functions, he cannot, as a necessary consequence, be excused from liability, inasmuch as immunity
from liability springs solely from the exercise of such functions. But that logic is fatally defective. Its major
premise, namely, that if he have not jurisdiction a judge is not a judge and can not, therefore, exercise judicial
functions, is wholly false? How is he to know whether he has jurisdiction or not? By what process does he
determine whether or not he has any power at all? Does that determination come to him by inspiration? Is it
handed to him ready-made? How does he arrive at the conclusion that he has jurisdiction or that there is a
complete failure of it? Why does he arrive at one of these conclusions and not the other; and why does he not
arrive at both? Is he simply a man when he determines the question of jurisdiction but a judge when he decides
every question in the case? The answer to these question is simple. The determination by the court of the
question whether he has not jurisdiction is a judicial determination. The indispensable prerequisite to the
simplest and most elementary judicial act of any court is the determination of the question of jurisdiction. It is
utterly impossible for him to act in the simplest matter that can be brought before him without first making that
determination. It is an inevitable necessity which is inexorably required to precede everything else in the
functions of every court. It is thrust upon him instantly with the appearance of the first suitor in his court. It is
the indispensable prerequisite of every judicial act. It was elemental in the creation of the judicial office. The
implacable forces that created the office, the unalterable nature of its functions, drive him irresistibly to that
primordial determination. That necessity is ever with him. It is imperative, merciless, and inexorable. Born
with his office, it dies only with his office. May we say, then, that it is not a judicial determination the
exercise of judicial functions? Shall we assert that it is not an exercise of judicial nature of his office inevitably
requires him to decide as an absolute condition precedent to the performance of any other act in the cause? It
seems to me that it can not be doubted that it is a judicial determination, and one of the very first importance.
In fact, it is the highest and most important judicial function which a court can possibly exercise.
The court, although he sees his jurisdiction written as clear as light, makes, nevertheless, the judicial
determination of jurisdiction as really and as fully as does the court who spends days and nights of laborious
Page 309 of 557

inquiry into doubtful laws to decide the same question. The court who had jurisdiction and then exceeded it
inevitably determined first of all that very question of primary jurisdiction as completely as did the court who,
really having no jurisdiction, determined erroneously that he had; and, if the first had made a mistake in
determining jurisdiction at the beginning, ought he suffer more than he did suffer for making later in the cause
the very same mistake, the mistake by which he exceeded his jurisdiction? The mistake in either case was over
the same question, namely, jurisdiction. Ought it, in fairness, to make any difference when the jurisdictional
mistake is made? Ought the judge who made the mistake at the beginning of the cause to suffer more than he
who made a mistake over the same question later in the same case? Ought an error in regard to jurisdiction
made at the opening of court be more fatal or require severer punishment than one made at the close? Is a
mistake greater because it was made at 10 a.m. than 5 p.m. To be sure, in the one case he had jurisdiction at
first; but he used it only as a means to exceed that jurisdiction later, to put himself outside of it. That is simply
a history of how he came to be outside of his jurisdiction but, of itself, it furnishes no reason why he should be
excused from liability while the judge who never had jurisdiction should be ruined financially, disgraced
before the public and his usefulness as a judge destroyed, wholly irrespective of the nature of the questions
involved or the functions exercised, and utterly without regard to the results produced. I know it may be urged
that the law having given the court jurisdiction and power to embark upon the cause, it must necessarily be
presumed that he has also power and jurisdiction to dispose of it; and that if that disposition is wrong he ought
not to be liable as he was simply performing the judicial duty which the law imposed. Exactly. But when the
judicial office is created and a judge is appointed, is there not, must there not be, a presumption of power on
his part to determine the limits and extent of his jurisdiction? Indeed, must he not necessarily have the power
to determine whether he has any power at all or not? The jurisdiction to determine whether he has
jurisdiction? The question whether a court has any power at all is often involved in greatest doubt. The very
existence of the law under which he is asked to act may be doubtful. When its existence is assumed, its
meaning, extent, scope, and applications. He must decide all these questions before he proceeds with the case
presented. I say again, he must have, necessarily, jurisdiction to determine whether he has jurisdiction. Who is
to determine that question if he does not? He has no one to do it for him; no one to whom he may turn for
assistance. There is no one to whom he may hand the responsibility. He must act. He alone must assume the
responsibility. He may not idly on his bench and refuse to act because he is uncertain whether or not he has the
authority to act. Such conduct would warrant his removal from office. But removal would not be the cure
inasmuch as his successor would be in the same condition of doubt. If the judge refused to act in every case
where jurisdiction was in doubt, a court of justice would be a rank imposture. The judge must act, and he must
act not only in cases of doubt upon the merits where jurisdiction is conceded, but he must also act in cases
where jurisdiction itself over the whole subject-matter is a serious and doubtful question. How can it be said,
then, that in the one case he is liable and in the other he is not? A judge of a court having jurisdiction and
acting on the merits of a question may, by a decision plainly and manifestly in violation of the law, literally
confiscate the property of a party litigant and thereby reduce him and his family to beggary, himself escaping
entirely unscathed; while the judge of another court who , by an erroneous assumption of jurisdiction after a
thorough and painstaking investigation of that question, a question concerning which the best minds might
reasonably differ, promotes thereby the real justice between the parties upon the merits, would, nevertheless,
be helplessly liable to respond fully in damages for the injuries caused by his act, with all that such liability
might imply to his fame, his fortune, and his official position.
It may be added, by way of repetition, that it signifies nothing to say that, because a curt finds himself lawfully
in the midst of a cause, he must be allowed to determine it in one way or another, and that in doing so he
should be protected. It is no more essential that he continue it than that he begin it. A litigant who is not
permitted to finish is in no worse condition than one who was never allowed to begin. Moreover, if it held that
the law requires a court to begin right, it must be equally true that a court having begun right, must continue
right. There should be no more license to continue wrong than to begin wrong. The prohibition should be equal
in both cases. While it is true that a court can not give itself jurisdiction by determining that it has it,
nevertheless, that idea in nowise militates against the position here taken, as the argument which it presents is
as applicable to a case involving excess of jurisdiction as to one where there is want of jurisdiction.

Page 310 of 557

If we follow strictly the rule which holds civilly liable the court who, at the beginning of the cause, errs, as to
his jurisdiction over the subject-matter, and wholly excuse him who errs as to his jurisdiction over the subjectmatter later in the cause, we have this result:
A matter is presented to a court for action. He has really no jurisdiction whatever over it; but, after due
deliberation decides that he has, and proceeds. He arrests A, tries and convicts him of homecide, and sentences
him to twenty years in prison. Question determined, jurisdiction. Act, coram non judice and void. Result, judge
liable.
A matter is presented to another court for action. He has jurisdiction in the first instance. He proceeds. Later he
arrives at a point in the case where he fails absolutely of jurisdiction to proceed further with the cause. But,
after due deliberation, he nevertheless decides that he has jurisdiction and proceeds. He tries and convicts B of
homecide and sentences him to twenty years in prison. Questioned determined, jurisdiction. Act, coram non
judice and void. Result, judge not liable.
Why this difference in result? It is no answer to easy that, in the second case, the court, having jurisdiction,
had, therefore, the right to determine any question that might arise during the progress of the case, even if it be
a question as to his jurisdiction to proceed further, and in making such determination he would be protected;
for, in the first case, the fact that he is a court gives this right, as it places upon him the duty to determine
whether he has the authority to inaugurate the proceedings, and in the determination of that question he, too,
ought to be protected. The determination of the jurisdictional right to begin, is of exactly the same nature and
quality as the determination of the jurisdiction to continue. The resolution of the two questions involves
exactly the same mental processes, the use of exactly the same discretion, the adoption of precisely the same
methods, the exercise of identical functions; while the purposes animating the courts in their decisions are
absolutely the same in both cases, namely, the faithful and efficient discharge of the duties and obligations of
the office. The two question themselves, as representing the two legal conditions, are exactly the same
inherently. The fact the one question is determined at one stage of the cause, while the other is decided at
another, is purely accidental and incidental.
Let me give an example more concrete: Whether or not a Court of First Instance of the Philippine has
jurisdiction over a given subject-matter depends upon whether or not a certain law of Spanish origin in force
prior to the American occupation survived the change of sovereignty. If that law survived he has jurisdiction. If
did not, he is absolutely devoid of jurisdiction. The determination of that question involves a careful
investigation of the fundamental law of the Islands as derived from American sources; an interpretation of its
force and significance as well as the scope of its application; the construction of the order of the President to
General Merritt and of the proclamation of the latter to the Philippine people, both heretofore quoted, and last,
and perhaps most difficult of all, the resolution of the question presented by that part of the above-mentioned
order of the President which provides that "the municipal laws of the conquered territory, such as affect private
rights of person and property, and provided for the punishment of crime, are considered as continuing in force,
so far as they are compatible with the new order of things." When is a Spanish law "compatible with the new
order of things' and when incompatible? Upon the determination of that questions depends absolutely the
jurisdiction of the court. Was ever a question more perfectly judicial? Could there possibly be a question in the
resolution of which the judicial function was more clearly exercised? Has there ever been, or will there ever
be, a situation in which a man could be more a judge than here? Yet we are asked hold that the Court of First
Instance would not be protected in the determination of that question.
Moreover, this rule take cognizance whatever, as we have before noted, of the nature of the questions to be
solved by the two judges in question. It makes no difference between the cases where the question of
jurisdiction of great doubt and difficulty and those where the lack of jurisdiction and authority is so plain and
clear that it ceases altogether to be a question. For example, in the illustration given, wherein the Court of First
Instance was obliged to determine the existence of a Spanish law, there is presented a question of great
intricacy and extreme difficulty of determination. Yet the judge who decided that question, after the most
Page 311 of 557

careful and painstaking investigation and study, and decides wrongly, receives, under the doctrine we are
discussing, no more mercy than another judge who, during the progress of the cause, orders the head of one of
the parties stricken off by the sheriff. Although the lack of jurisdictional authority or power to make such an
order is so clear and so plain that it can not be a question of any kind from any point of view, and especially
not one requiring for its solution the exercise of the judicial functions; and although such an act so transgresses
every judicial precedent, so violates every principle of law, so outrages the commonest sense of justice, and so
debauches the functions and purposes of a court, that no judge can be heard to say that he was exercising
judicial functions in the performance of such an act, nevertheless, that judge, so far as his civil responsibility is
concerned, stands, under the doctrine referred to, in exactly the same position as the judge who clearly and
admittedly exercised judicial functions in the determination of a question over which the best legal minds have
been found to differ.
Still worse. A judge who, even while acting in excess of his jurisdiction, corruptly and criminally sells his
judgment to whomsoever pays him highest, and thus, debauches and prostitutes the functions of his office
before the world, would not be liable civilly to the person injured; while another judge, learned in the law,
unimpeachable in integrity, unquestioned in honesty, but who made a mistake of judgment over the intricate
and doubtful question of his initial jurisdiction, would be ruined financially and his usefulness as a judge
completely destroyed. And all this because one judge erroneously decided the question of jurisdiction at the
beginning of the cause, while the other erroneously decided the same question later in the case.
Under this doctrine I am anxious to know what reason would be given for holding civilly liable a judge who,
as a court, having jurisdiction of the cause and parties, should order the head of one of the parties stricken off
and that order should be obeyed. That he would be so liable is certain. But what reason could be given for it
under the doctrine that jurisdiction is the touchstone of liability? He had jurisdiction of the case, and, under the
doctrine, had the right to pass upon any question which he might regard as related to the case, and he could not
be questioned civilly for so passing his judgment even though it lead him wholly outside and beyond his
jurisdiction and indeed him to perform acts completely illegal and void. It is no answer to say that the act was
wholly outside of his jurisdiction and power to perform and was illegal and void, for, so was the act of the
United States Circuit Court judge in Lange vs. Benedict, supra; and yet he was held not to be civilly liable. The
mere fact that he acted in excess of his jurisdiction is not sufficient to condemn under the doctrine. Neither is it
a reply to say that such a question could not possibly arise in the case, nor that such an act was so gross and
apparent a violation of the duties of the court and such a palpable prostitution of his proper functions, that he
would not be allowed to say that he acted as a judge in the performance of such an act. These are not answers,
base the liability of the judge not upon the question of jurisdiction but upon the proposition that the question
was one the determination of which required the exercise of judicial functions. The essence of the whole
matter is this. Was the determination of the question whether he had the right to perform the act complained of
one which required the exercise of the judicial function? Whether or ]not he was, in the resolution of the
question, exercising judicial functions does not all depend upon whether he had jurisdiction of the subjectmatter of the cause. As we have said, a court may exercise judicial functions as perfectly and as fully in
determining whether he has jurisdiction of the subject-matter presented to him for action as he may in deciding
any question in the case when his jurisdiction of the subject-matter is conceded. A court always has power and
jurisdiction to determine whether it has jurisdiction.
We thus see the embarrassment which is necessarily present in attempting, under the doctrine that jurisdiction
determines liability, to hold a judge who has jurisdiction of the cause civilly liable for performing an act
outside of his jurisdiction no matter how far outside it may be. It is as apparent, also, that all such
embarrassment disappears when, instead of making jurisdiction the test of liability, we make the exercise of
judicial functions the real test.
I believe that it has been thoroughly established that the test of judicial liability is not jurisdiction. I believe it
has also been as thoroughly established that such liability depends wholly upon the nature of the question
which was being determined when the error complained of was made by the court; that is, it must have been a
Page 312 of 557

question the determination of which required the exercise of judicial functions. With that condition,
jurisdiction has nothing vital to do.
When, then, is a judge civilly liable for his illegal acts? When the question which he wrongly determines is one
in the solution of which he can not be said to use judicial attributes. I again present the illustrations I have
already given. During the course of a trial the judge orders the head of one of the parties stricken off by the
sheriff. As we have already said, such an act so transgresses every judicial precedent, so violates every
principle of law, so outrages the commonest sense of justice, and so debauches the functions and purposes of a
court, that no judge can be heard to say that he was exercising judicial functions in its performance. His lack of
power is so clear that, whether he has such power, ceases to be a question. There are certain limits beyond
which a judge will not be permitted to say that he was a judge, or that he was acting as a judge. On the other
hand, the example given in which the Court of First Instance was required to determine the question of the
survival of the Spanish law in order to reach a conclusion as to whether he had jurisdiction or not, clearly
discloses a case where the judicial attributes were exercised. That is the question over which courts in general
may really differ. Concerning it two opinions are allowable. In other words, there are two sides to the question.
If the question is one which a judge, qualified in the average way for the position occupied by the offending
judge or for a similar judicial position, would regard as a question, then it is one whose determination requires
the exercise of judicial functions. But if it is one so clear that a judge qualified as aforesaid, would not regard it
as a question, then it is one whose determination does not require the exercise of judicial functions. In the
former case the judge is not liable. In the latter case, he is. To put in another way. If the question is one which
can be regarded by a judge, qualified as above stated, as having two sides, then the judge is not liable for an
erroneous decision. But if it be one which can not be regarded by such judge as having two sides, then the
judge is liable for a wrong decision.
Although it is admitted, as I do admit, that the Governor-General had and has no power or authority to expel
domiciled aliens, it must, nevertheless, be freely conceded, and this is the vital and conclusive point in this
case, that from his point of view there are two sides to that question. That such is the case is conclusively
established by the fact that three judges of this court have already decided, after mature deliberation, that he
actually has such powers. This being so, it becomes a real question, the determination of which requires the
exercise of judicial functions. In such determination he is protected even though he errs.
Whether or not the given question is such one as I have above described, that is, whether it is one which would
be regarded by a judge, qualified in the average way for the position occupied by the offending judge or a
similar judicial position, as having two sides, is always a question of law and not of fact. It is a condition
established by the existing law. It is a matter not susceptible of proof. The court is required to take judicial
notice of the law of the land. It can not be established by evidence. The condition, the state, of the law when
the offending act was committed is fixed. It can not be changed by evidence. When the act is admitted, liability
is a pure question of law. Even the motive which influenced or controlled the judge in his decision can not be
proved. It is immaterial under the doctrine of Bradley vs. Fisher. He is not judged from his moral but from his
legal relation to the question.
The foregoing is an explanation, if one were needed, of the expression in my former opinion in this case, in
which I made reference to the Governor-General acting "in the honest belief" that he had the authority to
perform the acts complained of. By such expression I did not mean to call attention to the Governor-General
subjectively. I did not mean to bring in issue his state of mind, morally or ethically, at the time he acted, nor
the motive which impelled him. What was meant there is. Was the question which confronted him for solution
one over which men qualified for that or a similar station would really differ; one which the average of man fit
for that position would regard as a real question. In other words, Is it one which, from the viewpoint of a man
ordinarily qualified for that position, has two sides? "Honestly," as used, referred to the nature of the question
rather than the state of mind or motive of the Governor-General. The state of mind morally of a judge, the
motives which induce him to at, are of no consequence in determining his liability. In the case of Bradley vs.
Fisher, supra, cited in my former opinion as well as in this, the court says:
Page 313 of 557

Nor can this exemption of the judges from civil liability be affected by the motives with which their
judicial acts are performed. The purity of their motives can not in this way be the subject of judicial
inquiry. This was adjudged in the case of Floyd and Barker, reported by Coke, in 1608 (12 Coke, 25),
where it was laid down that the judges of the realm could not be drawn in question for any supposed
corruption impeaching the verity of their records, except before the King himself, and it was observed
that if they were required to answer otherwise, it would "tend to the scandal and subversion of all
justice, and those who are the most sincere would not be free from continual calumniation's."
The truth of this latter observation is manifest to all persons having much experience with judicial proceedings
in the superior courts. Controversies involving not merely great pecuniary interest, but the liberty and character
of the parties and, consequently exciting the deepest feelings, there is a great conflict in the evidence and great
doubt as to the law which should govern their decision. It is this class of cases which imposes upon the judge
the severest labor, and often create in his mind a painful sense of responsibility. Yet it is precisely in this class
of cases that the losing party feels most keenly but the soundness of the decision in explanation of the action of
the judge. Juts in proportion to the strength of his convictions of the correctness of his own view of the case is
he apt to complain of the judgement to pass to the ascription of improper motives to the judge. When the
controversy involves questions affecting large amounts of property or relates to a matter of general public
concern, to touches the interest of numerous parties, the disappointment occasioned by an adverse decisions
often finds vent in imputations of this character, and from the imperfection of human nature this is hardly a
subject of wonder. If civil actions could be maintained in such cases against in his complaint that the acts of
the judge were done with partiality, or maliciously, or corruptly, the protection essential to judicial
independence would be entirely swept away. Few persons sufficiently irritated to institute an action against a
judge for his judicial acts would hesitate to ascribe any character to the acts which would be essential to the
maintenance of the action.
If upon such allegations a judge could be compelled to answer in a civil action for his judicial acts, not
only would his office be degraded and his usefulness destroyed, but he would be subjected for his
protection to the necessity of preserving a complete record of all the evidence produced before him in
every litigated case, and of the authorities cited and arguments presented, in order that he might be
able to show to the judge before whom he might be summoned by the losing party and that judge
perhaps one of an inferior jurisdiction that he had decided as he did with judicial integrity; and the
second judge would be subjected to a similar burden, as he in his turn might also be held amenable by
the losing party.
Some just observations on this head by the late Chief Justice Shaw will be found in Pratt vs. Gardner
(2 Cush., 68), and the point here was adjudged in the recent case of Fray vs. Blackburn (3 West and
S., 576) by the Queen's Bench of England. One of the judges of that bench was sued for a judicial act,
and on demurrer one of the objections taken to the declaration was that it was bad in not alleging
malice. Judgment on the demurrer having passed for the defendant, the plaintiff applied for leave to
amend his declaration by introducing an allegation of malice and corruption; but Mr. Justice Compton
replied: "It is a principle of our law that no action will lie against a judge of one of the superior courts
for a judicial act, though it be alleged to have been done maliciously and corruptly; therefore the
proposed allegation would not make the declaration good. The public are deeply interested in this rule,
which, indeed, exists for their benefit, and was established in order to secure the independence of the
judges, and prevent them being harassed by the vexatious actions;" and the leave was refused. (Scott
vs. Stansfield, L. R., 3 Exch., 220.)
In this country the judges of the superior courts of record are only responsible to the people, or the
authorities constituted by the people, from whom they receive their commissions, for the manner in
which they discharge the great thrusts of their office. In the exercise of the powers with which they are
clothed as ministers of justice they act with partiality, or maliciously, or corruptly, or arbitrarily, or
oppressively, they may be called to account by an impeachment and suspended or removed from
Page 314 of 557

office. In some States they may be thus suspended or removed without impeachment by a vote of the
two houses of the legislature.
In the case of Randall vs. Brigham (7 Wall., 523; 74 U. s., 285), decided by this court at the December
term of 18 68, we had occasion to consider at some length the liability] of judicial officers to answer
in a civil plaintiff had been removed by the defendant, who was one of the justices of the Superior
Court of Massachusetts, from the bar of that State, and the action was brought for such removal,
which was alleged in the declaration to have been made without lawful authority and wantonly,
arbitrarily, and oppressively. In considering the questions presented, the court observed that it was a
general principle, applicable to all judicial officers, that they were not liable to a civil action for any
judicial act done by them within their jurisdiction; that with reference to judges of limited and inferior
authority it had been held that they were protected only when they acted within jurisdiction; that if this
were the case with respect to them, no such limitation existed with respect to judges of superior or
general authority; that they were not liable in civil actions for their judicial acts, even when such acts
were in excess of their jurisdiction, "unless, perhaps when the acts in excess of jurisdiction are done
maliciously or corruptly." The qualifying words were inserted upon the suggestion that the previous
language laid down the doctrine of judicial exemption from liability to civil actions in terms broader
than was necessary for the case under consideration, and that if the language remained unqualified it
would require an explanation of some apparently conflicting adjudications found in the reports. They
were not intended as an expression of opinion that in the cases supposed such liability would exist, but
to avoid the expression of a contrary doctrine.
In the present case we have looked into the authorities and are clear, from them, as well as from the
principle on which any exemption is maintained, that the qualifying words used were not necessary to
a correct statement of the law, and that judges of courts of superior or general jurisdiction are not
liable to civil actions for their judicial acts; even when such acts are in excess of their jurisdiction, and
are alleged to have been done maliciously or corruptly.
Applying to the case at bar the analogy to which we have so far consistently adhered, it is necessary to
conclude, from the principles asserted in the quotation, that the motives with which the illegal acts of the
Governor-General were performed can not effect in any way his responsibility stated heretofore, the liability of
the Governor-General is a question of law and not of fact. It depends entirely on the state of law, of that the
court takes judicial notice without proof.
The foregoing discussion is not a criticism of the case of Bradley vs. Fisher, so many times referred to. On the
contrary, I am confident that this case, when properly viewed, is, as I have heretofore stated, fully in accord
with the considerations and conclusions indulged herein, and may reasonably, indeed, if the dictum therein
contained authority for them. In that case the name of the plaintiff criminal branch of the supreme court of the
District of Columbia by the judge thereof, the defendant in the action. The following was the order entered by
the court:
On the 2nd day of July last, during the progress of the trial of John H. Surat for the murder of
Abraham Lincoln, immediately after the court had taken a recess until the following morning, as the
presiding justice was descending from the bench, Joseph H. Bradley, esq., accosted him in a rude and
insulting manner, charging the judge with having offered from the commencement of the trial. The
judge disclaimed any intention of passing any insult whatever, and assured Mr. Bradley that he
entertained for him no other feelings than those of respect. Mr. Bradley, so far from accepting this
explanation or disclaimer threatened the judge with personal chastisement. No court can administer
justice or live if its judges are to be threatened with personal chastisement on all occasions whenever
the irascibility of counsel may be excited by imaginary insult. The offense of Mr. Bradley is one
which even his years will not palliate. It can not be overlooked or go unpunished.

Page 315 of 557

It is therefore, ordered that his name be stricken from the roll of attorneys practicing in this court.
The suit was founded on this order, the plaintiff alleging that the defendant "falsely, fraudulently, corruptly,
and maliciously intended thereby to give color of jurisdiction" for making order referred to, and that he acted
unlawfully, wrongfully, unjustly, and oppressively in making such order. The action was one against the judge
for damages occasioned by such act. In deciding the case the court said:
In other words, it sets up that the order for the entry of which the suit is brought was a judicial act,
done by the defendant as the presiding justice of a court of general criminal jurisdiction. If such were
the character of the act, and the jurisdiction of the court, the defendant can not be subjected to
responsibility for it in a civil action, however erroneous the act may have been, and however injurious
in its consequences it may have proved to the plaintiff. For it is a general principle of the highest
importance to the proper administration of justice that a judicial officer, in exercising the authority
vested in him, shall be free to act upon his own convictions, without apprehensions of personal
consequences to himself. Liability to answer every one who might himself aggrieved by the action of
the judge would be inconsistent with the possession of his freedom, and would destroy that
independence without which no judiciary can be either respectable or useful. As observed by a
distinguished English judge, it would establish the weakness of judicial authority in a degrading
responsibility.
The criminal court of the District, as a court of general criminal jurisdiction, possessed the power to
strike the name of the plaintiff from its rolls as a practicing attorney. This power of removal from the
bar is possessed by all court which have authority to admit attorneys to practice.
The criminal court of the District erred in not citing the plaintiff, before making the order striking his
name from the roll of its attorneys, to show cause why such order should not be made for the offensive
language and conduct stated, and affording him opportunity for explanation, or defense, or apology.
But this erroneous manner in which its jurisdiction was exercised, however it may have affected the
validity of the act, did not make the act any less a judicial act; nor did it render the defendant liable to
answer in damages for it at the suit of the plaintiff, as though the court had proceeded without having
any jurisdiction whatever over its attorneys.
A distinction must be here observed between the excess of jurisdiction and the clear absence of all
jurisdiction over the subject-matter. Where there is clearly no jurisdiction over the subject-matter any
authority exercised is a usurped authority, and for the exercise of such authority, when the want of
jurisdiction is known to the judge, no excuse is permissible, But where jurisdiction over the subjectmatter is invested by law in the judge, or in the court which he holds, the manner and extent in which
the jurisdiction shall be exercised are generally as much questions for his determination as any other
questions involved in the case, although upon the correctness of his determination in these particulars
the validity of his judgment may depend. Thus, if a probate court, invested only with authority over
wills and the settlement of estates of deceased persons should proceed to try parties for public
offenses, jurisdiction over the subject of offenses being entirely wanting in the court, and this being
necessarily known to its judge, his commission would afford no protection to him in the exercise of
the usurped authority. But if, on the other hand, a judge of a criminal court, invested with general
criminal jurisdiction over offenses committed within a certain district, should hold a particular act to
be a public offense, which is not by the law made an offense, and proceed to the arrest and trial of a
party charged with such act, or should sentence a party convicted to a greater punishment than that
authorized by the law upon its proper construction, no personal liability to civil action for such acts
would attach to the judge, although those acts would be in excess of his jurisdiction, or of the
jurisdiction of the court held by him, whenever his general jurisdiction over the subject-matter is
invoked. Indeed some of the most difficult and embarrassing questions which a judicial officer is
called upon to consider and determine relate to his jurisdiction, or that of the court held by him, or the
Page 316 of 557

manner in which the jurisdiction shall be exercised. And the same principle of exemption from
liability which obtains for errors committed in the ordinary prosecution of a suit where there is
jurisdiction of both subject and person applies in cases of this kind, and for the same reasons.
It must be noted in the first, place, that, inasmuch as the court, in that case, was found to have had full
jurisdiction of the person of the plaintiff and the subject-matter before him, the court erring simply in his
method of procedure, the question of the civil liability of a judge for acts performed with complete lack of
jurisdiction did not arise.
In the second place, especial and particular attention is called to certain expressions in the decision which
occur in that portion relative to the liability of a judge acting in complete absence of jurisdiction: "Where there
is clearly no jurisdiction over the subject-matter any authority is a usurped authority, and for the exercise of
such authority, when the want of jurisdiction is known to the judge, no excuse is permissible." Again: "Thus if
a probate court, invested only with authority over wills and the settlement of estates of deceased persons
should try parties for public offenses, jurisdiction over the subject of offenses being entirely wanting in the
court, and this being necessarily known to its judge, his commission would afford no protection to him in the
exercise of the usurped authority."
These portions of the sentence quoted which I have italicized contain the essence of the whole matter of
judicial liability where there is a lack or failure of jurisdiction. I am of the opinion that those expressions
indicate necessarily and decisively that the principle which I have herein laid down as the one logically and
inevitably governing judicial liability is the true and the only one whose results are not absurdities in many
cases. Otherwise those expressions are wholly meaningless and the suggestions they contain valueless. If the
jurisdiction is the real test of liability, if a judge acting wholly and completely without jurisdiction is
necessarily liable, as contend text writers and courts generally, what difference does it make whether the want
of jurisdiction "clearly" appear or not. If entire absence of jurisdiction is decisive, what does it signify whether
or not "the want of jurisdiction is known to the judge." If the crucial test is jurisdiction, what means the phrase
"and this (entire want of jurisdiction) being necessarily known to its judge?" If these expressions mean nothing,
then there is an end of the matter so far as the case we are discussing is concerned. But if they mean anything
at all commensurate with the signification which would ordinarily be given to the words which compose them,
then they destroy utterly the doctrine that jurisdiction is the test of judicial liability. The word "clearly" refers
either to the judge himself or to some one or something apart from him. If to the judge, then the want of
jurisdiction must be clear to him before he can be liable. But if his want of jurisdiction is clear to him and he
still goes forward with the cause, he must be actuated by a motive other than his belief that he is within his
jurisdiction. If, therefore, "clearly" refers to the judge himself, to his subjective condition, then it can have no
relation or materiality except to disclose the motive which removed him. But motive has been expressly held
by this very case to be wholly immaterial in determining a judge's civil liability. Motive is merely a state of
mind. If the motive can have no influence on the matter, then it is of no consequence whatever what the state
of mind may be. This is in perfect accord with the universal doctrine that a one man's rights can not be made to
depend on another man's mind. If A illegally injures B, B's right of action can not be dependent on A's state of
mind when he caused the injury. Such state of mind might have some influence on the amount of damages or
the kind of action to be brought, but, never on the right of action. So the right of action against a judge never
can be made to depend on the state of mind of the judge who causes the injury, but solely upon the nature of
the question determined. Rights are children of the law, not of man's fancy.
If, however, the word "clearly" refers to some one or something apart from the judge himself, then the
expression in which it occurs has meaning and significance. If the want of jurisdiction is so "clear," not to that
judge in particular, but to a judge having the average qualifications for the position occupied by the offending
judge, or a similar judicial position, that whether or not there is jurisdiction is not a question at all, then we can
understand what was intended by the use of the word "clearly." The whole doctrine that the civil liability of a
judge depends upon jurisdiction alone, as stated by text writers and enforced by most courts, is utterly at
variance with the conception that the state of mind of the offending judge should have any influence on his
liability. Moreover, the very case I am discussing holds clearly that public policy requires that the motives of a
Page 317 of 557

judge in deciding a cause, his state of mind accompanying in determining his liability. We find in that case the
following:
Yet it is precisely in this class of cases that the losing party feels most keenly the decision against him,
and most readily accepts anything but the soundness of the decision in explanation of the action of the
judge. Just in proportion to the strength of his conviction of the correctness of his own view of the
case is he apt to complaint of the judgment against him, and from complaints of the judgment to pass
to the ascription of improper motives to the judge. When the controversy involves questions affecting
large amounts of property or relates to a matter of general public concern, touches the interests of
numerous parties, the disappointment occasioned by an adverse decision often finds vent in
imputations of this character, and from the imperfections of human nature this is hardly a subject of
wonder. If civil actions could be maintained in such cases against the judge, because the losing party
should see fit to allege in his complaint that the acts of the judge were done with partiality, or
maliciously, or corruptly, the protection essential to judicial independence would be entirely swept
away. Few persons sufficiently irritated to institute an action against a judge for his judicial acts would
hesitate to ascribe any character to the acts which would be essential to the maintenance of the action.
Motive, as he used, can not be restricted to a state of mind morally wrong. It includes also a state of mind
legally wrong. A judge, knowing full well that he is absolutely without jurisdiction, who, in spite of the parties
in complete violation of the law, may be impelled thus to violate the law by an honest belief that he is thereby
doing justice between the parties; but his motives are nevertheless tainted with illegality, and, even though they
are not morally wrong, they fall within the definition of "motives" as that word is used in the decision I am
discussing. But even though I be wrong in that contention, it nevertheless is certain that if a corrupt motive can
not be influential in determining the liability of a judge, one not corrupt can not be.
It, therefore, seems to me clear that the word "clearly" as used in the case under discussion does not refer to the
state of mind of the offending judge, but rather to the nature of the question which he determines; not to the
way the judge himself views the question, but to the way it would be viewed by the standard judge, the average
judge, as I have heretofore stated.
What I have said of the word "clearly," as it appears in the case under discussion, is equally applicable to the
other expressions quoted therefrom. The phrase "when the want of jurisdiction is known to the judge" presents
precisely the same questions. As I have said, the very case in which that expressions occurs to holds
unequivocally that the motives which move the judge to action are not permitted to weigh for or against him,
even though they are corrupt and immoral. It can not be possible, then, that any other motive, especially an
honest one, can be permitted to affect his case. The conclusion is, therefore, unavoidable that the phrase "when
the want of jurisdiction is known to the judge" does not refer to the actual state of the mind of the judge but to
the state of mind which he ought to be in and which he would have been in if he had taken into consideration
properly the nature of the question before him. In other words, he will be deemed to have been in the same
state of mind as the ideal, the standard judge of whom we have spoken would have been had he had the same
question before him. We have here somewhat the idea which is predominant in the theory of negligence
embodied in the question, "Did he use the care which an ordinary careful and prudent an would have used
under the same circumstances?" This means simply that everything depends, in the last analysis, on the nature
of the question with which the judge was dealing when he committed the error made the basis of the action
against him.
Lastly, as to the phrase " and this [the want of jurisdiction] being necessarily known to the judge."
The word "necessarily" seems to me to be absolutely conclusive as to the intention of the Supreme Court of
the] United States in the case under discussion relative to the doctrine of judicial liability in cases involving a
failure or want of jurisdiction. This expression, it will be remembered, was used in connection with the
illustration of a probate court assuming criminal jurisdiction. Why, in such illustration, should the want of
Page 318 of 557

jurisdiction be "necessarily" known to the judge? No reason can be given except that it was a perfectly plain
case, and, in consequence, he was bound to know it, whether he actually did or not. In other words, the
question which he was called upon to decide was so plain and so clear that the standard judge would not have
regarded it as a question at all; i.e., there was really only one side to it it could be decided in only one way.
Therefore, the judge was bound to know it; it was necessarily known to him. The nature of the question was
such that he was estopped from denying knowledge. Thus are we brought back again to the proposition I have
so often asserted, that the liability of the judge depends wholly upon the nature of the question in
determination of which the error was made.
It appears to me to be evident, therefore, that the case of Bradley vs. Fisher is an authority, so far as dictum can
be such, in support of the doctrine I am advocating, both affirmatively and negatively. Affirmatively, because
it asserts the doctrine that the nature of the question controls. Negatively, because it also asserts that the
motives which induced the judge to the error which is the basis of his liability are wholly immaterial in
establishing that liability. This necessarily means, as we have already seen, that the state of mind of the judge
by which the error was induced, of whatever kind it may be, good, bad, or indifferent, is entirely without
significance as an element of his liability. This is all I set out to establish. (See Bishop Non-Contract Law, par.
783; Root vs. Ross, 72 Northwestern, 1022; Grove vs. Van Duyn, 15 Vroom, 654.) Section 9 of the Code of
Civil Procedure relating to the liability of judges is simple declaratory of the law as heretofore set forth.
The discussion up to this point has proceeded upon the theory that the Governor-General acted wholly without
power, authority, or jurisdiction. I here note by way of suggestion merely that it should be remembered that the
Governor-General, in performing the acts complained of, was operating in a field distinctively his own,
namely, that of the execution of the law. Of that branch of the government he is the head. Over that field has
general authority and jurisdiction. Taking for the moment the position of those who maintain that there is
difference between excess of jurisdiction and an entire failure of jurisdiction, may not his act of expulsion have
been in excess of jurisdiction rather than in complete failure thereof? I do not now stop to argue this question,
inasmuch as I have already presented the matter fully from the other point of view.
I have treated thus at length the liability of judges for analogical purposes, founding myself not only upon the
reason and principle involved, but also upon the case of Spalding vs. Vilas (161 U. S., 483), in which the
opinion discussed at length the civil liability of judges, using the principles there applied of the defendant, who
was postmaster-general, and who had been sued for damages alleged to have been caused by certain acts
performed by him in the execution of what he believed to be the duties of his office. This is precisely what I
have done in the case at bar.
So far I have discussed the liability of the Governor-General for the acts complained of, viewing the acts as
springing from the determination of questions judicial in their nature. I now propose to treat the question at bar
as arising from determination made and acts performed by the Governor-General in discharging the duties laid
upon him as Chief Executive of the Government.
The immunity of the judges from personal liability for damages resulting from their wrongful acts while in the
discharge of the duties of the office rests wholly in public policy. The reasons for such immunity are nowhere
better stated than in Mr. Cooley's work on Torts. He says:
1. The necessary result of the liability would be to occupy the judge's time and mind with the defense
of his own interests, when he should be giving them up wholly to his public duties, thereby defeating,
to some extent, the very purpose for which his office was created.
2. The effect of putting the judge on his defense as a wrongdoer necessarily is to lower the estimation
in which his office is held by the public, and any adjudication against him lessens the weight of his
subsequent decisions. This of itself is a serious evil, affecting the whole community; for the
confidence and respect of the people for the government will always repose most securely on the
Page 319 of 557

judicial authority when it is esteemed, and must always be unstable and unreliable when this is not
respected. If the judiciary is unjustly assailed in the public press, the wise judge refuses to put himself
in position of defendant by responding, but he leaves the tempest to rage an awakened public
sentiments silences his detractors. But if he is forced upon his defense, as was well said in an early
case, it would tend to the scandal and subversion of all justice, and those who are most sincere would
not be free from continual calumniation's.
3. The civil responsibility of the judge would often be an incentive to dishonest instead of honest
judgments, and would invite him to consult public opinion and public prejudices,] when he ought to
be wholly above and uninfluenced by them. As every suit against him would be to some extent an
appeal to popular feeling, a judge, caring specially for his own protection, rather than for the cause of
justice, could not well resist a leaning adverse to the parties against whom the popular passion or
prejudice for the time being was running, and he would thus become a prosecutor in the cases where
he ought to be protector, and might count with confidence on escaping responsibility in the very cases
in which he ought to be punished. Of what avail, for example, could the civil liability of the judge
have been to the victims of the brutality of Jeffreys if, while he was at the height of his power and
influence and was wreaking his brutal passions upon them amidst the applause of crowded court
rooms, these victims had demanded redress against him at the hands of any other court and jury of the
realm?
4. Such civil responsibility would constitute a serious obstruction to justice, in that it would render
essential a large increase in the judicial force, not only as it would multiply litigation, but as it would
open each case to endless controversy. This of itself would be an incalculable evil. The interest of the
public in general rules and in settled order is vastly greater than in any results which only affect
individual; and it is more important that their action shall tend to the peace and quiet of society than
that, at the expense of order, and after many suits, they shall finally punish an officer with damages for
his misconduct. And it is to be borne in mind that if one judge can be tried for his judgment, the one
who presides on the trial may also be tried for his, and thus the process may go on until it becomes
intolerable.
5. But where the judge is really deserving of condemnation a prosecution at the instance of the State is
a much more effectual method of bringing him to account than a private suit. A want of integrity, a
failure to apply his judgment to the case before him, a reckless or malicious disposition to delay or
defeat justice may exist and be perfectly capable of being shown, and yet not be made so apparent by
the facts of any particular case that in a trial confined to those fact he would be condemned. It may
require the facts of many cases to established the fault; it may be necessary to show the official action
for years. Where an officer is impeached, the whole official career is or may be gone into; in that case
one delinquency after another is perhaps shown each tends to characterize the other, and the whole
will enable the triers to form a just opinion of the official integrity. But in a private suit the party
would be confined to the facts of his own case. It is against inflexible rules that one man should be
allowed to base his recovery for his own benefit on a wrong done to another; and could it be
permitted, the person first wronged, and whose right to redress would be as complete as any, would
lose this advantage by the very fact that he stood first in the line of injured persons.
Whenever, therefore, the State confers judicial powers upon an individual, it confers them with full
immunity from private suits. In effect, the State says to the officers that these duties are confided to
his judgment; that he is to exercise his judgment fully, freely, and without favor, and he may exercise
it without fear; that the duties concern individuals, but they concern more especially of the welfare of
the State and the peace and happiness of society; that if he shall fail in the faithful discharge of them
he shall be called to account as a criminal; but that in order that he may not be annoyed, disturbed, and
impeded in the performance of these high functions, a dissatisfied individual shall not be suffered to a
call in question his official action in a suit for damages. This is what the State, speaking by the month
of common law says to the judicial officer. (Cooley on Torts, 2nd ed., pp. 475-478.)
Page 320 of 557

The following cases are also in point: Bradley vs. Fisher (13 Wall., 335), Spalding vs. Vilas (161 U. S., 483),
Pratt vs. Gardner (2 Cush., 63), Yates vs. Lansing (5 Johns., 282, 291), Fray vs. Blackburn (3 B. and S., 576),
Scott vs. Stansfields (L. R., 3 Exch., 220).
It needs no use of imagination to permit the assertion that the execution of the law is a matter fully as
important as the creation or determination of the law. One branch of the government is, largely speaking, as
necessary and important as the other. The system of representative government is founded in that proposition.
The three departments are not only coordinate; they are co-equal; they are coimportant. Whatever affects
adversely the efficiency of one affects adversely the efficiency of all. One is quite useless without the other.
The legislature is supremer than a king in the making of laws, but if they remain unexecuted they are but dry
thunder that rolls and growls along the sky but disappoints the husbandman in a thousand thirsty fields. The
judiciary is an invincible and irresistible giant in promulgating its decrees, but a day-old infant in their
execution.
Whatever impedes or prevents the free and unconstrained activity of a governmental department, within its
proper limits, tends to evil results. The civil responsibility of the chief executive would produce in him an
inevitable tendency, insidious in character, constant in pressure, certain in results, to protect himself by
following lines of least resistance and to temper the force of his executive arm in places and upon occasions
where there was strong opposition, either by powerful and influential persons or by great federated interests,
and where public prejudice was intense, active, and threatening. Personal interest is a force which in the long
run is apt to drive as it will. Reputation, pride, riches, family, home, all endangered in many respects by
personal responsibility, are influences which grip and cling with threw of steel and exert a power upon men
almost incalculable in its extent, almost certain in its results. To allow these well-nigh irresistible forces to
exercise to the full their effects upon the coordinate branches of the government, through men who, for the
moment, are, in a sense, the state, is to drive a blow at the very vitals of impartial government.
Anyone may bring an action. It needs no merits, no real grounds, no just cause, no expectation of winning, to
commence suit. Any person who feels himself aggrieved by any action of the chief executive, whether he have
the slightest grounds therefor or not, may begin suit. Or, not particularly desiring to bring an action upon his
own initiative, he may be induced thereto by any evil-disposed person, any political rival, party antagonist, or
personal enemy of the chief executive, or by any person desiring for any reason to see his administration
hampered and brought into contempt by public display of the alleged inefficiency of the chief functionary. For
the purposes in view, it is almost immaterial whether or not the action succeeds. Substantially the same results
are attained by commencing the action and carrying it haltingly to its final determination. A person who brings
an action for the reasons mentioned, or his inducers, will always be fertile and conscienceless in the method of
conducting it. Every means will be employed to make it sensational. Every effort will be used to bring the
salient features of the plaintiff's claim before the public. Opposition papers will deem it strategy to lend their
ready columns to everything that reflects adversely on the defendant. Startling headlines will appear in every
issue inviting all people to read the charges against their chief executive. Occasions for delay will be found or
made. The case will drag along through months of calumny, vituperation, and sensation until the people,
nauseated and weary of the noise and the spectacle, cry for riddance. This is precisely the result desired by the
plaintiff. The matter can be stopped and quitted only by the removal of the offending official. This would
usually follow in one way or another.
Moreover, the bringing of an action against him because of his act in relation to a given matter would naturally
prevent his taking further or other steps against other person similarly circumstance until the final
determination of the pending action. Respect for law and the judiciary, as well as his own protection, would
probably require this. No words are necessary to indicate the intolerable condition thus resulting from general
civil responsibility. Action upon important matters of state delayed; the time and substance of the chief
executive spent in wrangling litigation; disrespect engendered for the person of one of the highest officials of
the State and for the office he occupies; a tendency to unrest and disorder; resulting, in a way, in a distrust as to
the integrity of government itself.
Page 321 of 557

Although the three departments of the government are coordinate and equal of importance in the
administration of governmental affairs, nevertheless, it is generally recognized that, in many ways, and at least
popularly, the chief executive is the first man in the state. He is regarded by the public generally as the official
who most nearly represents the people, who most perfectly epitomozes the government and the state. An
assault upon him is, popularly speaking at least, an assault upon the people. An offense against the state.
Generally speaking, the government is good or bad as he is good or bad. To degrade and humiliate him is to
degrade and humiliate the government. To put him on trial as a wrongdoer is to put on trial government itself.
To bring him publicly to the bar is to breed in the public mind and unwholesome disrespect not only for his
person but for his office as well; while a decision against him is, popularly speaking acts as unworthy of
consideration, but also a partial demonstration of the inefficiency of government itself. As the state may not be
held liable, and by such process its sovereignty weakened, without express provision of law, so the person
most perfectly its incarnation should not be subjected civilly to personal liability for damages resulting from
the performance of official acts except by law equally express.
While the three coordinate governmental departments are mutually dependent, each being unable to perform its
functions without the other, they are, nevertheless, paradoxical as it may seem, wholly independent of each
other, except for what is known as the checks and balances of government. That is to say, one department may
not control or interfere in any way with another in the exercise of its functions. This, of course, is fundamental.
The legislature may neither dictate the courts what judgments they shall render, nor modify, alter or set aside
such judgments after they have been promulgated. The legislature can not be permitted to override executive
action nor interfere with the performance of those duties laid by the constitution upon the chief executive. In
the same way, the courts have no power to control or interfere in any way with the legislature in the making of
laws or in taking or refraining from taking any action whatever, however clear may be its constitutional duty to
take or not to take such action. The legislature may refuse to pass the laws which are absolutely necessary for
the preservation of society, thus clearly and openly violating and disregarding the trust reposed in it, and still
neither the judicial nor the executive branch can interfere. The courts may openly and flagrantly violate their
duty, render the most partial, unjust, illegal, and even corrupt judgments, thereby openly prostituting their
proper functions, yet neither the legislature nor the executive department can interfere.
Moreover, except as hereinbefore indicated, neither the members of the legislature nor the judiciary are subject
to personal liability for damages either by their failure to perform their duties or for their open defiance of the
plain command of the constitution to perform them.
The power to interfere is the power to control. The power to control is the power to abrogate. Upon what
reasons, then, may we base the right of the courts to interfere with the executive branch of the government by
taking cognizance of a personal action against the chief executive for damages resulting from an official act;
for, to take jurisdiction of such an action is one of the surest methods of controlling his action. We have
already seen the dangers which lurk in the unhampered privilege of personal suit against the chief executive
from the viewpoint of the effects which it would have on him personally and, therefore, on the general
enforcement of the law. Another question closely akin to this is that of the effect on the independence of that
branch of the government. In that argument we touched the results of such responsibility from the viewpoint of
the influence wielded by the person who complained by suit against the act of the chief executive. Here we
refer to it from the standpoint of the force, the power, the instrumentality by which the complaint is made
effective. Every argument advanced against the civil responsibility of the chief executive founded in the
beneful results to the public welfare which such responsibility would inevitably carry, is applicable to the
proposition that the court may take cognizance of personal actions against him for damages resulting from his
official acts. If the courts may require the chief executive to pay a sum of money every time they believe he
has committed an error in the discharge of his official duty which prejudices any citizen, they hold such a grip
upon the vitals of the executive branch of the government that they may swerve it from the even tenor of its
course or thwart altogether the purpose of its creation. If such responsibility would prove harmful by reason of
the influence thus given to persons or interests involved in the execution of the law, how much more disastrous
would be the results of such responsibility which would normally flow from the power which the courts might
wield, that power which alone makes effective the influence of the persons or interest referred to. not only
Page 322 of 557

determining their remedy and adjudicating their rights, but also fixing the amount of damages which the
infringement of those rights has occasioned. That the courts may declare a law passed by the legislature
unconstitutional and void, or an act of the executive unauthorized and illegal; or that the legislature may curtail
within limits the jurisdiction and power of the courts, or restrict, in a measure, the scope of executive action; or
that the executive may, by his veto, render null and ineffective the acts of legislature and thus effectually
thwart the purposes of the majority, is no reply to the argument presented. These are merely the checks and
balances made by the people through the constitution inherent in the form of government for its preservation as
an effective institution. Without them the government would collapse like a house of cards. In spite of these
checks and balances, if not by reason of them, the fundamental departments of the government are independent
of each other in the truest sense of the word. The quality of government consists in their remaining so.
It must not be forgotten that there is a great difference, intrinsically and in result, between the power to declare
the executed acts of the chief executive illegal and void, and the power to hold him personally responsible in
damages resulting from such acts. In the one case the results are. in a real sense, entirely impersonal. No evil to
him directly flows from such acts. He is secure in his person and estate. In the other, he is directly involved
personally in a high and effective responsibility. His person and estate are alike in danger. In the one case he
acts freely and fearlessly without fear of consequences. In the other he proceeds with fear and trembling, not
knowing, and being wholly unable to know, when he will be called upon to pay heavy damages to some person
whom he has unconsciously injured.
The principle of nonliability, as herein enunciated, does not mean that the judiciary has no authority to touch
the acts of the Governor-General; that he may, under cover of his office, do what he will, unimpeded and
restrained. Such a construction would mean that tyranny, under the guise of the execution of the law, could
walk defiantly abroad, destroying rights of person and of property, wholly free from interference of courts or
legislatures. This does not mean, either, that a person injured by the executive authority by an act unjustifiable
under the law has no remedy, but must submit in silence. On the contrary, it means, simply, that the GovernorGeneral, like the judges of the courts and the members of the Legislature, may not be personally mulcted in
civil damages for the consequences of an executed in the performance of his official duties. The judiciary has
full power to, and will, when the matter is properly presented to it and the occasion justly warrants it, declare
an act of the Governor-General illegal and void and place as nearly as possible in status quo any person who
has been deprived of his liberty or his property by such act. This remedy is assured every person, however
humble or of whatever country, when his personal or property rights have been invaded, even by the highest
authority of the state. The thing which the judiciary can not do is to mulct the Governor-General personally in
damages which result from the performance of his official duty, any more than it can a member of the
Philippine Commission or the Philippine Assembly. Public policy forbids it.
Neither does this principle of nonliability mean that the chief executive may not be personally sued at all in
relation to acts which he claims to perform as such official. On the contrary, it clearly appears from the
discussion heretofore had, particularly that portion which touched the liability of judges and drew an analogy
between such liability and that of the Governor-General, that the latter is liable when he acts in a case so
plainly outside of his power and authority that he can not be said to have exercised discretion in determining
whether or not he had the right to act. What is held here is that he will be protected from personal liability for
damages not only when he acts within his authority, but also when he is without authority, provided he actually
used discretion and judgment, that is, the judicial faculty, in determining whether he had authority to act or not.
In other words, he is entitled to protection in determining the question of his authority. If he decide wrongly,
he is still protected provided the question of his authority was one over which two men, reasonably qualified
for that position, might honestly differ; but he is not protected if the lack of authority to act is so plain that two
such men could not honestly differ over its determination. In such a case, he acts, not as Governor-General, but
as a private individual, and, as such, must answer for the consequences of his act.
The attorneys for the defendant in the action before us earnestly contend that even though the GovernorGeneral is not liable, his agents, Harding and Trowbridge, are. In support of that contention they cite numerous
authorities. One of those is Little vs. Barreme (2 Cranch, 170). This was a case in which obeyed certain
Page 323 of 557

instructions emanating from the President of the United States which were not strictly warranted by the law
under which said instructions were given; and had seized a ship not subject to seizure under the law. The
attorneys for the defendant cite that portion of the opinion of Mr. Chief Justice Marshall in that case which
reads as follows:
These orders given by the executive under the construction of the Act of Congress made by the
department to which its execution was assigned, enjoined the seizure of American vessels sailing from
a French port. Is the officer who obeys them liable for damages sustained by this misconstruction of
the Act, or will his orders excuse him? If his instructions afford him no protection, then the law must
take its course, and he must pay such damages as are legally awarded against him; if they excuse an
act not otherwise excusable, it would then be necessary to inquire whether this is a case in which the
probable cause which existed to induce a suspicion that the vessel was American, would excuse the
captor from damages when the vessel appeared in fact to be neutral.
I confess the first bias of my mind was very strong in favor of the opinion that though the instructions
of the executive could not give a right, they might yet excuse from damages. I was much inclined to
think that a distinction ought to be taken between the acts of civil and those of military officers; and
between proceedings within the body of the country and those on the high seas. That implicit
obedience which military men usually pay to the orders of their superiors which indeed is
indispensably necessary to every military system, appeared to me strongly to imply the principle that
those orders, if not to perform a prohibited act, ought to justify the person whose general duty it is to
obey them, and who is placed by the laws of his country in a situation which in general requires, that
he should obey them. I was strongly inclined to think that where, in consequence of orders from the
legitimate authority, a vessel is seized with pure intention, the claim of the injured party for damages
would be against that government from which the orders proceeded, and would be a proper subject for
negotiation. But I have been convinced that I was mistaken, and I have receded from this first opinion,
I acquiesce in that of my brethren, which is, that the instructions can not change the nature of the
transaction, or legalize an act which, without those instructions, would have been a plain trespass.
The case cited is distinguished from the case at bar in that in that case the duty to exercise judgment as to what
vessels should be seized was placed, by express provisions of the law, upon the commander of the American
warship. No duty whatever was placed upon the President of the United States. Under the law he might, if he
chose, give instructions to commanders of American war vessels to subject to examination any ship or vessel
of the United Stated on the high seas which there might be reason to suspect was engaged in commerce
contrary to the tenor of the law; but the duty of action, using judgment and discretion as to whether or not a
given ship was susceptible of seizure under said law, was placed wholly upon the commander o the vessel.
This appears from reading the Act. Section 5 thereof provides as follows:
That it shall be lawful for the President of the United States to give instructions to the commanders of
the public armed ships of the United States to stop and examine any ship or vessel of the United States
on the high seas which there may be reason to suspect to be engaged in any traffic or commerce
contrary to the true tenor hereof; and if, upon examination, it shall appear that such ship or vessel is
bound sailing to any port or place within the territory of the French Republic, or her dependencies,
contrary to the intent of this Act, it shall be the duty of the commander of such public armed vessel to
seize every ship or vessel engaged in such illicit commerce, and send the same to the nearest port in
the United States; and every such ship or vessel, thus bound or sailing to any such port or place, shall,
upon due proof thereof, be liable to the like penalties and forfeitures as are provided in and by the first
section of this Act.
Under the law as quoted, the commander was acting for himself, upon his own responsibility. He has no
authority whatever from the President of the United States to act in a given way, or at a particular time, or upon
a given ship, or upon a given set of facts. He was controlled entirely by the provisions of the law, not by the
Page 324 of 557

orders or instructions of the President. The source of his authority was the Act, not the President. He was
acting for himself, as principal, upon whom lay all of the obligation and all of the responsibility and whose
duties were clearly specified in the Act, and not as agent or servant of the President. He was acting in the
performance of his own duty, and not in the performance of a duty laid upon the President of the United States.
In the case at bar no duty whatever was laid upon Harding or Trowbridge. The only duty, if there was a duty
connection with the act performed, was laid upon the Governor-General personally. If the law was as the
supposed it to be, it was his duty and not their duty which they were performing. They acted not as principals
upon whom an obligation was directly or indirectly laid by law. They were at the time merely the hands of the
Governor-General.
The case of Trace vs. Swartwout (10 Peters, 80), is distinguishable upon the same grounds.
In the case of Marbury vs. Madison (1 Cranch, 137), the court said (p. 164):
By the constitution of the United States the President is invested with certain important political
powers, in the exercise of which he is use to his own discretion, and is accountable only to his country
in his political character, and to his own conscience. To aid him in the performance of these duties, he
is authorized to appoint certain officers, who act by his authority, and in conformity with his orders. In
such cases, their acts are his acts; and whatever opinion may be entertained of the manner in which
executive discretion may be used, still there exists, and can exist, no power to control that discretion.
The subjects are political: they respect the nation, not individual rights, and being entrusted to the
executive, the decision of the executive is conclusive. The application of this remark will be received,
by adverting to the Act of Congress for establishing the department of foreign affairs. This officer, as
his duties were prescribed by that Act, is to conform precisely to the will of the President: he is the
mere organ by whom that will is communicated. The acts of such an officer, as an officer, can never
be examinable by the courts. But when the legislature proceeds to impose on that officer other duties;
when he is directed peremptorily to perform certain acts; when the rights of individuals are dependent
on the performance of those acts; he is so far his conduct; and can not, at his discretion, sport away the
vested rights of others.
I do not discuss here the other citations made by the attorneys for the defendant for the reason that those
authorities exclusively to the liability of executive officers of the Government occupying subordinate
positions, who were creatures of the legislature and not of the constitution, and whose duties are specified by
the law under which they acted and were by nature different from those laid upon the chief executive. As we
have distinctly stated heretofore, the rule of liability, herein set forth, applicable to the chief executive is not
applied in this opinion to those occupying subordinate positions. The principle of the nonliability of the chief
executive rests in public policy. It is not held in this case that public policy reaches persons other than those
who, in the highest sense, constitute the coordinate departments of the government. That question is not
involved and is not discussed.
I have looked in vain for any logical reason which requires us to hold Harding and Trowbridge liable when the
person whose act they were in reality performing is himself free from responsibility.
Trent, J., concurs.

Footnotes
1

August 3, 1901, for the reasons stated in this case, writs of prohibition were granted, demurrers
overruled, injunctions made perpetual, and the actions dismissed in the cases of W. Cameron Forbes,
Page 325 of 557

et al. vs. Gan Tico and A. S. Crossfield (No. 6158), and W. Cameron Forbes et al Sy Chang and A. S.
Crossfield (No. 6159).
MORELAND AND TRENT, JJ., concurring:
1

15 Phil. Rep., 7.

15 Phil. Rep., 7.

Page 366, supra.

Page 326 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 71977 February 27, 1987
DEMETRIO G. DEMETRIA, M.P., AUGUSTO S. SANCHEZ, M.P., ORLANDO S. MERCADO, M.P.,
HONORATO Y. AQUINO, M.P., ZAFIRO L. RESPICIO, M.P., DOUGLAS R. CAGAS, M.P., OSCAR
F. SANTOS, M.P., ALBERTO G. ROMULO, M.P., CIRIACO R. ALFELOR, M.P., ISIDORO E.
REAL, M.P., EMIGDIO L. LINGAD, M.P., ROLANDO C. MARCIAL, M.P., PEDRO M.
MARCELLANA, M.P., VICTOR S. ZIGA, M.P., and ROGELIO V. GARCIA. M.P., petitioners,
vs.
HON. MANUEL ALBA in his capacity as the MINISTER OF THE BUDGET and VICTOR
MACALINGCAG in his capacity as the TREASURER OF THE PHILIPPINES, respondents.

FERNAN, J.:
Assailed in this petition for prohibition with prayer for a writ of preliminary injunction is the
constitutionality of the first paragraph of Section 44 of Presidential Decree No. 1177, otherwise
known as the "Budget Reform Decree of 1977."
Petitioners, who filed the instant petition as concerned citizens of this country, as members of the
National Assembly/Batasan Pambansa representing their millions of constituents, as parties with
general interest common to all the people of the Philippines, and as taxpayers whose vital interests
may be affected by the outcome of the reliefs prayed for" 1 listed the grounds relied upon in this
petition as follows:
A. SECTION 44 OF THE 'BUDGET REFORM DECREE OF 1977' INFRINGES
UPON THE FUNDAMENTAL LAW BY AUTHORIZING THE ILLEGAL TRANSFER
OF PUBLIC MONEYS.
B. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 IS REPUGNANT TO THE
CONSTITUTION AS IT FAILS TO SPECIFY THE OBJECTIVES AND PURPOSES
FOR WHICH THE PROPOSED TRANSFER OF FUNDS ARE TO BE MADE.
C. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 ALLOWS THE
PRESIDENT TO OVERRIDE THE SAFEGUARDS, FORM AND PROCEDURE
PRESCRIBED BY THE CONSTITUTION IN APPROVING APPROPRIATIONS.
D. SECTION 44 OF THE SAME DECREE AMOUNTS TO AN UNDUE
DELEGATION OF LEGISLATIVE POWERS TO THE EXECUTIVE.
E. THE THREATENED AND CONTINUING TRANSFER OF FUNDS BY THE
PRESIDENT AND THE IMPLEMENTATION THEREOF BY THE BUDGET
MINISTER AND THE TREASURER OF THE PHILIPPINES ARE WITHOUT OR IN
EXCESS OF THEIR AUTHORITY AND JURISDICTION. 2

Page 327 of 557

Commenting on the petition in compliance with the Court resolution dated September 19, 1985, the
Solicitor General, for the public respondents, questioned the legal standing of petitioners, who were
allegedly merely begging an advisory opinion from the Court, there being no justiciable controversy
fit for resolution or determination. He further contended that the provision under consideration was
enacted pursuant to Section 16[5], Article VIII of the 1973 Constitution; and that at any rate,
prohibition will not lie from one branch of the government to a coordinate branch to enjoin the
performance of duties within the latter's sphere of responsibility.
On February 27, 1986, the Court required the petitioners to file a Reply to the Comment. This, they
did, stating, among others, that as a result of the change in the administration, there is a need to
hold the resolution of the present case in abeyance "until developments arise to enable the parties to
concretize their respective stands." 3
Thereafter, We required public respondents to file a rejoinder. The Solicitor General filed a rejoinder
with a motion to dismiss, setting forth as grounds therefor the abrogation of Section 16[5], Article VIII
of the 1973 Constitution by the Freedom Constitution of March 25, 1986, which has allegedly
rendered the instant petition moot and academic. He likewise cited the "seven pillars" enunciated by
Justice Brandeis in Ashwander v. TVA, 297 U.S. 288 (1936) 4 as basis for the petition's dismissal.
In the case of Evelio B. Javier v. The Commission on Elections and Arturo F. Pacificador, G.R. Nos.
68379-81, September 22, 1986, We stated that:
The abolition of the Batasang Pambansa and the disappearance of the office in
dispute between the petitioner and the private respondents both of whom have
gone their separate ways could be a convenient justification for dismissing the
case. But there are larger issues involved that must be resolved now, once and for
all, not only to dispel the legal ambiguities here raised. The more important purpose
is to manifest in the clearest possible terms that this Court will not disregard and in
effect condone wrong on the simplistic and tolerant pretext that the case has become
moot and academic.
The Supreme Court is not only the highest arbiter of legal questions but also the
conscience of the government. The citizen comes to us in quest of law but we must
also give him justice. The two are not always the same. There are times when we
cannot grant the latter because the issue has been settled and decision is no longer
possible according to the law. But there are also times when although the dispute
has disappeared, as in this case, it nevertheless cries out to be resolved. Justice
demands that we act then, not only for the vindication of the outraged right, though
gone, but also for the guidance of and as a restraint upon the future.
It is in the discharge of our role in society, as above-quoted, as well as to avoid great disservice to
national interest that We take cognizance of this petition and thus deny public respondents' motion to
dismiss. Likewise noteworthy is the fact that the new Constitution, ratified by the Filipino people in
the plebiscite held on February 2, 1987, carries verbatim section 16[5], Article VIII of the 1973
Constitution under Section 24[5], Article VI. And while Congress has not officially reconvened, We
see no cogent reason for further delaying the resolution of the case at bar.
The exception taken to petitioners' legal standing deserves scant consideration. The case of Pascual
v. Secretary of Public Works, et al., 110 Phil. 331, is authority in support of petitioners' locus standi.
Thus:

Page 328 of 557

Again, it is well-settled that the validity of a statute may be contested only by one
who will sustain a direct injury in consequence of its enforcement. Yet, there are
many decisions nullifying at the instance of taxpayers, laws providing for the
disbursement of public funds, upon the theory that the expenditure of public funds by
an officer of the state for the purpose of administering an unconstitutional act
constitutes a misapplication of such funds which may be enjoined at the request of a
taxpayer. Although there are some decisions to the contrary, the prevailing view in
the United States is stated in the American Jurisprudence as follows:
In the determination of the degree of interest essential to give the
requisite standing to attack the constitutionality of a statute, the
general rule is that not only persons individually affected, but also
taxpayers have sufficient interest in preventing the illegal
expenditures of moneys raised by taxation and may therefore
question the constitutionality of statutes requiring expenditure of
public moneys. [ 11 Am. Jur. 761, Emphasis supplied. ]
Moreover, in Tan v. Macapagal, 43 SCRA 677 and Sanidad v. Comelec, 73 SCRA 333, We said that
as regards taxpayers' suits, this Court enjoys that open discretion to entertain the same or not.
The conflict between paragraph 1 of Section 44 of Presidential Decree No. 1177 and Section 16[5],
Article VIII of the 1973 Constitution is readily perceivable from a mere cursory reading thereof. Said
paragraph 1 of Section 44 provides:
The President shall have the authority to transfer any fund, appropriated for the
different departments, bureaus, offices and agencies of the Executive Department,
which are included in the General Appropriations Act, to any program, project or
activity of any department, bureau, or office included in the General Appropriations
Act or approved after its enactment.
On the other hand, the constitutional provision under consideration reads as follows:
Sec. 16[5]. No law shall be passed authorizing any transfer of appropriations,
however, the President, the Prime Minister, the Speaker, the Chief Justice of the
Supreme Court, and the heads of constitutional commis ions may by law be
authorized to augment any item in the general appropriations law for their respective
offices from savings in other items of their respective appropriations.
The prohibition to transfer an appropriation for one item to another was explicit and categorical under
the 1973 Constitution. However, to afford the heads of the different branches of the government and
those of the constitutional commissions considerable flexibility in the use of public funds and
resources, the constitution allowed the enactment of a law authorizing the transfer of funds for the
purpose of augmenting an item from savings in another item in the appropriation of the government
branch or constitutional body concerned. The leeway granted was thus limited. The purpose and
conditions for which funds may be transferred were specified, i.e. transfer may be allowed for the
purpose of augmenting an item and such transfer may be made only if there are savings from
another item in the appropriation of the government branch or constitutional body.
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over extends the privilege granted under said
Section 16[5]. It empowers the President to indiscriminately transfer funds from one department,
bureau, office or agency of the Executive Department to any program, project or activity of any
department, bureau or office included in the General Appropriations Act or approved after its
Page 329 of 557

enactment, without regard as to whether or not the funds to be transferred are actually savings in the
item from which the same are to be taken, or whether or not the transfer is for the purpose of
augmenting the item to which said transfer is to be made. It does not only completely disregard the
standards set in the fundamental law, thereby amounting to an undue delegation of legislative
powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the
provision in question null and void.
"For the love of money is the root of all evil: ..." and money belonging to no one in particular, i.e.
public funds, provide an even greater temptation for misappropriation and embezzlement. This,
evidently, was foremost in the minds of the framers of the constitution in meticulously prescribing the
rules regarding the appropriation and disposition of public funds as embodied in Sections 16 and 18
of Article VIII of the 1973 Constitution. Hence, the conditions on the release of money from the
treasury [Sec. 18(1)]; the restrictions on the use of public funds for public purpose [Sec. 18(2)]; the
prohibition to transfer an appropriation for an item to another [See. 16(5) and the requirement of
specifications [Sec. 16(2)], among others, were all safeguards designed to forestall abuses in the
expenditure of public funds. Paragraph 1 of Section 44 puts all these safeguards to naught. For, as
correctly observed by petitioners, in view of the unlimited authority bestowed upon the President, "...
Pres. Decree No. 1177 opens the floodgates for the enactment of unfunded appropriations, results in
uncontrolled executive expenditures, diffuses accountability for budgetary performance and
entrenches the pork barrel system as the ruling party may well expand [sic] public money not on the
basis of development priorities but on political and personal expediency." 5 The contention of public
respondents that paragraph 1 of Section 44 of P.D. 1177 was enacted pursuant to Section 16(5) of
Article VIII of the 1973 Constitution must perforce fall flat on its face.
Another theory advanced by public respondents is that prohibition will not lie from one branch of the
government against a coordinate branch to enjoin the performance of duties within the latter's
sphere of responsibility.
Thomas M. Cooley in his "A Treatise on the Constitutional Limitations," Vol. 1, Eight Edition, Little,
Brown and Company, Boston, explained:
... The legislative and judicial are coordinate departments of the government, of
equal dignity; each is alike supreme in the exercise of its proper functions, and
cannot directly or indirectly, while acting within the limits of its authority, be subjected
to the control or supervision of the other, without an unwarrantable assumption by
that other of power which, by the Constitution, is not conferred upon it. The
Constitution apportions the powers of government, but it does not make any one of
the three departments subordinate to another, when exercising the trust committed to
it. The courts may declare legislative enactments unconstitutional and void in some
cases, but not because the judicial power is superior in degree or dignity to the
legislative. Being required to declare what the law is in the cases which come before
them, they must enforce the Constitution, as the paramount law, whenever a
legislative enactment comes in conflict with it. But the courts sit, not to review or
revise the legislative action, but to enforce the legislative will, and it is only where
they find that the legislature has failed to keep within its constitutional limits, that they
are at liberty to disregard its action; and in doing so, they only do what every private
citizen may do in respect to the mandates of the courts when the judges assumed to
act and to render judgments or decrees without jurisdiction. "In exercising this high
authority, the judges claim no judicial supremacy; they are only the administrators of
the public will. If an act of the legislature is held void, it is not because the judges
have any control over the legislative power, but because the act is forbidden by the
Constitution, and because the will of the people, which is therein declared, is
paramount to that of their representatives expressed in any law." [Lindsay v.
Page 330 of 557

Commissioners, & c., 2 Bay, 38, 61; People v. Rucker, 5 Col. 5; Russ v. Com., 210
Pa. St. 544; 60 Atl. 169, 1 L.R.A. [N.S.] 409, 105 Am. St. Rep. 825] (pp. 332-334).
Indeed, where the legislature or the executive branch is acting within the limits of its authority, the
judiciary cannot and ought not to interfere with the former. But where the legislature or the executive
acts beyond the scope of its constitutional powers, it becomes the duty of the judiciary to declare
what the other branches of the government had assumed to do as void. This is the essence of
judicial power conferred by the Constitution "in one Supreme Court and in such lower courts as may
be established by law" [Art. VIII, Section 1 of the 1935 Constitution; Art. X, Section 1 of the 1973
Constitution and which was adopted as part of the Freedom Constitution, and Art. VIII, Section 1 of
the 1987 Constitution] and which power this Court has exercised in many instances. *
Public respondents are being enjoined from acting under a provision of law which We have earlier
mentioned to be constitutionally infirm. The general principle relied upon cannot therefore accord
them the protection sought as they are not acting within their "sphere of responsibility" but without it.
The nation has not recovered from the shock, and worst, the economic destitution brought about by
the plundering of the Treasury by the deposed dictator and his cohorts. A provision which allows
even the slightest possibility of a repetition of this sad experience cannot remain written in our
statute books.
WHEREFORE, the instant petition is granted. Paragraph 1 of Section 44 of Presidential Decree No.
1177 is hereby declared null and void for being unconstitutional.
SO ORDER RED.
Teehankee, C.J., Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., Cruz, Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Footnotes
1 Petition, p. 3, Rollo.
2 pp. 6-7, Rollo
3 p. 169, Rollo.
4 The relevant portions read as follows:
The Court developed, for its own governance in the case confessedly within its
jurisdiction, a series of rules under which it has avoided passing upon a large part of
all the constitutional questions pressed upon it for decision. They are:
1. The Court will not pass upon the constitutionality of legislation in a friendly, nonadversary proceeding, declining because to decide such questions "is legitimate only
in the last resort, and as a necessity in the determination of real, earnest and vital
controversy between individuals. It never was the thought tht, by means of a friendly
suit, a party beaten in the legislature could transfer to the courts an inquiry as to the

Page 331 of 557

constitutionality of the legislative act." Chicago & Grand Trunk Ry. v. Wellman, 143
U.S. 339, 345.
2. The Court will not "anticipate question of constitutional law in advance of the
necessity of deciding it." Liverpool. N.Y. & P.S.S. Co. v. Emigration Commissioners,
113 U.S. 33, 39 ... "It is not the habit of the Court to decide questions of a
constitutional nature unless absolutely necessary to a decision of the case. 'Burton v.
United States. 196 U.S. 283, 295.
3. The Court will not formulate a rule of constitutional law broader than is required by
the precise facts to which it is to be applied." Liverpool, N.Y. & P.S.S. Co. v.
Emigration Commissioners, supra.
4. The Court will not pass upon a constitutional question although properly presented
by the record, if there is also present some other ground upon which the case may
be disposed of. This rule has found most varied application. Thus, if a case can be
decided on either of two grounds, one involving a constitutional question, the other a
question of statutory construction or general law, the Court will decide only the latter.
Siler v. Louisville & Nashville R. Co., 213 U.S. 175, 191; Light v. United States, 220
U.S. 523, 538. Appeals from the highest court of a state challenging its decision of a
question under the Federal Constitution are frequently dismissed because the
judgment can be sustained on an independent state ground. Berea College v.
Kentucky, 211 U.S. 45, 53.
5. The Court will not pass upon the validity of a statute upon complaint of one who
fails to show that he is injured by its operation. Tyler v. The Judges, 179 U.S. 405;
Hendrick v. Maryland, 235 U.S. 610, 621. Among the many applications of this rule,
none is more striking than the denial of the right of challenge to one who lacks a
personal or property right. Thus, the challenge by a public official interested only in
the performance of his official duty will not be entertained..... In Fairchild v. Hughes,
258 U.S. 126, the Court affirmed the dismissal of a suit brought by a citizenwho
sought to have the Nineteenth Amendment declared unconstitutional. In
Massachusetts v. Mellon, 262 U.S. 447, the challenge of the federal Maternity Act
was not entertained although made by the Commonwealth on behalf of all its
citizens.
6. The Court will not pass upon the constitutionality of a statute at the instance of one
who has availed himself of its benefits. Great Falls Mfg. Co. v. Attorney General, 124,
U.S. 581 . . .
7. "When the validity of an act of the Congress is drawn in question, and even if a
serious doubt of constitutionality is raised, it is a cardinal principle that this Court will
first ascertain whether a construction of the statute is fairly possible by which the
question may be avoided.' Cromwell v. Benson, 285 U.S. 22, 62." [pp. 176-177,
Rollo].
5 p. 14, Rollo.
* Casanovas vs. Hord 8 Phil. 125; McGirr vs. Hamilton, 30 Phil. 563; Compania
General de Tabacos vs. Board of Public Utility, 34 Phil. 136; Central Capiz vs.
Ramirez, 40 Phil. 883; Concepcion vs. Paredes, 42 Phil. 599; US vs. Ang Tang Ho
43 Phil. 6; McDaniel vs. Apacible, 44 Phil. 248; People vs. Pomar, 46 Phil. 440;
Page 332 of 557

Agcaoili vs. Suguitan, 48 Phil. 676; Government of P.I. vs. Springer, 50 Phil. 259;
Manila Electric Co. vs. Pasay Transp. Co., 57 Phil. 600: People vs. Linsangan; 62
Phil. 464; People and Hongkong & Shanghai Banking Corp. vs. Jose O. Vera, 65
Phil. 56; People vs. Carlos, 78 Phil. 535; City of Baguio vs. Nawasa, 106 Phil. 144;
City of Cebu vs. Nawasa, 107 Phil, 1112; Rutter vs. Esteban 93 Phil. 68.

Page 333 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 71977 February 27, 1987
DEMETRIO G. DEMETRIA, M.P., AUGUSTO S. SANCHEZ, M.P., ORLANDO S. MERCADO, M.P.,
HONORATO Y. AQUINO, M.P., ZAFIRO L. RESPICIO, M.P., DOUGLAS R. CAGAS, M.P., OSCAR
F. SANTOS, M.P., ALBERTO G. ROMULO, M.P., CIRIACO R. ALFELOR, M.P., ISIDORO E.
REAL, M.P., EMIGDIO L. LINGAD, M.P., ROLANDO C. MARCIAL, M.P., PEDRO M.
MARCELLANA, M.P., VICTOR S. ZIGA, M.P., and ROGELIO V. GARCIA. M.P., petitioners,
vs.
HON. MANUEL ALBA in his capacity as the MINISTER OF THE BUDGET and VICTOR
MACALINGCAG in his capacity as the TREASURER OF THE PHILIPPINES, respondents.

