SECTION 24

Tolentino vs Secretary of Finance

Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known
as the Expanded Value Added Tax (EVAT) Law. Tolentino averred that this revenue bill
did not exclusively originate from the House of Representatives as required by Section
24, Article 6 of the Constitution. Even though RA 7716 originated as HB 11197 and that
it passed the 3 readings in the HoR, the same did not complete the 3 readings in Senate
for after the 1st reading it was referred to the Senate Ways & Means Committee thereafter
Senate passed its own version known as Senate Bill 1630. Tolentino averred that what
Senate could have done is amend HB 11197 by striking out its text and substituting it with
the text of SB 1630 in that way “the bill remains a House Bill and the Senate version just
becomes the text (only the text) of the HB”. (It’s ironic however to note that Tolentino and
co-petitioner Raul Roco even signed the said Senate Bill.)
ISSUE: Whether or not the EVAT law is procedurally infirm.
HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such
consolidation was consistent with the power of the Senate to propose or concur with
amendments to the version originated in the HoR. What the Constitution simply means,
according to the 9 justices, is that the initiative must come from the HoR. Note also that
there were several instances before where Senate passed its own version rather than
having the HoR version as far as revenue and other such bills are concerned. This
practice of amendment by substitution has always been accepted. The proposition of
Tolentino concerns a mere matter of form. There is no showing that it would make a
significant difference if Senate were to adopt his over what has been done.

B.
Tolentino v. Secretary of Finance - 249 SCRA 635

FACTS:
Petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines, Roco, and Chamber of Real
Estate and Builders Association) seek reconsideration of the Court’s previous ruling
dismissing the petitions filed for the declaration of unconstitutionality of R.A. No. 7716,
the Expanded Value-Added Tax Law. Petitioners contend that the R.A. did not “originate
exclusively” in the HoR as required by Article 6, Section 24 of the Constitution. The Senate
allegedly did not pass it on second and third readings, instead passing its own version.
Petitioners contend that it should have amended the House bill by striking out the text of
the bill and substituting it with the text of its own bill, so as to conform with the Constitution.

ISSUE:
W/N the R.A. is unconstitutional for having “originated” from the Senate, and not the HoR.

HELD:
Petition is unmeritorious. The enactment of the Senate bill has not been the first instance
where the Senate, in the exercise of its power to propose amendments to bills (required
to originate in the House), passed its own version. An amendment by substitution (striking
out the text and substituting it), as urged by petitioners, concerns a mere matter of form,
and considering the petitioner has not shown what substantial difference it would make if
Senate applied such substitution in the case, it cannot be applied to the case at bar. While
the aforementioned Constitutional provision states that bills must “originate exclusively in
the HoR,” it also adds, “but the Senate may propose or concur with amendments.” The
Senate may then propose an entirely new bill as a substitute measure. Petitioners erred
in assuming the Senate version to be an independent and distinct bill. Without the House
bill, Senate could not have enacted the Senate bill, as the latter was a mere amendment
of the former. As such, it did not have to pass the Senate on second and third readings.

Petitioners question the signing of the President on both bills, to support their contention
that such are separate and distinct. The President certified the bills separately only
because the certification had to be made of the version of the same revenue bill which
AT THE MOMENT was being considered.

Petitioners question the power of the Conference Committee to insert new provisions.
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, given that
such are germane to the subject of the conference, and that the respective houses of
Congress subsequently approve its report.

Petitioner PAL contends that the amendment of its franchise by the withdrawal of its
exemption from VAT is not expressed in the title of the law, thereby violating the
Constitution. The Court believes that the title of the R.A. satisfies the Constitutional
Requirement.

Petitioners claim that the R.A. violates their press freedom and religious liberty, having
removed them from the exemption to pay VAT. Suffice it to say that since the law granted
the press a privilege, the law could take back the privilege anytime without offense to the
Constitution. By granting exemptions, the State does not forever waive the exercise of its
sovereign prerogative.

Lastly, petitioners contend that the R.A. violates due process, equal protection and
contract clauses and the rule on taxation. Petitioners fail to take into consideration the
fact that the VAT was already provided for in E.O. No. 273 long before the R.A. was
enacted. The latter merely EXPANDS the base of the tax. Equality and uniformity in
taxation means that all taxable articles or kinds of property of the same class be taxed at
the same rate, the taxing power having authority to make reasonable and natural
classifications for purposes of taxation. It is enough that the statute applies equally to all
persons, forms and corporations placed in s similar situation.
Alvarez vs Guingona
Alvarez v. Guingona
G.R. No. 118303 January 31, 1996
Hermosisima, Jr., J.

Facts:

HB 8817, entitled “An Act Converting the Municipality of Santiago into an

Independent Component City to be known as the City of Santiago,” was filed in the House
of Representatives, subsequently passed by the House of Representatives, and
transmitted to the Senate. A counterpart of HB 8817, SB 1243 was filed in the Senate,
and was passed as well. The enrolled bill was submitted to and signed by the Chief
Executive as RA 7720. When a plebiscite on the Act was held on July 13, 1994, a great
majority of the registered voters of Santiago voted in favor of the conversion of Santiago
into a city.