FERNAN, J.:
Assailed in this petition for prohibition with prayer for a writ of preliminary injunction is the
constitutionality of the first paragraph of Section 44 of Presidential Decree No. 1177, otherwise
known as the "Budget Reform Decree of 1977."
Petitioners, who filed the instant petition as concerned citizens of this country, as members of the
National Assembly/Batasan Pambansa representing their millions of constituents, as parties with
general interest common to all the people of the Philippines, and as taxpayers whose vital interests
may be affected by the outcome of the reliefs prayed for" 1 listed the grounds relied upon in this
petition as follows:
A. SECTION 44 OF THE 'BUDGET REFORM DECREE OF 1977' INFRINGES
UPON THE FUNDAMENTAL LAW BY AUTHORIZING THE ILLEGAL TRANSFER
OF PUBLIC MONEYS.
B. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 IS REPUGNANT TO THE
CONSTITUTION AS IT FAILS TO SPECIFY THE OBJECTIVES AND PURPOSES
FOR WHICH THE PROPOSED TRANSFER OF FUNDS ARE TO BE MADE.
C. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 ALLOWS THE
PRESIDENT TO OVERRIDE THE SAFEGUARDS, FORM AND PROCEDURE
PRESCRIBED BY THE CONSTITUTION IN APPROVING APPROPRIATIONS.
D. SECTION 44 OF THE SAME DECREE AMOUNTS TO AN UNDUE
DELEGATION OF LEGISLATIVE POWERS TO THE EXECUTIVE.
E. THE THREATENED AND CONTINUING TRANSFER OF FUNDS BY THE
PRESIDENT AND THE IMPLEMENTATION THEREOF BY THE BUDGET
MINISTER AND THE TREASURER OF THE PHILIPPINES ARE WITHOUT OR IN
EXCESS OF THEIR AUTHORITY AND JURISDICTION. 2

Page 334 of 557

Commenting on the petition in compliance with the Court resolution dated September 19, 1985, the
Solicitor General, for the public respondents, questioned the legal standing of petitioners, who were
allegedly merely begging an advisory opinion from the Court, there being no justiciable controversy
fit for resolution or determination. He further contended that the provision under consideration was
enacted pursuant to Section 16[5], Article VIII of the 1973 Constitution; and that at any rate,
prohibition will not lie from one branch of the government to a coordinate branch to enjoin the
performance of duties within the latter's sphere of responsibility.
On February 27, 1986, the Court required the petitioners to file a Reply to the Comment. This, they
did, stating, among others, that as a result of the change in the administration, there is a need to
hold the resolution of the present case in abeyance "until developments arise to enable the parties to
concretize their respective stands." 3
Thereafter, We required public respondents to file a rejoinder. The Solicitor General filed a rejoinder
with a motion to dismiss, setting forth as grounds therefor the abrogation of Section 16[5], Article VIII
of the 1973 Constitution by the Freedom Constitution of March 25, 1986, which has allegedly
rendered the instant petition moot and academic. He likewise cited the "seven pillars" enunciated by
Justice Brandeis in Ashwander v. TVA, 297 U.S. 288 (1936) 4 as basis for the petition's dismissal.
In the case of Evelio B. Javier v. The Commission on Elections and Arturo F. Pacificador, G.R. Nos.
68379-81, September 22, 1986, We stated that:
The abolition of the Batasang Pambansa and the disappearance of the office in
dispute between the petitioner and the private respondents both of whom have
gone their separate ways could be a convenient justification for dismissing the
case. But there are larger issues involved that must be resolved now, once and for
all, not only to dispel the legal ambiguities here raised. The more important purpose
is to manifest in the clearest possible terms that this Court will not disregard and in
effect condone wrong on the simplistic and tolerant pretext that the case has become
moot and academic.
The Supreme Court is not only the highest arbiter of legal questions but also the
conscience of the government. The citizen comes to us in quest of law but we must
also give him justice. The two are not always the same. There are times when we
cannot grant the latter because the issue has been settled and decision is no longer
possible according to the law. But there are also times when although the dispute
has disappeared, as in this case, it nevertheless cries out to be resolved. Justice
demands that we act then, not only for the vindication of the outraged right, though
gone, but also for the guidance of and as a restraint upon the future.
It is in the discharge of our role in society, as above-quoted, as well as to avoid great disservice to
national interest that We take cognizance of this petition and thus deny public respondents' motion to
dismiss. Likewise noteworthy is the fact that the new Constitution, ratified by the Filipino people in
the plebiscite held on February 2, 1987, carries verbatim section 16[5], Article VIII of the 1973
Constitution under Section 24[5], Article VI. And while Congress has not officially reconvened, We
see no cogent reason for further delaying the resolution of the case at bar.
The exception taken to petitioners' legal standing deserves scant consideration. The case of Pascual
v. Secretary of Public Works, et al., 110 Phil. 331, is authority in support of petitioners' locus standi.
Thus:

Page 335 of 557

Again, it is well-settled that the validity of a statute may be contested only by one
who will sustain a direct injury in consequence of its enforcement. Yet, there are
many decisions nullifying at the instance of taxpayers, laws providing for the
disbursement of public funds, upon the theory that the expenditure of public funds by
an officer of the state for the purpose of administering an unconstitutional act
constitutes a misapplication of such funds which may be enjoined at the request of a
taxpayer. Although there are some decisions to the contrary, the prevailing view in
the United States is stated in the American Jurisprudence as follows:
In the determination of the degree of interest essential to give the
requisite standing to attack the constitutionality of a statute, the
general rule is that not only persons individually affected, but also
taxpayers have sufficient interest in preventing the illegal
expenditures of moneys raised by taxation and may therefore
question the constitutionality of statutes requiring expenditure of
public moneys. [ 11 Am. Jur. 761, Emphasis supplied. ]
Moreover, in Tan v. Macapagal, 43 SCRA 677 and Sanidad v. Comelec, 73 SCRA 333, We said that
as regards taxpayers' suits, this Court enjoys that open discretion to entertain the same or not.
The conflict between paragraph 1 of Section 44 of Presidential Decree No. 1177 and Section 16[5],
Article VIII of the 1973 Constitution is readily perceivable from a mere cursory reading thereof. Said
paragraph 1 of Section 44 provides:
The President shall have the authority to transfer any fund, appropriated for the
different departments, bureaus, offices and agencies of the Executive Department,
which are included in the General Appropriations Act, to any program, project or
activity of any department, bureau, or office included in the General Appropriations
Act or approved after its enactment.
On the other hand, the constitutional provision under consideration reads as follows:
Sec. 16[5]. No law shall be passed authorizing any transfer of appropriations,
however, the President, the Prime Minister, the Speaker, the Chief Justice of the
Supreme Court, and the heads of constitutional commis ions may by law be
authorized to augment any item in the general appropriations law for their respective
offices from savings in other items of their respective appropriations.
The prohibition to transfer an appropriation for one item to another was explicit and categorical under
the 1973 Constitution. However, to afford the heads of the different branches of the government and
those of the constitutional commissions considerable flexibility in the use of public funds and
resources, the constitution allowed the enactment of a law authorizing the transfer of funds for the
purpose of augmenting an item from savings in another item in the appropriation of the government
branch or constitutional body concerned. The leeway granted was thus limited. The purpose and
conditions for which funds may be transferred were specified, i.e. transfer may be allowed for the
purpose of augmenting an item and such transfer may be made only if there are savings from
another item in the appropriation of the government branch or constitutional body.
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over extends the privilege granted under said
Section 16[5]. It empowers the President to indiscriminately transfer funds from one department,
bureau, office or agency of the Executive Department to any program, project or activity of any
department, bureau or office included in the General Appropriations Act or approved after its
Page 336 of 557

enactment, without regard as to whether or not the funds to be transferred are actually savings in the
item from which the same are to be taken, or whether or not the transfer is for the purpose of
augmenting the item to which said transfer is to be made. It does not only completely disregard the
standards set in the fundamental law, thereby amounting to an undue delegation of legislative
powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the
provision in question null and void.
"For the love of money is the root of all evil: ..." and money belonging to no one in particular, i.e.
public funds, provide an even greater temptation for misappropriation and embezzlement. This,
evidently, was foremost in the minds of the framers of the constitution in meticulously prescribing the
rules regarding the appropriation and disposition of public funds as embodied in Sections 16 and 18
of Article VIII of the 1973 Constitution. Hence, the conditions on the release of money from the
treasury [Sec. 18(1)]; the restrictions on the use of public funds for public purpose [Sec. 18(2)]; the
prohibition to transfer an appropriation for an item to another [See. 16(5) and the requirement of
specifications [Sec. 16(2)], among others, were all safeguards designed to forestall abuses in the
expenditure of public funds. Paragraph 1 of Section 44 puts all these safeguards to naught. For, as
correctly observed by petitioners, in view of the unlimited authority bestowed upon the President, "...
Pres. Decree No. 1177 opens the floodgates for the enactment of unfunded appropriations, results in
uncontrolled executive expenditures, diffuses accountability for budgetary performance and
entrenches the pork barrel system as the ruling party may well expand [sic] public money not on the
basis of development priorities but on political and personal expediency." 5 The contention of public
respondents that paragraph 1 of Section 44 of P.D. 1177 was enacted pursuant to Section 16(5) of
Article VIII of the 1973 Constitution must perforce fall flat on its face.
Another theory advanced by public respondents is that prohibition will not lie from one branch of the
government against a coordinate branch to enjoin the performance of duties within the latter's
sphere of responsibility.
Thomas M. Cooley in his "A Treatise on the Constitutional Limitations," Vol. 1, Eight Edition, Little,
Brown and Company, Boston, explained:
... The legislative and judicial are coordinate departments of the government, of
equal dignity; each is alike supreme in the exercise of its proper functions, and
cannot directly or indirectly, while acting within the limits of its authority, be subjected
to the control or supervision of the other, without an unwarrantable assumption by
that other of power which, by the Constitution, is not conferred upon it. The
Constitution apportions the powers of government, but it does not make any one of
the three departments subordinate to another, when exercising the trust committed to
it. The courts may declare legislative enactments unconstitutional and void in some
cases, but not because the judicial power is superior in degree or dignity to the
legislative. Being required to declare what the law is in the cases which come before
them, they must enforce the Constitution, as the paramount law, whenever a
legislative enactment comes in conflict with it. But the courts sit, not to review or
revise the legislative action, but to enforce the legislative will, and it is only where
they find that the legislature has failed to keep within its constitutional limits, that they
are at liberty to disregard its action; and in doing so, they only do what every private
citizen may do in respect to the mandates of the courts when the judges assumed to
act and to render judgments or decrees without jurisdiction. "In exercising this high
authority, the judges claim no judicial supremacy; they are only the administrators of
the public will. If an act of the legislature is held void, it is not because the judges
have any control over the legislative power, but because the act is forbidden by the
Constitution, and because the will of the people, which is therein declared, is
paramount to that of their representatives expressed in any law." [Lindsay v.
Page 337 of 557

Commissioners, & c., 2 Bay, 38, 61; People v. Rucker, 5 Col. 5; Russ v. Com., 210
Pa. St. 544; 60 Atl. 169, 1 L.R.A. [N.S.] 409, 105 Am. St. Rep. 825] (pp. 332-334).
Indeed, where the legislature or the executive branch is acting within the limits of its authority, the
judiciary cannot and ought not to interfere with the former. But where the legislature or the executive
acts beyond the scope of its constitutional powers, it becomes the duty of the judiciary to declare
what the other branches of the government had assumed to do as void. This is the essence of
judicial power conferred by the Constitution "in one Supreme Court and in such lower courts as may
be established by law" [Art. VIII, Section 1 of the 1935 Constitution; Art. X, Section 1 of the 1973
Constitution and which was adopted as part of the Freedom Constitution, and Art. VIII, Section 1 of
the 1987 Constitution] and which power this Court has exercised in many instances. *
Public respondents are being enjoined from acting under a provision of law which We have earlier
mentioned to be constitutionally infirm. The general principle relied upon cannot therefore accord
them the protection sought as they are not acting within their "sphere of responsibility" but without it.
The nation has not recovered from the shock, and worst, the economic destitution brought about by
the plundering of the Treasury by the deposed dictator and his cohorts. A provision which allows
even the slightest possibility of a repetition of this sad experience cannot remain written in our
statute books.
WHEREFORE, the instant petition is granted. Paragraph 1 of Section 44 of Presidential Decree No.
1177 is hereby declared null and void for being unconstitutional.
SO ORDER RED.
Teehankee, C.J., Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., Cruz, Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Footnotes
1 Petition, p. 3, Rollo.
2 pp. 6-7, Rollo
3 p. 169, Rollo.
4 The relevant portions read as follows:
The Court developed, for its own governance in the case confessedly within its
jurisdiction, a series of rules under which it has avoided passing upon a large part of
all the constitutional questions pressed upon it for decision. They are:
1. The Court will not pass upon the constitutionality of legislation in a friendly, nonadversary proceeding, declining because to decide such questions "is legitimate only
in the last resort, and as a necessity in the determination of real, earnest and vital
controversy between individuals. It never was the thought tht, by means of a friendly
suit, a party beaten in the legislature could transfer to the courts an inquiry as to the

Page 338 of 557

constitutionality of the legislative act." Chicago & Grand Trunk Ry. v. Wellman, 143
U.S. 339, 345.
2. The Court will not "anticipate question of constitutional law in advance of the
necessity of deciding it." Liverpool. N.Y. & P.S.S. Co. v. Emigration Commissioners,
113 U.S. 33, 39 ... "It is not the habit of the Court to decide questions of a
constitutional nature unless absolutely necessary to a decision of the case. 'Burton v.
United States. 196 U.S. 283, 295.
3. The Court will not formulate a rule of constitutional law broader than is required by
the precise facts to which it is to be applied." Liverpool, N.Y. & P.S.S. Co. v.
Emigration Commissioners, supra.
4. The Court will not pass upon a constitutional question although properly presented
by the record, if there is also present some other ground upon which the case may
be disposed of. This rule has found most varied application. Thus, if a case can be
decided on either of two grounds, one involving a constitutional question, the other a
question of statutory construction or general law, the Court will decide only the latter.
Siler v. Louisville & Nashville R. Co., 213 U.S. 175, 191; Light v. United States, 220
U.S. 523, 538. Appeals from the highest court of a state challenging its decision of a
question under the Federal Constitution are frequently dismissed because the
judgment can be sustained on an independent state ground. Berea College v.
Kentucky, 211 U.S. 45, 53.
5. The Court will not pass upon the validity of a statute upon complaint of one who
fails to show that he is injured by its operation. Tyler v. The Judges, 179 U.S. 405;
Hendrick v. Maryland, 235 U.S. 610, 621. Among the many applications of this rule,
none is more striking than the denial of the right of challenge to one who lacks a
personal or property right. Thus, the challenge by a public official interested only in
the performance of his official duty will not be entertained..... In Fairchild v. Hughes,
258 U.S. 126, the Court affirmed the dismissal of a suit brought by a citizenwho
sought to have the Nineteenth Amendment declared unconstitutional. In
Massachusetts v. Mellon, 262 U.S. 447, the challenge of the federal Maternity Act
was not entertained although made by the Commonwealth on behalf of all its
citizens.
6. The Court will not pass upon the constitutionality of a statute at the instance of one
who has availed himself of its benefits. Great Falls Mfg. Co. v. Attorney General, 124,
U.S. 581 . . .
7. "When the validity of an act of the Congress is drawn in question, and even if a
serious doubt of constitutionality is raised, it is a cardinal principle that this Court will
first ascertain whether a construction of the statute is fairly possible by which the
question may be avoided.' Cromwell v. Benson, 285 U.S. 22, 62." [pp. 176-177,
Rollo].
5 p. 14, Rollo.
* Casanovas vs. Hord 8 Phil. 125; McGirr vs. Hamilton, 30 Phil. 563; Compania
General de Tabacos vs. Board of Public Utility, 34 Phil. 136; Central Capiz vs.
Ramirez, 40 Phil. 883; Concepcion vs. Paredes, 42 Phil. 599; US vs. Ang Tang Ho
43 Phil. 6; McDaniel vs. Apacible, 44 Phil. 248; People vs. Pomar, 46 Phil. 440;
Page 339 of 557

Agcaoili vs. Suguitan, 48 Phil. 676; Government of P.I. vs. Springer, 50 Phil. 259;
Manila Electric Co. vs. Pasay Transp. Co., 57 Phil. 600: People vs. Linsangan; 62
Phil. 464; People and Hongkong & Shanghai Banking Corp. vs. Jose O. Vera, 65
Phil. 56; People vs. Carlos, 78 Phil. 535; City of Baguio vs. Nawasa, 106 Phil. 144;
City of Cebu vs. Nawasa, 107 Phil, 1112; Rutter vs. Esteban 93 Phil. 68.

Page 340 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-53487 May 25, 1981
ANDRES GARCES, Reverend Father SERGIO MARILAO OSMEA, NICETAS DAGAR and
JESUS EDULLANTES, petitioners,
vs.
Hon. NUMERIANO G. ESTENZO, Presiding Judge of the Court of First Instance of Leyte,
Ormoc City Branch V, BARANGAY COUNCIL of Valencia, Ormoc City, Barangay Captain
MANUEL C. VELOSO, Councilmen GAUDENCIO LAVEZARES, TOMAS CABATINGAN and
MAXIMINO NAVARRO, Barangay Secretary CONCHITA MARAYA and Barangay Treasurer
LUCENA BALTAZAR, respondents.

AQUINO, J.:1wph1.t
This case is about the constitutionality of four resolutions of the barangay council of Valencia, Ormoc
City, regarding the acquisition of the wooden image of San Vicente Ferrer to be used in the
celebration of his annual feast day. That issue was spawned by the controversy as to whether the
parish priest or a layman should have the custody of the image.
On March 23, 1976, the said barangay council adopted Resolution No. 5, "reviving the traditional
socio-religious celebration" every fifth day of April "of the feast day of Seor San Vicente Ferrer, the
patron saint of Valencia".
That resolution designated the members of nine committees who would take charge of the 1976
festivity. lt provided for (1) the acquisition of the image of San Vicente Ferrer and (2) the construction
of a waiting shed as the barangay's projects. Funds for the two projects would be obtained through
the selling of tickets and cash donations " (Exh A or 6).
On March 26, 1976, the barangay council passed Resolution No. 6 which specified that, in
accordance with the practice in Eastern Leyte, Councilman Tomas Cabatingan, the Chairman or
hermano mayor of the fiesta, would be the caretaker of the image of San Vicente Ferrer and that the
image would remain in his residence for one year and until the election of his successor as chairman
of the next feast day.
It was further provided in the resolution that the image would be made available to the Catholic
parish church during the celebration of the saint's feast day (Exh. B or 7).
Resolutions Nos. 5 and 6 were submitted to a plebiscite and were duly ratified by the barangay
general assembly on March 26, 1976. Two hundred seventy-two voters ratified the two resolutions
(Exh. 2 and 5).
Funds were raised by means of solicitations0 and cash donations of the barangay residents and
those of the neighboring places of Valencia. With those funds, the waiting shed was constructed and

Page 341 of 557

the wooden image of San Vicente Ferrer was acquired in Cebu City by the barangay council for four
hundred pesos (Exh. F-l, 3 and 4).
On April 5, 1976, the image was temporarily placed in the altar of the Catholic church of Barangay
Valencia so that the devotees could worship the saint during the mass for the fiesta.
A controversy arose after the mass when the parish priest, Father Sergio Marilao Osmea refused to
return that image to the barangay council on the pretext that it was the property of the church
because church funds were used for its acquisition.
Several days after the fiesta or on April 11, 1976, on the occasion of his sermon during a mass,
Father Osmea allegedly uttered defamatory remarks against the barangay captain, Manuel C.
Veloso, apparently in connection with the disputed image. That incident provoked Veloso to file
against Father Osmea in the city court of Ormoc City a charge for grave oral defamation.
Father Osmea retaliated by filing administrative complaints against Veloso with the city mayor's
office and the Department of Local Government and Community Development on the grounds of
immorality, grave abuse of authority, acts unbecoming a public official and ignorance of the law.
Meanwhile, the image of San Vicente Ferrer remained in the Catholic church of Valencia. Because
Father Osmea did not accede to the request of Cabatingan to have custody of the image and
"maliciously ignored" the council's Resolution No. 6, the council enacted on May 12, 1976 Resolution
No. 10, authorizing the hiring of a lawyer to file a replevin case against Father Osmea for the
recovery of the image (Exh. C or 8). On June 14, 1976, the barangay council passed Resolution No.
12, appointing Veloso as its representative in the replevin case (Exh. D or 9).
The replevin case was filed in the city court of Ormoc City against Father Osmea and Bishop
Cipriano Urgel (Exh. F). After the barangay council had posted a cash bond of eight hundred pesos,
Father Osmea turned over the image to the council (p. 10, Rollo). ln his answer to the complaint for
replevin, he assailed the constitutionality of the said resolutions (Exh. F-1).
Later, he and three other persons, Andres Garces, a member of the Aglipayan Church, and two
Catholic laymen, Jesus Edullantes and Nicetas Dagar, filed against the barangay council and its
members (excluding two members) a complaint in the Court of First Instance at Ormoc City, praying
for the annulment of the said resolutions (Civil Case No. 1680-0).
The lower court dismissed the complaint. lt upheld the validity of the resolutions. The petitioners
appealed under Republic Act No. 5440. The petitioners contend that the barangay council was not
duly constituted because lsidoro M. Maago, Jr., the chairman of the kabataang barangay, was not
allowed to participate in its sessions.
Barangays used to be known as citizens assemblies (Presidential Decrees Nos. 86 and 86-A).
Presidential Decree No. 557, which took effect on September 21, 1974, 70 O.G. 8450-L, directed
that all barrios should be known as barangays and adopted the Revised Barrio Charter as the
Barangay Charter.
Barrios are units of municipalities or municipal districts in which they are situated. They are quasimunicipal corporations endowed with such powers" as are provided by law "for the performance of
particular government functions, to be exercised by and through their respective barrio governments
in conformity with law" (Sec. 2, Revised Barrio Charter, R.A. No. 3590).

Page 342 of 557

The barrio assembly consists of all persons who are residents of the barrio for at least six months,
eighteen years of age or over and Filipino citizens duly registered in the list kept by the barrio
secretary (Sec. 4, Ibid).
The barrio council, now barangay council, is composed of the barangay captain and six councilmen
(Sec. 7, Ibid). Section 3 of Presidential Decree No. 684, which took effect on April 15, 1975, provides
that "the barangay youth chairman shall be an ex-officio member of the barangay council", having
the same powers and functions as a barangay councilman.
In this case, Maago, the barangay youth chairman, was notified of the sessions of the barangay
council to be held on March 23 and 26, 1976 but he was not able to attend those sessions because
he was working with a construction company based at Ipil, Ormoc City (Par. 2[d] Exh. 1).
Maago's absence from the sessions of the barangay council did not render the said resolutions
void. There was a quorum when the said resolutions were passed.
The other contention of the petitioners is that the resolutions contravene the constitutional provisions
that "no law shall be made respecting an establishment of religion" and that "no public money or
property shall ever be appropriated, applied, paid, or used, directly or indirectly, for the use, benefit,
or support of any sect, church, denomination, sectarian institution, or system of religion, or for the
use, benefit, or support of any priest, preacher, minister, or other religious teacher or dignitary as
such. except when such priest, preacher, minister, or dignitary is assigned to the armed forces, or to
any penal institution, or government orphanage or leprosarium (Sec. 8, Article IV and sec. 18[2],
Article VIII, Constitution).
That contention is glaringly devoid of merit. The questioned resolutions do not directly or indirectly
establish any religion, nor abridge religious liberty, nor appropriate public money or property for the
benefit of any sect, priest or clergyman. The image was purchased with private funds, not with tax
money. The construction of a waiting shed is entirely a secular matter.
Manifestly puerile and flimsy is Petitioners argument that the barangay council favored the Catholic
religion by using the funds raised by solicitations and donations for the purchase of the patron saint's
wooden image and making the image available to the Catholic church.
The preposterousness of that argument is rendered more evident by the fact that counsel advanced
that argument in behalf of the petitioner, Father Osmea the parish priest.
The wooden image was purchased in connection with the celebration of the barrio fiesta honoring
the patron saint, San Vicente Ferrer, and not for the purpose of favoring any religion nor interfering
with religious matters or the religious beliefs of the barrio residents. One of the highlights of the fiesta
was the mass. Consequently, the image of the patron saint had to be placed in the church when the
mass was celebrated.
If there is nothing unconstitutional or illegal in holding a fiesta and having a patron saint for the
barrio, then any activity intended to facilitate the worship of the patron saint (such as the acquisition
and display of his image) cannot be branded as illegal.
As noted in the first resolution, the barrio fiesta is a socio-religious affair. Its celebration is an
ingrained tradition in rural communities. The fiesta relieves the monotony and drudgery of the lives of
the masses.

Page 343 of 557

The barangay council designated a layman as the custodian of the wooden image in order to
forestall any suspicion that it is favoring the Catholic church. A more practical reason for that
arrangement would be that the image, if placed in a layman's custody, could easily be made
available to any family desiring to borrow the image in connection with prayers and novenas.
The contradictory positions of the petitioners are shown in their affidavits. Petitioner Garces swore
that the said resolutions favored the Catholic church. On the other hand, petitioners Dagar and
Edullantes swore that the resolutions prejudiced the Catholics because they could see the image in
the church only once a year or during the fiesta (Exh. H and J).
We find that the momentous issues of separation of church and state, freedom of religion annd the
use of public money to favor any sect or church are not involved at all in this case even remotely or
indirectly. lt is not a microcosmic test case on those issues.
This case is a petty quarrel over the custody of a saint's image. lt would never have arisen if the
parties had been more diplomatic and tactful and if Father Osmea had taken the trouble of causing
contributions to be solicited from his own parishioners for the purchase of another image of San
Vicente Ferrer to be installed in his church.
There can be no question that the image in question belongs to the barangay council. Father
Osmea claim that it belongs to his church is wrong. The barangay council, as owner of the image,
has the right to determine who should have custody thereof.
If it chooses to change its mind and decides to give the image to the Catholic church. that action
would not violate the Constitution because the image was acquired with private funds and is its
private property.
The council has the right to take measures to recover possession of the image by enacting
Resolutions Nos. 10 and 12.
Not every governmental activity which involves the expenditure of public funds and which has some
religious tint is violative of the constitutional provisions regarding separation of church and state,
freedom of worship and banning the use of public money or property.
In Aglipay vs. Ruiz, 64 Phil. 201, what was involved was Act No. 4052 which appropriated sixty
thousand pesos for the cost of plates and the printing of postage stamps with new designs. Under
the law, the Director of Posts, with the approval of the Department Head and the President of the
Philippines, issued in 1936 postage stamps to commemorate the celebration in Manila of the 33rd
International Eucharistic Congress sponsored by the Catholic Church.
The purpose of the stamps was to raise revenue and advertise the Philippines. The design of the
stamps showed a map of the Philippines and nothing about the Catholic Church. No religious
purpose was intended.
Monsignor Gregorio Aglipay, the founder and head of the Philippine Independent Church, sought to
enjoin the sale of those commemorative postage stamps.
It was held that the issuance of the stamps, while linked inseparably with an event of a religious
character, was not designed as a propaganda for the Catholic Church. Aglipay's prohibition suit was
dismissed.

Page 344 of 557

The instant case is easily distinguishable from Verzosa vs. Fernandez, 49 Phil., 627 and 55 Phil.
307, where a religious brotherhood, La Archicofradia del Santisimo Sacramento, organized for the
purpose of raising funds to meet the expenses for the annual fiesta in honor of the Most Holy
Sacrament and the Virgin Lady of Guadalupe, was held accountable for the funds which it held as
trustee. 0
Finding that the petitioners have no cause of action for the annulment of the barangay resolutions,
the lower court's judgment dismissing their amended petition is affirmed. No costs.
SO ORDERED.
Fernando C.J., Barredo, Makasiar, Guerrero, De Castro and Melencio-Herrera, JJ.,
concur.1wph1.t
Teehankee, J., concur in the result.
Fernandez, J., Concepcion Jr. J., are on leave.

Separate Opinions

ABAD SANTOS, J., concurring:

I want to add these observations: the images of saints are not worshiped; they are venerated. "Thou
shall not have strange gods." A petty dispute on who should have custody of the statue of San
Vicente Ferrer should not have taken up the time of the Supreme Court. There can be no doubt that
the statue was bought with private funds raised by the barangay council which also decided who
should have custody of it. How the cura parroco got it into his head that he should have custody of
the statue defies logic. lt is not, therefore, suprising to hear statements that religion has no relevance
to current problems. Let there be affirmation action by the churches and less concern for
inconsequential matters.

Separate Opinions
ABAD SANTOS, J., concurring:
I want to add these observations: the images of saints are not worshiped; they are venerated. "Thou
shall not have strange gods." A petty dispute on who should have custody of the statue of San
Vicente Ferrer should not have taken up the time of the Supreme Court. There can be no doubt that
the statue was bought with private funds raised by the barangay council which also decided who
should have custody of it. How the cura parroco got it into his head that he should have custody of
the statue defies logic. lt is not, therefore, suprising to hear statements that religion has no relevance
Page 345 of 557

to current problems. Let there be affirmation action by the churches and less concern for
inconsequential matters.

Page 346 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-45459

March 13, 1937

GREGORIO AGLIPAY, petitioner,

vs.
JUAN RUIZ, respondent.
Vicente Sotto for petitioner.
Office of the Solicitor-General Tuason for respondent.
LAUREL, J.:
The petitioner, Mons. Gregorio Aglipay, Supreme Head of the Philippine Independent Church, seeks the
issuance from this court of a writ of prohibition to prevent the respondent Director of Posts from issuing and
selling postage stamps commemorative of the Thirty-third International Eucharistic Congress.
In May, 1936, the Director of Posts announced in the dailies of Manila that he would order the issues of
postage stamps commemorating the celebration in the City of Manila of the Thirty-third international
Eucharistic Congress, organized by the Roman Catholic Church. The petitioner, in the fulfillment of what he
considers to be a civic duty, requested Vicente Sotto, Esq., member of the Philippine Bar, to denounce the
matter to the President of the Philippines. In spite of the protest of the petitioner's attorney, the respondent
publicly announced having sent to the United States the designs of the postage stamps for printing as follows:
"In the center is chalice, with grape vine and stalks of wheat as border design. The stamps are blue, green,
brown, cardinal red, violet and orange, 1 inch by 1,094 inches. The denominations are for 2, 6, 16, 20, 36 and
50 centavos." The said stamps were actually issued and sold though the greater part thereof, to this day,
remains unsold. The further sale of the stamps is sought to be prevented by the petitioner herein.
The Solicitor-General contends that the writ of prohibition is not the proper legal remedy in the instant case,
although he admits that the writ may properly restrain ministerial functions. While, generally, prohibition as an
extraordinary legal writ will not issue to restrain or control the performance of other than judicial or quasijudicial functions (50 C. J., 6580, its issuance and enforcement are regulated by statute and in this jurisdiction
may issue to . . . inferior tribunals, corporations, boards, or persons, whether excercising functions judicial or
ministerial, which are without or in excess of the jurisdiction of such tribunal, corporation, board, or person, . .
. ." (Secs. 516 and 226, Code of Civil Procedure.) The terms "judicial" and "ministerial" used with reference to
"functions" in the statute are undoubtedly comprehensive and include the challenged act of the respondent
Director of Posts in the present case, which act because alleged to be violative of the Constitution is a
fortiorari "without or in excess of . . . jurisdiction." The statutory rule, therefore, in the jurisdiction is that the
writ of prohibition is not confined exclusively to courts or tribunals to keep them within the limits of their own
jurisdiction and to prevent them from encroaching upon the jurisdiction of other tribunals, but will issue, in
appropriate cases, to an officer or person whose acts are without or in excess of his authority. Not infrequently,
"the writ is granted, where it is necessary for the orderly administration of justice, or to prevent the use of the
strong arm of the law in an oppressive or vindictive manner, or a multiplicity of actions." (Dimayuga and
Fajardo vs. Fernandez [1923], 43 Phil., 304, 307.)
The more important question raised refers to the alleged violation of the Constitution by the respondent in
issuing and selling postage stamps commemorative of the Thirty-third International Eucharistic Congress. It is
Page 347 of 557

alleged that this action of the respondent is violative of the provisions of section 23, subsection 3, Article VI,
of the Constitution of the Philippines, which provides as follows:
No public money or property shall ever be appropriated, applied, or used, directly or indirectly, for the
use, benefit, or support of any sect, church, denomination, secretarian, institution, or system of
religion, or for the use, benefit, or support of any priest, preacher, minister, or other religious teacher
or dignitary as such, except when such priest, preacher, minister, or dignitary is assigned to the armed
forces or to any penal institution, orphanage, or leprosarium.
The prohibition herein expressed is a direct corollary of the principle of separation of church and state.
Without the necessity of adverting to the historical background of this principle in our country, it is sufficient
to say that our history, not to speak of the history of mankind, has taught us that the union of church and state
is prejudicial to both, for ocassions might arise when the estate will use the church, and the church the state, as
a weapon in the furtherance of their recognized this principle of separation of church and state in the early
stages of our constitutional development; it was inserted in the Treaty of Paris between the United States and
Spain of December 10, 1898, reiterated in President McKinley's Instructions of the Philippine Commission,
reaffirmed in the Philippine Bill of 1902 and in the autonomy Act of August 29, 1916, and finally embodied in
the constitution of the Philippines as the supreme expression of the Filipino people. It is almost trite to say now
that in this country we enjoy both religious and civil freedom. All the officers of the Government, from the
highest to the lowest, in taking their oath to support and defend the constitution, bind themselves to recognize
and respect the constitutional guarantee of religious freedom, with its inherent limitations and recognized
implications. It should be stated that what is guaranteed by our Constitution is religious liberty, not mere
religious toleration.
Religious freedom, however, as a constitutional mandate is not inhibition of profound reverence for religion
and is not denial of its influence in human affairs. Religion as a profession of faith to an active power that
binds and elevates man to his Creator is recognized. And, in so far as it instills into the minds the purest
principles of morality, its influence is deeply felt and highly appreciated. When the Filipino people, in the
preamble of their Constitution, implored "the aid of Divine Providence, in order to establish a government that
shall embody their ideals, conserve and develop the patrimony of the nation, promote the general welfare, and
secure to themselves and their posterity the blessings of independence under a regime of justice, liberty and
democracy," they thereby manifested reliance upon Him who guides the destinies of men and nations. The
elevating influence of religion in human society is recognized here as elsewhere. In fact, certain general
concessions are indiscriminately accorded to religious sects and denominations. Our Constitution and laws
exempt from taxation properties devoted exclusively to religious purposes (sec. 14, subsec. 3, Art. VI,
Constitution of the Philippines and sec. 1, subsec. 4, Ordinance appended thereto; Assessment Law, sec. 344,
par. [c]. Adm. Code). Sectarian aid is not prohibited when a priest, preacher, minister or other religious teacher
or dignitary as such is assigned to the armed forces or to any penal institution, orphanage or leprosarium 9 sec.
13, subsec. 3, Art. VI, Constitution of the Philippines). Optional religious instruction in the public schools is
by constitutional mandate allowed (sec. 5, Art. XIII, Constitution of the Philippines, in relation to sec. 928,
Adm. Code). Thursday and Friday of Holy Week, Thanksgiving Day, Christmas Day, and Sundays and made
legal holidays (sec. 29, Adm. Code) because of the secular idea that their observance is conclusive to
beneficial moral results. The law allows divorce but punishes polygamy and bigamy; and certain crimes
against religious worship are considered crimes against the fundamental laws of the state (see arts. 132 and
133, Revised Penal Code).
In the case at bar, it appears that the respondent Director of Posts issued the postage stamps in question under
the provisions of Act No. 4052 of the Philippine Legislature. This Act is as follows:
No. 4052. AN ACT APPROPRIATING THE SUM OF SIXTY THOUSAND PESOS AND
MAKING THE SAME AVAILABLE OUT OF ANY FUNDS IN THE INSULAR TREASURY NOT

Page 348 of 557

OTHERWISE APPROPRIATED FOR THE COST OF PLATES AND PRINTING OF POSTAGE

STAMPS WITH NEW DESIGNS, AND FOR OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled
and by the authority of the same:
SECTION 1. The sum of sixty thousand pesos is hereby appropriated and made immediately available out of
any funds in the Insular Treasury not otherwise appropriated, for the costs of plates and printing of postage
stamps with new designs, and other expenses incident thereto.
SEC. 2. The Director of Posts, with the approval of the Secretary of Public Works and Communications, is
hereby authorized to dispose of the whole or any portion of the amount herein appropriated in the manner
indicated and as often as may be deemed advantageous to the Government.
SEC. 3. This amount or any portion thereof not otherwise expended shall not revert to the Treasury.
SEC. 4. This act shall take effect on its approval.
Approved, February 21, 1933.
It will be seen that the Act appropriates the sum of sixty thousand pesos for the costs of plates and printing of
postage stamps with new designs and other expenses incident thereto, and authorizes the Director of Posts,
with the approval of the Secretary of Public Works and Communications, to dispose of the amount
appropriated in the manner indicated and "as often as may be deemed advantageous to the Government". The
printing and issuance of the postage stamps in question appears to have been approved by authority of the
President of the Philippines in a letter dated September 1, 1936, made part of the respondent's memorandum as
Exhibit A. The respondent alleges that the Government of the Philippines would suffer losses if the writ prayed
for is granted. He estimates the revenue to be derived from the sale of the postage stamps in question at
P1,618,17.10 and states that there still remain to be sold stamps worth P1,402,279.02.
Act No. 4052 contemplates no religious purpose in view. What it gives the Director of Posts is the
discretionary power to determine when the issuance of special postage stamps would be "advantageous to the
Government." Of course, the phrase "advantageous to the Government" does not authorize the violation of the
Constitution. It does not authorize the appropriation, use or application of public money or property for the
use, benefit or support of a particular sect or church. In the present case, however, the issuance of the postage
stamps in question by the Director of Posts and the Secretary of Public Works and Communications was not
inspired by any sectarian denomination. The stamps were not issue and sold for the benefit of the Roman
Catholic Church. Nor were money derived from the sale of the stamps given to that church. On the contrary, it
appears from the latter of the Director of Posts of June 5, 1936, incorporated on page 2 of the petitioner's
complaint, that the only purpose in issuing and selling the stamps was "to advertise the Philippines and attract
more tourist to this country." The officials concerned merely, took advantage of an event considered of
international importance "to give publicity to the Philippines and its people" (Letter of the Undersecretary of
Public Works and Communications to the President of the Philippines, June 9, 1936; p. 3, petitioner's
complaint). It is significant to note that the stamps as actually designed and printed (Exhibit 2), instead of
showing a Catholic Church chalice as originally planned, contains a map of the Philippines and the location of
the City of Manila, and an inscription as follows: "Seat XXXIII International Eucharistic Congress, Feb. 37,1937." What is emphasized is not the Eucharistic Congress itself but Manila, the capital of the Philippines, as
the seat of that congress. It is obvious that while the issuance and sale of the stamps in question may be said to
be inseparably linked with an event of a religious character, the resulting propaganda, if any, received by the
Roman Catholic Church, was not the aim and purpose of the Government. We are of the opinion that the
Government should not be embarassed in its activities simply because of incidental results, more or less
religious in character, if the purpose had in view is one which could legitimately be undertaken by appropriate
Page 349 of 557

legislation. The main purpose should not be frustrated by its subordinate to mere incidental results not
contemplated. (Vide Bradfield vs. Roberts, 175 U. S., 295; 20 Sup. Ct. Rep., 121; 44 Law. ed., 168.)
We are much impressed with the vehement appeal of counsel for the petitioner to maintain inviolate the
complete separation of church and state and curb any attempt to infringe by indirection a constitutional
inhibition. Indeed, in the Philippines, once the scene of religious intolerance and prescription, care should be
taken that at this stage of our political development nothing is done by the Government or its officials that may
lead to the belief that the Government is taking sides or favoring a particular religious sect or institution. But,
upon very serious reflection, examination of Act No. 4052, and scrutiny of the attending circumstances, we
have come to the conclusion that there has been no constitutional infraction in the case at bar, Act No. 4052
grants the Director of Posts, with the approval of the Secretary of Public Works and Communications,
discretion to misuse postage stamps with new designs "as often as may be deemed advantageous to the
Government." Even if we were to assume that these officials made use of a poor judgment in issuing and
selling the postage stamps in question still, the case of the petitioner would fail to take in weight. Between the
exercise of a poor judgment and the unconstitutionality of the step taken, a gap exists which is yet to be filled
to justify the court in setting aside the official act assailed as coming within a constitutional inhibition.
The petition for a writ of prohibition is hereby denied, without pronouncement as to costs. So ordered.
Avancea, C.J., Villa-Real, Abad Santos, Imperial, Diaz and Concepcion, JJ., concur.

Page 350 of 557

Maria Carolina P. Araullo v. Benigno Simeon C. Aquino III, G.R. No. 209287, 1 July 2014
Decision, Bersamin [J]
Separate Opinion, Carpio [J]
Separate Opinion, Brion [J]
Concurring and Dissenting Opinion, Del Castillo [J]
Separate Concurring Opinion, Perlas-Bernabe [J]
Concurring Opinion, Leonen [J]

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 209287

July 1, 2014

MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG MAKABAYAN;

JUDY M. TAGUIWALO, PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, COCHAIRPERSON, PAGBABAGO; HENRI KAHN, CONCERNED CITIZENS MOVEMENT; REP.
LUZ ILAGAN, GABRIELA WOMEN'S PARTY REPRESENTATIVE; REP. CARLOS ISAGANI
ZARATE, BAY AN MUNA PARTY-LIST REPRESENTATIVE; RENATO M. REYES, JR.,
SECRETARY GENERAL OF BAYAN; MANUEL K. DAYRIT, CHAIRMAN, ANG KAPATIRAN
PARTY; VENCER MARI E. CRISOSTOMO, CHAIRPERSON, ANAKBAYAN; VICTOR
VILLANUEVA, CONVENOR, YOUTH ACT NOW, Petitioners,
vs.
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;
PAQUITO N. OCHOA, JR., EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD,
SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209135
AUGUSTO L. SY JUCO JR., Ph.D., Petitioner,
vs.
FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF
BUDGET AND MANAGEMENT; AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAP A
CITY AS THE SENATE PRESIDENT OF THE PHILIPPINES, Respondents.
x-----------------------x
G.R. No. 209136
MANUELITO R. LUNA, Petitioner,
vs.
SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT; AND EXECUTIVE SECRETARY PAQUITO
OCHOA, IN HIS OFFICIAL CAPACITY AS ALTER EGO OF THE PRESIDENT, Respondents.
x-----------------------x
Page 351 of 557

G.R. No. 209155

ATTY. JOSE MALV AR VILLEGAS, JR., Petitioner,
vs.
THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE
SECRETARY OF BUDGET AND MANAGEMENT FLORENCIO B. ABAD, Respondents.
x-----------------------x
G.R. No. 209164
PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN
FROILAN M. BACUNGAN, BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B. ABAD,
Respondents.
x-----------------------x
G.R. No. 209260
INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner,
vs.
SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT
(DBM), Respondent.
x-----------------------x
G.R. No. 209442
GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN MABANTE AND REV. JOSE L.
GONZALEZ, Petitioners,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES,
REPRESENTED BY SENATE PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF
REPRESENTATIVES, REPRESENTED BY SPEAKER FELICIANO BELMONTE, JR.; THE
EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE SECRETARY PAQUITO N. OCHOA,
JR.; THE DEPARTMENT OF BUDGET AND MANAGEMENT, REPRESENTED BY SECRETARY
FLORENCIO ABAD; THE DEPARTMENT OF FINANCE, REPRESENTED BY SECRETARY
CESAR V. PURISIMA; AND THE BUREAU OF TREASURY, REPRESENTED BY ROSALIA V. DE
LEON, Respondents.
x-----------------------x
G.R. No. 209517
CONFEDERATION FOR UNITY, RECOGNITION AND ADV AN CEMENT OF GOVERNMENT
EMPLOYEES (COURAGE), REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO
DASMARINAS, JR.; ROSALINDA NARTATES, FOR HERSELF AND AS NATIONAL PRESIDENT
OF THE CONSOLIDATED UNION OF EMPLOYEES NATIONAL HOUSING AUTHORITY
(CUENHA); MANUEL BACLAGON, FOR HIMSELF AND AS PRESIDENT OF THE SOCIAL
Page 352 of 557

WELFARE EMPLOYEES ASSOCIATION OF THE PHILIPPINES, DEPARTMENT OF SOCIAL

WELFARE AND DEVELOPMENT CENTRAL OFFICE (SWEAP-DSWD CO); ANTONIA
PASCUAL, FOR HERSELF AND AS NATIONAL PRESIDENT OF THE DEPARTMENT OF
AGRARIAN REFORM EMPLOYEES ASSOCIATION (DAREA); ALBERT MAGALANG, FOR
HIMSELF AND AS PRESIDENT OF THE ENVIRONMENT AND MANAGEMENT BUREAU
EMPLOYEES UNION (EMBEU); AND MARCIAL ARABA, FOR HIMSELF AND AS PRESIDENT
OF THE KAPISANAN PARA SA KAGALINGAN NG MGA KAW ANI NG MMDA (KKKMMDA),
Petitioners,
vs.
BENIGNO SIMEON C. AQUINO Ill, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;
PAQUITO OCHOA, JR., EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD,
SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209569
VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC), REPRESENTED BY DANTE L.
JIMENEZ, Petitioner,
vs.
PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY OF
THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
DECISION
BERSAMIN, J.:
For resolution are the consolidated petitions assailing the constitutionality of the Disbursement Acceleration
Program(DAP), National Budget Circular (NBC) No. 541, and related issuances of the Department of Budget
and Management (DBM) implementing the DAP.
At the core of the controversy is Section 29(1) of Article VI of the 1987 Constitution, a provision of the
fundamental law that firmly ordains that "[n]o money shall be paid out of the Treasury except in pursuance of
an appropriation made by law." The tenor and context of the challenges posed by the petitioners against the
DAP indicate that the DAP contravened this provision by allowing the Executive to allocate public money
pooled from programmed and unprogrammed funds of its various agencies in the guise of the President
exercising his constitutional authority under Section 25(5) of the 1987 Constitution to transfer funds out of
savings to augment the appropriations of offices within the Executive Branch of the Government. But the
challenges are further complicated by the interjection of allegations of transfer of funds to agencies or offices
outside of the Executive.
Antecedents
What has precipitated the controversy?
On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the Senate of the
Philippines to reveal that some Senators, including himself, had been allotted an additional P50 Million each as
"incentive" for voting in favor of the impeachment of Chief Justice Renato C. Corona.
Responding to Sen. Estradas revelation, Secretary Florencio Abad of the DBM issued a public statement
entitled Abad: Releases to Senators Part of Spending Acceleration Program,1 explaining that the funds
Page 353 of 557

released to the Senators had been part of the DAP, a program designed by the DBM to ramp up spending to
accelerate economic expansion. He clarified that the funds had been released to the Senators based on their
letters of request for funding; and that it was not the first time that releases from the DAP had been made
because the DAP had already been instituted in 2011 to ramp up spending after sluggish disbursements had
caused the growth of the gross domestic product (GDP) to slow down. He explained that the funds under the
DAP were usually taken from (1) unreleased appropriations under Personnel Services;2 (2) unprogrammed
funds; (3) carry-over appropriations unreleased from the previous year; and (4) budgets for slow-moving items
or projects that had been realigned to support faster-disbursing projects.
The DBM soon came out to claim in its website3 that the DAP releases had been sourced from savings
generated by the Government, and from unprogrammed funds; and that the savings had been derived from (1)
the pooling of unreleased appropriations, like unreleased Personnel Services4 appropriations that would lapse
at the end of the year, unreleased appropriations of slow-moving projects and discontinued projects per zero
based budgeting findings;5 and (2) the withdrawal of unobligated allotments also for slow-moving programs
and projects that had been earlier released to the agencies of the National Government.
The DBM listed the following as the legal bases for the DAPs use of savings,6 namely: (1) Section 25(5),
Article VI of the 1987 Constitution, which granted to the President the authority to augment an item for his
office in the general appropriations law; (2) Section 49 (Authority to Use Savings for Certain Purposes) and
Section 38 (Suspension of Expenditure Appropriations), Chapter 5, Book VI of Executive Order (EO) No. 292
(Administrative Code of 1987); and (3) the General Appropriations Acts (GAAs) of 2011, 2012 and 2013,
particularly their provisions on the (a) use of savings; (b) meanings of savings and augmentation; and (c)
priority in the use of savings.
As for the use of unprogrammed funds under the DAP, the DBM cited as legal bases the special provisions on
unprogrammed fund contained in the GAAs of 2011, 2012 and 2013.
The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM brought the DAP to the
consciousness of the Nation for the first time, and made this present controversy inevitable. That the issues
against the DAP came at a time when the Nation was still seething in anger over Congressional pork barrel
"an appropriation of government spending meant for localized projects and secured solely or primarily to bring
money to a representatives district"7 excited the Nation as heatedly as the pork barrel controversy.
Nine petitions assailing the constitutionality of the DAP and the issuances relating to the DAP were filed
within days of each other, as follows: G.R. No. 209135 (Syjuco), on October 7, 2013; G.R. No. 209136
(Luna), on October 7, 2013; G.R. No. 209155 (Villegas),8 on October 16, 2013; G.R. No. 209164
(PHILCONSA), on October 8, 2013; G.R. No. 209260 (IBP), on October 16, 2013; G.R. No. 209287
(Araullo), on October 17, 2013; G.R. No. 209442 (Belgica), on October 29, 2013; G.R. No. 209517
(COURAGE), on November6, 2013; and G.R. No. 209569 (VACC), on November 8, 2013.
In G.R. No. 209287 (Araullo), the petitioners brought to the Courts attention NBC No. 541 (Adoption of
Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments as of June 30, 2012),
alleging that NBC No. 541, which was issued to implement the DAP, directed the withdrawal of unobligated
allotments as of June 30, 2012 of government agencies and offices with low levels of obligations, both for
continuing and current allotments.
In due time, the respondents filed their Consolidated Comment through the Office of the Solicitor General
(OSG).
The Court directed the holding of oral arguments on the significant issues raised and joined.
Issues
Page 354 of 557

Under the Advisory issued on November 14, 2013, the presentations of the parties during the oral arguments
were limited to the following, to wit:
Procedural Issue:
A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the constitutionality and
validity of the Disbursement Acceleration Program (DAP), National Budget Circular (NBC) No. 541, and all
other executive issuances allegedly implementing the DAP. Subsumed in this issue are whether there is a
controversy ripe for judicial determination, and the standing of petitioners.
Substantive Issues:
B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution, which provides: "No money
shall be paid out of the Treasury except in pursuance of an appropriation made by law."
C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP
violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:
(a)They treat the unreleased appropriations and unobligated allotments withdrawn from
government agencies as "savings" as the term is used in Sec. 25(5), in relation to the
provisions of the GAAs of 2011, 2012 and 2013;
(b)They authorize the disbursement of funds for projects or programs not provided in the
GAAs for the Executive Department; and
(c)They "augment" discretionary lump sum appropriations in the GAAs.
D. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of checks and balances,
and (3) the principle of public accountability enshrined in the 1987 Constitution considering that it authorizes
the release of funds upon the request of legislators.
E. Whether or not factual and legal justification exists to issue a temporary restraining order to restrain the
implementation of the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP.
In its Consolidated Comment, the OSG raised the matter of unprogrammed funds in order to support its
argument regarding the Presidents power to spend. During the oral arguments, the propriety of releasing
unprogrammed funds to support projects under the DAP was considerably discussed. The petitioners in G.R.
No. 209287 (Araullo) and G.R. No. 209442 (Belgica) dwelled on unprogrammed funds in their respective
memoranda. Hence, an additional issue for the oral arguments is stated as follows:
F. Whether or not the release of unprogrammed funds under the DAP was in accord with the GAAs.
During the oral arguments held on November 19, 2013, the Court directed Sec. Abad to submit a list of savings
brought under the DAP that had been sourced from (a) completed programs; (b) discontinued or abandoned
programs; (c) unpaid appropriations for compensation; (d) a certified copy of the Presidents directive dated
June 27, 2012 referred to in NBC No. 541; and (e) all circulars or orders issued in relation to the DAP.9
In compliance, the OSG submitted several documents, as follows:
(1) A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and their Realignment);10
Page 355 of 557

(2) Circulars and orders, which the respondents identified as related to the DAP, namely:
a. NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for FY 2011);
b. NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds for FY 2012);
c. NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure
Withdrawal of Agencies Unobligated Allotments as of June 30, 2012);
d. NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for FY 2013);
e. DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment of
Commitments/Obligations of the National Government);
f. COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised Guidelines on the
Submission of Quarterly Accountability Reports on Appropriations, Allotments, Obligations
and Disbursements);
g. NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release System in
the Government).
(3) A breakdown of the sources of savings, including savings from discontinued projects and unpaid
appropriations for compensation from 2011 to 2013
On January 28, 2014, the OSG, to comply with the Resolution issued on January 21, 2014 directing the
respondents to submit the documents not yet submitted in compliance with the directives of the Court or its
Members, submitted several evidence packets to aid the Court in understanding the factual bases of the DAP,
to wit:
(1) First Evidence Packet11 containing seven memoranda issued by the DBM through Sec. Abad,
inclusive of annexes, listing in detail the 116 DAP identified projects approved and duly signed by the
President, as follows:
a. Memorandum for the President dated October 12, 2011 (FY 2011 Proposed Disbursement
Acceleration Program (Projects and Sources of Funds);
b. Memorandum for the President dated December 12, 2011 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and its Realignment);
c. Memorandum for the President dated June 25, 2012 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment);
d. Memorandum for the President dated September 4, 2012 (Release of funds for other
priority projects and expenditures of the Government);
e. Memorandum for the President dated December 19, 2012 (Proposed Priority Projects and
Expenditures of the Government);
f. Memorandum for the President dated May 20, 2013 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment to Fund the Quarterly Disbursement
Acceleration Program); and
Page 356 of 557

g. Memorandum for the President dated September 25, 2013 (Funding for the Task Force
Pablo Rehabilitation Plan).
(2) Second Evidence Packet12 consisting of 15 applications of the DAP, with their corresponding
Special Allotment Release Orders (SAROs) and appropriation covers;
(3) Third Evidence Packet13 containing a list and descriptions of 12 projects under the DAP;
(4) Fourth Evidence Packet14 identifying the DAP-related portions of the Annual Financial Report
(AFR) of the Commission on Audit for 2011 and 2012;
(5) Fifth Evidence Packet15 containing a letter of Department of Transportation and
Communications(DOTC) Sec. Joseph Abaya addressed to Sec. Abad recommending the withdrawal of
funds from his agency, inclusive of annexes; and
(6) Sixth Evidence Packet16 a print-out of the Solicitor Generals visual presentation for the January
28, 2014 oral arguments.
On February 5, 2014,17 the OSG forwarded the Seventh Evidence Packet,18 which listed the sources of funds
brought under the DAP, the uses of such funds per project or activity pursuant to DAP, and the legal bases
thereof.
On February 14, 2014, the OSG submitted another set of documents in further compliance with the Resolution
dated January 28, 2014, viz:
(1) Certified copies of the certifications issued by the Bureau of Treasury to the effect that the revenue
collections exceeded the original revenue targets for the years 2011, 2012 and 2013, including collections
arising from sources not considered in the original revenue targets, which certifications were required for the
release of the unprogrammed funds as provided in Special Provision No. 1 of Article XLV, Article XVI, and
Article XLV of the 2011, 2012 and 2013 GAAs; and (2) A report on releases of savings of the Executive
Department for the use of the Constitutional Commissions and other branches of the Government, as well as
the fund releases to the Senate and the Commission on Elections (COMELEC).
RULING
I.
Procedural Issue:
a) The petitions under Rule 65 are proper remedies
All the petitions are filed under Rule 65 of the Rules of Court, and include applications for the issuance of
writs of preliminary prohibitory injunction or temporary restraining orders. More specifically, the nature of the
petitions is individually set forth hereunder, to wit:
G.R. No. 209135 (Syjuco)

Certiorari, Prohibition and Mandamus

G.R. No. 209136 (Luna)

Certiorariand Prohibition

G.R. No. 209155 (Villegas)

Certiorariand Prohibition

Page 357 of 557

G.R. No. 209164 (PHILCONSA) Certiorariand Prohibition

G.R. No. 209260 (IBP)

Prohibition

G.R. No. 209287 (Araullo)

Certiorariand Prohibition

G.R. No. 209442 (Belgica)

Certiorari

G.R. No. 209517 (COURAGE)

Certiorari and Prohibition

G.R. No. 209569 (VACC)

Certiorari and Prohibition

The respondents submit that there is no actual controversy that is ripe for adjudication in the absence of
adverse claims between the parties;19 that the petitioners lacked legal standing to sue because no allegations
were made to the effect that they had suffered any injury as a result of the adoption of the DAP and issuance of
NBC No. 541; that their being taxpayers did not immediately confer upon the petitioners the legal standing to
sue considering that the adoption and implementation of the DAP and the issuance of NBC No. 541 were not
in the exercise of the taxing or spending power of Congress;20 and that even if the petitioners had suffered
injury, there were plain, speedy and adequate remedies in the ordinary course of law available to them, like
assailing the regularity of the DAP and related issuances before the Commission on Audit (COA) or in the trial
courts.21
The respondents aver that the special civil actions of certiorari and prohibition are not proper actions for
directly assailing the constitutionality and validity of the DAP, NBC No. 541, and the other executive
issuances implementing the DAP.22
In their memorandum, the respondents further contend that there is no authorized proceeding under the
Constitution and the Rules of Court for questioning the validity of any law unless there is an actual case or
controversy the resolution of which requires the determination of the constitutional question; that the
jurisdiction of the Court is largely appellate; that for a court of law to pass upon the constitutionality of a law
or any act of the Government when there is no case or controversy is for that court to set itself up as a reviewer
of the acts of Congress and of the President in violation of the principle of separation of powers; and that, in
the absence of a pending case or controversy involving the DAP and NBC No. 541, any decision herein could
amount to a mere advisory opinion that no court can validly render.23
The respondents argue that it is the application of the DAP to actual situations that the petitioners can question
either in the trial courts or in the COA; that if the petitioners are dissatisfied with the ruling either of the trial
courts or of the COA, they can appeal the decision of the trial courts by petition for review on certiorari, or
assail the decision or final order of the COA by special civil action for certiorari under Rule 64 of the Rules of
Court.24
The respondents arguments and submissions on the procedural issue are bereft of merit.
Section 1, Article VIII of the 1987 Constitution expressly provides:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.
Page 358 of 557

Thus, the Constitution vests judicial power in the Court and in such lower courts as may be established by law.
In creating a lower court, Congress concomitantly determines the jurisdiction of that court, and that court, upon
its creation, becomes by operation of the Constitution one of the repositories of judicial power.25 However,
only the Court is a constitutionally created court, the rest being created by Congress in its exercise of the
legislative power.
The Constitution states that judicial power includes the duty of the courts of justice not only "to settle actual
controversies involving rights which are legally demandable and enforceable" but also "to determine whether
or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government." It has thereby expanded the concept of judicial power, which up
to then was confined to its traditional ambit of settling actual controversies involving rights that were legally
demandable and enforceable.
The background and rationale of the expansion of judicial power under the 1987 Constitution were laid out
during the deliberations of the 1986 Constitutional Commission by Commissioner Roberto R. Concepcion (a
former Chief Justice of the Philippines) in his sponsorship of the proposed provisions on the Judiciary, where
he said:
The Supreme Court, like all other courts, has one main function: to settle actual controversies involving
conflicts of rights which are demandable and enforceable. There are rights which are guaranteed by law but
cannot be enforced by a judicial party. In a decided case, a husband complained that his wife was unwilling to
perform her duties as a wife. The Court said: "We can tell your wife what her duties as such are and that she is
bound to comply with them, but we cannot force her physically to discharge her main marital duty to her
husband. There are some rights guaranteed by law, but they are so personal that to enforce them by actual
compulsion would be highly derogatory to human dignity." This is why the first part of the second paragraph
of Section 1 provides that: Judicial power includes the duty of courts to settle actual controversies involving
rights which are legally demandable or enforceable
The courts, therefore, cannot entertain, much less decide, hypothetical questions. In a presidential system of
government, the Supreme Court has, also, another important function. The powers of government are generally
considered divided into three branches: the Legislative, the Executive and the Judiciary. Each one is supreme
within its own sphere and independent of the others. Because of that supremacy power to determine whether a
given law is valid or not is vested in courts of justice.
Briefly stated, courts of justice determine the limits of power of the agencies and offices of the government as
well as those of its officers. In other words, the judiciary is the final arbiter on the question whether or not a
branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so
capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction or lack of jurisdiction.
This is not only a judicial power but a duty to pass judgmenton matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter evade the
duty to settle matters of this nature, by claiming that such matters constitute a political question. (Bold
emphasis supplied)26
Upon interpellation by Commissioner Nolledo, Commissioner Concepcion clarified the scope of judicial
power in the following manner:
MR. NOLLEDO. x x x
The second paragraph of Section 1 states: "Judicial power includes the duty of courts of justice to settle actual
controversies" The term "actual controversies" according to the Commissioner should refer to questions
which are political in nature and, therefore, the courts should not refuse to decide those political questions. But
Page 359 of 557

do I understand it right that this is restrictive or only an example? I know there are cases which are not actual
yet the court can assume jurisdiction. An example is the petition for declaratory relief.
May I ask the Commissioners opinion about that?
MR. CONCEPCION. The Supreme Court has no jurisdiction to grant declaratory judgments.
MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is not vested in the
Supreme Court alone but also in other lower courts as may be created by law.
MR. CONCEPCION. Yes.
MR. NOLLEDO. And so, is this only an example?
MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political questions with
jurisdictional questions. But there is a difference.
MR. NOLLEDO. Because of the expression "judicial power"?
MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where there is a question as to
whether the government had authority or had abused its authority to the extent of lacking jurisdiction or excess
of jurisdiction, that is not a political question. Therefore, the court has the duty to decide.27
Our previous Constitutions equally recognized the extent of the power of judicial review and the great
responsibility of the Judiciary in maintaining the allocation of powers among the three great branches of
Government. Speaking for the Court in Angara v. Electoral Commission,28 Justice Jose P. Laurel intoned:
x x x In times of social disquietude or political excitement, the great landmarks of the Constitution are apt to
be forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial department is the only
constitutional organ which can be called upon to determine the proper allocation of powers between the several
department and among the integral or constituent units thereof.
xxxx
The Constitution is a definition of the powers of government. Who is to determine the nature, scope and extent
of such powers? The Constitution itself has provided for the instrumentality of the judiciary as the rational
way. And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority
over the other department; it does not in reality nullify or invalidate an act of the legislature, but only asserts
the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority
under the Constitution and to establish for the parties in an actual controversy the rights which that instrument
secures and guarantees to them. This is in truth all that is involved in what is termed "judicial supremacy"
which properly is the power of judicial review under the Constitution. x x x29
What are the remedies by which the grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government may be determined under the Constitution?
The present Rules of Court uses two special civil actions for determining and correcting grave abuse of
discretion amounting to lack or excess of jurisdiction. These are the special civil actions for certiorari and
prohibition, and both are governed by Rule 65. A similar remedy of certiorari exists under Rule 64, but the
remedy is expressly applicable only to the judgments and final orders or resolutions of the Commission on
Elections and the Commission on Audit.
Page 360 of 557

The ordinary nature and function of the writ of certiorari in our present system are aptly explained in Delos
Santos v. Metropolitan Bank and Trust Company:30
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of
Chancery, or the Kings Bench, commanding agents or officers of the inferior courts to return the record of a
cause pending before them, so as to give the party more sure and speedy justice, for the writ would enable the
superior court to determine from an inspection of the record whether the inferior courts judgment was
rendered without authority. The errors were of such a nature that, if allowed to stand, they would result in a
substantial injury to the petitioner to whom no other remedy was available. If the inferior court acted without
authority, the record was then revised and corrected in matters of law. The writ of certiorari was limited to
cases in which the inferior court was said to be exceeding its jurisdiction or was not proceeding according to
essential requirements of law and would lie only to review judicial or quasi-judicial acts.
The concept of the remedy of certiorari in our judicial system remains much the same as it has been in the
common law. In this jurisdiction, however, the exercise of the power to issue the writ of certiorari is largely
regulated by laying down the instances or situations in the Rules of Court in which a superior court may issue
the writ of certiorari to an inferior court or officer. Section 1, Rule 65 of the Rules of Court compellingly
provides the requirements for that purpose, viz:
xxxx
The sole office of the writ of certiorari is the correction of errors of jurisdiction, which includes the
commission of grave abuse of discretion amounting to lack of jurisdiction. In this regard, mere abuse of
discretion is not enough to warrant the issuance of the writ. The abuse of discretion must be grave, which
means either that the judicial or quasi-judicial power was exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, or that the respondent judge, tribunal or board evaded a positive duty,
or virtually refused to perform the duty enjoined or to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi-judicial powers acted in a capricious or whimsical manner as to
be equivalent to lack of jurisdiction.31
Although similar to prohibition in that it will lie for want or excess of jurisdiction, certiorari is to be
distinguished from prohibition by the fact that it is a corrective remedy used for the re-examination of some
action of an inferior tribunal, and is directed to the cause or proceeding in the lower court and not to the court
itself, while prohibition is a preventative remedy issuing to restrain future action, and is directed to the court
itself.32 The Court expounded on the nature and function of the writ of prohibition in Holy Spirit Homeowners
Association, Inc. v. Defensor:33
A petition for prohibition is also not the proper remedy to assail an IRR issued in the exercise of a quasilegislative function. Prohibition is an extraordinary writ directed against any tribunal, corporation, board,
officer or person, whether exercising judicial, quasi-judicial or ministerial functions, ordering said entity or
person to desist from further proceedings when said proceedings are without or in excess of said entitys or
persons jurisdiction, or are accompanied with grave abuse of discretion, and there is no appeal or any other
plain, speedy and adequate remedy in the ordinary course of law. Prohibition lies against judicial or ministerial
functions, but not against legislative or quasi-legislative functions. Generally, the purpose of a writ of
prohibition is to keep a lower court within the limits of its jurisdiction in order to maintain the administration
of justice in orderly channels. Prohibition is the proper remedy to afford relief against usurpation of
jurisdiction or power by an inferior court, or when, in the exercise of jurisdiction in handling matters clearly
within its cognizance the inferior court transgresses the bounds prescribed to it by the law, or where there is no
adequate remedy available in the ordinary course of law by which such relief can be obtained. Where the
principal relief sought is to invalidate an IRR, petitioners remedy is an ordinary action for its nullification, an
action which properly falls under the jurisdiction of the Regional Trial Court. In any case, petitioners
allegation that "respondents are performing or threatening to perform functions without or in excess of their
Page 361 of 557

jurisdiction" may appropriately be enjoined by the trial court through a writ of injunction or a temporary
restraining order.
With respect to the Court, however, the remedies of certiorari and prohibition are necessarily broader in scope
and reach, and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction committed not
only by a tribunal, corporation, board or officer exercising judicial, quasi-judicial or ministerial functions but
also to set right, undo and restrain any act of grave abuse of discretion amounting to lack or excess of
jurisdiction by any branch or instrumentality of the Government, even if the latter does not exercise judicial,
quasi-judicial or ministerial functions. This application is expressly authorized by the text of the second
paragraph of Section 1, supra.
Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to
review and/or prohibit or nullify the acts of legislative and executive officials.34
Necessarily, in discharging its duty under Section 1, supra, to set right and undo any act of grave abuse of
discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the Government, the
Court is not at all precluded from making the inquiry provided the challenge was properly brought by
interested or affected parties. The Court has been thereby entrusted expressly or by necessary implication with
both the duty and the obligation of determining, in appropriate cases, the validity of any assailed legislative or
executive action. This entrustment is consistent with the republican system of checks and balances.35
Following our recent dispositions concerning the congressional pork barrel, the Court has become more alert to
discharge its constitutional duty. We will not now refrain from exercising our expanded judicial power in order
to review and determine, with authority, the limitations on the Chief Executives spending power.
b) Requisites for the exercise of the
power of judicial review were
complied with
The requisites for the exercise of the power of judicial review are the following, namely: (1) there must bean
actual case or justiciable controversy before the Court; (2) the question before the Court must be ripe for
adjudication; (3) the person challenging the act must be a proper party; and (4) the issue of constitutionality
must be raised at the earliest opportunity and must be the very litis mota of the case.36
The first requisite demands that there be an actual case calling for the exercise of judicial power by the
Court.37 An actual case or controversy, in the words of Belgica v. Executive Secretary Ochoa:38
x x x is one which involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of
judicial resolution as distinguished from a hypothetical or abstract difference or dispute. In other words,
"[t]here must be a contrariety of legal rights that can be interpreted and enforced on the basis of existing law
and jurisprudence." Related to the requirement of an actual case or controversy is the requirement of
"ripeness," meaning that the questions raised for constitutional scrutiny are already ripe for adjudication. "A
question is ripe for adjudication when the act being challenged has had a direct adverse effect on the individual
challenging it. It is a prerequisite that something had then been accomplished or performed by either branch
before a court may come into the picture, and the petitioner must allege the existence of an immediate or
threatened injury to itself as a result of the challenged action." "Withal, courts will decline to pass upon
constitutional issues through advisory opinions, bereft as they are of authority to resolve hypothetical or moot
questions."
An actual and justiciable controversy exists in these consolidated cases. The incompatibility of the perspectives
of the parties on the constitutionality of the DAP and its relevant issuances satisfy the requirement for a
conflict between legal rights. The issues being raised herein meet the requisite ripeness considering that the
Page 362 of 557

challenged executive acts were already being implemented by the DBM, and there are averments by the
petitioners that such implementation was repugnant to the letter and spirit of the Constitution. Moreover, the
implementation of the DAP entailed the allocation and expenditure of huge sums of public funds. The fact that
public funds have been allocated, disbursed or utilized by reason or on account of such challenged executive
acts gave rise, therefore, to an actual controversy that is ripe for adjudication by the Court.
It is true that Sec. Abad manifested during the January 28, 2014 oral arguments that the DAP as a program had
been meanwhile discontinued because it had fully served its purpose, saying: "In conclusion, Your Honors,
may I inform the Court that because the DAP has already fully served its purpose, the Administrations
economic managers have recommended its termination to the President. x x x."39
The Solicitor General then quickly confirmed the termination of the DAP as a program, and urged that its
termination had already mooted the challenges to the DAPs constitutionality, viz:
DAP as a program, no longer exists, thereby mooting these present cases brought to challenge its
constitutionality. Any constitutional challenge should no longer be at the level of the program, which is now
extinct, but at the level of its prior applications or the specific disbursements under the now defunct policy. We
challenge the petitioners to pick and choose which among the 116 DAP projects they wish to nullify, the full
details we will have provided by February 5. We urge this Court to be cautious in limiting the constitutional
authority of the President and the Legislature to respond to the dynamic needs of the country and the evolving
demands of governance, lest we end up straight jacketing our elected representatives in ways not consistent
with our constitutional structure and democratic principles.40
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening
events, so that a declaration thereon would be of no practical use or value.41
The Court cannot agree that the termination of the DAP as a program was a supervening event that effectively
mooted these consolidated cases. Verily, the Court had in the past exercised its power of judicial review
despite the cases being rendered moot and academic by supervening events, like: (1) when there was a grave
violation of the Constitution; (2) when the case involved a situation of exceptional character and was of
paramount public interest; (3) when the constitutional issue raised required the formulation of controlling
principles to guide the Bench, the Bar and the public; and (4) when the case was capable of repetition yet
evading review.42
Assuming that the petitioners several submissions against the DAP were ultimately sustained by the Court
here, these cases would definitely come under all the exceptions. Hence, the Court should not abstain from
exercising its power of judicial review.
Did the petitioners have the legal standing to sue?
Legal standing, as a requisite for the exercise of judicial review, refers to "a right of appearance in a court of
justice on a given question."43 The concept of legal standing, or locus standi, was particularly discussed in De
Castro v. Judicial and Bar Council,44 where the Court said:
In public or constitutional litigations, the Court is often burdened with the determination of the locus standi of
the petitioners due to the ever-present need to regulate the invocation of the intervention of the Court to correct
any official action or policy in order to avoid obstructing the efficient functioning of public officials and
offices involved in public service. It is required, therefore, that the petitioner must have a personal stake in the
outcome of the controversy, for, as indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have "alleged such a personal stake in the outcome of
the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which
Page 363 of 557

the court so largely depends for illumination of difficult constitutional questions." Accordingly, it has been
held that the interest of a person assailing the constitutionality of a statute must be direct and personal. He must
be able to show, not only that the law or any government act is invalid, but also that he sustained or is in
imminent danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers
thereby in some indefinite way. It must appear that the person complaining has been or is about to be denied
some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or
penalties by reason of the statute or act complained of.
It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for determining
whether a petitioner in a public action had locus standi. There, the Court held that the person who would assail
the validity of a statute must have "a personal and substantial interest in the case such that he has sustained, or
will sustain direct injury as a result." Vera was followed in Custodio v. President of the Senate, Manila Race
Horse Trainers Association v. De la Fuente, Anti-Chinese League of the Philippines v. Felix, and Pascual v.
Secretary of Public Works.
Yet, the Court has also held that the requirement of locus standi, being a mere procedural technicality, can be
waived by the Court in the exercise of its discretion. For instance, in 1949, in Araneta v. Dinglasan, the Court
liberalized the approach when the cases had "transcendental importance." Some notable controversies whose
petitioners did not pass the direct injury test were allowed to be treated in the same way as in Araneta v.
Dinglasan.
In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues raised by
the petition due to their "far reaching implications," even if the petitioner had no personality to file the suit.
The liberal approach of Aquino v. Commission on Elections has been adopted in several notable cases,
permitting ordinary citizens, legislators, and civic organizations to bring their suits involving the
constitutionality or validity of laws, regulations, and rulings.
However, the assertion of a public right as a predicate for challenging a supposedly illegal or unconstitutional
executive or legislative action rests on the theory that the petitioner represents the public in general. Although
such petitioner may not be as adversely affected by the action complained against as are others, it is enough
that he sufficiently demonstrates in his petition that he is entitled to protection or relief from the Court in the
vindication of a public right.
Quite often, as here, the petitioner in a public action sues as a citizen or taxpayer to gain locus standi. That is
not surprising, for even if the issue may appear to concern only the public in general, such capacities
nonetheless equip the petitioner with adequate interest to sue. In David v. Macapagal-Arroyo, the Court aptly
explains why:
Case law in most jurisdiction snow allows both "citizen" and "taxpayer" standing in public actions. The
distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit is
in a different category from the plaintiff in a citizens suit. In the former, the plaintiff is affected by the
expenditure of public funds, while in the latter, he is but the mere instrument of the public concern. As held by
the New York Supreme Court in People ex rel Case v. Collins: "In matter of mere public right, howeverthe
people are the real partiesIt is at least the right, if not the duty, of every citizen to interfere and see that a
public offence be properly pursued and punished, and that a public grievance be remedied." With respect to
taxpayers suits, Terr v. Jordan held that "the right of a citizen and a taxpayer to maintain an action in courts to
restrain the unlawful use of public funds to his injury cannot be denied."45
The Court has cogently observed in Agan, Jr. v. Philippine International Air Terminals Co., Inc.46 that
"[s]tanding is a peculiar concept in constitutional law because in some cases, suits are not brought by parties
who have been personally injured by the operation of a law or any other government act but by concerned
citizens, taxpayers or voters who actually sue in the public interest."
Page 364 of 557

Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners have invoked their capacities as
taxpayers who, by averring that the issuance and implementation of the DAP and its relevant issuances
involved the illegal disbursements of public funds, have an interest in preventing the further dissipation of
public funds. The petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) also assert their
right as citizens to sue for the enforcement and observance of the constitutional limitations on the political
branches of the Government.47
On its part, PHILCONSA simply reminds that the Court has long recognized its legal standing to bring cases
upon constitutional issues.48 Luna, the petitioner in G.R. No. 209136, cites his additional capacity as a lawyer.
The IBP, the petitioner in G.R. No. 209260, stands by "its avowed duty to work for the rule of law and of
paramount importance of the question in this action, not to mention its civic duty as the official association of
all lawyers in this country."49
Under their respective circumstances, each of the petitioners has established sufficient interest in the outcome
of the controversy as to confer locus standi on each of them.
In addition, considering that the issues center on the extent of the power of the Chief Executive to disburse and
allocate public funds, whether appropriated by Congress or not, these cases pose issues that are of
transcendental importance to the entire Nation, the petitioners included. As such, the determination of such
important issues call for the Courts exercise of its broad and wise discretion "to waive the requirement and so
remove the impediment to its addressing and resolving the serious constitutional questions raised."50
II.
Substantive Issues
1.
Overview of the Budget System
An understanding of the Budget System of the Philippines will aid the Court in properly appreciating and
justly resolving the substantive issues.
a) Origin of the Budget System
The term "budget" originated from the Middle English word bouget that had derived from the Latin word
bulga (which means bag or purse).51
In the Philippine setting, Commonwealth Act (CA) No. 246 (Budget Act) defined "budget" as the financial
program of the National Government for a designated fiscal year, consisting of the statements of estimated
receipts and expenditures for the fiscal year for which it was intended to be effective based on the results of
operations during the preceding fiscal years. The term was given a different meaning under Republic Act No.
992 (Revised Budget Act) by describing the budget as the delineation of the services and products, or benefits
that would accrue to the public together with the estimated unit cost of each type of service, product or
benefit.52 For a forthright definition, budget should simply be identified as the financial plan of the
Government,53 or "the master plan of government."54
The concept of budgeting has not been the product of recent economies. In reality, financing public goals and
activities was an idea that existed from the creation of the State.55 To protect the people, the territory and
sovereignty of the State, its government must perform vital functions that required public expenditures. At the
beginning, enormous public expenditures were spent for war activities, preservation of peace and order,
security, administration of justice, religion, and supply of limited goods and services.56 In order to finance
those expenditures, the State raised revenues through taxes and impositions.57 Thus, budgeting became
necessary to allocate public revenues for specific government functions.58 The States budgeting mechanism
Page 365 of 557

eventually developed through the years with the growing functions of its government and changes in its market
economy.
The Philippine Budget System has been greatly influenced by western public financial institutions. This is
because of the countrys past as a colony successively of Spain and the United States for a long period of time.
Many aspects of the countrys public fiscal administration, including its Budget System, have been naturally
patterned after the practices and experiences of the western public financial institutions. At any rate, the
Philippine Budget System is presently guided by two principal objectives that are vital to the development of a
progressive democratic government, namely: (1) to carry on all government activities under a comprehensive
fiscal plan developed, authorized and executed in accordance with the Constitution, prevailing statutes and the
principles of sound public management; and (2) to provide for the periodic review and disclosure of the
budgetary status of the Government in such detail so that persons entrusted by law with the responsibility as
well as the enlightened citizenry can determine the adequacy of the budget actions taken, authorized or
proposed, as well as the true financial position of the Government.59
b) Evolution of the Philippine Budget System
The budget process in the Philippines evolved from the early years of the American Regime up to the passage
of the Jones Law in 1916. A Budget Office was created within the Department of Finance by the Jones Law to
discharge the budgeting function, and was given the responsibility to assist in the preparation of an executive
budget for submission to the Philippine Legislature.60
As early as under the 1935 Constitution, a budget policy and a budget procedure were established, and
subsequently strengthened through the enactment of laws and executive acts.61 EO No. 25, issued by President
Manuel L. Quezon on April 25, 1936, created the Budget Commission to serve as the agency that carried out
the Presidents responsibility of preparing the budget.62 CA No. 246, the first budget law, went into effect on
January 1, 1938 and established the Philippine budget process. The law also provided a line-item budget as the
framework of the Governments budgeting system,63 with emphasis on the observance of a "balanced budget"
to tie up proposed expenditures with existing revenues.
CA No. 246 governed the budget process until the passage on June 4, 1954 of Republic Act (RA) No.
992,whereby Congress introduced performance-budgeting to give importance to functions, projects and
activities in terms of expected results.64 RA No. 992 also enhanced the role of the Budget Commission as the
fiscal arm of the Government.65
The 1973 Constitution and various presidential decrees directed a series of budgetary reforms that culminated
in the enactment of PD No. 1177 that President Marcos issued on July30, 1977, and of PD No. 1405, issued on
June 11, 1978. The latter decree converted the Budget Commission into the Ministry of Budget, and gave its
head the rank of a Cabinet member.
The Ministry of Budget was later renamed the Office of Budget and Management (OBM) under EO No. 711.
The OBM became the DBM pursuant to EO No. 292 effective on November 24, 1989.
c) The Philippine Budget Cycle66
Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2) Budget
Legislation; (3) Budget Execution; and (4) Accountability. Each phase is distinctly separate from the others but
they overlap in the implementation of the budget during the budget year.
c.1.Budget Preparation67

Page 366 of 557

The budget preparation phase is commenced through the issuance of a Budget Call by the DBM. The Budget
Call contains budget parameters earlier set by the Development Budget Coordination Committee (DBCC) as
well as policy guidelines and procedures to aid government agencies in the preparation and submission of their
budget proposals. The Budget Call is of two kinds, namely: (1) a National Budget Call, which is addressed to
all agencies, including state universities and colleges; and (2) a Corporate Budget Call, which is addressed to
all government-owned and -controlled corporations (GOCCs) and government financial institutions (GFIs).
Following the issuance of the Budget Call, the various departments and agencies submit their respective
Agency Budget Proposals to the DBM. To boost citizen participation, the current administration has tasked the
various departments and agencies to partner with civil society organizations and other citizen-stakeholders in
the preparation of the Agency Budget Proposals, which proposals are then presented before a technical panel
of the DBM in scheduled budget hearings wherein the various departments and agencies are given the
opportunity to defend their budget proposals. DBM bureaus thereafter review the Agency Budget Proposals
and come up with recommendations for the Executive Review Board, comprised by the DBM Secretary and
the DBMs senior officials. The discussions of the Executive Review Board cover the prioritization of
programs and their corresponding support vis--vis the priority agenda of the National Government, and their
implementation.
The DBM next consolidates the recommended agency budgets into the National Expenditure Program
(NEP)and a Budget of Expenditures and Sources of Financing (BESF). The NEP provides the details of
spending for each department and agency by program, activity or project (PAP), and is submitted in the form
of a proposed GAA. The Details of Selected Programs and Projects is the more detailed disaggregation of key
PAPs in the NEP, especially those in line with the National Governments development plan. The Staffing
Summary provides the staffing complement of each department and agency, including the number of positions
and amounts allocated.
The NEP and BESF are thereafter presented by the DBM and the DBCC to the President and the Cabinet for
further refinements or reprioritization. Once the NEP and the BESF are approved by the President and the
Cabinet, the DBM prepares the budget documents for submission to Congress. The budget documents consist
of: (1) the Presidents Budget Message, through which the President explains the policy framework and budget
priorities; (2) the BESF, mandated by Section 22, Article VII of the Constitution,68 which contains the
macroeconomic assumptions, public sector context, breakdown of the expenditures and funding sources for the
fiscal year and the two previous years; and (3) the NEP.
Public or government expenditures are generally classified into two categories, specifically: (1) capital
expenditures or outlays; and (2) current operating expenditures. Capital expenditures are the expenses whose
usefulness lasts for more than one year, and which add to the assets of the Government, including investments
in the capital of government-owned or controlled corporations and their subsidiaries.69 Current operating
expenditures are the purchases of goods and services in current consumption the benefit of which does not
extend beyond the fiscal year.70 The two components of current expenditures are those for personal services
(PS), and those for maintenance and other operating expenses(MOOE).
Public expenditures are also broadly grouped according to their functions into: (1) economic development
expenditures (i.e., expenditures on agriculture and natural resources, transportation and communications,
commerce and industry, and other economic development efforts);71 (2) social services or social development
expenditures (i.e., government outlay on education, public health and medicare, labor and welfare and
others);72 (3) general government or general public services expenditures (i.e., expenditures for the general
government, legislative services, the administration of justice, and for pensions and gratuities);73 (4) national
defense expenditures (i.e., sub-divided into national security expenditures and expenditures for the
maintenance of peace and order);74 and (5) public debt.75

Page 367 of 557

Public expenditures may further be classified according to the nature of funds, i.e., general fund, special fund
or bond fund.76
On the other hand, public revenues complement public expenditures and cover all income or receipts of the
government treasury used to support government expenditures.77
Classical economist Adam Smith categorized public revenues based on two principal sources, stating: "The
revenue which must defraythe necessary expenses of government may be drawn either, first from some fund
which peculiarly belongs to the sovereign or commonwealth, and which is independent of the revenue of the
people, or, secondly, from the revenue of the people."78 Adam Smiths classification relied on the two aspects
of the nature of the State: first, the State as a juristic person with an artificial personality, and, second, the State
as a sovereign or entity possessing supreme power. Under the first aspect, the State could hold property and
engage in trade, thereby deriving what is called its quasi private income or revenues, and which "peculiarly
belonged to the sovereign." Under the second aspect, the State could collect by imposing charges on the
revenues of its subjects in the form of taxes.79
In the Philippines, public revenues are generally derived from the following sources, to wit: (1) tax
revenues(i.e., compulsory contributions to finance government activities); 80 (2) capital revenues(i.e., proceeds
from sales of fixed capital assets or scrap thereof and public domain, and gains on such sales like sale of public
lands, buildings and other structures, equipment, and other properties recorded as fixed assets); 81 (3)
grants(i.e., voluntary contributions and aids given to the Government for its operation on specific purposes in
the form of money and/or materials, and do not require any monetary commitment on the part of the
recipient);82 (4) extraordinary income(i.e., repayment of loans and advances made by government
corporations and local governments and the receipts and shares in income of the Banko Sentral ng Pilipinas,
and other receipts);83 and (5) public borrowings(i.e., proceeds of repayable obligations generally with interest
from domestic and foreign creditors of the Government in general, including the National Government and its
political subdivisions).84
More specifically, public revenues are classified as follows:85
General Income

Specific Income

1.