Issue:

whether or not considering that the Senate passed SB 1243, its own version of HB
8817, RA 7720 can be said to have originated in the House of Representatives

Held:

Yes. Bills of local application are required to originate exclusively in the

House of Representatives. Petitioners contend that since a bill of the same import was
passed in the Senate, it cannot be said to have originated in the House of
Representatives.

Such is untenable because it cannot be denied that the HB was filed first (18 Apr
1993). The SB was filed 19 May. The HB was approved on third reading 17 Dec, and was
transmitted to the Senate 28 Jan 1994.

The filing in the Senate of a substitute bill in anticipation of its receipt of the bill
from the House, does not contravene the constitutional requirement that a bill of local
application should originate in the House of Representatives, for as long as the Senate
does not act thereupon until it receives the House bill.

The filing in the Senate of a substitute bill in anticipation of its receipt of the bill
from the House of Representatives, does not contravene the constitutional requirement
that a bill of local application should originate in the House of Representatives, for as long
as the Senate does not act thereupon until it receives the House bill.
 In Tolentino v. Secretary of Finance, the Court said that what the Constitution
simply means is that the initiative for filing revenue, tariff, or tax bills, bills authorizing an
increase of the public debt, private bills and bills of local application must come from the
House of Representatives on the theory that, elected as they are from the districts, the
members of the House can be expected to be more sensitive to the local needs and
problems. On the other hand, the senators, who are elected at large, are expected to
approach the same problems from the national perspective. Both views are thereby made
to bear on the enactment of such laws. Nor does the Constitution prohibit the filing in the
Senate of a substitute bill in anticipation of its receipt of the bill from the House, so long
as action by the Senate as a body is withheld pending receipt of the House bill.

In April 1993, House Bill 8817 (An Act Converting the Municipality of Santiago into an
Independent Component City to be known as the City of Santiago) was passed in the
House of Representatives.
In May 1993, a Senate Bill (SB 1243) of similar title and content with that of HB 8817 was
introduced in the Senate.
In January 1994, HB 8817 was transmitted to the Senate. In February 1994, the Senate
conducted a public hearing on SB 1243. In March 1994, the Senate Committee on Local
Government rolled out its recommendation for approval of HB 8817 as it was totally the
same with SB 1243. Eventually, HB 8817 became a law (RA 7720).
Now Senator Heherson Alvarez et al are assailing the constitutionality of the said law on
the ground that the bill creating the law did not originate from the lower house and that
City of Santiago was not able to comply with the income of at least P20M per annum in
order for it to be a city. That in the computation of the reported average income of
P20,974,581.97, the IRA was included which should not be.

ISSUES:
1. Whether or not RA 7720 is invalid for not being originally from the HOR.
2. Whether or not the IRA should be included in the computation of an LGU’s income.
HELD: 1. NO. The house bill was filed first before the senate bill as the record shows.
Further, the Senate held in abeyance any hearing on the said SB while the HB was on its
1st, 2nd and 3rd reading in the HOR. The Senate only conducted its 1st hearing on the said
SB one month after the HB was transmitted to the Senate (in anticipation of the said HB
as well).
2. YES. The IRA should be added in the computation of an LGU’s average annual
income as was done in the case at bar. The IRAs are items of income because they form
part of the gross accretion of the funds of the local government unit. The IRAs regularly
and automatically accrue to the local treasury without need of any further action on the
part of the local government unit. They thus constitute income which the local
government can invariably rely upon as the source of much needed funds.
To reiterate, IRAs are a regular, recurring item of income; nil is there a basis, too, to
classify the same as a special fund or transfer, since IRAs have a technical definition and
meaning all its own as used in the Local Government Code that unequivocally makes it
distinct from special funds or transfers referred to when the Code speaks of “funding
support from the national government, its instrumentalities and government-owned-or-
controlled corporations.

SECTION 25
Garcia vs Mata
Garcia vs Mata Digest
G.R. No. L-33713 July 30, 1975

Facts:

The donation of the property to the government to make the property public does not
cure the constitutional defect. The fact that the law was passed when the said property
was still a private property cannot be ignored. “In accordance with the rule that the
taxing power must be exercised for public purposes only, money raised by taxation can
be expanded only for public purposes and not for the advantage of private individuals.”
Inasmuch as the land on which the projected feeder roads were to be constructed
belonged then to Zulueta, the result is that said appropriation sought a private purpose,
and, hence, was null and void.
Issue:

Whether RA 1600 is valid. Does it contain rider in an appropriation bill?

Held:

The incongruity and irrelevancy are already evident. Section 11 of RA 1600 fails to
disclose the relevance to any appropriation item. RA 1600 is an appropriation law for
the operation of government while Section 11 refers to a fundamental governmental
policy of calling to active duty and the reversion of inactive statute of reserve officers in
the AFP.

Hence it was A NON-APPROPRIATION ITEM INSERTED IN AN APPROPRIATION

MEASURE, in violation of the constitutional prohibition against RIDERS to the general
appropriation act. It was indeed a new and completely unrelated provision attached to
the GAA.

It also violates the rule on one-bill, one subject. The subject to be considered must be
expressed in the title of the act. When an act contains provisions which are clearly not
embraced in the subject of the act, as expressed in the title, such provisions are void,
inoperative and without effect.

SECTION 11 is unconstitutional. Garcia cannot compel the AFP to reinstate him.

Demetrio Demetria vs Manuel

Alba
Demetrio Demetria et al as taxpayers and members of the Batasan Pambansa sought
to prohibit Manuel Alba, then Minister of the Budget, from disbursing funds pursuant to
Presidential Decree No. 1177 or the Budget Reform Decree of 1977. Demetria assailed
the constitutionality of paragraph 1, Section 44 of the said PD. This Section provides
that:

“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.”

Demetria averred that this is unconstitutional for it violates the 1973 Constitution.

ISSUE: Whether or not Paragraph 1, Section 44, of PD 1177 is constitutional.

HELD: No. The Constitution provides that 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.

However, paragraph 1 of Section 44 of PD 1177 unduly overextends the privilege

granted under the Constitution. 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
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.

But it should be noted, transfers of savings within one department from one item to
another in the GAA may be allowed by law in the interest of expediency and efficiency.
There is no transfer from one department to another here.

PHILCONSA vs. HON. SALVADOR ENRIQUEZ, G.R. No.

113105 August 19, 1994
Facts:
House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of 1994), was passed
and approved by both houses of Congress on December 17, 1993. As passed, it imposed conditions
and limitations on certain items of appropriations in the proposed budget previously submitted by the
President. It also authorized members of Congress to propose and identify projects in the “pork
barrels” allotted to them and to realign their respective operating budgets.
Pursuant to the procedure on the passage and enactment of bills as prescribed by the
Constitution, Congress presented the said bill to the President for consideration and approval.
On December 30, 1993, the President signed the bill into law, and declared the same to have
become Republic Act NO. 7663, entitled “AN ACT APPROPRIATING FUNDS FOR THE OPERATION
OF THE GOVERNMENT OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY
ONE, NINETEEN HUNDRED AND NINETY-FOUR, AND FOR OTHER PURPOSES” (GAA of 1994).
On the same day, the President delivered his Presidential Veto Message, specifying the provisions of
the bill he vetoed and on which he imposed certain conditions, as follows:
1. Provision on Debt Ceiling, on the ground that “this debt reduction scheme cannot be validly done
through the 1994 GAA.” And that “appropriations for payment of public debt, whether foreign or
domestic, are automatically appropriated pursuant to the Foreign Borrowing Act and Section 31 of
 P.D. No. 1177 as reiterated under Section 26, Chapter 4, Book VI of E.O. No. 292, the Administrative
Code of 1987.
2. Special provisions which authorize the use of income and the creation, operation and maintenance
of revolving funds in the appropriation for State Universities and Colleges (SUC’s),
3. Provision on 70% (administrative)/30% (contract) ratio for road maintenance.
4. Special provision on the purchase by the AFP of medicines in compliance with the Generics Drugs
Law (R.A. No. 6675).