Subsidy Income from National

Government

1. Income Taxes

2.

Subsidy from Central Office

3. Taxes on Goods and Services

3.

Subsidy from Regional

Office/Staff Bureaus

4. Taxes on International Trade and

Transactions

4.

Income from Government

Services

5. Other Taxes 6.Fines and Penalties-Tax Revenue

5.

Income from Government

Business Operations

6.

Sales Revenue

7.

Rent Income

8.

Insurance Income

9.

Dividend Income

10.

Interest Income

11.

Sale of Confiscated Goods and

Properties

2. Property Taxes

7. Other Specific Income

Page 368 of 557

12.

Foreign Exchange (FOREX)

Gains

13.

Miscellaneous Operating and

Service Income

14.

Fines and Penalties-Government

Services and Business Operations

15.

Income from Grants and

Donations

c.2. Budget Legislation86

The Budget Legislation Phase covers the period commencing from the time Congress receives the Presidents
Budget, which is inclusive of the NEPand the BESF, up to the Presidents approval of the GAA. This phase is
also known as the Budget Authorization Phase, and involves the significant participation of the Legislative
through its deliberations.
Initially, the Presidents Budget is assigned to the House of Representatives Appropriations Committee on
First Reading. The Appropriations Committee and its various Sub-Committees schedule and conduct budget
hearings to examine the PAPs of the departments and agencies. Thereafter, the House of Representatives drafts
the General Appropriations Bill (GAB).87
The GABis sponsored, presented and defended by the House of Representatives Appropriations Committee
and Sub-Committees in plenary session. As with other laws, the GAB is approved on Third Reading before the
House of Representatives version is transmitted to the Senate.88
After transmission, the Senate conducts its own committee hearings on the GAB. To expedite proceedings, the
Senate may conduct its committee hearings simultaneously with the House of Representatives deliberations.
The Senates Finance Committee and its Sub-Committees may submit the proposed amendments to the GAB
to the plenary of the Senate only after the House of Representatives has formally transmitted its version to the
Senate. The Senate version of the GAB is likewise approved on Third Reading.89
The House of Representatives and the Senate then constitute a panel each to sit in the Bicameral Conference
Committee for the purpose of discussing and harmonizing the conflicting provisions of their versions of the
GAB. The "harmonized" version of the GAB is next presented to the President for approval.90 The President
reviews the GAB, and prepares the Veto Message where budget items are subjected to direct veto,91 or are
identified for conditional implementation.
If, by the end of any fiscal year, the Congress shall have failed to pass the GAB for the ensuing fiscal year, the
GAA for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until the
GAB is passed by the Congress.92
c.3. Budget Execution93
With the GAA now in full force and effect, the next step is the implementation of the budget. The Budget
Execution Phase is primarily the function of the DBM, which is tasked to perform the following procedures,
namely: (1) to issue the programs and guidelines for the release of funds; (2) to prepare an Allotment and Cash
Release Program; (3) to release allotments; and (4) to issue disbursement authorities.

Page 369 of 557

The implementation of the GAA is directed by the guidelines issued by the DBM. Prior to this, the various
departments and agencies are required to submit Budget Execution Documents(BED) to outline their plans and
performance targets by laying down the physical and financial plan, the monthly cash program, the estimate of
monthly income, and the list of obligations that are not yet due and demandable.
Thereafter, the DBM prepares an Allotment Release Program (ARP)and a Cash Release Program (CRP).The
ARP sets a limit for allotments issued in general and to a specific agency. The CRP fixes the monthly,
quarterly and annual disbursement levels.
Allotments, which authorize an agency to enter into obligations, are issued by the DBM. Allotments are lesser
in scope than appropriations, in that the latter embrace the general legislative authority to spend. Allotments
may be released in two forms through a comprehensive Agency Budget Matrix (ABM),94 or, individually,
by SARO.95
Armed with either the ABM or the SARO, agencies become authorized to incur obligations96 on behalf of the
Government in order to implement their PAPs. Obligations may be incurred in various ways, like hiring of
personnel, entering into contracts for the supply of goods and services, and using utilities.
In order to settle the obligations incurred by the agencies, the DBM issues a disbursement authority so that
cash may be allocated in payment of the obligations. A cash or disbursement authority that is periodically
issued is referred to as a Notice of Cash Allocation (NCA),97 which issuance is based upon an agencys
submission of its Monthly Cash Program and other required documents. The NCA specifies the maximum
amount of cash that can be withdrawn from a government servicing bank for the period indicated. Apart from
the NCA, the DBM may issue a Non-Cash Availment Authority(NCAA) to authorize non-cash disbursements,
or a Cash Disbursement Ceiling(CDC) for departments with overseas operations to allow the use of income
collected by their foreign posts for their operating requirements.
Actual disbursement or spending of government funds terminates the Budget Execution Phase and is usually
accomplished through the Modified Disbursement Scheme under which disbursements chargeable against the
National Treasury are coursed through the government servicing banks.
c.4. Accountability98
Accountability is a significant phase of the budget cycle because it ensures that the government funds have
been effectively and efficiently utilized to achieve the States socio-economic goals. It also allows the DBM to
assess the performance of agencies during the fiscal year for the purpose of implementing reforms and
establishing new policies.
An agencys accountability may be examined and evaluated through (1) performance targets and outcomes; (2)
budget accountability reports; (3) review of agency performance; and (4) audit conducted by the Commission
on Audit(COA).
2.
Nature of the DAP as a fiscal plan
a. DAP was a program designed to
promote economic growth
Policy is always a part of every budget and fiscal decision of any Administration.99 The national budget the
Executive prepares and presents to Congress represents the Administrations "blueprint for public policy" and
Page 370 of 557

reflects the Governments goals and strategies.100 As such, the national budget becomes a tangible
representation of the programs of the Government in monetary terms, specifying therein the PAPs and services
for which specific amounts of public funds are proposed and allocated.101 Embodied in every national budget
is government spending.102
When he assumed office in the middle of 2010, President Aquino made efficiency and transparency in
government spending a significant focus of his Administration. Yet, although such focus resulted in an
improved fiscal deficit of 0.5% in the gross domestic product (GDP) from January to July of 2011, it also
unfortunately decelerated government project implementation and payment schedules.103 The World Bank
observed that the Philippines economic growth could be reduced, and potential growth could be weakened
should the Government continue with its underspending and fail to address the large deficiencies in
infrastructure.104 The economic situation prevailing in the middle of 2011 thus paved the way for the
development and implementation of the DAP as a stimulus package intended to fast-track public spending and
to push economic growth by investing on high-impact budgetary PAPs to be funded from the "savings"
generated during the year as well as from unprogrammed funds.105 In that respect, the DAP was the product
of "plain executive policy-making" to stimulate the economy by way of accelerated spending.106 The
Administration would thereby accelerate government spending by: (1) streamlining the implementation
process through the clustering of infrastructure projects of the Department of Public Works and Highways
(DPWH) and the Department of Education (DepEd),and (2) front loading PPP-related projects107 due for
implementation in the following year.108
Did the stimulus package work?
The March 2012 report of the World Bank,109 released after the initial implementation of the DAP, revealed
that the DAP was partially successful. The disbursements under the DAP contributed 1.3 percentage points to
GDP growth by the fourth quarter of 2011.110 The continued implementation of the DAP strengthened growth
by 11.8% year on year while infrastructure spending rebounded from a 29% contraction to a 34% growth as of
September 2013.111
The DAP thus proved to be a demonstration that expenditure was a policy instrument that the Government
could use to direct the economies towards growth and development.112 The Government, by spending on
public infrastructure, would signify its commitment of ensuring profitability for prospective investors.113 The
PAPs funded under the DAP were chosen for this reason based on their: (1) multiplier impact on the economy
and infrastructure development; (2) beneficial effect on the poor; and (3) translation into disbursements.114
b. History of the implementation of
the DAP, and sources of funds
under the DAP
How the Administrations economic managers conceptualized and developed the DAP, and finally presented it
to the President remains unknown because the relevant documents appear to be scarce.
The earliest available document relating to the genesis of the DAP was the memorandum of October 12,2011
from Sec. Abad seeking the approval of the President to implement the proposed DAP. The memorandum,
which contained a list of the funding sources for P72.11 billion and of the proposed priority projects to be
funded,115 reads:
MEMORANDUM FOR THE PRESIDENT
xxxx

Page 371 of 557

SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM (PROJECTS AND

SOURCES OF FUNDS)
DATE: OCTOBER 12, 2011
Mr. President, this is to formally confirm your approval of the Disbursement Acceleration Program totaling
P72.11 billion. We are already working with all the agencies concerned for the immediate execution of the
projects therein.
A. Fund Sources for the Acceleration Program

Fund Sources

Amount
(In million
Php)

Description

Unreleased Personnel
Services (PS)
appropriations which
will lapse at the end of
FY 2011 but may be
pooled as savings and
realigned for priority
programs that require
immediate funding

Action
Requested

FY 2011
Unreleased
Personal
Services (PS)
Appropriations

30,000

Declare as
savings and
approve/
authorize its use
for the 2011
Disbursement
Acceleration
Program

FY 2011
Unreleased
Appropriations

482

Unreleased
appropriations (slow
moving projects and
programs for
discontinuance)

FY 2010
Unprogrammed
Fund

12,336

Supported by the GFI

Dividends

Approve and
authorize its use
for the 2011
Disbursement
Acceleration
Program

FY 2010
Carryover
Appropriation

21,544

Unreleased
appropriations (slow
moving projects and
programs for
discontinuance) and
savings from Zero-based Budgeting
Initiative

With prior
approval from
the President in
November 2010
to declare as
savings and with
authority to use
for priority
projects

FY 2011 Budget
items for
realignment

7,748

FY 2011 Agency
Budget items that can
be realigned within the

For information

Page 372 of 557

agency to fund new fast

disbursing projects
DPWH-3.981 Billion
DA 2.497 Billion
DOT 1.000 Billion
DepEd 270 Million
TOTAL

72.110

B. Projects in the Disbursement Acceleration Program

(Descriptions of projects attached as Annex A)
GOCCs and GFIs
Agency/Project
(SARO and NCA Release)
1. LRTA: Rehabilitation of LRT 1 and 2
2. NHA:
a. Resettlement of North Triangle residents to
Camarin A7
b. Housing for BFP/BJMP
c. On-site development for families living
along dangerous
d. Relocation sites for informal settlers
along Iloilo River and its tributaries

Allotment
(in Million Php)
1,868
11,050
450
500
10,000
100

3. PHIL. HEART CENTER: Upgrading of

ageing physical plant and medical equipment

357

4. CREDIT INFO CORP: Establishment of

centralized credit information system

75

5. PIDS: purchase of land to relocate the PIDS

office and building construction

100

6. HGC: Equity infusion for credit insurance

and mortgage guaranty operations of HGC

400

7. PHIC: Obligations incurred (premium

subsidy for indigent families) in January-June
2010, booked for payment in Jul[y] Dec
2010. The delay in payment is due to the
delay in the certification of the LGU
counterpart. Without it, the NG is obliged to
pay the full amount.

1,496

8. Philpost: Purchase of foreclosed property.

Payment of Mandatory Obligations, (GSIS,
PhilHealth, ECC), Franking Privilege

644

Page 373 of 557

9. BSP: First equity infusion out of Php 40B

capitalization under the BSP Law

10,000

10. PCMC: Capital and Equipment Renovation

280

11. LCOP:
a. Pediatric Pulmonary Program
b. Bio-regenerative Technology Program
(Stem-Cell Research subject to legal
review and presentation)

105

12. TIDCORP: NG Equity infusion

570

35
70

TOTAL

26,945

NGAs/LGUs
Agency/Project

Allotment
(SARO)
(In Million
Php)

Cash
Requirement
(NCA)

13. DOF-BIR: NPSTAR

centralization of data
processing and others (To be
synchronized with GFMIS
activities)

758

758

14. COA: IT infrastructure

program and hiring of
additional litigational experts

144

144

15. DND-PAF: On Base Housing

Facilities and Communication
Equipment

30

30

2,959

2,223

1,629

1,629

919

183

411

411

1,293

1,293

1,293

132
5,432

16. DA:
a. Irrigation, FMRs and
Integrated Community Based Multi-Species
Hatchery and Aquasilvi
Farming
b. Mindanao Rural
Development Project
c. NIA Agno River Integrated
Irrigation Project
17. DAR:
a. Agrarian Reform
Communities Project 2
b. Landowners Compensation
18. DBM: Conduct of National
Survey of

Page 374 of 557

Farmers/Fisherfolks/Ips

625

625

19. DOJ: Operating requirements

of 50 investigation agents and
15 state attorneys

11

11

20. DOT: Preservation of the Cine

Corregidor Complex

25

25

1,819

1,819

425

425

275

275

190

190

2,800

2,800

24. OEO-FDCP: Establishment of

the National Film Archive and
local cinematheques, and other
local activities

20

20

25. DPWH: Various infrastructure

projects

5,500

5,500

26. DepEd/ERDT/DOST: Thin

Client Cloud Computing
Project

270

270

27. DOH: Hiring of nurses and

midwives

294

294

1,100

1,100

21. OPAPP: Activities for Peace

Process (PAMANA- Project
details: budget breakdown,
implementation plan, and
conditions on fund release
attached as Annex B)
22. DOST
a. Establishment of National
Meterological and Climate
Center
b. Enhancement of Doppler
Radar Network for National
Weather Watch, Accurate
Forecasting and Flood Early
Warning
23. DOF-BOC: To settle the
principal obligations with
PDIC consistent with the
agreement with the CISS and
SGS

28. TESDA: Training Program in

partnership with BPO industry
and other sectors
29. DILG: Performance Challenge
Fund (People Empowered
Community Driven
Development with DSWD and

Page 375 of 557

NAPC)

250

50

30. ARMM: Comprehensive Peace

and Development Intervention

8,592

8,592

31. DOTC-MRT: Purchase of

additional MRT cars

4,500

32. LGU Support Fund

6,500

6,500

33. Various Other Local Projects

6,500

6,500

750

750

45,165

44,000

34. Development Assistance to the

Province of Quezon
TOTAL
C. Summary
Fund Sources
Identified for
Approval
(In Million
Php)

Allotments
for Release

Cash
Requirements for
Release in FY
2011

72,110

70,895

GOCCs

26,895

26,895

NGAs/LGUs

45,165

44,000

Total

72,110

For His Excellencys Consideration

(Sgd.) FLORENCIO B. ABAD
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
OCT 12, 2011
The memorandum of October 12, 2011 was followed by another memorandum for the President dated
December 12, 2011116 requesting omnibus authority to consolidate the savings and unutilized balances for
fiscal year 2011. Pertinent portions of the memorandum of December 12, 2011 read:
MEMORANDUM FOR THE PRESIDENT
xxxx
SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances and its Realignment
Page 376 of 557

DATE: December 12, 2011

This is to respectfully request for the grant of Omnibus Authority to consolidate savings/unutilized balances in
FY 2011 corresponding to completed or discontinued projects which may be pooled to fund additional projects
or expenditures.
In addition, Mr. President, this measure will allow us to undertake projects even if their implementation carries
over to 2012 without necessarily impacting on our budget deficit cap next year.
BACKGROUND
1.0 The DBM, during the course of performance reviews conducted on the agencies
operations, particularly on the implementation of their projects/activities, including expenses
incurred in undertaking the same, have identified savings out of the 2011 General
Appropriations Act. Said savings correspond to completed or discontinued projects under
certain departments/agencies which may be pooled, for the following:
1.1 to provide for new activities which have not been anticipated during preparation
of the budget;
1.2 to augment additional requirements of on-going priority projects; and
1.3 to provide for deficiencies under the Special Purpose Funds, e.g., PDAF,
Calamity Fund, Contingent Fund
1.4 to cover for the modifications of the original allotment class allocation as a result
of on-going priority projects and implementation of new activities
2.0 x x x x
2.1 x x x
2.2 x x x
ON THE UTILIZATION OF POOLED SAVINGS
3.0 It may be recalled that the President approved our request for omnibus authority to pool
savings/unutilized balances in FY 2010 last November 25, 2010.
4.0 It is understood that in the utilization of the pooled savings, the DBM shall secure the
corresponding approval/confirmation of the President. Furthermore, it is assured that the
proposed realignments shall be within the authorized Expenditure level.
5.0 Relative thereto, we have identified some expenditure items that may be sourced from the
said pooled appropriations in FY 2010 that will expire on December 31, 2011 and
appropriations in FY 2011 that may be declared as savings to fund additional expenditures.
5.1 The 2010 Continuing Appropriations (pooled savings) is proposed to be spent for
the projects that we have identified to be immediate actual disbursements considering
that this same fund source will expire on December 31, 2011.

Page 377 of 557

5.2 With respect to the proposed expenditure items to be funded from the FY 2011
Unreleased Appropriations, most of these are the same projects for which the DBM
is directed by the Office of the President, thru the Executive Secretary, to source
funds.
6.0 Among others, the following are such proposed additional projects that have been chosen
given their multiplier impact on economy and infrastructure development, their beneficial
effect on the poor, and their translation into disbursements. Please note that we have classified
the list of proposed projects as follows:
7.0 x x x
FOR THE PRESIDENTS APPROVAL
8.0 Foregoing considered, may we respectfully request for the Presidents approval for the
following:
8.1 Grant of omnibus authority to consolidate FY 2011 savings/unutilized balances
and its realignment; and
8.2 The proposed additional projects identified for funding.
For His Excellencys consideration and approval.
(Sgd.)
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
DEC 21, 2011
Substantially identical requests for authority to pool savings and to fund proposed projects were contained in
various other memoranda from Sec. Abad dated June 25, 2012,117 September 4, 2012,118 December 19,
2012,119 May 20, 2013,120 and September 25, 2013.121 The President apparently approved all the requests,
withholding approval only of the proposed projects contained in the June 25, 2012 memorandum, as borne out
by his marginal note therein to the effect that the proposed projects should still be "subject to further
discussions."122
In order to implement the June25, 2012 memorandum, Sec. Abad issued NBC No. 541 (Adoption of
Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments as of June 30, 2012),123
reproduced herein as follows:
NATIONAL BUDGET CIRCULAR No. 541
July 18, 2012

Page 378 of 557

TO: All Heads of Departments/Agencies/State Universities and Colleges and other Offices of the National
Government, Budget and Planning Officers; Heads of Accounting Units and All Others Concerned
SUBJECT : Adoption of Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments
as of June 30, 2012
1.0 Rationale
The DBM, as mandated by Executive Order (EO) No. 292 (Administrative Code of 1987), periodically
reviews and evaluates the departments/agencies efficiency and effectiveness in utilizing budgeted funds for
the delivery of services and production of goods, consistent with the government priorities.
In the event that a measure is necessary to further improve the operational efficiency of the government, the
President is authorized to suspend or stop further use of funds allotted for any agency or expenditure
authorized in the General Appropriations Act. Withdrawal and pooling of unutilized allotment releases can be
effected by DBM based on authority of the President, as mandated under Sections 38 and 39, Chapter 5, Book
VI of EO 292.
For the first five months of 2012, the National Government has not met its spending targets. In order to
accelerate spending and sustain the fiscal targets during the year, expenditure measures have to be
implemented to optimize the utilization of available resources.
Departments/agencies have registered low spending levels, in terms of obligations and disbursements per
initial review of their 2012 performance. To enhance agencies performance, the DBM conducts continuous
consultation meetings and/or send call-up letters, requesting them to identify slow-moving programs/projects
and the factors/issues affecting their performance (both pertaining to internal systems and those which are
outside the agencies spheres of control). Also, they are asked to formulate strategies and improvement plans
for the rest of 2012.
Notwithstanding these initiatives, some departments/agencies have continued to post low obligation levels as
of end of first semester, thus resulting to substantial unobligated allotments.
In line with this, the President, per directive dated June 27, 2012 authorized the withdrawal of unobligated
allotments of agencies with low levels of obligations as of June 30, 2012, both for continuing and current
allotments. This measure will allow the maximum utilization of available allotments to fund and undertake
other priority expenditures of the national government.
2.0 Purpose
2.1 To provide the conditions and parameters on the withdrawal of unobligated allotments of
agencies as of June 30, 2012 to fund priority and/or fast-moving programs/projects of the
national government;
2.2 To prescribe the reports and documents to be used as bases on the withdrawal of said
unobligated allotments; and
2.3 To provide guidelines in the utilization or reallocation of the withdrawn allotments.
3.0 Coverage

Page 379 of 557

3.1 These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012
of all national government agencies (NGAs) charged against FY 2011 Continuing
Appropriation (R.A. No.10147) and FY 2012 Current Appropriation (R.A. No. 10155),
pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the
implementation of programs and projects, as well as capitalized MOOE; and
3.1.3 Personal Services corresponding to unutilized pension benefits declared as
savings by the agencies concerned based on their updated/validated list of
pensioners.
3.2 The withdrawal of unobligated allotments may cover the identified programs, projects and
activities of the departments/agencies reflected in the DBM list shown as Annex A or specific
programs and projects as may be identified by the agencies.
4.0 Exemption
These guidelines shall not apply to the following:
4.1 NGAs
4.1.1 Constitutional Offices/Fiscal Autonomy Group, granted fiscal autonomy under
the Philippine Constitution; and
4.1.2 State Universities and Colleges, adopting the Normative Funding allocation
scheme i.e., distribution of a predetermined budget ceiling.
4.2 Fund Sources
4.2.1 Personal Services other than pension benefits;
4.2.2 MOOE items earmarked for specific purposes or subject to realignment
conditions per General Provisions of the GAA:
Confidential and Intelligence Fund;
Savings from Traveling, Communication, Transportation and Delivery,
Repair and Maintenance, Supplies and Materials and Utility which shall be
used for the grant of Collective Negotiation Agreement incentive benefit;
Savings from mandatory expenditures which can be realigned only in the
last quarter after taking into consideration the agencys full year
requirements, i.e., Petroleum, Oil and Lubricants, Water, Illumination,
Power Services, Telephone, other Communication Services and Rent.
4.2.3 Foreign-Assisted Projects (loan proceeds and peso counterpart);

Page 380 of 557

4.2.4 Special Purpose Funds such as: E-Government Fund, International

Commitments Fund, PAMANA, Priority Development Assistance Fund, Calamity
Fund, Budgetary Support to GOCCs and Allocation to LGUs, among others;
4.2.5 Quick Response Funds; and
4.2.6 Automatic Appropriations i.e., Retirement Life Insurance Premium and Special
Accounts in the General Fund.
5.0 Guidelines
5.1 National government agencies shall continue to undertake procurement activities
notwithstanding the implementation of the policy of withdrawal of unobligated allotments
until the end of the third quarter, FY 2012. Even without the allotments, the agency shall
proceed in undertaking the procurement processes (i.e., procurement planning up to the
conduct of bidding but short of awarding of contract) pursuant to GPPB Circular Nos. 022008 and 01-2009 and DBM Circular Letter No. 2010-9.
5.2 For the purpose of determining the amount of unobligated allotments that shall be
withdrawn, all departments/agencies/operating units (OUs) shall submit to DBM not later
than July 30, 2012, the following budget accountability reports as of June 30, 2012;
Statement of Allotments, Obligations and Balances (SAOB);
Financial Report of Operations (FRO); and
Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the
agencys latest report available shall be used by DBM as basis for withdrawal of allotment.
The DBM shall compute/approximate the agencys obligation level as of June 30 to derive its
unobligated allotments as of same period. Example: If the March 31 SAOB or FRO reflects
actual obligations of P 800M then the June 30 obligation level shall approximate to P1,600 M
(i.e., P800 M x 2 quarters).
5.4 All released allotments in FY 2011 charged against R.A. No. 10147 which remained
unobligated as of June 30, 2012 shall be immediately considered for withdrawal. This policy
is based on the following considerations:
5.4.1 The departments/agencies approved priority programs and projects are
assumed to be implementation-ready and doable during the given fiscal year; and
5.4.2 The practice of having substantial carryover appropriations may imply that the
agency has a slower-than-programmed implementation capacity or agency tends to
implement projects within a two-year timeframe.
5.5. Consistent with the Presidents directive, the DBM shall, based on evaluation of the
reports cited above and results of consultations with the departments/agencies, withdraw the
unobligated allotments as of June 30, 2012 through issuance of negative Special Allotment
Release Orders (SAROs).

Page 381 of 557

5.6 DBM shall prepare and submit to the President, a report on the magnitude of withdrawn
allotments. The report shall highlight the agencies which failed to submit the June 30 reports
required under this Circular.
5.7 The withdrawn allotments may be:
5.7.1 Reissued for the original programs and projects of the agencies/OUs concerned,
from which the allotments were withdrawn;
5.7.2 Realigned to cover additional funding for other existing programs and projects
of the agency/OU; or
5.7.3 Used to augment existing programs and projects of any agency and to fund
priority programs and projects not considered in the 2012 budget but expected to be
started or implemented during the current year.
5.8 For items 5.7.1 and 5.7.2 above, agencies/OUs concerned may submit to DBM a Special
Budget Request (SBR), supported with the following:
5.8.1 Physical and Financial Plan (PFP);
5.8.2 Monthly Cash Program (MCP); and
5.8.3 Proof that the project/activity has started the procurement processes i.e., Proof
of Posting and/or Advertisement of the Invitation to Bid.
5.9 The deadline for submission of request/s pertaining to these categories shall be until the
end of the third quarter i.e., September 30, 2012. After said cut-off date, the withdrawn
allotments shall be pooled and form part of the overall savings of the national government.
5.10 Utilization of the consolidated withdrawn allotments for other priority programs and
projects as cited under item 5.7.3 of this Circular, shall be subject to approval of the
President. Based on the approval of the President, DBM shall issue the SARO to cover the
approved priority expenditures subject to submission by the agency/OU concerned of the
SBR and supported with PFP and MCP.
5.11 It is understood that all releases to be made out of the withdrawn allotments (both 2011
and 2012 unobligated allotments) shall be within the approved Expenditure Program level of
the national government for the current year. The SAROs to be issued shall properly disclose
the appropriation source of the release to determine the extent of allotment validity, as
follows:
For charges under R.A. 10147 allotments shall be valid up to December 31, 2012;
and
For charges under R.A. 10155 allotments shall be valid up to December 31, 2013.
5.12 Timely compliance with the submission of existing BARs and other reportorial
requirements is reiterated for monitoring purposes.
6.0 Effectivity
Page 382 of 557

This circular shall take effect immediately.

(Sgd.) FLORENCIO B. ABAD
Secretary
As can be seen, NBC No. 541 specified that the unobligated allotments of all agencies and departments as of
June 30, 2012 that were charged against the continuing appropriations for fiscal year 2011 and the 2012 GAA
(R.A. No. 10155) were subject to withdrawal through the issuance of negative SAROs, but such allotments
could be either: (1) reissued for the original PAPs of the concerned agencies from which they were withdrawn;
or (2) realigned to cover additional funding for other existing PAPs of the concerned agencies; or (3) used to
augment existing PAPs of any agency and to fund priority PAPs not considered in the 2012 budget but
expected to be started or implemented in 2012. Financing the other priority PAPs was made subject to the
approval of the President. Note here that NBC No. 541 used terminologies like "realignment" and
"augmentation" in the application of the withdrawn unobligated allotments.
Taken together, all the issuances showed how the DAP was to be implemented and funded, that is (1) by
declaring "savings" coming from the various departments and agencies derived from pooling unobligated
allotments and withdrawing unreleased appropriations; (2) releasing unprogrammed funds; and (3) applying
the "savings" and unprogrammed funds to augment existing PAPs or to support other priority PAPs.
c. DAP was not an appropriation
measure; hence, no appropriation
law was required to adopt or to
implement it
Petitioners Syjuco, Luna, Villegas and PHILCONSA state that Congress did not enact a law to establish the
DAP, or to authorize the disbursement and release of public funds to implement the DAP. Villegas,
PHILCONSA, IBP, Araullo, and COURAGE observe that the appropriations funded under the DAP were not
included in the 2011, 2012 and 2013 GAAs. To petitioners IBP, Araullo, and COURAGE, the DAP, being
actually an appropriation that set aside public funds for public use, should require an enabling law for its
validity. VACC maintains that the DAP, because it involved huge allocations that were separate and distinct
from the GAAs, circumvented and duplicated the GAAs without congressional authorization and control.
The petitioners contend in unison that based on how it was developed and implemented the DAP violated the
mandate of Section 29(1), Article VI of the 1987 Constitution that "[n]o money shall be paid out of the
Treasury except in pursuance of an appropriation made by law."
The OSG posits, however, that no law was necessary for the adoption and implementation of the DAP because
of its being neither a fund nor an appropriation, but a program or an administrative system of prioritizing
spending; and that the adoption of the DAP was by virtue of the authority of the President as the Chief
Executive to ensure that laws were faithfully executed.
We agree with the OSGs position.
The DAP was a government policy or strategy designed to stimulate the economy through accelerated
spending. In the context of the DAPs adoption and implementation being a function pertaining to the
Executive as the main actor during the Budget Execution Stage under its constitutional mandate to faithfully
execute the laws, including the GAAs, Congress did not need to legislate to adopt or to implement the DAP.
Congress could appropriate but would have nothing more to do during the Budget Execution Stage. Indeed,
appropriation was the act by which Congress "designates a particular fund, or sets apart a specified portion of
the public revenue or of the money in the public treasury, to be applied to some general object of governmental
expenditure, or to some individual purchase or expense."124 As pointed out in Gonzales v. Raquiza:125 "In a
Page 383 of 557

strict sense, appropriation has been defined as nothing more than the legislative authorization prescribed by
the Constitution that money may be paid out of the Treasury, while appropriation made by law refers to the
act of the legislature setting apart or assigning to a particular use a certain sum to be used in the payment of
debt or dues from the State to its creditors."126
On the other hand, the President, in keeping with his duty to faithfully execute the laws, had sufficient
discretion during the execution of the budget to adapt the budget to changes in the countrys economic
situation.127 He could adopt a plan like the DAP for the purpose. He could pool the savings and identify the
PAPs to be funded under the DAP. The pooling of savings pursuant to the DAP, and the identification of the
PAPs to be funded under the DAP did not involve appropriation in the strict sense because the money had been
already set apart from the public treasury by Congress through the GAAs. In such actions, the Executive did
not usurp the power vested in Congress under Section 29(1), Article VI of the Constitution.
3.
Unreleased appropriations and withdrawn
unobligated allotments under the DAP
were not savings, and the use of such
appropriations contravened Section 25(5),
Article VI of the 1987 Constitution.
Notwithstanding our appreciation of the DAP as a plan or strategy validly adopted by the Executive to ramp up
spending to accelerate economic growth, the challenges posed by the petitioners constrain us to dissect the
mechanics of the actual execution of the DAP. The management and utilization of the public wealth inevitably
demands a most careful scrutiny of whether the Executives implementation of the DAP was consistent with
the Constitution, the relevant GAAs and other existing laws.
a. Although executive discretion
and flexibility are necessary in
the execution of the budget, any
transfer of appropriated funds
should conform to Section 25(5),
Article VI of the Constitution
We begin this dissection by reiterating that Congress cannot anticipate all issues and needs that may come into
play once the budget reaches its execution stage. Executive discretion is necessary at that stage to achieve a
sound fiscal administration and assure effective budget implementation. The heads of offices, particularly the
President, require flexibility in their operations under performance budgeting to enable them to make whatever
adjustments are needed to meet established work goals under changing conditions.128 In particular, the power
to transfer funds can give the President the flexibility to meet unforeseen events that may otherwise impede the
efficient implementation of the PAPs set by Congress in the GAA.
Congress has traditionally allowed much flexibility to the President in allocating funds pursuant to the
GAAs,129 particularly when the funds are grouped to form lump sum accounts.130 It is assumed that the
agencies of the Government enjoy more flexibility when the GAAs provide broader appropriation items.131
This flexibility comes in the form of policies that the Executive may adopt during the budget execution phase.
The DAP as a strategy to improve the countrys economic position was one policy that the President
decided to carry out in order to fulfill his mandate under the GAAs.
Denying to the Executive flexibility in the expenditure process would be counterproductive. In Presidential
Spending Power,132 Prof. Louis Fisher, an American constitutional scholar whose specialties have included
budget policy, has justified extending discretionary authority to the Executive thusly:

Page 384 of 557

[T]he impulse to deny discretionary authority altogether should be resisted. There are many number of reasons
why obligations and outlays by administrators may have to differ from appropriations by legislators.
Appropriations are made many months, and sometimes years, in advance of expenditures. Congress acts with
imperfect knowledge in trying to legislate in fields that are highly technical and constantly undergoing change.
New circumstances will develop to make obsolete and mistaken the decisions reached by Congress at the
appropriation stage. It is not practicable for Congress to adjust to each new development by passing separate
supplemental appropriation bills. Were Congress to control expenditures by confining administrators to narrow
statutory details, it would perhaps protect its power of the purse but it would not protect the purse itself. The
realities and complexities of public policy require executive discretion for the sound management of public
funds.
xxxx
x x x The expenditure process, by its very nature, requires substantial discretion for administrators. They need
to exercise judgment and take responsibility for their actions, but those actions ought to be directed toward
executing congressional, not administrative policy. Let there be discretion, but channel it and use it to satisfy
the programs and priorities established by Congress.
In contrast, by allowing to the heads of offices some power to transfer funds within their respective offices, the
Constitution itself ensures the fiscal autonomy of their offices, and at the same time maintains the separation of
powers among the three main branches of the Government. The Court has recognized this, and emphasized so
in Bengzon v. Drilon,133 viz:
The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and
flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and constraints
on the manner the independent constitutional offices allocate and utilize the funds appropriated for their
operations is anathema to fiscal autonomy and violative not only of the express mandate of the Constitution
but especially as regards the Supreme Court, of the independence and separation of powers upon which the
entire fabric of our constitutional system is based.
In the case of the President, the power to transfer funds from one item to another within the Executive has not
been the mere offshoot of established usage, but has emanated from law itself. It has existed since the time of
the American Governors-General.134 Act No. 1902 (An Act authorizing the Governor-General to direct any
unexpended balances of appropriations be returned to the general fund of the Insular Treasury and to transfer
from the general fund moneys which have been returned thereto), passed on May 18, 1909 by the First
Philippine Legislature,135 was the first enabling law that granted statutory authority to the President to transfer
funds. The authority was without any limitation, for the Act explicitly empowered the Governor-General to
transfer any unexpended balance of appropriations for any bureau or office to another, and to spend such
balance as if it had originally been appropriated for that bureau or office.
From 1916 until 1920, the appropriations laws set a cap on the amounts of funds that could be transferred,
thereby limiting the power to transfer funds. Only 10% of the amounts appropriated for contingent or
miscellaneous expenses could be transferred to a bureau or office, and the transferred funds were to be used to
cover deficiencies in the appropriations also for miscellaneous expenses of said bureau or office.
In 1921, the ceiling on the amounts of funds to be transferred from items under miscellaneous expenses to any
other item of a certain bureau or office was removed.
During the Commonwealth period, the power of the President to transfer funds continued to be governed by
the GAAs despite the enactment of the Constitution in 1935. It is notable that the 1935 Constitution did not
include a provision on the power to transfer funds. At any rate, a shift in the extent of the Presidents power to
transfer funds was again experienced during this era, with the President being given more flexibility in
Page 385 of 557

implementing the budget. The GAAs provided that the power to transfer all or portions of the appropriations in
the Executive Department could be made in the "interest of the public, as the President may determine."136
In its time, the 1971 Constitutional Convention wanted to curtail the Presidents seemingly unbounded
discretion in transferring funds.137 Its Committee on the Budget and Appropriation proposed to prohibit the
transfer of funds among the separate branches of the Government and the independent constitutional bodies,
but to allow instead their respective heads to augment items of appropriations from savings in their respective
budgets under certain limitations.138 The clear intention of the Convention was to further restrict, not to
liberalize, the power to transfer appropriations.139 Thus, the Committee on the Budget and Appropriation
initially considered setting stringent limitations on the power to augment, and suggested that the augmentation
of an item of appropriation could be made "by not more than ten percent if the original item of appropriation to
be augmented does not exceed one million pesos, or by not more than five percent if the original item of
appropriation to be augmented exceeds one million pesos."140 But two members of the Committee objected to
the P1,000,000.00 threshold, saying that the amount was arbitrary and might not be reasonable in the future.
The Committee agreed to eliminate the P1,000,000.00 threshold, and settled on the ten percent limitation.141
In the end, the ten percent limitation was discarded during the plenary of the Convention, which adopted the
following final version under Section 16, Article VIII of the 1973 Constitution, to wit:
(5) No law shall be passed authorizing any transfer of appropriations; however, the President, the Prime
Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions
may by law be authorized to augment any item in the general appropriations law for their respective offices
from savings in other items of their respective appropriations.
The 1973 Constitution explicitly and categorically prohibited the transfer of funds from one item to another,
unless Congress enacted a law authorizing the President, the Prime Minister, the Speaker, the Chief Justice of
the Supreme Court, and the heads of the Constitutional omissions to transfer funds for the purpose of
augmenting any item from savings in another item in the GAA of their respective offices. The leeway was
limited to augmentation only, and was further constricted by the condition that the funds to be transferred
should come from savings from another item in the appropriation of the office.142
On July 30, 1977, President Marcos issued PD No. 1177, providing in its Section 44 that:
Section 44. Authority to Approve Fund Transfers. The President shall have the authority to transfer any fund
appropriated for the different departments, bureaus, offices and agencies of the Executive Department which
are included in the General Appropriations Act, to any program, project, or activity of any department, bureau
or office included in the General Appropriations Act or approved after its enactment.
The President shall, likewise, have the authority to augment any appropriation of the Executive Department in
the General Appropriations Act, from savings in the appropriations of another department, bureau, office or
agency within the Executive Branch, pursuant to the provisions of Article VIII, Section 16 (5) of the
Constitution.
In Demetria v. Alba, however, the Court struck down the first paragraph of Section 44 for contravening
Section 16(5)of the 1973 Constitution, ruling:
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the privilege granted under said Section 16. It
empowers the President to indiscriminately transfer funds from one department, bureau, office or agency of the
Executive Department to any program, project or activity of any department, bureau or office included in the
General Appropriations Act or approved after its enactment, without regard as to whether or not the funds to be
transferred are actually savings in the item from which the same are to be taken, or whether or not the transfer
is for the purpose of augmenting the item to which said transfer is to be made. It does not only completely
Page 386 of 557

disregard the standards set in the fundamental law, thereby amounting to an undue delegation of legislative
powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the provision
in question null and void.143
It is significant that Demetria was promulgated 25 days after the ratification by the people of the 1987
Constitution, whose Section 25(5) of Article VI is identical to Section 16(5), Article VIII of the 1973
Constitution, to wit:
Section 25. x x x
xxxx
5) No law shall be passed authorizing any transfer of appropriations; however, the President, the President of
the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads
of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations
law for their respective offices from savings in other items of their respective appropriations.
xxxx
The foregoing history makes it evident that the Constitutional Commission included Section 25(5), supra, to
keep a tight rein on the exercise of the power to transfer funds appropriated by Congress by the President and
the other high officials of the Government named therein. The Court stated in Nazareth v. Villar:144
In the funding of current activities, projects, and programs, the general rule should still be that the budgetary
amount contained in the appropriations bill is the extent Congress will determine as sufficient for the
budgetary allocation for the proponent agency. The only exception is found in Section 25 (5), Article VI of the
Constitution, by which the President, the President of the Senate, the Speaker of the House of Representatives,
the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions are authorized to transfer
appropriations to augmentany item in the GAA for their respective offices from the savings in other items of
their respective appropriations. The plain language of the constitutional restriction leaves no room for the
petitioners posture, which we should now dispose of as untenable.
It bears emphasizing that the exception in favor of the high officials named in Section 25(5), Article VI of the
Constitution limiting the authority to transfer savings only to augment another item in the GAA is strictly but
reasonably construed as exclusive. As the Court has expounded in Lokin, Jr. v. Commission on Elections:
When the statute itself enumerates the exceptions to the application of the general rule, the exceptions are
strictly but reasonably construed. The exceptions extend only as far as their language fairly warrants, and all
doubts should be resolved in favor of the general provision rather than the exceptions. Where the general rule
is established by a statute with exceptions, none but the enacting authority can curtail the former. Not even the
courts may add to the latter by implication, and it is a rule that an express exception excludes all others,
although it is always proper in determining the applicability of the rule to inquire whether, in a particular case,
it accords with reason and justice.
The appropriate and natural office of the exception is to exempt something from the scope of the general words
of a statute, which is otherwise within the scope and meaning of such general words. Consequently, the
existence of an exception in a statute clarifies the intent that the statute shall apply to all cases not excepted.
Exceptions are subject to the rule of strict construction; hence, any doubt will be resolved in favor of the
general provision and against the exception. Indeed, the liberal construction of a statute will seem to require in
many circumstances that the exception, by which the operation of the statute is limited or abridged, should
receive a restricted construction.

Page 387 of 557

Accordingly, we should interpret Section 25(5), supra, in the context of a limitation on the Presidents
discretion over the appropriations during the Budget Execution Phase.
b. Requisites for the valid transfer of
appropriated funds under Section
25(5), Article VI of the 1987
Constitution
The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon a concurrence of
the following requisites, namely:
(1) There is a law authorizing the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the heads of the Constitutional
Commissions to transfer funds within their respective offices;
(2) The funds to be transferred are savings generated from the appropriations for their respective
offices; and (3) The purpose of the transfer is to augment an item in the general appropriations law for
their respective offices.
b.1. First RequisiteGAAs of 2011 and
2012 lacked valid provisions to
authorize transfers of funds under
the DAP; hence, transfers under the
DAP were unconstitutional
Section 25(5), supra, not being a self-executing provision of the Constitution, must have an implementing law
for it to be operative. That law, generally, is the GAA of a given fiscal year. To comply with the first requisite,
the GAAs should expressly authorize the transfer of funds.
Did the GAAs expressly authorize the transfer of funds?
In the 2011 GAA, the provision that gave the President and the other high officials the authority to transfer
funds was Section 59, as follows:
Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying
fiscal autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in
other items of their respective appropriations.
In the 2012 GAA, the empowering provision was Section 53, to wit:
Section 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying
fiscal autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in
other items of their respective appropriations.
In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by the DBM as justification for the
use of savings under the DAP.145
A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012 were textually
unfaithful to the Constitution for not carrying the phrase "for their respective offices" contained in Section
Page 388 of 557

25(5), supra. The impact of the phrase "for their respective offices" was to authorize only transfers of funds
within their offices (i.e., in the case of the President, the transfer was to an item of appropriation within the
Executive). The provisions carried a different phrase ("to augment any item in this Act"), and the effect was
that the 2011 and 2012 GAAs thereby literally allowed the transfer of funds from savings to augment any item
in the GAAs even if the item belonged to an office outside the Executive. To that extent did the 2011 and 2012
GAAs contravene the Constitution. At the very least, the aforequoted provisions cannot be used to claim
authority to transfer appropriations from the Executive to another branch, or to a constitutional commission.
Apparently realizing the problem, Congress inserted the omitted phrase in the counterpart provision in the
2013 GAA, to wit:
Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying
fiscal autonomy, and the Ombudsman are hereby authorized to use savings in their respective appropriations to
augment actual deficiencies incurred for the current year in any item of their respective appropriations.
Even had a valid law authorizing the transfer of funds pursuant to Section 25(5), supra, existed, there still
remained two other requisites to be met, namely: that the source of funds to be transferred were savings from
appropriations within the respective offices; and that the transfer must be for the purpose of augmenting an
item of appropriation within the respective offices.
b.2. Second Requisite There were
no savings from which funds
could be sourced for the DAP
Were the funds used in the DAP actually savings?
The petitioners claim that the funds used in the DAP the unreleased appropriations and withdrawn
unobligated allotments were not actual savings within the context of Section 25(5), supra, and the relevant
provisions of the GAAs. Belgica argues that "savings" should be understood to refer to the excess money after
the items that needed to be funded have been funded, or those that needed to be paid have been paid pursuant
to the budget.146 The petitioners posit that there could be savings only when the PAPs for which the funds had
been appropriated were actually implemented and completed, or finally discontinued or abandoned. They insist
that savings could not be realized with certainty in the middle of the fiscal year; and that the funds for "slowmoving" PAPs could not be considered as savings because such PAPs had not actually been abandoned or
discontinued yet.147 They stress that NBC No. 541, by allowing the withdrawn funds to be reissued to the
"original program or project from which it was withdrawn," conceded that the PAPs from which the supposed
savings were taken had not been completed, abandoned or discontinued.148
The OSG represents that "savings" were "appropriations balances," being the difference between the
appropriation authorized by Congress and the actual amount allotted for the appropriation; that the definition
of "savings" in the GAAs set only the parameters for determining when savings occurred; that it was still the
President (as well as the other officers vested by the Constitution with the authority to augment) who
ultimately determined when savings actually existed because savings could be determined only during the
stage of budget execution; that the President must be given a wide discretion to accomplish his tasks; and that
the withdrawn unobligated allotments were savings inasmuch as they were clearly "portions or balances of any
programmed appropriationfree from any obligation or encumbrances which are (i) still available after the
completion or final discontinuance or abandonment of the work, activity or purpose for which the
appropriation is authorized"
We partially find for the petitioners.

Page 389 of 557

In ascertaining the meaning of savings, certain principles should be borne in mind. The first principle is that
Congress wields the power of the purse. Congress decides how the budget will be spent; what PAPs to fund;
and the amounts of money to be spent for each PAP. The second principle is that the Executive, as the
department of the Government tasked to enforce the laws, is expected to faithfully execute the GAA and to
spend the budget in accordance with the provisions of the GAA.149 The Executive is expected to faithfully
implement the PAPs for which Congress allocated funds, and to limit the expenditures within the allocations,
unless exigencies result to deficiencies for which augmentation is authorized, subject to the conditions
provided by law. The third principle is that in making the Presidents power to augment operative under the
GAA, Congress recognizes the need for flexibility in budget execution. In so doing, Congress diminishes its
own power of the purse, for it delegates a fraction of its power to the Executive. But Congress does not thereby
allow the Executive to override its authority over the purse as to let the Executive exceed its delegated
authority. And the fourth principle is that savings should be actual. "Actual" denotes something that is real or
substantial, or something that exists presently in fact, as opposed to something that is merely theoretical,
possible, potential or hypothetical.150
The foregoing principles caution us to construe savings strictly against expanding the scope of the power to
augment. It is then indubitable that the power to augment was to be used only when the purpose for which the
funds had been allocated were already satisfied, or the need for such funds had ceased to exist, for only then
could savings be properly realized. This interpretation prevents the Executive from unduly transgressing
Congress power of the purse.
The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this interpretation and
made it operational, viz:
Savings refer to portions or balances of any programmed appropriation in this Act free from any obligation or
encumbrance which are: (i) still available after the completion or final discontinuance or abandonment of the
work, activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising
from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay;
and (iii) from appropriations balances realized from the implementation of measures resulting in improved
systems and efficiencies and thus enabled agencies to meet and deliver the required or planned targets,
programs and services approved in this Act at a lesser cost.
The three instances listed in the GAAs aforequoted definition were a sure indication that savings could be
generated only upon the purpose of the appropriation being fulfilled, or upon the need for the appropriation
being no longer existent.
The phrase "free from any obligation or encumbrance" in the definition of savings in the GAAs conveyed the
notion that the appropriation was at that stage when the appropriation was already obligated and the
appropriation was already released. This interpretation was reinforced by the enumeration of the three
instances for savings to arise, which showed that the appropriation referred to had reached the agency level. It
could not be otherwise, considering that only when the appropriation had reached the agency level could it be
determined whether (a) the PAP for which the appropriation had been authorized was completed, finally
discontinued, or abandoned; or (b) there were vacant positions and leaves of absence without pay; or (c) the
required or planned targets, programs and services were realized at a lesser cost because of the implementation
of measures resulting in improved systems and efficiencies.
The DBM declares that part of the savings brought under the DAP came from "pooling of unreleased
appropriations such as unreleased Personnel Services appropriations which will lapse at the end of the year,
unreleased appropriations of slow moving projects and discontinued projects per Zero-Based Budgeting
findings."

Page 390 of 557

The declaration of the DBM by itself does not state the clear legal basis for the treatment of unreleased or
unalloted appropriations as savings.
The fact alone that the appropriations are unreleased or unalloted is a mere description of the status of the
items as unalloted or unreleased. They have not yet ripened into categories of items from which savings can be
generated. Appropriations have been considered "released" if there has already been an allotment or
authorization to incur obligations and disbursement authority. This means that the DBM has issued either an
ABM (for those not needing clearance), or a SARO (for those needing clearance), and consequently an NCA,
NCAA or CDC, as the case may be. Appropriations remain unreleased, for instance, because of noncompliance
with documentary requirements (like the Special Budget Request), or simply because of the unavailability of
funds. But the appropriations do not actually reach the agencies to which they were allocated under the GAAs,
and have remained with the DBM technically speaking. Ergo, unreleased appropriations refer to appropriations
with allotments but without disbursement authority.
For us to consider unreleased appropriations as savings, unless these met the statutory definition of savings,
would seriously undercut the congressional power of the purse, because such appropriations had not even
reached and been used by the agency concerned vis--vis the PAPs for which Congress had allocated them.
However, if an agency has unfilled positions in its plantilla and did not receive an allotment and NCA for such
vacancies, appropriations for such positions, although unreleased, may already constitute savings for that
agency under the second instance.
Unobligated allotments, on the other hand, were encompassed by the first part of the definition of "savings" in
the GAA, that is, as "portions or balances of any programmed appropriation in this Act free from any
obligation or encumbrance." But the first part of the definition was further qualified by the three enumerated
instances of when savings would be realized. As such, unobligated allotments could not be indiscriminately
declared as savings without first determining whether any of the three instances existed. This signified that the
DBMs withdrawal of unobligated allotments had disregarded the definition of savings under the GAAs.
Justice Carpio has validly observed in his Separate Concurring Opinion that MOOE appropriations are deemed
divided into twelve monthly allocations within the fiscal year; hence, savings could be generated monthly from
the excess or unused MOOE appropriations other than the Mandatory Expenditures and Expenditures for
Business-type Activities because of the physical impossibility to obligate and spend such funds as MOOE for a
period that already lapsed. Following this observation, MOOE for future months are not savings and cannot be
transferred.
The DBMs Memorandum for the President dated June 25, 2012 (which became the basis of NBC No. 541)
stated:
ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS
5.0 The DBM, during the course of performance reviews conducted on the agencies operations,
particularly on the implementation of their projects/activities, including expenses incurred in
undertaking the same, have been continuously calling the attention of all National Government
agencies (NGAs) with low levels of obligations as of end of the first quarter to speedup the
implementation of their programs and projects in the second quarter.
6.0 Said reminders were made in a series of consultation meetings with the concerned agencies and
with call-up letters sent.
7.0 Despite said reminders and the availability of funds at the departments disposal, the level of
financial performance of some departments registered below program, with the targeted
obligations/disbursements for the first semester still not being met.
Page 391 of 557

8.0 In order to maximize the use of the available allotment, all unobligated balances as of June 30,
2012, both for continuing and current allotments shall be withdrawn and pooled to fund fast moving
programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow moving
projects to be identified by the agencies and their catch up plans to be evaluated by the DBM.
It is apparent from the foregoing text that the withdrawal of unobligated allotments would be based on whether
the allotments pertained to slow-moving projects, or not. However, NBC No. 541 did not set in clear terms the
criteria for the withdrawal of unobligated allotments, viz:
3.1. These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012 ofall
national government agencies (NGAs) charged against FY 2011 Continuing Appropriation (R.A. No.
10147) and FY 2012 Current Appropriation (R.A. No. 10155), pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the implementation of
programs and projects, as well as capitalized MOOE; and
3.1.3 Personal Services corresponding to unutilized pension benefits declared as savings by
the agencies concerned based on their undated/validated list of pensioners.
A perusal of its various provisions reveals that NBC No. 541 targeted the "withdrawal of unobligated
allotments of agencies with low levels of obligations"151 "to fund priority and/or fast-moving
programs/projects."152 But the fact that the withdrawn allotments could be "[r]eissued for the original
programs and projects of the agencies/OUs concerned, from which the allotments were withdrawn"153
supported the conclusion that the PAPs had not yet been finally discontinued or abandoned. Thus, the purpose
for which the withdrawn funds had been appropriated was not yet fulfilled, or did not yet cease to exist,
rendering the declaration of the funds as savings impossible.
Worse, NBC No. 541 immediately considered for withdrawal all released allotments in 2011 charged against
the 2011 GAA that had remained unobligated based on the following considerations, to wit:
5.4.1 The departments/agencies approved priority programs and projects are assumed to be
implementation-ready and doable during the given fiscal year; and
5.4.2 The practice of having substantial carryover appropriations may imply that the agency has a
slower-than-programmed implementation capacity or agency tends to implement projects within a
two-year timeframe.
Such withdrawals pursuant to NBC No. 541, the circular that affected the unobligated allotments for
continuing and current appropriations as of June 30, 2012, disregarded the 2-year period of availability of the
appropriations for MOOE and capital outlay extended under Section 65, General Provisions of the 2011 GAA,
viz:
Section 65. Availability of Appropriations. Appropriations for MOOE and capital outlays authorized in this
Act shall be available for release and obligation for the purpose specified, and under the same special
provisions applicable thereto, for a period extending to one fiscal year after the end of the year in which such
items were appropriated: PROVIDED, That appropriations for MOOE and capital outlays under R.A. No.
9970 shall be made available up to the end of FY 2011: PROVIDED, FURTHER, That a report on these
Page 392 of 557

releases and obligations shall be submitted to the Senate Committee on Finance and the House Committee on
Appropriations.
and Section 63 General Provisions of the 2012 GAA, viz:
Section 63. Availability of Appropriations. Appropriations for MOOE and capital outlays authorized in this
Act shall be available for release and obligation for the purpose specified, and under the same special
provisions applicable thereto, for a period extending to one fiscal year after the end of the year in which such
items were appropriated: PROVIDED, That a report on these releases and obligations shall be submitted to the
Senate Committee on Finance and the House Committee on Appropriations, either in printed form or by way
of electronic document.154
Thus, another alleged area of constitutional infirmity was that the DAP and its relevant issuances shortened the
period of availability of the appropriations for MOOE and capital outlays.
Congress provided a one-year period of availability of the funds for all allotment classes in the 2013 GAA
(R.A. No. 10352), to wit:
Section 63. Availability of Appropriations. All appropriations authorized in this Act shall be available for
release and obligation for the purposes specified, and under the same special provisions applicable thereto,
until the end of FY 2013: PROVIDED, That a report on these releases and obligations shall be submitted to the
Senate Committee on Finance and House Committee on Appropriations, either in printed form or by way of
electronic document.
Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad sought omnibus authority to
consolidate savings and unutilized balances to fund the DAP on a quarterly basis, viz:
7.0 If the level of financial performance of some department will register below program, even with
the availability of funds at their disposal, the targeted obligations/disbursements for each quarter will
not be met. It is important to note that these funds will lapse at the end of the fiscal year if these
remain unobligated.
8.0 To maximize the use of the available allotment, all unobligated balances at the end of every
quarter, both for continuing and current allotments shall be withdrawn and pooled to fund fast moving
programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow moving
projects to be identified by the agencies and their catch up plans to be evaluated by the DBM.
The validity period of the affected appropriations, already given the brief Lifes pan of one year, was further
shortened to only a quarter of a year under the DBMs memorandum dated May 20, 2013.
The petitioners accuse the respondents of forcing the generation of savings in order to have a larger fund
available for discretionary spending. They aver that the respondents, by withdrawing unobligated allotments in
the middle of the fiscal year, in effect deprived funding for PAPs with existing appropriations under the
GAAs.155
The respondents belie the accusation, insisting that the unobligated allotments were being withdrawn upon the
instance of the implementing agencies based on their own assessment that they could not obligate those
allotments pursuant to the Presidents directive for them to spend their appropriations as quickly as they could
in order to ramp up the economy.156
Page 393 of 557

We agree with the petitioners.

Contrary to the respondents insistence, the withdrawals were upon the initiative of the DBM itself. The text of
NBC No. 541 bears this out, to wit:
5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn, all
departments/agencies/operating units (OUs) shall submit to DBM not later than July 30, 2012, the following
budget accountability reports as of June 30, 2012;
Statement of Allotments, Obligation and Balances (SAOB);
Financial Report of Operations (FRO); and
Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agencys latest report
available shall be used by DBM as basis for withdrawal of allotment. The DBM shall compute/approximate
the agencys obligation level as of June 30 to derive its unobligated allotments as of same period. Example: If
the March 31 SAOB or FRO reflects actual obligations of P 800M then the June 30 obligation level shall
approximate to P1,600 M (i.e., P800 M x 2 quarters).
The petitioners assert that no law had authorized the withdrawal and transfer of unobligated allotments and the
pooling of unreleased appropriations; and that the unbridled withdrawal of unobligated allotments and the
retention of appropriated funds were akin to the impoundment of appropriations that could be allowed only in
case of "unmanageable national government budget deficit" under the GAAs,157 thus violating the provisions
of the GAAs of 2011, 2012 and 2013 prohibiting the retention or deduction of allotments.158
In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving, policy as a last-ditch
effort of the Executive to push agencies into actually spending their appropriations; that such policy did not
amount to an impoundment scheme, because impoundment referred to the decision of the Executive to refuse
to spend funds for political or ideological reasons; and that the withdrawal of allotments under NBC No. 541
was made pursuant to Section 38, Chapter 5, Book VI of the Administrative Code, by which the President was
granted the authority to suspend or otherwise stop further expenditure of funds allotted to any agency
whenever in his judgment the public interest so required.
The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated allotments and the
pooling of unreleased appropriations were invalid for being bereft of legal support. Nonetheless, such
withdrawal of unobligated allotments and the retention of appropriated funds cannot be considered as
impoundment.
According to Philippine Constitution Association v. Enriquez:159 "Impoundment refers to a refusal by the
President, for whatever reason, to spend funds made available by Congress. It is the failure to spend or obligate
budget authority of any type." Impoundment under the GAA is understood to mean the retention or deduction
of appropriations. The 2011 GAA authorized impoundment only in case of unmanageable National
Government budget deficit, to wit:
Section 66. Prohibition Against Impoundment of Appropriations. No appropriations authorized under this Act
shall be impounded through retention or deduction, unless in accordance with the rules and regulations to be
issued by the DBM: PROVIDED, That all the funds appropriated for the purposes, programs, projects and
activities authorized under this Act, except those covered under the Unprogrammed Fund, shall be released
pursuant to Section 33 (3), Chapter 5, Book VI of E.O. No. 292.
Page 394 of 557

Section 67. Unmanageable National Government Budget Deficit. Retention or deduction of appropriations
authorized in this Act shall be effected only in cases where there is an unmanageable national government
budget deficit.
Unmanageable national government budget deficit as used in this section shall be construed to mean that (i) the
actual national government budget deficit has exceeded the quarterly budget deficit targets consistent with the
full-year target deficit as indicated in the FY 2011 Budget of
Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant to
Section 22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending
occurrence of such condition, as determined by the Development Budget Coordinating Committee and
approved by the President.
The 2012 and 2013 GAAs contained similar provisions.
The withdrawal of unobligated allotments under the DAP should not be regarded as impoundment because it
entailed only the transfer of funds, not the retention or deduction of appropriations.
Nor could Section 68 of the 2011 GAA (and the similar provisions of the 2012 and 2013 GAAs) be applicable.
They uniformly stated:
Section 68. Prohibition Against Retention/Deduction of Allotment. Fund releases from appropriations
provided in this Act shall be transmitted intact or in full to the office or agency concerned. No retention or
deduction as reserves or overhead shall be made, except as authorized by law, or upon direction of the
President of the Philippines. The COA shall ensure compliance with this provision to the extent that suballotments by agencies to their subordinate offices are in conformity with the release documents issued by the
DBM.
The provision obviously pertained to the retention or deduction of allotments upon their release from the
DBM, which was a different matter altogether. The Court should not expand the meaning of the provision by
applying it to the withdrawal of allotments.
The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to justify the
withdrawal of unobligated allotments. But the provision authorized only the suspension or stoppage of further
expenditures, not the withdrawal of unobligated allotments, to wit:
Section 38. Suspension of Expenditure of Appropriations.- Except as otherwise provided in the General
Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to
the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted
for any agency, or any other expenditure authorized in the General Appropriations Act, except for personal
services appropriations used for permanent officials and employees.
Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38, supra, but
instead transferred the funds to other PAPs.
It is relevant to remind at this juncture that the balances of appropriations that remained unexpended at the end
of the fiscal year were to be reverted to the General Fund.1wphi1 This was the mandate of Section 28,
Chapter IV, Book VI of the Administrative Code, to wit:
Section 28. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.- Unexpended
balances of appropriations authorized in the General Appropriation Act shall revert to the unappropriated
Page 395 of 557

surplus of the General Fund at the end of the fiscal year and shall not thereafter be available for expenditure
except by subsequent legislative enactment: Provided, that appropriations for capital outlays shall remain valid
until fully spent or reverted: provided, further, that continuing appropriations for current operating
expenditures may be specifically recommended and approved as such in support of projects whose effective
implementation calls for multi-year expenditure commitments: provided, finally, that the President may
authorize the use of savings realized by an agency during given year to meet non-recurring expenditures in a
subsequent year.
The balances of continuing appropriations shall be reviewed as part of the annual budget preparation process
and the preparation process and the President may approve upon recommendation of the Secretary, the
reversion of funds no longer needed in connection with the activities funded by said continuing appropriations.
The Executive could not circumvent this provision by declaring unreleased appropriations and unobligated
allotments as savings prior to the end of the fiscal year.
b.3. Third Requisite No funds from
savings could be transferred under
the DAP to augment deficient items
not provided in the GAA
The third requisite for a valid transfer of funds is that the purpose of the transfer should be "to augment an item
in the general appropriations law for the respective offices." The term "augment" means to enlarge or increase
in size, amount, or degree.160
The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the appropriation for the PAP
item to be augmented must be deficient, to wit:
x x x Augmentation implies the existence in this Act of a program, activity, or project with an appropriation,
which upon implementation, or subsequent evaluation of needed resources, is determined to be deficient. In no
case shall a non-existent program, activity, or project, be funded by augmentation from savings or by the use of
appropriations otherwise authorized in this Act.
In other words, an appropriation for any PAP must first be determined to be deficient before it could be
augmented from savings. Note is taken of the fact that the 2013 GAA already made this quite clear, thus:
Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying
fiscal autonomy, and the Ombudsman are hereby authorized to use savings in their respective appropriations to
augment actual deficiencies incurred for the current year in any item of their respective appropriations.
As of 2013, a total of P144.4 billion worth of PAPs were implemented through the DAP.161
Of this amount P82.5 billion were released in 2011 and P54.8 billion in 2012.162 Sec. Abad has reported that
9% of the total DAP releases were applied to the PAPs identified by the legislators.163
The petitioners disagree, however, and insist that the DAP supported the following PAPs that had not been
covered with appropriations in the respective GAAs, namely:
(i) P1.5 billion for the Cordillera Peoples Liberation Army;
(ii) P1.8 billion for the Moro National Liberation Front;
Page 396 of 557

(iii) P700 million for assistance to Quezon Province;164

(iv) P50 million to P100 (million) each to certain senators;165
(v) P10 billion for the relocation of families living along dangerous zones under the National Housing
Authority;
(vi) P10 billion and P20 billion equity infusion under the Bangko Sentral;
(vii) P5.4 billion landowners compensation under the Department of Agrarian Reform;
(viii) P8.6 billion for the ARMM comprehensive peace and development program;
(ix) P6.5 billion augmentation of LGU internal revenue allotments
(x) P5 billion for crucial projects like tourism road construction under the Department of Tourism and
the Department of Public Works and Highways;
(xi) P1.8 billion for the DAR-DPWH Tulay ng Pangulo;
(xii) P1.96 billion for the DOH-DPWH rehabilitation of regional health units; and
(xiii) P4 billion for the DepEd-PPP school infrastructure projects.166
In refutation, the OSG argues that a total of 116 DAP-financed PAPs were implemented, had appropriation
covers, and could properly be accounted for because the funds were released following and pursuant to the
standard practices adopted by the DBM.167 In support of its argument, the OSG has submitted seven evidence
packets containing memoranda, SAROs, and other pertinent documents relative to the implementation and
fund transfers under the DAP.168
Upon careful review of the documents contained in the seven evidence packets, we conclude that the "savings"
pooled under the DAP were allocated to PAPs that were not covered by any appropriations in the pertinent
GAAs.
For example, the SARO issued on December 22, 2011 for the highly vaunted Disaster Risk, Exposure,
Assessment and Mitigation (DREAM) project under the Department of Science and Technology (DOST)
covered the amount of P1.6 Billion,169 broken down as follows:
APPROPRIATION
CODE
A.03.a.01.a

PARTICULARS
Generation of new knowledge and technologies and
research capability building in priority areas
identified as strategic to National Development
Personnel Services
Maintenance and Other Operating Expenses
Capital Outlays

AMOUNT
AUTHORIZED

P 43,504,024
1,164,517,589
391,978,387
P 1,600,000,000

Page 397 of 557

the pertinent provision of the 2011 GAA (R.A. No. 10147) showed that Congress had appropriated only
P537,910,000 for MOOE, but nothing for personnel services and capital outlays, to wit:
Personnel
Services

Maintenance
and Other
Operating
Expenditures

Capital
Outlays

TOTAL

III. Operations
a. Funding Assistance to Science 177,406,000 1,887,365,000 49,090,000 2,113,861,000
and Technology Activities
1. Central Office
a. Generation of new
knowledge and
technologies and research
capability building in
priority areas identified as
strategic to National
Development

1,554,238,000

1,554,238,000

537,910,000

537,910,000

Aside from this transfer under the DAP to the DREAM project exceeding by almost 300% the appropriation
by Congress for the program Generation of new knowledge and technologies and research capability building
in priority areas identified as strategic to National Development, the Executive allotted funds for personnel
services and capital outlays. The Executive thereby substituted its will to that of Congress. Worse, the
Executive had not earlier proposed any amount for personnel services and capital outlays in the NEP that
became the basis of the 2011 GAA.170
It is worth stressing in this connection that the failure of the GAAs to set aside any amounts for an expense
category sufficiently indicated that Congress purposely did not see fit to fund, much less implement, the PAP
concerned. This indication becomes clearer when even the President himself did not recommend in the NEP to
fund the PAP. The consequence was that any PAP requiring expenditure that did not receive any appropriation
under the GAAs could only be a new PAP, any funding for which would go beyond the authority laid down by
Congress in enacting the GAAs. That happened in some instances under the DAP.
In relation to the December 22, 2011 SARO issued to the Philippine Council for Industry, Energy and
Emerging Technology Research and Development (DOST-PCIEETRD)171 for Establishment of the Advanced
Failure Analysis Laboratory, which reads:
APPROPRIATION
CODE

A.02.a

PARTICULARS
Development, integration and coordination of the National
Research System for Industry, Energy and Emerging
Technology and Related Fields
Capital Outlays

AMOUNT
AUTHORIZED

P 300,000,000

the appropriation code and the particulars appearing in the SARO did not correspond to the program specified
in the GAA, whose particulars were Research and Management Services(inclusive of the following activities:
(1) Technological and Economic Assessment for Industry, Energy and Utilities; (2) Dissemination of Science
Page 398 of 557

and Technology Information; and (3) Management of PCIERD Information System for Industry, Energy and
Utilities. Even assuming that Development, integration and coordination of the National Research System for
Industry, Energy and Emerging Technology and Related Fields the particulars stated in the SARO could
fall under the broad program description of Research and Management Services as appearing in the SARO, it
would nonetheless remain a new activity by reason of its not being specifically stated in the GAA. As such, the
DBM, sans legislative authorization, could not validly fund and implement such PAP under the DAP.
In defending the disbursements, however, the OSG contends that the Executive enjoyed sound discretion in
implementing the budget given the generality in the language and the broad policy objectives identified under
the GAAs;172 and that the President enjoyed unlimited authority to spend the initial appropriations under his
authority to declare and utilize savings,173 and in keeping with his duty to faithfully execute the laws.
Although the OSG rightly contends that the Executive was authorized to spend in line with its mandate to
faithfully execute the laws (which included the GAAs), such authority did not translate to unfettered discretion
that allowed the President to substitute his own will for that of Congress. He was still required to remain
faithful to the provisions of the GAAs, given that his power to spend pursuant to the GAAs was but a
delegation to him from Congress. Verily, the power to spend the public wealth resided in Congress, not in the
Executive.174 Moreover, leaving the spending power of the Executive unrestricted would threaten to undo the
principle of separation of powers.175
Congress acts as the guardian of the public treasury in faithful discharge of its power of the purse whenever it
deliberates and acts on the budget proposal submitted by the Executive.176 Its power of the purse is touted as
the very foundation of its institutional strength,177 and underpins "all other legislative decisions and regulating
the balance of influence between the legislative and executive branches of government."178 Such enormous
power encompasses the capacity to generate money for the Government, to appropriate public funds, and to
spend the money.179 Pertinently, when it exercises its power of the purse, Congress wields control by
specifying the PAPs for which public money should be spent.
It is the President who proposes the budget but it is Congress that has the final say on matters of
appropriations.180 For this purpose, appropriation involves two governing principles, namely: (1) "a Principle
of the Public Fisc, asserting that all monies received from whatever source by any part of the government are
public funds;" and (2) "a Principle of Appropriations Control, prohibiting expenditure of any public money
without legislative authorization."181 To conform with the governing principles, the Executive cannot
circumvent the prohibition by Congress of an expenditure for a PAP by resorting to either public or private
funds.182 Nor could the Executive transfer appropriated funds resulting in an increase in the budget for one
PAP, for by so doing the appropriation for another PAP is necessarily decreased. The terms of both
appropriations will thereby be violated.
b.4 Third Requisite Cross-border
augmentations from savings were
prohibited by the Constitution
By providing that the President, the President of the Senate, the Speaker of the House of Representatives, the
Chief Justice of the Supreme Court, and the Heads of the Constitutional Commissions may be authorized to
augment any item in the GAA "for their respective offices," Section 25(5), supra, has delineated borders
between their offices, such that funds appropriated for one office are prohibited from crossing over to another
office even in the guise of augmentation of a deficient item or items. Thus, we call such transfers of funds
cross-border transfers or cross-border augmentations.
To be sure, the phrase "respective offices" used in Section 25(5), supra, refers to the entire Executive, with
respect to the President; the Senate, with respect to the Senate President; the House of Representatives, with

Page 399 of 557

respect to the Speaker; the Judiciary, with respect to the Chief Justice; the Constitutional Commissions, with
respect to their respective Chairpersons.
Did any cross-border transfers or augmentations transpire?
During the oral arguments on January 28, 2014, Sec. Abad admitted making some cross-border augmentations,
to wit:
JUSTICE BERSAMIN:
Alright, the whole time that you have been Secretary of Department of Budget and Management, did the
Executive Department ever redirect any part of savings of the National Government under your control cross
border to another department?
SECRETARY ABAD:
Well, in the Memos that we submitted to you, such an instance, Your Honor
JUSTICE BERSAMIN:
Can you tell me two instances? I dont recall having read your material.
SECRETARY ABAD:
Well, the first instance had to do with a request from the House of Representatives. They started building their
e-library in 2010 and they had a budget for about 207 Million but they lack about 43 Million to complete its
250 Million requirements. Prior to that, the COA, in an audit observation informed the Speaker that they had to
continue with that construction otherwise the whole building, as well as the equipments therein may suffer
from serious deterioration. And at that time, since the budget of the House of Representatives was not enough
to complete 250 Million, they wrote to the President requesting for an augmentation of that particular item,
which was granted, Your Honor. The second instance in the Memos is a request from the Commission on
Audit. At the time they were pushing very strongly the good governance programs of the government and
therefore, part of that is a requirement to conduct audits as well as review financial reports of many agencies.
And in the performance of that function, the Commission on Audit needed information technology equipment
as well as hire consultants and litigators to help them with their audit work and for that they requested funds
from the Executive and the President saw that it was important for the Commission to be provided with those
IT equipments and litigators and consultants and the request was granted, Your Honor.
JUSTICE BERSAMIN:
These cross border examples, cross border augmentations were not supported by appropriations
SECRETARY ABAD:
They were, we were augmenting existing items within their (interrupted)
JUSTICE BERSAMIN:
No, appropriations before you augmented because this is a cross border and the tenor or text of the
Constitution is quite clear as far as I am concerned. It says here, "The power to augment may only be made to

Page 400 of 557

increase any item in the General Appropriations Law for their respective offices." Did you not feel constricted
by this provision?
SECRETARY ABAD:
Well, as the Constitution provides, the prohibition we felt was on the transfer of appropriations, Your Honor.
What we thought we did was to transfer savings which was needed by the Commission to address deficiency in
an existing item in both the Commission as well as in the House of Representatives; thats how we
saw(interrupted)
JUSTICE BERSAMIN:
So your position as Secretary of Budget is that you could do that?
SECRETARY ABAD:
In an extreme instances because(interrupted)
JUSTICE BERSAMIN:
No, no, in all instances, extreme or not extreme, you could do that, thats your feeling.
SECRETARY ABAD:
Well, in that particular situation when the request was made by the Commission and the House of
Representatives, we felt that we needed to respond because we felt(interrupted).183
The records show, indeed, that funds amounting to P143,700,000.00 and P250,000,000.00 were transferred
under the DAP respectively to the COA184 and the House of Representatives.185 Those transfers of funds,
which constituted cross-border augmentations for being from the Executive to the COA and the House of
Representatives, are graphed as follows:186

OFFICE

PURPOSE

DATE
RELEASED

Commission on IT Infrastructure Program and hiring of

Audit
additional litigation experts

11/11/11

Congress
Completion of the construction of the
House of
Legislative Library and Archives
Representatives Building/Congressional e-library

07/23/12

AMOUNT
(In thousand pesos)
Reserve
Imposed

Releases
143,700

207,034
(Savings of HOR)

250,000

The respondents further stated in their memorandum that the President "made available" to the "Commission
on Elections the savings of his department upon [its] request for funds"187 This was another instance of a
cross-border augmentation.
The respondents justified all the cross-border transfers thusly:
Page 401 of 557

99. The Constitution does not prevent the President from transferring savings of his department to another
department upon the latters request, provided it is the recipient department that uses such funds to augment its
own appropriation. In such a case, the President merely gives the other department access to public funds but
he cannot dictate how they shall be applied by that department whose fiscal autonomy is guaranteed by the
Constitution.188
In the oral arguments held on February 18, 2014, Justice Vicente V. Mendoza, representing Congress,
announced a different characterization of the cross-border transfers of funds as in the nature of "aid" instead of
"augmentation," viz:
HONORABLE MENDOZA:
The cross-border transfers, if Your Honors please, is not an application of the DAP. What were these crossborder transfers? They are transfers of savings as defined in the various General Appropriations Act. So, that
makes it similar to the DAP, the use of savings. There was a cross-border which appears to be in violation of
Section 25, paragraph 5 of Article VI, in the sense that the border was crossed. But never has it been claimed
that the purpose was to augment a deficient item in another department of the government or agency of the
government. The cross-border transfers, if Your Honors please, were in the nature of [aid] rather than
augmentations. Here is a government entity separate and independent from the Executive Department solely in
need of public funds. The President is there 24 hours a day, 7 days a week. Hes in charge of the whole
operation although six or seven heads of government offices are given the power to augment. Only the
President stationed there and in effect in-charge and has the responsibility for the failure of any part of the
government. You have election, for one reason or another, the money is not enough to hold election. There
would be chaos if no money is given as an aid, not to augment, but as an aid to a department like COA. The
President is responsible in a way that the other heads, given the power to augment, are not. So, he cannot very
well allow this, if Your Honor please.189
JUSTICE LEONEN:
May I move to another point, maybe just briefly. I am curious that the position now, I think, of government is
that some transfers of savings is now considered to be, if Im not mistaken, aid not augmentation. Am I correct
in my hearing of your argument?
HONORABLE MENDOZA:
Thats our submission, if Your Honor, please.
JUSTICE LEONEN:
May I know, Justice, where can we situate this in the text of the Constitution? Where do we actually derive the
concepts that transfers of appropriation from one branch to the other or what happened in DAP can be
considered a said? What particular text in the Constitution can we situate this?
HONORABLE MENDOZA:
There is no particular provision or statutory provision for that matter, if Your Honor please. It is drawn from
the fact that the Executive is the executive in-charge of the success of the government.
JUSTICE LEONEN:
So, the residual powers labelled in Marcos v. Manglapus would be the basis for this theory of the government?
Page 402 of 557

HONORABLE MENDOZA:
Yes, if Your Honor, please.
JUSTICE LEONEN:
A while ago, Justice Carpio mentioned that the remedy is might be to go to Congress. That there are
opportunities and there have been opportunities of the President to actually go to Congress and ask for
supplemental budgets?
HONORABLE MENDOZA:
If there is time to do that, I would say yes.
JUSTICE LEONEN:
So, the theory of aid rather than augmentation applies in extra-ordinary situation?
HONORABLE MENDOZA:
Very extra-ordinary situations.
JUSTICE LEONEN:
But Counsel, this would be new doctrine, in case?
HONORABLE MENDOZA:
Yes, if Your Honor please.190
Regardless of the variant characterizations of the cross-border transfers of funds, the plain text of Section
25(5), supra, disallowing cross border transfers was disobeyed. Cross-border transfers, whether as
augmentation, or as aid, were prohibited under Section 25(5), supra.
4.
Sourcing the DAP from unprogrammed
funds despite the original revenue targets
not having been exceeded was invalid
Funding under the DAP were also sourced from unprogrammed funds provided in the GAAs for 2011,
2012,and 2013. The respondents stress, however, that the unprogrammed funds were not brought under the
DAP as savings, but as separate sources of funds; and that, consequently, the release and use of unprogrammed
funds were not subject to the restrictions under Section 25(5), supra.
The documents contained in the Evidence Packets by the OSG have confirmed that the unprogrammed funds
were treated as separate sources of funds. Even so, the release and use of the unprogrammed funds were still
subject to restrictions, for, to start with, the GAAs precisely specified the instances when the unprogrammed
funds could be released and the purposes for which they could be used.