5. The President vetoed the underlined proviso in the appropriation for the modernization of the AFP of
the Special Provision No. 2 on the “Use of Fund,” which requires the prior approval of the Congress
for the release of the corresponding modernization funds, as well as the entire Special Provision No.
3 on the “Specific Prohibition” which states that the said Modernization Fund “shall not be used for
payment of six (6) additional S-211 Trainer planes, 18 SF-260 Trainer planes and 150 armored
personnel carriers”
6. New provision authorizing the Chief of Staff to use savings in the AFP to augment pension and
gratuity funds.
7. Conditions on the appropriation for the Supreme Court, Ombudsman, COA, and CHR, the Congress.
Issue:
whether or not the conditions imposed by the President in the items of the GAA of 1994: (a)
for the Supreme Court, (b) Commission on Audit (COA), (c) Ombudsman, (d) Commission on Human
Rights, (CHR), (e) Citizen Armed Forces Geographical Units (CAFGU’S) and (f) State Universities and
Colleges (SUC’s) are constitutional; whether or not the veto of the special provision in the appropriation
for debt service and the automatic appropriation of funds therefore is constitutional
Held:
The veto power, while exercisable by the President, is actually a part of the legislative
process. There is, therefore, sound basis to indulge in the presumption of validity of a veto. The burden
shifts on those questioning the validity thereof to show that its use is a violation of the Constitution.
The vetoed provision on the debt servicing is clearly an attempt to repeal Section 31 of P.D.
No. 1177 (Foreign Borrowing Act) and E.O. No. 292, and to reverse the debt payment policy. As held
by the court in Gonzales, the repeal of these laws should be done in a separate law, not in the
appropriations law.
In the veto of the provision relating to SUCs, there was no undue discrimination when the
President vetoed said special provisions while allowing similar provisions in other government
agencies. If some government agencies were allowed to use their income and maintain a revolving
fund for that purpose, it is because these agencies have been enjoying such privilege before by virtue
of the special laws authorizing such practices as exceptions to the “one-fund policy” (e.g., R.A. No.
4618 for the National Stud Farm, P.D. No. 902-A for the Securities and Exchange Commission; E.O.
No. 359 for the Department of Budget and Management’s Procurement Service).
The veto of the second paragraph of Special Provision No. 2 of the item for the DPWH is
unconstitutional. The Special Provision in question is not an inappropriate provision which can be the
subject of a veto. It is not alien to the appropriation for road maintenance, and on the other hand, it
specifies how the said item shall be expended — 70% by administrative and 30% by contract.
 The Special Provision which requires that all purchases of medicines by the AFP should strictly
comply with the formulary embodied in the National Drug Policy of the Department of Health is an
“appropriate” provision. Being directly related to and inseparable from the appropriation item on
purchases of medicines by the AFP, the special provision cannot be vetoed by the President without
also vetoing the said item.
The requirement in Special Provision No. 2 on the “use of Fund” for the AFP modernization
program that the President must submit all purchases of military equipment to Congress for its
approval, is an exercise of the “congressional or legislative veto.” However the case at bench is not
the proper occasion to resolve the issues of the validity of the legislative veto as provided in Special
Provisions Nos. 2 and 3 because the issues at hand can be disposed of on other grounds. Therefore,
being “inappropriate” provisions, Special Provisions Nos. 2 and 3 were properly vetoed.

Furthermore, Special Provision No. 3, prohibiting the use of the Modernization fund for
payment of the trainer planes and armored personnel carriers, which have been contracted for by the
AFP, is violative of the Constitutional prohibition on the passage of laws that impair the obligation of
contracts (Art. III, Sec. 10), more so, contracts entered into by the Government itself. The veto of said
special provision is therefore valid.
The Special Provision, which allows the Chief of Staff to use savings to augment the pension
fund for the AFP being managed by the AFP Retirement and Separation Benefits System is violative
of Sections 25(5) and 29(1) of the Article VI of the Constitution.

Regarding the deactivation of CAFGUS, we do not find anything in the language used in the
challenged Special Provision that would imply that Congress intended to deny to the President the
right to defer or reduce the spending, much less to deactivate 11,000 CAFGU members all at once in
1994. But even if such is the intention, the appropriation law is not the proper vehicle for such purpose.
Such intention must be embodied and manifested in another law considering that it abrades the
powers of the Commander-in-Chief and there are existing laws on the creation of the CAFGU’s to be
amended.
On the conditions imposed by the President on certain provisions relating to appropriations to
the Supreme Court, constitutional commissions, the NHA and the DPWH, there is less basis to
complain when the President said that the expenditures shall be subject to guidelines he will issue.
Until the guidelines are issued, it cannot be determined whether they are proper or inappropriate.
Under the Faithful Execution Clause, the President has the power to take “necessary and proper steps”
to carry into execution the law. These steps are the ones to be embodied in the guidelines.

SECTION 26
PHILCONSA v. PEDRO M. GIMENEZ G.R. No. L-23326
December 18, 1965
Facts:
Philippine Constitution Association, Inc (PHILCONSA) assails the validity of RA 3836 insofar
as the same allows retirement gratuity and commutation of vacation and sick leave to Senators and
Representatives, and to the elective officials of both Houses (of Congress). The provision on
retirement gratuity is an attempt to circumvent the Constitutional ban on increase of salaries of the
members of Congress during their term of office, contrary to the provisions of Article VI, Section 14 of
the Constitution. The same provision constitutes “selfish class legislation” because it allows members
and officers of Congress to retire after twelve (12) years of service and gives them a gratuity equivalent
to one year salary for every four years of service, which is not refundable in case of reinstatement or
re election of the retiree, while all other officers and employees of the government can retire only after
at least twenty (20) years of service and are given a gratuity which is only equivalent to one month
salary for every year of service, which, in any case, cannot exceed 24 months. The provision on
vacation and sick leave, commutable at the highest rate received, insofar as members of Congress
are concerned, is another attempt of the legislator to further increase their compensation in violation
of the Constitution.
The Solicitor General counter-argued alleging that the grant of retirement or pension benefits
under Republic Act No. 3836 to the officers objected to by the petitioner does not constitute “forbidden
compensation” within the meaning of Section 14 of Article VI of the Philippine Constitution. The law in
question does not constitute class legislation. The payment of commutable vacation and sick leave
benefits under the said Act is merely “in the nature of a basis for computing the gratuity due each
retiring member” and, therefore, is not an indirect scheme to increase their salary.