Page 403 of 557

The petitioners point out that a condition for the release of the unprogrammed funds was that the revenue
collections must exceed revenue targets; and that the release of the unprogrammed funds was illegal because
such condition was not met.191
The respondents disagree, holding that the release and use of the unprogrammed funds under the DAP were in
accordance with the pertinent provisions of the GAAs. In particular, the DBM avers that the unprogrammed
funds could be availed of when any of the following three instances occur, to wit: (1) the revenue collections
exceeded the original revenue targets proposed in the BESFs submitted by the President to Congress; (2) new
revenues were collected or realized from sources not originally considered in the BESFs; or(3) newlyapproved loans for foreign assisted projects were secured, or when conditions were triggered for other sources
of funds, such as perfected loan agreements for foreign-assisted projects.192 This view of the DBM was
adopted by all the respondents in their Consolidated Comment.193
The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations" as appropriations that
provided standby authority to incur additional agency obligations for priority PAPs when revenue collections
exceeded targets, and when additional foreign funds are generated.194 Contrary to the DBMs averment that
there were three instances when unprogrammed funds could be released, the BESFs envisioned only two
instances. The third mentioned by the DBM the collection of new revenues from sources not originally
considered in the BESFs was not included. This meant that the collection of additional revenues from new
sources did not warrant the release of the unprogrammed funds. Hence, even if the revenues not considered in
the BESFs were collected or generated, the basic condition that the revenue collections should exceed the
revenue targets must still be complied with in order to justify the release of the unprogrammed funds.
The view that there were only two instances when the unprogrammed funds could be released was bolstered by
the following texts of the Special Provisions of the 2011 and 2012 GAAs, to wit:
2011 GAA
1. Release of Fund. The amounts authorized herein shall be released only when the revenue collections exceed
the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22,
Article VII of the Constitution, including savings generated from programmed appropriations for the year:
PROVIDED, That collections arising from sources not considered in the aforesaid original revenue targets may
be used to cover releases from appropriations in this Fund: PROVIDED, FURTHER, That in case of newly
approved loans for foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall
be sufficient basis for the issuance of a SARO covering the loan proceeds: PROVIDED, FURTHERMORE,
That if there are savings generated from the programmed appropriations for the first two quarters of the year,
the DBM may, subject to the approval of the President, release the pertinent appropriations under the
Unprogrammed Fund corresponding to only fifty percent (50%) of the said savings net of revenue shortfall:
PROVIDED, FINALLY, That the release of the balance of the total savings from programmed appropriations
for the year shall be subject to fiscal programming and approval of the President.
2012 GAA
1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections
exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant to
Section 22, Article VII of the Constitution: PROVIDED, That collections arising from sources not considered
in the aforesaid original revenue targets may be used to cover releases from appropriations in this Fund:
PROVIDED, FURTHER, That in case of newly approved loans for foreign-assisted projects, the existence of a
perfected loan agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the loan
proceeds.

Page 404 of 557

As can be noted, the provisos in both provisions to the effect that "collections arising from sources not
considered in the aforesaid original revenue targets may be used to cover releases from appropriations in this
Fund" gave the authority to use such additional revenues for appropriations funded from the unprogrammed
funds. They did not at all waive compliance with the basic requirement that revenue collections must still
exceed the original revenue targets.
In contrast, the texts of the provisos with regard to additional revenues generated from newly-approved foreign
loans were clear to the effect that the perfected loan agreement would be in itself "sufficient basis" for the
issuance of a SARO to release the funds but only to the extent of the amount of the loan. In such instance, the
revenue collections need not exceed the revenue targets to warrant the release of the loan proceeds, and the
mere perfection of the loan agreement would suffice.
It can be inferred from the foregoing that under these provisions of the GAAs the additional revenues from
sources not considered in the BESFs must be taken into account in determining if the revenue collections
exceeded the revenue targets. The text of the relevant provision of the 2013 GAA, which was substantially
similar to those of the GAAs for 2011 and 2012, already made this explicit, thus:
1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections
exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant to
Section 22, Article VII of the Constitution, including collections arising from sources not considered in the
aforesaid original revenue target, as certified by the BTr: PROVIDED, That in case of newly approved loans
for foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient
basis for the issuance of a SARO covering the loan proceeds.
Consequently, that there were additional revenues from sources not considered in the revenue target would not
be enough. The total revenue collections must still exceed the original revenue targets to justify the release of
the unprogrammed funds (other than those from newly-approved foreign loans).
The present controversy on the unprogrammed funds was rooted in the correct interpretation of the phrase
"revenue collections should exceed the original revenue targets." The petitioners take the phrase to mean that
the total revenue collections must exceed the total revenue target stated in the BESF, but the respondents
understand the phrase to refer only to the collections for each source of revenue as enumerated in the BESF,
with the condition being deemed complied with once the revenue collections from a particular source already
exceeded the stated target.
The BESF provided for the following sources of revenue, with the corresponding revenue target stated for each
source of revenue, to wit:
TAX REVENUES
Taxes on Net Income and Profits
Taxes on Property
Taxes on Domestic Goods and Services
General Sales, Turnover or VAT
Selected Excises on Goods
Selected Taxes on Services
Taxes on the Use of Goods or Property or Permission to Perform Activities
Other Taxes
Taxes on International Trade and Transactions

Page 405 of 557

NON-TAX REVENUES
Fees and Charges
BTR Income
Government Services
Interest on NG Deposits
Interest on Advances to Government Corporations
Income from Investments
Interest on Bond Holdings
Guarantee Fee
Gain on Foreign Exchange
NG Income Collected by BTr
Dividends on Stocks
NG Share from Airport Terminal Fee
NG Share from PAGCOR Income
NG Share from MIAA Profit
Privatization
Foreign Grants
Thus, when the Court required the respondents to submit a certification from the Bureau of Treasury (BTr) to
the effect that the revenue collections had exceeded the original revenue targets,195 they complied by
submitting certifications from the BTr and Department of Finance (DOF) pertaining to only one identified
source of revenue the dividends from the shares of stock held by the Government in government-owned and
controlled corporations.
To justify the release of the unprogrammed funds for 2011, the OSG presented the certification dated March 4,
2011 issued by DOF Undersecretary Gil S. Beltran, as follows:
This is to certify that under the Budget for Expenditures and Sources of Financing for 2011, the programmed
income from dividends from shares of stock in government-owned and controlled corporations is 5.5 billion.
This is to certify further that based on the records of the Bureau of Treasury, the National Government has
recorded dividend income amounting to P23.8 billion as of 31 January 2011.196
For 2012, the OSG submitted the certification dated April 26, 2012 issued by National Treasurer Roberto B.
Tan, viz:
This is to certify that the actual dividend collections remitted to the National Government for the period
January to March 2012 amounted to P19.419 billion compared to the full year program of P5.5 billion for
2012.197
And, finally, for 2013, the OSG presented the certification dated July 3, 2013 issued by National Treasurer
Rosalia V. De Leon, to wit:

Page 406 of 557

This is to certify that the actual dividend collections remitted to the National Government for the period
January to May 2013 amounted to P12.438 billion compared to the full year program of P10.0198 billion for
2013.
Moreover, the National Government accounted for the sale of the right to build and operate the NAIA
expressway amounting to P11.0 billion in June 2013.199
The certifications reflected that by collecting dividends amounting to P23.8 billion in 2011, P19.419 billion in
2012, and P12.438 billion in 2013 the BTr had exceeded only the P5.5 billion in target revenues in the form of
dividends from stocks in each of 2011 and 2012, and only the P10 billion in target revenues in the form of
dividends from stocks in 2013.
However, the requirement that revenue collections exceed the original revenue targets was to be construed in
light of the purpose for which the unprogrammed funds were incorporated in the GAAs as standby
appropriations to support additional expenditures for certain priority PAPs should the revenue collections
exceed the resource targets assumed in the budget or when additional foreign project loan proceeds were
realized. The unprogrammed funds were included in the GAAs to provide ready cover so as not to delay the
implementation of the PAPs should new or additional revenue sources be realized during the year.200 Given
the tenor of the certifications, the unprogrammed funds were thus not yet supported by the corresponding
resources.201
The revenue targets stated in the BESF were intended to address the funding requirements of the proposed
programmed appropriations. In contrast, the unprogrammed funds, as standby appropriations, were to be
released only when there were revenues in excess of what the programmed appropriations required. As such,
the revenue targets should be considered as a whole, not individually; otherwise, we would be dealing with
artificial revenue surpluses. The requirement that revenue collections must exceed revenue target should be
understood to mean that the revenue collections must exceed the total of the revenue targets stated in the
BESF. Moreover, to release the unprogrammed funds simply because there was an excess revenue as to one
source of revenue would be an unsound fiscal management measure because it would disregard the budget
plan and foster budget deficits, in contravention of the Governments surplus budget policy.202
We cannot, therefore, subscribe to the respondents view.
5.
Equal protection, checks and balances,
and public accountability challenges
The DAP is further challenged as violative of the Equal Protection Clause, the system of checks and balances,
and the principle of public accountability.
With respect to the challenge against the DAP under the Equal Protection Clause,203 Luna argues that the
implementation of the DAP was "unfair as it [was] selective" because the funds released under the DAP was
not made available to all the legislators, with some of them refusing to avail themselves of the DAP funds, and
others being unaware of the availability of such funds. Thus, the DAP practised "undue favoritism" in favor of
select legislators in contravention of the Equal Protection Clause.
Similarly, COURAGE contends that the DAP violated the Equal Protection Clause because no reasonable
classification was used in distributing the funds under the DAP; and that the Senators who supposedly availed
themselves of said funds were differently treated as to the amounts they respectively received.
Anent the petitioners theory that the DAP violated the system of checks and balances, Luna submits that the
grant of the funds under the DAP to some legislators forced their silence about the issues and anomalies
Page 407 of 557

surrounding the DAP. Meanwhile, Belgica stresses that the DAP, by allowing the legislators to identify PAPs,
authorized them to take part in the implementation and execution of the GAAs, a function that exclusively
belonged to the Executive; that such situation constituted undue and unjustified legislative encroachment in the
functions of the Executive; and that the President arrogated unto himself the power of appropriation vested in
Congress because NBC No. 541 authorized the use of the funds under the DAP for PAPs not considered in the
2012 budget.
Finally, the petitioners insist that the DAP was repugnant to the principle of public accountability enshrined in
the Constitution,204 because the legislators relinquished the power of appropriation to the Executive, and
exhibited a reluctance to inquire into the legality of the DAP.
The OSG counters the challenges, stating that the supposed discrimination in the release of funds under the
DAP could be raised only by the affected Members of Congress themselves, and if the challenge based on the
violation of the Equal Protection Clause was really against the constitutionality of the DAP, the arguments of
the petitioners should be directed to the entitlement of the legislators to the funds, not to the proposition that all
of the legislators should have been given such entitlement.
The challenge based on the contravention of the Equal Protection Clause, which focuses on the release of
funds under the DAP to legislators, lacks factual and legal basis. The allegations about Senators and
Congressmen being unaware of the existence and implementation of the DAP, and about some of them having
refused to accept such funds were unsupported with relevant data. Also, the claim that the Executive
discriminated against some legislators on the ground alone of their receiving less than the others could not of
itself warrant a finding of contravention of the Equal Protection Clause. The denial of equal protection of any
law should be an issue to be raised only by parties who supposedly suffer it, and, in these cases, such parties
would be the few legislators claimed to have been discriminated against in the releases of funds under the
DAP. The reason for the requirement is that only such affected legislators could properly and fully bring to the
fore when and how the denial of equal protection occurred, and explain why there was a denial in their
situation. The requirement was not met here. Consequently, the Court was not put in the position to determine
if there was a denial of equal protection. To have the Court do so despite the inadequacy of the showing of
factual and legal support would be to compel it to speculate, and the outcome would not do justice to those for
whose supposed benefit the claim of denial of equal protection has been made.
The argument that the release of funds under the DAP effectively stayed the hands of the legislators from
conducting congressional inquiries into the legality and propriety of the DAP is speculative. That deficiency
eliminated any need to consider and resolve the argument, for it is fundamental that speculation would not
support any proper judicial determination of an issue simply because nothing concrete can thereby be gained.
In order to sustain their constitutional challenges against official acts of the Government, the petitioners must
discharge the basic burden of proving that the constitutional infirmities actually existed.205 Simply put,
guesswork and speculation cannot overcome the presumption of the constitutionality of the assailed executive
act.
We do not need to discuss whether or not the DAP and its implementation through the various circulars and
memoranda of the DBM transgressed the system of checks and balances in place in our constitutional system.
Our earlier expositions on the DAP and its implementing issuances infringing the doctrine of separation of
powers effectively addressed this particular concern.
Anent the principle of public accountability being transgressed because the adoption and implementation of the
DAP constituted an assumption by the Executive of Congress power of appropriation, we have already held
that the DAP and its implementing issuances were policies and acts that the Executive could properly adopt
and do in the execution of the GAAs to the extent that they sought to implement strategies to ramp up or
accelerate the economy of the country.

Page 408 of 557

6.
Doctrine of operative fact was applicable
After declaring the DAP and its implementing issuances constitutionally infirm, we must now deal with the
consequences of the declaration.
Article 7 of the Civil Code provides:
Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be
excused by disuse, or custom or practice to the contrary.
When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter
shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the
laws or the Constitution.
A legislative or executive act that is declared void for being unconstitutional cannot give rise to any right or
obligation.206 However, the generality of the rule makes us ponder whether rigidly applying the rule may at
times be impracticable or wasteful. Should we not recognize the need to except from the rigid application of
the rule the instances in which the void law or executive act produced an almost irreversible result?
The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one, has been
exhaustively explained in De Agbayani v. Philippine National Bank:207
The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive
order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights
or duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once
judicially declared results in its being to all intents and purposes a mere scrap of paper. As the new Civil Code
puts it: When the courts declare a law to be inconsistent with the Constitution, the former shall be void and
the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they
are not contrary to the laws of the Constitution. It is understandable why it should be so, the Constitution being
supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently
realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or
executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it
and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be
had to what has been done while such legislative or executive act was in operation and presumed to be valid in
all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental
organ which has the final say on whether or not a legislative or executive measure is valid, a period of time
may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It
would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: The actual existence of a statute, prior to such a
determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as
to invalidity may have to be considered in various aspects, with respect to particular relations, individual and
corporate, and particular conduct, private and official."
Page 409 of 557

The doctrine of operative fact recognizes the existence of the law or executive act prior to the determination of
its unconstitutionality as an operative fact that produced consequences that cannot always be erased, ignored or
disregarded. In short, it nullifies the void law or executive act but sustains its effects. It provides an exception
to the general rule that a void or unconstitutional law produces no effect.208 But its use must be subjected to
great scrutiny and circumspection, and it cannot be invoked to validate an unconstitutional law or executive
act, but is resorted to only as a matter of equity and fair play.209 It applies only to cases where extraordinary
circumstances exist, and only when the extraordinary circumstances have met the stringent conditions that will
permit its application.
We find the doctrine of operative fact applicable to the adoption and implementation of the DAP. Its
application to the DAP proceeds from equity and fair play. The consequences resulting from the DAP and its
related issuances could not be ignored or could no longer be undone.
To be clear, the doctrine of operative fact extends to a void or unconstitutional executive act. The term
executive act is broad enough to include any and all acts of the Executive, including those that are quasi
legislative and quasi-judicial in nature. The Court held so in Hacienda Luisita, Inc. v. Presidential Agrarian
Reform Council:210
Nonetheless, the minority is of the persistent view that the applicability of the operative fact doctrine should be
limited to statutes and rules and regulations issued by the executive department that are accorded the same
status as that of a statute or those which are quasi-legislative in nature. Thus, the minority concludes that the
phrase executive act used in the case of De Agbayani v. Philippine National Bank refers only to acts, orders,
and rules and regulations that have the force and effect of law. The minority also made mention of the
Concurring Opinion of Justice Enrique Fernando in Municipality of Malabang v. Benito, where it was
supposedly made explicit that the operative fact doctrine applies to executive acts, which are ultimately quasilegislative in nature.
We disagree. For one, neither the De Agbayani case nor the Municipality of Malabang case elaborates what
executive act mean. Moreover, while orders, rules and regulations issued by the President or the executive
branch have fixed definitions and meaning in the Administrative Code and jurisprudence, the phrase executive
act does not have such specific definition under existing laws. It should be noted that in the cases cited by the
minority, nowhere can it be found that the term executive act is confined to the foregoing. Contrarily, the
term executive act is broad enough to encompass decisions of administrative bodies and agencies under the
executive department which are subsequently revoked by the agency in question or nullified by the Court.
A case in point is the concurrent appointment of Magdangal B. Elma (Elma) as Chairman of the Presidential
Commission on Good Government (PCGG) and as Chief Presidential Legal Counsel (CPLC) which was
declared unconstitutional by this Court in Public Interest Center, Inc. v. Elma. In said case, this Court ruled
that the concurrent appointment of Elma to these offices is in violation of Section 7, par. 2, Article IX-B of the
1987 Constitution, since these are incompatible offices. Notably, the appointment of Elma as Chairman of the
PCGG and as CPLC is, without a question, an executive act. Prior to the declaration of unconstitutionality of
the said executive act, certain acts or transactions were made in good faith and in reliance of the appointment
of Elma which cannot just be set aside or invalidated by its subsequent invalidation.
In Tan v. Barrios, this Court, in applying the operative fact doctrine, held that despite the invalidity of the
jurisdiction of the military courts over civilians, certain operative facts must be acknowledged to have existed
so as not to trample upon the rights of the accused therein. Relevant thereto, in Olaguer v. Military
Commission No. 34, it was ruled that military tribunals pertain to the Executive Department of the
Government and are simply instrumentalities of the executive power, provided by the legislature for the
President as Commander-in-Chief to aid him in properly commanding the army and navy and enforcing
discipline therein, and utilized under his orders or those of his authorized military representatives.

Page 410 of 557

Evidently, the operative fact doctrine is not confined to statutes and rules and regulations issued by the
executive department that are accorded the same status as that of a statute or those which are quasi-legislative
in nature.
Even assuming that De Agbayani initially applied the operative fact doctrine only to executive issuances like
orders and rules and regulations, said principle can nonetheless be applied, by analogy, to decisions made by
the President or the agencies under the executive department. This doctrine, in the interest of justice and
equity, can be applied liberally and in a broad sense to encompass said decisions of the executive branch. In
keeping with the demands of equity, the Court can apply the operative fact doctrine to acts and consequences
that resulted from the reliance not only on a law or executive act which is quasi-legislative in nature but also
on decisions or orders of the executive branch which were later nullified. This Court is not unmindful that such
acts and consequences must be recognized in the higher interest of justice, equity and fairness.
Significantly, a decision made by the President or the administrative agencies has to be complied with because
it has the force and effect of law, springing from the powers of the President under the Constitution and
existing laws. Prior to the nullification or recall of said decision, it may have produced acts and consequences
in conformity to and in reliance of said decision, which must be respected. It is on this score that the operative
fact doctrine should be applied to acts and consequences that resulted from the implementation of the PARC
Resolution approving the SDP of HLI. (Bold underscoring supplied for emphasis)
In Commissioner of Internal Revenue v. San Roque Power Corporation,211 the Court likewise declared that
"for the operative fact doctrine to apply, there must be a legislative or executive measure, meaning a law or
executive issuance." Thus, the Court opined there that the operative fact doctrine did not apply to a mere
administrative practice of the Bureau of Internal Revenue, viz:
Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the
rule or ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given
retroactive effect. This, in essence, is the doctrine of operative fact. There must, however, be a rule or ruling
issued by the Commissioner that is relied upon by the taxpayer in good faith. A mere administrative practice,
not formalized into a rule or ruling, will not suffice because such a mere administrative practice may not be
uniformly and consistently applied. An administrative practice, if not formalized as a rule or ruling, will not be
known to the general public and can be availed of only by those with informal contacts with the government
agency.
It is clear from the foregoing that the adoption and the implementation of the DAP and its related issuances
were executive acts.1avvphi1 The DAP itself, as a policy, transcended a merely administrative practice
especially after the Executive, through the DBM, implemented it by issuing various memoranda and circulars.
The pooling of savings pursuant to the DAP from the allotments made available to the different agencies and
departments was consistently applied throughout the entire Executive. With the Executive, through the DBM,
being in charge of the third phase of the budget cycle the budget execution phase, the President could
legitimately adopt a policy like the DAP by virtue of his primary responsibility as the Chief Executive of
directing the national economy towards growth and development. This is simply because savings could and
should be determined only during the budget execution phase.
As already mentioned, the implementation of the DAP resulted into the use of savings pooled by the Executive
to finance the PAPs that were not covered in the GAA, or that did not have proper appropriation covers, as
well as to augment items pertaining to other departments of the Government in clear violation of the
Constitution. To declare the implementation of the DAP unconstitutional without recognizing that its prior
implementation constituted an operative fact that produced consequences in the real as well as juristic worlds
of the Government and the Nation is to be impractical and unfair. Unless the doctrine is held to apply, the
Executive as the disburser and the offices under it and elsewhere as the recipients could be required to undo

Page 411 of 557

everything that they had implemented in good faith under the DAP. That scenario would be enormously
burdensome for the Government. Equity alleviates such burden.
The other side of the coin is that it has been adequately shown as to be beyond debate that the implementation
of the DAP yielded undeniably positive results that enhanced the economic welfare of the country. To count
the positive results may be impossible, but the visible ones, like public infrastructure, could easily include
roads, bridges, homes for the homeless, hospitals, classrooms and the like. Not to apply the doctrine of
operative fact to the DAP could literally cause the physical undoing of such worthy results by destruction, and
would result in most undesirable wastefulness.
Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact does not
always apply, and is not always the consequence of every declaration of constitutional invalidity. It can be
invoked only in situations where the nullification of the effects of what used to be a valid law would result in
inequity and injustice;212 but where no such result would ensue, the general rule that an unconstitutional law
is totally ineffective should apply.
In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the PAPs that can
no longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP, but cannot apply
to the authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in
their favor by the proper tribunals determining their criminal, civil, administrative and other liabilities.
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and
DECLARES the following acts and practices under the Disbursement Acceleration Program, National Budget
Circular No. 541 and related executive issuances UNCONSTITUTIONAL for being in violation of Section
25(5), Article VI of the 1987 Constitution and the doctrine of separation of powers, namely:
(a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration of
the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the
fiscal year and without complying with the statutory definition of savings contained in the General
Appropriations Acts;
(b) The cross-border transfers of the savings of the Executive to augment the appropriations of other
offices outside the Executive; and
(c) The funding of projects, activities and programs that were not covered by any appropriation in the
General Appropriations Act.
The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by
the National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the
conditions provided in the relevant General Appropriations Acts.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
WE CONCUR:
MARIA LOURDES P. A. SERENO
Chief Justice

Page 412 of 557

See Dissenting Opinion

ANTONIO T. CARPIO
Associate Justice

I join the Concurring and Dissenting Opinion

of J. Del Castillo
PRESBITERO J. VELASCO, JR.
Associate Justice

No part:
TERSITA J. LEONARDO-DE CASTRO
Associate Justice

See: Separate Opinion

ARTURO D. BRION
Associate Justice

DIOSDADO M. PERALTA
Associate Justice

Pls. see separate concurring and dissenting

opinion
MARIANO C. DEL CASTILLO
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

BIENVENIDO L. REYES
Associate Justice

Pls. see Separate Concurring Opinion

ESTELA M. PERLAS-BERNABE
Associate Justice

See separate concurring opinion

MARVIC MARIO VICTOR F. LEONEN
Associate Justice

CERTIFICATION
I certify that the conclusions in the above Decision had been reached in consultation before the cases were
assigned to the writer of the opinion of the court.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1 <http://www.dbm.gov.ph/?p=7302> (visited May 27, 2014).
2 Labeled as "Personal Services" under the GAAs.
3 Frequently Asked Questions about the Disbursement Acceleration Program (DAP)
<http://www.dbm.gov.ph/?page_id=7362> (visited May 27, 2014).
4 See note 2.
5 Zero-based budgeting is a budgeting approach that involves the review/evaluation of on-going
programs and projects implemented by different departments/agencies in order to: (a) establish the
continued relevance of programs/projects given the current developments/directions; (b) assess
Page 413 of 557

whether the program objectives/outcomes are being achieved; (c) ascertain alternative or more
efficient or effective ways of achieving the objectives; and (d) guide decision makers on whether or
not the resources for the program/project should continue at the present level or be increased, reduced
or discontinued. (see NBC Circular No. 539, March 21, 2012).
6 Constitutional and Legal Bases < http://www.dbm.gov.ph/?page_id=7364> (visited May 27, 2014).
7 Belgica v. Executive Secretary Ochoa, G.R. No. 208566, November 19, 2013.
8 The Villegas petition was originally undocketed due to lack of docket fees being paid; subsequently,
the docket fees were paid.
9 Rollo (G.R. No. 209287), p. 119.
10 Id. at 190-196. Sec. Abad manifested that the Memorandum for the President dated June 25, 2012
was the directive referred to in NBC No. 541; and that although the date appearing on the
Memorandum was June 25, 2012, the actual date of its approval was June 27, 2012.
11 Id. at 523-625.
12 Id. at 627-692.
13 Id. at 693-698.
14 Id. at 699-746.
15 Id. at 748-764.
16 Id. at 766-784.
17 Id. at 925.
18 Id. at 786-922.
19 Rollo (G.R. No. 209287), pp. 1050-1051 (Respondents Memorandum).
20 Id. at 1044.
21 Id. at 1048.
22 Id. at 1053.
23 Id. at 1053-1056.
24 Id. at 1056.
25 Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary, 2009 Edition, p.
959.
26 I RECORD of the 1986 Constitutional Commission 436 (July 10, 1986).
Page 414 of 557

27 I RECORD of the 1986 Constitutional Commission, 439 (July 10, 1986).

28 63 Phil. 139 (1936).
29 Id. at 157-158.
30 G.R. No. 153852, October 24, 2012, 684 SCRA 410.
31 Id. at 420-423.
32 Municipal Council of Lemery v. Provincial Board of Batangas, No. 36201, October 29, 1931, 56
Phil. 260, 266-267.
33 G.R. No. 163980, August 3, 2006, 497 SCRA 581, 595-596.
34 Francisco, Jr. v. Toll Regulatory Board, G.R. No. 166910, October 19, 2010, 633 SCRA 470, 494.
35 Planas v. Gil, 67 Phil. 62, 73-74 (1939), with the Court saying:
It must be conceded that the acts of the Chief Executive performed within the limits of his
jurisdiction are his official acts and courts will neither direct nor restrain executive action in
such cases. The rule is non-interference. But from this legal premise, it does not necessarily
follow that we are precluded from making an inquiry into the validity or constitutionality of
his acts when these are properly challenged in an appropriate proceeding. xxx As far as the
judiciary is concerned, while it holds "neither the sword nor the purse" it is by constitutional
placement the organ called upon to allocate constitutional boundaries, and to the Supreme
Court is entrusted expressly or by necessary implication the obligation of determining in
appropriate cases the constitutionality or validity of any treaty, law, ordinance, or executive
order or regulation. (Sec.2 [1], Art. VIII, Constitution of the Philippines.) In this sense and to
this extent, the judiciary restrains the other departments of the government and this result is
one of the necessary corollaries of the "system of checks and balances" of the government
established.
36 Funa v. Villar, G.R. No. 192791, April 24, 2012, 670 SCRA 579, 593. According to Blacks Law
Dictionary (Ninth Edition), lis motais "[a] dispute that has begun and later forms the basis of a
lawsuit."
37 Bernas, op. cit., at 970.
38 Supra note 7.
39 Oral Arguments, TSN of January 28, 2014, p. 14.
40 Id. at 23.
41 Funa v. Ermita, G.R. No. 184740, February 11, 2010, 612 SCRA 308, 319.
42 Funa v. Villar, supra note 36, at 592; citing David v. Macapagal-Arroyo, G.R. Nos. 171396,
171409, 171485, 171483, 171400, 171489 & 171424, May 3, 2006, 489 SCRA 160, 214-215.

Page 415 of 557

43 Blacks Law Dictionary, 941 (6th Ed. 1991).

44 G.R. No. 191002, March 17, 2010, 615 SCRA 666.
45 Id. at 722-726.
46 G.R. No. 155001, May 5, 2003, 402 SCRA 612, 645.
47 Rollo (G.R. No. 209412), Petition, pp. 3-4.
48 Rollo (G.R. No. 209164), p. 5.
49 Rollo (G.R. No. 209260), p. 6.
50 Agan, Jr. v. Philippine International Air Terminals Co., Inc., note 46 at 645.
51 Magtolis-Briones, Leonor, Philippine Public Fiscal Administration, National Research Council of
the Philippines and Commission on Audit, 1983, p. 243.
52 Manasan, Rosario G., Public Finance in the Philippines: A Review of the Literature, Philippine
Institute for Development Studies Working Paper 81-03, March 1981, p. 37.
53 Magtolis-Briones, op. cit., p. 79.
54 American economist Prof. Philip E. Taylor has tendered the following understanding of the term
budget (as quoted in Magtolis-Briones, op. cit., p. 243), to wit:
The budget is the master plan of government. It brings together estimates of anticipated revenues and
proposed expenditures, implying the schedule of activities to be undertaken and the means of
financing those activities. In the budget, fiscal policies are coordinated, and only in the budget can a
more unified view of the financial direction which the government is going to be observed.
55 Id. at 10.
56 Id. at 10-11.
57 Id. at 11.
58 Id. at 12.
59 Manasan, op cit., at. 39; Manasan, Budget Operations Manual Revised Edition, Operations Budget
Commission (1968), p. 3.
60 Magtolis-Briones, op cit., at 80.
61 Id.
62 http://www.dbm.gov.ph/?page_id=352. Visited on May 27, 2014.
63 Id.
Page 416 of 557

64 Magtolis-Briones, op cit., p. 269.

65 http://www.dbm.gov.ph/?page_id=352. Visited on March 27, 2014.
66 http://budgetngbayan.com/the-budget-cycle/. Visited on March 27, 2014.
67 http://budgetngbayan.com/budget-101/budget.preparation.
68 Section 22. The President shall submit to the Congress, within thirty days from the opening of
every regular session as the basis of the general appropriations bill, a budget of expenditures and
sources of financing, including receipts from existing and proposed revenue measures.
69 Section 2(e), P.D. No. 1177 states that capital expenditures refer to appropriations for the
purchase of goods and services, the benefits of which extend beyond the fiscal year and which add to
the assets of Government, including investments in the capital of government-owned or controlled
corporations and their subsidiaries.
70 Section 2(d), PD 1177 defines current oprating expenditures as appropriations for the purchase of
goods and services for current consumption or within the fiscal year, including the acquisition of
furniture and equipment normally used in the conduct of government operations, and for temporary
construction of promotional, research and similar purposes.
71 Manasan, op.cit.,at 32.
72 Id.
73 Id.
74 Id.
75 Id.; see also Banzon Abello, Amelia, Pattern of Philippine Public Expenditures and Revenue, UP
Institute of Economic Development and Research, p. 2 (1962).
76 Magtolis-Briones, op.cit.,at 383.
77 Id. at 139.
78 Quoted in Banzon Abello, op.cit., at 32-33.
79 Prof. Charles Bastable, a political economist, proposed a similar classification of public revenues in
Public Finance (3rd Edition (1917), Book II, Chapter I(2), London: McMillan and Co., Ltd.), to wit:
The widest division of public revenue is into (1) that obtained by the State in its various
functions as a great corporation or "juristic person," operating under the ordinary conditions
that govern individuals or private companies, and (2) that taken from the revenues of the
society by the power of the sovereign. To the former class belong the rents received by the
State as landlord, rent charges due to it, interest on capital lent by it, the earnings of its
various employments, whether these cover the expenses of the particular function or not, and
finally the accrual of property by escheat or absence of a visible owner. Under the second
class have to be placed taxes, either general or special, and finally all extra returns obtained
by state industrial agencies through the privileges granted by them.
Page 417 of 557

80 Magtolis-Briones, supra at 140.

81 Id. at 141.
82 Id.
83 Id. at 142.
84 Id.
85 Manual on the New Government Accounting System, Accounting Policies, Volume I, Chapter 1,
Section 17 (For National Government Agencies).
86 http://budgetngbayan.com/budget-101/budget-legislation.
87 Article VI of the 1987 Constitution provides:
Section 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills
of local application, and private bills shall originate exclusively in the House of Representatives, but
the Senate may propose or concur with amendments.
88 Section 26, Article VI of the 1987 Constitution, to wit:
Section 26.
1. Every bill passed by the Congress shall embrace only one subject which shall be expressed
in the title thereof.
2. No bill passed by either House shall become a law unless it has passed three readings on
separate days, and printed copies thereof in its final form have been distributed to its
Members three days before its passage, except when the President certifies to the necessity of
its immediate enactment to meet a public calamity or emergency. Upon the last reading of a
bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately
thereafter, and the yeas and nays entered in the Journal.
89 Id.
90 Section 27,1, Article VI of the 1987 Constitution, viz:
Section 27.
1. Every bill passed by the Congress shall, before it becomes a law, be presented to the
President. If he approves the same he shall sign it; otherwise, he shall veto it and return the
same with his objections to the House where it originated, which shall enter the objections at
large in its Journal and proceed to reconsider it. If, after such reconsideration, two-thirds of all
the Members of such House shall agree to pass the bill, it shall be sent, together with the
objections, to the other House by which it shall likewise be reconsidered, and if approved by
two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes
of each House shall be determined by yeas or nays, and the names of the Members voting for
or against shall be entered in its Journal. The President shall communicate his veto of any bill

Page 418 of 557

to the House where it originated within thirty days after the date of receipt thereof, otherwise,
it shall become a law as if he had signed it.
2. The President shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not
object.
91 Id.
92 Section 25, 7, Article VI of the 1987 Constitution, thus :
xxxx.
7. If, by the end of any fiscal year, the Congress shall have failed to pass the general
appropriations bill for the ensuing fiscal year, the general appropriations law for the preceding
fiscal year shall be deemed re-enacted and shall remain in force and effect until the general
appropriations bill is passed by the Congress.
xxxx.
93 http://budgetngbayan.com/budget-101/budget-execution.
94 The ABM disaggregates all programmed appropriations for each agency into two main expenditure
categories: "not needing clearance" and "needing clearance"; it is a comprehensive allotment release
document for all appropriations that do not need clearance, or those that have already been itemized
and fleshed out in the GAA.
95 Items identified as "needing clearance" are those that require the approval of the DBM or the
President, as the case may be (for instance, lump sum funds and confidential and intelligence funds).
For such items, an agency needs to submit a Special Budget Request to the DBM with supporting
documents. Once approved, a SARO is issued.
96 Liabilities legally incurred that the Government will pay for.
97 Belgica v. Executive Secretary, supra note 7 clarifies the distinction between an NCA and SARO,
viz:
A SARO, as defined by the DBM itself in its website, is "[a] specific authority issued to
identified agencies to incur obligations not exceeding a given amount during a specified
period for the purpose indicated. It shall cover expenditures the release of which is subject to
compliance with specific laws or regulations, or is subject to separate approval or clearance
by competent authority." Based on this definition, it may be gleaned that a SARO only
evinces the existence of an obligation and not the directive to pay. Practically speaking, the
SARO does not have the direct and immediate effect of placing public funds beyond the
control of the disbursing authority. In fact, a SARO may even be withdrawn under certain
circumstances which will prevent the actual release of funds. On the other hand, the actual
release of funds is brought about by the issuance of the NCA, which is subsequent to the
issuance of a SARO.
xxxx

Page 419 of 557

98 http://budgetngbayan.com/budget-101/budget-accountability.
99 Fisher, Presidential Spending Power, 1975, p. 165.
100 Keefe and Ogul, The American Legislative Process: Congress and the States, 1993, p. 359.
101 Magtolis-Briones, op. cit., p. 79.
102 Diokno, Philippine Fiscal Behavior in Recent History, The Philippine Review of Economics, Vol.
XLVII, No. 1, June 1, 2010, p. 53.
103 World Bank, Philippines Quarterly Update: Solid Economic Fundamentals Cushion External
Turmoil, available at http://www.investphilippines.info/arangkada/wp-content/uploads/2011/10/WBPhilippinesQuarterly-Update-Sept2011.pdf (last accessed March 31, 2014).
104 Id.
105 Department of Budget and Management, Frequently Asked Questions About the Disbursement
Acceleration Program (DAP), available at http://www.dbm.gov.ph/?page_id=7362 (last accessed,
December 3, 2013).
106 Respondents Consolidated Comment, p.8.
107 Public-Private Partnership.
108 Philippines Quarterly Update: Solid Economic Fundamentals Cushion External Turmoil, available
at http://www.investphilippines.info/arangkada/wp-content/uploads/2011/10/WB-PhilippinesQuarterlyUpdate-Sept2011.pdf (last accessed March 31, 2014).
109 Respondents Memorandum, p. 2, citing the Philippines Quarterly Update: From Stability to
Prosperity for All, available at http://wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB/
2012/06/12/000333037_20120612011744/Rendered/PDF/698330WP0P12740ch020120FINAL00510
12.pdf (last accessed March 31, 2014).
110 The research group IBON International contests this finding, saying that the contribution of the
DAP spending was only one-fourth of a percentage point at most during the last quarter of 2011, and a
"negligible fraction" for the entire year of 2011. See "DAP did not contribute 1.3 percentage points to
growthIBON," available at http://ibon.org/ibon_articles.php?id=344 (last accessed April 5, 2014).
111 TSN, Oral Arguments, January 28, 2014, p. 12.
112 Diokno, Philippine Fiscal Behavior in Recent History, The Philippine Review of Economics, Vol.
XLVII, No. 1, June 1, 2010, p. 51.
113 Id. at 52.
114 Rollo (G.R. No. 209287), p. 539, (Respondents 1st Evidence Packet).
115 Id. at 526-529, (Respondents 1st Evidence Packet).
Page 420 of 557

116 Id. at 537-540.

117 Id. at 549-555.
118 Id. at 563-568.
119 Id. at 579-587.
120 Id. at 601-608.
121 This memorandum was a request to fund the rehabilitation plan for the Typhoon Pablo-stricken
areas in Mindanao amounting to P10.534 billion to be sourced from the (i) 2012 and 2013 pooled
savings from programmed appropriations, and (ii) revenue windfall collections during the first
semester comprising the 2013 Unprogrammed Fund, Respondents 1st Evidence Packet, p. 609-B.
122 Rollo (G.R. No. 209287), p. 555, (Respondents 1st Evidence Packet).
123 Id. at 185-189, (Respondents Manifestation dated December 6, 2013).
124 Blacks Law Dictionary (6th Ed.) p. 102.
125 ] G.R. No. 29627, December 19, 1989, 180SCRA 254.
126 Id. at 160.
127 Daniel Tomassi, "Budget Execution," in Budgeting and Budgetary Institutions, ed. Anwar Shah
(Washington: The International Bank for Reconstruction and Development/World Bank, 2007), p.
279, available at
http://siteresources.worldbank.org/PSGLP/Resources/BudgetingandBudgetaryInstitutions.pdf (last
accessed April 9, 2014).
128 Budget Operations Manual (Revised Edition) 1968, Office of the President, Budget Commission.
129 Fujitani and Shirck, Executive Spending Powers: The Capacity to Reprogram, Rescind, and
Impound. Harvard Law School, Federal Budget Policy Seminar, Briefing Paper No. 8, p. 1, available
at http://www.law.harvard.edu/faculty/hjackson/ExecutiveSpendingPowers_8.pdf (last accessed
December 3, 2013).
130 Id. at 8.
131 Id.
132 Princeton University Press, 1975, pp. 261-262.
133 G.R. No. 103524, April 15, 1992, 208 SCRA 133, 150.
134 Waldby, Odell, Philippine Public Fiscal Administration, Institute of Public Administration,
University of the Philippines, 1954, p. 319.

Page 421 of 557

135 The Philippine Commission, which lasted from 1900 to 1916, comprised the Upper House of the
Philippines Legislature. The Philippine Assembly, which existed from 1907 to 1916, served in its time
as the Lower House of the Philippine Legislature.
136 Waldby, op. cit., pp. 321-322.
137 In his Sponsorship Speech, Delegate Honesto Mendoza, the Chairman of the Committee on
Budget and Appropriations of the 1971 Constitutional Convention, stated that it was deemed
"absolutely necessary to remove the anomaly of illegal fund transfers of public funds to projects or
purposes not contemplated by law."
138 Minutes of the Meeting, Commission on Budget and Appropriations, 1971 Constitutional
Convention, November 4, 1971, p. 18.
139 Minutes of the Meeting, Commission on Budget and Appropriations, 1971 Constitutional
Convention, January 13, 1972, p. 10.
140 Id. at 9.
141 Id. at 10-11.
142 Demetria v. Alba, No. L-71977, February 27, 1987, 148 SCRA 208.
143 Id. at 214-215.
144 G.R. No. 188635, January 29, 2013, 689 SCRA 385, 402-404.
145 Constitutional and Legal Bases < http://www.dbm.gov.ph/?page_id=7364> (visited March 27,
2014)
146 Rollo (G.R. No. 209442), p. 7.
147 Rollo (G.R. No. 209260), p. 17; (G.R. No. 209517), p. 19; (G.R. No. 209155), p. 11; (G.R. No.
209135), p. 13.
148 Rollo (G.R. No. 209287), p. 6; (G.R. No. 209517), p. 19; (G.R. No. 209442), p. 23.
149 Section 17, Article VII of the 1987 Constitution provides:
Section 17. The President shall have control of all the executive departments, bureaus, and
offices. He shall ensure that the laws be faithfully executed.
150 Sanchez v. Commission on Audit, G.R. No. 127545, April 23, 2008, 552 SCRA 471, 497.
151 NBC No. 541 (Rationale); see also NBC No. 541 (5.3), which stated that, in case of failure to
submit budget accountability reports, the DBM would compute/approximate the agencys obligation
level as of June 30 to derive its unobligated allotments as of the same period.
152 NBC No. 541 (2.1).

Page 422 of 557

153 NBC No. 541 (5.7.1).

154 These GAA provisions are reflected, respectively, in NBC No. 528 (Guidelines on the Release of
funds for FY 2011), thus:
3.9.1.2 Appropriations under FY 2011 GAA, R.A. 10147 shall be available for release and
obligations up to December 31, 2012 with the exception of PS which shall lapse at the end of
2011.
and NBC No. 535 (Guidelines on the Release of funds for FY 2012), thus:
3.9.1.2 Appropriations under CY 2012 GAA, R.A. 10155 shall be available for release and
obligations up to December 31, 2013 with the exception of PS which shall lapse at the end of
2012.
155 Rollo (G.R. No. 209442), p. 23.
156 Rollo (G.R. No. 209287), p. 1060, (Memorandum for the Respondents).
157 Rollo (209287), pp. 18-19.
158 Rollo (209442), pp. 21-22.
159 G.R. No. 113105, August 19, 1994, 235 SCRA 506, 545.
160 Websters Third New International Dictionary.
161 TSN, January 28, 2014, p. 12.
162 DBM, "Sec. Abad: DAP used to buoy spending, not to buy votes," available at
http://www.dbm.gov.ph/?p=7328 (last accessed March 28, 2014).
163 DBM, "Sec. Abad: DAP used to buoy spending, not to buy votes," available at
http://www.dbm.gov.ph/?p=7328 (last accessed March 28, 2014).
164 Rollo (G.R. No. 209136), p. 18.
165 Rollo (G.R. No. 209136), p. 18; (G.R. No. 209442), p. 13.
166 Rollo (G.R. No. 209155), p. 9.
167 Rollo (G.R. No. 209287), pp. 68-104; (Respondents Consolidated Comment).
168 Rollo (G.R. No. 209287), pp. 524-922.
169 SARO No. E-11-02253; Rollo (G.R. No. 209287), p. 628, (Respondents 2nd Evidence Packet).
170 See FY2011 National Expenditure Program, p. 1186, available at
http://www.dbm.gov.ph/wpcontent/uploads/NEP2011/DOSTG-GAA.pdf.

Page 423 of 557

171 SARO No. E-14-02254; Rollo (G.R. No. 209287), p. 630, (Respondents 2nd Evidence Packet).
172 Rollo (G.R. No. 209287), p. 27, (Respondents Memorandum).
173 TSN, January 28, 2014, p. 26.
174 Section 29(1), Article VI of the 1987 Constitution provides that no money shall be paid out of the
Treasury except in pursuance of an appropriation made by law.
175 According to Allen and Miller. The Constitutionality of Executive Spending Powers, Harvard
Law School, Federal Budget Policy Seminar, Briefing Paper No. 38, p. 16, available at
http://www.law.harvard.edu/faculty/hjackson/ConstitutionalityOfExecutive_38.pdf (December 3,
2013):
If the executive could spend under its own authority, "then the constitutional grants of power
to the legislature to raise taxes and to borrow money would be for naught because the
Executive could effectively compel such legislation by spending at will. The [L]egislative
Powers referred to in section 8 of Article I would then be shared by the President in his
executive as well as in his legislative capacity" The framers intended the powers to spend and
the powers to tax to be "two sides of the same coin," and for good reason. Separating the two
powers or giving the President one without the other might reduce accountability and
result in excessive spending: the President would be able to spend and leave Congress to deal
with the political repercussions of financing such spending through heightened tax rates.
176 Bernas, op. cit., at 811.
177 Wander and Herbert (Ed.), Congressional Budgeting: Politics, Process and Power (1984), p. 3.
178 Wander and Herbert (Ed.), Congressional Budgeting: Politics, Process and Power (1984), at 133.
179 Bernas, op. cit., at 812.
180 Philippine Constitution Association v. Enriquez, supra, note 159, at 522.
181 Stith, Kate, "Congress Power of the Purse" (1988), Faculty Scholarship Series, Paper No. 1267,
p. 1345, available at
http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2282&context=fss_papers (last
accessed March 29, 2014).
182 Id. at 1377.
183 TSN of January 28, 2014, pp. 42-45.
184 Rollo (G.R. No. 209287), p. 883, (Respondents 7th Evidence Packet).
185 Id. at 562, (Respondents 1st Evidence Packet).
186 See the OSGs Compliance dated February 14, 2014, Annex B, p. 2.
187 Rollo (G.R. No. 209287), p. 35, (Memorandum for the Respondents).
Page 424 of 557

188 Id.
189 TSN of February 18, 2014, p. 32.
190 TSN of February 18, 2014, pp. 45-46.
191 Rollo (G.R. No. 209287), p. 1027; (G.R. No. 209442), p. 8.
192 Other References: A Brief on the Special Purpose Funds in the National Budget
<http://www.dbm.gov.ph/?page_id=7366> (visited May 2, 2014).
193 Rollo (G.R. No. 209287), p. 95.
194 Glossary of Terms, BESF.
195 TSN, January 28, 2014, p. 106.
196 Rollo (G.R. No. 209155), pp. 327 & 337.
197 Id. at 337 & 338.
198 The target revenue for dividends on stocks of P5.5 billion was according to the BESF (2013),
Table C.1 Revenue Program, by Source 2011-2013.
199 Rollo (G.R. No. 209155), pp. 337 & 339.
200 Other References: A Brief on the Special Purpose Funds in the National Budget
<http://www.dbm.gov.ph/?page_id=7366> (visited May 2, 2014).
201 Basic Concepts in Budgeting <http://www.dbm.gov.ph/wp-content/uploads/2012/03/PGBB1.pdf> (visited May 2, 2014).
202 Id.
203 The Equal Protection Clause is found in Section 1, Article III of the 1987 Constitution, to wit:
Section 1. No person shall be deprived of life, liberty, or property without due process of law,
nor shall any person be denied the equal protection of the laws.
204 Article XI of the 1987 Constitution states:
Section 1. Public office is a public trust. Public officers and employees must, at all times, be
accountable to the people, serve them with utmost responsibility, integrity, loyalty, and
efficiency; act with patriotism and justice, and lead modest lives.
205 See Farias v. Executive Secretary, G.R. No. 147387, December 10, 2003, 417 SCRA 503.
206 Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, October
8, 2013.

Page 425 of 557

207 G.R. No. L-23127, April 29, 1971, 38 SCRA 429, 434-435.
208 Yap v. Thenamaris Ships Management, G.R. No. 179532, May 30 2011, 649 SCRA 369, 381.
209 League of Cities Philippines v. COMELEC, G.R. No. 176951, August 24, 2010, 628 SCRA 819,
833.
210 G.R. No. 171101, November 22, 2011, 660 SCRA 525, 545-548.
211 Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, October
8, 2013.
212 This view is similarly held by Justice Leonen, who asserts in his separate opinion that the
application of the doctrine of operative fact should be limited to situations (a) where there has been a
reliance in good faith in the acts involved, or (b) where in equity the difficulties that will be borne by
the public far outweigh the rigid application of the legal nullity of an act.

Page 426 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19201

June 16, 1965

REV. FR. CASIMIRO LLADOC, petitioner,

vs.
The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX APPEALS, respondents.
Hilado and Hilado for petitioner.
Office of the Solicitor General for respondents.
PAREDES, J.:
Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in cash to Rev. Fr. Crispin
Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of herein petitioner, for the
construction of a new Catholic Church in the locality. The total amount was actually spent for the purpose
intended.
On March 3, 1958, the donor M.B. Estate, Inc., filed the donor's gift tax return. Under date of April 29, 1960,
the respondent Commissioner of Internal Revenue issued an assessment for donee's gift tax against the
Catholic Parish of Victorias, Negros Occidental, of which petitioner was the priest. The tax amounted to
P1,370.00 including surcharges, interests of 1% monthly from May 15, 1958 to June 15, 1960, and the
compromise for the late filing of the return.
Petitioner lodged a protest to the assessment and requested the withdrawal thereof. The protest and the motion
for reconsideration presented to the Commissioner of Internal Revenue were denied. The petitioner appealed to
the Court of Tax Appeals on November 2, 1960. In the petition for review, the Rev. Fr. Casimiro Lladoc
claimed, among others, that at the time of the donation, he was not the parish priest in Victorias; that there is
no legal entity or juridical person known as the "Catholic Parish Priest of Victorias," and, therefore, he should
not be liable for the donee's gift tax. It was also asserted that the assessment of the gift tax, even against the
Roman Catholic Church, would not be valid, for such would be a clear violation of the provisions of the
Constitution.
After hearing, the CTA rendered judgment, the pertinent portions of which are quoted below:
... . Parish priests of the Roman Catholic Church under canon laws are similarly situated as its
Archbishops and Bishops with respect to the properties of the church within their parish. They are the
guardians, superintendents or administrators of these properties, with the right of succession and may
sue and be sued.
xxx

xxx

xxx

The petitioner impugns the, fairness of the assessment with the argument that he should not be held
liable for gift taxes on donation which he did not receive personally since he was not yet the parish
priest of Victorias in the year 1957 when said donation was given. It is intimated that if someone has
to pay at all, it should be petitioner's predecessor, the Rev. Fr. Crispin Ruiz, who received the donation
in behalf of the Catholic parish of Victorias or the Roman Catholic Church. Following petitioner's line
Page 427 of 557

of thinking, we should be equally unfair to hold that the assessment now in question should have been
addressed to, and collected from, the Rev. Fr. Crispin Ruiz to be paid from income derived from his
present parish where ever it may be. It does not seem right to indirectly burden the present
parishioners of Rev. Fr. Ruiz for donee's gift tax on a donation to which they were not benefited.
xxx

xxx

xxx

We saw no legal basis then as we see none now, to include within the Constitutional exemption, taxes
which partake of the nature of an excise upon the use made of the properties or upon the exercise of
the privilege of receiving the properties. (Phipps vs. Commissioner of Internal Revenue, 91 F [2d]
627; 1938, 302 U.S. 742.)
It is a cardinal rule in taxation that exemptions from payment thereof are highly disfavored by law,
and the party claiming exemption must justify his claim by a clear, positive, or express grant of such
privilege by law. (Collector vs. Manila Jockey Club, G.R. No. L-8755, March 23, 1956; 53 O.G.
3762.)
The phrase "exempt from taxation" as employed in Section 22(3), Article VI of the Constitution of the
Philippines, should not be interpreted to mean exemption from all kinds of taxes. Statutes exempting
charitable and religious property from taxation should be construed fairly though strictly and in such
manner as to give effect to the main intent of the lawmakers. (Roman Catholic Church vs. Hastrings 5
Phil. 701.)
xxx

xxx

xxx

WHEREFORE, in view of the foregoing considerations, the decision of the respondent Commissioner
of Internal Revenue appealed from, is hereby affirmed except with regard to the imposition of the
compromise penalty in the amount of P20.00 (Collector of Internal Revenue v. U.S.T., G.R. No. L11274, Nov. 28, 1958); ..., and the petitioner, the Rev. Fr. Casimiro Lladoc is hereby ordered to pay to
the respondent the amount of P900.00 as donee's gift tax, plus the surcharge of five per centum (5%)
as ad valorem penalty under Section 119 (c) of the Tax Code, and one per centum (1%) monthly
interest from May 15, 1958 to the date of actual payment. The surcharge of 25% provided in Section
120 for failure to file a return may not be imposed as the failure to file a return was not due to willful
neglect.( ... ) No costs.
The above judgment is now before us on appeal, petitioner assigning two (2) errors allegedly committed by the
Tax Court, all of which converge on the singular issue of whether or not petitioner should be liable for the
assessed donee's gift tax on the P10,000.00 donated for the construction of the Victorias Parish Church.
Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation cemeteries, churches and
parsonages or convents, appurtenant thereto, and all lands, buildings, and improvements used exclusively for
religious purposes. The exemption is only from the payment of taxes assessed on such properties enumerated,
as property taxes, as contra distinguished from excise taxes. In the present case, what the Collector assessed
was a donee's gift tax; the assessment was not on the properties themselves. It did not rest upon general
ownership; it was an excise upon the use made of the properties, upon the exercise of the privilege of receiving
the properties (Phipps vs. Com. of Int. Rec. 91 F 2d 627). Manifestly, gift tax is not within the exempting
provisions of the section just mentioned. A gift tax is not a property tax, but an excise tax imposed on the
transfer of property by way of gift inter vivos, the imposition of which on property used exclusively for
religious purposes, does not constitute an impairment of the Constitution. As well observed by the learned
respondent Court, the phrase "exempt from taxation," as employed in the Constitution (supra) should not be
interpreted to mean exemption from all kinds of taxes. And there being no clear, positive or express grant of
such privilege by law, in favor of petitioner, the exemption herein must be denied.
Page 428 of 557

The next issue which readily presents itself, in view of petitioner's thesis, and Our finding that a tax liability
exists, is, who should be called upon to pay the gift tax? Petitioner postulates that he should not be liable,
because at the time of the donation he was not the priest of Victorias. We note the merit of the above claim,
and in order to put things in their proper light, this Court, in its Resolution of March 15, 1965, ordered the
parties to show cause why the Head of the Diocese to which the parish of Victorias pertains, should not be
substituted in lieu of petitioner Rev. Fr. Casimiro Lladoc it appearing that the Head of such Diocese is the real
party in interest. The Solicitor General, in representation of the Commissioner of Internal Revenue, interposed
no objection to such a substitution. Counsel for the petitioner did not also offer objection thereto.
On April 30, 1965, in a resolution, We ordered the Head of the Diocese to present whatever legal issues and/or
defenses he might wish to raise, to which resolution counsel for petitioner, who also appeared as counsel for
the Head of the Diocese, the Roman Catholic Bishop of Bacolod, manifested that it was submitting itself to the
jurisdiction and orders of this Court and that it was presenting, by reference, the brief of petitioner Rev. Fr.
Casimiro Lladoc as its own and for all purposes.
In view here of and considering that as heretofore stated, the assessment at bar had been properly made and the
imposition of the tax is not a violation of the constitutional provision exempting churches, parsonages or
convents, etc. (Art VI, sec. 22 [3], Constitution), the Head of the Diocese, to which the parish Victorias
Pertains, is liable for the payment thereof.
The decision appealed from should be, as it is hereby affirmed insofar as tax liability is concerned; it is
modified, in the sense that petitioner herein is not personally liable for the said gift tax, and that the Head of
the Diocese, herein substitute petitioner, should pay, as he is presently ordered to pay, the said gift tax, without
special, pronouncement as to costs.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., and
Zaldivar, JJ., concur.
Barrera, J., took no part.

Page 429 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-3820

July 18, 1950

JEAN L. ARNAULT, petitioner,

vs.
LEON NAZARENO, Sergeant-at-arms, Philippine Senate, and EUSTAQUIO BALAGTAS, Director of
Prisons, respondents.
J.C. Orendain, Augusto Revilla, and Eduardo Arboleda for petitioner.
Office of the Solicitor General Felix Bautista Angelo, Lorenzo Sumulong, Lorenzo Taada, and Vicente J.
Francisco for respondents.
OZAETA, J.:
This is an original petition for habeas corpus to relieve the petitioner from his confinement in the New Bilibid
Prison to which he has been committed by virtue of a resolution adopted by the Senate on May 15, 1950,
which reads as follows:
Whereas, Jean L. Arnault refused to reveal the name of the person to whom he gave the P440,000, as
well as answer other pertinent questions related to the said amount; Now, therefore, be it.
Resolved, that for his refusal to reveal the name of the person to whom he gave the P440,000 Jean L.
Arnault be committed to the custody of the Sergeant-at-Arms and imprisoned in the New Bilibid
Prison, Muntinlupa, Rizal, until discharged by further order of the Senate or by the special committee
created by Senate Resolution No. 8, such discharge to be ordered when he shall have purged the
contempt by revealing to the Senate or to the said special committee the name of the person to whom
he gave the P440,000, as well as answer other pertinent questions in connection therewith.
The facts that gave rise to the adoption of said resolution, insofar as pertinent here, may be briefly stated as
follows:
In the latter part of October, 1949, the Philippine Government, through the Rural Progress Administration,
bought two estates known as Buenavista and Tambobong for the sums of P4,500,000 and P500,000,
respectively. Of the first sum, P1,000,000 was paid to Ernest H. Burt, a nonresident American, thru his
attorney-in-fact in the Philippines, the Associated Estates, Inc., represented by Jean L. Arnault, for alleged
interest of the said Burt in the Buenavista Estate. The second sum of P500,000 was all paid to the same Ernest
H. Burt through his other attorney-in-fact, the North Manila Development Co., Inc., also represented by Jean
L. Arnault, for the alleged interest of the said Burt in the Tambobong Estate.
The original owner of the Buenavista Estate was the San Juan de Dios Hospital. The Philippine Government
held a 25-year lease contract on said estate, with an option to purchase it for P3,000,000 within the same
period of 25 years counted from January 1, 1939. The occupation Republic of the Philippines purported to
exercise that option by tendering to the owner the sum of P3,000,000 and, upon its rejection, by depositing it in
court on June 21, 1944, together with the accrued rentals amounting to P3224,000. Since 1939 the Government
has remained in possession of the estate.

Page 430 of 557

On June 29, 1946, the San Juan de Dios Hospital sold the Buenavista Estate for P5,000,000 to Ernest H. Burt,
who made a down payment of P10,000 only and agreed to pay P5000,000 within one year and the remainder in
annual installments of P500,000 each, with the stipulation that failure on his part to make any of said payments
would cause the forfeiture of his down payment of P10,000 and would entitle the Hospital to rescind to sale to
him. Aside from the down payment of P10,000, Burt has made no other payment on account of the purchase
price of said estate.
The original owner of the Tambobong Estate was the Philippine Trust Company. On May 14, 1946, the
Philippine Trust Company sold estate for the sum of P1,200,000 to Ernest H. Burt, who paid P10,000 down
and promise to pay P90,000 within nine months and the balance of P1,100,000 in ten successive installments
of P110,000 each. The nine-month period within which to pay the first installment of P90,000 expired on
February 14, 1947, without Burt's having paid the said or any other amount then or afterwards. On September
4, 1947, the Philippine Trust Company sold, conveyed, and delivered the Tambobong Estate to the Rural
Progress Administration by an absolute deed of sale in consideration of the sum of P750,000. On February 5,
1948, the Rural Progress Administration made, under article 1504 of the Civil Code, a notarial demand upon
Burt for the resolution and cancellation of his contract of purchase with the Philippine Trust Company due to
his failure to pay the installment of P90,000 within the period of nine months. Subsequently the Court of First
Instance of Rizal ordered the cancellation of Burt's certificate of title and the issuance of a new one in the name
of the Rural Progress Administration, from which order he appealed to the Supreme Court.1
It was in the face of the antecedents sketched in the last three preceding paragraphs that the Philippine
Government, through the Secretary of Justice as Chairman of the Board of Directors of the Rural Progress
Administration and as Chairman of the Board of Directors of the Philippine National Bank, from which the
money was borrowed, accomplished the purchase of the two estates in the latter part of October, 1949, as
stated at the outset.
On February 27, 1950, the Senate adopted its Resolution No. 8, which reads as follows:
RESOLUTION CREATING A SPECIAL COMMITTEE TO INVESTIGATE THE BUENAVISTA
AND THE TAMBOBONG ESTATES DEAL.
WHEREAS, it is reported that the Philippine government, through the Rural Progress Administration,
has bought the Buenavista and the Tambobong Estates for the aggregate sum of five million pesos;
WHEREAS, it is reported that under the decision of the Supreme Court dated October 31, 1949, the
Buenavista Estate could have been bought for three million pesos by virtue of a contract entered into
between the San Juan de Dios Hospital and Philippine Government in 1939;
WHEREAS, it is even alleged that the Philippine Government did not have to purchase the Buenavista
Estate because the occupation government had made tender of payment in the amount of three million
pesos, Japanese currency, which fact is believed sufficient to vest title of Ownership in the Republic
of the Philippines pursuant to decisions of the Supreme Court sustaining the validity of payments
made in Japanese military notes during the occupation;
WHEREAS, it is reported that the Philippine Government did not have to pay a single centavo for the
Tambobong Estate as it was already practically owned by virtue of a deed of sale from the Philippine
Trust Company dated September 3, 194, for seven hundred and fifty thousand pesos, and by virtue of
the recission of the contract through which Ernest H. Burt had an interest in the estate; Now, therefore,
be it.
RESOLVED, That a Special Committee, be, as it hereby is, created, composed of five members to be
appointed by the President of the Senate to investigate the Buenavista and Tambobong Estate deals. It
Page 431 of 557

shall be the duty of the said Committee to determine whether the said purchase was honest, valid, and
proper and whether the price involved in the deal was fair and just, the parties responsible therefor,
and any other facts the Committee may deem proper in the premises. Said Committee shall have the
power to conduct public hearings; issue subpoena or subpoena duces tecum to compel the attendance
of witnesses or the production of documents before it; and may require any official or employee of
any bureau, office, branch, subdivision, agency, or instrumentality of the Government to assist or
otherwise cooperate with the Special Committee in the performance of its functions and duties. Said
Committee shall submit its report of findings and recommendations within two weeks from the
adoption of this Resolution.
The special committee created by the above resolution called and examined various witnesses, among the most
important of whom was the herein petitioner, Jean L. Arnault. An intriguing question which the committee
sought to resolve was that involved in the apparent unnecessariness and irregularity of the Government's
paying to Burt the total sum of P1,500,000 for his alleged interest of only P20,000 in the two estates, which he
seemed to have forfeited anyway long before October, 1949. The committee sought to determine who were
responsible for and who benefited from the transaction at the expense of the Government.
Arnault testified that two checks payable to Burt aggregating P1,500,000 were delivered to him on the
afternoon of October 29, 1949; that on the same date he opened a new account in the name of Ernest H. Burt
with the Philippine National Bank in which he deposited the two checks aggregating P1,500,000; and that on
the same occasion he draw on said account two checks; one for P500,000, which he transferred to the account
of the Associated Agencies, Inc., with the Philippine National Bank, and another for P440,000 payable to cash,
which he himself cashed. It was the desire of the committee to determine the ultimate recipient of this sum of
P440,000 that gave rise to the present case.
At first the petitioner claimed before the Committee:
Mr. ARNAULT (reading from a note). Mr. Chairman, for questions involving the disposition of funds,
I take the position that the transactions were legal, that no laws were being violated, and that all
requisites had been complied with. Here also I acted in a purely functional capacity of representative. I
beg to be excused from making answer which might later be used against me. I have been assured that
it is my constitutional right to refuse to incriminate myself, and I am certain that the Honorable
Members of this Committee, who, I understand, are lawyers, will see the justness of my position.
At as subsequent session of the committee (March 16) Senator De Vera, a member of the committee,
interrogated him as follows:
Senator DE VERA. Now these transactions, according to your own typewritten statement, were legal?
Mr. ARNAULT. I believe so.
Senator DE VERA. And the disposition of that fund involved, according to your own statement, did
not violate any law?
Mr. ARNAULT. I believe so.
xxx

xxx

xxx

Senator DE VERA. So that if the funds were disposed of in such a manner that no laws were violated,
how is it that when you were asked by the Committee to tell what steps you took to have this money
delivered to Burt, you refused to answer the questions, saying that it would incriminate you?
Page 432 of 557

Mr. ARNAULT. Because it violates the rights of a citizen to privacy in his dealings with other people.
xxx

xxx

xxx

Senator DE VERA. Are you afraid to state how the money was disposed of because you would be
incriminated, or you would be incriminating somebody?
Mr. ARNAULT. I am not afraid; I simply stand on the privilege to dispose of the money that has been
paid to me as a result of a legal transaction without having to account for any use of it.
But when in the same session the chairman of the committee, Senator Sumulong, interrogated the petitioner,
the latter testified as follows:
The CHAIRMAN. The other check of P440,000 which you also made on October 29, 1949, is payable
to cash; and upon cashing this P440,000 on October 29, 1949, what did you do with that amount?
Mr. ARNAULT. I turned it over to a certain person.
The CHAIRMAN. The whole amount of P440,000?
Mr. ARNAULT. Yes.
The CHAIRMAN. Who was that certain person to whom you delivered these P440,000 which you
cashed on October 29, 1949?
Mr. ARNAULT. I don't remember the name; he was a representative of Burt.
The CHAIRMAN. That representative of Burt to whom you delivered the P440,000 was a Filipino?
Mr. ARNAULT. I don't know.
The CHAIRMAN. You do not remember the name of that representative of Burt to whom you
delivered this big amount of P440,000?
Mr. ARNAULT. I am not sure; I do not remember the name.
The CHAIRMAN. That certain person who represented Burt to whom you delivered the big amount
on October 29, 1949, gave you a receipt for the amount?
Mr. ARNAULT. No.
The CHAIRMAN. Neither did you ask a receipt?
Mr. ARNAULT. I didn't ask.
The CHAIRMAN. And why did you give that certain person, representative of Burt, this big amount
of P440,000 which forms part of the P1- million paid to Burt?
Mr. ARNAULT. Because I have instructions to that effect.

Page 433 of 557

The CHAIRMAN. Who gave you the instruction?

Mr. ARNAULT. Burt.
The CHAIRMAN. Where is the instruction; was that in writing?
Mr. ARNAULT. No.
The CHAIRMAN. By cable?
Mr. ARNAULT. No.
The CHAIRMAN. In what form did you receive that instruction?
Mr. ARNAULT. Verbal instruction.
The CHAIRMAN. When did you receive this verbal instruction from Burt to deliver these P440,000
to a certain person whose name you do not like to reveal?
Mr. ARNAULT. I have instruction to comply with the request of the person.
The CHAIRMAN. Now, you said that instruction given to you by Burt was verbal?
Mr. ARNAULT. Yes.
The CHAIRMAN. When was that instruction given to you by Burt?
Mr. ARNAULT. Long time ago.
The CHAIRMAN. In what year did Burt give you that verbal instruction; when Burt was still here in
the Philippines?
Mr. ARNAULT. Yes.
The CHAIRMAN. But at that time Burt already knew that he would receive the money?
Mr. ARNAULT. No.
The CHAIRMAN. In what year was that when Burt while he was here in the Philippines gave you the
verbal instruction?
Mr. ARNAULT. In 1946.
The CHAIRMAN. And what has that certain person done for Burt to merit receiving these P440,000?
Mr. ARNAULT. I absolutely do not know.
The CHAIRMAN. You do not know?
Mr. ARNAULT. I do not know.
Page 434 of 557

The CHAIRMAN. Burt did not tell you when he gave you the verbal instruction why that certain
person should receive these P440,000?
Mr. ARNAULT. He did not tell me.
The CHAIRMAN. And Burt also authorized you to give this big amount to that certain person without
receipt?
Mr. ARNAULT. He told me that a certain person would represent him and where could I meet him.
The CHAIRMAN. Did Burt know already that certain person as early as 1946?
Mr. ARNAULT. I presume much before that.
The CHAIRMAN. Did that certain person have any intervention in the prosecution of the two cases
involving the Buenavista and Tambobong estates?
Mr. ARNAULT. Not that I know of.
The CHAIRMAN. Is that certain person related to any high government official?
Mr. ARNAULT. No, I do not know.
The CHAIRMAN. Why can you not tell us the name of that certain person?
Mr. ARNAULT. Because I am not sure of his name; I cannot remember the name.
The CHAIRMAN. When gave that certain person that P440,000 on October 29, 1949, you knew
already that person?
Mr. ARNAULT. Yes, I have seen him several times.
The CHAIRMAN. And the name of that certain person is a Filipino name?
Mr. ARNAULT. I would say Spanish name.
The CHAIRMAN. And how about his Christian name; is it also a Spanish name?
Mr. ARNAULT. I am not sure; I think the initial is J.
The CHAIRMAN. Did he have a middle name?
Mr. ARNAULT. I never knew it.
The CHAIRMAN. And how about his family name which according to your recollection is Spanish;
can you remember the first letter with which that family name begins?
Mr. ARNAULT. S, D or F.
The CHAIRMAN. And what was the last letter of the family name?
Page 435 of 557

Mr. ARNAULT. I do not know.

The CHAIRMAN. Have you seen that person again after you have delivered this P440,000?
Mr. ARNAULT. Yes.
The CHAIRMAN. Several times?
Mr. ARNAULT. Two or three times.
The CHAIRMAN. Here in Manila?
Mr. ARNAULT. Yes.
The CHAIRMAN. And in spite of the fact that you met that person two or three times, you never were
able to find out what was his name?
Mr. ARNAULT. If I knew, I would [have] taken it down. Mr. Peralta knows my name; of course, we
have not done business. Lots of people in Manila know me, but they don't know my name, and I don't
know them. They sa{ I am "chiflado" because I don't know their names.
The CHAIRMAN. That certain person is a male or female?
Mr. ARNAULT. He is a male.
The CHAIRMAN. You are sure that he is a male at least?
Mr. ARNAULT. Let us say 38 or 40 years, more or less.
The CHAIRMAN. Can you give us, more or less, a description of that certain person? What is his
complexion: light, dark or light brown?
Mr. ARNAULT. He is like the gentleman there (pointing to Senator Cabili), but smaller. He walks
very straight, with military bearing.
The CHAIRMAN. Do you know the residence of that certain person to whom you gave the P440,000?
Mr. ARNAULT. No.
The CHAIRMAN. During these frequent times that you met that certain person, you never came to
know his residence?
Mr. ARNAULT. No, because he was coming to the office.
The CHAIRMAN. How tall is that certain person?
Mr. ARNAULT. Between 5-2 and 5-6.
On May 15, 1950, the petitioner was haled before the bar of the Senate, which approved and read to him the
following resolution:
Page 436 of 557

Be it resolved by the Senate of the Philippines in Session assembled:

That Jean L. Arnault, now at the bar of the Senate, be arraigned for contempt consisting of
contumacious acts committed by him during the investigation conducted by the Special Committee
created by Senate Resolution No. 8 to probe the Tambobong and Buenavista estates deal of October
21, 1949, and that the President of the Senate propounded to him the following interrogatories:
1. What excuse have you for persistently refusing to reveal the name of the person to whom you gave
the P440,000 on October 29, 1949, a person whose name it is impossible for you not to remember not
only because of the big amount of money you gave to him without receipt, but also by your own
statements you knew him as early as 1946 when General Ernest H. Burt was still in the Philippines,
you made two other deliveries of money to him without receipt, and the last time you saw him was in
December 1949?
Thereupon petitioner's attorney, Mr. Orendain, submitted for him a written answer alleging that the questions
were incriminatory in nature and begging leave to be allowed to stand on his constitutional right not to be
compelled to be a witness against himself. Not satisfied with that written answer Senator Sumulong, over the
objection of counsel for the petitioner, propounded to the latter the following question:
Sen. SUMULONG. During the investigation, when the Committee asked you for the name of that
person to whom you gave the P440,000, you said that you can [could] not remember his name. That
was the reason then for refusing to reveal the name of the person. Now, in the answer that you have
just cited, you are refusing to reveal the name of that person to whom you gave the P440,000 on the
ground that your answer will be self-incriminating. Now, do I understand from you that you are
abandoning your former claim that you cannot remember the name of that person, and that your
reason now for your refusal to reveal the name of that person is that your answer might be selfincriminating? In other words, the question is this: What is your real reason for refusing to reveal the
name of that person to whom you gave the P440,000: that you do not remember his name or that your
answer would be self-incriminating?
xxx

xxx

xxx

Mr. ORENDAIN. Mr. President, we are begging for the rules of procedure that the accused should not
be required to testify unless he so desires.
The PRESIDENT. It is the duty of the respondent to answer the question. The question is very clear. It
does not incriminate him.
xxx

xxx

xxx

Mr. ARNAULT. I stand by every statement that I have made before the Senate Committee on the first,
second, and third hearings to which I was made in my letter to this Senate of May 2, 1950, in which I
gave all the reasons that were in my powers to give, as requested. I cannot change anything in those
statements that I made because they represent the best that I can do , to the best of my ability.
The PRESIDENT. You are not answering the question. The answer has nothing to do with the
question.
Sen. SUMULONG. I would like to remind you , Mr. Arnault, that the reason that you gave during the
investigation for not revealing the name of the person to whom you gave the P440,000 is not the same

Page 437 of 557

reason that you are now alleging because during the investigation you told us: "I do not remember his
name." But, now, you are now saying: "My answer might incriminate me." What is your real position?
Mr. ARNAULT. I have just stated that I stand by my statements that I made at the first, second, and
third hearings. I said that I wanted to be excused from answering the question. I beg to be excused
from making any answer that might be incriminating in nature. However, in this answer, if the detail
of not remembering the name of the person has not been included, it is an oversight.
Sen. SUMULONG. Mr. Arnault, will you kindly answer a simple question: Do you remember or not
the name of the person to whom you gave the P440,000?
Mr. ARNAULT. I do not remember .
Sen. SUMULONG. Now, if you do not remember the name of that person, how can you say that your
answer might be incriminating? If you do not remember his name, you cannot answer the question; so
how could your answer be self-incriminating? What do you say to that?
Mr. ARNAULT. This is too complicated for me to explain. Please, I do not see how to answer those
questions. That is why I asked for a lawyer, so he can help me. I have no means of knowing what the
situation is about. I have been in jail 13 days without communication with the outside. How could I
answer the question? I have no knowledge of legal procedure or rule, of which I am completely
ignorant.
xxx

xxx

xxx

Sen. SUMULONG. Mr. President, I ask that the question be answered.

The PRESIDENT. The witness is ordered to answer the question. It is very clear. It does not
incriminate the witness.
xxx

xxx

xxx

Mr. ARNAULT. I do not remember. I stand on my constitutional rights. I beg to be excused from
making further answer, please.
Sen. SUMULONG. In that mimeographed letter that you sent addressed to the President of the Senate,
dated May 2, 1950, you stated there that you cannot reveal the name of the person to whom you gave
the P440,000 because if he is a public official you might render yourself liable for prosecution for
bribery, and that if he is a private individual you might render yourself liable for prosecution for
slander. Why did you make those statements when you cannot even tell us whether that person to
whom you gave the P440,000 is a public official or a private individual ? We are giving you this
chance to convince the Senate that all these allegations of yours that your answers might incriminate
you are given by you honestly or you are just trying to make a pretext for not revealing the
information desired by the Senate.
The PRESIDENT. You are ordered to answer the question.
Mr. ARNAULT. I do not even understand the question. (The question is restated and explained.)

Page 438 of 557

Mr. ARNAULT. That letter of May 2, was prepared by a lawyer for me and signed it. That is all I can
say how I stand about this letter. I have no knowledge myself enough to write such a letter, so I had to
secure the help of a lawyer to help me in my period of distress.
In that same session of the Senate before which the petitioner was called to show cause why he should not be
adjudged guilty of contempt of the Senate, Senator Sumulong propounded to the petitioner questions tending
to elicit information from him as to the identity of the person to whom he delivered the P440,000; but the
petitioner refused to reveal it by saying that he did not remember. The President of the Senate then propounded
to him various questions concerning his past activities dating as far back as when witness was seven years of
age and ending as recently as the post liberation period, all of which questions the witness answered
satisfactorily. In view thereof, the President of the Senate also made an attempt to illicit the desired
information from the witness, as follows:
The PRESIDENT. Now I am convinced that you have a good memory. Answer: Did you deliver the
P440,000 as a gift, or of any consideration?
Mr. ARNAULT. I have said that I had instructions to deliver it to that person, that is all.
The PRESIDENT. Was it the first time you saw that person?
Mr. ARNAULT. I saw him various times, I have already said.
The PRESIDENT. In spite of that, you do not have the least remembrance of the name of that person?
Mr. ARNAULT. I cannot remember.
The PRESIDENT. How is it that you do not remember events that happened a short time ago and, on
the other hand, you remember events that occurred during your childhood?
Mr. ARNAULT. I cannot explain.
The Senate then deliberated and adopted the resolution of May 15 hereinabove quoted whereby the petitioner
was committed to the custody of the Sergeant-at-Arms and imprisoned until "he shall have purged the
contempt by revealing to the Senate or to the aforesaid Special Committee the name of the person to whom he
gave the P440,000, as well as answer other pertinent questions in connection therewith."
The Senate also adopted on the same date another resolution (No. 16) , to wit:
That the Special Committee created by Senate Resolution No. 8 be empowered and directed to
continue its investigation of the Tambobong and Buenavista Estates deal of October 21, 1949, more
particularly to continue the examination of Jean L. Arnault regarding the name of the person to whom
he gave the P440,000 and other matters related therewith.
The first session of the Second Congress was adjourned at midnight on May 18, 1950.
The case was argued twice before us. We have given its earnest and prolonged consideration because it is the
first of its kind to arise since the Constitution of the Republic of the Philippines was adopted. For the first time
this Court is called upon to define the power of either House of Congress to punish a person not a member for
contempt; and we are fully conscious that our pronouncements here will set an important precedent for the
future guidance of all concerned.

Page 439 of 557

Before discussing the specific issues raised by the parties, we deem it necessary to lay down the general
principles of law which form the background of those issues.
Patterned after the American system, our Constitution vests the powers of the Government in three
independent but coordinate Departments Legislative, Executive, and Judicial. The legislative power is
vested in the Congress, which consists of the Senate and the House of Representatives. (Section 1, Article VI.)
Each house may determine the rules of its proceedings, punish its Members for disorderly behavior, and, with
the concurrence of two-thirds of all its Members, expel a Member. (Section 10, Article VI.) The judicial power
is vested in the Supreme Court and in such inferior courts as may be established by law. (Section 1, Article
VIII.) Like the Constitution of the United States, ours does not contain an express provision empowering either
of the two Houses of Congress to punish nonmembers for contempt. It may also be noted that whereas in the
United States the legislative power is shared by and between the Congress of the United States, on the one
hand, and the respective legislatures of the different States, on the other the powers not delegated to the
United States by the Constitution nor prohibited by it to States being reserved to the States, respectively, or to
the people in the Philippines, the legislative power is vested in the Congress of the Philippines alone. It may
therefore be said that the Congress of the Philippines has a wider range of legislative field than the Congress of
the United States or any State Legislature. Our form of Government being patterned after the American system
the framers of our Constitution having drawn largely from American institutions and practices we can, in
this case, properly draw also from American precedents in interpreting analogous provisions of our
Constitution, as we have done in other cases in the past. Although there is no provision in the Constitution
expressly investing either House of Congress with power to make investigations and exact testimony to the end
that it may exercise its legislative functions as to be implied. In other words, the power of inquiry with
process to enforce it is an essential and appropriate auxiliary to the legislative function. A legislative body
cannot legislate wisely or effectively in the absence of information respecting the conditions which the
legislation is intended to effect or change; and where the legislative body does not itself possess the requisite
information which is not infrequently true recourse must be had to others who do possess it. Experience
has shown that mere requests for such information are often unavailing, and also that information which is
volunteered is not always accurate or complete; so some means of compulsion is essential to obtain what is
needed. (McGrain vs. Daugherty, 273 U.S., 135; 71 L. ed., 580; 50 A.L R., 1.) The fact that the Constitution
expressly gives to Congress the power to punish its Members for disorderly behavior, does not by necessary
implication exclude the power to punish for contempt any other person. (Anderson vs. Dunn, 6, Wheaton, 204;
5 L. ed., 242.) But no person can be punished for contumacy as a witness before either House, unless his
testimony is required in a matter into which that House has jurisdiction to inquire. (Kilbourn vs. Thompson, 26
L. ed., 377.).
Since, as we have noted, the Congress of the Philippines has a wider range of legislative field than either the
Congress of the United States or a State Legislature, we think it is correct to say that the field of inquiry into
which it may enter is also wider. It would be difficult to define any limits by which the subject matter of its
inquiry can be bounded. It is not necessary to do so in this case. Suffice it to say that it must be coextensive
with the range of the legislative power.
In the present case the jurisdiction of the Senate, thru the Special Committee created by it, to investigate the
Buenavista and Tambobong Estates deal is not challenged by the petitioner; and we entertain no doubt as to the
Senate's authority to do so and as to the validity of Resolution No. 8 hereinabove quoted. The transaction
involved a questionable and allegedly unnecessary and irregular expenditure of no less than P5,000,000 of
public funds, of which Congress is the constitutional guardian. It also involved government agencies created
by Congress to regulate or even abolish. As a result of the yet uncompleted investigation, the investigating
committee has recommended and the Senate approved three bills (1) prohibiting the Secretary of Justice or any
other department head from discharging functions and exercising powers other than those attached to his own
office, without ]previous congressional authorization; (2) prohibiting brothers and near relatives of any
President of the Philippines from intervening directly or indirectly and in whatever capacity in transactions in
which the Government is a party, more particularly where the decision lies in the hands of executive or
administrative officers who are appointees of the President; and (3) providing that purchases of the Rural
Page 440 of 557

Progress Administration of big landed estates at a price of P100,000 or more, shall not become effective
without previous congressional confirmation.2
We shall now consider and pass upon each of the questions raised by the petitioner in support of his contention
that his commitment is unlawful.
First He contends that the Senate has no power to punish him for contempt for refusing to reveal the name of
the person to whom he gave the P440,000, because such information is immaterial to, and will not serve, any
intended or purported legislation and his refusal to answer the question has not embarrassed, obstructed, or
impeded the legislative process. It is argued that since the investigating committee has already rendered its
report and has made all its recommendations as to what legislative measures should be taken pursuant to its
findings, there is no necessity to force the petitioner to give the information desired other than that mentioned
in its report, to wit: "In justice to Judge Quirino and to Secretary Nepomuceno, this atmosphere of suspicion
that now pervades the public mind must be dissipated, and it can only be done if appropriate steps are taken by
the Senate to compel Arnault to stop pretending that he cannot remember the name of the person to whom he
gave the P440,000 and answer the questions which will definitely establish the identity of that person . . ."
Senator Sumulong, Chairman of the Committee, who appeared and argued the case for the respondents, denied
that that was the only purpose of the Senate in seeking the information from the witness. He said that the
investigation had not been completed, because, due to the contumacy of the witness, his committee had not yet
determined the parties responsible for the anomalous transaction as required by Resolution No. 8; that, by
Resolution No. 16, his committee was empowered and directed to continue its investigation, more particularly
to continue its examination of the witness regarding the name of the person to whom he gave the P440,000 and
other matters related therewith; that the bills recommended by his committee had not been approved by the
House and might not be approved pending the completion of the investigation; and that those bills were not
necessarily all the measures that Congress might deem it necessary to pass after the investigation is finished.
Once an inquiry is admitted or established to be within the jurisdiction of a legislative body to make, we think
the investigating committee has the power to require a witness to answer any question pertinent to that inquiry,
subject of course to his constitutional right against self-incrimination. The inquiry, to be within the jurisdiction
of the legislative body to make, must be material or necessary to the exercise of a power in it vested by the
Constitution, such as to legislate, or to expel a Member; and every question which the investigator is
empowered to coerce a witness to answer must be material or pertinent to the subject of the inquiry or
investigation. So a witness may not be coerced to answer a question that obviously has no relation to the
subject of the inquiry. But from this it does not follow that every question that may be propounded to a witness
must be material to any proposed or possible legislation. In other words, the materiality of the question must be
determined by its direct relation to any proposed or possible legislation. The reason is, that the necessity or
lack of necessity for legislative action and the form and character of the action itself are determined by the sum
total of the information to be gathered as a result of the investigation, and not by a fraction of such information
elicited from a single question.
In this connection, it is suggested by counsel for the respondents that the power of the Court is limited to
determining whether the legislative body has jurisdiction to institute the inquiry or investigation; that once that
jurisdiction is conceded, this Court cannot control the exercise of that jurisdiction; and it is insinuated, that the
ruling of the Senate on the materiality of the question propounded to the witness is not subject to review by
this Court under the principle of the separation of powers. We have to qualify this proposition. As was said by
the Court of Appeals of New York: "We are bound to presume that the action of the legislative body was with
a legitimate object if it is capable of being so construed, and we have no right to assume that the contrary was
intended." (People ex rel. McDonald vs. Keeler, 99 N.Y., 463; 52 Am. Rep., 49; 2 N.E., 615, quoted with
approval by the Supreme Court of the United States in the said case of McGrain vs. Daugherty, it is necessary
deduction from the decision in Re Chapman, 41 L. ed., 1154, that where the questions are not pertinent to the
matter under inquiry a witness rightfully may refuse to answer. So we are of the opinion that where the alleged
immateriality of the information sought by the legislative body from a witness is relied upon to contest its
jurisdiction, the court is in duty bound to pass upon the contention. The fact that the legislative body has
Page 441 of 557

jurisdiction or the power to make the inquiry would not preclude judicial intervention to correct a clear abuse
of discretion in the exercise of that power.
Applying the criterion laid down in the last two preceding paragraphs to the resolution of the issue under
consideration, we find that the question for the refusal to answer which the petitioner was held in contempt by
the Senate is pertinent to the matter under inquiry. In fact, this is not and cannot be disputed. Senate Resolution
No. 8, the validity of which is not challenged by the petitioner, requires the Special Committee, among other
things, to determine the parties responsible for the Buenavista and Tambobong estates deal, and it is obvious
that the name of the person to whom the witness gave the P440,000 involved in said deal is pertinent to that
determination it is in fact the very thing sought to be determined. The contention is not that the question is
impertinent to the subject of the inquiry but that it has no relation or materiality to any proposed legislation.
We have already indicated that it is not necessary for the legislative body to show that every question
propounded to a witness is material to any proposed or possible legislation; what is required is that is that it be
pertinent to the matter under inquiry.
It is said that the Senate has already approved the three bills recommended by the Committee as a result of the
uncompleted investigation and that there is no need for it to know the name of the person to whom the witness
gave the P440,000. But aside from the fact that those bills have not yet been approved by the lower house and
by the President and that they may be withdrawn or modified if after the inquiry is completed they should be
found unnecessary or inadequate, there is nothing to prevent the Congress from approving other measures it
may deem necessary after completing the investigation. We are not called upon, nor is it within our province,
to determine or imagine what those measures may be. And our inability to do so is no reason for overruling the
question propounded by the Senate to the witness.
The case of Re Chapman , 166 U.S., 661; 41 L. ed., 1154, is in point here. The inquiry there in question was
conducted under a resolution of the Senate and related to charges, published in the press, that senators were
yielding to corrupt influences in considering a tariff bill then before the Senate and were speculating in stocks
the value of which would be affected by pending amendments to the bill. Chapman, a member of a firm of
stock brokers dealing in the stock of the American Sugar Refining Company, appeared before the committee in
response to a subpoena and asked, among others, the following questions:
Had the firm, during the month of March, 1894, bought or sold any stock or securities, known as sugar
stocks, for or in the interest, directly or indirectly, of any United Senate senator?
Was the said firm at that time carrying any sugar stock for the benefit of, or in the interest, directly or
indirectly, of any United Senate senator?
He refused to answer the questions and was prosecuted under an Act of Congress for contempt of the Senate.
Upon being convicted and sent to jail he petitioned the Supreme Court of the United States for a writ of habeas
corpus. One of the questions decided by the Supreme Court of the United States in that case was whether the
committee had the right to compel the witness to answer said questions, and the Court held that the committee
did have such right, saying:
The questions were undoubtedly pertinent to the subject-matter of the inquiry. The resolution directed
the committee to inquire whether any senator has been, or is, speculating in what are known as sugar
stocks during the consideration of the tariff bill now before the Senate." What the Senate might or
might not do upon the facts when ascertained, we cannot say, nor are we called upon to inquire
whether such ventures might be defensible, as contended in argument, but is plain that negative
answers would have cleared that body of what the Senate regarded as offensive imputations, while
affirmative answers might have led to further action on the part of the Senate within its constitutional
powers. (Emphasis supplied.)

Page 442 of 557

It may be contended that the determination of the parties responsible for the deal is incumbent upon the
judicial rather than upon the legislative branch. But we think there is no basis in fact or in law for such
assumption. The petitioner has not challenged the validity of Senate Resolution No. 8, and that resolution
expressly requires the committee to determine the parties responsible for the deal. We are bound to presume
that the Senate has acted in the due performance of its constitutional function in instituting the inquiry, if the
act is capable of being so construed. On the other hand, there is no suggestion that the judiciary has instituted
an inquiry to determine the parties responsible for the deal. Under the circumstances of the case, it appearing
that the questioned transaction was affected by the head of the Department of Justice himself, it is not
reasonable to expect that the Fiscal or the Court of First Instance of Manila will take the initiative to
investigate and prosecute the parties responsible for the deal until and unless the Senate shall determined those
parties are and shall taken such measures as may be within its competence to take the redress the wrong that
may have been committed against the people as a result of the transaction. As we have said, the transaction
involved no less than P5,000,000 of public funds. That certainly is a matter of a public concern which it is the
duty of the constitutional guardian of the treasury to investigate.
If the subject of investigation before the committee is within the range of legitimate legislative inquiry and the
proposed testimony of the witness called relates to that subject, obedience, to its process may be enforced by
the committee by imprisonment. (Sullivan vs. Hill, 73 W. Va., 49; 79 S.E., 670; 40 Ann. Cas. [1916 B.], 1115.)
The decision in the case of Kilbourn vs. Thompson, 26 L. ed., 377, relied upon by the petitioner, is not
applicable here. In that case the inquiry instituted by the House of Representatives of the United States related
to a private real-estate pool or partnership in the District of Columbia. Jay Cook and Company had had an
interest in the pool but become bankrupts, and their estate was in course of administration in a federal
bankruptcy court in Pennsylvania. The United States was one of their creditors. The trustee in the bankruptcy
proceeding had effected a settlement of the bankrupts' interest in the pool, and of course his action was subject
to examination and approval or disapproval by the bankruptcy court. Some of the creditors, including the
United States, were dissatisfied with the settlement. The resolution of the House directed the Committee "to
inquire into the nature and history of said real-estate pool and the character of said settlement, with the amount
of property involve, in which Jay Cooke and Co. were interested, and the amount paid or to be paid in said
settlement, with power to send for persons and papers, and report to this House." The Supreme Court of the
United States, speaking thru Mr. Justice Miller, pointed out that the resolution contained no suggestion of
contemplated legislation; that the matter was one in respect of which no valid legislation could be had; that the
bankrupts' estate and the trustee's settlement were still pending in the bankruptcy court; and that the United
States and other creditors were free to press their claims in that proceeding. And on these grounds the court
held that in undertaking the investigation "the House of Representatives not only exceeded the limit of its own
authority, but assumed a power which could only be properly exercised by another branch of the government,
because the power was in its nature clearly judicial." The principles announced and applied in that case are:
that neither House of Congress possesses a "general power of making inquiry into the private affairs of the
citizen"; that the power actually possessed is limited to inquires relating to matters of which the particular
House has jurisdiction, and in respect of which it rightfully may take other action; that if the inquiry relates to a
matter wherein relief or redress could be had only by judicial proceeding, it is not within the range of this
power , but must be left to the court, conformably to the constitutional separation of government powers.
That case differs from the present case in two important respects: (1) There the court found that the subject of
the inquiry, which related to a private real-estate pool or partnership, was not within the jurisdiction of either
House of Congress; while here if it is not disputed that the subject of the inquiry, which relates to a transaction
involving a questionable expenditure by the Government of P5,000,000 of public funds, is within the
jurisdiction of the Senate, (2) There the claim of the Government as a creditor of Jay Cooke and Company,
which had had an interest in the pool, was pending adjudication by the court; while here the interposition of the
judicial power on the subject of the inquiry cannot be expected, as we have pointed out above, until after the
Senate shall have determined who the parties responsible are and shall have taken such measures as may be
within its competence to take to redress the wrong that may have been committed against the people as a result
of the transaction.
Page 443 of 557

It is interesting to note that the decision in the case of Killbourn vs. Thompson has evoked strong criticisms
from legal scholars. (See Potts, Power of Legislative Bodies to Punish for Contempt [1926], 74 U. Pa. L. Rev.,
692-699; James L. Land is, Constitutional Limitations on the Congressional Power of Investigation [1926], 40
Harvard L. Rev., 153, 154, 214-220.) We quoted the following from Professor Land is' criticism: "Mr. Justice
Miller saw the case purely as an attempt by the House to secure to the Government certain priority rights as
creditor of the bankrupt concern. To him it assumed the character of a lawsuit between the Government and
Jay Cooke and Co., with the Government, acting through the House, attempting to override the orderliness of
established procedure and thereby prefer a creditors' bill not before the courts but before Congress. That
bankruptcy proceedings had already been instituted against Jay Cooke and Co., in a federal court gave added
impetus to such a conception. The House was seeking to oust a court of prior acquired jurisdiction by an
extraordinary and unwarranted assumption of "judicial power"! The broader aspect of the investigation had not
been disclosed to the Court. That Jay Cooke and Co.'s indebtedness and the particular funds in question were
only part of the great administrative problem connected with the use and disposition of public monies, that the
particular failure was of consequence mainly in relation to the security demanded for all government deposits,
that the facts connected with one such default revealed the possibility of other and greater maladministration,
such considerations had not been put before the Court. Nor had it been acquainted with the every-day nature of
the particular investigation and the powers there exerted by the House, powers whose exercise was customary
and familiar in legislative practice. Instead of assuming the character of an extraordinary judicial proceeding,
the inquiry, place in its proper background, should have been regarded as a normal and customary part of the
legislative process. Detailed definiteness of legislative purpose was thus made the demand of the court in
Killbourn vs. Thompson. But investigators cannot foretell the results that may be achieved. The power of
Congress to exercise control over a real-estate pool is not a matter for abstract speculation but one to be
determined only after an exhaustive examination of the problem. Relationship, and not their possibilities,
determine the extent of congressional power. Constitutionality depends upon such disclosures. Their presence,
whether determinative of legislative or judicial power, cannot be relegated to guesswork. Neither Congress nor
the Court can predict, prior to the event, the result of the investigation."
The other case relied upon by the petitioner is Marshall vs. Gordon, 243 U.S., 521; 61. ed., 881. The question
there was whether the House of Representatives exceeded its power in punishing, as for contempt of its
authority, the District Attorney of the Southern District of New York, who had written, published, and sent to
the chairman of one of its committees an ill-tempered and irritating letter respecting the action and purposes of
the committee in interfering with the investigation by the grand jury of alleged illegal activities of a member of
the House of Representatives. Power to make inquires and obtain evidence by compulsory process was not
involved. The court recognized distinctly that the House of Representatives had implied power to punish a
person not a member for contempt, but held that its action in this instance was without constitutional
justification. The decision was put on the ground that the letter, while offensive and vexatious, was not
calculated or likely to affect the House in any of its proceedings or in the exercise of any of its functions. This
brief statement of the facts and the issues decided in that case is sufficient to show the inapplicability thereof to
the present case. There the contempt involved consisted in the district attorney's writing to the chairman of the
committee an offensive and vexatious letter, while here the contempt involved consists in the refusal of the
witness to answer questions pertinent to the subject of an inquiry which the Senate has the power and
jurisdiction to make . But in that case, it was recognized that the House of Representatives has implied power
to punish a person not a member of contempt. In that respect the case is applicable here in favor of the Senate's
(and not of the Petitioner's ) contention.
Second. It is next contended for the petitioner that the Senate lacks authority to commit him for contempt for a
term beyond its period of legislative session, which ended on May 18, 1950. This contention is based on the
opinion of Mr. Justice Malcolm, concurred in by Justices Street and Villa-Real, in the case of Lopez vs. De los
Reyes (1930), 55 Phil., 170. In that case it appears that on October 23, 1929, Candido Lopez assaulted a
member of the House of Representatives while the latter was going to the hall of the House of Representatives
to attend the session which was then about to begin, as a result of which assault said representative was unable
to attend the sessions on that day and those of the two days next following by reason of the threats which
Candido Lopez made against him. By the resolution of the House adopted November 6, 1929, Lopez was
Page 444 of 557

declared guilty of contempt of the House of Representatives and ordered punished by confinement in Bilibid
Prison for a period of twenty-four hours. That resolution was not complied with because the session of the
House of Representatives adjourned at midnight on November 8, 1929, and was reiterated at the next session
on September 16, 1930. Lopez was subsequently arrested, whereupon he applied for the writ of habeas corpus
in the Court of First Instance of Manila, which denied the application. Upon appeal to the Supreme Court, six
justices voted to grant the writ: Justice Malcolm, Street, and Villa-real, on the ground that the term of
imprisonment meted out to the petitioner could not legally be extended beyond the session of the body in
which the contempt occurred; and Justices Johns, Villamor, and Ostrand, on the ground that the Philippine
Legislature had no power to punish for contempt because it was a creature merely of an Act of the Congress of
the United States and not of a Constitution adopted by the people. Chief Justice Avancea, Justice Johnson,
and Justice Romualdez wrote separate opinions, concurring with Justice Malcolm, Street, and Villa-Real, that
the Legislature had inherent power to punish for contempt but dissenting from the opinion that the order of
commitment could only be executed during the particular session in which the act of contempt was committed.
Thus, on the question under consideration, the Court was equally divided and no decisive pronouncement was
made. The opinion of Mr. Justice Malcolm is based mainly on the following passage in the case of Anderson
vs. Dunn, supra:
And although the legislative power continues perpetual, the legislative body ceases to exist on the
moment of its adjournment or periodical dissolution. It follows that imprisonment must terminate with
that adjournment.
as well as on the following quotation from Marshall vs. Gordon, supra:
And the essential nature of the power also makes clear the cogency and application of the two
limitations which were expressly pointed out in Anderson vs. Dunn, supra, that is, that the power even
when applied to subjects which justified its exercise is limited to imprisonment and such
imprisonment may not be extended beyond the session of the body in which the contempt occurred.
Interpreting the above quotations, Chief Justice Avancea held:
From this doctrine it follows, in my judgement, that the imposition of the penalty is limited to the
existence of the legislative body, which ceases to function upon its final periodical dissolution. The
doctrine refers to its existence and not to any particular session thereof. This must be so, inasmuch as
the basis of the power to impose such penalty is the right which the Legislature has to selfpreservation, and which right is enforceable during the existence of the legislative body. Many causes
might be conceived to constitute contempt to the Legislature, which would continue to be a menace to
its preservation during the existence of the legislative body against which contempt was committed.
If the basis of the power of the legislature to punish for contempt exists while the legislative body
exercising it is in session, then that power and the exercise thereof must perforce continue until the
final adjournment and the election of its successor.
Mr. Justice Johnson's more elaborate opinion, supported by quotations from Cooley's Constitutional
Limitations and from Jefferson's Manual, is to the same effect. Mr. Justice Romualdez said: "In my opinion,
where as in the case before us, the members composing the legislative body against which the contempt was
committed have not yet completed their three-year term, the House may take action against the petitioner
herein."
We note that the quotations from Anderson vs. Dunn and Marshall vs. Gordon relied upon by Justice Malcolm
are obiter dicta. Anderson vs. Dunn was an action of trespass against the Sergeant-at-Arms of the House of
Representatives of the United States for assault and battery and false imprisonment. The plaintiff had been
Page 445 of 557

arrested for contempt of the House, brought before the bar of the House, and reprimanded by the Speaker, and
then discharged from custody. The question as to the duration of the penalty was not involved in that case. The
question there was "whether the House of Representatives can take cognizance of contempt committed against
themselves, under any circumstances." The court there held that the House of Representatives had the power to
punish for contempt, and affirmed the judgment of the lower court in favor of the defendant. In Marshall vs.
Gordon, the question presented was whether the House had the power under the Constitution to deal with the
conduct of the district attorney in writing a vexatious letter as a contempt of its authority, and to inflict
punishment upon the writer for such contempt as a matter of legislative power. The court held that the House
had no such power because the writing of the letter did not obstruct the performance of legislative duty and did
not endanger the preservation of the power of the House to carry out its legislative authority. Upon that ground
alone, and not because the House had adjourned, the court ordered the discharge of the petitioner from
custody.
The case where the question was squarely decided is McGrain vs. Daugherty, supra. There it appears that the
Senate had adopted a resolution authorizing and directing a select committee of five senators to investigate
various charges of misfeasance and nonfeasance in the Department of Justice after Attorney General Harry M.
Daugherty became its supervising head. In the course of the investigation the committee caused to be served
on Mally S. Daugherty, brother of Harry M. Daugherty and president of the Midland National Bank of
Washington Court House, Ohio, a subpoena commanding him to appear before it for the purpose of giving
testimony relating to the subject under consideration. The witness failed to appear without offering any excuse
for his failure. The committee reported the matter to the Senate and the latter adopted a resolution, "That the
President of the Senate pro tempore issue his warrant commanding the Sergeant-at-Arms or his deputy to take
into custody the body of the said M.S. Daugherty wherever found, and to bring the said M.S. Daugherty before
the bar of the Senate, then and there to answer such questions pertinent to the matter under inquiry as the
Senate may order the President of the Senate pro tempore to propound; and to keep the said M.S. Daugherty in
custody to await the further order of the Senate." Upon being arrested, the witness petitioned the federal court
in Cincinnati for a writ of habeas corpus. The federal court granted the writ and discharged the witness on the
ground that the Senate, in directing the investigation and in ordering the arrest, exceeded its power under the
Constitution. Upon appeal to the Supreme Court of the United States, one of the contentions of the witness was
that the case ha become moot because the investigation was ordered and the committee was appointed during
the Sixty-eighth Congress, which expired on March 4, 1926. In overruling the contention, the court said:
. . . The resolution ordering the investigation in terms limited the committee's authority to the period
of the Sixty-eighth Congress; but this apparently was changed by a later and amendatory resolution
authorizing the committee to sit at such times and places as it might deem advisable or necessary. It is
said in Jefferson's Manual: "Neither House can continue any portion of itself in any parliamentary
function beyond the end of the session without the consent of the other two branches. When done, it is
by a bill constituting them commissioners for the particular purpose." But the context shows that the
reference is to the two houses of Parliament when adjourned by prorogation or dissolution by the
King. The rule may be the same with the House of Representatives whose members are all elected for
the period of a single Congress: but it cannot well be the same with the Senate, which is a continuing
body whose members are elected for a term of six years and so divided into classes that the seats of
one third only become vacant at the end of each Congress, two thirds always continuing into the next
Congress, save as vacancies may occur through death or resignation.
Mr. Hinds in his collection of precedents, says: "The Senate, as a continuing body, may continue its
committees through the recess following the expiration of a Congress;" and, after quoting the above
statement from Jefferson's Manual, he says: "The Senate, however being a continuing body, gives
authority to its committees during the recess after the expiration of a Congress." So far as we are
advised the select committee having this investigation in charge has neither made a final report nor
been discharged; nor has been continued by an affirmative order. Apparently its activities have been
suspended pending the decision of this case. But, be this as it may, it is certain that the committee may
be continued or revived now by motion to that effect, and if, continued or revived, will have all its
Page 446 of 557

original powers. This being so, and the Senate being a continuing body, the case cannot be said to
have become moot in the ordinary sense. The situation is measurably like that in Southern P. Terminal
Co. vs. Interstate Commerce Commission, 219 U. S., 498, 514-516; 55 L. ed., 310, 315, 316; 31 Sup.
Ct. Rep., 279, where it was held that a suit to enjoin the enforcement of an order of the Interstate
Commerce Commission did not become moot through the expiration of the order where it was capable
of repetition by the Commission and was a matter of public interest. Our judgment may yet be carried
into effect and the investigation proceeded with from the point at which it apparently was interrupted
by reason of the habeas corpus proceedings. In these circumstances we think a judgment should be
rendered as was done in the case cited.
What has been said requires that the final order in the District Court discharging the witness from
custody be reversed.
Like the Senate of the United States , the Senate of the Philippines is a continuing body whose members are
elected for a term of six years and so divided that the seats of only one-third become vacant every two years,
two-thirds always continuing into the next Congress save as vacancies may occur thru death or resignation.
Members of the House of Representatives are all elected for a term of four years; so that the term of every
Congress is four years. The Second Congress of the Philippines was constituted on December 30, 1949, and
will expire on December 30, 1953. The resolution of the Senate committing the Petitioner was adopted during
the first session of the Second Congress, which began on the fourth Monday of January and ended in May 18,
1950.
Had said resolution of commitment been adopted by the House of Representatives, we think it could be
enforced until the final adjournment of the last session of the Second Congress in 1953. We find no sound
reason to limit the power of the legislative body to punish for contempt to the end of every session and not to
the end of the last session terminating the existence of that body. The very reason for the exercise of the power
to punish for contempt is to enable the legislative body to perform its constitutional function without
impediment or obstruction. Legislative functions may be and in practice are performed during recess by duly
constituted committees charged with the duty of performing investigations or conducting hearing relative to
any proposed legislation. To deny to such committees the power of inquiry with process to enforce it would be
to defeat the very purpose for which that the power is recognized in the legislative body as an essential and
appropriate auxiliary to is legislative function. It is but logical to say that the power of self-preservation is
coexistent with the life to be preserved.
But the resolution of commitment here in question was adopted by the Senate, which is a continuing body and
which does not cease exist upon the periodical dissolution of the Congress or of the House of Representatives.
There is no limit as to time to the Senate's power to punish for contempt in cases where that power may
constitutionally be exerted as in the present case.
Mere reflection upon the situation at hand convinces us of the soundness of this proposition. The Senate has
ordered an investigation of the Buenavista and Tambobong estates deal, which we have found it is within its
competence to make. That investigation has not been completed because of the refusal of the petitioner as a
witness to answer certain questions pertinent to the subject of the inquiry. The Senate has empowered the
committee to continue the investigation during the recess. By refusing to answer the questions, the witness has
obstructed the performance by the Senate of its legislative function, and the Senate has the power to remove
the obstruction by compelling the witness to answer the questions thru restraint of his liberty until he shall
have answered them. That power subsists as long as the Senate, which is a continuing body, persists in
performing the particular legislative function involved. To hold that it may punish the witness for contempt
only during the session in which investigation was begun, would be to recognize the right of the Senate to
perform its function but at the same time to deny to it an essential and appropriate means for its performance.
Aside from this, if we should hold that the power to punish for contempt terminates upon the adjournment of
the session, the Senate would have to resume the investigation at the next and succeeding sessions and repeat
Page 447 of 557

the contempt proceedings against the witness until the investigation is completed-an absurd, unnecessary, and
vexatious procedure, which should be avoided.
As against the foregoing conclusion it is argued for the petitioner that the power may be abusively and
oppressively exerted by the Senate which might keep the witness in prison for life. But we must assume that
the Senate will not be disposed to exert the power beyond its proper bounds. And if, contrary to this
assumption, proper limitations are disregarded, the portals of this Court are always open to those whose rights
might thus be transgressed.
Third. Lastly, the petitioner invokes the privilege against self-incrimination. He contends that he would
incriminate himself if he should reveal the name of the person to whom he gave the P440,000 if that person be
a public official be (witness) might be accused of bribery, and if that person be a private individual the latter
might accuse him of oral defamation.
The ground upon which the witness' claim is based is too shaky, in firm, and slippery to afford him safety. At
first he told the Committee that the transactions were legal, that no laws were violated, and that all requisites
had been replied with; but at the time he begged to be excused from making answers "which might later be
used against me." A little later he explained that although the transactions were legal he refused to answer
questions concerning them "because it violates the right of a citizen to privacy in his dealings with other people
. . . I simply stand on my privilege to dispose of the money that has been paid to me as a result of a legal
transaction without having to account for the use of it." But after being apparently convinced by the Committee
that his position was untenable, the witness testified that, without securing any receipt, he turned over the
P440,000 to a certain person, a representative of Burt, in compliance with Burt's verbal instruction made in
1946; that as far as he know, that certain person had nothing to do with the negotiations for the settlement of
the Buenavista and Tambobong cases; that he had seen that person several times before he gave him the
P440,000 on October 29, 1949, and that since then he had seen him again two or three times, the last time
being in December, 1949, in Manila; that the person was a male, 39 to 40 years of age, between 5 feet, 2 inches
and 5 feet, 6 inches in height. Butt the witness would not reveal the name of that person on these pretexts: " I
don't remember the name; he was a representative of Burt." "I am not sure; I don't remember the name."
We are satisfied that those answers of the witness to the important question, what is the name of that person to
whom you gave the P440,000? were obviously false. His insistent claim before the bar of the Senate that if he
should reveal the name he would incriminate himself, necessarily implied that he knew the name. Moreover, it
is unbelievable that he gave the P440,000 to a person to him unknown.
"Testimony which is obviously false or evasive is equivalent to a refusal to testify and is punishable as
contempt, assuming that a refusal to testify would be so punishable." (12 Am. Jur., sec. 15, Contempt, pp. 399400.) In the case of Mason vs. U.S., 61 L. ed., 1198, it appears that Mason was called to testify before a grand
jury engaged in investigating a charge of gambling against six other men. After stating that he was sitting at a
table with said men when they were arrested, he refused to answer two questions, claiming so to do might tend
to incriminate him: (1) "Was there a game of cards being played on this particular evening at the table at which
you are sitting?" (2) "Was there a game of cards being played at another table at this time?" The foreman of the
grand jury reported the matter to the judge, who ruled "that each and all of said questions are proper and that
the answers thereto would not tend to incriminate the witness." Mason was again called and refused to answer
the first question propounded to him, but, half yielding to frustration, he said in response to the second
question: "I don't know." In affirming the conviction for contempt, the Supreme Court of the United States
among other things said:
In the present case, the witness certainly were not relieved from answering merely because they
declared that so to do might incriminate them. The wisdom of the rule in this regard is well illustrated
by the enforced answer, "I don't know ," given by Mason to the second question, after he had refused
to reply under a claim of constitutional privilege.
Page 448 of 557

Since according to the witness himself the transaction was legal, and that he gave the P440,000 to a
representative of Burt in compliance with the latter's verbal instruction, we find no basis upon which to sustain
his claim that to reveal the name of that person might incriminate him. There is no conflict of authorities on the
applicable rule, to wit:
Generally, the question whether testimony is privileged is for the determination of the Court. At least,
it is not enough for the witness to say that the answer will incriminate him. as he is not the sole judge
of his liability. The danger of self-incrimination must appear reasonable and real to the court, from all
the circumstances, and from the whole case, as well as from his general conception of the relations of
the witness. Upon the facts thus developed, it is the province of the court to determine whether a direct
answer to a question may criminate or not. . . . The fact that the testimony of a witness may tend to
show that he has violated the law is not sufficient to entitle him to claim the protection of the
constitutional provision against self-incrimination, unless he is at the same time liable to prosecution
and punishment for such violation. The witness cannot assert his privilege by reason of some fanciful
excuse, for protection against an imaginary danger, or to secure immunity to a third person. ( 3
Wharton's Criminal Evidence, 11th ed., secs. 1135,1136.)
It is the province of the trial judge to determine from all the facts and circumstances of the case
whether the witness is justified in refusing to answer. (People vs. Gonzo, 23 N.E. [2d], 210 [Ill. App.,
1939].) A witness is not relieved from answering merely on his own declaration that an answer might
incriminate him, but rather it is for the trial judge to decide that question. (Mason vs. U.S., 244 U. S.,
362; 61 L. ed., 1193, 1200.)
As against witness's inconsistent and unjustified claim to a constitutional right, is his clear duty as a citizen to
give frank, sincere, and truthful testimony before a competent authority. The state has the right to exact
fulfillment of a citizen's obligation, consistent of course with his right under the Constitution. The witness in
this case has been vociferous and militant in claiming constitutional rights and privileges but patently recreant
to his duties and obligations to the Government which protects those rights under the law. When a specific
right and a specific obligation conflict with each other, and one is doubtful or uncertain while the other is clear
and imperative, the former must give way to the latter. The right to life is one of the most sacred that the
citizen may claim, and yet the state may deprive him of it if he violates his corresponding obligation to respect
the life of others. As Mr. Justice Johnson said in Anderson vs. Dunn: "The wretch beneath the gallows may
repine at the fate which awaits him, and yet it is not certain that the laws under which he suffers were made for
the security." Paraphrasing and applying that pronouncement here, the petitioner may not relish the restraint of
his liberty pending the fulfillment by him of his duty, but it is no less certain that the laws under which his
liberty is restrained were made for his welfare.
From all the foregoing, it follows that the petition must be denied, and it is so ordered, with costs.
Paras, Pablo, Bengzon, Montemayor, and Reyes, JJ., concur.

Separate Opinions
TUASON, J., dissenting:
The estates deal which gave the petitioner's examination by a committee of the Senate was one that aroused
popular indignation as few cases of graft and corruption have. The investigation was greeted with spontaneous
outburst of applause by an outraged citizenry, and the Senate was rightly commended for making the lead in
getting at the bottom of an infamous transaction.

Page 449 of 557

All the more necessary it is that we should approach the consideration of this case with circumspection, lest the
influence of strong public passions should get the batter of our judgment. It is trite to say that public sentiment
fades into insignificance before a proper observance of constitutional processes, the maintenance of the
constitutional structure, and the protection of individual rights. Only thus can a government of laws, the
foundation stone of human liberty, be strengthened and made secure for that very public.
It is with these thoughts in mind that, with sincere regret, I am constrained to dissent.
The power of the legislative bodies under the American system of government to punish for contempt was at
the beginning totally denied by some courts and students of constitutional law, on the ground that this power is
judicial in nature and belongs to the judiciary branch of the government under the constitutional scheme. The
point however is now settled in favor of the existence of the power. This rule is based on the necessity for the
attainment of the ends for which legislative body is created. Nor can the legitimacy of the purpose of the
investigation which the Senate ordered in this case be disputed. As a corollary, it was likewise legitimate and
necessary for the committee to summon the petitioner with a command to produce his books and documents,
and to commit him to prison for his refusal or failure to obey the subpoena. And, finally, there is no question
that the arresting officers were fully justified in using necessary bodily force to bring him before the bar of the
Senate when he feigned illness and stalled for time in the mistaken belief that after the closing of the then
current session of Congress he could go scot-free.
At the same time, there is also universal agreement that the power is not absolute. The disagreement lies in the
extent of the power, and such disagreement is to be found even between decisions of the same court. Anderson
vs. Dunn, 6 Wheat., No. 204, may be said to have taken the most liberal view of the legislature's authority and
Kilbourn vs. Thompson, 103 U.S. 168, which partly overruled and qualified the former, the strictest. By the
most liberal standard the power is restricted "by considerations as to the nature of the inquiry, occasion, or
action in connection with which the contemptuous conduct has occurred." Punishment must be resorted to for
the efficient exercise of the legislative function. Even Anderson vs. Dunn speaks of the power as "the least
possible power adequate to the end proposed."
Judged by any test, the question propounded to the witness does not, in my opinion, meet the constitutional
requirement. It is obvious, I think, that the query has nothing to do with any matter within the cognizance of
the Congress. There is, on the contrary, positive suggestion that the question has no relation to the
contemplated legislation. The statement of the committee in its report that the information sought to be
obtained would clear the names of the persons suspected of having received the money, is, on the surface, the
most or only plausible reason that can be advanced. Assuming this to be the motive behind the question, yet
little reflection will show that the same is beyond the scope of legislative authority and prerogatives. It is
outside the concern of the Congress to protect the honor of particular citizens except that of its own members'
as a means of preserving respect and confidence in that body. Moreover, the purported good intention must
assume, if it is to materialize, that the persons under suspicion are really innocent; for if they are not and the
witness will tell the truth, the result will be to augment their disgrace rather than vindicate their honor. This is
all the more likely to happen because one of those persons, is judged from the committee's findings, the most
likely one, to say the least, who got the money.
If the process of deduction is pressed further, the reasonable conclusion seems to be that the object of the
question is, to mention only one, to prepare the way for a court action. The majority, decision indirectly admits
or insinuates this to be the case. It says, "It appearing that the questioned transaction was affected by the head
of the Department of Justice himself, it is not reasonable to expect the fiscal or the Court of First Instance of
Manila will take the initiative to investigate and prosecute the parties responsible for the deal until and unless
the Senate shall have determined who those parties are and shall have taken such measures as may be within its
competence to take, to redress the wrong that may have been committed against the people as a result of the
transaction." So here is an admission, implied if not express, that the Senate wants the witness to give names
because the fiscal or the courts will not initiate an action against parties who should be prosecuted. It is
Page 450 of 557

needless to say that the institution of a criminal or civil suit is a matter that devolves upon other departments of
the government, alien to the duties of the Congress to look after.
The Congress is at full liberty, of course, to make any investigation for the purpose of aiding the fiscal or the
courts, but this liberty does not carry with it the authority to imprison persons who refuse to testify.
In the intricacy and complexity of an investigation it is often impossible to foretell before its close what
relation certain facts may bear on the final results, and experience has shown that investigators and courts
would do well to veer on the liberal side in the resolution of doubtful questions. But the Senate is not now in
the midst of an inquiry with the situation still in a fluid or tentative state. Now the facts are no longer confused.
The committee has finished its investigation and submitted its final report and the Senate has approved a bill
on the bases of the facts found. All the pertinent facts having been gathered, as is to be inferred from that the
report and the nature of the Senate's action, every question, every fact, every bit of testimony has taken a
distinct meaning susceptible of concrete and definite evaluation; the task has been reduced to the simple
process of sifting the grain from the chaffs.
In the light of the committee's report and of the bill introduced and approved in the Senate, it seems quite plain
that the express naming of the recipient or recipients of the money is entirely unessential to anything the
Senate has a right or duty to do in premises. Names may be necessary for the purpose of criminal prosecution,
impeachment or civil suit. In such proceedings, identities are essential. In some legislative investigations it is
important to know the names of public officials involved. But the particular disclosure sought of the petitioner
here is immaterial to the proposed law. It is enough for the Senate, for its own legitimate object, to learn how
the Department of Justice had in the purchase, and to have a moral conviction as to the identity of the person
who benefited thereby. The need for such legislation and translated into the bill approved by the Senate is met
by an insight into a broad outline of the deal. To paraphrase the U.S. Supreme Court in Anderson vs. Dunn,
although the passage was used in another connection, legislation is a science of experiment and the relation
between the legislator and the end does not have to be so direct as to strike the eye of the former.
One of the proposed laws have prohibits brothers and near relatives of any president of the Philippines from
intervening directly or indirectly in transactions in which the Government is a party. It is stated that this is
subject to change depending on the answer Arnault may give. This statement is wide open to challenge.
If Arnault should Antonio Quirino it must be admitted that the bill would not be altered. But let us suppose that
the witness will point to another man. Will the result be any different? Will the Senate recall the bill? I can not
perceive the slightest possibility of such eventuality. The pending bill was framed on the assumption that
Antonio Quirino was a party to the deal in question. As has been said, the committee entertains a moral
conviction that this brother of the President was the recipient of a share of the proceeds of sale. No amount of
assurance by Arnault to the contrary would be believed for truth. And, I repeat, the proposed legislation does
not need for its justification legal evidence of Antonio Quirino's intervention in the transaction.
All this in the first place. In the second place, it is not to be assumed that the present bill is aimed solely
against Antonio Quirino whose relation to the Administration is but temporary. It is more reasonable to
presume that the proposed enactment is intended for all time and for all brothers of future presidents, for in
reality it is no more than an extension or enlargement of laws already found in the statute book which guard
against temptations to exploit official positions or influence to the prejudice of public interests.
The disputed question is, in fact, not only irrelevant but moot. This is decisive of the irrelevancy of this
question. As has been noticed, the committee has submitted its final report and recommendation, and a bill has
been approved by the Senate calculated to prevent recurrence of the anomalies exposed. For the purpose for
which it was instituted the inquiry is over and the committee's mission accomplished.

Page 451 of 557

It is true that the committee continues to sit during the recess of Congress, but it is obvious from all the
circumstances that the sole and real object of the extension of the committee's sittings is to receive the witness'
answer in the event he capitulates. I am unable to see any new phase of the deal which the Senate could
legitimately wish to know, and the respondents and this Court have not pointed out any. That the committee
has not sat and nothing has been done so far except to wait for Arnault's answer is a convincing manifestation
of the above conclusion.
The order "to continue its investigation" contained in Senate Resolution No. 16 cannot disguise the realities
revealed by the Senate's actions already referred to and by the emphasis given to the instruction "to continue its
(committee's) examination of Jean L. Arnault regarding the name of the person to whom he gave the
P440,000." The instruction 'to continue the investigation' is not entitled to the blind presumption that it
embraces matters other than the revelation by the witness of the name of the person who got the money.
Jurisdiction to deprive a citizen of liberty outside the usual process is not acquired by innuendoes or vague
assertions of the facts on which jurisdiction is made to depend. If the judgment of the court of law of limited
jurisdiction does not enjoy the presumption of legality, much less can the presumption of regularity be invoked
for a resolution of a deliberative body whose power to inflict punishment upon private citizens is wholly
derived by implication and vehemently contested by some judges. At any rate, "the stronger presumption of
innocence attends accused at the trial", "and it is incumbent" upon the respondents "to show that the question
pertains to some matter under investigation." (Sinclair vs. U. S., 73 L. ed., 693.) This rule stems from the fact
that the power is in derogation of the constitutional guarantee that no person shall be deprived of life, liberty,
or property without due process of law, which presupposes " a trial in which the rights of the parties shall be
decided by a tribunal appointed by law, which tribunal is to governed by rules of law previously established."
Powers so dangerous to the liberty of a citizen can not be allowed except where the pertinence is clear. A
Judge who abuses such power may be impeached and he acts at all times under the sense of this accountability
and responsibility. His victims may be reached by the pardoning power. But if the Congress be allowed this
unbounded jurisdiction of discretion, there is no redress, The Congress may dispoil of a citizen's life, liberty or
property and there is no power on earth to stop its hand. There is, there can be, no such unlimited power in any
department of the government of the Republic. (Loan Association vs. Topeka, 20 Wall, Nos. 662, 663; Taylor
vs. Porter, 4 Hill No. N.Y. 140.)
The above rule and discussion apply with equal force to the instruction to the committee in the original
resolution, "to determine the parties responsible for the deal." It goes without saying that the congress cannot
authorize a committee to do what it itself cannot do. In other words, the` Senate could not insist on the
disclosure of Arnault's accomplice in the present state of the investigation if the Senate were conducting the
inquiry itself instead of through a committee.
Our attention is called to the fact that "in the Philippines, the legislative power is vested in the Congress of the
Philippines alone, and therefore that the Congress of the Philippines has a wider range of legislative field than
the Congress of the United States or any state legislature." From this premise the inference is drawn that " the
field of inquiry into it (Philippine Congress) may enter is also wider."
This argument overlooks the important fact that congressional or legislative committees both here and in the
Unived States, do not embark upon fishing expeditions in search of information which by chance may be
useful to legislation. Inquiries entrusted to congressional committee, whether here or in the United States, are
necessarily for specific objects within the competence of the Congress to look into. I do not believe any reason,
rule or principle could be found which would sustain the theory that just because the United States Congress or
a state legislature could legislate on, say, only ten subjects and the Philippine Congress on twenty, the latter's
power to commit to prison for contempt is proportionately as great as that of the former. In the consideration of
the legality of an imprisonment for the contempt by each House, the power is gauged not be the greater or
lesser number of subject matters that fall within its sphere of action, but by the answer to the question, has it
jurisdiction over the matter under investigation? Bearing this distinction in mind, it is apparent that the power
of a legislature to punish for contempt can be no greater nor less than that of any other. Were it possible for the
Philippine Senate and the United States Senate to undertake an investigation of exactly identical anomalies in
Page 452 of 557

their respective departments of justice, could it be asserted with any support of logic that one Senate has a
wider authority to imprison for contempt in such investigation simply because it has a "wider range of
legislative field?"
It is said that the Senate bill has not been acted upon by the lower house and that even if it should pass in that
chamber it would still have the President's veto to hurdle. It has been expressly stated at the oral argument, and
there is insinuation in this Court's decision, that the revelation of the name or names of the person or persons
who received the money may help in convincing the House of Representatives or the President of the wisdom
of the pending measure. Entirely apart from the discussion that the House of Representatives and the Chief
Executive have their own idea of what they need to guide them in the discharge of their respective duties, and
they have the facilities of their own for obtaining the requisite data.
There is another objection, more fundamental, to the Senate invoking the interest or convenience of the other
House or the President as ground of jurisdiction. The House of Representatives and the President are
absolutely independent of the Senate, in the conduct of legislative and administrative inquiries, and the power
of each House to imprison for contempt does not go beyond the necessity for its own self-preservation or for
making its express powers effective. Each House exercises this power to protect or accomplish its own
authority and not that of the other House or the President. Each House and the President are supposed to take
care of their respective affairs. The two Houses and the Chief Executive act separately although the
concurrence of the three is required in the passage of legislation and of both Houses in the approval of
resolutions. As the U.S. Supreme Court in Kilbourn vs. Thompson, said, "No general power of inflicting
punishment by the Congress (as distinct from a House is found in the Constitution." "An act of Congress it
said which proposed to adjudge a man guilty of a crime and inflict the punishment, will be considered by all
thinking men to be unauthorized by the Constitution."
Kilbourn vs. Thompson, supra, it is said can not be relied on in this case as a precedent because, so it is also
said, "the subject of the inquiry, which related to a private real-estate pool or partnership, was not within the
jurisdiction of either House of Congress; while here it is not disputed that the subject of the inquiry, which
relates to a transaction involving a questionable expenditure by the Government of P5,000,000 of public funds,
is within the Jurisdiction of the Senate." Yet the remarks of Judge Land is which are quoted in the majority
decision point out that the inquiry "was a normal and customary part of the legislative process." Moreover,
Kilbourn vs. Thompson is important, not for the matter it treated but for the principles it enunciated.
It is also said that Kilbourn vs. Thompson did not meet with universal approval as Judge Land is' article above
mentioned shows. The jurist who delivered the opinion in that case, Mr. Justice Miller, was one of the "giants"
who have ever sat on the Supreme Federal Bench, venerated and eminent for the width and depth of his
learning. Subsequent decisions, as far as I have been able to ascertain, have not rejected or criticized but have
followed it, and it still stands as a landmark in this branch of constitutional law.
If we can lean on private opinions and magazine articles for comfort, the petitioner can cite one by a legal
scholar and author no less reknown and respected than Judge Land is. I refer to Judge Wigmore who, referring
to an investigation of the U.S. Department of Justice said in an article published in 19 (1925) Illinois Law
Review, 452:
The senatorial debauch of investigations poking into political garbage cans and dragging the
sewers of political intrigue filled the winter of 1923-24 with a stench which has not yet passed
away. Instead of employing the constitutional, manly, fair procedure of impeachment, the Senate flung
self-respect and fairness to the winds. As a prosecutor, the Senate presented a spectacle which cannot
even be dignified by a comparison with the persecutive scoldings of Coke and Scroggs and Jeffreys,
but fell rather in popular estimate to the level of professional searchers of the municipal dunghills.

Page 453 of 557

It is far from my thought to subscribe to this vituperation as applied to our Senate. Certainly, this august body
said not only do the right thing but is entitled to the lasting gratitude of the people for taking the courageous
stand it did in probing into an anomaly that robbed a depleted treasury of a huge amount. I have tried to make
it clear that my disagreement with the majority lies not in the propriety or constitutionality of the investigation
but in the pertinence to that investigation of a single question. The investigation, as had been said, was legal
and commendable. My objection is that the Senate having started within the bounds of its authority, has, in
entire good faith, overstepped those bounds and trespassed on a territory reserved to other branches of the
government, when it imprisoned a witness for contumacy on a point that is unimportant, useless, impertinent
and irrelevant, let alone moot.
Thus understood, this humble opinion does not conflict with the views of Judge Land is and all other advocates
of wide latitude for congressional investigations. All are agreed, and the majority accept the proposition, that
there is a limit to the legislative power to punish for contempt. The limit is set in Anderson vs. Dunn which
Judge Land is approved "the least possible power adequate to the end proposed."

Footnotes
1

The appeal was withdrawn on November 9, 1949.

These bills, however, have not yet been acted upon by the House of Representatives.

Page 454 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 169777*

April 20, 2006

SENATE OF THE PHILIPPINES, represented by FRANKLIN M. DRILON, in his capacity as Senate

President, JUAN M. FLAVIER, in his capacity as Senate President Pro Tempore, FRANCIS N.
PANGILINAN, in his capacity as Majority Leader, AQUILINO Q. PIMENTEL, JR., in his capacity as
Minority Leader, SENATORS RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO,
JINGGOY EJERCITO ESTRADA, LUISA "LOI" EJERCITO ESTRADA, JUAN PONCE ENRILE,
RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO S.LIM, M. A. MADRIGAL, SERGIO
OSMENA III, RALPH G. RECTO, and MAR ROXAS, Petitioners,
vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria
Macapagal-Arroyo, and anyone acting in his stead and in behalf of the President of the Philippines,
Respondents.
x-------------------------x
G.R. No. 169659

April 20, 2006

BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep. SATUR OCAMPO, Rep.
CRISPIN BELTRAN, Rep. RAFAEL MARIANO, Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep.
JOEL VIRADOR, COURAGE represented by FERDINAND GAITE, and COUNSELS FOR THE
DEFENSE OF LIBERTIES (CODAL) represented by ATTY. REMEDIOS BALBIN, Petitioners,
vs.
EDUARDO ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria
Macapagal-Arroyo, Respondent.
x-------------------------x
G.R. No. 169660

April 20, 2006

FRANCISCO I. CHAVEZ, Petitioner,

vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his
capacity as Secretary of Defense, and GENEROSO S. SENGA, in his capacity as AFP Chief of Staff,
Respondents.
x-------------------------x
G.R. No. 169667

April 20, 2006

ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner,

vs.
HON. EDUARDO R. ERMITA, in his capacity as Executive Secretary, Respondent.
x-------------------------x
Page 455 of 557

G.R. No. 169834

April 20, 2006

PDP- LABAN, Petitioner,

vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
x-------------------------x
G.R. No. 171246

April 20, 2006

JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA, JOSE AMOR

AMORANDO, ALICIA A. RISOS-VIDAL, FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B.
JOVY C. BERNABE, BERNARD L. DAGCUTA, ROGELIO V. GARCIA, and the INTEGRATED
BAR FOR THE PHILIPPINES, Petitioners,
vs.
HON. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
DECISION
CARPIO MORALES, J.:
A transparent government is one of the hallmarks of a truly republican state. Even in the early history of
republican thought, however, it has been recognized that the head of government may keep certain information
confidential in pursuit of the public interest. Explaining the reason for vesting executive power in only one
magistrate, a distinguished delegate to the U.S. Constitutional Convention said: "Decision, activity, secrecy,
and dispatch will generally characterize the proceedings of one man, in a much more eminent degree than the
proceedings of any greater number; and in proportion as the number is increased, these qualities will be
diminished."1
History has been witness, however, to the fact that the power to withhold information lends itself to abuse,
hence, the necessity to guard it zealously.
The present consolidated petitions for certiorari and prohibition proffer that the President has abused such
power by issuing Executive Order No. 464 (E.O. 464) last September 28, 2005. They thus pray for its
declaration as null and void for being unconstitutional.
In resolving the controversy, this Court shall proceed with the recognition that the issuance under review has
come from a co-equal branch of government, which thus entitles it to a strong presumption of constitutionality.
Once the challenged order is found to be indeed violative of the Constitution, it is duty-bound to declare it so.
For the Constitution, being the highest expression of the sovereign will of the Filipino people, must prevail
over any issuance of the government that contravenes its mandates.
In the exercise of its legislative power, the Senate of the Philippines, through its various Senate Committees,
conducts inquiries or investigations in aid of legislation which call for, inter alia, the attendance of officials and
employees of the executive department, bureaus, and offices including those employed in Government Owned
and Controlled Corporations, the Armed Forces of the Philippines (AFP), and the Philippine National Police
(PNP).
On September 21 to 23, 2005, the Committee of the Senate as a whole issued invitations to various officials of
the Executive Department for them to appear on September 29, 2005 as resource speakers in a public hearing
on the railway project of the North Luzon Railways Corporation with the China National Machinery and
Page 456 of 557

Equipment Group (hereinafter North Rail Project). The public hearing was sparked by a privilege speech of
Senator Juan Ponce Enrile urging the Senate to investigate the alleged overpricing and other unlawful
provisions of the contract covering the North Rail Project.
The Senate Committee on National Defense and Security likewise issued invitations2 dated September 22,
2005 to the following officials of the AFP: the Commanding General of the Philippine Army, Lt. Gen.
Hermogenes C. Esperon; Inspector General of the AFP Vice Admiral Mateo M. Mayuga; Deputy Chief of
Staff for Intelligence of the AFP Rear Admiral Tirso R. Danga; Chief of the Intelligence Service of the AFP
Brig. Gen. Marlu Q. Quevedo; Assistant Superintendent of the Philippine Military Academy (PMA) Brig. Gen.
Francisco V. Gudani; and Assistant Commandant, Corps of Cadets of the PMA, Col. Alexander F. Balutan, for
them to attend as resource persons in a public hearing scheduled on September 28, 2005 on the following: (1)
Privilege Speech of Senator Aquilino Q. Pimentel Jr., delivered on June 6, 2005 entitled "Bunye has Provided
Smoking Gun or has Opened a Can of Worms that Show Massive Electoral Fraud in the Presidential Election
of May 2005"; (2) Privilege Speech of Senator Jinggoy E. Estrada delivered on July 26, 2005 entitled "The
Philippines as the Wire-Tapping Capital of the World"; (3) Privilege Speech of Senator Rodolfo Biazon
delivered on August 1, 2005 entitled "Clear and Present Danger"; (4) Senate Resolution No. 285 filed by
Senator Maria Ana Consuelo Madrigal Resolution Directing the Committee on National Defense and
Security to Conduct an Inquiry, in Aid of Legislation, and in the National Interest, on the Role of the Military
in the So-called "Gloriagate Scandal"; and (5) Senate Resolution No. 295 filed by Senator Biazon Resolution
Directing the Committee on National Defense and Security to Conduct an Inquiry, in Aid of Legislation, on
the Wire-Tapping of the President of the Philippines.
Also invited to the above-said hearing scheduled on September 28 2005 was the AFP Chief of Staff, General
Generoso S. Senga who, by letter3 dated September 27, 2005, requested for its postponement "due to a
pressing operational situation that demands [his utmost personal attention" while "some of the invited AFP
officers are currently attending to other urgent operational matters."
On September 28, 2005, Senate President Franklin M. Drilon received from Executive Secretary Eduardo R.
Ermita a letter4 dated September 27, 2005 "respectfully request[ing] for the postponement of the hearing
[regarding the NorthRail project] to which various officials of the Executive Department have been invited" in
order to "afford said officials ample time and opportunity to study and prepare for the various issues so that
they may better enlighten the Senate Committee on its investigation."
Senate President Drilon, however, wrote5 Executive Secretary Ermita that the Senators "are unable to accede to
[his request]" as it "was sent belatedly" and "[a]ll preparations and arrangements as well as notices to all
resource persons were completed [the previous] week."
Senate President Drilon likewise received on September 28, 2005 a letter6 from the President of the North
Luzon Railways Corporation Jose L. Cortes, Jr. requesting that the hearing on the NorthRail project be
postponed or cancelled until a copy of the report of the UP Law Center on the contract agreements relative to
the project had been secured.
On September 28, 2005, the President issued E.O. 464, "Ensuring Observance of the Principle of Separation of
Powers, Adherence to the Rule on Executive Privilege and Respect for the Rights of Public Officials
Appearing in Legislative Inquiries in Aid of Legislation Under the Constitution, and For Other Purposes,"7
which, pursuant to Section 6 thereof, took effect immediately. The salient provisions of the Order are as
follows:
SECTION 1. Appearance by Heads of Departments Before Congress. In accordance with Article VI, Section
22 of the Constitution and to implement the Constitutional provisions on the separation of powers between coequal branches of the government, all heads of departments of the Executive Branch of the government shall
secure the consent of the President prior to appearing before either House of Congress.
Page 457 of 557

When the security of the State or the public interest so requires and the President so states in writing, the
appearance shall only be conducted in executive session.
SECTION. 2. Nature, Scope and Coverage of Executive Privilege.
(a) Nature and Scope. - The rule of confidentiality based on executive privilege is fundamental to the operation
of government and rooted in the separation of powers under the Constitution (Almonte vs. Vasquez, G.R. No.
95367, 23 May 1995). Further, Republic Act No. 6713 or the Code of Conduct and Ethical Standards for
Public Officials and Employees provides that Public Officials and Employees shall not use or divulge
confidential or classified information officially known to them by reason of their office and not made available
to the public to prejudice the public interest.
Executive privilege covers all confidential or classified information between the President and the public
officers covered by this executive order, including:
Conversations and correspondence between the President and the public official covered by this executive
order (Almonte vs. Vasquez G.R. No. 95367, 23 May 1995; Chavez v. Public Estates Authority, G.R. No.
133250, 9 July 2002);
Military, diplomatic and other national security matters which in the interest of national security should not be
divulged (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995; Chavez v. Presidential Commission on Good
Government, G.R. No. 130716, 9 December 1998).
Information between inter-government agencies prior to the conclusion of treaties and executive agreements
(Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998);
Discussion in close-door Cabinet meetings (Chavez v. Presidential Commission on Good Government, G.R.
No. 130716, 9 December 1998);
Matters affecting national security and public order (Chavez v. Public Estates Authority, G.R. No. 133250, 9
July 2002).
(b) Who are covered. The following are covered by this executive order:
Senior officials of executive departments who in the judgment of the department heads are covered by the
executive privilege;
Generals and flag officers of the Armed Forces of the Philippines and such other officers who in the judgment
of the Chief of Staff are covered by the executive privilege;
Philippine National Police (PNP) officers with rank of chief superintendent or higher and such other officers
who in the judgment of the Chief of the PNP are covered by the executive privilege;
Senior national security officials who in the judgment of the National Security Adviser are covered by the
executive privilege; and
Such other officers as may be determined by the President.
SECTION 3. Appearance of Other Public Officials Before Congress. All public officials enumerated in
Section 2 (b) hereof shall secure prior consent of the President prior to appearing before either House of
Congress to ensure the observance of the principle of separation of powers, adherence to the rule on executive
Page 458 of 557

privilege and respect for the rights of public officials appearing in inquiries in aid of legislation. (Emphasis and
underscoring supplied)
Also on September 28, 2005, Senate President Drilon received from Executive Secretary Ermita a copy of E.O.
464, and another letter8 informing him "that officials of the Executive Department invited to appear at the
meeting [regarding the NorthRail project] will not be able to attend the same without the consent of the
President, pursuant to [E.O. 464]" and that "said officials have not secured the required consent from the
President." On even date which was also the scheduled date of the hearing on the alleged wiretapping, Gen.
Senga sent a letter9 to Senator Biazon, Chairperson of the Committee on National Defense and Security,
informing him "that per instruction of [President Arroyo], thru the Secretary of National Defense, no officer of
the [AFP] is authorized to appear before any Senate or Congressional hearings without seeking a written
approval from the President" and "that no approval has been granted by the President to any AFP officer to
appear before the public hearing of the Senate Committee on National Defense and Security scheduled [on] 28
September 2005."
Despite the communications received from Executive Secretary Ermita and Gen. Senga, the investigation
scheduled by the Committee on National Defense and Security pushed through, with only Col. Balutan and
Brig. Gen. Gudani among all the AFP officials invited attending.
For defying President Arroyos order barring military personnel from testifying before legislative inquiries
without her approval, Brig. Gen. Gudani and Col. Balutan were relieved from their military posts and were
made to face court martial proceedings.
As to the NorthRail project hearing scheduled on September 29, 2005, Executive Secretary Ermita, citing E.O.
464, sent letter of regrets, in response to the invitations sent to the following government officials: Light
Railway Transit Authority Administrator Melquiades Robles, Metro Rail Transit Authority Administrator
Roberto Lastimoso, Department of Justice (DOJ) Chief State Counsel Ricardo V. Perez, then Presidential
Legal Counsel Merceditas Gutierrez, Department of Transportation and Communication (DOTC)
Undersecretary Guiling Mamonding, DOTC Secretary Leandro Mendoza, Philippine National Railways
General Manager Jose Serase II, Monetary Board Member Juanita Amatong, Bases Conversion Development
Authority Chairperson Gen. Narciso Abaya and Secretary Romulo L. Neri.10 NorthRail President Cortes sent
personal regrets likewise citing E.O. 464.11
On October 3, 2005, three petitions, docketed as G.R. Nos. 169659, 169660, and 169667, for certiorari and
prohibition, were filed before this Court challenging the constitutionality of E.O. 464.
In G.R. No. 169659, petitioners party-list Bayan Muna, House of Representatives Members Satur Ocampo,
Crispin Beltran, Rafael Mariano, Liza Maza, Joel Virador and Teodoro Casino, Courage, an organization of
government employees, and Counsels for the Defense of Liberties (CODAL), a group of lawyers dedicated to
the promotion of justice, democracy and peace, all claiming to have standing to file the suit because of the
transcendental importance of the issues they posed, pray, in their petition that E.O. 464 be declared null and
void for being unconstitutional; that respondent Executive Secretary Ermita, in his capacity as Executive
Secretary and alter-ego of President Arroyo, be prohibited from imposing, and threatening to impose sanctions
on officials who appear before Congress due to congressional summons. Additionally, petitioners claim that
E.O. 464 infringes on their rights and impedes them from fulfilling their respective obligations. Thus, Bayan
Muna alleges that E.O. 464 infringes on its right as a political party entitled to participate in governance; Satur
Ocampo, et al. allege that E.O. 464 infringes on their rights and duties as members of Congress to conduct
investigation in aid of legislation and conduct oversight functions in the implementation of laws; Courage
alleges that the tenure of its members in public office is predicated on, and threatened by, their submission to
the requirements of E.O. 464 should they be summoned by Congress; and CODAL alleges that its members
have a sworn duty to uphold the rule of law, and their rights to information and to transparent governance are
threatened by the imposition of E.O. 464.
Page 459 of 557

In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his constitutional rights as a citizen, taxpayer
and law practitioner, are affected by the enforcement of E.O. 464, prays in his petition that E.O. 464 be
declared null and void for being unconstitutional.
In G.R. No. 169667, petitioner Alternative Law Groups, Inc.12 (ALG), alleging that as a coalition of 17 legal
resource non-governmental organizations engaged in developmental lawyering and work with the poor and
marginalized sectors in different parts of the country, and as an organization of citizens of the Philippines and a
part of the general public, it has legal standing to institute the petition to enforce its constitutional right to
information on matters of public concern, a right which was denied to the public by E.O. 464,13 prays, that said
order be declared null and void for being unconstitutional and that respondent Executive Secretary Ermita be
ordered to cease from implementing it.
On October 11, 2005, Petitioner Senate of the Philippines, alleging that it has a vital interest in the resolution
of the issue of the validity of E.O. 464 for it stands to suffer imminent and material injury, as it has already
sustained the same with its continued enforcement since it directly interferes with and impedes the valid
exercise of the Senates powers and functions and conceals information of great public interest and concern,
filed its petition for certiorari and prohibition, docketed as G.R. No. 169777 and prays that E.O. 464 be
declared unconstitutional.
On October 14, 2005, PDP-Laban, a registered political party with members duly elected into the Philippine
Senate and House of Representatives, filed a similar petition for certiorari and prohibition, docketed as G.R.
No. 169834, alleging that it is affected by the challenged E.O. 464 because it hampers its legislative agenda to
be implemented through its members in Congress, particularly in the conduct of inquiries in aid of legislation
and transcendental issues need to be resolved to avert a constitutional crisis between the executive and
legislative branches of the government.
Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated his invitation to Gen. Senga for him
and other military officers to attend the hearing on the alleged wiretapping scheduled on February 10, 2005.
Gen. Senga replied, however, by letter15 dated February 8, 2006, that "[p]ursuant to Executive Order No. 464,
th[e] Headquarters requested for a clearance from the President to allow [them] to appear before the public
hearing" and that "they will attend once [their] request is approved by the President." As none of those invited
appeared, the hearing on February 10, 2006 was cancelled.16
In another investigation conducted jointly by the Senate Committee on Agriculture and Food and the Blue
Ribbon Committee on the alleged mismanagement and use of the fertilizer fund under the Ginintuang
Masaganang Ani program of the Department of Agriculture (DA), several Cabinet officials were invited to the
hearings scheduled on October 5 and 26, November 24 and December 12, 2005 but most of them failed to
attend, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Felix Jose Montes, Fertilizer and
Pesticide Authority Executive Director Norlito R. Gicana,17 and those from the Department of Budget and
Management18 having invoked E.O. 464.
In the budget hearings set by the Senate on February 8 and 13, 2006, Press Secretary and Presidential
Spokesperson Ignacio R. Bunye,19 DOJ Secretary Raul M. Gonzalez20 and Department of Interior and Local
Government Undersecretary Marius P. Corpus21 communicated their inability to attend due to lack of
appropriate clearance from the President pursuant to E.O. 464. During the February 13, 2005 budget hearing,
however, Secretary Bunye was allowed to attend by Executive Secretary Ermita.
On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members of the Board of Governors of the
Integrated Bar of the Philippines, as taxpayers, and the Integrated Bar of the Philippines as the official
organization of all Philippine lawyers, all invoking their constitutional right to be informed on matters of
public interest, filed their petition for certiorari and prohibition, docketed as G.R. No. 171246, and pray that
E.O. 464 be declared null and void.
Page 460 of 557

All the petitions pray for the issuance of a Temporary Restraining Order enjoining respondents from
implementing, enforcing, and observing E.O. 464.
In the oral arguments on the petitions conducted on February 21, 2006, the following substantive issues were
ventilated: (1) whether respondents committed grave abuse of discretion in implementing E.O. 464 prior to its
publication in the Official Gazette or in a newspaper of general circulation; and (2) whether E.O. 464 violates
the following provisions of the Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7, Art. IV. Sec. 1,
Art. VI, Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16. The procedural issue of whether there
is an actual case or controversy that calls for judicial review was not taken up; instead, the parties were
instructed to discuss it in their respective memoranda.
After the conclusion of the oral arguments, the parties were directed to submit their respective memoranda,
paying particular attention to the following propositions: (1) that E.O. 464 is, on its face, unconstitutional; and
(2) assuming that it is not, it is unconstitutional as applied in four instances, namely: (a) the so called Fertilizer
scam; (b) the NorthRail investigation (c) the Wiretapping activity of the ISAFP; and (d) the investigation on
the Venable contract.22
Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their memoranda on March 7, 2006, while those
in G.R. No. 16966725 and G.R. No. 16983426 filed theirs the next day or on March 8, 2006. Petitioners in G.R.
No. 171246 did not file any memorandum.
Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for extension to file memorandum27 was
granted, subsequently filed a manifestation28 dated March 14, 2006 that it would no longer file its
memorandum in the interest of having the issues resolved soonest, prompting this Court to issue a Resolution
reprimanding them.29
Petitioners submit that E.O. 464 violates the following constitutional provisions:
Art. VI, Sec. 2130
Art. VI, Sec. 2231
Art. VI, Sec. 132
Art. XI, Sec. 133
Art. III, Sec. 734
Art. III, Sec. 435
Art. XIII, Sec. 16 36
Art. II, Sec. 2837
Respondents Executive Secretary Ermita et al., on the other hand, pray in their consolidated memorandum38 on
March 13, 2006 for the dismissal of the petitions for lack of merit.
The Court synthesizes the issues to be resolved as follows:
1. Whether E.O. 464 contravenes the power of inquiry vested in Congress;

Page 461 of 557

2. Whether E.O. 464 violates the right of the people to information on matters of public concern; and
3. Whether respondents have committed grave abuse of discretion when they implemented E.O. 464
prior to its publication in a newspaper of general circulation.
Essential requisites for judicial review
Before proceeding to resolve the issue of the constitutionality of E.O. 464, ascertainment of whether the
requisites for a valid exercise of the Courts power of judicial review are present is in order.
Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to
wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person
challenging the act must have standing to challenge the validity of the subject act or issuance; otherwise stated,
he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct
injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest
opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.39
Except with respect to the requisites of standing and existence of an actual case or controversy where the
disagreement between the parties lies, discussion of the rest of the requisites shall be omitted.
Standing
Respondents, through the Solicitor General, assert that the allegations in G.R. Nos. 169659, 169660 and
169667 make it clear that they, adverting to the non-appearance of several officials of the executive department
in the investigations called by the different committees of the Senate, were brought to vindicate the
constitutional duty of the Senate or its different committees to conduct inquiry in aid of legislation or in the
exercise of its oversight functions. They maintain that Representatives Ocampo et al. have not shown any
specific prerogative, power, and privilege of the House of Representatives which had been effectively impaired
by E.O. 464, there being no mention of any investigation called by the House of Representatives or any of its
committees which was aborted due to the implementation of E.O. 464.
As for Bayan Munas alleged interest as a party-list representing the marginalized and underrepresented, and
that of the other petitioner groups and individuals who profess to have standing as advocates and defenders of
the Constitution, respondents contend that such interest falls short of that required to confer standing on them
as parties "injured-in-fact."40
Respecting petitioner Chavez, respondents contend that Chavez may not claim an interest as a taxpayer for the
implementation of E.O. 464 does not involve the exercise of taxing or spending power.41
With regard to the petition filed by the Senate, respondents argue that in the absence of a personal or direct
injury by reason of the issuance of E.O. 464, the Senate and its individual members are not the proper parties
to assail the constitutionality of E.O. 464.
Invoking this Courts ruling in National Economic Protectionism Association v. Ongpin42 and Valmonte v.
Philippine Charity Sweepstakes Office,43 respondents assert that to be considered a proper party, one must
have a personal and substantial interest in the case, such that he has sustained or will sustain direct injury due
to the enforcement of E.O. 464.44
That the Senate of the Philippines has a fundamental right essential not only for intelligent public decisionmaking in a democratic system, but more especially for sound legislation45 is not disputed. E.O. 464, however,
allegedly stifles the ability of the members of Congress to access information that is crucial to law-making.46
Page 462 of 557

Verily, the Senate, including its individual members, has a substantial and direct interest over the outcome of
the controversy and is the proper party to assail the constitutionality of E.O. 464. Indeed, legislators have
standing to maintain inviolate the prerogative, powers and privileges vested by the Constitution in their office
and are allowed to sue to question the validity of any official action which they claim infringes their
prerogatives as legislators.47
In the same vein, party-list representatives Satur Ocampo (Bayan Muna), Teodoro Casino (Bayan Muna), Joel
Virador (Bayan Muna), Crispin Beltran (Anakpawis), Rafael Mariano (Anakpawis), and Liza Maza (Gabriela)
are allowed to sue to question the constitutionality of E.O. 464, the absence of any claim that an investigation
called by the House of Representatives or any of its committees was aborted due to the implementation of E.O.
464 notwithstanding, it being sufficient that a claim is made that E.O. 464 infringes on their constitutional
rights and duties as members of Congress to conduct investigation in aid of legislation and conduct oversight
functions in the implementation of laws.
The national political party, Bayan Muna, likewise meets the standing requirement as it obtained three seats in
the House of Representatives in the 2004 elections and is, therefore, entitled to participate in the legislative
process consonant with the declared policy underlying the party list system of affording citizens belonging to
marginalized and underrepresented sectors, organizations and parties who lack well-defined political
constituencies to contribute to the formulation and enactment of legislation that will benefit the nation.48
As Bayan Muna and Representatives Ocampo et al. have the standing to file their petitions, passing on the
standing of their co-petitioners Courage and Codal is rendered unnecessary.49
In filing their respective petitions, Chavez, the ALG which claims to be an organization of citizens, and the
incumbent members of the IBP Board of Governors and the IBP in behalf of its lawyer members,50 invoke
their constitutional right to information on matters of public concern, asserting that the right to information,
curtailed and violated by E.O. 464, is essential to the effective exercise of other constitutional rights51 and to
the maintenance of the balance of power among the three branches of the government through the principle of
checks and balances.52
It is well-settled that when suing as a citizen, the interest of the petitioner in assailing the constitutionality of
laws, presidential decrees, orders, and other regulations, must be direct and personal. In Franciso v. House of
Representatives,53 this Court held that when the proceeding involves the assertion of a public right, the mere
fact that he is a citizen satisfies the requirement of personal interest.
As for petitioner PDP-Laban, it asseverates that it is clothed with legal standing in view of the transcendental
issues raised in its petition which this Court needs to resolve in order to avert a constitutional crisis. For it to be
accorded standing on the ground of transcendental importance, however, it must establish (1) the character of
the funds (that it is public) or other assets involved in the case, (2) the presence of a clear case of disregard of a
constitutional or statutory prohibition by the public respondent agency or instrumentality of the government,
and (3) the lack of any party with a more direct and specific interest in raising the questions being raised.54 The
first and last determinants not being present as no public funds or assets are involved and petitioners in G.R.
Nos. 169777 and 169659 have direct and specific interests in the resolution of the controversy, petitioner PDPLaban is bereft of standing to file its petition. Its allegation that E.O. 464 hampers its legislative agenda is
vague and uncertain, and at best is only a "generalized interest" which it shares with the rest of the political
parties. Concrete injury, whether actual or threatened, is that indispensable element of a dispute which serves
in part to cast it in a form traditionally capable of judicial resolution.55 In fine, PDP-Labans alleged interest as
a political party does not suffice to clothe it with legal standing.
Actual Case or Controversy

Page 463 of 557

Petitioners assert that an actual case exists, they citing the absence of the executive officials invited by the
Senate to its hearings after the issuance of E.O. 464, particularly those on the NorthRail project and the
wiretapping controversy.
Respondents counter that there is no case or controversy, there being no showing that President Arroyo has
actually withheld her consent or prohibited the appearance of the invited officials.56 These officials, they claim,
merely communicated to the Senate that they have not yet secured the consent of the President, not that the
President prohibited their attendance.57 Specifically with regard to the AFP officers who did not attend the
hearing on September 28, 2005, respondents claim that the instruction not to attend without the Presidents
consent was based on its role as Commander-in-Chief of the Armed Forces, not on E.O. 464.
Respondents thus conclude that the petitions merely rest on an unfounded apprehension that the President will
abuse its power of preventing the appearance of officials before Congress, and that such apprehension is not
sufficient for challenging the validity of E.O. 464.
The Court finds respondents assertion that the President has not withheld her consent or prohibited the
appearance of the officials concerned immaterial in determining the existence of an actual case or controversy
insofar as E.O. 464 is concerned. For E.O. 464 does not require either a deliberate withholding of consent or an
express prohibition issuing from the President in order to bar officials from appearing before Congress.
As the implementation of the challenged order has already resulted in the absence of officials invited to the
hearings of petitioner Senate of the Philippines, it would make no sense to wait for any further event before
considering the present case ripe for adjudication. Indeed, it would be sheer abandonment of duty if this Court
would now refrain from passing on the constitutionality of E.O. 464.
Constitutionality of E.O. 464
E.O. 464, to the extent that it bars the appearance of executive officials before Congress, deprives Congress of
the information in the possession of these officials. To resolve the question of whether such withholding of
information violates the Constitution, consideration of the general power of Congress to obtain information,
otherwise known as the power of inquiry, is in order.
The power of inquiry
The Congress power of inquiry is expressly recognized in Section 21 of Article VI of the Constitution which
reads:
SECTION 21. The Senate or the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons
appearing in or affected by such inquiries shall be respected. (Underscoring supplied)
This provision is worded exactly as Section 8 of Article VIII of the 1973 Constitution except that, in the latter,
it vests the power of inquiry in the unicameral legislature established therein the Batasang Pambansa and
its committees.
The 1935 Constitution did not contain a similar provision. Nonetheless, in Arnault v. Nazareno,58 a case
decided in 1950 under that Constitution, the Court already recognized that the power of inquiry is inherent in
the power to legislate.
Arnault involved a Senate investigation of the reportedly anomalous purchase of the Buenavista and
Tambobong Estates by the Rural Progress Administration. Arnault, who was considered a leading witness in
Page 464 of 557

the controversy, was called to testify thereon by the Senate. On account of his refusal to answer the questions
of the senators on an important point, he was, by resolution of the Senate, detained for contempt. Upholding
the Senates power to punish Arnault for contempt, this Court held:
Although there is no provision in the Constitution expressly investing either House of Congress with power to
make investigations and exact testimony to the end that it may exercise its legislative functions advisedly and
effectively, such power is so far incidental to the legislative function as to be implied. In other words, the
power of inquiry with process to enforce it is an essential and appropriate auxiliary to the legislative
function. A legislative body cannot legislate wisely or effectively in the absence of information respecting the
conditions which the legislation is intended to affect or change; and where the legislative body does not itself
possess the requisite information which is not infrequently true recourse must be had to others who do
possess it. Experience has shown that mere requests for such information are often unavailing, and also that
information which is volunteered is not always accurate or complete; so some means of compulsion is essential
to obtain what is needed.59 . . . (Emphasis and underscoring supplied)
That this power of inquiry is broad enough to cover officials of the executive branch may be deduced from the
same case. The power of inquiry, the Court therein ruled, is co-extensive with the power to legislate.60 The
matters which may be a proper subject of legislation and those which may be a proper subject of investigation
are one. It follows that the operation of government, being a legitimate subject for legislation, is a proper
subject for investigation.
Thus, the Court found that the Senate investigation of the government transaction involved in Arnault was a
proper exercise of the power of inquiry. Besides being related to the expenditure of public funds of which
Congress is the guardian, the transaction, the Court held, "also involved government agencies created by
Congress and officers whose positions it is within the power of Congress to regulate or even abolish."
Since Congress has authority to inquire into the operations of the executive branch, it would be incongruous to
hold that the power of inquiry does not extend to executive officials who are the most familiar with and
informed on executive operations.
As discussed in Arnault, the power of inquiry, "with process to enforce it," is grounded on the necessity of
information in the legislative process. If the information possessed by executive officials on the operation of
their offices is necessary for wise legislation on that subject, by parity of reasoning, Congress has the right to
that information and the power to compel the disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy era," however, the right of Congress
to conduct inquiries in aid of legislation is, in theory, no less susceptible to abuse than executive or judicial
power. It may thus be subjected to judicial review pursuant to the Courts certiorari powers under Section 1,
Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the inquiry itself might not properly be in
aid of legislation, and thus beyond the constitutional power of Congress. Such inquiry could not usurp judicial
functions. Parenthetically, one possible way for Congress to avoid such a result as occurred in Bengzon is to
indicate in its invitations to the public officials concerned, or to any person for that matter, the possible needed
statute which prompted the need for the inquiry. Given such statement in its invitations, along with the usual
indication of the subject of inquiry and the questions relative to and in furtherance thereof, there would be less
room for speculation on the part of the person invited on whether the inquiry is in aid of legislation.
Section 21, Article VI likewise establishes crucial safeguards that proscribe the legislative power of inquiry.
The provision requires that the inquiry be done in accordance with the Senate or Houses duly published rules
of procedure, necessarily implying the constitutional infirmity of an inquiry conducted without duly published

Page 465 of 557

rules of procedure. Section 21 also mandates that the rights of persons appearing in or affected by such
inquiries be respected, an imposition that obligates Congress to adhere to the guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper suit filed by the persons affected,
even if they belong to the executive branch. Nonetheless, there may be exceptional circumstances, none
appearing to obtain at present, wherein a clear pattern of abuse of the legislative power of inquiry might be
established, resulting in palpable violations of the rights guaranteed to members of the executive department
under the Bill of Rights. In such instances, depending on the particulars of each case, attempts by the
Executive Branch to forestall these abuses may be accorded judicial sanction.
Even where the inquiry is in aid of legislation, there are still recognized exemptions to the power of inquiry,
which exemptions fall under the rubric of "executive privilege." Since this term figures prominently in the
challenged order, it being mentioned in its provisions, its preambular clauses,62 and in its very title, a
discussion of executive privilege is crucial for determining the constitutionality of E.O. 464.
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior to the promulgation
of the 1986 Constitution.63 Being of American origin, it is best understood in light of how it has been defined
and used in the legal literature of the United States.
Schwartz defines executive privilege as "the power of the Government to withhold information from the
public, the courts, and the Congress."64 Similarly, Rozell defines it as "the right of the President and high-level
executive branch officers to withhold information from Congress, the courts, and ultimately the public."65
Executive privilege is, nonetheless, not a clear or unitary concept. 66 It has encompassed claims of varying
kinds.67 Tribe, in fact, comments that while it is customary to employ the phrase "executive privilege," it may
be more accurate to speak of executive privileges "since presidential refusals to furnish information may be
actuated by any of at least three distinct kinds of considerations, and may be asserted, with differing degrees of
success, in the context of either judicial or legislative investigations."
One variety of the privilege, Tribe explains, is the state secrets privilege invoked by U.S. Presidents, beginning
with Washington, on the ground that the information is of such nature that its disclosure would subvert crucial
military or diplomatic objectives. Another variety is the informers privilege, or the privilege of the
Government not to disclose the identity of persons who furnish information of violations of law to officers
charged with the enforcement of that law. Finally, a generic privilege for internal deliberations has been said to
attach to intragovernmental documents reflecting advisory opinions, recommendations and deliberations
comprising part of a process by which governmental decisions and policies are formulated. 68
Tribes comment is supported by the ruling in In re Sealed Case, thus:
Since the beginnings of our nation, executive officials have claimed a variety of privileges to resist disclosure
of information the confidentiality of which they felt was crucial to fulfillment of the unique role and
responsibilities of the executive branch of our government. Courts ruled early that the executive had a right to
withhold documents that might reveal military or state secrets. The courts have also granted the executive a
right to withhold the identity of government informers in some circumstances and a qualified right to withhold
information related to pending investigations. x x x"69 (Emphasis and underscoring supplied)
The entry in Blacks Law Dictionary on "executive privilege" is similarly instructive regarding the scope of the
doctrine.