Issue:
whether Republic Act 3836 violates Section 14, Article VI, of the Constitution which reads
as follows:

The senators and the Members of the House of Representatives shall, unless otherwise provided by
law, receive an annual compensation of seven thousand two hundred pesos each, including per diems
and other emoluments or allowances, and exclusive only of travelling expenses to and from their
respective districts in the case of Members of the House of Representative and to and from their places
of residence in the case of Senators, when attending sessions of the Congress. No increase in said
compensation shall take effect until after the expiration of the full term of all the Members of the Senate
and of the House of Representatives approving such increase. Until otherwise provided by law, the
President of the Senate and the Speaker of the House of Representatives shall each receive an annual
compensation of sixteen thousand pesos.

Held:
Yes. When the Constitutional Convention first determined the compensation for the
Members of Congress, the amount fixed by it was only P5,000.00 per annum but it embodies a special
proviso which reads as follows: “No increase in said compensation shall take effect until after the
expiration of the full term of all the members of the National Assembly elected subsequent to approval
of such increase.” In other words, under the original constitutional provision regarding the power of the
National Assembly to increase the salaries of its members, no increase would take effect until after
the expiration of the full term of the members of the Assembly elected subsequent to the approval of
such increase.
The Constitutional provision in the aforementioned Section 14, Article VI, includes in the term
compensation “other emoluments”. This is the pivotal point on this fundamental question as to whether
the retirement benefit as provided for in Republic Act 3836 fall within the purview of the term “other
emoluments.”
Emolument is defined as the profit arising from office or employment; that which is received
as compensation for services or which is annexed to the possession of an office, as salary, fees and
perquisites.
 It is evident that retirement benefit is a form or another species of emolument, because it is a
part of compensation for services of one possessing any office.
Republic Act 3836 provides for an increase in the emoluments of Senators and Members of
the House of Representatives, to take effect upon the approval of said Act, which was on June 22,
1963. Retirement benefits were immediately available thereunder, without awaiting the expiration of
the full term of all the Members of the Senate and the House of Representatives approving such
increase. Such provision clearly runs counter to the prohibition in Article VI, Section 14 of the
Constitution. RA 3836 is therefore unconstitutional.

TIO VS. VIDEOGRAM REGULATORY BOARD [151 SCRA 208; G.R. No. L-75697; 18
Jun 1987]
Friday, January 30, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: The case is a petition filed by petitioner on behalf of videogram operators

adversely affected by Presidential Decree No. 1987, “An Act Creating the Videogram
Regulatory Board" with broad powers to regulate and supervise the videogram industry.

A month after the promulgation of the said Presidential Decree, the amended the
National Internal Revenue Code provided that:

"SEC. 134. Video Tapes. — There shall be collected on each processed video-tape
cassette, ready for playback, regardless of length, an annual tax of five pesos;
Provided, That locally manufactured or imported blank video tapes shall be subject to
sales tax."

"Section 10. Tax on Sale, Lease or Disposition of Videograms. — Notwithstanding any

provision of law to the contrary, the province shall collect a tax of thirty percent (30%) of
the purchase price or rental rate, as the case may be, for every sale, lease or
disposition of a videogram containing a reproduction of any motion picture or
audiovisual program.”

“Fifty percent (50%) of the proceeds of the tax collected shall accrue to the province,
and the other fifty percent (50%) shall accrue to the municipality where the tax is
collected; PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by
the City/Municipality and the Metropolitan Manila Commission.”
The rationale behind the tax provision is to curb the proliferation and unregulated
circulation of videograms including, among others, videotapes, discs, cassettes or any
technical improvement or variation thereof, have greatly prejudiced the operations of
movie houses and theaters. Such unregulated circulation have caused a sharp decline
in theatrical attendance by at least forty percent (40%) and a tremendous drop in the
collection of sales, contractor's specific, amusement and other taxes, thereby resulting
in substantial losses estimated at P450 Million annually in government revenues.

Videogram(s) establishments collectively earn around P600 Million per annum from
rentals, sales and disposition of videograms, and these earnings have not been
subjected to tax, thereby depriving the Government of approximately P180 Million in
taxes each year.

The unregulated activities of videogram establishments have also affected the viability
of the movie industry.

Issues:

(1) Whether or not tax imposed by the DECREE is a valid exercise of police power.

(2) Whether or nor the DECREE is constitutional.

Held: Taxation has been made the implement of the state's police power. The levy of
the 30% tax is for a public purpose. It was imposed primarily to answer the need for
regulating the video industry, particularly because of the rampant film piracy, the
flagrant violation of intellectual property rights, and the proliferation of pornographic
video tapes. And while it was also an objective of the DECREE to protect the movie
industry, the tax remains a valid imposition.