Page 466 of 557

This privilege, based on the constitutional doctrine of separation of powers, exempts the executive from
disclosure requirements applicable to the ordinary citizen or organization where such exemption is necessary
to the discharge of highly important executive responsibilities involved in maintaining governmental
operations, and extends not only to military and diplomatic secrets but also to documents integral to an
appropriate exercise of the executive domestic decisional and policy making functions, that is, those
documents reflecting the frank expression necessary in intra-governmental advisory and deliberative
communications.70 (Emphasis and underscoring supplied)
That a type of information is recognized as privileged does not, however, necessarily mean that it would be
considered privileged in all instances. For in determining the validity of a claim of privilege, the question that
must be asked is not only whether the requested information falls within one of the traditional privileges, but
also whether that privilege should be honored in a given procedural setting.71
The leading case on executive privilege in the United States is U.S. v. Nixon, 72 decided in 1974. In issue in
that case was the validity of President Nixons claim of executive privilege against a subpoena issued by a
district court requiring the production of certain tapes and documents relating to the Watergate investigations.
The claim of privilege was based on the Presidents general interest in the confidentiality of his conversations
and correspondence. The U.S. Court held that while there is no explicit reference to a privilege of
confidentiality in the U.S. Constitution, it is constitutionally based to the extent that it relates to the effective
discharge of a Presidents powers. The Court, nonetheless, rejected the Presidents claim of privilege, ruling
that the privilege must be balanced against the public interest in the fair administration of criminal justice.
Notably, the Court was careful to clarify that it was not there addressing the issue of claims of privilege in a
civil litigation or against congressional demands for information.
Cases in the U.S. which involve claims of executive privilege against Congress are rare.73 Despite frequent
assertion of the privilege to deny information to Congress, beginning with President Washingtons refusal to
turn over treaty negotiation records to the House of Representatives, the U.S. Supreme Court has never
adjudicated the issue.74 However, the U.S. Court of Appeals for the District of Columbia Circuit, in a case
decided earlier in the same year as Nixon, recognized the Presidents privilege over his conversations against a
congressional subpoena.75 Anticipating the balancing approach adopted by the U.S. Supreme Court in Nixon,
the Court of Appeals weighed the public interest protected by the claim of privilege against the interest that
would be served by disclosure to the Committee. Ruling that the balance favored the President, the Court
declined to enforce the subpoena. 76
In this jurisdiction, the doctrine of executive privilege was recognized by this Court in Almonte v. Vasquez.77
Almonte used the term in reference to the same privilege subject of Nixon. It quoted the following portion of
the Nixon decision which explains the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations and correspondences, like the claim
of confidentiality of judicial deliberations, for example, has all the values to which we accord deference for the
privacy of all citizens and, added to those values, is the necessity for protection of the public interest in candid,
objective, and even blunt or harsh opinions in Presidential decision-making. A President and those who assist
him must be free to explore alternatives in the process of shaping policies and making decisions and to do so in
a way many would be unwilling to express except privately. These are the considerations justifying a
presumptive privilege for Presidential communications. The privilege is fundamental to the operation of
government and inextricably rooted in the separation of powers under the Constitution x x x " (Emphasis and
underscoring supplied)
Almonte involved a subpoena duces tecum issued by the Ombudsman against the therein petitioners. It did not
involve, as expressly stated in the decision, the right of the people to information.78 Nonetheless, the Court
recognized that there are certain types of information which the government may withhold from the public,

Page 467 of 557

thus acknowledging, in substance if not in name, that executive privilege may be claimed against citizens
demands for information.
In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the common law holding that there is a
"governmental privilege against public disclosure with respect to state secrets regarding military, diplomatic
and other national security matters."80 The same case held that closed-door Cabinet meetings are also a
recognized limitation on the right to information.
Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the right to information does not extend
to matters recognized as "privileged information under the separation of powers,"82 by which the Court meant
Presidential conversations, correspondences, and discussions in closed-door Cabinet meetings. It also held that
information on military and diplomatic secrets and those affecting national security, and information on
investigations of crimes by law enforcement agencies before the prosecution of the accused were exempted
from the right to information.
From the above discussion on the meaning and scope of executive privilege, both in the United States and in
this jurisdiction, a clear principle emerges. Executive privilege, whether asserted against Congress, the courts,
or the public, is recognized only in relation to certain types of information of a sensitive character. While
executive privilege is a constitutional concept, a claim thereof may be valid or not depending on the ground
invoked to justify it and the context in which it is made. Noticeably absent is any recognition that executive
officials are exempt from the duty to disclose information by the mere fact of being executive officials. Indeed,
the extraordinary character of the exemptions indicates that the presumption inclines heavily against executive
secrecy and in favor of disclosure.
Validity of Section 1
Section 1 is similar to Section 3 in that both require the officials covered by them to secure the consent of the
President prior to appearing before Congress. There are significant differences between the two provisions,
however, which constrain this Court to discuss the validity of these provisions separately.
Section 1 specifically applies to department heads. It does not, unlike Section 3, require a prior determination
by any official whether they are covered by E.O. 464. The President herself has, through the challenged order,
made the determination that they are. Further, unlike also Section 3, the coverage of department heads under
Section 1 is not made to depend on the department heads possession of any information which might be
covered by executive privilege. In fact, in marked contrast to Section 3 vis--vis Section 2, there is no
reference to executive privilege at all. Rather, the required prior consent under Section 1 is grounded on Article
VI, Section 22 of the Constitution on what has been referred to as the question hour.
SECTION 22. The heads of departments may upon their own initiative, with the consent of the President, or
upon the request of either House, as the rules of each House shall provide, appear before and be heard by such
House on any matter pertaining to their departments. Written questions shall be submitted to the President of
the Senate or the Speaker of the House of Representatives at least three days before their scheduled
appearance. Interpellations shall not be limited to written questions, but may cover matters related thereto.
When the security of the State or the public interest so requires and the President so states in writing, the
appearance shall be conducted in executive session.
Determining the validity of Section 1 thus requires an examination of the meaning of Section 22 of Article VI.
Section 22 which provides for the question hour must be interpreted vis--vis Section 21 which provides for
the power of either House of Congress to "conduct inquiries in aid of legislation." As the following excerpt of
the deliberations of the Constitutional Commission shows, the framers were aware that these two provisions
involved distinct functions of Congress.

Page 468 of 557

MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on the Question Hour] yesterday, I
noticed that members of the Cabinet cannot be compelled anymore to appear before the House of
Representatives or before the Senate. I have a particular problem in this regard, Madam President, because in
our experience in the Regular Batasang Pambansa as the Gentleman himself has experienced in the interim
Batasang Pambansa one of the most competent inputs that we can put in our committee deliberations, either
in aid of legislation or in congressional investigations, is the testimonies of Cabinet ministers. We usually
invite them, but if they do not come and it is a congressional investigation, we usually issue subpoenas.
I want to be clarified on a statement made by Commissioner Suarez when he said that the fact that the Cabinet
ministers may refuse to come to the House of Representatives or the Senate [when requested under Section 22]
does not mean that they need not come when they are invited or subpoenaed by the committee of either House
when it comes to inquiries in aid of legislation or congressional investigation. According to Commissioner
Suarez, that is allowed and their presence can be had under Section 21. Does the gentleman confirm this,
Madam President?
MR. DAVIDE. We confirm that, Madam President, because Section 20 refers only to what was originally the
Question Hour, whereas, Section 21 would refer specifically to inquiries in aid of legislation, under which
anybody for that matter, may be summoned and if he refuses, he can be held in contempt of the House.83
(Emphasis and underscoring supplied)
A distinction was thus made between inquiries in aid of legislation and the question hour. While attendance
was meant to be discretionary in the question hour, it was compulsory in inquiries in aid of legislation. The
reference to Commissioner Suarez bears noting, he being one of the proponents of the amendment to make the
appearance of department heads discretionary in the question hour.
So clearly was this distinction conveyed to the members of the Commission that the Committee on Style,
precisely in recognition of this distinction, later moved the provision on question hour from its original
position as Section 20 in the original draft down to Section 31, far from the provision on inquiries in aid of
legislation. This gave rise to the following exchange during the deliberations:
MR. GUINGONA. [speaking in his capacity as Chairman of the Committee on Style] We now go, Mr.
Presiding Officer, to the Article on Legislative and may I request the chairperson of the Legislative
Department, Commissioner Davide, to give his reaction.
THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide is recognized.|avvphi|.net
MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to the Question Hour. I propose
that instead of putting it as Section 31, it should follow Legislative Inquiries.
THE PRESIDING OFFICER. What does the committee say?
MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding Officer.
MR. MAAMBONG. Actually, we considered that previously when we sequenced this but we reasoned that in
Section 21, which is Legislative Inquiry, it is actually a power of Congress in terms of its own lawmaking;
whereas, a Question Hour is not actually a power in terms of its own lawmaking power because in Legislative
Inquiry, it is in aid of legislation. And so we put Question Hour as Section 31. I hope Commissioner Davide
will consider this.

Page 469 of 557

MR. DAVIDE. The Question Hour is closely related with the legislative power, and it is precisely as a
complement to or a supplement of the Legislative Inquiry. The appearance of the members of Cabinet would
be very, very essential not only in the application of check and balance but also, in effect, in aid of legislation.
MR. MAAMBONG. After conferring with the committee, we find merit in the suggestion of Commissioner
Davide. In other words, we are accepting that and so this Section 31 would now become Section 22. Would it
be, Commissioner Davide?
MR. DAVIDE. Yes.84 (Emphasis and underscoring supplied)
Consistent with their statements earlier in the deliberations, Commissioners Davide and Maambong proceeded
from the same assumption that these provisions pertained to two different functions of the legislature. Both
Commissioners understood that the power to conduct inquiries in aid of legislation is different from the power
to conduct inquiries during the question hour. Commissioner Davides only concern was that the two
provisions on these distinct powers be placed closely together, they being complementary to each other.
Neither Commissioner considered them as identical functions of Congress.
The foregoing opinion was not the two Commissioners alone. From the above-quoted exchange,
Commissioner Maambongs committee the Committee on Style shared the view that the two provisions
reflected distinct functions of Congress. Commissioner Davide, on the other hand, was speaking in his capacity
as Chairman of the Committee on the Legislative Department. His views may thus be presumed as
representing that of his Committee.
In the context of a parliamentary system of government, the "question hour" has a definite meaning. It is a
period of confrontation initiated by Parliament to hold the Prime Minister and the other ministers accountable
for their acts and the operation of the government,85 corresponding to what is known in Britain as the question
period. There was a specific provision for a question hour in the 1973 Constitution86 which made the
appearance of ministers mandatory. The same perfectly conformed to the parliamentary system established by
that Constitution, where the ministers are also members of the legislature and are directly accountable to it.
An essential feature of the parliamentary system of government is the immediate accountability of the Prime
Minister and the Cabinet to the National Assembly. They shall be responsible to the National Assembly for the
program of government and shall determine the guidelines of national policy. Unlike in the presidential system
where the tenure of office of all elected officials cannot be terminated before their term expired, the Prime
Minister and the Cabinet remain in office only as long as they enjoy the confidence of the National Assembly.
The moment this confidence is lost the Prime Minister and the Cabinet may be changed.87
The framers of the 1987 Constitution removed the mandatory nature of such appearance during the question
hour in the present Constitution so as to conform more fully to a system of separation of powers.88 To that
extent, the question hour, as it is presently understood in this jurisdiction, departs from the question period of
the parliamentary system. That department heads may not be required to appear in a question hour does not,
however, mean that the legislature is rendered powerless to elicit information from them in all circumstances.
In fact, in light of the absence of a mandatory question period, the need to enforce Congress right to executive
information in the performance of its legislative function becomes more imperative. As Schwartz observes:
Indeed, if the separation of powers has anything to tell us on the subject under discussion, it is that the
Congress has the right to obtain information from any source even from officials of departments and
agencies in the executive branch. In the United States there is, unlike the situation which prevails in a
parliamentary system such as that in Britain, a clear separation between the legislative and executive branches.
It is this very separation that makes the congressional right to obtain information from the executive so
essential, if the functions of the Congress as the elected representatives of the people are adequately to be
carried out. The absence of close rapport between the legislative and executive branches in this country,
Page 470 of 557

comparable to those which exist under a parliamentary system, and the nonexistence in the Congress of an
institution such as the British question period have perforce made reliance by the Congress upon its right to
obtain information from the executive essential, if it is intelligently to perform its legislative tasks. Unless the
Congress possesses the right to obtain executive information, its power of oversight of administration in a
system such as ours becomes a power devoid of most of its practical content, since it depends for its
effectiveness solely upon information parceled out ex gratia by the executive.89 (Emphasis and underscoring
supplied)
Sections 21 and 22, therefore, while closely related and complementary to each other, should not be considered
as pertaining to the same power of Congress. One specifically relates to the power to conduct inquiries in aid
of legislation, the aim of which is to elicit information that may be used for legislation, while the other pertains
to the power to conduct a question hour, the objective of which is to obtain information in pursuit of Congress
oversight function.
When Congress merely seeks to be informed on how department heads are implementing the statutes which it
has issued, its right to such information is not as imperative as that of the President to whom, as Chief
Executive, such department heads must give a report of their performance as a matter of duty. In such
instances, Section 22, in keeping with the separation of powers, states that Congress may only request their
appearance. Nonetheless, when the inquiry in which Congress requires their appearance is "in aid of
legislation" under Section 21, the appearance is mandatory for the same reasons stated in Arnault.90
In fine, the oversight function of Congress may be facilitated by compulsory process only to the extent that it is
performed in pursuit of legislation. This is consistent with the intent discerned from the deliberations of the
Constitutional Commission.
Ultimately, the power of Congress to compel the appearance of executive officials under Section 21 and the
lack of it under Section 22 find their basis in the principle of separation of powers. While the executive branch
is a co-equal branch of the legislature, it cannot frustrate the power of Congress to legislate by refusing to
comply with its demands for information.
When Congress exercises its power of inquiry, the only way for department heads to exempt themselves
therefrom is by a valid claim of privilege. They are not exempt by the mere fact that they are department
heads. Only one executive official may be exempted from this power the President on whom executive
power is vested, hence, beyond the reach of Congress except through the power of impeachment. It is based on
her being the highest official of the executive branch, and the due respect accorded to a co-equal branch of
government which is sanctioned by a long-standing custom.
By the same token, members of the Supreme Court are also exempt from this power of inquiry. Unlike the
Presidency, judicial power is vested in a collegial body; hence, each member thereof is exempt on the basis not
only of separation of powers but also on the fiscal autonomy and the constitutional independence of the
judiciary. This point is not in dispute, as even counsel for the Senate, Sen. Joker Arroyo, admitted it during the
oral argument upon interpellation of the Chief Justice.
Having established the proper interpretation of Section 22, Article VI of the Constitution, the Court now
proceeds to pass on the constitutionality of Section 1 of E.O. 464.
Section 1, in view of its specific reference to Section 22 of Article VI of the Constitution and the absence of
any reference to inquiries in aid of legislation, must be construed as limited in its application to appearances of
department heads in the question hour contemplated in the provision of said Section 22 of Article VI. The
reading is dictated by the basic rule of construction that issuances must be interpreted, as much as possible, in a
way that will render it constitutional.

Page 471 of 557

The requirement then to secure presidential consent under Section 1, limited as it is only to appearances in the
question hour, is valid on its face. For under Section 22, Article VI of the Constitution, the appearance of
department heads in the question hour is discretionary on their part.
Section 1 cannot, however, be applied to appearances of department heads in inquiries in aid of legislation.
Congress is not bound in such instances to respect the refusal of the department head to appear in such inquiry,
unless a valid claim of privilege is subsequently made, either by the President herself or by the Executive
Secretary.
Validity of Sections 2 and 3
Section 3 of E.O. 464 requires all the public officials enumerated in Section 2(b) to secure the consent of the
President prior to appearing before either house of Congress. The enumeration is broad. It covers all senior
officials of executive departments, all officers of the AFP and the PNP, and all senior national security officials
who, in the judgment of the heads of offices designated in the same section (i.e. department heads, Chief of
Staff of the AFP, Chief of the PNP, and the National Security Adviser), are "covered by the executive
privilege."
The enumeration also includes such other officers as may be determined by the President. Given the title of
Section 2 "Nature, Scope and Coverage of Executive Privilege" , it is evident that under the rule of
ejusdem generis, the determination by the President under this provision is intended to be based on a similar
finding of coverage under executive privilege.
En passant, the Court notes that Section 2(b) of E.O. 464 virtually states that executive privilege actually
covers persons. Such is a misuse of the doctrine. Executive privilege, as discussed above, is properly invoked
in relation to specific categories of information and not to categories of persons.
In light, however, of Sec 2(a) of E.O. 464 which deals with the nature, scope and coverage of executive
privilege, the reference to persons being "covered by the executive privilege" may be read as an abbreviated
way of saying that the person is in possession of information which is, in the judgment of the head of office
concerned, privileged as defined in Section 2(a). The Court shall thus proceed on the assumption that this is the
intention of the challenged order.
Upon a determination by the designated head of office or by the President that an official is "covered by the
executive privilege," such official is subjected to the requirement that he first secure the consent of the
President prior to appearing before Congress. This requirement effectively bars the appearance of the official
concerned unless the same is permitted by the President. The proviso allowing the President to give its consent
means nothing more than that the President may reverse a prohibition which already exists by virtue of E.O.
464.
Thus, underlying this requirement of prior consent is the determination by a head of office, authorized by the
President under E.O. 464, or by the President herself, that such official is in possession of information that is
covered by executive privilege. This determination then becomes the basis for the officials not showing up in
the legislative investigation.
In view thereof, whenever an official invokes E.O. 464 to justify his failure to be present, such invocation must
be construed as a declaration to Congress that the President, or a head of office authorized by the President, has
determined that the requested information is privileged, and that the President has not reversed such
determination. Such declaration, however, even without mentioning the term "executive privilege," amounts to
an implied claim that the information is being withheld by the executive branch, by authority of the President,
on the basis of executive privilege. Verily, there is an implied claim of privilege.

Page 472 of 557

The letter dated September 28, 2005 of respondent Executive Secretary Ermita to Senate President Drilon
illustrates the implied nature of the claim of privilege authorized by E.O. 464. It reads:
In connection with the inquiry to be conducted by the Committee of the Whole regarding the Northrail Project
of the North Luzon Railways Corporation on 29 September 2005 at 10:00 a.m., please be informed that
officials of the Executive Department invited to appear at the meeting will not be able to attend the same
without the consent of the President, pursuant to Executive Order No. 464 (s. 2005), entitled "Ensuring
Observance Of The Principle Of Separation Of Powers, Adherence To The Rule On Executive Privilege And
Respect For The Rights Of Public Officials Appearing In Legislative Inquiries In Aid Of Legislation Under
The Constitution, And For Other Purposes". Said officials have not secured the required consent from the
President. (Underscoring supplied)
The letter does not explicitly invoke executive privilege or that the matter on which these officials are being
requested to be resource persons falls under the recognized grounds of the privilege to justify their absence.
Nor does it expressly state that in view of the lack of consent from the President under E.O. 464, they cannot
attend the hearing.
Significant premises in this letter, however, are left unstated, deliberately or not. The letter assumes that the
invited officials are covered by E.O. 464. As explained earlier, however, to be covered by the order means that
a determination has been made, by the designated head of office or the President, that the invited official
possesses information that is covered by executive privilege. Thus, although it is not stated in the letter that
such determination has been made, the same must be deemed implied. Respecting the statement that the
invited officials have not secured the consent of the President, it only means that the President has not reversed
the standing prohibition against their appearance before Congress.
Inevitably, Executive Secretary Ermitas letter leads to the conclusion that the executive branch, either through
the President or the heads of offices authorized under E.O. 464, has made a determination that the information
required by the Senate is privileged, and that, at the time of writing, there has been no contrary pronouncement
from the President. In fine, an implied claim of privilege has been made by the executive.
While there is no Philippine case that directly addresses the issue of whether executive privilege may be
invoked against Congress, it is gathered from Chavez v. PEA that certain information in the possession of the
executive may validly be claimed as privileged even against Congress. Thus, the case holds:
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the
separation of powers. The information does not cover Presidential conversations, correspondences, or
discussions during closed-door Cabinet meetings which, like internal-deliberations of the Supreme Court and
other collegiate courts, or executive sessions of either house of Congress, are recognized as confidential. This
kind of information cannot be pried open by a co-equal branch of government. A frank exchange of
exploratory ideas and assessments, free from the glare of publicity and pressure by interested parties, is
essential to protect the independence of decision-making of those tasked to exercise Presidential, Legislative
and Judicial power. This is not the situation in the instant case.91 (Emphasis and underscoring supplied)
Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by the mere fact that it sanctions
claims of executive privilege. This Court must look further and assess the claim of privilege authorized by the
Order to determine whether it is valid.
While the validity of claims of privilege must be assessed on a case to case basis, examining the ground
invoked therefor and the particular circumstances surrounding it, there is, in an implied claim of privilege, a
defect that renders it invalid per se. By its very nature, and as demonstrated by the letter of respondent
Executive Secretary quoted above, the implied claim authorized by Section 3 of E.O. 464 is not accompanied
by any specific allegation of the basis thereof (e.g., whether the information demanded involves military or
Page 473 of 557

diplomatic secrets, closed-door Cabinet meetings, etc.). While Section 2(a) enumerates the types of
information that are covered by the privilege under the challenged order, Congress is left to speculate as to
which among them is being referred to by the executive. The enumeration is not even intended to be
comprehensive, but a mere statement of what is included in the phrase "confidential or classified information
between the President and the public officers covered by this executive order."
Certainly, Congress has the right to know why the executive considers the requested information privileged. It
does not suffice to merely declare that the President, or an authorized head of office, has determined that it is
so, and that the President has not overturned that determination. Such declaration leaves Congress in the dark
on how the requested information could be classified as privileged. That the message is couched in terms that,
on first impression, do not seem like a claim of privilege only makes it more pernicious. It threatens to make
Congress doubly blind to the question of why the executive branch is not providing it with the information that
it has requested.
A claim of privilege, being a claim of exemption from an obligation to disclose information, must, therefore,
be clearly asserted. As U.S. v. Reynolds teaches:
The privilege belongs to the government and must be asserted by it; it can neither be claimed nor waived by a
private party. It is not to be lightly invoked. There must be a formal claim of privilege, lodged by the head of
the department which has control over the matter, after actual personal consideration by that officer. The court
itself must determine whether the circumstances are appropriate for the claim of privilege, and yet do so
without forcing a disclosure of the very thing the privilege is designed to protect.92 (Underscoring supplied)
Absent then a statement of the specific basis of a claim of executive privilege, there is no way of determining
whether it falls under one of the traditional privileges, or whether, given the circumstances in which it is made,
it should be respected.93 These, in substance, were the same criteria in assessing the claim of privilege asserted
against the Ombudsman in Almonte v. Vasquez94 and, more in point, against a committee of the Senate in
Senate Select Committee on Presidential Campaign Activities v. Nixon.95
A.O. Smith v. Federal Trade Commission is enlightening:
[T]he lack of specificity renders an assessment of the potential harm resulting from disclosure impossible,
thereby preventing the Court from balancing such harm against plaintiffs needs to determine whether to
override any claims of privilege.96 (Underscoring supplied)
And so is U.S. v. Article of Drug:97
On the present state of the record, this Court is not called upon to perform this balancing operation. In stating
its objection to claimants interrogatories, government asserts, and nothing more, that the disclosures sought by
claimant would inhibit the free expression of opinion that non-disclosure is designed to protect. The
government has not shown nor even alleged that those who evaluated claimants product were involved in
internal policymaking, generally, or in this particular instance. Privilege cannot be set up by an unsupported
claim. The facts upon which the privilege is based must be established. To find these interrogatories
objectionable, this Court would have to assume that the evaluation and classification of claimants products
was a matter of internal policy formulation, an assumption in which this Court is unwilling to indulge sua
sponte.98 (Emphasis and underscoring supplied)
Mobil Oil Corp. v. Department of Energy99 similarly emphasizes that "an agency must provide precise and
certain reasons for preserving the confidentiality of requested information."
Black v. Sheraton Corp. of America100 amplifies, thus:

Page 474 of 557

A formal and proper claim of executive privilege requires a specific designation and description of the
documents within its scope as well as precise and certain reasons for preserving their confidentiality. Without
this specificity, it is impossible for a court to analyze the claim short of disclosure of the very thing sought to
be protected. As the affidavit now stands, the Court has little more than its sua sponte speculation with which
to weigh the applicability of the claim. An improperly asserted claim of privilege is no claim of privilege.
Therefore, despite the fact that a claim was made by the proper executive as Reynolds requires, the Court can
not recognize the claim in the instant case because it is legally insufficient to allow the Court to make a just
and reasonable determination as to its applicability. To recognize such a broad claim in which the Defendant
has given no precise or compelling reasons to shield these documents from outside scrutiny, would make a
farce of the whole procedure.101 (Emphasis and underscoring supplied)
Due respect for a co-equal branch of government, moreover, demands no less than a claim of privilege clearly
stating the grounds therefor. Apropos is the following ruling in McPhaul v. U.S:102
We think the Courts decision in United States v. Bryan, 339 U.S. 323, 70 S. Ct. 724, is highly relevant to
these questions. For it is as true here as it was there, that if (petitioner) had legitimate reasons for failing to
produce the records of the association, a decent respect for the House of Representatives, by whose authority
the subpoenas issued, would have required that (he) state (his) reasons for noncompliance upon the return of
the writ. Such a statement would have given the Subcommittee an opportunity to avoid the blocking of its
inquiry by taking other appropriate steps to obtain the records. To deny the Committee the opportunity to
consider the objection or remedy is in itself a contempt of its authority and an obstruction of its processes. His
failure to make any such statement was "a patent evasion of the duty of one summoned to produce papers
before a congressional committee[, and] cannot be condoned." (Emphasis and underscoring supplied; citations
omitted)
Upon the other hand, Congress must not require the executive to state the reasons for the claim with such
particularity as to compel disclosure of the information which the privilege is meant to protect.103 A useful
analogy in determining the requisite degree of particularity would be the privilege against self-incrimination.
Thus, Hoffman v. U.S.104 declares:
The witness is not exonerated from answering merely because he declares that in so doing he would
incriminate himself his say-so does not of itself establish the hazard of incrimination. It is for the court to say
whether his silence is justified, and to require him to answer if it clearly appears to the court that he is
mistaken. However, if the witness, upon interposing his claim, were required to prove the hazard in the sense
in which a claim is usually required to be established in court, he would be compelled to surrender the very
protection which the privilege is designed to guarantee. To sustain the privilege, it need only be evident from
the implications of the question, in the setting in which it is asked, that a responsive answer to the question or
an explanation of why it cannot be answered might be dangerous because injurious disclosure could result." x
x x (Emphasis and underscoring supplied)
The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus invalid per se. It is not
asserted. It is merely implied. Instead of providing precise and certain reasons for the claim, it merely invokes
E.O. 464, coupled with an announcement that the President has not given her consent. It is woefully
insufficient for Congress to determine whether the withholding of information is justified under the
circumstances of each case. It severely frustrates the power of inquiry of Congress.
In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated.
No infirmity, however, can be imputed to Section 2(a) as it merely provides guidelines, binding only on the
heads of office mentioned in Section 2(b), on what is covered by executive privilege. It does not purport to be
conclusive on the other branches of government. It may thus be construed as a mere expression of opinion by
the President regarding the nature and scope of executive privilege.
Page 475 of 557

Petitioners, however, assert as another ground for invalidating the challenged order the alleged unlawful
delegation of authority to the heads of offices in Section 2(b). Petitioner Senate of the Philippines, in
particular, cites the case of the United States where, so it claims, only the President can assert executive
privilege to withhold information from Congress.
Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines that a certain
information is privileged, such determination is presumed to bear the Presidents authority and has the effect of
prohibiting the official from appearing before Congress, subject only to the express pronouncement of the
President that it is allowing the appearance of such official. These provisions thus allow the President to
authorize claims of privilege by mere silence.
Such presumptive authorization, however, is contrary to the exceptional nature of the privilege. Executive
privilege, as already discussed, is recognized with respect to information the confidential nature of which is
crucial to the fulfillment of the unique role and responsibilities of the executive branch,105 or in those instances
where exemption from disclosure is necessary to the discharge of highly important executive
responsibilities.106 The doctrine of executive privilege is thus premised on the fact that certain informations
must, as a matter of necessity, be kept confidential in pursuit of the public interest. The privilege being, by
definition, an exemption from the obligation to disclose information, in this case to Congress, the necessity
must be of such high degree as to outweigh the public interest in enforcing that obligation in a particular case.
In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to the President
the power to invoke the privilege. She may of course authorize the Executive Secretary to invoke the privilege
on her behalf, in which case the Executive Secretary must state that the authority is "By order of the
President," which means that he personally consulted with her. The privilege being an extraordinary power, it
must be wielded only by the highest official in the executive hierarchy. In other words, the President may not
authorize her subordinates to exercise such power. There is even less reason to uphold such authorization in
the instant case where the authorization is not explicit but by mere silence. Section 3, in relation to Section
2(b), is further invalid on this score.
It follows, therefore, that when an official is being summoned by Congress on a matter which, in his own
judgment, might be covered by executive privilege, he must be afforded reasonable time to inform the
President or the Executive Secretary of the possible need for invoking the privilege. This is necessary in order
to provide the President or the Executive Secretary with fair opportunity to consider whether the matter indeed
calls for a claim of executive privilege. If, after the lapse of that reasonable time, neither the President nor the
Executive Secretary invokes the privilege, Congress is no longer bound to respect the failure of the official to
appear before Congress and may then opt to avail of the necessary legal means to compel his appearance.
The Court notes that one of the expressed purposes for requiring officials to secure the consent of the President
under Section 3 of E.O. 464 is to ensure "respect for the rights of public officials appearing in inquiries in aid
of legislation." That such rights must indeed be respected by Congress is an echo from Article VI Section 21 of
the Constitution mandating that "[t]he rights of persons appearing in or affected by such inquiries shall be
respected."
In light of the above discussion of Section 3, it is clear that it is essentially an authorization for implied claims
of executive privilege, for which reason it must be invalidated. That such authorization is partly motivated by
the need to ensure respect for such officials does not change the infirm nature of the authorization itself.
Right to Information
E.O 464 is concerned only with the demands of Congress for the appearance of executive officials in the
hearings conducted by it, and not with the demands of citizens for information pursuant to their right to
information on matters of public concern. Petitioners are not amiss in claiming, however, that what is involved
Page 476 of 557

in the present controversy is not merely the legislative power of inquiry, but the right of the people to
information.
There are, it bears noting, clear distinctions between the right of Congress to information which underlies the
power of inquiry and the right of the people to information on matters of public concern. For one, the demand
of a citizen for the production of documents pursuant to his right to information does not have the same
obligatory force as a subpoena duces tecum issued by Congress. Neither does the right to information grant a
citizen the power to exact testimony from government officials. These powers belong only to Congress and not
to an individual citizen.
Thus, while Congress is composed of representatives elected by the people, it does not follow, except in a
highly qualified sense, that in every exercise of its power of inquiry, the people are exercising their right to
information.
To the extent that investigations in aid of legislation are generally conducted in public, however, any executive
issuance tending to unduly limit disclosures of information in such investigations necessarily deprives the
people of information which, being presumed to be in aid of legislation, is presumed to be a matter of public
concern. The citizens are thereby denied access to information which they can use in formulating their own
opinions on the matter before Congress opinions which they can then communicate to their representatives
and other government officials through the various legal means allowed by their freedom of expression. Thus
holds Valmonte v. Belmonte:
It is in the interest of the State that the channels for free political discussion be maintained to the end that the
government may perceive and be responsive to the peoples will. Yet, this open dialogue can be effective only
to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only when the
participants in the discussion are aware of the issues and have access to information relating thereto can such
bear fruit.107 (Emphasis and underscoring supplied)
The impairment of the right of the people to information as a consequence of E.O. 464 is, therefore, in the
sense explained above, just as direct as its violation of the legislatures power of inquiry.
Implementation of E.O. 464 prior to its publication
While E.O. 464 applies only to officials of the executive branch, it does not follow that the same is exempt
from the need for publication. On the need for publishing even those statutes that do not directly apply to
people in general, Taada v. Tuvera states:
The term "laws" should refer to all laws and not only to those of general application, for strictly speaking all
laws relate to the people in general albeit there are some that do not apply to them directly. An example is a
law granting citizenship to a particular individual, like a relative of President Marcos who was decreed instant
naturalization. It surely cannot be said that such a law does not affect the public although it unquestionably
does not apply directly to all the people. The subject of such law is a matter of public interest which any
member of the body politic may question in the political forums or, if he is a proper party, even in courts of
justice.108 (Emphasis and underscoring supplied)
Although the above statement was made in reference to statutes, logic dictates that the challenged order must
be covered by the publication requirement. As explained above, E.O. 464 has a direct effect on the right of the
people to information on matters of public concern. It is, therefore, a matter of public interest which members
of the body politic may question before this Court. Due process thus requires that the people should have been
apprised of this issuance before it was implemented.
Conclusion
Page 477 of 557

Congress undoubtedly has a right to information from the executive branch whenever it is sought in aid of
legislation. If the executive branch withholds such information on the ground that it is privileged, it must so
assert it and state the reason therefor and why it must be respected.
The infirm provisions of E.O. 464, however, allow the executive branch to evade congressional requests for
information without need of clearly asserting a right to do so and/or proffering its reasons therefor. By the
mere expedient of invoking said provisions, the power of Congress to conduct inquiries in aid of legislation is
frustrated. That is impermissible. For
[w]hat republican theory did accomplishwas to reverse the old presumption in favor of secrecy, based on the
divine right of kings and nobles, and replace it with a presumption in favor of publicity, based on the doctrine
of popular sovereignty. (Underscoring supplied)109
Resort to any means then by which officials of the executive branch could refuse to divulge information cannot
be presumed valid. Otherwise, we shall not have merely nullified the power of our legislature to inquire into
the operations of government, but we shall have given up something of much greater value our right as a
people to take part in government.
WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of Executive Order No. 464
(series of 2005), "Ensuring Observance of the Principle of Separation of Powers, Adherence to the Rule on
Executive
Privilege and Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of
Legislation Under the Constitution, and For Other Purposes," are declared VOID. Sections 1 and 2(a) are,
however, VALID.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief Justice

(ON LEAVE)
REYNATO S. PUNO
Associate Justice

CONSUELO YNARES- SANTIAGO

Asscociate Justice

LEONARDO A. QUISUMBING
Associate Justice

ANGELINA SANDOVAL-GUTIERREZ
Asscociate Justice

ANTONIO T. CARPIO
Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ

Asscociate Justice

RENATO C. CORONA

ADOLFO S. AZCUNA
Page 478 of 557

Associate Justice

Asscociate Justice

ROMEO J. CALLEJO, SR.

Associate Justice

DANTE O. TINGA
Asscociate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

CANCIO C. GARCIA
Asscociate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above
Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court.
ARTEMIO V. PANGANIBAN
Chief Justice

Footnotes
*

Henceforth, in consolidated petitions which assail the validity or constitutionality of an issuance of a

government official or agency, the petitioner which is the most directly affected by the issuance shall
be first in the order of enumeration of the titles of the petitions irrespective of their docket numbers or
dates of filing.
**

On Leave.

Hamilton, The Federalist No. 70.

Annexes "J-2" to "J-7," rollo (G.R. No. 169777), pp. 72-77.

Annex "G," id. at 58.

Annex "B," id. at 52.

Annex "C," id. at 53.

Annex "D," id. at 54-55.

Annex "A," id. at 48-51.

Annex "F," id. at 57.

Page 479 of 557

Annex "H," id. at 59.

10

Rollo (G.R. No. 169777), p. 379.

11

Ibid.

12

The petitioner names the following organizations as members: Albert Schweitzer Association,
Philippines, Inc. (ASAP), Alternative Law Research and Development Center, Inc. (ALTERLAW),
Ateneo Human Rights Center (AHRC), Balay Alternative Legal Advocates for Development in
Mindanaw, Inc (BALAOD Mindanaw), Childrens Legal Bureau (CLB), Inc., Environment Legal
Assistance Center (ELAC), Free Rehabilitation, Economic, Education and Legal Assistance
Volunteers Association, Inc. (FREELAVA), Kaisahan Tungo sa Kaunlaran ng Kanayunan at
Repormang Pansakahan (KAISAHAN), Legal Rights and Natural Resources Center-Kasama sa
Kalikasan/Friends of the Earth-Philippines, Inc. (LRC-LSK/FOEI-Phils.), Paglilingkod Batas
Pangkapatiran Foundation (PBPF), Participatory Research Organization of Communities and
Education Towards Struggle for Self-Reliance (PROCESS) Foundation-PANAY, Inc., Pilipina Legal
Resources Center (PLRC), Sentro ng Alternatibong Lingap Panligal (SALIGAN), Tanggapang
Panligal ng Katutubong Pilipino (PANLIPI), Tanggol Kalikasan (TK), Womens Legal Bureau
(WLB), and Womens Legal Education, Advocacy and Defense Foundation, Inc. (WomenLEAD).
13

Rollo (G.R. No. 169667), p. 22.

14

Annex "H," id. at 460-461.

15

Annex "H-1," id. at 462.

16

Rollo (G.R. No. 169777), pp. 383-384.

17

Annex "K," rollo (G.R. No. 169777), p. 466.

18

Annex "J," id. at 465.

19

Annex "M," id. at 468.

20

Annex "N," id. at 469.

21

Annex "O," id. at 470.

22

Court En Banc Resolution dated February 21, 2006, rollo (G.R. No. 169659), pp. 370-372.

23

Rollo (G.R. No. 169660), pp. 339-370.

24

Rollo (G.R. No. 169777), pp. 373-439.

25

Rollo (G.R. No. 169667), pp. 388-426.

26

Rollo (G.R. No. 169834), pp. 211-240.

27

Rollo (G.R. No. 169659), pp. 419-421.

Page 480 of 557

28

id. at 469-471.

29

Court En Banc Resolution dated March 21, 2006, rollo (G.R. No. 169659), pp. 570-572.

30

Sec. 21. The Senate or the House of Representatives or any of its respective committees may
conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The
rights of persons appearing in or affected by such inquiries shall be respected.
31

Sec. 22. The heads of departments may upon their own initiative, with the consent of the President,
or upon the request of either House, as the rules of each House shall provide, appear before and be
heard by such House on any matter pertaining to their departments. Written questions shall be
submitted to the President of the Senate or the Speaker of the House of Representatives at least three
days before their scheduled appearance. Interpellations shall not be limited to written questions, but
may cover matters related thereto. When the security of the State or the public interest so requires and
the President so states in writing, the appearance shall be conducted in executive session.
32

Sec. 1. The legislative power shall be vested in the Congress of the Philippines which shall consist
of a Senate and a House of Representatives, except to the extent reserved to the people by the
provision on initiative and referendum.1avvphil.net
33

Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable
to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with
patriotism and justice, and lead modest lives.
34

Sec. 7. The right of the people to information on matters of public concern shall be recognized.
Access to official records, and to documents, and papers pertaining to official acts, transactions, or
decisions, as well as to government research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be provided by law.
35

Sec. 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the
right of the people peaceably to assemble and petition the government for redress of grievances.
36

Sec. 16. The right of the people and their organizations to effective and reasonable participation at
all levels of social, political, and economic decision-making shall not be abridged. The State shall, by
law, facilitate the establishment of adequate consultation mechanisms.
37

Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a
policy of full public disclosure of all its transactions involving public interest.
38

Rollo (G.R. No. 169777), pp. 524-569.

39

Francisco v. House of Representatives, G.R. No. 160261, November 10, 2003, 415 SCRA 44, 133.

40

Citing Lujan v. Defenders of Wildlife, 504 US 555, 119 L. Ed.2d 351 (1992), rollo (G.R. No.
169777), p. 116.
41

Citing Lim v. Hon. Exec. Sec., 430 Phil. 555 (2002), rollo (G.R. No. 169777), p. 116.

42

G.R. No. 67752, April 10, 1989, 171 SCRA 657.

43

G.R. No. 78716, September 22, 1987 (res).

Page 481 of 557

44

Rollo (G.R. No. 169777), p. 117.

45

Id. at 279.

46

Ibid.

47

Pimentel Jr., v. Executive Secretary, G.R. No. 158088, July 6, 2005, 462 SCRA 623, 631-632.

48

Section 2 of The Party-List System Act (Republic Act 7941) reads:

SEC. 2. Declaration of Policy. The State shall promote proportional representation in the election of
representatives to the House of Representatives through a party-list system of registered national,
regional and sectoral parties or organizations or coalitions thereof, which will enable Filipino citizens
belonging to marginalized and underrepresented sectors, organizations and parties, and who lack welldefined political constituencies but who could contribute to the formulation and enactment of
appropriate legislation that will benefit the nation as a whole, to become members of the House of
Representatives. Towards this end, the State shall develop and guarantee a full, free and open party
system in order to attain the broadest possible representation of party, sectoral or group interests in the
House of Representatives by enhancing their chances to compete for and win seats in the legislature,
and shall provide the simplest scheme possible.
49

Chavez v. PCGG, G.R. No. 130716, December 9, 1998, 299 SCRA 744 , 761 (1998).

50

IBP Board of Governors Resolution No. XVII-2005-18, rollo (G.R. No 171246), p. 28.

51

Rollo (G.R. No. 169667), p. 3.

52

Rollo (G.R. No. 169660), p. 5.

53

Supra note 39 at 136.

54

Francisco, Jr. v. House of Representatives, supra note 39 at 139.

55

Lozada v. Commission on Elections, 205 Phil. 283, 287 (1983).

56

Rollo (G.R. No. 169659), p. 79.

57

Rollo (G.R. No. 169659), pp. 80-81.

58

87 Phil. 29 (1950).

59

Supra at 45, citing McGrain v. Daugherty 273 US 135, 47 S. Ct. 319, 71 L.Ed. 580, 50 A.L.R. 1
(1927).
60

Id. at 46.

61

G.R. 89914, Nov. 20, 1991, 203 SCRA 767.

62

"WHEREAS, pursuant to the rule on executive privilege, the President and those who assist her
must be free to explore the alternatives in the process of shaping policies and making decisions since
Page 482 of 557

this is fundamental to the operation of the government and is rooted in the separation of powers under
the Constitution;
xxxx
"WHEREAS, recent events, particularly with respect to the invitation of a member of the Cabinet by
the Senate as well as various heads of offices, civilian and military, have highlighted the need to
ensure the observance of the principle of separation of powers, adherence to the rule on executive
privilege and respect for the rights of persons appearing in such inquiries in aid of legislation and due
regard to constitutional mandate; x x x"
63

II Record, Constitutional Commission 150-151 (July 23, 1986).

64

B. Schwartz, Executive Privilege and Congressional Investigatory Power 47 Cal. L. Rev. 3.

65

M. Rozell, Executive Privilege and the Modern Presidents: In Nixons Shadow (83 Minn. L. Rev.
1069).
66

P. Shane & H. Bruff, Separation of Powers: Law Cases and Materials 292 (1996).

67

Id. at 293.

68

I L.Tribe, American Constitutional Law 770-1 (3rd ed., 2000).

69

121 F.3d 729, 326 U.S. App. D.C. 276.

70

Blacks Law Dictionary 569-570 (6th ed., 1991) citing 5 U.S.C.A. Sec. 552(b)(1); Black v. Sheraton
Corp. of America, D.C.D.C., 371 F.Supp. 97, 100.
71

I L.Tribe, supra note 68 at 771.

72

418 U.S. 683 (1974)

73

In re Sealed Case 121 F.3d 729, 326 U.S.App.D.C. 276 (1997) states: "It appears that the courts
have been drawn into executive-congressional privilege disputes over access to information on only
three recent occasions. These were: Unites States v. AT&T, 551 F.2d 384 (D.C. Cir.1976), appeal
after remand, 567 F.2d 121 (D.C.Cir.1977); Senate Select Committee on Presidential Campaign
Activities v. Nixon (Senate Committee), 498 F.2d 725 (D.C. Cir. 1974); United States v. House of
Representatives, 556 F. Supp. 150 (D.D.C. 1983)"; Vide R. Iraola, Congressional Oversight,
Executive Privilege, and Requests for Information Relating to Federal Criminal Investigations and
Prosecutions (87 Iowa L. Rev. 1559): "The Supreme Court has yet to rule on a dispute over
information requested by Congress where executive privilege has been asserted; in the past twentyfive years, there have been only three reported cases dealing with this issue."
74

J. Chaper & R. Fallon, Jr., Constitutional Law: Cases Comments Questions 197 (9th ed., 2001).

75

Senate Select Committee on Presidential Campaign Activities v. Nixon 498 F.2d 725, 162
U.S.App.D.C.183 (May 23, 1974).
76

N. Redlich & B. Schwartz, Constitutional Law 333 (3rd ed. ,1996) states in Note 24: "Now that the
Supreme Court decision has specifically recognized a "privilege of confidentiality of Presidential
Page 483 of 557

communications," the Select Committee decision appears even stronger. If the need of the Watergate
Committee for evidence was not enough before the Supreme Court recognized executive privilege, the
same would surely have been true after the recognition. And, if the demand of the Watergate
Committee, engaged in a specific investigation of such importance, was not enough to outweigh the
nondisclosure claim, it is hard to see what Congressional demand will fare better when met by an
assertion of privilege."
77

314 Phil. 150 (1995).

78

Comm. Almonte v. Hon. Vasquez, 314 Phil. 150, 166 (1995) states: "To put this case in perspective
it should be stated at the outset that it does not concern a demand by a citizen for information under
the freedom of information guarantee of the Constitution."
79

360 Phil. 133 (1998).

80

Chavez v. PCGG, 360 Phil. 133, 160 (1998).

81

433 Phil. 506 (2002).

82

Chavez v. Public Estates Authority, 433 Phil. 506, 534 (2002).

83

II Record, Constitutional Commission 199 (July 24, 1986).

84

II Record, Constitutional Commission 900-1 (October 12, 1986).

85

H. Mendoza & A. Lim, The New Constitution 177 (1974).

86

Constitution (1973), Art. VIII, Sec. 12(1).

87

R. Martin, The New Constitution of the Philippines 394 (1973).

88

II Record, Constitutional Commission 133 (July 23, 1986).

89

Schwartz, supra at 11-12.

90

Supra.

91

Supra note 82 at 189.

92

345 U.S. 1 , 73 S. Ct. 528, 97 L.Ed. 727, 32 A.L.R.2d 382 (1953).

93

Vide Tribe, supra note 68.

94

Supra note 78.

95

Supra note 75.

96

403 F.Supp. 1000, 20 Fed,R.Serv.2d 1382 (1975).

97

43 F.R.D. 181 (1967).

Page 484 of 557

98

Ibid., citation omitted.

99

520 F.Supp.414, 32 Fed.R.Serv.2d 913 (1981).

100

371 F.Supp.97, 18 Fed.R.Serv.2d 563 (1974).

101

Ibid., citations omitted.

102

364 U.S. 372, 81 S.Ct. 138, 5 L.Ed.2d 136 (1960).

103

U.S. v. Reynolds, supra note 85.

104

341 U.S. 479, 71 S.Ct. 814, 95 L.Ed. 1118 (1951).

105

In re Sealed Case, supra note 69.

106

Blacks Law Dictionary, supra note 70 at 569.

107

G.R. No. 74930, February 13, 1989, 170 SCRA 256.

108

G.R. No. L-63915, December 29, 1986, 146 SCRA 446, 453.

109

Hoffman, Governmental Secrecy and the Founding Fathers: A Study in Constitutional Controls
(1981) 13.

Page 485 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BAN
G.R. No. 174340

October 17, 2006

IN THE MATTER OF THE PETITION FOR ISSUANCE OF WRIT OF HABEAS CORPUS OF

CAMILO L. SABIO, petitioner,
J. ERMIN ERNEST LOUIE R. MIGUEL, petitioner-relator,
vs.
HONORABLE SENATOR RICHARD GORDON, in his capacity as Chairman, and the HONORABLE
MEMBERS OF THE COMMITTEE ON GOVERNMENT CORPORATIONS AND PUBLIC
ENTERPRISES and THE COMMITTEE ON PUBLIC SERVICES of the Senate, HONORABLE
SENATOR JUAN PONCE-ENRILE, in his official capacity as Member, HONORABLE MANUEL
VILLAR, Senate President, SENATE SERGEANT-AT-ARMS, and the SENATE OF THE
PHILIPPINES, respondents.
x --------------------------------------------------------------------------- x
G.R. No. 174318

October 17, 2006

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) and CAMILO L. SABIO,

Chairman, NARCISO S. NARIO, RICARDO M. ABCEDE, TERESO L. JAVIER and NICASIO A.
CONTI, Commissioners, MANUEL ANDAL and JULIO JALANDONI, PCGG nominees to Philcomsat
Holdings Corporation, petitioners,
vs.
RICHARD GORDON, in his capacity as Chairman, and MEMBERS OF THE COMMITTEE ON
GOVERNMENT CORPORATIONS AND PUBLIC ENTERPRISES, MEMBERS OF THE
COMMITTEE ON PUBLIC SERVICES, SENATOR JUAN PONCE-ENRILE, in his capacity as
member of both said Committees, MANUEL VILLAR, Senate President, THE SENATE SERGEANTAT-ARMS, and SENATE OF THE PHILIPPINES, respondents.
x --------------------------------------------------------------------------- x
G.R. No. 174177

October 17, 2006

PHILCOMSAT HOLDINGS CORPORATIONS, PHILIP G. BRODETT, LUIS K. LOKIN, JR.,

ROBERTO V. SAN JOSE, DELFIN P. ANGCAO, ROBERTO L. ABAD, ALMA KRISTINA ALOBBA,
and JOHNNY TAN, petitioners,
vs.
SENATE COMMITTEE ON GOVERNMENT CORPORATIONS and PUBLIC ENTERPRISES, its
MEMBERS and CHAIRMAN, the HONORABLE SENATOR RICHARD GORDON and SENATE
COMMITTEE ON PUBLIC SERVICES, its Members and Chairman, the HONORABLE SENATOR
JOKER P. ARROYO, respondents.

DECISION

Page 486 of 557

SANDOVAL-GUTIERREZ, J.:
Two decades ago, on February 28, 1986, former President Corazon C. Aquino installed her regime by issuing
Executive Order (E.O.) No. 1,1 creating the Presidential Commission on Good Government (PCGG). She
entrusted upon this Commission the herculean task of recovering the ill-gotten wealth accumulated by the
deposed President Ferdinand E. Marcos, his family, relatives, subordinates and close associates.2 Section 4 (b)
of E.O. No. 1 provides that: "No member or staff of the Commission shall be required to testify or
produce evidence in any judicial, legislative or administrative proceeding concerning matters within its
official cognizance." Apparently, the purpose is to ensure PCGG's unhampered performance of its task.3
Today, the constitutionality of Section 4(b) is being questioned on the ground that it tramples upon the Senate's
power to conduct legislative inquiry under Article VI, Section 21 of the 1987 Constitution, which reads:
The Senate or the House of Representatives or any of its respective committees may conduct inquiries
in aid of legislation in accordance with its duly published rules of procedure. The rights of persons
appearing in or affected by such inquiries shall be respected.
The facts are undisputed.
On February 20, 2006, Senator Miriam Defensor Santiago introduced Philippine Senate Resolution No. 455
(Senate Res. No. 455),4 "directing an inquiry in aid of legislation on the anomalous losses incurred by the
Philippines Overseas Telecommunications Corporation (POTC), Philippine Communications Satellite
Corporation (PHILCOMSAT), and PHILCOMSAT Holdings Corporation (PHC) due to the alleged
improprieties in their operations by their respective Board of Directors."
The pertinent portions of the Resolution read:
WHEREAS, in the last quarter of 2005, the representation and entertainment expense of the PHC
skyrocketed to P4.3 million, as compared to the previous year's mere P106 thousand;
WHEREAS, some board members established wholly owned PHC subsidiary called
Telecommunications Center, Inc. (TCI), where PHC funds are allegedly siphoned; in 18 months, over
P73 million had been allegedly advanced to TCI without any accountability report given to PHC and
PHILCOMSAT;
WHEREAS, the Philippine Star, in its 12 February 2002 issue reported that the executive committee
of Philcomsat has precipitately released P265 million and granted P125 million loan to a relative of an
executive committee member; to date there have been no payments given, subjecting the company to
an estimated interest income loss of P11.25 million in 2004;
WHEREAS, there is an urgent need to protect the interest of the Republic of the Philippines in the
PHC, PHILCOMSAT, and POTC from any anomalous transaction, and to conserve or salvage any
remaining value of the government's equity position in these corporations from any abuses of power
done by their respective board of directors;
WHEREFORE, be it resolved that the proper Senate Committee shall conduct an inquiry in aid
of legislation, on the anomalous losses incurred by the Philippine Overseas Telecommunications
Corporation (POTC), Philippine Communications Satellite Corporation (PHILCOMSAT), and

Page 487 of 557

Philcomsat Holdings Corporations (PHC) due to the alleged improprieties in the operations by
their respective board of directors.
Adopted.
(Sgd) MIRIAM DEFENSOR SANTIAGO
On the same date, February 20, 2006, Senate Res. No. 455 was submitted to the Senate and referred to the
Committee on Accountability of Public Officers and Investigations and Committee on Public Services.
However, on March 28, 2006, upon motion of Senator Francis N. Pangilinan, it was transferred to the
Committee on Government Corporations and Public Enterprises.5
On May 8, 2006, Chief of Staff Rio C. Inocencio, under the authority of Senator Richard J. Gordon, wrote
Chairman Camilo L. Sabio of the PCGG, one of the herein petitioners, inviting him to be one of the resource
persons in the public meeting jointly conducted by the Committee on Government Corporations and Public
Enterprises and Committee on Public Services. The purpose of the public meeting was to deliberate on Senate
Res. No. 455.6
On May 9, 2006, Chairman Sabio declined the invitation because of prior commitment.7 At the same time, he
invoked Section 4(b) of E.O. No. 1 earlier quoted.
On August 10, 2006, Senator Gordon issued a Subpoena Ad Testificandum,8 approved by Senate President
Manuel Villar, requiring Chairman Sabio and PCGG Commissioners Ricardo Abcede, Nicasio Conti, Tereso
Javier and Narciso Nario to appear in the public hearing scheduled on August 23, 2006 and testify on what
they know relative to the matters specified in Senate Res. No. 455. Similar subpoenae were issued against the
directors and officers of Philcomsat Holdings Corporation, namely: Benito V. Araneta, Philip J. Brodett,
Enrique L. Locsin, Manuel D. Andal, Roberto L. Abad, Luis K. Lokin, Jr., Julio J. Jalandoni, Roberto V. San
Jose, Delfin P. Angcao, Alma Kristina Alloba and Johnny Tan.9
Again, Chairman Sabio refused to appear. In his letter to Senator Gordon dated August 18, 2006, he reiterated
his earlier position, invoking Section 4(b) of E.O. No. 1. On the other hand, the directors and officers of
Philcomsat Holdings Corporation relied on the position paper they previously filed, which raised issues on the
propriety of legislative inquiry.
Thereafter, Chief of Staff Ma. Carissa O. Coscolluela, under the authority of Senator Gordon, sent another
notice10 to Chairman Sabio requiring him to appear and testify on the same subject matter set on September 6,
2006. The notice was issued "under the same authority of the Subpoena Ad Testificandum previously served
upon (him) last 16 August 2006."
Once more, Chairman Sabio did not comply with the notice. He sent a letter11 dated September 4, 2006 to
Senator Gordon reiterating his reason for declining to appear in the public hearing.
This prompted Senator Gordon to issue an Order dated September 7, 2006 requiring Chairman Sabio and
Commissioners Abcede, Conti, Javier and Nario to show cause why they should not be cited in contempt of the
Senate. On September 11, 2006, they submitted to the Senate their Compliance and Explanation,12 which
partly reads:
Doubtless, there are laudable intentions of the subject inquiry in aid of legislation. But the rule of
law requires that even the best intentions must be carried out within the parameters of the Constitution
and the law. Verily, laudable purposes must be carried out by legal methods. (Brillantes, Jr., et al. v.
Commission on Elections, En Banc [G.R. No. 163193, June 15, 2004])
Page 488 of 557

On this score, Section 4(b) of E.O. No. 1 should not be ignored as it explicitly provides:
No member or staff of the Commission shall be required to testify or produce evidence
in any judicial legislative or administrative proceeding concerning matters within its
official cognizance.
With all due respect, Section 4(b) of E.O. No. 1 constitutes a limitation on the power of legislative
inquiry, and a recognition by the State of the need to provide protection to the PCGG in order to
ensure the unhampered performance of its duties under its charter. E.O. No. 1 is a law, Section 4(b) of
which had not been amended, repealed or revised in any way.
To say the least, it would require both Houses of Congress and Presidential fiat to amend or repeal the
provision in controversy. Until then, it stands to be respected as part of the legal system in this
jurisdiction. (As held in People v. Veneracion, G.R. Nos. 119987-88, October 12, 1995: Obedience to
the rule of law forms the bedrock of our system of justice. If judges, under the guise of religious or
political beliefs were allowed to roam unrestricted beyond boundaries within which they are required
by law to exercise the duties of their office, then law becomes meaningless. A government of laws, not
of men excludes the exercise of broad discretionary powers by those acting under its authority. Under
this system, judges are guided by the Rule of Law, and ought to 'protect and enforce it without fear or
favor,' 4 [Act of Athens (1955)] resist encroachments by governments, political parties, or even the
interference of their own personal beliefs.)
xxxxxx
Relevantly, Chairman Sabio's letter to Sen. Gordon dated August 19, 2006 pointed out that the
anomalous transactions referred to in the P.S. Resolution No. 455 are subject of pending cases before
the regular courts, the Sandiganbayan and the Supreme Court (Pending cases include: a. Samuel
Divina v. Manuel Nieto, Jr., et al., CA-G.R. No. 89102; b. Philippine Communications Satellite
Corporation v. Manuel Nieto, et al.; c. Philippine Communications Satellite Corporation v. Manuel D.
Andal, Civil Case No. 06-095, RTC, Branch 61, Makati City; d. Philippine Communications Satellite
Corporation v. PHILCOMSAT Holdings Corporation, et al., Civil Case No. 04-1049) for which
reason they may not be able to testify thereon under the principle of sub judice. The laudable
objectives of the PCGG's functions, recognized in several cases decided by the Supreme Court, of the
PCGG will be put to naught if its recovery efforts will be unduly impeded by a legislative
investigation of cases that are already pending before the Sandiganbayan and trial courts.
In Bengzon v. Senate Blue Ribbon Committee, (203 SCRA 767, 784 [1991]) the Honorable Supreme
Court held:
"[T]he issues sought to be investigated by the respondent Committee is one over which
jurisdiction had been acquired by the Sandiganbayan. In short, the issue has been pre-empted
by that court. To allow the respondent Committee to conduct its own investigation of an issue
already before the Sandigabayan would not only pose the possibility of conflicting judgments
between a legislative committee and a judicial tribunal, but if the Committee's judgment were
to be reached before that of the Sandiganbayan, the possibility of its influence being made to
bear on the ultimate judgment of the Sandiganbayan can not be discounted.
xxxxxx
IT IS IN VIEW OF THE FOREGOING CONSIDERATIONS that the Commission decided not to
attend the Senate inquiry to testify and produce evidence thereat.

Page 489 of 557

Unconvinced with the above Compliance and Explanation, the Committee on Government Corporations and
Public Enterprises and the Committee on Public Services issued an Order13 directing Major General Jose
Balajadia (Ret.), Senate Sergeant-At-Arms, to place Chairman Sabio and his Commissioners under arrest for
contempt of the Senate. The Order bears the approval of Senate President Villar and the majority of the
Committees' members.
On September 12, 2006, at around 10:45 a.m., Major General Balajadia arrested Chairman Sabio in his office
at IRC Building, No. 82 EDSA, Mandaluyong City and brought him to the Senate premises where he was
detained.
Hence, Chairman Sabio filed with this Court a petition for habeas corpus against the Senate Committee on
Government Corporations and Public Enterprises and Committee on Public Services, their Chairmen, Senators
Richard Gordon and Joker P. Arroyo and Members. The case was docketed as G.R. No. 174340.
Chairman Sabio, Commissioners Abcede, Conti, Nario, and Javier, and the PCGG's nominees to Philcomsat
Holdings Corporation, Manuel Andal and Julio Jalandoni, likewise filed a petition for certiorari and
prohibition against the same respondents, and also against Senate President Manuel Villar, Senator Juan Ponce
Enrile, the Sergeant-at-Arms, and the entire Senate. The case was docketed as G.R. No. 174318.
Meanwhile, Philcomsat Holdings Corporation and its officers and directors, namely: Philip G. Brodett, Luis K.
Lokin, Jr., Roberto V. San Jose, Delfin P. Angcao, Roberto L. Abad, Alma Kristina Alobba and Johnny Tan
filed a petition for certiorari and prohibition against the Senate Committees on Government Corporations and
Public Enterprises and Public Services, their Chairmen, Senators Gordon and Arroyo, and Members. The case
was docketed as G.R. No. 174177.
In G.R. No. 174340 (for habeas corpus) and G.R. No. 174318 (for certiorari and prohibition) Chairman Sabio,
Commissioners Abcede, Conti, Nario, and Javier; and the PCGG's nominees Andal and Jalandoni alleged:
first, respondent Senate Committees disregarded Section 4(b) of E.O. No. 1 without any justifiable reason;
second, the inquiries conducted by respondent Senate Committees are not in aid of legislation; third, the
inquiries were conducted in the absence of duly published Senate Rules of Procedure Governing Inquiries in
Aid of Legislation; and fourth, respondent Senate Committees are not vested with the power of contempt.
In G.R. No. 174177, petitioners Philcomsat Holdings Corporation and its directors and officers alleged: first,
respondent Senate Committees have no jurisdiction over the subject matter stated in Senate Res. No. 455;
second, the same inquiry is not in accordance with the Senate's Rules of Procedure Governing Inquiries in Aid
of Legislation; third, the subpoenae against the individual petitioners are void for having been issued without
authority; fourth, the conduct of legislative inquiry pursuant to Senate Res. No. 455 constitutes undue
encroachment by respondents into justiciable controversies over which several courts and tribunals have
already acquired jurisdiction; and fifth, the subpoenae violated petitioners' rights to privacy and against selfincrimination.
In their Consolidated Comment, the above-named respondents countered: first, the issues raised in the petitions
involve political questions over which this Court has no jurisdiction; second, Section 4(b) has been repealed by
the Constitution; third, respondent Senate Committees are vested with contempt power; fourth, Senate's Rules
of Procedure Governing Inquiries in Aid of Legislation have been duly published; fifth, respondents have not
violated any civil right of the individual petitioners, such as their (a) right to privacy; and (b) right against selfincrimination; and sixth, the inquiry does not constitute undue encroachment into justiciable controversies.
During the oral arguments held on September 21, 2006, the parties were directed to submit simultaneously
their respective memoranda within a non-extendible period of fifteen (15) days from date. In the meantime, per
agreement of the parties, petitioner Chairman Sabio was allowed to go home. Thus, his petition for habeas
corpus has become moot. The parties also agreed that the service of the arrest warrants issued against all
Page 490 of 557

petitioners and the proceedings before the respondent Senate Committees are suspended during the pendency
of the instant cases.14
Crucial to the resolution of the present petitions is the fundamental issue of whether Section 4(b) of E.O. No.
1 is repealed by the 1987 Constitution. On this lone issue hinges the merit of the contention of Chairman
Sabio and his Commissioners that their refusal to appear before respondent Senate Committees is justified.
With the resolution of this issue, all the other issues raised by the parties have become inconsequential.
Perched on one arm of the scale of justice is Article VI, Section 21 of the 1987 Constitution granting
respondent Senate Committees the power of legislative inquiry. It reads:
The Senate or the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The
rights of persons appearing in or affected by such inquiries shall be respected.
On the other arm of the scale is Section 4(b) of E.O. No.1 limiting such power of legislative inquiry by
exempting all PCGG members or staff from testifying in any judicial, legislative or administrative proceeding,
thus:
No member or staff of the Commission shall be required to testify or produce evidence in any
judicial, legislative or administrative proceeding concerning matters within its official
cognizance.
To determine whether there exists a clear and unequivocal repugnancy between the two quoted provisions that
warrants a declaration that Section 4(b) has been repealed by the 1987 Constitution, a brief consideration of the
Congress' power of inquiry is imperative.
The Congress' power of inquiry has been recognized in foreign jurisdictions long before it reached our shores
through McGrain v. Daugherty,15 cited in Arnault v. Nazareno.16 In those earlier days, American courts
considered the power of inquiry as inherent in the power to legislate. The 1864 case of Briggs v. MacKellar17
explains the breath and basis of the power, thus:
Where no constitutional limitation or restriction exists, it is competent for either of the two bodies
composing the legislature to do, in their separate capacity, whatever may be essential to enable them
to legislate.It is well-established principle of this parliamentary law, that either house may
institute any investigation having reference to its own organization, the conduct or qualification of
its members, its proceedings, rights, or privileges or any matter affecting the public interest upon
which it may be important that it should have exact information, and in respect to which it
would be competent for it to legislate. The right to pass laws, necessarily implies the right to
obtain information upon any matter which may become the subject of a law. It is essential to the
full and intelligent exercise of the legislative function.In American legislatures the
investigation of public matters before committees, preliminary to legislation, or with the view of
advising the house appointing the committee is, as a parliamentary usage, well established as it
is in England, and the right of either house to compel witnesses to appear and testify before its
committee, and to punish for disobedience has been frequently enforced.The right of inquiry, I
think, extends to other matters, in respect to which it may be necessary, or may be deemed advisable
to apply for legislative aid.
Remarkably, in Arnault, this Court adhered to a similar theory. Citing McGrain, it recognized that the power of
inquiry is "an essential and appropriate auxiliary to the legislative function," thus:

Page 491 of 557

Although there is no provision in the "Constitution expressly investing either House of Congress with
power to make investigations and exact testimony to the end that it may exercise its legislative
functions advisedly and effectively, such power is so far incidental to the legislative function as to be
implied. In other words, the power of inquiry with process to enforce it is an essential and
appropriate auxiliary to the legislative function. A legislative body cannot legislate wisely or
effectively in the absence of information respecting the conditions which the legislation is
intended to affect or change; and where the legislation body does not itself possess the requisite
information which is not infrequently true recourse must be had to others who possess it."
Dispelling any doubt as to the Philippine Congress' power of inquiry, provisions on such power made their
maiden appearance in Article VIII, Section 12 of the 1973 Constitution.18 Then came the 1987 Constitution
incorporating the present Article VI, Section 12. What was therefore implicit under the 1935 Constitution, as
influenced by American jurisprudence, became explicit under the 1973 and 1987 Constitutions.19
Notably, the 1987 Constitution recognizes the power of investigation, not just of Congress, but also of "any of
its committee." This is significant because it constitutes a direct conferral of investigatory power upon the
committees and it means that the mechanisms which the Houses can take in order to effectively perform its
investigative function are also available to the committees.20
It can be said that the Congress' power of inquiry has gained more solid existence and expansive construal. The
Court's high regard to such power is rendered more evident in Senate v. Ermita,21 where it categorically ruled
that "the power of inquiry is broad enough to cover officials of the executive branch." Verily, the Court
reinforced the doctrine in Arnault that "the operation of government, being a legitimate subject for
legislation, is a proper subject for investigation" and that "the power of inquiry is co-extensive with the
power to legislate."
Considering these jurisprudential instructions, we find Section 4(b) directly repugnant with Article VI, Section
21. Section 4(b) exempts the PCGG members and staff from the Congress' power of inquiry. This cannot
be countenanced. Nowhere in the Constitution is any provision granting such exemption. The Congress' power
of inquiry, being broad, encompasses everything that concerns the administration of existing laws as well as
proposed or possibly needed statutes.22 It even extends "to government agencies created by Congress and
officers whose positions are within the power of Congress to regulate or even abolish."23 PCGG belongs
to this class.
Certainly, a mere provision of law cannot pose a limitation to the broad power of Congress, in the absence of
any constitutional basis.
Furthermore, Section 4(b) is also inconsistent with Article XI, Section 1 of the Constitution stating that:
"Public office is a public trust. Public officers and employees must at all times be accountable to the people,
serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and
lead modest lives."
The provision presupposes that since an incumbent of a public office is invested with certain powers and
charged with certain duties pertinent to sovereignty, the powers so delegated to the officer are held in trust for
the people and are to be exercised in behalf of the government or of all citizens who may need the
intervention of the officers. Such trust extends to all matters within the range of duties pertaining to the
office. In other words, public officers are but the servants of the people, and not their rulers.24
Section 4(b), being in the nature of an immunity, is inconsistent with the principle of public accountability.
It places the PCGG members and staff beyond the reach of courts, Congress and other administrative bodies.
Instead of encouraging public accountability, the same provision only institutionalizes irresponsibility and
non-accountability. In Presidential Commission on Good Government v. Pea,25 Justice Florentino P.
Page 492 of 557

Feliciano characterized as "obiter" the portion of the majority opinion barring, on the basis of Sections 4(a) and
(b) of E.O. No. 1, a civil case for damages filed against the PCGG and its Commissioners. He eloquently
opined:
The above underscored portions are, it is respectfully submitted, clearly obiter. It is important to
make clear that the Court is not here interpreting, much less upholding as valid and
constitutional, the literal terms of Section 4 (a), (b) of Executive Order No.1. If Section 4 (a) were
given its literal import as immunizing the PCGG or any member thereof from civil liability "for
anything done or omitted in the discharge of the task contemplated by this Order," the constitutionality
of Section 4 (a) would, in my submission, be open to most serious doubt. For so viewed, Section 4 (a)
would institutionalize the irresponsibility and non-accountability of members and staff of the PCGG, a
notion that is clearly repugnant to both the 1973 and 1987 Constitution and a privileged status not
claimed by any other official of the Republic under the 1987 Constitution. x x x.
xxxxxx
It would seem constitutionally offensive to suppose that a member or staff member of the PCGG
could not be required to testify before the Sandiganbayan or that such members were exempted
from complying with orders of this Court.
Chavez v. Sandiganbayan26 reiterates the same view. Indeed, Section 4(b) has been frowned upon by this
Court even before the filing of the present petitions.
Corollarily, Section 4(b) also runs counter to the following constitutional provisions ensuring the people's
access to information:
Article II, Section 28
Subject to reasonable conditions prescribed by law, the State adopts and implements a policy
of full public disclosure of all its transactions involving public interest.
Article III, Section 7
The right of the people to information on matters of public concern shall be recognized.
Access to official records, and to documents, and papers pertaining to official acts,
transactions, or decisions, as well as to government research data used as basis for policy
development, shall be afforded the citizen, subject to such limitations as may be provided by
law.
These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations
of the government, as well as provide the people sufficient information to enable them to exercise effectively
their constitutional rights. Armed with the right information, citizens can participate in public discussions
leading to the formulation of government policies and their effective implementation. In Valmonte v. Belmonte,
Jr.27 the Court explained that an informed citizenry is essential to the existence and proper functioning of any
democracy, thus:
An essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that the
channels for free political discussion be maintained to the end that the government may perceive and
be responsive to the people's will. Yet, this open dialogue can be effective only to the extent that the

Page 493 of 557

citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the
discussion are aware of the issues and have access to information relating thereto can such bear fruit.
Consequently, the conduct of inquiries in aid of legislation is not only intended to benefit Congress but also the
citizenry. The people are equally concerned with this proceeding and have the right to participate therein in
order to protect their interests. The extent of their participation will largely depend on the information gathered
and made known to them. In other words, the right to information really goes hand-in-hand with the
constitutional policies of full public disclosure and honesty in the public service. It is meant to enhance the
widening role of the citizenry in governmental decision-making as well as in checking abuse in the
government.28 The cases of Taada v. Tuvera29 and Legaspi v. Civil Service Commission30 have recognized a
citizen's interest and personality to enforce a public duty and to bring an action to compel public officials and
employees to perform that duty.
Section 4(b) limits or obstructs the power of Congress to secure from PCGG members and staff information
and other data in aid of its power to legislate. Again, this must not be countenanced. In Senate v. Ermita,31 this
Court stressed:
To the extent that investigations in aid of legislation are generally conducted in public, however, any
executive issuance tending to unduly limit disclosures of information in such investigations
necessarily deprives the people of information which, being presumed to be in aid of legislation,
is presumed to be a matter of public concern. The citizens are thereby denied access to information
which they can use in formulating their own opinions on the matter before Congress opinions which
they can then communicate to their representatives and other government officials through the various
legal means allowed by their freedom of expression.
A statute may be declared unconstitutional because it is not within the legislative power to enact; or it
creates or establishes methods or forms that infringe constitutional principles; or its purpose or effect violates
the Constitution or its basic principles.32 As shown in the above discussion, Section 4(b) is inconsistent with
Article VI, Section 21 (Congress' power of inquiry), Article XI, Section 1 (principle of public
accountability), Article II, Section 28 (policy of full disclosure) and Article III, Section 7 (right to public
information).
Significantly, Article XVIII, Section 3 of the Constitution provides:
All existing laws, decrees, executive orders, proclamations, letters of instructions, and other executive
issuances not inconsistent with this Constitution shall remain operative until amended, repealed, or
revoked.
The clear import of this provision is that all existing laws, executive orders, proclamations, letters of
instructions and other executive issuances inconsistent or repugnant to the Constitution are repealed.
Jurisprudence is replete with decisions invalidating laws, decrees, executive orders, proclamations, letters of
instructions and other executive issuances inconsistent with the Constitution. In Pelaez v. Auditor General,33
the Court considered repealed Section 68 of the Revised Administrative Code of 1917 authorizing the
Executive to change the seat of the government of any subdivision of local governments, upon the approval of
the 1935 Constitution. Section 68 was adjudged incompatible and inconsistent with the Constitutional grant of
limited executive supervision over local governments. In Islamic Da'wah Council of the Philippines, Inc., v.
Office of the Executive Secretary,34 the Court declared Executive Order No. 46, entitled "Authorizing the Office
on Muslim Affairs to Undertake Philippine Halal Certification," void for encroaching on the religious freedom
of Muslims. In The Province of Batangas v. Romulo,35 the Court declared some provisions of the General
Appropriations Acts of 1999, 2000 and 2001 unconstitutional for violating the Constitutional precept on local
autonomy. And in Ople v. Torres,36 the Court likewise declared unconstitutional Administrative Order No.
Page 494 of 557

308, entitled "Adoption of a National Computerized Identification Reference System," for being violative of the
right to privacy protected by the Constitution.
These Decisions, and many others, highlight that the Constitution is the highest law of the land. It is "the basic
and paramount law to which all other laws must conform and to which all persons, including the highest
officials of the land, must defer. No act shall be valid, however noble its intentions, if it conflicts with the
Constitution."37 Consequently, this Court has no recourse but to declare Section 4(b) of E.O. No. 1 repealed
by the 1987 Constitution.
Significantly, during the oral arguments on September 21, 2006, Chairman Sabio admitted that should this
Court rule that Section 4(b) is unconstitutional or that it does not apply to the Senate, he will answer the
questions of the Senators, thus:
CHIEF JUSTICE PANGANIBAN:
Okay. Now, if the Supreme Court rules that Sec. 4(b) is unconstitutional or that it does not
apply to the Senate, will you answer the questions of the Senators?
CHAIRMAN SABIO:
Your Honor, my father was a judge, died being a judge. I was here in the Supreme Court as
Chief of Staff of Justice Feria. I would definitely honor the Supreme Court and the rule of
law.
CHIEF JUSTICE PANGANIBAN:
You will answer the questions of the Senators if we say that?
CHAIRMAN SABIO:
Yes, Your Honor. That is the law already as far as I am concerned.
With his admission, Chairman Sabio is not fully convinced that he and his Commissioners are shielded from
testifying before respondent Senate Committees by Section 4(b) of E.O. No. 1. In effect, his argument that the
said provision exempts him and his co-respondent Commissioners from testifying before respondent Senate
Committees concerning Senate Res. No. 455 utterly lacks merit.
Incidentally, an argument repeated by Chairman Sabio is that respondent Senate Committees have no power to
punish him and his Commissioners for contempt of the Senate.
The argument is misleading.
Article VI, Section 21 provides:
The Senate or the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The
rights of persons appearing in or affected by such inquiries shall be respected.
It must be stressed that the Order of Arrest for "contempt of Senate Committees and the Philippine Senate"
was approved by Senate President Villar and signed by fifteen (15) Senators. From this, it can be

Page 495 of 557

concluded that the Order is under the authority, not only of the respondent Senate Committees, but of the entire
Senate.
At any rate, Article VI, Section 21 grants the power of inquiry not only to the Senate and the House of
Representatives, but also to any of their respective committees. Clearly, there is a direct conferral of power
to the committees. Father Bernas, in his Commentary on the 1987 Constitution, correctly pointed out its
significance:
It should also be noted that the Constitution explicitly recognizes the power of investigation not just of
Congress but also of "any of its committees." This is significant because it constitutes a direct
conferral of investigatory power upon the committees and it means that the means which the
Houses can take in order to effectively perform its investigative function are also available to the
Committees.38
This is a reasonable conclusion. The conferral of the legislative power of inquiry upon any committee of
Congress must carry with it all powers necessary and proper for its effective discharge. Otherwise, Article VI,
Section 21 will be meaningless. The indispensability and usefulness of the power of contempt in a legislative
inquiry is underscored in a catena of cases, foreign and local.
In the 1821 case of Anderson v. Dunn,39 the function of the Houses of Congress with respect to the contempt
power was likened to that of a court, thus:
But the court in its reasoning goes beyond this, and though the grounds of the decision are not very
clearly stated, we take them to be: that there is in some cases a power in each House of Congress to
punish for contempt; that this power is analogous to that exercised by courts of justice, and that
it being the well established doctrine that when it appears that a prisoner is held under the order
of a court of general jurisdiction for a contempt of its authority, no other court will discharge
the prisoner or make further inquiry into the cause of his commitment. That this is the general
ruleas regards the relation of one court to another must be conceded.
In McGrain,40 the U.S. Supreme Court held: "Experience has shown that mere requests for such
information are often unavailing, and also that information which is volunteered is not always accurate
or complete; so some means of compulsion is essential to obtain what is needed." The Court, in Arnault v.
Nazareno,41 sustained the Congress' power of contempt on the basis of this observation.
In Arnault v. Balagtas,42 the Court further explained that the contempt power of Congress is founded upon
reason and policy and that the power of inquiry will not be complete if for every contumacious act, Congress
has to resort to judicial interference, thus:
The principle that Congress or any of its bodies has the power to punish recalcitrant witnesses is
founded upon reason and policy. Said power must be considered implied or incidental to the exercise
of legislative power. How could a legislative body obtain the knowledge and information on
which to base intended legislation if it cannot require and compel the disclosure of such
knowledge and information if it is impotent to punish a defiance of its power and authority?
When the framers of the Constitution adopted the principle of separation of powers, making
each branch supreme within the realm of its respective authority, it must have intended each
department's authority to be full and complete, independently of the other's authority or power.
And how could the authority and power become complete if for every act of refusal, every act of
defiance, every act of contumacy against it, the legislative body must resort to the judicial
department for the appropriate remedy, because it is impotent by itself to punish or deal
therewith, with the affronts committed against its authority or dignity.43

Page 496 of 557

In Negros Oriental II Electric Cooperative, Inc. v. Sangguniang Panlungsod of Dumaguete,44 the Court
characterized contempt power as a matter of self-preservation, thus:
The exercise by the legislature of the contempt power is a matter of self-preservation as that branch
of the government vested with the legislative power, independently of the judicial branch, asserts its
authority and punishes contempts thereof. The contempt power of the legislature is, therefore, sui
generis x x x.
Meanwhile, with respect to G.R. No. 174177, the petition of Philcomsat Holdings Corporation and its directors
and officers, this Court holds that the respondent Senate Committees' inquiry does not violate their right to
privacy and right against self-incrimination.
One important limitation on the Congress' power of inquiry is that "the rights of persons appearing in or
affected by such inquiries shall be respected." This is just another way of saying that the power of inquiry
must be "subject to the limitations placed by the Constitution on government action." As held in Barenblatt v.
United States,45 "the Congress, in common with all the other branches of the Government, must exercise
its powers subject to the limitations placed by the Constitution on governmental action, more
particularly in the context of this case, the relevant limitations of the Bill of Rights."
First is the right to privacy.
Zones of privacy are recognized and protected in our laws.46 Within these zones, any form of intrusion is
impermissible unless excused by law and in accordance with customary legal process. The meticulous regard
we accord to these zones arises not only from our conviction that the right to privacy is a "constitutional right"
and "the right most valued by civilized men,"47 but also from our adherence to the Universal Declaration of
Human Rights which mandates that, "no one shall be subjected to arbitrary interference with his privacy" and
"everyone has the right to the protection of the law against such interference or attacks."48
Our Bill of Rights, enshrined in Article III of the Constitution, provides at least two guarantees that explicitly
create zones of privacy. It highlights a person's "right to be let alone" or the "right to determine what, how
much, to whom and when information about himself shall be disclosed."49 Section 2 guarantees "the right of
the people to be secure in their persons, houses, papers and effects against unreasonable searches and
seizures of whatever nature and for any purpose." Section 3 renders inviolable the "privacy of
communication and correspondence" and further cautions that "any evidence obtained in violation of this
or the preceding section shall be inadmissible for any purpose in any proceeding."
In evaluating a claim for violation of the right to privacy, a court must determine whether a person has
exhibited a reasonable expectation of privacy and, if so, whether that expectation has been violated by
unreasonable government intrusion.50 Applying this determination to these cases, the important inquiries are:
first, did the directors and officers of Philcomsat Holdings Corporation exhibit a reasonable expectation of
privacy?; and second, did the government violate such expectation?
The answers are in the negative. Petitioners were invited in the Senate's public hearing to deliberate on Senate
Res. No. 455, particularly "on the anomalous losses incurred by the Philippine Overseas
Telecommunications Corporation (POTC), Philippine Communications Satellite Corporation
(PHILCOMSAT), and Philcomsat Holdings Corporations (PHC) due to the alleged improprieties in the
operations by their respective board of directors." Obviously, the inquiry focus on petitioners' acts
committed in the discharge of their duties as officers and directors of the said corporations, particularly
Philcomsat Holdings Corporation. Consequently, they have no reasonable expectation of privacy over
matters involving their offices in a corporation where the government has interest. Certainly, such
matters are of public concern and over which the people have the right to information.