We find no clear violation of the Constitution which would justify us in pronouncing

Presidential Decree No. 1987 as unconstitutional and void. While the underlying
objective of the DECREE is to protect the moribund movie industry, there is no question
that public welfare is at bottom of its enactment, considering "the unfair competition
posed by rampant film piracy; the erosion of the moral fiber of the viewing public
brought about by the availability of unclassified and unreviewed video tapes containing
pornographic films and films with brutally violent sequences; and losses in government
revenues due to the drop in theatrical attendance, not to mention the fact that the
activities of video establishments are virtually untaxed since mere payment of Mayor's
permit and municipal license fees are required to engage in business."

WHEREFORE, the instant Petition is hereby dismissed. No costs.

PHIL JUDGES ASSOCIATION VS PRADO ENBANC

Posted by kaye lee on 6:34 PM
227 SCRA 703 G.R. No. 105371 November 11, 1993

FACTS:
Petitioners assailed the validity of Sec 35 R.A. No. 7354 which withdraw the franking
privilege from the Supreme Court, the Court of Appeals, the Regional Trial Courts, the
Metropolitan Trial Courts, the Municipal Trial Courts, and the Land Registration
Commission and its Registers of Deeds, along with certain other government offices.
The petition assails the constitutionality of R.A. No. 7354 on the grounds that: (1) its title
embraces more than one subject and does not express its purposes; (2) it did not pass
the required readings in both Houses of Congress and printed copies of the bill in its
final form were not distributed among the members before its passage; and (3) it is
discriminatory and encroaches on the independence of the Judiciary.

ISSUE:
Whether or not Sec 35 of RA 7354 is constitutional.

RULING:
No. SC held that Sec 35 R.A. No. 7354 is unconstitutional.
1. Article VI, Sec. 26(l), of the Constitution providing that "Every bill passed by the
Congress shall embrace only one subject which shall be expressed in the title thereof."
The title of the bill is not required to be an index to the body of the act, or to be as
comprehensive as to cover every single detail of the measure. It has been held that if
the title fairly indicates the general subject, and reasonably covers all the provisions of
the act, and is not calculated to mislead the legislature or the people, there is sufficient
compliance with the constitutional requirement.
We are convinced that the withdrawal of the franking privilege from some agencies is
germane to the accomplishment of the principal objective of R.A. No. 7354, which is the
creation of a more efficient and effective postal service system. Our ruling is that, by
virtue of its nature as a repealing clause, Section 35 did not have to be expressly
included in the title of the said law.

2. The petitioners maintain that the second paragraph of Sec. 35 covering the repeal of
the franking privilege from the petitioners and this Court under E.O. 207, PD 1882 and
PD 26 was not included in the original version of Senate Bill No. 720 or House Bill No.
4200. As this paragraph appeared only in the Conference Committee Report, its
addition, violates Article VI, Sec. 26(2) of the Constitution. The petitioners also invoke
Sec. 74 of the Rules of the House of Representatives, requiring that amendment to any
bill when the House and the Senate shall have differences thereon may be settled by a
conference committee of both chambers.
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.
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.

3. SC annuls Section 35 of the law as violative of Article 3, Sec. 1, of the Constitution

providing that no person shall "be deprived of the equal protection of laws."
It is worth observing that the Philippine Postal Corporation, as a government-controlled
corporation, was created and is expected to operate for the purpose of promoting the
public service. While it may have been established primarily for private gain, it cannot
excuse itself from performing certain functions for the benefit of the public in exchange
for the franchise extended to it by the government and the many advantages it enjoys
under its charter. 14 Among the services it should be prepared to extend is free carriage
of mail for certain offices of the government that need the franking privilege in the
discharge of their own public functions.
Tan v. Del Rosario Digest

Tan v Del Rosario

Facts:

1. Two consolidated cases assail the validity of RA 7496 or the Simplified Net Income
Taxation Scheme ("SNIT"), which amended certain provisions of the NIRC, as well as
the Rules and Regulations promulgated by public respondents pursuant to said law.

2. Petitioners posit that RA 7496 is unconstitutional as it allegedly violates the following

provisions of the Constitution:

-Article VI, Section 26(1) — Every bill passed by the Congress shall embrace only one
subject which shall be expressed in the title thereof.
- Article VI, Section 28(1) — The rule of taxation shall be uniform and equitable. The
Congress shall evolve a progressive system of taxation.
- Article III, Section 1 — No person shall be deprived of . . . property without due
process of law, nor shall any person be denied the equal protection of the laws.

3. Petitioners contended that public respondents exceeded their rule-making authority

in applying SNIT to general professional partnerships. Petitioner contends that the title
of HB 34314, progenitor of RA 7496, is deficient for being merely entitled, "Simplified
Net Income Taxation Scheme for the Self-Employed and Professionals Engaged in the
Practice of their Profession" (Petition in G.R. No. 109289) when the full text of the title
actually reads,
'An Act Adopting the Simplified Net Income Taxation Scheme For The Self-Employed
and Professionals Engaged In The Practice of Their Profession, Amending Sections 21
and 29 of the National Internal Revenue Code,' as amended. Petitioners also contend it
violated due process.