Page 497 of 557

This goes to show that the right to privacy is not absolute where there is an overriding compelling state
interest. In Morfe v. Mutuc,51 the Court, in line with Whalen v. Roe,52 employed the rational basis relationship
test when it held that there was no infringement of the individual's right to privacy as the requirement to
disclosure information is for a valid purpose, i.e., to curtail and minimize the opportunities for official
corruption, maintain a standard of honesty in public service, and promote morality in public administration.53
In Valmonte v. Belmonte,54 the Court remarked that as public figures, the Members of the former Batasang
Pambansa enjoy a more limited right to privacy as compared to ordinary individuals, and their actions are
subject to closer scrutiny. Taking this into consideration, the Court ruled that the right of the people to access
information on matters of public concern prevails over the right to privacy of financial transactions.
Under the present circumstances, the alleged anomalies in the PHILCOMSAT, PHC and POTC, ranging in
millions of pesos, and the conspiratorial participation of the PCGG and its officials are compelling reasons for
the Senate to exact vital information from the directors and officers of Philcomsat Holdings Corporations, as
well as from Chairman Sabio and his Commissioners to aid it in crafting the necessary legislation to prevent
corruption and formulate remedial measures and policy determination regarding PCGG's efficacy. There being
no reasonable expectation of privacy on the part of those directors and officers over the subject covered by
Senate Res. No. 455, it follows that their right to privacy has not been violated by respondent Senate
Committees.
Anent the right against self-incrimination, it must be emphasized that this right maybe invoked by the said
directors and officers of Philcomsat Holdings Corporation only when the incriminating question is being
asked, since they have no way of knowing in advance the nature or effect of the questions to be asked of
them."55 That this right may possibly be violated or abused is no ground for denying respondent Senate
Committees their power of inquiry. The consolation is that when this power is abused, such issue may be
presented before the courts. At this juncture, what is important is that respondent Senate Committees have
sufficient Rules to guide them when the right against self-incrimination is invoked. Sec. 19 reads:
Sec. 19. Privilege Against Self-Incrimination
A witness can invoke his right against self-incrimination only when a question tends to elicit an
answer that will incriminate him is propounded to him. However, he may offer to answer any question
in an executive session.
No person can refuse to testify or be placed under oath or affirmation or answer questions before an
incriminatory question is asked. His invocation of such right does not by itself excuse him from his
duty to give testimony.
In such a case, the Committee, by a majority vote of the members present there being a quorum, shall
determine whether the right has been properly invoked. If the Committee decides otherwise, it shall
resume its investigation and the question or questions previously refused to be answered shall be
repeated to the witness. If the latter continues to refuse to answer the question, the Committee may
punish him for contempt for contumacious conduct.
The same directors and officers contend that the Senate is barred from inquiring into the same issues being
litigated before the Court of Appeals and the Sandiganbayan. Suffice it to state that the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation provide that the filing or pendency of any prosecution of
criminal or administrative action should not stop or abate any inquiry to carry out a legislative purpose.
Let it be stressed at this point that so long as the constitutional rights of witnesses, like Chairman Sabio and his
Commissioners, will be respected by respondent Senate Committees, it their duty to cooperate with them in
their efforts to obtain the facts needed for intelligent legislative action. The unremitting obligation of every

Page 498 of 557

citizen is to respond to subpoenae, to respect the dignity of the Congress and its Committees, and to testify
fully with respect to matters within the realm of proper investigation.
In fine, PCGG Chairman Camilo Sabio and Commissioners Ricardo Abcede, Narciso Nario, Nicasio Conti,
and Tereso Javier; and Manuel Andal and Julio Jalandoni, PCGG's nominees to Philcomsat Holdings
Corporation, as well as its directors and officers, must comply with the Subpoenae Ad Testificandum issued by
respondent Senate Committees directing them to appear and testify in public hearings relative to Senate
Resolution No. 455.
WHEREFORE, the petition in G.R. No. 174340 for habeas corpus is DISMISSED, for being moot. The
petitions in G.R Nos. 174318 and 174177 are likewise DISMISSED.
Section 4(b) of E.O. No. 1 is declared REPEALED by the 1987 Constitution. Respondent Senate Committees'
power of inquiry relative to Senate Resolution 455 is upheld. PCGG Chairman Camilo L. Sabio and
Commissioners Ricardo Abcede, Narciso Nario, Nicasio Conti and Tereso Javier; and Manuel Andal and Julio
Jalandoni, PCGG's nominees to Philcomsat Holdings Corporation, as well as its directors and officers,
petitioners in G.R. No. 174177, are ordered to comply with the Subpoenae Ad Testificandum issued by
respondent Senate Committees directing them to appear and testify in public hearings relative to Senate
Resolution No. 455.
SO ORDERED.
Panganiban, C.J., Puno, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona, Carpio Morales,
Callejo, Sr., Azcuna, Chico-Nazario, Tinga, Garcia, and Velasco, JJ., concur.

Footnotes
1

E.O. No. 1 was issued by Former President Aquino in the exercise of her legislative power under the
Provisional (Freedom) Constitution. Thus, it is of the same category and has the same binding force as
a statute. (Agpalo, Statutory Construction, 1998 citing Legaspi v. Ministry of Finance, 115 SCRA 418
[1982]; Garcia-Padilla v. Ponce Enrile, G.R. No. 61388, April 20, 1983; Aquino v. Commission on
Elections, 62 SCRA 275 [1975] )
2

Section 2 (a), Executive Order No.1.

See Presidential Commission on Good Government v. Pena, April 12, 1988, 159 SCRA 558

Annex "E" of the Petition in G.R. No. 174318.

Id.

Annex "F" of the Petition in G.R. No. 174318.

Annex "G" of the Petition in G.R. No. 174318.

Annex "A" of the Petition in G.R. No. 174318.

Petition in G.R. No. 174177 at p. 15.

Page 499 of 557

10

Annex "B" of the Petition in G.R. No. 174318.

11

Annex "I" of the Petition in G.R. No. 174318.

12

Annex "J" of the Petition in G.R. No. 174318.

13

Annex "D" of the petition in G.R. No. 174318.

14

En Banc Resolution dated September 21, 2006.

15

273 U.S. 135, 47 S. Ct. 319, 71 L. Ed. 580, 50 A.L.R. 1 (1927).

16

No. L- 3820, 87 Phil. 29 (1950).

17

2 Abb. Pr. 30 (N.Y. 1864).

18

Puno, Lecture on Legislative Investigations and the Right to Privacy, at p. 22.

19

Bernas S.J., The 1987 Constitution of the Republic of the Philippines, 2003 Ed. at p.737.

20

Bernas S.J., The 1987 Constitution of the Republic of the Philippines, 2003 Ed. at p.739.

21

G.R. No. 169777, April 20, 2006.

22

Watkins v. United States, 354 U.S. 178 (1957), pp. 194-195.

23

Senate v. Ermita, Id.

24

De Leon, De Leon, Jr. The Law on Public Officers and Election Law, p. 2.

25

No. L-77663, April 12, 1988, 159 SCRA 558.

26

193 SCRA 282 (1991).

27

G.R. No. 74930, February 13, 1989, 170 SCRA 256.

28

Valmonte v. Belmonte, Jr., supra.

29

136 SCRA 27.

30

150 SCRA 530.

31

Supra.

32

Agpalo, Statutory Construction, 1998 citing In re Cunanan, 94 Phil. 534 (1954).

33

No. L-23825, December 24, 1965, 15 SCRA 569.

34

G.R. No. 153888, July 9, 2003, 405 SCRA 497.

Page 500 of 557

35

G.R. No. 152774, May 27, 2004, 429 SCRA 736.

36

293 SCRA 141 (1998).

37

Cruz, Constitutional Law, 2003, p. 4.

38

Bernas, S.J., The 1987 Constitution of the Republic of the Philippines A Commentary, p. 678.

39

19 U.S. [6 Wheat.] 204 (1821) cited in Justice Puno, Legislative Investigations and Right to
Privacy.
40

Supra.

41

Supra.

42

97 Phil. 358 [1955].

43

Id.

44

No. L-72492, November 5, 1987, 155 SCRA 421.

45

360 U.S. 109 (1959).

46

Marquez v. Desierto, G.R. No. 135882, June 27, 2001, 359 SCRA 772.

47

See Morfe v. Mutuc No. L-20387, January 31, 1968, 22 SCRA 424.

48

Article 12 of the Universal Declaration of Human Rights. See also Article 17 (1) and (2) of the
International Covenant on Civil and Political Rights.
49

Constitutional and Legal Systems of ASEAN Countries, Sison, Academy of ASEAN Law and
Jurisprudence, 1990, at 221, citing I.R. Cortes, The Constitutional Foundations of Privacy, 7 (1970).
50

Burrows v. Superior Court of San Bernardino County, 13 Cal. 3d 238, 529 P 2d 590 (1974). See
Katz v. United states (1967), 389 U.S. 347, 350-352, 88 S. Ct. 507, 19 L. Ed. 2d 576; People v. Krivda
(1971) 5 Cal. 3d 357, 364, 96 Cal. Rptr. 62, 486 P. 2d 1262; 8 Cal. 3d 623-624,105 Cal. Rptr. 521,
504 P. 2d 457. INSERT Herrera's Handbook on Arrest, Search and Seizure.
51

Supra.

52

429 U.S. 589 (1977).

53

Justice Puno, Lecture on Legislative Inquiry and Right to Privacy, p. 60.

54

170 SCRA 256 (1989)

55

Cruz, Constitutional Law, 2003, p. 307.

Page 501 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 89914 November 20, 1991

JOSE F.S. BENGZON JR., ABELARDO TERMULO, JOSE MANTECON, VICENTE MILLS JR.,
LEONARDO GAMBOA, KURT BACHMANN JR., JOSE V.E. JIMENEZ, ERNESTO CALUYA,
AGERICO UNGSON, SUSAN ROXAS, ELVIE CASTILLO, and CYNTHIA SABIDO LIMJAP,
petitioners,
vs.
THE SENATE BLUE RIBBON COMMITTEE AND ITS MEMBERS, represented by and through
the CHAIRMAN, HON. WIGBERTO TAADA, respondents, JOSE S. SANDEJAS, intervenor.
Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioners.
Balgos & Perez for intervening petitioner.
Eddie Tamondong and Antonio T. Tagaro for respondents.

PADILLA, J.:p
This is a petition for prohibition with prayer for the issuance of a temporary restraining order and/or
injuective relief, to enjoin the respondent Senate Blue Ribbon committee from requiring the
petitioners to testify and produce evidence at its inquiry into the alleged sale of the equity of
Benjamin "Kokoy" Romualdez to the Lopa Group in thirty-six (36) or thirty-nine (39) corporations.
On 30 July 1987, the Republic of the Philippines, represented by the Presidential Commission on
Good Government (PCGG), assisted by the Solicitor General, filed with the Sandiganbayan Civil
Case No. 0035 (PCGG Case No. 35) entitled "Republic of the Philippines vs. Benjamin "Kokoy"
Romualdez, et al.", for reconveyance, reversion, accounting, restitution and damages.
The complaint was amended several times by impleading new defendants and/or amplifying the
allegations therein. Under the Second Amended Complaint, 1 the herein petitioners were impleaded
as party defendants.
The complaint insofar as pertinent to herein petitioners, as defendants, alleges among others that:
14. Defendants Benjamin (Kokoy) Romualdez and Juliette Gomez Romualdez,
acting by themselves and/or in unlawful concert with Defendants Ferdinand E.
Marcos and Imelda R. Marcos, and taking undue advantage of their relationship,
influence and connection with the latter Defendant spouses, engaged in devices,
schemes and strategems to unjuestly enrigh themselves at the expense of Plaintiff
and the Filipino people, among others:

Page 502 of 557

(a) Obatained, with the active collaboration of Defendants Sene J.

Gabaldon, Mario D. Camacho, Mamerto Nepomuceno, Carlos J.
Valdez, Cesar C. Zalamea and Francisco Tantuico, Atty. Jose
Bengzon, Jr. and his law partners, namely: Edilberto S. Narciso, Jr.,
Jose Vicente E. Jimenez, Amando V. Faustino, Jr., and Leonardo C.
Cruz; Jose S. Sandejas and his fellow senior managers of FMMC/PNI
Holdings groups of companies such as Leonardo Gamboa, Vicente T.
Mills, Jr., Jose M. Mantecon, Abelardo S. Termulo, Rex C. Drilon II
and Kurt Bachmann, Jr., control of some of the biggest business
enterprises in the Philippines, such as the Manila Corporation
(MERALCO), Benguet Consolidated and the Philippine Commercial
International Bank (PCI Bank) by employing devious financial
schemes and techniques calculated to require the massive infusion
and hemorrhage of government funds with minimum or negligible
"cashout" from Defendant Benjamin Romualdez...
xxx xxx xxx
(m) manipulated, with the support, assistance and collaboration of
Philgurantee officials led by chairman Cesar E.A. Virata and the
Senior managers of FMMC/PNI Holdings, Inc. led by Jose S.
Sandejas, Jr., Jose M. Mantecom and Kurt S. Bachmann, Jr., among
others, the formation of Erectors Holdings, Inc. without infusing
additional capital solely for the purpose of Erectors Incorporated with
Philguarantee in the amount of P527,387,440.71 with insufficient
securities/collaterals just to enable Erectors Inc, to appear viable and
to borrow more capitals, so much so that its obligation with
Philgurantee has reached a total of more than P2 Billion as of June
30, 1987.
(n) at the onset of the present Administration and/or within the week
following the February 1986 People's Revolution, in conspiracy with,
supoort, assistance and collaboration of the abovenamed lawyers of
the Bengzon Law Offices, or specifically Defendants Jose F.S.
Bengzon, Jr., V.E. Jimenez, Amando V. Faustino, Jr., and Edilberto
S. Narciso, Jr., manipulated, shcemed, and/or executed a series of
devices intended to conceal and place, and/or for the purpose of
concealing and placing, beyond the inquiry and jurisdiction of the
Presidential Commission on Good Government (PCGG) herein
Defendant's individual and collective funds, properties, and assets
subject of and/or suited int he instant Complaint.
(o) manuevered, with the technical know-how and legalitic talents of
the FMMC senior manager and some of the Bengzon law partners,
such as Attys. Jose F.S. Bengzon, Jr., Edilberto S. Narciso, Jr.,
Amando V. Faustino, Jose Vicente E. Jimenez and Leonardo C.
Cruz, the purported sale of defendant Benjamin Romualdez's
interests in the (i) Professional Managers, (ii) A & E International
Corporation (A & E), (iii) First Manila Managerment Corporation
(FMMC), (iv) Philippine World Travel Inc. (PWTI) and its subsidiaries
consisting of 36 corporations in all, to PNI Holdings, Inc. (wjose
purported incorporations are all members of Atty. Jose F.S.
Bengzon's law firm) for only P5 million on March 3, 1986 or three
Page 503 of 557

days after the creation of the Presidential Commission on Good

Government on February 28, 1986, for the sole purpose of deceiving
and preempting the Government, particularly the PCGG, and making
it appear that defendant Benjamin Romualdez had already divested
himself of his ownership of the same when in truth and in fact, his
interests are well intact and being protected by Atty. Jose F.S.
Bengzon, Jr. and some of his law partners, together with the FMMC
senior managers who still control and run the affiars of said
corporations, and in order to entice the PCGG to approve the said
fictitious sale, the above-named defendants offered P20 million as
"donation" to the Government;
(p) misused, with the connivance, support and technical assitance of
the Bengzon law firm represented by Atty. Jose F.S. Bengzon, Jr. as
legal counsel, together with defendants Cesar Zalamea, Antonio
Ozaeta, Mario D. Camacho amd Senen J. Gabaldon as members of
the Board of Directors of the Philippine Commercial International
bank (PCIB), the Meralco Pension Fund (Fund, for short) in the
amount of P25 million by cuasing it to be invested in the PCIB and
through the Bank's TSG, assigned to PCI Development and PCI
Equity at 50% each, the Fund's (a) 8,028.011 common shares in the
Bank and (b) "Deposit in Subscription" in the amount of
P4,929.972.50 but of the agreed consideration of P28 million for the
said assignment, PCI Development and PCI Equity were able to pay
only P5,500.00 downpayment and the first amortization of
P3,937,500.00 thus prompting the Fund to rescind its assignment,
and the consequent reversion of the assigned brought the total
shareholding of the Fund to 11,470,555 voting shares or 36.8% of the
voting stock of the PCIB, and this development (which the defendants
themselves orchestrated or allowed to happen) was used by them as
an excuse for the unlawful dismantling or cancellation of the Fund's
10 million shares for allegedly exceeding the 30-percent ceiling
prescribed by Section 12-B of the General Banking Act, although they
know for a fact that what the law declares as unlawful and void ab
initio are the subscriptions in excess of the 30% ceiling "to the extent
of the excess over any of the ceilings prescribed ..." and not the
whole or entire stockholding which they allowed to stay for six years
(from June 30, 1980 to March 24, 1986);
(q) cleverly hid behind the veil of corporate entity, through the use of
the names and managerial expertise of the FMMC senior manager
and lawyers identified as Jose B. Sandejas, Leonardo Gamboa,
Vicente T. Mills, Abelardo S, Termulo, Edilberto S. Narciso, Jr., Jose
M. Mantecon, Rex C. Drilon II, Kurt Bachmann, Jr. together with the
legal talents of corporate lawyers, such as Attys. Jose F.S. Bengzon,
Jr., Jose V.E. Jimenez, Amando V. Faustino, Jr., and Leonardo C.
Cruz, the ill-gotten wealth of Benjamin T. Romualdez including,
among others, the 6,229,177 shares in PCIB registered in the names
of Trans Middle East Phils. Equities, Inc. and Edilberto S. Narciso, Jr.
which they refused to surrender to PCGG despite their disclosure as
they tried and continue to exert efforts in getting hold of the same as
well as the shares in Benguet registered in the names of Palm
Avenue Holdings and Palm Avenue Realty Development Corp.
Page 504 of 557

purportedly to be applied as payment for the claim of P70 million of a

"merger company of the First Manila Managerment Corp. group"
supposedly owned by them although the truth is that all the said firms
are still beneficially owned by defendants Benjamin Romualdez.
xxx xxx xxx
On 28 September 1988, petitioner (as defendants) filed their respective answers. 2 Meanwhile, from
2 to 6 August 1988, conflicting reports on the disposition by the PCGG of the "Romualdez
corporations" were carried in various metropolitan newspapers. Thus, one newspaper reported that
the Romuladez firms had not been sequestered because of the opposition of certain PCGG officials
who "had worked prviously as lawyers of the Marcos crony firms." Another daily reported otherwise,
while others declared that on 3 March 1986, or shortly after the EDSA February 1986 revolution, the
Romualdez companies" were sold for P5 million, without PCGG approval, to a holding company
controlled by Romualdez, and that Ricardo Lopa, the President's brother-in-law, had effectively
taken over the firms, even pending negotiations for the purchase of the corporations, for the same
price of P5 million which was reportedly way below the fair value of their assets. 3
On 13 September 1988, the Senate Minority Floor Leader, Hon. Juan Ponce Enrile delivered a
speech "on a matter of personal privilege" before the Senate on the alleged "take-over personal
privilege" before the Senate on the alleged "take-over of SOLOIL Incorporated, the flaship of the
First Manila Management of Companies (FMMC) by Ricardo Lopa" and called upon "the Senate to
look into the possible violation of the law in the case, particularly with regard to Republic Act No.
3019, the Anti-Graft and Corrupt Practices Act." 4
On motion of Senator Orlando Mercado, the matter was referred by the Senate to the Committee on
Accountability of Public Officers (Blue Ribbon Committee). 5 Thereafter, the Senate Blue Ribbon
Committee started its investigation on the matter. Petitioners and Ricardo Lopa were subpoenaed by
the Committee to appear before it and testify on "what they know" regarding the "sale of thirty-six
(36) corporations belonging to Benjamin "Kokoy" Romualdez."
At the hearing held on 23 May 1989, Ricardo Lopa declined to testify on the ground that his
testimony may "unduly prejudice" the defendants in Civil Case No. 0035 before the Sandiganbayan.
Petitioner Jose F.S. Bengzon, Jr. likewise refused to testify involing his constitutional right to due
process, and averring that the publicity generated by respondents Committee's inquiry could
adversely affect his rights as well as those of the other petitioners who are his co-defendants in Civil
Case No. 0035 before the Sandiganbayan.
The Senate Blue Ribbon Committee, thereupon, suspended its inquiry and directed the petitioners to
file their memorandum on the constitutional issues raised, after which, it issued a resolution 6 dated
5 June 1989 rejecting the petitioner's plea to be excused from testifying, and the Committee voted to
pursue and continue its investigation of the matter. Senator Neptali Gonzales dissented. 7
Claiming that the Senate Blue Ribbon Committee is poised to subpoena them and required their
attendance and testimony in proceedings before the Committee, in excess of its jurisdiction and
legislative purpose, in clear and blatant disregard of their constitutional rights, and to their grave and
irreparable damager, prejudice and injury, and that there is no appeal nor any other plain, speedy
and adequate remedy in the ordinary course of law, the petitioners filed the present petition for
prohibition with a prayer for temporary restraning order and/or injunctive relief.
Meanwhile, one of the defendants in Civil Case No. 0035 before the Sandiganbayan, Jose S.
Sandejas, filed with the Court of motion for intervention, 8 which the Court granted in the resolution 9
Page 505 of 557

of 21 December 1989, and required the respondent Senate Blue Ribbon Committee to comment on
the petition in intervention. In compliance, therewith, respondent Senate Blue Ribbon Committee
filed its comment 10 thereon.
Before discussing the issues raised by petitioner and intervenor, we will first tackle the jurisdictional
question raised by the respondent Committee.
In its comment, respondent Committee claims that this court cannot properly inquire into the motives
of the lawmakers in conducting legislative investigations, much less cna it enjoin the Congress or
any its regular and special commitees like what petitioners seek from making inquiries in aid of
legislation, under the doctrine of separation of powers, which obtaines in our present system of
government.
The contention is untenable. In Angara vs. Electoral Commission, 11 the Court held:
The separation of powers is a fundamental principle in our system of government. It
obtains not hrough express provision but by actual division in our Constitution. Each
department of the government has exclusive cognizance of matters wihtin its
jurisdiction, and is supreme within its own sphere. But it does not follow from the fact
that the three powers are to be kept separate and distinct that the Constitution
intended them to be absolutely unrestrained and independent of each other. The
Constitution has provided for an elaborate system of checks and balances to secure
coordination in the workings of the various departments of the government...
xxx xxx xxx
But in the main, the Constitution has blocked out with deft strokes and in bold lines,
allotment of power to the executive, the legislative and the judicial departments of the
government. The ovelapping and interlacing of funcstions and duties between the
several deaprtments, however, sometimes makes it hard to say just where the
political excitement, the great landmarks of the Constitution are apt to be forgotten or
marred, if not entirely obliterated, in cases of conflict, the judicial departments is the
only constitutional organ which can be called upon to determine the proper allocation
of powers between the several departments and among the integral or constituent
units thereof.
xxx xxx xxx
The Constitution is a definition of the powers of government. Who is to determine the
nature, scope and extent of such powers? The Constitution itself has provided for the
instrumentality of the judiciary as the rational way. And when the judiciary mediates
to allocate constitutional boundaries; it does not assert any superiority over the other
departments; it does not inr eality nullify or invalidate an act of the legislature, but
only asserts the solemn and sacred obligation assigned to it by tyhe Constitution to
determine conflicting claims of authority under the Constitution and to established for
the parties in an actual controversy the rights which that instrument secures and
guarantess to them. This is in thruth all that is involved in what is termed "judicial
supremacy" which properly is the power of judicial review under the Constitution.
Even the, this power of judicial review is limited to actual cases and controversies to
be exercised after full opportunity of argument by the parties, and limited further to
the constitutional question raised or the very lis mota presented. Any attempt at
abstraction could only lead to dialectics and barren legal questions and to sterile
Page 506 of 557

conclusions unrelated to actualities. Narrowed as its function is in this manner, the

judiciary does not pass upon questions of wisdom, justice or expediency of
legislation. More thatn that, courts accord the presumption of constitutionality to
legislative enactments, not only because the legislature is presumed to abide by the
Constitution but also becuase the judiciary in the determination of actual cases and
controversies must reflect the wisdom and justice of the people as expressed
through their representatives in the executive and legislative departments of the
government.
The "allocation of constituional boundaries" is a task that this Court must perfomr under the
Constitution. Moreowever, as held in a recent case, 12 "(t)he political question doctrine neither
interposes an obstacle to judicial determination of the rival claims. The jurisdiction to delimit
constitutional boundaries has been given to this Court. It cannot abdicate that obligation mandated
by the 1987 Constitution, although said provision by no means does away with kthe applicability of
the principle in appropriate cases." 13
The Court is thus of the considered view that it has jurisdiction over the present controversy for the
purpose of determining the scope and extent of the power of the Senate Blue Ribbon Committee to
conduct inquiries into private affirs in purported aid of legislation.
Coming to the specific issues raised in this case, petitioners contend that (1) the Senate Blue Ribbon
Committee's inquiry has no valid legislative purpose, i.e., it is not done in aid of legislation; (2) the
sale or disposition of hte Romualdez corporations is a "purely private transaction" which is beyond
the power of the Senate Blue Ribbon Committee to inquire into; and (3) the inquiry violates their right
to due process.
The 1987 Constition expressly recognizes the power of both houses of Congress to conduct
inquiries in aid of legislation. 14 Thus, Section 21, Article VI thereof provides:
The Senate or the House of Representatives or any of its respective committee may
conduct inquiries in aid of legislation in accordance with its duly published rules of
procedure. The rights of persons appearing in or affected by such inquiries shall be
respected. 15
The power of both houses of Congress to conduct inquiries in aid of legislation is not, therefore,
absolute or unlimited. Its exercise is circumscribed by the afore-quoted provision of the Constitution.
Thus, as provided therein, the investigation must be "in aid of legislation in accordance with its duly
published rules of procedure" and that "the rights of persons appearing in or affected by such
inquiries shall be respected." It follows then that the rights of persons under the Bill of Rights must
be respected, including the right to due process and the right not to be compelled to testify against
one's self.
The power to conduct formal inquiries or investigations in specifically provided for in Sec. 1 of the
Senate Rules of Procedure Governing Inquiries in Aid of Legislation. Such inquiries may refer to the
implementation or re-examination of any law or in connection with any proposed legislation or the
formulation of future legislation. They may also extend to any and all matters vested by the
Constitution in Congress and/or in the Seante alone.
As held in Jean L. Arnault vs. Leon Nazareno, et al., 16 the inquiry, to be within the jurisdiction of the
legislative body making it, must be material or necessary to the exervise of a power in it vested by
the Constitution, such as to legislate or to expel a member.

Page 507 of 557

Under Sec. 4 of the aforementioned Rules, the Senate may refer to any committee or committees
any speech or resolution filed by any Senator which in tis judgment requires an appropriate inquiry in
aid of legislation. In order therefore to ascertain the character or nature of an inquiry, resort must be
had to the speech or resolution under which such an inquiry is proposed to be made.
A perusal of the speech of Senator Enrile reveals that he (Senator Enrile) made a statement which
was published in various newspapers on 2 September 1988 accusing Mr. Ricardo "Baby" Lopa of
"having taken over the FMMC Group of Companies." As a consequence thereof, Mr. Lopa wrote a
letter to Senator Enrile on 4 September 1988 categorically denying that he had "taken over " the
FMMC Group of Companies; that former PCGG Chairman Ramon Diaz himself categorically stated
in a telecast interview by Mr. Luis Beltran on Channel 7 on 31 August 1988 that there has been no
takeover by him (Lopa); and that theses repeated allegations of a "takeover" on his (Lopa's) part of
FMMC are baseless as they are malicious.
The Lopa reply prompted Senator Enrile, during the session of the Senate on 13 September 1988, to
avail of the privilege hour, 17 so that he could repond to the said Lopa letter, and also to vindicate
his reputation as a Member of the Senate of the Philippines, considering the claim of Mr. Lopa that
his (Enrile's) charges that he (Lopa) had taken over the FMMC Group of Companies are "baseless"
and "malicious." Thus, in his speech, 18 Senator Enrile said, among others, as follows:
Mr. President, I rise this afternnon on a matter of personal privilege; the privilege
being that I received, Mr. President, a letter dated September 4, 1988, signed by Mr.
ricardo A. Lopa, a.k.a. or Baby Lopa, wherein he denied categorically that he has
taken over the First Manila Management Group of Companies which includes
SOLOIL Incorporated.
xxx xxxx xxx
In answer to Mr. Lopa, I will quote pertinent portions from an Official Memorandum to
the Presidential Commission of Good Government written and signed by former
Governor, now Congressman Jose Ramirez, in his capacity as head of the PCGG
Task Force for Region VIII. In his memorandum dated July 3, 1986, then Governor
Ramirez stated that when he and the members of his task force sought to serve a
sequestration order on the management of SOLOIL in Tanauan, Leyte, management
officials assured him that relatives of the President of the Philippines were personally
discussing and representing SOLOIL so that the order of sequestration would be
lifted and that the new owner was Mr. Ricardo A. Lopa.
I will quote the pertinent portions in the Ramire's memorandum.
The first paragraph of the memorandum reads as follows and I quote, Mr. President:
"Our sequestration work of SOLOIL in Tanauan, Leyte was not
heeded by management because they said another representation
was being made to this Commission for the ventual lifting of our
sequestrationorder. They even assured us that Mr. Ricardo Lopa and
Peping Cojunangco were personally discussing and representing
SOLOIL, so the order of sequestration will finally be lifted. While we
attempted to carry on our order, management refused to cooperate
and vehemently turned down our request to make available to us the
records of the company. In fact it was obviously clear that they will
meet us with forcethe moment we insist on doing normally our
Page 508 of 557

assigned task. In view of the impending threat, and to avoid any

untoward incident we decided to temporarily suspend our work until
there is a more categorical stand of this Commission in view of the
seemingly influential represetation being made by SOLOIL for us not
to continue our work."
Another pertinent portion of the same memorandum is paragraph five, which reads
as follows, and I quote Mr. President:
"The President, Mr. Gamboa, this is, I understand, the President of
SOLOIL, and the Plant Superintendent, Mr. Jimenez including their
chief counsel, Atty. Mandong Mendiola are now saying that there
have been divestment, and that the new owner is now Mr. Ricardo
Lopa who according to them, is the brother-in-law of the President.
They even went further by telling us that even Peping Cojuangco who
we know is the brother of her excellency is also interested in the
ownership and management of SOLOIL. When he demanded for
supporting papers which will indicate aforesaid divestment, Messrs.
Gamboa, Jimenez and Mendiola refused vehemently to submit these
papers to us, instead they said it will be submitted directly to this
Commission. To our mind their continuous dropping of names is not
good for this Commission and even to the President if our dersire is
to achieve respectability and stability of the government."
The contents of the memorandum of then Governor and now Congressman Jose
Ramirez were personally confirmed by him in a news interview last September 7,
1988.
xxx xxxx xxx
Also relevant to this case, Mr. President, is a letter of Mr. Ricardo Lopa himself in
August 11, 1988 issue of the newspaper Malaya headlined "On Alleged Takeover of
Romualdez Firms."
Mr. Lopa states in the last paragraph of the published letter and I quote him:
12. As of this writing, the sales agreement is under review by the
PCGG solely to determine the appropriate price. The sale of these
companies and our prior rigtht to requires them have never been at
issue.
Perhaps I could not make it any clearer to Mr. Lopa that I was not really making
baseless and malicious statements.
Senator Enrile concluded his privilege speech in the following tenor:
Mr. President, it may be worthwhile for the Senate to look into the possible violation
of the law in the case particularly with regard to Republic Act No. 3019, the Anti-Graft
and Corrupt Practices Act, Section 5 of which reads as follows and I quote:

Page 509 of 557

Sec. 5. Prohibition on certain relatives. It shall be unlawful for the

spouse or for nay relative, by consanguinity or affinity, within the third
civil degree, of the President of the Philippines, the Vice-President of
the Philippines, the President of the Senate, or the Speaker of the
House of Representatives, to intervene directly or indirectly, in any
business, transaction, contract or application with the Government:
Provided, that this section shall not apply to any person who prior to
the assumption of office of any of the above officials to whom he is
related, has been already dealing with the Government along the
same line of business, nor to any transaction, contract or application
filed by him for approval of which is not discretionary on the part of
the officials concerned but depends upon compliance with requisites
provided by law, nor to any act lawfully performed in an official
capacity or in the exercise of a profession.
Mr. President, I have done duty to this Senate and to myself. I leave it to this august
Body to make its own conclusion.
Verily, the speech of Senator Enrile contained no suggestion of contemplated legislation; he merely
called upon the Senate to look into a possible violation of Sec. 5 of RA No. 3019, otherwise known
as "The Anti-Graft and Corrupt Practices Act." I other words, the purpose of the inquiry to be
conducted by respondent Blue Ribbon commitee was to find out whether or not the relatives of
President Aquino, particularly Mr. ricardo Lopa, had violated the law in connection with the alleged
sale of the 36 or 39 corporations belonging to Benjamin "Kokoy" Romualdez to the Lopaa Group.
There appears to be, therefore, no intended legislation involved.
The Court is also not impressed with the respondent Committee's argument that the questioned
inquiry is to be conducted pursuant to Senate Resolution No. 212. The said resolution was
introduced by Senator Jose D. Lina in view of the representaions made by leaders of school youth,
community groups and youth of non-governmental organizations to the Senate Committee on Youth
and Sports Development, to look into the charges against the PCGG filed by three (3) stockholders
of Oriental petroleum, i.e., that it has adopted a "get-rich-quick scheme" for its nominee-directors in a
sequestered oil exploration firm.The pertinent portion of Senate Resolution No. 212 reads as follows:
xxx xxx xxx
WHEREAS, recent developments have shown that no less than the Solicitor-General
has stated that the PCGG Chairman and at least three Commissioners should resign
and that the agency should rid itself of "ineptness, incompetence and corruption" and
that the Sandiganbayan has reportedly ordered the PCGG to answer charges filed by
three stockholders of Oriental Petroleum that it has adopted a "get-rich-quick
scheme" for its nominee-directors in a sequestered oil exploration firm;
WHEREAS, leaders of school youth, community groups and youth of nongovernmental organization had made representations to the Senate Committee on
Youth and Sports Development to look into the charges against the PCGG since said
agency is a symbol of the changes expected by the people when the EDSA
revolution took place and that the ill-gotten wealth to be recovered will fund priority
projects which will benefit our people such as CARP, free education in the
elementary and secondary levels reforestration, and employment generation for rural
and urban workers;

Page 510 of 557

WHEREAS, the government and the present leadeship must demonstrate in their
public and private lives integrity, honor and efficient management of government
services lest our youth become disillusioned and lose hope and return to an Idelogy
and form of government which is repugnant to true freedom, democratic participation
and human rights: Now, therefore, be it.
Resolved by the Senate, That the activities of the Presidential Commission on Good
Government be investigated by the appropriate Committee in connection with the
implementation of Section 26, Article XVIII of the Constitution. 19
Thus, the inquiry under Senate Resolution No. 212 is to look into the charges against the PCGG
filed by the three (3) stockholders of Oriental Petroleum in connection with the implementation of
Section 26, Article XVIII of the Constitution.
It cannot, therefore, be said that the contemplated inquiry on the subject of the privilege speech of
Senator Juan Ponce Enrile, i.e., the alleged sale of the 36 (or 39) corporations belonging to
Benjamin "Kokoy" Romualdez to the Lopa Group is to be conducted pursuant to Senate Resolution
No. 212 because, firstly, Senator Enrile did not indict the PCGG, and, secondly, neither Mr. Ricardo
Lopa nor the herein petitioners are connected with the government but are private citizens.
It appeals, therefore, that the contemplated inquiry by respondent Committee is not really "in aid of
legislation" becuase it is not related to a purpose within the jurisdiction of Congress, since the aim of
the investigation is to find out whether or not the ralatives of the President or Mr. Ricardo Lopa had
violated Section 5 RA No. 3019, the "Anti-Graft and Corrupt Practices Act", a matter that appears
more within the province of the courts rather than of the legislature. Besides, the Court may take
judicial notice that Mr. Ricardo Lopa died during the pendency of this case. In John T. Watkins vs.
United States, 20 it was held held:
... The power of congress to conduct investigations in inherent in the legislative
process. That power is broad. it encompasses inquiries concerning the
administration of existing laws as well as proposed, or possibly needed statutes. It
includes surveys of defects in our social,economic, or political system for the purpose
of enabling Congress to remedy them. It comprehends probes into departments of
the Federal Government to expose corruption, inefficiency or waste. But broad asis
this power of inquiry, it is not unlimited. There is no general authority to expose the
private affairs ofindividuals without justification in terms of the functions of congress.
This was freely conceded by Solicitor General in his argument in this case. Nor is the
Congress a law enforcement or trial agency. These are functions of the executive
and judicial departments of government. No inquiry is an end in itself; it must be
related to and in furtherance of a legitimate task of Congress. Investigations
conducted soly for the personal aggrandizement of the investigators or to "punish"
those investigated are indefensible. (emphasis supplied)
It can not be overlooked that when respondent Committee decide to conduct its investigation of the
petitioners, the complaint in Civil No. 0035 had already been filed with the Sandiganbayan. A perusal
of that complaint shows that one of its principal causes of action against herein petitioners, as
defendants therein, is the alleged sale of the 36 (or 39) corporations belonging to Benjamin "Kokoy"
Romualdez. Since the issues in said complaint had long been joined by the filing of petitioner's
respective answers thereto, the issue sought to be investigated by the respondent Commitee is one
over which jurisdiction had been acquired by the Sandiganbayan. In short, the issue had been preempted by that court. To allow the respondent Committee to conduct its own investigation of an
issue already before the Sandiganbayan would not only pose the possibility of conflicting judgments
Page 511 of 557

betweena legislative commitee and a judicial tribunal, but if the Committee's judgment were to be
reached before that of the Sandiganbayan, the possibility of its influence being made to bear on the
ultimate judgment of the Sandiganbayan can not be discounted.
In fine, for the rspondent Committee to probe and inquire into the same justiciable controversy
already before the Sandiganbayan, would be an encroachment into the exclusive domain of judicial
jurisdiction that had much earlier set in. In Baremblatt vs. United States, 21 it was held that:
Broad as it is, the power is not, howevern, without limitations. Since congress may
only investigate into those areas in which it may potentially legislate or appropriate, it
cannot inquire into matters which are within the exclusive province of one of the other
branches of the government. Lacking the judicial power given to the Judiciary, it
cannot inquire into mattes that are exclusively the concern of the Judiciary. Neither
can it suplant the Executive in what exclusively belongs to the Executive. ...
Now to another matter. It has been held that "a congressional committee's right to inquire is 'subject
to all relevant limitations placed by the Constitution on governmental action,' including "'the relevant
limitations of the Bill of Rights'." 22
In another case
... the mere semblance of legislative purpose would not justify an inquiry in the face
of the Bill of Rights. The critical element is the exeistence of, and the weight to be
ascribed to, the interest of the Congress in demanding disclosures from an unwilling
witness. We cannot simply assume, however, that every congressional investigation
is justified by a public need that over-balances any private rights affected. To do so
would be to abdicate the responsibility placed by the Constitution upon the judiciary
to insure that the Congress does not unjustifiably encroah upon an individual's right
to privacy nor abridge his liberty of speech, press, religion or assembly. 23
One of the basic rights guaranteed by the Constitution to an individual is the right against selfincrimination. 24 Thir right constured as the right to remain completely silent may be availed of by
the accused in a criminal case; but kit may be invoked by other witnesses only as questions are
asked of them.
This distinction was enunciated by the Court in Romeo Chavez vs. The Honorable Court of Appeals,
et al. 25 thus
Petitioner, as accused, occupies a different tier of protection from an ordinary
witness. Whereas an ordinary witness may be compelled to take the witness stand
and claim the privilege as each question requiring an incriminating answer is hot at
him, an accused may altother refuse to take the witness stand and refuse to answer
any all questions.
Moreover, this right of the accused is extended to respondents in administrative investigations but
only if they partake of the nature of a criminal proceeding or analogous to a criminal proceeding. In
Galman vs. Pamaran, 26 the Court reiterated the doctrine in Cabal vs. Kapuanan (6 SCRA 1059) to
illustrate the right of witnesses to invoke the right against self-incrimination not only in criminal
proceedings but also in all other types of suit
It was held that:

Page 512 of 557

We did not therein state that since he is not an accused and the case is not a
criminal case, Cabal cannot refuse to take the witness stand and testify, and that he
can invoke his right against self-incrimination only when a question which tends to
elicit an answer that will incriminate him is propounded to him. Clearly then, it is not
the characeter of the suit involved but the nature of the proceedings that controls.
The privilege has consistenly been held to extend to all proceedings sanctioned by
law and to all cases in which punishment is sought to be visited upon a witness,
whether a party or not.
We do not here modify these doctrines. If we presently rule that petitioners may not be compelled by
the respondent Committee to appear, testify and produce evidenc before it, it is only becuase we
hold that the questioned inquiry is not in aid of legislation and, if pursued, would be violative of the
principle of separation of powers between the legislative and the judicial departments of government,
ordained by the Constitution.
WHEREFORE, the petition is GRANTED. The Court holds that, under the facts, including the
circumtance that petitioners are presently impleaded as defendants in a case before the
Sandiganbayan, which involves issues intimately related to the subject of contemplated inquiry
before the respondet Committee, the respondent Senate Blue Ribbon Committee is hereby enjoined
from compelling the petitioners and intervenor to testify before it and produce evidence at the said
inquiry.
SO ORDERED.
Fernan, C.J., Melencio-Herrera, Feliciano, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr.
and Romero, JJ., concur.

Separate Opinions

PARAS, J., concurring:

I concur principally because any decision of the respondent committee may unduly influence the
Sandiganbayan
GUTIERREZ, JR., J., dissenting:
I regret that I must express a strong dissent the Court's opinion in this case.
The Court is asserting a power which I believe we do not possess. We are encroaching on the turf of
Congress. We are prohibiting the Senate from proceeding with a consitutionally vested function. We
are stopping the Senate Blue Ribbon Committee from exercising a legislative prerogative
investigations in aid of legislation. We do so becuase we somehow feel that the purported aim is not
the real purpose.

Page 513 of 557

The Court has no power to second guess the motives behind an act of a House of Congress. Neither
can we substitute our judgment for its judgment on a matter specifically given to it by the
Constitution. The scope of the legislative power is broad. it emcompasses practically every aspect of
human or corporate behavior capable of regulation. How can this Court say that unraveling the
tangled and secret skeins behind the acquisition by Benjamin "Kokoy" Romualdez of 39 corporations
under the past regime and their sudden sale to the Lopa Group at the outset of the new dispensation
will not result in useful legislation?
The power of either House of Congress to conduct investigations is inherent. It needs no textual
grant. As stated in Arnault v. Nazareno, 87 Phil. 29 (1950)
Our form of government being patterned after the American system the framers of
our Constitution having drawn largely from American institutions and practices we
can, in this case, properly draw also from American precedents in interpreting
analogous provisions of our Constitution, as we have done in other cases in the past.
Although there is no provision in the Constitution expressly investing either House of
Congress with power to make investigations and exact testimony to the end that it
may exercise its legislative functions advisely and effectively, such power is so far
incidental to the legislative function as to be implied. In other words, the power of
inquiry with process to enforce it is an essential and appropriate auxiliary to the
legislative function. A legislative body cannot legislate wisely or effectively in the
absence of information respecting the conditions which the legislation is intended to
affect or change: and where the legislative body does not itself possess the requisite
information which is not infrequently true recourse must be had to others who
do possess it. ... (At p. 45)
The framers of the present Constitution were not content to leave the power inherent, incidental or
implied. The power is now expressed as follows:
Sec. 21 The Senate or the House of Representatives or may of its respective
committees may conduct inquiries in aid of legialtion in accordance with its duly
published rules of precedure. The rights of persons appearing in or affected by such
inquiries shall be respected.
Apart from the formal requirement of publishing the rules of procedure, I agree that there are three
queries which, if answered in the affirmative, may give us cause to intervene.
First, is the matter being investigated one on which no valid legislation could possibly be enacted?
Second, is Congress encroaching on terrain which the Constitution has reserved as the exclusive
domain of another branch of government?
And third, is Congress violating the basic liberties of an individual?
The classic formulation of the power of the Court to interpret the meaning of "in aid of legislation" is
expressed in Kilbourn v. Thompson, 103 U.S. 168 (1880).
The House of Representatives passed a resolution creating a committee to investigate the financial
relations between Jay Cooke and Co., a depositary of federal funds and a real estate pool. A debtor
of Jay Cooke and Co, Kilbourn, general manager of the pool refused to answer questions put to him
Page 514 of 557

by the Committee and to produce certain book sna papers. Consequently, he was ordered jailed for
forty-five days. He brought an action for false imprisonment and the Supreme Court decided in his
favor.
Speaking through Justice Miller, the Court ruled:
The resolution adopted as a sequence of this preamble contains no hint of any
intention of final action by Congress on the subject, In all the argument of the case
no suggestion has been made of what the House of Respresentatives or the
Congress could have done in the way of remedying the wrong or securing the
creditors of Jay Cooke and Co., or even the United States. Was it to be simply a
fruitless investigation into the personal affiars of individuals? If so the House of
Representatives had no power or authority in the matter more than any other equal
number of gentlemen interested for the government of their country. By fruitless we
mean that it could result in no valid legislation on the subject to which the inquiry
referrred. (Kilbourn v. Thompson, Id. at page 388)
The Kilbourn decision is, however, crica 1880. The world has turned over many times since that era.
The same court which validated separate but equal facilities against of racial discrimination and
ruled that a private contract may bar improved labor standards and social justice legislation has
reversed itslef on these and many other questions.
In McGrain v. Daugherty, 273 U.S. 135; 71 L. Ed. 580 [1927], the court went beyond the express
terms of the Senate resolution directing the investigation of a former Attorney General for nonfeasance, misfeasance, and malfeasance in office. It presumed that the action of the Senate was
with a legitimate object.
... Plainly the subject was one on which legislation could be had and would be
materially aided by the information which the investigation was calculated to elicit.
This becomes manifest when it is reflected that the functions of the Department of
Justice, the powers and duties of the Attorney-General and the duties of his
assitants, are all subject to regulation by congressional legislation, and that the
department is maintained and its activitites are carried on under such appropriations
as in the judgment of Congress are needed from year to year.
The only legitimate object the Senate could have in ordering the investigation was to
aid it in legislating, and we think the subject was the real object. An express avowal
of the object would have been better; but in view of the particular subject matter was
not indispenable. In People ex rel. Mc Donald v. Keeler, 99, N.Y. 463, 52 Am. Rep.
49, 2 N.E. 615, where the Court of Appeals of New york sustained an investigation
order by the House of Representatives of that state where the resolution contained
no avowal, but disclosed that it definitely related to the administrative of public office
the duties of which were subject to legislative regulation, the court said (pp. 485,
487): Where public institutions under the control of the State are ordered to be
investigated, it is generally with the view of some legislative action respecting them,
and the same may be said in respect of public officers,' And again "We are bound to
presume that the action of the legislative body was with a legitimate object if it is
capable of being so construed, and we have no right to assume that the contrary was
intended." (McGrain v. Daugherty Id., at page 594-595, Emphasis supplied)
The American Court was more categorical in United States v. Josephson, 333 U.S. 858 (1938). It
declared that declaration of legislative purpose was conclusive on the Courts:
Page 515 of 557

Whatever may be said of the Committee on the un-American activities, its authorizing
resolution recites it is in aid of legislation and that fact is establshed for courts.
And since the matter before us in somethingwe inherited from the American constitutional system,
rulings from the decision of federal courts may be apropos. (Stamler v. Willis, 287 F. Supp. 734
[1968]
The Court cannot probe into the motives of the members of the Congress.
Barsky v. United States, 167 F. 2d 241 [1948]
The measure of the power of inquiry is the potentiality that constitutional legislation
might ensue from information derived from such inquiry.
The possibility that invalid as well as valid legislation might ensue from an inquiry
does not limit the power of inquiry, since invalid legislation might ensue from any
inquiry.
United States v. Shelton, 148 F. Supp. 926 [1957]
The contention of the defendant that the hearing at which he testified and from which
the indictment arose was not in furtherance og a legislative purpose proceeds on the
assumption that a failure to have specific legislation in contemplation, or a failure to
show that legislation was in fact enacted, estabished an absence of legislative
purpose. This argument is patently unsound. The investigative power of Congress is
not subject to the limitation that hearings must result in legislation or
recommendations for legislation.
United States v. Deutch (147 F. Supp. 89 (1956)
Under the Constitution of the U.S., the Federal Government is a government of
limited powers. The Congress, being the legislative branch of the Federal
Government, is also clothed with limited legislative powers. In orders, however, to
carry its legislative powers into effect successfully, it has always been held that
Congress has the power to secure information concerning matters in respect to
which it has the authority to legislate. In fact, it would seem that Congress must
secure information in order to legislate intelligently. Beyond that, the Congress has
the right secure information in order to determine whether or not to legislate on a
particular subject matter on which it is within its constitutional powers to act.
(Emphasis Supplied)
The even broader scope of legislative investigation in the Philippine context is explained by a
member of the Constitutional Commission.
The requirement that the investigation be "in aid of legislation" is an essential
element for establishing the jurisdiction of the legislative body. It is, however, a
requirement which is not difficult to satisfy becuase, unlike in the United States,
where legislative power is shared by the United State Congress and the states
legislatures, the totality of legislative power is possessed by the Congress nad its
legislative field is well-nigh unlimited. "It would be difficult to define any limits by
which the subject matter of its inquiry can be bounded." (Supra, at p. 46) Moreover, it
Page 516 of 557

is not necessary that every question propounded to a witness must be material to a

proposed legislation. "In other words, the materiality of the question must be
determined by its direct relation to the subject of the inquiry and not by its indirect
relation to any proposed or possible legislation. The reason is that the necessity or
lack of necessity for legislative action and form and character of the action itself are
determined by the sum total of the information to be gathered as a result of the
investigation, and not by a fraction to be gathered as a result of the investigation, and
not by a fraction of such information elicited from a single question. (Id., at 48)
On the basis of this interpretation of what "in aid of legislation" means, it can readily
be seen that the phrase contributes practically nothing towards protecting witnesses.
Practically any investigation can be in aid of the broad legislative power of Congress.
The limitation, therefore cannot effectively prevent what Kilbourn v. Thompson (103
U.S. 168 [1880]) characterized as "roving commissions" or what Watkins v. United
States (354 U.S. 178, 200 [1957] labeled as exposure for the sake of exposure.
(Bernas, Constitution of the Republic of the Philippines, Vol. II, 1st Ed., page 132).
Applying the above principles to the present casem, it can readily be seen that the Senate is
investigating an area where it may potentially legislate. The ease with which relatives of the
President were allegedly able to amass great wealth under the past regime is a legitimate area of
inquiry. And if we tack on the alleged attempts o f relatives of a succeeding adminsitration to
duplicate the feat, the need for remedial legislation becomes more imperative.
Our second area of concern is congressional encroachment on matters reserved by the Constitution
for the Executive or the Judiciary.
The majority opinion cites the decision in Angara v. Electoral Commission, 63 Phil. 139 (1936)
explaining our power to determined conflicting claims of authority. It is indeed the function on this
Court to allocate constitutional boundaries but in the exercise of this "umpire" function we have to
take care that we do not keep any of the three great departments of government from performing
functions peculiar to each department or specifically vested to it sby the Constitution. When a power
is vested, ti carries with is everything legitimately neede to exercise it.
It may be argued that the investigation into the Romualdez Lopa transactions is more appropriate
for the Department of Justice and the judiciary. This argument misses the point of legislative inquiry.
The prosecution of offenders by the Department of Justice or the Ombudsman and their trial before
courts of justice is intended to punish persons who violate the law. Legislative investigations go
further. The aim is to arrive at policy determinations which may or may not be enacted into
legislation. Referral to prosecutors or courts of justice is an added bonus. For sure, the Senate Blue
Ribbon Committee knows it cannot sentence any offender, no matter how overwhelming the proof
that it may gatherm to a jail term. But certainly, the Committee can recommend to Congress how the
situation which enabled get-rich-quick schemes to flourish may be remedied. The fact that the
subject of the investigation may currently be undergoing trial does not restrict the power of Congress
to investigate for its own purposes. The legislative purpose is distinctly different from the judicial
purpose.
In Sinclair v. United States, 279 U.S. 263, 73 L ed. 692 (1928), leases of naval reservations to oil
companies were investigated by the United States Senate. On a finding that certain leases were
fraudulent, court action was recommended. In other words, court action on one hand and legislation
on the other, are not mutually exclusive. They may complement each other.

Page 517 of 557

... It may be conceded that Congress is without authority to compel disclosyres for
the purpose of aiding the prosecution of pending suits; but the authority of that body,
directly or through it Committees, to require pertinent disclosures in aid of its own
consitutional power is not abridged because the information sought to be elicited may
also be of use in such suits... It is plain that investigation of the matters involved in
suits brought or to be commenced under the Senate resolution directing the
institution of suits for the cancellation of the leases might directly aid in respect of
legislative action... (Sinclair v. United States, Id.at page 698).
In United States v. Orman, 207 F. 2d Ed. 148 (1953), the court declared that it was pertinent for a
legislative committee to seek facts indicating that a witness was linked to unlawful intestate
gambling.
The power of a congressional committee to investigate matters cannot be challenged
on the ground that the Committee went beyond the scope of any contemplated
legislative and assumed the functions of a grand jury. Whre the genral subject of
investigation is one concerning which Congress can legislate, and the information
sought might aid the congressional consideration, in such a situation a legitimate
legislative purpose must be presumed...
I submit that the filing of indictments or informations or the trial of certain persons cannot, by
themselves, half the intitiation or stop the progress of legislative investigations.
The other ground which I consider the more important one is where the legislative investigation
violates the liberties of the witnesses.
The Constitution expressly provides that "the rights of persons appearing in or affected by such
inquiries shall be respected.
It should be emphasized that the constitutional restriction does not call for the banning or prohibition
of investigations where a violation of a basis rights is claimed. It only requires that in the course of
the proceedings, the right of persons should be respected.
What the majority opinion mandates is a blanket prohibition against a witness testifying at all, simply
because he is already facing charges before the Sandiganbayan. To my mind, the Consitution
allows him to interpose objections whenever an incriminating question is posed or when he is
compelled to reveal his ocurt defenses, but not ot refuse to take the witness stand completely.
Arnault v. Nazareno, supra, illustrates the reticence, with which the court views petitions to curtail
legislative investigations even where an invocation of individual liberties is made.
In Arnault, the entire country already knew the name of the presidential realtive whom the Sentate
was trying to link to the Tambobong-Buenavista estate anomalies. Still, the Court did not interfere
when Arnault refused to answer specific questions directed at him and he was punished for hir
refusal. The Court did not restrain the Senate when Arnault was sent o the national penitentiary for
an indefinite visit until the name which the Senate wanted him to utter was extracted. Only when the
imprisonment became ureasonably prolonged and the situation in Congress had changed was he
released.
As pointed out by the respondents, not one question has been asked requiring an answer that would
incriminate the petitioners. The allegation that their basic rights are vilolated is not only without basis
but is also premature.
Page 518 of 557

I agree with the respondents that the slae of 39 Romualdez corporations to Mr. Lopa is not a purely
private transaction into which the Senate may not inquire. if this were so, much of the work of the
Presidential Commission on Good Government (PCGG) as it seeks to recover illegally acquired
wealth would be negated. Much of what PCGG is trying to recover is the product of arrangements
which are not only private but also secret and hidden.
I therefore, vote to DISMISS the petition.
Narvasa, J., dissents.
CRUZ, J., dissenting:
I regret I am unable to give my concurrence, I do not agree that the investigation being conducted by
the Blue Ribbon Committee is not in aid of legislation.
In Arnault v. Nazareno, 87 Phil. 29, this Court observed that "we are bound to presume that the
action of the legislative body was with a legitimate object if it is capable of being so construed, and
we have no right ot assume that the contrary was intended." (People ex rel. Mc Donald vs. Keeler,
99 N.Y. 463; 52 Am. Rep., 49; 2 N.E., 615, quoted with approval by the U.S. Supreme Court in
McGrain vs. Daugherty, 273 U.S. 135). As far as I know, that is still the rule today.
More importantly, the presumption is supported by the established facts. The inquiry is sustainable
as an implied of power the legislature and even as expressly limited by the Constitution.
The inquiry deals with alleged manipulations of public funds and illicit acquisitions of properties now
being claimed by the PCGG for the Republic of the Philippines. The purpose of the Committee is to
ascertain if and how such anomalies have been committed. It is settled that the legislature has a
right to investigate the disposition of the public funds it has appropriated; indeed, "an inquiry into the
expenditure of all public money is na indispensable duty of the legislature." Moreover, an
investigation of a possible violation of a law may be useful in the drafting of amendatory legislation to
correct or strengthen that law.
The ponencia quotes lengthily from Senator Enrile's speech and concludes that it "contained no
suggestions of contemplated legislation; he merely called upon the Senate to look into a possible
violation of section 5 of R.A. No. 3019." However, according to McGrain v. Daugherty, supra:
Primarily, the purpose for which legislative inquiry and investigation is pursued is to
serve as an aid in legislation. Through it, the legislature is able to obtain facts or data
in aid fo proposed legislation. However, it is not necessary that the resolution
ordering an investigation should in terms expressly state that the object of the inquiry
is to obtain data in aid of proposed legislation. It is enough that such purpose
appears from a consideration of the entire proceedings or one in which legislation
could be had and would be materially aided by the information which the
investigation was calculated to elicit. An express avowal of the object would be
better, but such is not indispensable. (Emphasis supplied).
The petitioner's contention that the questioned investigation would compel them to reveal their
defense in the cases now pending against them in the Sandigangbayan is untenable. They know or
should know that they cannot be compelled to answer incriminating questions. The case of Chavez
v. Court of Appeals, 24 SCRA 663, where we held that an accused may refuse at the outset to take
the stand on the ground that the questions to be put by the prosecutor will tend to incriminate him is,
of course, not applicable to them. They are not facing criminal charges before the Blue Ribbon
Page 519 of 557

Committee. Like any ordinary witness, they can invoke the right against self-incrimination only when
and as the incriminating question is propounded.
While it is true that the Court is now allowed more leeway in reviewing the traditionally political acts
of the legislative and executive departments, the power must be exercised with the utmost
circumspection lest we unduly trench on their prerogatives and disarrange the constitutional
separation of powers. That power is available to us only if there is a clear showing of a grave abuse
of discretion, which I do not see in the case at bar.
Guided by the presumption and the facts, I vote to DISMISS the petition.
Narvasa, J., dissents.

# Separate Opinions
PARAS, J., concurring:
I concur principally because any decision of the respondent committee may unduly influence the
Sandiganbayan
GUTIERREZ, JR., J., dissenting:
I regret that I must express a strong dissent the Court's opinion in this case.
The Court is asserting a power which I believe we do not possess. We are encroaching on the turf of
Congress. We are prohibiting the Senate from proceeding with a consitutionally vested function. We
are stopping the Senate Blue Ribbon Committee from exercising a legislative prerogative
investigations in aid of legislation. We do so becuase we somehow feel that the purported aim is not
the real purpose.
The Court has no power to second guess the motives behind an act of a House of Congress. Neither
can we substitute our judgment for its judgment on a matter specifically given to it by the
Constitution. The scope of the legislative power is broad. it emcompasses practically every aspect of
human or corporate behavior capable of regulation. How can this Court say that unraveling the
tangled and secret skeins behind the acquisition by Benjamin "Kokoy" Romualdez of 39 corporations
under the past regime and their sudden sale to the Lopa Group at the outset of the new dispensation
will not result in useful legislation?
The power of either House of Congress to conduct investigations is inherent. It needs no textual
grant. As stated in Arnault v. Nazareno, 87 Phil. 29 (1950)
Our form of government being patterned after the American system the framers of
our Constitution having drawn largely from American institutions and practices we
can, in this case, properly draw also from American precedents in interpreting
analogous provisions of our Constitution, as we have done in other cases in the past.

Page 520 of 557

Although there is no provision in the Constitution expressly investing either House of

Congress with power to make investigations and exact testimony to the end that it
may exercise its legislative functions advisely and effectively, such power is so far
incidental to the legislative function as to be implied. In other words, the power of
inquiry with process to enforce it is an essential and appropriate auxiliary to the
legislative function. A legislative body cannot legislate wisely or effectively in the
absence of information respecting the conditions which the legislation is intended to
affect or change: and where the legislative body does not itself possess the requisite
information which is not infrequently true recourse must be had to others who
do possess it. ... (At p. 45)
The framers of the present Constitution were not content to leave the power inherent, incidental or
implied. The power is now expressed as follows:
Sec. 21 The Senate or the House of Representatives or may of its respective
committees may conduct inquiries in aid of legialtion in accordance with its duly
published rules of precedure. The rights of persons appearing in or affected by such
inquiries shall be respected.
Apart from the formal requirement of publishing the rules of procedure, I agree that there are three
queries which, if answered in the affirmative, may give us cause to intervene.
First, is the matter being investigated one on which no valid legislation could possibly be enacted?
Second, is Congress encroaching on terrain which the Constitution has reserved as the exclusive
domain of another branch of government?
And third, is Congress violating the basic liberties of an individual?
The classic formulation of the power of the Court to interpret the meaning of "in aid of legislation" is
expressed in Kilbourn v. Thompson, 103 U.S. 168 (1880).
The House of Representatives passed a resolution creating a committee to investigate the financial
relations between Jay Cooke and Co., a depositary of federal funds and a real estate pool. A debtor
of Jay Cooke and Co, Kilbourn, general manager of the pool refused to answer questions put to him
by the Committee and to produce certain book sna papers. Consequently, he was ordered jailed for
forty-five days. He brought an action for false imprisonment and the Supreme Court decided in his
favor.
Speaking through Justice Miller, the Court ruled:
The resolution adopted as a sequence of this preamble contains no hint of any
intention of final action by Congress on the subject, In all the argument of the case
no suggestion has been made of what the House of Respresentatives or the
Congress could have done in the way of remedying the wrong or securing the
creditors of Jay Cooke and Co., or even the United States. Was it to be simply a
fruitless investigation into the personal affiars of individuals? If so the House of
Representatives had no power or authority in the matter more than any other equal
number of gentlemen interested for the government of their country. By fruitless we
mean that it could result in no valid legislation on the subject to which the inquiry
referrred. (Kilbourn v. Thompson, Id. at page 388)

Page 521 of 557

The Kilbourn decision is, however, crica 1880. The world has turned over many times since that era.
The same court which validated separate but equal facilities against of racial discrimination and
ruled that a private contract may bar improved labor standards and social justice legislation has
reversed itslef on these and many other questions.
In McGrain v. Daugherty, 273 U.S. 135; 71 L. Ed. 580 [1927], the court went beyond the express
terms of the Senate resolution directing the investigation of a former Attorney General for nonfeasance, misfeasance, and malfeasance in office. It presumed that the action of the Senate was
with a legitimate object.
... Plainly the subject was one on which legislation could be had and would be
materially aided by the information which the investigation was calculated to elicit.
This becomes manifest when it is reflected that the functions of the Department of
Justice, the powers and duties of the Attorney-General and the duties of his
assitants, are all subject to regulation by congressional legislation, and that the
department is maintained and its activitites are carried on under such appropriations
as in the judgment of Congress are needed from year to year.
The only legitimate object the Senate could have in ordering the investigation was to
aid it in legislating, and we think the subject was the real object. An express avowal
of the object would have been better; but in view of the particular subject matter was
not indispenable. In People ex rel. Mc Donald v. Keeler, 99, N.Y. 463, 52 Am. Rep.
49, 2 N.E. 615, where the Court of Appeals of New york sustained an investigation
order by the House of Representatives of that state where the resolution contained
no avowal, but disclosed that it definitely related to the administrative of public office
the duties of which were subject to legislative regulation, the court said (pp. 485,
487): Where public institutions under the control of the State are ordered to be
investigated, it is generally with the view of some legislative action respecting them,
and the same may be said in respect of public officers,' And again "We are bound to
presume that the action of the legislative body was with a legitimate object if it is
capable of being so construed, and we have no right to assume that the contrary was
intended." (McGrain v. Daugherty Id., at page 594-595, Emphasis supplied)
The American Court was more categorical in United States v. Josephson, 333 U.S. 858 (1938). It
declared that declaration of legislative purpose was conclusive on the Courts:
Whatever may be said of the Committee on the un-American activities, its authorizing
resolution recites it is in aid of legislation and that fact is establshed for courts.
And since the matter before us in somethingwe inherited from the American constitutional system,
rulings from the decision of federal courts may be apropos. (Stamler v. Willis, 287 F. Supp. 734
[1968]
The Court cannot probe into the motives of the members of the Congress.
Barsky v. United States, 167 F. 2d 241 [1948]
The measure of the power of inquiry is the potentiality that constitutional legislation
might ensue from information derived from such inquiry.

Page 522 of 557

The possibility that invalid as well as valid legislation might ensue from an inquiry
does not limit the power of inquiry, since invalid legislation might ensue from any
inquiry.
United States v. Shelton, 148 F. Supp. 926 [1957]
The contention of the defendant that the hearing at which he testified and from which
the indictment arose was not in furtherance og a legislative purpose proceeds on the
assumption that a failure to have specific legislation in contemplation, or a failure to
show that legislation was in fact enacted, estabished an absence of legislative
purpose. This argument is patently unsound. The investigative power of Congress is
not subject to the limitation that hearings must result in legislation or
recommendations for legislation.
United States v. Deutch (147 F. Supp. 89 (1956)
Under the Constitution of the U.S., the Federal Government is a government of
limited powers. The Congress, being the legislative branch of the Federal
Government, is also clothed with limited legislative powers. In orders, however, to
carry its legislative powers into effect successfully, it has always been held that
Congress has the power to secure information concerning matters in respect to
which it has the authority to legislate. In fact, it would seem that Congress must
secure information in order to legislate intelligently. Beyond that, the Congress has
the right secure information in order to determine whether or not to legislate on a
particular subject matter on which it is within its constitutional powers to act.
(Emphasis Supplied)
The even broader scope of legislative investigation in the Philippine context is explained by a
member of the Constitutional Commission.
The requirement that the investigation be "in aid of legislation" is an essential
element for establishing the jurisdiction of the legislative body. It is, however, a
requirement which is not difficult to satisfy becuase, unlike in the United States,
where legislative power is shared by the United State Congress and the states
legislatures, the totality of legislative power is possessed by the Congress nad its
legislative field is well-nigh unlimited. "It would be difficult to define any limits by
which the subject matter of its inquiry can be bounded." (Supra, at p. 46) Moreover, it
is not necessary that every question propounded to a witness must be material to a
proposed legislation. "In other words, the materiality of the question must be
determined by its direct relation to the subject of the inquiry and not by its indirect
relation to any proposed or possible legislation. The reason is that the necessity or
lack of necessity for legislative action and form and character of the action itself are
determined by the sum total of the information to be gathered as a result of the
investigation, and not by a fraction to be gathered as a result of the investigation, and
not by a fraction of such information elicited from a single question. (Id., at 48)
On the basis of this interpretation of what "in aid of legislation" means, it can readily
be seen that the phrase contributes practically nothing towards protecting witnesses.
Practically any investigation can be in aid of the broad legislative power of Congress.
The limitation, therefore cannot effectively prevent what Kilbourn v. Thompson (103
U.S. 168 [1880]) characterized as "roving commissions" or what Watkins v. United

Page 523 of 557

States (354 U.S. 178, 200 [1957] labeled as exposure for the sake of exposure.
(Bernas, Constitution of the Republic of the Philippines, Vol. II, 1st Ed., page 132).
Applying the above principles to the present casem, it can readily be seen that the Senate is
investigating an area where it may potentially legislate. The ease with which relatives of the
President were allegedly able to amass great wealth under the past regime is a legitimate area of
inquiry. And if we tack on the alleged attempts o f relatives of a succeeding adminsitration to
duplicate the feat, the need for remedial legislation becomes more imperative.
Our second area of concern is congressional encroachment on matters reserved by the Constitution
for the Executive or the Judiciary.
The majority opinion cites the decision in Angara v. Electoral Commission, 63 Phil. 139 (1936)
explaining our power to determined conflicting claims of authority. It is indeed the function on this
Court to allocate constitutional boundaries but in the exercise of this "umpire" function we have to
take care that we do not keep any of the three great departments of government from performing
functions peculiar to each department or specifically vested to it sby the Constitution. When a power
is vested, ti carries with is everything legitimately neede to exercise it.
It may be argued that the investigation into the Romualdez Lopa transactions is more appropriate
for the Department of Justice and the judiciary. This argument misses the point of legislative inquiry.
The prosecution of offenders by the Department of Justice or the Ombudsman and their trial before
courts of justice is intended to punish persons who violate the law. Legislative investigations go
further. The aim is to arrive at policy determinations which may or may not be enacted into
legislation. Referral to prosecutors or courts of justice is an added bonus. For sure, the Senate Blue
Ribbon Committee knows it cannot sentence any offender, no matter how overwhelming the proof
that it may gatherm to a jail term. But certainly, the Committee can recommend to Congress how the
situation which enabled get-rich-quick schemes to flourish may be remedied. The fact that the
subject of the investigation may currently be undergoing trial does not restrict the power of Congress
to investigate for its own purposes. The legislative purpose is distinctly different from the judicial
purpose.
In Sinclair v. United States, 279 U.S. 263, 73 L ed. 692 (1928), leases of naval reservations to oil
companies were investigated by the United States Senate. On a finding that certain leases were
fraudulent, court action was recommended. In other words, court action on one hand and legislation
on the other, are not mutually exclusive. They may complement each other.
... It may be conceded that Congress is without authority to compel disclosyres for
the purpose of aiding the prosecution of pending suits; but the authority of that body,
directly or through it Committees, to require pertinent disclosures in aid of its own
consitutional power is not abridged because the information sought to be elicited may
also be of use in such suits... It is plain that investigation of the matters involved in
suits brought or to be commenced under the Senate resolution directing the
institution of suits for the cancellation of the leases might directly aid in respect of
legislative action... (Sinclair v. United States, Id.at page 698).
In United States v. Orman, 207 F. 2d Ed. 148 (1953), the court declared that it was pertinent for a
legislative committee to seek facts indicating that a witness was linked to unlawful intestate
gambling.

Page 524 of 557

The power of a congressional committee to investigate matters cannot be challenged

on the ground that the Committee went beyond the scope of any contemplated
legislative and assumed the functions of a grand jury. Whre the genral subject of
investigation is one concerning which Congress can legislate, and the information
sought might aid the congressional consideration, in such a situation a legitimate
legislative purpose must be presumed...
I submit that the filing of indictments or informations or the trial of certain persons cannot, by
themselves, half the intitiation or stop the progress of legislative investigations.
The other ground which I consider the more important one is where the legislative investigation
violates the liberties of the witnesses.
The Constitution expressly provides that "the rights of persons appearing in or affected by such
inquiries shall be respected.
It should be emphasized that the constitutional restriction does not call for the banning or prohibition
of investigations where a violation of a basis rights is claimed. It only requires that in the course of
the proceedings, the right of persons should be respected.
What the majority opinion mandates is a blanket prohibition against a witness testifying at all, simply
because he is already facing charges before the Sandiganbayan. To my mind, the Consitution
allows him to interpose objections whenever an incriminating question is posed or when he is
compelled to reveal his ocurt defenses, but not ot refuse to take the witness stand completely.
Arnault v. Nazareno, supra, illustrates the reticence, with which the court views petitions to curtail
legislative investigations even where an invocation of individual liberties is made.
In Arnault, the entire country already knew the name of the presidential realtive whom the Sentate
was trying to link to the Tambobong-Buenavista estate anomalies. Still, the Court did not interfere
when Arnault refused to answer specific questions directed at him and he was punished for hir
refusal. The Court did not restrain the Senate when Arnault was sent o the national penitentiary for
an indefinite visit until the name which the Senate wanted him to utter was extracted. Only when the
imprisonment became ureasonably prolonged and the situation in Congress had changed was he
released.
As pointed out by the respondents, not one question has been asked requiring an answer that would
incriminate the petitioners. The allegation that their basic rights are vilolated is not only without basis
but is also premature.
I agree with the respondents that the slae of 39 Romualdez corporations to Mr. Lopa is not a purely
private transaction into which the Senate may not inquire. if this were so, much of the work of the
Presidential Commission on Good Government (PCGG) as it seeks to recover illegally acquired
wealth would be negated. Much of what PCGG is trying to recover is the product of arrangements
which are not only private but also secret and hidden.
I therefore, vote to DISMISS the petition.
Narvasa, J., dissents.
CRUZ, J., dissenting:
Page 525 of 557

I regret I am unable to give my concurrence, I do not agree that the investigation being conducted by
the Blue Ribbon Committee is not in aid of legislation.
In Arnault v. Nazareno, 87 Phil. 29, this Court observed that "we are bound to presume that the
action of the legislative body was with a legitimate object if it is capable of being so construed, and
we have no right ot assume that the contrary was intended." (People ex rel. Mc Donald vs. Keeler,
99 N.Y. 463; 52 Am. Rep., 49; 2 N.E., 615, quoted with approval by the U.S. Supreme Court in
McGrain vs. Daugherty, 273 U.S. 135). As far as I know, that is still the rule today.
More importantly, the presumption is supported by the established facts. The inquiry is sustainable
as an implied of power the legislature and even as expressly limited by the Constitution.
The inquiry deals with alleged manipulations of public funds and illicit acquisitions of properties now
being claimed by the PCGG for the Republic of the Philippines. The purpose of the Committee is to
ascertain if and how such anomalies have been committed. It is settled that the legislature has a
right to investigate the disposition of the public funds it has appropriated; indeed, "an inquiry into the
expenditure of all public money is na indispensable duty of the legislature." Moreover, an
investigation of a possible violation of a law may be useful in the drafting of amendatory legislation to
correct or strengthen that law.
The ponencia quotes lengthily from Senator Enrile's speech and concludes that it "contained no
suggestions of contemplated legislation; he merely called upon the Senate to look into a possible
violation of section 5 of R.A. No. 3019." However, according to McGrain v. Daugherty, supra:
Primarily, the purpose for which legislative inquiry and investigation is pursued is to
serve as an aid in legislation. Through it, the legislature is able to obtain facts or data
in aid fo proposed legislation. However, it is not necessary that the resolution
ordering an investigation should in terms expressly state that the object of the inquiry
is to obtain data in aid of proposed legislation. It is enough that such purpose
appears from a consideration of the entire proceedings or one in which legislation
could be had and would be materially aided by the information which the
investigation was calculated to elicit. An express avowal of the object would be
better, but such is not indispensable. (Emphasis supplied).
The petitioner's contention that the questioned investigation would compel them to reveal their
defense in the cases now pending against them in the Sandigangbayan is untenable. They know or
should know that they cannot be compelled to answer incriminating questions. The case of Chavez
v. Court of Appeals, 24 SCRA 663, where we held that an accused may refuse at the outset to take
the stand on the ground that the questions to be put by the prosecutor will tend to incriminate him is,
of course, not applicable to them. They are not facing criminal charges before the Blue Ribbon
Committee. Like any ordinary witness, they can invoke the right against self-incrimination only when
and as the incriminating question is propounded.
While it is true that the Court is now allowed more leeway in reviewing the traditionally political acts
of the legislative and executive departments, the power must be exercised with the utmost
circumspection lest we unduly trench on their prerogatives and disarrange the constitutional
separation of powers. That power is available to us only if there is a clear showing of a grave abuse
of discretion, which I do not see in the case at bar.
Guided by the presumption and the facts, I vote to DISMISS the petition.
Narvasa, J., dissents.
Page 526 of 557

# Footnotes
1 Annex "A", Rollo, p. 38.
2 Annexes "B", "C" and "D", Rollo, pp. 98, 114 and 128.
3 Rollo, pp. 219-220.
4 Annex "E-1", Rollo, p. 143.
5 Annex "E", Rollo, p. 142.
6 Annex "H-1", Rollo, p. 162.
7 Annex "H-2", Rollo, p. 189.
8 Rollo, p. 264.
9 Ibid., p. 263.
10 Ibid., p. 284.
11 63 Phil. 139, 156, 157, 158-159.
12 Neptali A. Gonzales, et al. vs. Hon. Catalino Macaraig, Jr., et al., G.R. No. 87636,
19 November 1990, 191 SCRA 452, 463.
13 Section 1, Article VII of the 1987 Constitution provides:
Section 1. The judicial power shall be vested in one Supreme Court and in such
lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the Government.
14 In Arnault vs. Nazareno, 87 Phil. 29, this Court held that although there was no
express provision in the 1935 Constitution giving such power to both houses of
Congress, it was so incidental to the legislative function as to be implied.
15 This was taken from Section 12(2), Article VII of the 1973 Constitution.
16 No. L-3820, July 18, 1950, 87 Phil. 29.
17 Questions of privilege are those affecting the rights, privileges, reputation,
conduct, decorum and dignity of the Senate or its Members as well as the integrity of
its proceedings." (Sec. 8, Rule XXXIX, Rules of hte Senate.)
18 Annex 2, Rollo, p. 242.
Page 527 of 557

19 Sec. 26, Article XVIII of the Constitution provides: The authority to issue
sequestration or freeze orders under Proclamation No. 3, dated March 24, 1986 in
relation to the recovery of ill-gotten wealth shall remain operative for not more than
eighteen months after the retification of this Constitution. However, in the national
interest, as certified by the President, the Congress may extend said period.
20 354 U.S. 178, 1 L. ed. 1273 (1957).
21 360 U.S. 109, 3 L ed. 2d 1115, S CT 1081 (1959).
22 Maurice A. Hutcheson vs. U.S., 369 US 599.
23 Watkins vs. US, 354 USS 178 citing US vs. Rumely, 345 US 41.
24 Sec. 17, Article III of the Constitution provides:
No person shall be compelled to be a witness against himself.
25 G.R. No. L-29169, August 19, 1968, 24 SCRA 663.
26 G.R. Nos. 71208-09, August 30, 1985, 138 SCRA 294.