5. The Solicitor General espouses the position taken by public respondents.

6. The Court has given due course to both petitions.

ISSUE: Whether or not the tax law is unconstitutional for violating due process

NO. The due process clause may correctly be invoked only when there is a clear
contravention of inherent or constitutional limitations in the exercise of the tax power. No
such transgression is so evident in herein case.

1. Uniformity of taxation, like the concept of equal protection, merely requires that all
subjects or objects of taxation, similarly situated, are to be treated alike both in
privileges and liabilities. Uniformity does not violate classification as long as: (1) the
standards that are used therefor are substantial and not arbitrary, (2) the categorization
is germane to achieve the legislative purpose, (3) the law applies, all things being equal,
to both present and future conditions, and (4) the classification applies equally well to all
those belonging to the same class.

2. What is apparent from the amendatory law is the legislative intent to increasingly
shift the income tax system towards the schedular approach in the income taxation of
individual taxpayers and to maintain, by and large, the present global treatment on
taxable corporations. The Court does not view this classification to be arbitrary and
inappropriate.

ISSUE 2: Whether or not public respondents exceeded their authority in promulgating

the RR

No. There is no evident intention of the law, either before or after the amendatory
legislation, to place in an unequal footing or in significant variance the income tax
treatment of professionals who practice their respective professions individually and of
those who do it through a general professional partnership.
Gonzales v. Macaraig
191 SCRA 452 (1990)

Facts:

On 16 December 1988, Congress passed House Bill 19186, or the General

Appropriations Bill for the Fiscal Year 1989. As passed, it eliminated or decreased
certain items included in the proposed budget submitted by the President. Pursuant to
the constitutional provision on the passage of bills, Congress presented the said Bill to
the President for consideration and approval. On 29 December 1988, the President
signed the Bill into law, and declared the same to have become RA 6688. In the
process, 7 Special Provisions and Section 55, a “General Provision,” were vetoed. On 2
February 1989, the Senate, in Resolution 381 (“Authorizing and Directing the
Committee on Finance to Bring in the Name of the Senate of the Philippines the Proper
Suit with the Supreme Court of the Philippines contesting the Constitutionality of the
Veto by the President of Special and General Provisions, particularly Section 55, of the
General Appropriation Bill of 1989 (H.B. No. 19186) and For Other Purposes”) was
adopted. On 11 April 1989, the Petition for Prohibition/ Mandamus was filed by Neptali
A. Gonzales, Ernesto M. Maceda, Alberto G. Romulo, Heherson T. Alvarez, Edgardo J.
Angara, Agapito A. Aquino, Teofisto T. Guingona, Jr., Ernesto F. Herrera, Jose D. Lina,
Jr., John Osmeña, Vicente T. Paterno, Rene A. Saguisag, Leticia Ramos-Shahani,
Mamintal Abdul J. Tamano, Wigberto E. Tañada, Jovito R. Salonga, Orlando S.
Mercado, Juan Ponce Enrile, Joseph Estrada, Sotero Laurel, Aquilino Pimentel, Jr.,
Santanina Rasul, Victor Ziga, as members and ex-officio members of the Committee on
Finance of the Senate and as “substantial taxpayers whose vital interests may be
affected by this case,” with a prayer for the issuance of a Writ of Preliminary Injunction
and Restraining Order, assailing mainly the constitutionality or legality of the
Presidential veto of Section 55, and seeking to enjoin Catalino Macaraig, Jr., Vicente
Jayme, Carlos Dominguez, Fulgencio Factoran, Fiorello Estuar, Lourdes Quisumbing,
Raul Manglapus, Alfredo Bengson, Jose Concepcion, Luis Santos, Mita Pardo De
Tavera, Rainerio Reyes, Guillermo Carague, Rosalina Cajucom and Eufemio C.
Domingo from implementing RA 6688. No Restraining Order was issued by the
Supreme Court. Gonzales et al.’s cause is anchored on the following grounds: (1) the
President’s line-veto power as regards appropriation bills is limited to item/s and does
not cover provision/s; therefore, she exceeded her authority when she vetoed Section
55 (FY ‘89) and Section 16 (FY ‘90) which are provisions; (2) when the President
objects to a provision of an appropriation bill, she cannot exercise the item-veto power
but should veto the entire bill; (3) the item-veto power does not carry with it the power to
strike out conditions or restrictions for that would be legislation, in violation of the
doctrine of separation of powers; and (4) the power of augmentation in Article VI,
Section 25 [5] of the 1987 Constitution, has to be provided for by law and, therefore,
Congress is also vested with the prerogative to impose restrictions on the exercise of
that power. The Solicitor General, as counsel for Macaraig et al., counters that the issue
in the present case is a political question beyond the power of the Supreme Court to
determine; that Gonzales et al. had a political remedy, which was to override the veto;
that Section 55 is a “rider” because it is extraneous to the Appropriations Act and,
therefore, merits the President’s veto; that the power of the President to augment items
in the appropriations for the executive branches had already been provided for in the
Budget Law, specifically Sections 44 and 45 of PD 1177, as amended by RA 6670 (4
August 1988); and that the President is empowered by the Constitution to veto
provisions or other “distinct and severable parts” of an Appropriations Bill.