Page 528 of 557

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 180643

September 4, 2008

ROMULO L. NERI, petitioner,

vs.
SENATE COMMITTEE ON ACCOUNTABILITY OF PUBLIC OFFICERS AND
INVESTIGATIONS, SENATE COMMITTEE ON TRADE AND COMMERCE, AND SENATE
COMMITTEE ON NATIONAL DEFENSE AND SECURITY, respondents.
RESOLUTION
LEONARDO-DE CASTRO, J.:
Executive privilege is not a personal privilege, but one that adheres to the Office of the President. It exists to
protect public interest, not to benefit a particular public official. Its purpose, among others, is to assure that the
nation will receive the benefit of candid, objective and untrammeled communication and exchange of
information between the President and his/her advisers in the process of shaping or forming policies and
arriving at decisions in the exercise of the functions of the Presidency under the Constitution. The
confidentiality of the Presidents conversations and correspondence is not unique. It is akin to the
confidentiality of judicial deliberations. It possesses the same value as the right to privacy of all citizens and
more, because it is dictated by public interest and the constitutionally ordained separation of governmental
powers.
In these proceedings, this Court has been called upon to exercise its power of review and arbitrate a hotly, even
acrimoniously, debated dispute between the Courts co-equal branches of government. In this task, this Court
should neither curb the legitimate powers of any of the co-equal and coordinate branches of government nor
allow any of them to overstep the boundaries set for it by our Constitution. The competing interests in the case
at bar are the claim of executive privilege by the President, on the one hand, and the respondent Senate
Committees assertion of their power to conduct legislative inquiries, on the other. The particular facts and
circumstances of the present case, stripped of the politically and emotionally charged rhetoric from both sides
and viewed in the light of settled constitutional and legal doctrines, plainly lead to the conclusion that the
claim of executive privilege must be upheld.
Assailed in this motion for reconsideration is our Decision dated March 25, 2008 (the "Decision"), granting the
petition for certiorari filed by petitioner Romulo L. Neri against the respondent Senate Committees on
Accountability of Public Officers and Investigations,1 Trade and Commerce,2 and National Defense and
Security (collectively the "respondent Committees").3
A brief review of the facts is imperative.
On September 26, 2007, petitioner appeared before respondent Committees and testified for about eleven (11)
hours on matters concerning the National Broadband Project (the "NBN Project"), a project awarded by the
Department of Transportation and Communications ("DOTC") to Zhong Xing Telecommunications
Equipment ("ZTE"). Petitioner disclosed that then Commission on Elections ("COMELEC") Chairman
Benjamin Abalos offered him P200 Million in exchange for his approval of the NBN Project. He further
narrated that he informed President Gloria Macapagal Arroyo ("President Arroyo") of the bribery attempt and
that she instructed him not to accept the bribe. However, when probed further on President Arroyo and
Page 529 of 557

petitioners discussions relating to the NBN Project, petitioner refused to answer, invoking "executive
privilege." To be specific, petitioner refused to answer questions on: (a) whether or not President Arroyo
followed up the NBN Project,4 (b) whether or not she directed him to prioritize it,5 and (c) whether or not she
directed him to approve it.6
Respondent Committees persisted in knowing petitioners answers to these three questions by requiring him to
appear and testify once more on November 20, 2007. On November 15, 2007, Executive Secretary Eduardo R.
Ermita wrote to respondent Committees and requested them to dispense with petitioners testimony on the
ground of executive privilege.7 The letter of Executive Secretary Ermita pertinently stated:
Following the ruling in Senate v. Ermita, the foregoing questions fall under conversations and
correspondence between the President and public officials which are considered executive privilege
(Almonte v. Vasquez, G.R. 95637, 23 May 1995; Chavez v. PEA, G.R. 133250, July 9, 2002).
Maintaining the confidentiality of conversations of the President is necessary in the exercise of her
executive and policy decision making process. The expectation of a President to the confidentiality of
her conversations and correspondences, like the value which we accord deference for the privacy of
all citizens, is the necessity for protection of the public interest in candid, objective, and even blunt or
harsh opinions in Presidential decision-making. Disclosure of conversations of the President will have
a chilling effect on the President, and will hamper her in the effective discharge of her duties and
responsibilities, if she is not protected by the confidentiality of her conversations.
The context in which executive privilege is being invoked is that the information sought to be
disclosed might impair our diplomatic as well as economic relations with the Peoples Republic of
China. Given the confidential nature in which these information were conveyed to the President, he
cannot provide the Committee any further details of these conversations, without disclosing the very
thing the privilege is designed to protect.
In light of the above considerations, this Office is constrained to invoke the settled doctrine of
executive privilege as refined in Senate v. Ermita, and has advised Secretary Neri accordingly.
Considering that Sec. Neri has been lengthily interrogated on the subject in an unprecedented 11-hour
hearing, wherein he has answered all questions propounded to him except the foregoing questions
involving executive privilege, we therefore request that his testimony on 20 November 2007 on the
ZTE / NBN project be dispensed with.
On November 20, 2007, petitioner did not appear before respondent Committees upon orders of the President
invoking executive privilege. On November 22, 2007, the respondent Committees issued the show-cause letter
requiring him to explain why he should not be cited in contempt. On November 29, 2007, in petitioners reply
to respondent Committees, he manifested that it was not his intention to ignore the Senate hearing and that he
thought the only remaining questions were those he claimed to be covered by executive privilege. He also
manifested his willingness to appear and testify should there be new matters to be taken up. He just requested
that he be furnished "in advance as to what else" he "needs to clarify."
Respondent Committees found petitioners explanations unsatisfactory. Without responding to his request for
advance notice of the matters that he should still clarify, they issued the Order dated January 30, 2008; In Re:
P.S. Res. Nos. 127,129,136 & 144; and privilege speeches of Senator Lacson and Santiago (all on the ZTENBN Project), citing petitioner in contempt of respondent Committees and ordering his arrest and detention at
the Office of the Senate Sergeant-at-Arms until such time that he would appear and give his testimony.
On the same date, petitioner moved for the reconsideration of the above Order.8 He insisted that he had not
shown "any contemptible conduct worthy of contempt and arrest." He emphasized his willingness to testify on
new matters, but respondent Committees did not respond to his request for advance notice of questions. He
Page 530 of 557

also mentioned the petition for certiorari he previously filed with this Court on December 7, 2007. According
to him, this should restrain respondent Committees from enforcing the order dated January 30, 2008 which
declared him in contempt and directed his arrest and detention.
Petitioner then filed his Supplemental Petition for Certiorari (with Urgent Application for TRO/Preliminary
Injunction) on February 1, 2008. In the Courts Resolution dated February 4, 2008, the parties were required to
observe the status quo prevailing prior to the Order dated January 30, 2008.
On March 25, 2008, the Court granted his petition for certiorari on two grounds: first, the communications
elicited by the three (3) questions were covered by executive privilege; and second, respondent Committees
committed grave abuse of discretion in issuing the contempt order. Anent the first ground, we considered the
subject communications as falling under the presidential communications privilege because (a) they related
to a quintessential and non-delegable power of the President, (b) they were received by a close advisor of the
President, and (c) respondent Committees failed to adequately show a compelling need that would justify the
limitation of the privilege and the unavailability of the information elsewhere by an appropriate investigating
authority. As to the second ground, we found that respondent Committees committed grave abuse of discretion
in issuing the contempt order because (a) there was a valid claim of executive privilege, (b) their invitations to
petitioner did not contain the questions relevant to the inquiry, (c) there was a cloud of doubt as to the
regularity of the proceeding that led to their issuance of the contempt order, (d) they violated Section 21,
Article VI of the Constitution because their inquiry was not in accordance with the "duly published rules of
procedure," and (e) they issued the contempt order arbitrarily and precipitately.
On April 8, 2008, respondent Committees filed the present motion for reconsideration, anchored on the
following grounds:
I
CONTRARY TO THIS HONORABLE COURTS DECISION, THERE IS NO DOUBT THAT
THE ASSAILED ORDERS WERE ISSUED BY RESPONDENT COMMITTEES PURSUANT
TO THE EXERCISE OF THEIR LEGISLATIVE POWER, AND NOT MERELY THEIR
OVERSIGHT FUNCTIONS.
II
CONTRARY TO THIS HONORABLE COURTS DECISION, THERE CAN BE NO
PRESUMPTION THAT THE INFORMATION WITHHELD IN THE INSTANT CASE IS
PRIVILEGED.
III
CONTRARY TO THIS HONORABLE COURTS DECISION, THERE IS NO FACTUAL OR
LEGAL BASIS TO HOLD THAT THE COMMUNICATIONS ELICITED BY THE SUBJECT
THREE (3) QUESTIONS ARE COVERED BY EXECUTIVE PRIVILEGE, CONSIDERING
THAT:
A. THERE IS NO SHOWING THAT THE MATTERS FOR WHICH EXECUTIVE
PRIVILEGE IS CLAIMED CONSTITUTE STATE SECRETS.
B. EVEN IF THE TESTS ADOPTED BY THIS HONORABLE COURT IN THE DECISION IS
APPLIED, THERE IS NO SHOWING THAT THE ELEMENTS OF PRESIDENTIAL
COMMUNICATIONS PRIVILEGE ARE PRESENT.
Page 531 of 557

C. ON THE CONTRARY, THERE IS ADEQUATE SHOWING OF A COMPELLING NEED

TO JUSTIFY THE DISCLOSURE OF THE INFORMATION SOUGHT.
D. TO UPHOLD THE CLAIM OF EXECUTIVE PRIVILEGE IN THE INSTANT CASE
WOULD SERIOUSLY IMPAIR THE RESPONDENTS PERFORMANCE OF THEIR
PRIMARY FUNCTION TO ENACT LAWS.
E. FINALLY, THE CONSTITUTIONAL RIGHT OF THE PEOPLE TO INFORMATION,
AND THE CONSTITUTIONAL POLICIES ON PUBLIC ACCOUNTABILITY AND
TRANSPARENCY OUTWEIGH THE CLAIM OF EXECUTIVE PRIVILEGE.
IV
CONTRARY TO THIS HONORABLE COURTS DECISION, RESPONDENTS DID NOT
COMMIT GRAVE ABUSE OF DISCRETION IN ISSUING THE ASSAILED CONTEMPT
ORDER, CONSIDERING THAT:
A. THERE IS NO LEGITIMATE CLAIM OF EXECUTIVE PRIVILEGE IN THE INSTANT
CASE.
B. RESPONDENTS DID NOT VIOLATE THE SUPPOSED REQUIREMENTS LAID DOWN
IN SENATE V. ERMITA.
C. RESPONDENTS DULY ISSUED THE CONTEMPT ORDER IN ACCORDANCE WITH
THEIR INTERNAL RULES.
D. RESPONDENTS DID NOT VIOLATE THE REQUIREMENTS UNDER ARTICLE VI,
SECTION 21 OF THE CONSTITUTION REQUIRING THAT ITS RULES OF PROCEDURE
BE DULY PUBLISHED, AND WERE DENIED DUE PROCESS WHEN THE COURT
CONSIDERED THE OSGS INTERVENTION ON THIS ISSUE WITHOUT GIVING
RESPONDENTS THE OPPORTUNITY TO COMMENT.
E. RESPONDENTS ISSUANCE OF THE CONTEMPT ORDER IS NOT ARBITRARY OR
PRECIPITATE.
In his Comment, petitioner charges respondent Committees with exaggerating and distorting the Decision of
this Court. He avers that there is nothing in it that prohibits respondent Committees from investigating the
NBN Project or asking him additional questions. According to petitioner, the Court merely applied the rule on
executive privilege to the facts of the case. He further submits the following contentions: first, the assailed
Decision did not reverse the presumption against executive secrecy laid down in Senate v. Ermita; second,
respondent Committees failed to overcome the presumption of executive privilege because it appears that they
could legislate even without the communications elicited by the three (3) questions, and they admitted that they
could dispense with petitioners testimony if certain NEDA documents would be given to them; third, the
requirement of specificity applies only to the privilege for State, military and diplomatic secrets, not to the
necessarily broad and all-encompassing presidential communications privilege; fourth, there is no right to pry
into the Presidents thought processes or exploratory exchanges; fifth, petitioner is not covering up or hiding
anything illegal; sixth, the Court has the power and duty to annul the Senate Rules; seventh, the Senate is not a
continuing body, thus the failure of the present Senate to publish its Rules of Procedure Governing Inquiries in
Aid of Legislation (Rules) has a vitiating effect on them; eighth, the requirement for a witness to be furnished
advance copy of questions comports with due process and the constitutional mandate that the rights of
witnesses be respected; and ninth, neither petitioner nor respondent has the final say on the matter of executive
privilege, only the Court.
Page 532 of 557

For its part, the Office of the Solicitor General maintains that: (1) there is no categorical pronouncement from
the Court that the assailed Orders were issued by respondent Committees pursuant to their oversight function;
hence, there is no reason for them "to make much" of the distinction between Sections 21 and 22, Article VI of
the Constitution; (2) presidential communications enjoy a presumptive privilege against disclosure as earlier
held in Almonte v. Vasquez9 and Chavez v. Public Estates Authority (PEA)10; (3) the communications elicited
by the three (3) questions are covered by executive privilege, because all the elements of the presidential
communications privilege are present; (4) the subpoena ad testificandum issued by respondent Committees to
petitioner is fatally defective under existing law and jurisprudence; (5) the failure of the present Senate to
publish its Rules renders the same void; and (6) respondent Committees arbitrarily issued the contempt order.
Incidentally, respondent Committees objection to the Resolution dated March 18, 2008 (granting the Office of
the Solicitor Generals Motion for Leave to Intervene and to Admit Attached Memorandum) only after the
promulgation of the Decision in this case is foreclosed by its untimeliness.
The core issues that arise from the foregoing respective contentions of the opposing parties are as follows:
(1) whether or not there is a recognized presumptive presidential communications privilege in our
legal system;
(2) whether or not there is factual or legal basis to hold that the communications elicited by the three
(3) questions are covered by executive privilege;
(3) whether or not respondent Committees have shown that the communications elicited by the three
(3) questions are critical to the exercise of their functions; and
(4) whether or not respondent Committees committed grave abuse of discretion in issuing the
contempt order.
We shall discuss these issues seriatim.
I
There Is a Recognized Presumptive
Presidential Communications Privilege
Respondent Committees ardently argue that the Courts declaration that presidential communications are
presumptively privileged reverses the "presumption" laid down in Senate v. Ermita11 that "inclines heavily
against executive secrecy and in favor of disclosure." Respondent Committees then claim that the Court erred
in relying on the doctrine in Nixon.
Respondent Committees argue as if this were the first time the presumption in favor of the presidential
communications privilege is mentioned and adopted in our legal system. That is far from the truth. The Court,
in the earlier case of Almonte v. Vasquez,12 affirmed that the presidential communications privilege is
fundamental to the operation of government and inextricably rooted in the separation of powers under the
Constitution. Even Senate v. Ermita,13 the case relied upon by respondent Committees, reiterated this concept.
There, the Court enumerated the cases in which the claim of executive privilege was recognized, among them
Almonte v. Chavez, Chavez v. Presidential Commission on Good Government (PCGG),14 and Chavez v. PEA.15
The Court articulated in these cases that "there are certain types of information which the government may
withhold from the public,16" that there is a "governmental privilege against public disclosure with respect to
state secrets regarding military, diplomatic and other national security matters";17 and that "the right to
information does not extend to matters recognized as privileged information under the separation of
Page 533 of 557

powers, by which the Court meant Presidential conversations, correspondences, and discussions in
closed-door Cabinet meetings."18
Respondent Committees observation that this Courts Decision reversed the "presumption that inclines
heavily against executive secrecy and in favor of disclosure" arises from a piecemeal interpretation of the said
Decision. The Court has repeatedly held that in order to arrive at the true intent and meaning of a decision, no
specific portion thereof should be isolated and resorted to, but the decision must be considered in its entirety.19
Note that the aforesaid presumption is made in the context of the circumstances obtaining in Senate v. Ermita,
which declared void Sections 2(b) and 3 of Executive Order (E.O.) No. 464, Series of 2005. The pertinent
portion of the decision in the said case reads:
From the above discussion on the meaning and scope of executive privilege, both in the United States
and in this jurisprudence, a clear principle emerges. Executive privilege, whether asserted against
Congress, the courts, or the public, is recognized only in relation to certain types of information of a
sensitive character. While executive privilege is a constitutional concept, a claim thereof may be valid
or not depending on the ground invoked to justify it and the context in which it is made. Noticeably
absent is any recognition that executive officials are exempt from the duty to disclose information by
the mere fact of being executive officials. Indeed, the extraordinary character of the exemptions
indicates that the presumption inclines heavily against executive secrecy and in favor of
disclosure. (Emphasis and underscoring supplied)
Obviously, the last sentence of the above-quoted paragraph in Senate v. Ermita refers to the "exemption" being
claimed by the executive officials mentioned in Section 2(b) of E.O. No. 464, solely by virtue of their positions
in the Executive Branch. This means that when an executive official, who is one of those mentioned in the said
Sec. 2(b) of E.O. No. 464, claims to be exempt from disclosure, there can be no presumption of
authorization to invoke executive privilege given by the President to said executive official, such that the
presumption in this situation inclines heavily against executive secrecy and in favor of disclosure.
Senate v. Ermita 20 expounds on the premise of the foregoing ruling in this wise:
Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines that a
certain information is privileged, such determination is presumed to bear the Presidents authority and
has the effect of prohibiting the official from appearing before Congress, subject only to the express
pronouncement of the President that it is allowing the appearance of such official. These provisions
thus allow the President to authorize claims of privilege by mere silence.
Such presumptive authorization, however, is contrary to the exceptional nature of the privilege.
Executive privilege, as already discussed, is recognized with respect to information the confidential
nature of which is crucial to the fulfillment of the unique role and responsibilities of the executive
branch, or in those instances where exemption from disclosure is necessary to the discharge of highly
important executive responsibilities. The doctrine of executive privilege is thus premised on the fact
that certain information must, as a matter of necessity, be kept confidential in pursuit of the public
interest. The privilege being, by definition, an exemption from the obligation to disclose information,
in this case to Congress, the necessity must be of such high degree as to outweigh the public interest in
enforcing that obligation in a particular case.
In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to the
President the power to invoke the privilege. She may of course authorize the Executive Secretary to
invoke the privilege on her behalf, in which case the Executive Secretary must state that the authority
is "By order of the President", which means that he personally consulted with her. The privilege being
an extraordinary power, it must be wielded only by the highest official in the executive hierarchy. In
Page 534 of 557

other words, the President may not authorize her subordinates to exercise such power. There is even
less reason to uphold such authorization in the instant case where the authorization is not explicit but
by mere silence. Section 3, in relation to Section 2(b), is further invalid on this score.
The constitutional infirmity found in the blanket authorization to invoke executive privilege granted by the
President to executive officials in Sec. 2(b) of E.O. No. 464 does not obtain in this case.
In this case, it was the President herself, through Executive Secretary Ermita, who invoked executive privilege
on a specific matter involving an executive agreement between the Philippines and China, which was the
subject of the three (3) questions propounded to petitioner Neri in the course of the Senate Committees
investigation. Thus, the factual setting of this case markedly differs from that passed upon in Senate v. Ermita.
Moreover, contrary to the claim of respondents, the Decision in this present case hews closely to the ruling in
Senate v. Ermita,21 to wit:
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior to the
promulgation of the 1986 Constitution. Being of American origin, it is best understood in light of how
it has been defined and used in the legal literature of the United States.
Schwart defines executive privilege as "the power of the Government to withhold information
from the public, the courts, and the Congress. Similarly, Rozell defines it as "the right of the
President and high-level executive branch officers to withhold information from Congress, the courts,
and ultimately the public." x x x In this jurisdiction, the doctrine of executive privilege was recognized
by this Court in Almonte v. Vasquez. Almonte used the term in reference to the same privilege subject
of Nixon. It quoted the following portion of the Nixon decision which explains the basis for the
privilege:
"The expectation of a President to the confidentiality of his conversations and correspondences, like
the claim of confidentiality of judicial deliberations, for example, he has all the values to which we
accord deference for the privacy of all citizens and, added to those values, is the necessity for
protection of the public interest in candid, objective, and even blunt or harsh opinions in Presidential
decision-making. A President and those who assist him must be free to explore alternatives in the
process of shaping policies and making decisions and to do so in a way many would be unwilling to
express except privately. These are the considerations justifying a presumptive privilege for
Presidential communications. The privilege is fundamental to the operation of government and
inextricably rooted in the separation of powers under the Constitution x x x " (Emphasis and
italics supplied)
Clearly, therefore, even Senate v. Ermita adverts to "a presumptive privilege for Presidential communication,"
which was recognized early on in Almonte v. Vasquez. To construe the passage in Senate v. Ermita adverted to
in the Motion for Reconsideration of respondent Committees, referring to the non-existence of a "presumptive
authorization" of an executive official, to mean that the "presumption" in favor of executive privilege "inclines
heavily against executive secrecy and in favor of disclosure" is to distort the ruling in the Senate v. Ermita and
make the same engage in self-contradiction.
Senate v. Ermita22 expounds on the constitutional underpinning of the relationship between the Executive
Department and the Legislative Department to explain why there should be no implied authorization or
presumptive authorization to invoke executive privilege by the Presidents subordinate officials, as follows:

Page 535 of 557

When Congress exercises its power of inquiry, the only way for department heads to exempt
themselves therefrom is by a valid claim of privilege. They are not exempt by the mere fact that
they are department heads. Only one executive official may be exempted from this power - the
President on whom executive power is vested, hence, beyond the reach of Congress except through
the power of impeachment. It is based on he being the highest official of the executive branch, and the
due respect accorded to a co-equal branch of governments which is sanctioned by a long-standing
custom. (Underscoring supplied)
Thus, if what is involved is the presumptive privilege of presidential communications when invoked by the
President on a matter clearly within the domain of the Executive, the said presumption dictates that the same
be recognized and be given preference or priority, in the absence of proof of a compelling or critical need for
disclosure by the one assailing such presumption. Any construction to the contrary will render meaningless the
presumption accorded by settled jurisprudence in favor of executive privilege. In fact, Senate v. Ermita
reiterates jurisprudence citing "the considerations justifying a presumptive privilege for Presidential
communications."23
II
There Are Factual and Legal Bases to
Hold that the Communications Elicited by the
Three (3) Questions Are Covered by Executive Privilege
Respondent Committees claim that the communications elicited by the three (3) questions are not covered by
executive privilege because the elements of the presidential communications privilege are not present.
A. The power to enter into an executive agreement is a "quintessential and non-delegable presidential
power."
First, respondent Committees contend that the power to secure a foreign loan does not relate to a
"quintessential and non-delegable presidential power," because the Constitution does not vest it in the
President alone, but also in the Monetary Board which is required to give its prior concurrence and to report to
Congress.
This argument is unpersuasive.
The fact that a power is subject to the concurrence of another entity does not make such power less executive.
"Quintessential" is defined as the most perfect embodiment of something, the concentrated essence of
substance.24 On the other hand, "non-delegable" means that a power or duty cannot be delegated to another or,
even if delegated, the responsibility remains with the obligor.25 The power to enter into an executive agreement
is in essence an executive power. This authority of the President to enter into executive agreements without the
concurrence of the Legislature has traditionally been recognized in Philippine jurisprudence.26 Now, the fact
that the President has to secure the prior concurrence of the Monetary Board, which shall submit to Congress a
complete report of its decision before contracting or guaranteeing foreign loans, does not diminish the
executive nature of the power.
The inviolate doctrine of separation of powers among the legislative, executive and judicial branches of
government by no means prescribes absolute autonomy in the discharge by each branch of that part of the
governmental power assigned to it by the sovereign people. There is the corollary doctrine of checks and
balances, which has been carefully calibrated by the Constitution to temper the official acts of each of these
three branches. Thus, by analogy, the fact that certain legislative acts require action from the President for their
validity does not render such acts less legislative in nature. A good example is the power to pass a law. Article
VI, Section 27 of the Constitution mandates that every bill passed by Congress shall, before it becomes a law,
Page 536 of 557

be presented to the President who shall approve or veto the same. The fact that the approval or vetoing of the
bill is lodged with the President does not render the power to pass law executive in nature. This is because the
power to pass law is generally a quintessential and non-delegable power of the Legislature. In the same vein,
the executive power to enter or not to enter into a contract to secure foreign loans does not become less
executive in nature because of conditions laid down in the Constitution. The final decision in the exercise of
the said executive power is still lodged in the Office of the President.
B. The "doctrine of operational proximity" was laid down precisely to limit the scope of the presidential
communications privilege but, in any case, it is not conclusive.
Second, respondent Committees also seek reconsideration of the application of the "doctrine of operational
proximity" for the reason that "it maybe misconstrued to expand the scope of the presidential communications
privilege to communications between those who are operationally proximate to the President but who may
have "no direct communications with her."
It must be stressed that the doctrine of "operational proximity" was laid down in In re: Sealed Case27precisely
to limit the scope of the presidential communications privilege. The U.S. court was aware of the dangers that a
limitless extension of the privilege risks and, therefore, carefully cabined its reach by explicitly confining it to
White House staff, and not to staffs of the agencies, and then only to White House staff that has "operational
proximity" to direct presidential decision-making, thus:
We are aware that such an extension, unless carefully circumscribed to accomplish the purposes of the
privilege, could pose a significant risk of expanding to a large swath of the executive branch a
privilege that is bottomed on a recognition of the unique role of the President. In order to limit this
risk, the presidential communications privilege should be construed as narrowly as is consistent with
ensuring that the confidentiality of the Presidents decision-making process is adequately protected.
Not every person who plays a role in the development of presidential advice, no matter how
remote and removed from the President, can qualify for the privilege. In particular, the
privilege should not extend to staff outside the White House in executive branch agencies.
Instead, the privilege should apply only to communications authored or solicited and received by those
members of an immediate White House advisors staff who have broad and significant responsibility
for investigation and formulating the advice to be given the President on the particular matter to which
the communications relate. Only communications at that level are close enough to the President to
be revelatory of his deliberations or to pose a risk to the candor of his advisers. See AAPS, 997
F.2d at 910 (it is "operational proximity" to the President that matters in determining whether
"[t]he Presidents confidentiality interests" is implicated). (Emphasis supplied)
In the case at bar, the danger of expanding the privilege "to a large swath of the executive branch" (a fear
apparently entertained by respondents) is absent because the official involved here is a member of the Cabinet,
thus, properly within the term "advisor" of the President; in fact, her alter ego and a member of her official
family. Nevertheless, in circumstances in which the official involved is far too remote, this Court also
mentioned in the Decision the organizational test laid down in Judicial Watch, Inc. v. Department of
Justice.28 This goes to show that the operational proximity test used in the Decision is not considered
conclusive in every case. In determining which test to use, the main consideration is to limit the availability of
executive privilege only to officials who stand proximate to the President, not only by reason of their function,
but also by reason of their positions in the Executives organizational structure. Thus, respondent Committees
fear that the scope of the privilege would be unnecessarily expanded with the use of the operational proximity
test is unfounded.
C. The Presidents claim of executive privilege is not merely based on a generalized interest; and in
balancing respondent Committees and the Presidents clashing interests, the Court did not disregard the
1987 Constitutional provisions on government transparency, accountability and disclosure of information.
Page 537 of 557

Third, respondent Committees claim that the Court erred in upholding the Presidents invocation, through the
Executive Secretary, of executive privilege because (a) between respondent Committees specific and
demonstrated need and the Presidents generalized interest in confidentiality, there is a need to strike the
balance in favor of the former; and (b) in the balancing of interest, the Court disregarded the provisions of the
1987 Philippine Constitution on government transparency, accountability and disclosure of information,
specifically, Article III, Section 7;29 Article II, Sections 2430 and 28;31 Article XI, Section 1;32 Article XVI,
Section 10;33 Article VII, Section 20;34 and Article XII, Sections 9,35 21,36 and 22.37
It must be stressed that the Presidents claim of executive privilege is not merely founded on her generalized
interest in confidentiality. The Letter dated November 15, 2007 of Executive Secretary Ermita specified
presidential communications privilege in relation to diplomatic and economic relations with another
sovereign nation as the bases for the claim. Thus, the Letter stated:
The context in which executive privilege is being invoked is that the information sought to be
disclosed might impair our diplomatic as well as economic relations with the Peoples Republic
of China. Given the confidential nature in which this information were conveyed to the President, he
cannot provide the Committee any further details of these conversations, without disclosing the very
thing the privilege is designed to protect. (emphasis supplied)
Even in Senate v. Ermita, it was held that Congress must not require the Executive to state the reasons for the
claim with such particularity as to compel disclosure of the information which the privilege is meant to protect.
This is a matter of respect for a coordinate and co-equal department.
It is easy to discern the danger that goes with the disclosure of the Presidents communication with her advisor.
The NBN Project involves a foreign country as a party to the agreement. It was actually a product of the
meeting of minds between officials of the Philippines and China. Whatever the President says about the
agreement - particularly while official negotiations are ongoing - are matters which China will surely view
with particular interest. There is danger in such kind of exposure. It could adversely affect our diplomatic as
well as economic relations with the Peoples Republic of China. We reiterate the importance of secrecy in
matters involving foreign negotiations as stated in United States v. Curtiss-Wright Export Corp., 38 thus:
The nature of foreign negotiations requires caution, and their success must often depend on secrecy,
and even when brought to a conclusion, a full disclosure of all the measures, demands, or eventual
concessions which may have been proposed or contemplated would be extremely impolitic, for this
might have a pernicious influence on future negotiations or produce immediate inconveniences,
perhaps danger and mischief, in relation to other powers. The necessity of such caution and secrecy
was one cogent reason for vesting the power of making treaties in the President, with the advice and
consent of the Senate, the principle on which the body was formed confining it to a small number of
members. To admit, then, a right in the House of Representatives to demand and to have as a matter of
course all the papers respecting a negotiation with a foreign power would be to establish a dangerous
precedent.
US jurisprudence clearly guards against the dangers of allowing Congress access to all papers relating to a
negotiation with a foreign power. In this jurisdiction, the recent case of Akbayan Citizens Action Party, et al. v.
Thomas G. Aquino, et al.39 upheld the privileged character of diplomatic negotiations. In Akbayan, the Court
stated:
Privileged character of diplomatic negotiations
The privileged character of diplomatic negotiations has been recognized in this jurisdiction. In
discussing valid limitations on the right to information, the Court in Chavez v. PCGG held that
"information on inter-government exchanges prior to the conclusion of treaties and executive
Page 538 of 557

agreements may be subject to reasonable safeguards for the sake of national interest." Even earlier, the
same privilege was upheld in Peoples Movement for Press Freedom (PMPF) v. Manglapus wherein
the Court discussed the reasons for the privilege in more precise terms.
In PMPF v. Manglapus, the therein petitioners were seeking information from the Presidents
representatives on the state of the then on-going negotiations of the RP-US Military Bases Agreement.
The Court denied the petition, stressing that "secrecy of negotiations with foreign countries is not
violative of the constitutional provisions of freedom of speech or of the press nor of the freedom of
access to information." The Resolution went on to state, thus:
The nature of diplomacy requires centralization of authority and expedition of decision
which are inherent in executive action. Another essential characteristic of diplomacy is
its confidential nature. Although much has been said about "open" and "secret" diplomacy,
with disparagement of the latter, Secretaries of State Hughes and Stimson have clearly
analyzed and justified the practice. In the words of Mr. Stimson:
"A complicated negotiation cannot be carried through without many, many
private talks and discussion, man to man; many tentative suggestions and
proposals. Delegates from other countries come and tell you in confidence of
their troubles at home and of their differences with other countries and with
other delegates; they tell you of what they would do under certain circumstances
and would not do under other circumstances If these reports should
become public who would ever trust American Delegations in another
conference? (United States Department of State, Press Releases, June 7, 1930, pp.
282-284)
xxxx
There is frequent criticism of the secrecy in which negotiation with foreign powers on
nearly all subjects is concerned. This, it is claimed, is incompatible with the substance of
democracy. As expressed by one writer, "It can be said that there is no more rigid system of
silence anywhere in the world." (E.J. Young, Looking Behind the Censorship, J. B. Lipincott
Co., 1938) President Wilson in starting his efforts for the conclusion of the World War
declared that we must have "open covenants, openly arrived at." He quickly abandoned his
thought.
No one who has studied the question believes that such a method of publicity is possible. In
the moment that negotiations are started, pressure groups attempt to "muscle in." An
ill-timed speech by one of the parties or a frank declaration of the concession which are
exacted or offered on both sides would quickly lead to a widespread propaganda to
block the negotiations. After a treaty has been drafted and its terms are fully published,
there is ample opportunity for discussion before it is approved. (The New American
Government and Its Works, James T. Young, 4th Edition, p. 194) (Emphasis and
underscoring supplied)
Still in PMPF v. Manglapus, the Court adopted the doctrine in U.S. v. Curtiss-Wright Export Corp.
that the President is the sole organ of the nation in its negotiations with foreign countries,viz:
"x x x In this vast external realm, with its important, complicated, delicate and manifold
problems, the President alone has the power to speak or listen as a representative of the
nation. He makes treaties with the advice and consent of the Senate; but he alone negotiates.
Into the field of negotiation the Senate cannot intrude; and Congress itself is powerless to
Page 539 of 557

invade it. As Marshall said in his great arguments of March 7, 1800, in the House of
Representatives, "The President is the sole organ of the nation in its external relations,
and its sole representative with foreign nations." Annals, 6th Cong., col. 613 (Emphasis
supplied; underscoring in the original)
Considering that the information sought through the three (3) questions subject of this Petition involves the
Presidents dealings with a foreign nation, with more reason, this Court is wary of approving the view that
Congress may peremptorily inquire into not only official, documented acts of the President but even her
confidential and informal discussions with her close advisors on the pretext that said questions serve some
vague legislative need. Regardless of who is in office, this Court can easily foresee unwanted consequences of
subjecting a Chief Executive to unrestricted congressional inquiries done with increased frequency and great
publicity. No Executive can effectively discharge constitutional functions in the face of intense and unchecked
legislative incursion into the core of the Presidents decision-making process, which inevitably would involve
her conversations with a member of her Cabinet.
With respect to respondent Committees invocation of constitutional prescriptions regarding the right of the
people to information and public accountability and transparency, the Court finds nothing in these arguments
to support respondent Committees case.
There is no debate as to the importance of the constitutional right of the people to information and the
constitutional policies on public accountability and transparency. These are the twin postulates vital to the
effective functioning of a democratic government. The citizenry can become prey to the whims and caprices of
those to whom the power has been delegated if they are denied access to information. And the policies on
public accountability and democratic government would certainly be mere empty words if access to such
information of public concern is denied.
In the case at bar, this Court, in upholding executive privilege with respect to three (3) specific questions, did
not in any way curb the publics right to information or diminish the importance of public accountability and
transparency.
This Court did not rule that the Senate has no power to investigate the NBN Project in aid of legislation. There
is nothing in the assailed Decision that prohibits respondent Committees from inquiring into the NBN Project.
They could continue the investigation and even call petitioner Neri to testify again. He himself has repeatedly
expressed his willingness to do so. Our Decision merely excludes from the scope of respondents investigation
the three (3) questions that elicit answers covered by executive privilege and rules that petitioner cannot be
compelled to appear before respondents to answer the said questions. We have discussed the reasons why these
answers are covered by executive privilege. That there is a recognized public interest in the confidentiality of
such information is a recognized principle in other democratic States. To put it simply, the right to information
is not an absolute right.
Indeed, the constitutional provisions cited by respondent Committees do not espouse an absolute right to
information. By their wording, the intention of the Framers to subject such right to the regulation of the law is
unmistakable. The highlighted portions of the following provisions show the obvious limitations on the right to
information, thus:
Article III, Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to official records, and
to documents, and papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be afforded the citizen, subject
to such limitations as may be provided by law.

Page 540 of 557

Article II, Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public interest.
(Emphasis supplied)
In Chavez v. Presidential Commission on Good Government,40 it was stated that there are no specific laws
prescribing the exact limitations within which the right may be exercised or the correlative state duty may be
obliged. Nonetheless, it enumerated the recognized restrictions to such rights, among them: (1) national
security matters, (2) trade secrets and banking transactions, (3) criminal matters, and (4) other confidential
information. National security matters include state secrets regarding military and diplomatic matters, as well
as information on inter-government exchanges prior to the conclusion of treaties and executive agreements. It
was further held that even where there is no need to protect such state secrets, they must be "examined
in strict confidence and given scrupulous protection."
Incidentally, the right primarily involved here is the right of respondent Committees to obtain information
allegedly in aid of legislation, not the peoples right to public information. This is the reason why we stressed
in the assailed Decision the distinction between these two rights. As laid down in Senate v. Ermita, "the
demand of a citizen for the production of documents pursuant to his right to information does not have the
same obligatory force as a subpoena duces tecum issued by Congress" and "neither does the right to
information grant a citizen the power to exact testimony from government officials." As pointed out, these
rights belong to Congress, not to the individual citizen. It is worth mentioning at this juncture that the parties
here are respondent Committees and petitioner Neri and that there was no prior request for information on the
part of any individual citizen. This Court will not be swayed by attempts to blur the distinctions between the
Legislature's right to information in a legitimate legislative inquiry and the public's right to information.
For clarity, it must be emphasized that the assailed Decision did not enjoin respondent Committees from
inquiring into the NBN Project. All that is expected from them is to respect matters that are covered by
executive privilege.
III.
Respondent Committees Failed to Show That
the Communications Elicited by the Three Questions
Are Critical to the Exercise of their Functions
In their Motion for Reconsideration, respondent Committees devote an unusually lengthy discussion on the
purported legislative nature of their entire inquiry, as opposed to an oversight inquiry.
At the outset, it must be clarified that the Decision did not pass upon the nature of respondent Committees
inquiry into the NBN Project. To reiterate, this Court recognizes respondent Committees power to investigate
the NBN Project in aid of legislation. However, this Court cannot uphold the view that when a constitutionally
guaranteed privilege or right is validly invoked by a witness in the course of a legislative investigation, the
legislative purpose of respondent Committees questions can be sufficiently supported by the expedient of
mentioning statutes and/or pending bills to which their inquiry as a whole may have relevance. The
jurisprudential test laid down by this Court in past decisions on executive privilege is that the presumption of
privilege can only be overturned by a showing of compelling need for disclosure of the information covered
by executive privilege.
In the Decision, the majority held that "there is no adequate showing of a compelling need that would justify
the limitation of the privilege and of the unavailability of the information elsewhere by an appropriate
investigating authority." In the Motion for Reconsideration, respondent Committees argue that the information
elicited by the three (3) questions are necessary in the discharge of their legislative functions, among them, (a)
to consider the three (3) pending Senate Bills, and (b) to curb graft and corruption.
Page 541 of 557

We remain unpersuaded by respondents assertions.

In U.S. v. Nixon, the U.S. Court held that executive privilege is subject to balancing against other interests and
it is necessary to resolve the competing interests in a manner that would preserve the essential functions of
each branch. There, the Court weighed between presidential privilege and the legitimate claims of the judicial
process. In giving more weight to the latter, the Court ruled that the President's generalized assertion of
privilege must yield to the demonstrated, specific need for evidence in a pending criminal trial.
The Nixon Court ruled that an absolute and unqualified privilege would stand in the way of the primary
constitutional duty of the Judicial Branch to do justice in criminal prosecutions. The said Court further
ratiocinated, through its ruling extensively quoted in the Honorable Chief Justice Puno's dissenting opinion, as
follows:
"... this presumptive privilege must be considered in light of our historic commitment to the rule of
law. This is nowhere more profoundly manifest than in our view that 'the twofold aim (of criminal
justice) is that guild shall not escape or innocence suffer.' Berger v. United States, 295 U.S., at 88, 55
S.Ct., at 633. We have elected to employ an adversary system of criminal justice in which the parties
contest all issues before a court of law. The need to develop all relevant facts in the adversary
system is both fundamental and comprehensive. The ends of criminal justice would be defeated
if judgments were to be founded on a partial or speculative presentation of the facts. The very
integrity of the judicial system and public confidence in the system depend on full disclosure of
all the facts, within the framework of the rules of evidence. To ensure that justice is done, it is
imperative to the function of courts that compulsory process be available for the production of
evidence needed either by the prosecution or by the defense.
xxx xxx xxx
The right to the production of all evidence at a criminal trial similarly has constitutional dimensions.
The Sixth Amendment explicitly confers upon every defendant in a criminal trial the right 'to be
confronted with the witness against him' and 'to have compulsory process for obtaining witnesses
in his favor.' Moreover, the Fifth Amendment also guarantees that no person shall be deprived of
liberty without due process of law. It is the manifest duty of the courts to vindicate those
guarantees, and to accomplish that it is essential that all relevant and admissible evidence be
produced.
In this case we must weigh the importance of the general privilege of confidentiality of
Presidential communications in performance of the President's responsibilities against the
inroads of such a privilege on the fair administration of criminal justice. (emphasis supplied)
xxx xxx xxx
...the allowance of the privilege to withhold evidence that is demonstrably relevant in a criminal
trial would cut deeply into the guarantee of due process of law and gravely impair the basic
function of the courts. A President's acknowledged need for confidentiality in the
communications of his office is general in nature, whereas the constitutional need for production of
relevant evidence in a criminal proceeding is specific and central to the fair adjudication of a
particular criminal case in the administration of justice. Without access to specific facts a criminal
prosecution may be totally frustrated. The President's broad interest in confidentiality of
communication will not be vitiated by disclosure of a limited number of conversations
preliminarily shown to have some bearing on the pending criminal cases.

Page 542 of 557

We conclude that when the ground for asserting privilege as to subpoenaed materials sought for use in
a criminal trial is based only on the generalized interest in confidentiality, it cannot prevail over
the fundamental demands of due process of law in the fair administration of criminal justice.
The generalized assertion of privilege must yield to the demonstrated, specific need for evidence in a
pending criminal trial. (emphasis supplied)
In the case at bar, we are not confronted with a courts need for facts in order to adjudge liability in a criminal
case but rather with the Senates need for information in relation to its legislative functions. This leads us to
consider once again just how critical is the subject information in the discharge of respondent Committees
functions. The burden to show this is on the respondent Committees, since they seek to intrude into the sphere
of competence of the President in order to gather information which, according to said respondents, would
"aid" them in crafting legislation.
Senate Select Committee on Presidential Campaign Activities v. Nixon41 expounded on the nature of a
legislative inquiry in aid of legislation in this wise:
The sufficiency of the Committee's showing of need has come to depend, therefore, entirely on
whether the subpoenaed materials are critical to the performance of its legislative functions. There is a
clear difference between Congress' legislative tasks and the responsibility of a grand jury, or any
institution engaged in like functions. While fact-finding by a legislative committee is undeniably a
part of its task, legislative judgments normally depend more on the predicted consequences of
proposed legislative actions and their political acceptability, than on precise reconstruction of
past events; Congress frequently legislates on the basis of conflicting information provided in its
hearings. In contrast, the responsibility of the grand jury turns entirely on its ability to determine
whether there is probable cause to believe that certain named individuals did or did not commit
specific crimes. If, for example, as in Nixon v. Sirica, one of those crimes is perjury concerning the
content of certain conversations, the grand jury's need for the most precise evidence, the exact text of
oral statements recorded in their original form, is undeniable. We see no comparable need in the
legislative process, at least not in the circumstances of this case. Indeed, whatever force there
might once have been in the Committee's argument that the subpoenaed materials are necessary to its
legislative judgments has been substantially undermined by subsequent events. (Emphasis supplied)
Clearly, the need for hard facts in crafting legislation cannot be equated with the compelling or
demonstratively critical and specific need for facts which is so essential to the judicial power to adjudicate
actual controversies. Also, the bare standard of "pertinency" set in Arnault cannot be lightly applied to the
instant case, which unlike Arnault involves a conflict between two (2) separate, co-equal and coordinate
Branches of the Government.
Whatever test we may apply, the starting point in resolving the conflicting claims between the Executive and
the Legislative Branches is the recognized existence of the presumptive presidential communications privilege.
This is conceded even in the Dissenting Opinion of the Honorable Chief Justice Puno, which states:
A hard look at Senate v. Ermita ought to yield the conclusion that it bestowed a qualified
presumption in favor of the Presidential communications privilege. As shown in the previous
discussion, U.S. v. Nixon, as well as the other related Nixon cases Sirica and Senate Select
Committee on Presidential Campaign Activities, et al., v. Nixon in the D.C. Court of Appeals, as
well as subsequent cases all recognize that there is a presumptive privilege in favor of Presidential
communications. The Almonte case quoted U.S. v. Nixon and recognized a presumption in favor of
confidentiality of Presidential communications.
The presumption in favor of Presidential communications puts the burden on the respondent Senate
Committees to overturn the presumption by demonstrating their specific need for the information to be elicited
Page 543 of 557

by the answers to the three (3) questions subject of this case, to enable them to craft legislation. Here, there is
simply a generalized assertion that the information is pertinent to the exercise of the power to legislate and a
broad and non-specific reference to pending Senate bills. It is not clear what matters relating to these bills
could not be determined without the said information sought by the three (3) questions. As correctly pointed
out by the Honorable Justice Dante O. Tinga in his Separate Concurring Opinion:
If respondents are operating under the premise that the president and/or her executive
officials have committed wrongdoings that need to be corrected or prevented from recurring by
remedial legislation, the answer to those three questions will not necessarily bolster or inhibit
respondents from proceeding with such legislation. They could easily presume the worst of the
president in enacting such legislation.
For sure, a factual basis for situations covered by bills is not critically needed before legislatives bodies can
come up with relevant legislation unlike in the adjudication of cases by courts of law. Interestingly, during the
Oral Argument before this Court, the counsel for respondent Committees impliedly admitted that the Senate
could still come up with legislations even without petitioner answering the three (3) questions. In other words,
the information being elicited is not so critical after all. Thus:
CHIEF JUSTICE PUNO
So can you tell the Court how critical are these questions to the lawmaking function of the
Senate. For instance, question Number 1 whether the President followed up the NBN project.
According to the other counsel this question has already been asked, is that correct?
ATTY. AGABIN
Well, the question has been asked but it was not answered, Your Honor.
CHIEF JUSTICE PUNO
Yes. But my question is how critical is this to the lawmaking function of the Senate?
ATTY. AGABIN
I believe it is critical, Your Honor.
CHIEF JUSTICE PUNO
Why?
ATTY. AGABIN
For instance, with respect to the proposed Bill of Senator Miriam Santiago, she would like to
indorse a Bill to include Executive Agreements had been used as a device to the
circumventing the Procurement Law.
CHIEF JUSTICE PUNO
But the question is just following it up.

Page 544 of 557

ATTY. AGABIN
I believe that may be the initial question, Your Honor, because if we look at this problem in
its factual setting as counsel for petitioner has observed, there are intimations of a bribery
scandal involving high government officials.
CHIEF JUSTICE PUNO
Again, about the second question, were you dictated to prioritize this ZTE, is that critical to
the lawmaking function of the Senate? Will it result to the failure of the Senate to cobble a
Bill without this question?
ATTY. AGABIN
I think it is critical to lay the factual foundations for a proposed amendment to the
Procurement Law, Your Honor, because the petitioner had already testified that he was
offered a P200 Million bribe, so if he was offered a P200 Million bribe it is possible that other
government officials who had something to do with the approval of the contract would be
offered the same amount of bribes.
CHIEF JUSTICE PUNO
Again, that is speculative.
ATTY. AGABIN
That is why they want to continue with the investigation, Your Honor.
CHIEF JUSTICE PUNO
How about the third question, whether the President said to go ahead and approve the project
after being told about the alleged bribe. How critical is that to the lawmaking function of the
Senate? And the question is may they craft a Bill a remedial law without forcing petitioner
Neri to answer this question?
ATTY. AGABIN
Well, they can craft it, Your Honor, based on mere speculation. And sound legislation
requires that a proposed Bill should have some basis in fact.42
The failure of the counsel for respondent Committees to pinpoint the specific need for the information sought
or how the withholding of the information sought will hinder the accomplishment of their legislative purpose is
very evident in the above oral exchanges. Due to the failure of the respondent Committees to successfully
discharge this burden, the presumption in favor of confidentiality of presidential communication stands. The
implication of the said presumption, like any other, is to dispense with the burden of proof as to whether the
disclosure will significantly impair the Presidents performance of her function. Needless to state this is
assumed, by virtue of the presumption.
Anent respondent Committees bewailing that they would have to "speculate" regarding the questions covered
by the privilege, this does not evince a compelling need for the information sought. Indeed, Senate Select
Committee on Presidential Campaign Activities v. Nixon43 held that while fact-finding by a legislative
Page 545 of 557

committee is undeniably a part of its task, legislative judgments normally depend more on the predicted
consequences of proposed legislative actions and their political acceptability than on a precise reconstruction
of past events. It added that, normally, Congress legislates on the basis of conflicting information provided in
its hearings. We cannot subscribe to the respondent Committees self-defeating proposition that without the
answers to the three (3) questions objected to as privileged, the distinguished members of the respondent
Committees cannot intelligently craft legislation.
Anent the function to curb graft and corruption, it must be stressed that respondent Committees need for
information in the exercise of this function is not as compelling as in instances when the purpose of the inquiry
is legislative in nature. This is because curbing graft and corruption is merely an oversight function of
Congress.44 And if this is the primary objective of respondent Committees in asking the three (3) questions
covered by privilege, it may even contradict their claim that their purpose is legislative in nature and not
oversight. In any event, whether or not investigating graft and corruption is a legislative or oversight function
of Congress, respondent Committees investigation cannot transgress bounds set by the Constitution.
In Bengzon, Jr. v. Senate Blue Ribbon Committee,45 this Court ruled:
The "allocation of constitutional boundaries" is a task that this Court must perform under the
Constitution. Moreover, as held in a recent case, "the political question doctrine neither interposes an
obstacle to judicial determination of the rival claims. The jurisdiction to delimit constitutional
boundaries has been given to this Court. It cannot abdicate that obligation mandated by the 1987
Constitution, although said provision by no means does away with the applicability of the principle in
appropriate cases.46 (Emphasis supplied)
There, the Court further ratiocinated that "the contemplated inquiry by respondent Committee is not really
in aid of legislation because it is not related to a purpose within the jurisdiction of Congress, since the
aim of the investigation is to find out whether or not the relatives of the President or Mr. Ricardo Lopa
had violated Section 5 of R.A. No. 3019, the Anti-Graft and Corrupt Practices Act, a matter that appears
more within the province of the courts rather than of the Legislature."47 (Emphasis and underscoring
supplied)
The general thrust and the tenor of the three (3) questions is to trace the alleged bribery to the Office of the
President.48 While it may be a worthy endeavor to investigate the potential culpability of high government
officials, including the President, in a given government transaction, it is simply not a task for the Senate to
perform. The role of the Legislature is to make laws, not to determine anyones guilt of a crime or wrongdoing.
Our Constitution has not bestowed upon the Legislature the latter role. Just as the Judiciary cannot legislate,
neither can the Legislature adjudicate or prosecute.
Respondent Committees claim that they are conducting an inquiry in aid of legislation and a "search for truth,"
which in respondent Committees view appears to be equated with the search for persons responsible for
"anomalies" in government contracts.
No matter how noble the intentions of respondent Committees are, they cannot assume the power reposed
upon our prosecutorial bodies and courts. The determination of who is/are liable for a crime or illegal activity,
the investigation of the role played by each official, the determination of who should be haled to court for
prosecution and the task of coming up with conclusions and finding of facts regarding anomalies, especially
the determination of criminal guilt, are not functions of the Senate. Congress is neither a law enforcement nor a
trial agency. Moreover, it bears stressing that no inquiry is an end in itself; it must be related to, and in
furtherance of, a legitimate task of the Congress, i.e. legislation. Investigations conducted solely to gather
incriminatory evidence and "punish" those investigated are indefensible. There is no Congressional power to
expose for the sake of exposure.49 In this regard, the pronouncement in Barenblatt v. United States50 is
instructive, thus:
Page 546 of 557

Broad as it is, the power is not, however, without limitations. Since Congress may only investigate
into the areas in which it may potentially legislate or appropriate, it cannot inquire into matters which
are within the exclusive province of one of the other branches of the government. Lacking the judicial
power given to the Judiciary, it cannot inquire into matters that are exclusively the concern of the
Judiciary. Neither can it supplant the Executive in what exclusively belongs to the Executive.
(Emphasis supplied.)
At this juncture, it is important to stress that complaints relating to the NBN Project have already been filed
against President Arroyo and other personalities before the Office of the Ombudsman. Under our Constitution,
it is the Ombudsman who has the duty "to investigate any act or omission of any public official, employee,
office or agency when such act or omission appears to be illegal, unjust, improper, or inefficient."51 The
Office of the Ombudsman is the body properly equipped by the Constitution and our laws to preliminarily
determine whether or not the allegations of anomaly are true and who are liable therefor. The same holds true
for our courts upon which the Constitution reposes the duty to determine criminal guilt with finality. Indeed,
the rules of procedure in the Office of the Ombudsman and the courts are well-defined and ensure that the
constitutionally guaranteed rights of all persons, parties and witnesses alike, are protected and
safeguarded.
Should respondent Committees uncover information related to a possible crime in the course of their
investigation, they have the constitutional duty to refer the matter to the appropriate agency or branch of
government. Thus, the Legislatures need for information in an investigation of graft and corruption cannot be
deemed compelling enough to pierce the confidentiality of information validly covered by executive privilege.
As discussed above, the Legislature can still legislate on graft and corruption even without the information
covered by the three (3) questions subject of the petition.
Corollarily, respondent Committees justify their rejection of petitioners claim of executive privilege on the
ground that there is no privilege when the information sought might involve a crime or illegal activity, despite
the absence of an administrative or judicial determination to that effect. Significantly, however, in Nixon
v. Sirica,52 the showing required to overcome the presumption favoring confidentiality turned, not on the
nature of the presidential conduct that the subpoenaed material might reveal, but, instead, on the nature
and appropriateness of the function in the performance of which the material was sought, and the
degree to which the material was necessary to its fulfillment.
Respondent Committees assert that Senate Select Committee on Presidential Campaign Activities v. Nixon
does not apply to the case at bar because, unlike in the said case, no impeachment proceeding has been
initiated at present. The Court is not persuaded. While it is true that no impeachment proceeding has been
initiated, however, complaints relating to the NBN Project have already been filed against President Arroyo
and other personalities before the Office of the Ombudsman. As the Court has said earlier, the prosecutorial
and judicial arms of government are the bodies equipped and mandated by the Constitution and our laws to
determine whether or not the allegations of anomaly in the NBN Project are true and, if so, who should be
prosecuted and penalized for criminal conduct.
Legislative inquiries, unlike court proceedings, are not subject to the exacting standards of evidence essential
to arrive at accurate factual findings to which to apply the law. Hence, Section 10 of the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation provides that "technical rules of evidence applicable to
judicial proceedings which do not affect substantive rights need not be observed by the Committee." Court
rules which prohibit leading, hypothetical, or repetitive questions or questions calling for a hearsay answer, to
name a few, do not apply to a legislative inquiry. Every person, from the highest public official to the most
ordinary citizen, has the right to be presumed innocent until proven guilty in proper proceedings by a
competent court or body.
IV
Page 547 of 557

Respondent Committees Committed Grave

Abuse of Discretion in Issuing the Contempt Order
Respondent Committees insist that they did not commit grave abuse of discretion in issuing the contempt order
because (1) there is no legitimate claim of executive privilege; (2) they did not violate the requirements laid
down in Senate v. Ermita; (3) they issued the contempt order in accordance with their internal Rules; (4) they
did not violate the requirement under Article VI, Section 21 of the Constitution requiring the publication of
their Rules; and (5) their issuance of the contempt order is not arbitrary or precipitate.
We reaffirm our earlier ruling.
The legitimacy of the claim of executive privilege having been fully discussed in the preceding pages, we see
no reason to discuss it once again.
Respondent Committees second argument rests on the view that the ruling in Senate v. Ermita, requiring
invitations or subpoenas to contain the "possible needed statute which prompted the need for the inquiry"
along with the "usual indication of the subject of inquiry and the questions relative to and in furtherance
thereof" is not provided for by the Constitution and is merely an obiter dictum.
On the contrary, the Court sees the rationale and necessity of compliance with these requirements.
An unconstrained congressional investigative power, like an unchecked Executive, generates its own abuses.
Consequently, claims that the investigative power of Congress has been abused (or has the potential for abuse)
have been raised many times.53 Constant exposure to congressional subpoena takes its toll on the ability of the
Executive to function effectively. The requirements set forth in Senate v. Ermita are modest mechanisms that
would not unduly limit Congress power. The legislative inquiry must be confined to permissible areas and
thus, prevent the "roving commissions" referred to in the U.S. case, Kilbourn v. Thompson.54 Likewise,
witnesses have their constitutional right to due process. They should be adequately informed what matters are
to be covered by the inquiry. It will also allow them to prepare the pertinent information and documents. To
our mind, these requirements concede too little political costs or burdens on the part of Congress when viewed
vis--vis the immensity of its power of inquiry. The logic of these requirements is well articulated in the study
conducted by William P. Marshall,55 to wit:
A second concern that might be addressed is that the current system allows committees to continually
investigate the Executive without constraint. One process solution addressing this concern is to
require each investigation be tied to a clearly stated purpose. At present, the charters of some
congressional committees are so broad that virtually any matter involving the Executive can be
construed to fall within their province. Accordingly, investigations can proceed without articulation of
specific need or purpose. A requirement for a more precise charge in order to begin an inquiry should
immediately work to limit the initial scope of the investigation and should also serve to contain the
investigation once it is instituted. Additionally, to the extent clear statements of rules cause
legislatures to pause and seriously consider the constitutional implications of proposed courses
of action in other areas, they would serve that goal in the context of congressional investigations
as well.
The key to this reform is in its details. A system that allows a standing committee to simply
articulate its reasons to investigate pro forma does no more than imposes minimal drafting
burdens. Rather, the system must be designed in a manner that imposes actual burdens on the
committee to articulate its need for investigation and allows for meaningful debate about the
merits of proceeding with the investigation. (Emphasis supplied)

Page 548 of 557

Clearly, petitioners request to be furnished an advance copy of questions is a reasonable demand that should
have been granted by respondent Committees.
Unfortunately, the Subpoena Ad Testificandum dated November 13, 2007 made no specific reference to any
pending Senate bill. It did not also inform petitioner of the questions to be asked. As it were, the subpoena
merely commanded him to "testify on what he knows relative to the subject matter under inquiry."
Anent the third argument, respondent Committees contend that their Rules of Procedure Governing Inquiries
in Aid of Legislation (the "Rules") are beyond the reach of this Court. While it is true that this Court must
refrain from reviewing the internal processes of Congress, as a co-equal branch of government, however, when
a constitutional requirement exists, the Court has the duty to look into Congress compliance therewith. We
cannot turn a blind eye to possible violations of the Constitution simply out of courtesy. In this regard, the
pronouncement in Arroyo v. De Venecia56 is enlightening, thus:
"Cases both here and abroad, in varying forms of expression, all deny to the courts the power to
inquire into allegations that, in enacting a law, a House of Congress failed to comply with its own
rules, in the absence of showing that there was a violation of a constitutional provision or the rights of
private individuals.
United States v. Ballin, Joseph & Co., the rule was stated thus: The Constitution empowers each
House to determine its rules of proceedings. It may not by its rules ignore constitutional restraints
or violate fundamental rights, and there should be a reasonable relation between the mode or
method of proceeding established by the rule and the result which is sought to be attained."
In the present case, the Courts exercise of its power of judicial review is warranted because there appears to
be a clear abuse of the power of contempt on the part of respondent Committees. Section 18 of the Rules
provides that:
"The Committee, by a vote of majority of all its members, may punish for contempt any witness
before it who disobey any order of the Committee or refuses to be sworn or to testify or to answer
proper questions by the Committee or any of its members." (Emphasis supplied)
In the assailed Decision, we said that there is a cloud of doubt as to the validity of the contempt order because
during the deliberation of the three (3) respondent Committees, only seven (7) Senators were present. This
number could hardly fulfill the majority requirement needed by respondent Committee on Accountability of
Public Officers and Investigations which has a membership of seventeen (17) Senators and respondent
Committee on National Defense and Security which has a membership of eighteen (18) Senators. With respect
to respondent Committee on Trade and Commerce which has a membership of nine (9) Senators, only three (3)
members were present.57 These facts prompted us to quote in the Decision the exchanges between Senators
Alan Peter Cayetano and Aquilino Pimentel, Jr. whereby the former raised the issue of lack of the required
majority to deliberate and vote on the contempt order.
When asked about such voting during the March 4, 2008 hearing before this Court, Senator Francis Pangilinan
stated that any defect in the committee voting had been cured because two-thirds of the Senators effectively
signed for the Senate in plenary session.58
Obviously the deliberation of the respondent Committees that led to the issuance of the contempt order is
flawed. Instead of being submitted to a full debate by all the members of the respondent Committees, the
contempt order was prepared and thereafter presented to the other members for signing. As a result, the
contempt order which was issued on January 30, 2008 was not a faithful representation of the proceedings that
took place on said date. Records clearly show that not all of those who signed the contempt order were present
during the January 30, 2008 deliberation when the matter was taken up.
Page 549 of 557

Section 21, Article VI of the Constitution states that:

The Senate or the House of Representatives or any of its respective committees may conduct inquiries
in aid of legislation in accordance with its duly published rules of procedure. The rights of person
appearing in or affected by such inquiries shall be respected. (Emphasis supplied)
All the limitations embodied in the foregoing provision form part of the witness settled expectation. If the
limitations are not observed, the witness settled expectation is shattered. Here, how could there be a majority
vote when the members in attendance are not enough to arrive at such majority? Petitioner has the right to
expect that he can be cited in contempt only through a majority vote in a proceeding in which the matter has
been fully deliberated upon. There is a greater measure of protection for the witness when the concerns and
objections of the members are fully articulated in such proceeding. We do not believe that respondent
Committees have the discretion to set aside their rules anytime they wish. This is especially true here where
what is involved is the contempt power. It must be stressed that the Rules are not promulgated for their benefit.
More than anybody else, it is the witness who has the highest stake in the proper observance of the Rules.
Having touched the subject of the Rules, we now proceed to respondent Committees fourth argument.
Respondent Committees argue that the Senate does not have to publish its Rules because the same was
published in 1995 and in 2006. Further, they claim that the Senate is a continuing body; thus, it is not required
to republish the Rules, unless the same is repealed or amended.
On the nature of the Senate as a "continuing body," this Court sees fit to issue a clarification. Certainly, there is
no debate that the Senate as an institution is "continuing", as it is not dissolved as an entity with each national
election or change in the composition of its members. However, in the conduct of its day-to-day business the
Senate of each Congress acts separately and independently of the Senate of the Congress before it. The Rules
of the Senate itself confirms this when it states:
RULE XLIV
UNFINISHED BUSINESS
SEC. 123. Unfinished business at the end of the session shall be taken up at the next session in the
same status.
All pending matters and proceedings shall terminate upon the expiration of one (1) Congress,
but may be taken by the succeeding Congress as if present for the first time. (emphasis supplied)
Undeniably from the foregoing, all pending matters and proceedings, i.e. unpassed bills and even legislative
investigations, of the Senate of a particular Congress are considered terminated upon the expiration of that
Congress and it is merely optional on the Senate of the succeeding Congress to take up such unfinished
matters, not in the same status, but as if presented for the first time. The logic and practicality of such a rule
is readily apparent considering that the Senate of the succeeding Congress (which will typically have a
different composition as that of the previous Congress) should not be bound by the acts and deliberations of
the Senate of which they had no part. If the Senate is a continuing body even with respect to the conduct of its
business, then pending matters will not be deemed terminated with the expiration of one Congress but will, as
a matter of course, continue into the next Congress with the same status.
This dichotomy of the continuity of the Senate as an institution and of the opposite nature of the conduct of its
business is reflected in its Rules. The Rules of the Senate (i.e. the Senates main rules of procedure) states:
RULE LI
AMENDMENTS TO, OR REVISIONS OF, THE RULES

Page 550 of 557

SEC. 136. At the start of each session in which the Senators elected in the preceding elections shall
begin their term of office, the President may endorse the Rules to the appropriate committee for
amendment or revision.
The Rules may also be amended by means of a motion which should be presented at least one day
before its consideration, and the vote of the majority of the Senators present in the session shall be
required for its approval. (emphasis supplied)
RULE LII
DATE OF TAKING EFFECT
SEC. 137. These Rules shall take effect on the date of their adoption and shall remain in force until
they are amended or repealed. (emphasis supplied)
Section 136 of the Senate Rules quoted above takes into account the new composition of the Senate after an
election and the possibility of the amendment or revision of the Rules at the start of each session in which the
newly elected Senators shall begin their term.
However, it is evident that the Senate has determined that its main rules are intended to be valid from the date
of their adoption until they are amended or repealed. Such language is conspicuously absent from the Rules.
The Rules simply state "(t)hese Rules shall take effect seven (7) days after publication in two (2) newspapers
of general circulation."59 The latter does not explicitly provide for the continued effectivity of such rules until
they are amended or repealed. In view of the difference in the language of the two sets of Senate rules, it
cannot be presumed that the Rules (on legislative inquiries) would continue into the next Congress. The Senate
of the next Congress may easily adopt different rules for its legislative inquiries which come within the rule on
unfinished business.
The language of Section 21, Article VI of the Constitution requiring that the inquiry be conducted in
accordance with the duly published rules of procedure is categorical. It is incumbent upon the Senate to
publish the rules for its legislative inquiries in each Congress or otherwise make the published rules clearly
state that the same shall be effective in subsequent Congresses or until they are amended or repealed to
sufficiently put public on notice.
If it was the intention of the Senate for its present rules on legislative inquiries to be effective even in the next
Congress, it could have easily adopted the same language it had used in its main rules regarding effectivity.
Lest the Court be misconstrued, it should likewise be stressed that not all orders issued or proceedings
conducted pursuant to the subject Rules are null and void. Only those that result in violation of the rights of
witnesses should be considered null and void, considering that the rationale for the publication is to protect the
rights of witnesses as expressed in Section 21, Article VI of the Constitution. Sans such violation, orders and
proceedings are considered valid and effective.
Respondent Committees last argument is that their issuance of the contempt order is not precipitate or
arbitrary. Taking into account the totality of circumstances, we find no merit in their argument.
As we have stressed before, petitioner is not an unwilling witness, and contrary to the assertion of respondent
Committees, petitioner did not assume that they no longer had any other questions for him. He repeatedly
manifested his willingness to attend subsequent hearings and respond to new matters. His only request was that
he be furnished a copy of the new questions in advance to enable him to adequately prepare as a resource
person. He did not attend the November 20, 2007 hearing because Executive Secretary Ermita requested
respondent Committees to dispense with his testimony on the ground of executive privilege. Note that
petitioner is an executive official under the direct control and supervision of the Chief Executive. Why punish
Page 551 of 557

petitioner for contempt when he was merely directed by his superior? Besides, save for the three (3) questions,
he was very cooperative during the September 26, 2007 hearing.
On the part of respondent Committees, this Court observes their haste and impatience. Instead of ruling on
Executive Secretary Ermitas claim of executive privilege, they curtly dismissed it as unsatisfactory and
ordered the arrest of petitioner. They could have informed petitioner of their ruling and given him time to
decide whether to accede or file a motion for reconsideration. After all, he is not just an ordinary witness; he is
a high- ranking official in a co-equal branch of government. He is an alter ego of the President. The same haste
and impatience marked the issuance of the contempt order, despite the absence of the majority of the members
of the respondent Committees, and their subsequent disregard of petitioners motion for reconsideration
alleging the pendency of his petition for certiorari before this Court.
On a concluding note, we are not unmindful of the fact that the Executive and the Legislature are political
branches of government. In a free and democratic society, the interests of these branches inevitably clash, but
each must treat the other with official courtesy and respect. This Court wholeheartedly concurs with the
proposition that it is imperative for the continued health of our democratic institutions that we preserve the
constitutionally mandated checks and balances among the different branches of government.
In the present case, it is respondent Committees contention that their determination on the validity of
executive privilege should be binding on the Executive and the Courts. It is their assertion that their internal
procedures and deliberations cannot be inquired into by this Court supposedly in accordance with the principle
of respect between co-equal branches of government. Interestingly, it is a courtesy that they appear to be
unwilling to extend to the Executive (on the matter of executive privilege) or this Court (on the matter of
judicial review). It moves this Court to wonder: In respondent Committees paradigm of checks and balances,
what are the checks to the Legislatures all-encompassing, awesome power of investigation? It is a power, like
any other, that is susceptible to grave abuse.
While this Court finds laudable the respondent Committees well-intentioned efforts to ferret out corruption,
even in the highest echelons of government, such lofty intentions do not validate or accord to Congress powers
denied to it by the Constitution and granted instead to the other branches of government.
There is no question that any story of government malfeasance deserves an inquiry into its veracity. As
respondent Committees contend, this is founded on the constitutional command of transparency and public
accountability. The recent clamor for a "search for truth" by the general public, the religious community and
the academe is an indication of a concerned citizenry, a nation that demands an accounting of an entrusted
power. However, the best venue for this noble undertaking is not in the political branches of government. The
customary partisanship and the absence of generally accepted rules on evidence are too great an obstacle in
arriving at the truth or achieving justice that meets the test of the constitutional guarantee of due process of
law. We believe the people deserve a more exacting "search for truth" than the process here in question, if that
is its objective.
WHEREFORE, respondent Committees Motion for Reconsideration dated April 8, 2008 is hereby
DENIED.
SO ORDERED.
Puno, C.J., Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona, Carpio-Morales, Azcuna,
Tinga, Chico-Nazario, Velasco, Jr., Nachura, Reyes, Brion, JJ., concur.
Dissenting Opinion - C.J. Puno
Separate Opinion on the Motion for Reconsideration - J. Quisumbing

Page 552 of 557

Separate Dissenting Opinion - J. Azcuna

Separate Opinion - J. Reyes

Footnotes
1

Chaired by Hon. Senator Alan Peter S. Cayetano.

Chaired by Hon. Senator Manuel A. Roxas II.

Chaired by Hon. Senator Rodolfo G. Biazon.

Transcript of the September 26, 2007 Hearing of the respondent Committees, pp. 91-92.

Id., pp. 114-115.

Id., pp. 276-277.

See Letter dated November 15, 2007.

See Letter dated January 30, 2008.

G.R. No. 95367, May 23, 1995, 244 SCRA 286.

10

433 Phil. 506 (2002)

11

G.R. No. 169777, April 20, 2006, 488 SCRA 1.

12

Supra., note 9.

13

Supra., note 11.

14

G.R. No. 130716, December 9, 1998, 299 SCRA 744.

15

Supra., note 10.

16

Almonte v. Vasquez, supra., note 9.

17

Chavez v. PCGG, supra., note 14.

18

Senate v. Ermita, supra., note 11.

19

Telefunken Semiconductors Employees Union -FFW v. Court of Appeals, G.R. Nos. 143013-14,
December 18, 2000, 348 SCRA 565,587; Valderama v. NLRC, G.R. No. 98239, April 25,1996, 256
SCRA 466, 472 citing Policarpio v. P.V.B. and Associated Ins. & Surety Co., Inc., 106 Phil. 125, 131
(1959).
20

Supra, note 11 at pp. 68-69

Page 553 of 557

21

Id., at pp. 45-46

22

Id., at p. 58

23

Id., at p. 50

24

Webster Encyclopedic Unabridged Dictionary, Gramercy Books 1994, p. 1181.

25

Business Dictionary, http://www.businessdictionary.com/definition/non-delegable-duty.html

26

Usaffe Veterans Association, Inc. v. Treasurer of the Philippines, et al. (105 Phil. 1030, 1038); See
also Commissioner of Internal Revenue v. John Gotamco & Sons, Inc. G.R. No. L-31092, February
27, 1987,148 SCRA 36, 39.
27

No. 96-3124, June 17, 1997, 121 F.3d 729,326 U.S. App. D.C. 276.

28

365 F 3d. 1108, 361 U.S. App. D.C. 183, 64 Fed. R. Evid. Serv.141.

29

Article III, Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to official records, and
to documents, and papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be afforded the citizen, subject
to such limitations as may be provided by law.
30

Article II, Sec. 24. The State recognizes the vital role of communication and information in nationbuilding.
31

Article II, Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public interest.
32

Article XI, Sec. 1. Public office is a public trust. Public officers and employees must at all times be
accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act
with patriotism and justice, and lead modest lives.
33

Article XVI, Sec. 10. The State shall provide the policy environment for the full development of
Filipino capability and the emergence of communications structures suitable to the needs and
aspirations of the nation and the balanced flow of information into, out of, and across the country, in
accordance with a policy that respects the freedom of speech and of the press.
34

Article VII, Sec. 20. The President may contract or guarantee foreign loans on behalf of the
Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such
limitations as may be provided by law. The Monetary Board shall, within thirty days from the end of
every quarter of the calendar year, submit to Congress a complete report of its decisions on
applications for loans to be contracted or guaranteed by the Government or government-controlled
corporations which would have the effect of increasing the foreign debt, and containing other matters
as may be provided by law.
35

Article XII, Sec. 9. The Congress may establish an independent economic and planning agency
headed by the President, which shall, after consultations with the appropriate public agencies, various
private sectors, and local government units, recommend to Congress, and implement continuing
integrated and coordinated programs and policies for national development. Until the Congress
Page 554 of 557

provides otherwise, the National Economic and Development Authority shall function as the
independent planning agency of the government.
36

Article XII, Sec. 21. Foreign loans may only be incurred in accordance with law and the regulation
of the monetary authority. Information on foreign loans obtained or guaranteed by the Government
shall be made available to the public.
37

Article XII, Sec. 22. Acts which circumvent or negate any of the provisions of this Article shall be
considered inimical to the national interest and subject to criminal and civil sanctions, as may be
provided by law.
38

14 F. Supp. 230, 299 U.S. 304 (1936).

39

G.R. No. 170516, promulgated July 16, 2008.

40

Supra note 14.

41

Senate Select Committee on Presidential Campaign Activities v. Nixon, 498 F.2d 725 (D.C. Cir.
1974).
42

TSN, Oral Argument, March 4, 2008, pp. 417 - 422.

43

Supra, note 41 at pp. 725, 731-32.

44

Senate Select Committee on Presidential Campaign Activities v. Nixon held that Congress "asserted
power to investigate and inform" was, standing alone, insufficient to overcome a claim of privilege
and so refused to enforce the congressional subpoena. Id.
45

G.R. No. 89914, November 20, 1991, 203 SCRA 767.

46

Id., at p. 776.

47

Id., at p. 783.

48

The dialogue between petitioner and Senator Lacson is a good illustration, thus:
SEN. LACSON. Did you report the attempted bribe offer to the President?
MR. NERI. I mentioned it to the President, Your Honor.
SEN. LACSON: What did she tell you?
MR. NERI. She told me, Dont accept it."
SEN. LACSON. And then, thats it?
MR. NERI. Yeah, because we had other things to discuss during that time.
SEN. LACSON. And then after the President told you, "Do not accept it," what did she do?
How did you report it to the President? In the same context that it was offered to you?
Page 555 of 557

MR. NERI. I remember it was over the phone, Your Honor.

SEN. LACSON. Hindi nga. Papaano ninyo ni-report, Inoperan (offer) ako ng bribe na P200
million ni Chairman Abalos or what? How did you report it to her?
MR.NERI. Well, I said, Chairman Abalos offered me 200 million for this.
SEN. LACSON. Okay. That clear?
MR. NERI. Im sorry.
SEN. LACSON. That clear?
MR. NERI. I think so, Your Honor.
SEN. LACSON. And after she told you. Do not accept it, what did she do?
MR. NERI. I dont know anymore, Your Honor, but I understand PAGC investigated it or-I
was not privy to any action of PAGC.
SEN. LACSON. You are not privy to any recommendation submitted by PAGC?
MR. NERI. No, Your Honor.
SEN. LACSON. How did she react, was she shocked also like you or was it just casually
responded to as, "Dont accept."
MR. NERI. It was over the phone, Your Honor, so I cannot see her facial expression.
SEN. LACSON. Did it have something to do with your change of heart so to speak - your
attitude towards the NBN project as proposed by ZTE?
MR. NERI. Can you clarify, Your Honor, I dont understand the change of heart.
SEN. LACSON. Because, on March 26 and even on November 21, as early as November 21,
2006 during the NEDA Board Cabinet Meeting, you were in agreement with the President
that it should be "pay as you use" and not take or pay. There should be no government
subsidy and it should be BOT or BOO or any similar scheme and you were in agreement, you
were not arguing. The President was not arguing with you, you were not arguing with the
President, so you were in agreement and all of a sudden nauwi tayo doon sa lahat ng --- and
proposal all in violation of the Presidents Guidelines and in violation of what you thought of
the project?
MR. NERI. Well, we defer to the implementing agencys choice as to how to implement the
project.
49

Watkins v. United States, 354 U.S. 178 (1957).

50

360 U.A. 109, 3 L Ed. 2d 1115, 69 S CT 1081 (1959).

Page 556 of 557

51

Article XI, Section 13, par.1 of the Constitution.

52

487 F. 2d 700.

53

Professor Christopher Schroeder (then with the Clinton Justice Department), for example, labeled
some of Congresss investigations as no more than "vendetta oversight" or "oversight that seems
primarily interested in bringing someone down, usually someone close to the President or perhaps the
President himself." Theodore Olson (the former Solicitor General in the Bush Justice Department), in
turn, has argued that oversight has been used improperly by Congress to influence decision making of
executive branch officials in a way that undercuts the Presidents power to assure that laws are
faithfully executed. (Marshall, The Limits on Congress Authority to Investigate the President,
Marshall-Illinois.Doc, November 24, 2004.)
54

103 U.S. 168 (1880).

55

Kenan Professor of Law, University of North Carolina.

56

G.R. No. 127255, August 14, 1997, 277 SCRA 268.

57

Transcript of the January 30, 2008 proceedings pp. 5-7.

58

TSN, March 4, 2008, at pp. 529-530.

59

Section 24, Rules of Procedure Governing Inquiries in Aid of Legislation.

Page 557 of 557