Issue:

whether or not the President exceeded the item-veto power accorded by the
Constitution or differently put, has the President the power to veto provisions of an
Appropriations Bill

Held:

No. The veto power of the President is expressed in Article VI, Section 27 of
the 1987 Constitution. Paragraph (1) refers to the general veto power of the President
and if exercised would result in the veto of the entire bill, as a general rule. Paragraph
(2) is what is referred to as the item-veto power or the line-veto power. It allows the
exercise of the veto over a particular item or items in an appropriation, revenue, or tariff
bill. As specified, the President may not veto less than all of an item of an
Appropriations Bill. In other words, the power given the executive to disapprove any
item or items in an Appropriations Bill does not grant the authority to veto a part of an
item and to approve the remaining portion of the same item. Notwithstanding the
elimination in Article VI, Section 27 (2) of the 1987 Constitution of any reference to the
veto of a provision, the extent of the President’s veto power as previously defined by the
1935 Constitution has not changed. This is because the eliminated proviso merely
pronounces the basic principle that a distinct and severable part of a bill may be the
subject of a separate veto. The restrictive interpretation urged by Gonzales et al. that
the President may not veto a provision without vetoing the entire bill not only disregards
the basic principle that a distinct and severable part of a bill may be the subject of a
separate veto but also overlooks the Constitutional mandate that any provision in the
general appropriations bill shall relate specifically to some particular appropriation
therein and that any such provision shall be limited in its operation to the appropriation
to which it relates. In other words, in the true sense of the term, a provision in an
Appropriations Bill is limited in its operation to some particular appropriation to which it
relates, and does not relate to the entire bill. The President promptly vetoed Section 55
(FY ‘89) and Section 16 (FY ‘90) because they nullify the authority of the Chief
Executive and heads of different branches of government to augment any item in the
General Appropriations Law for their respective offices from savings in other items of
their respective appropriations, as guaranteed by Article VI, Section 25 (5) of the
Constitution. Noteworthy is the fact that the power to augment from savings lies
dormant until authorized by law. When Sections 55 (FY ‘89) and 16 (FY ‘90) prohibit the
restoration or increase by augmentation of appropriations disapproved or reduced by
Congress, they impair the constitutional and statutory authority of the President and
other key officials to augment any item or any appropriation from savings in the interest
of expediency and efficiency. The exercise of such authority in respect of disapproved
or reduced items by no means vests in the Executive the power to rewrite the entire
budget, the leeway granted being delimited to transfers within the department or branch
concerned, the sourcing to come only from savings. More importantly, for such a special
power as that of augmentation from savings, the same is merely incorporated in the
General Appropriations Bill. An Appropriations Bill is “one the primary and specific aim
of which is to make appropriation of money from the public treasury”. It is a legislative
authorization of receipts and expenditures. The power of augmentation from savings, on
the other hand, can by no means be considered a specific appropriation of money. It is
a non-appropriation item inserted in an appropriation measure.

Issue:

whether Section 55 (FY ‘89) and Section 16 (FY ‘90) are provisions, not
items, in the appropriation bill

Held:

No. Section 55 (FY ‘89) and Section 16 (FY ‘90) are not provisions in the
budgetary sense of the term. Article VI, Section 25 (2) of the 1987 Constitution provides:
“Sec. 25 (2) No provision or enactment shall be embraced in the general appropriations
bill unless it relates specifically to some particular appropriation therein. Any such
provision or enactment shall be limited in its operation to the appropriation to which it
relates.” Explicit is the requirement that a provision in the Appropriations Bill should
relate specifically to some “particular appropriation” therein. The challenged “provisions”
fall short of this requirement. Firstly, the vetoed “provisions” do not relate to any
particular or distinctive appropriation. They apply generally to all items disapproved or
reduced by Congress in the Appropriations Bill. Secondly, the disapproved or reduced
items are nowhere to be found on the face of the Bill. To discover them, resort will have
to be made to the original recommendations made by the President and to the source
indicated by the “Legislative Budget Research and Monitoring Office.” Thirdly, the
vetoed Sections are more of an expression of Congressional policy in respect of
augmentation from savings rather than a budgetary appropriation. Consequently,
Section 55 (FY ‘89) and Section 16 (FY ‘90) although labeled as “provisions,” are
actually inappropriate provisions that should be treated as items for the purpose of the
President’s veto power.

Issue:

whether the Legislature’s inclusion of qualifications, conditions, limitations or

restrictions on expenditure of funds in the Appropriation Bill was proper

Held:

There can be no denying that inherent in the power of appropriation is the

power to specify how money shall be spent; and that in addition to distinct “items” of
appropriation, the Legislature may include in Appropriation Bills qualifications,
conditions, limitations or restrictions on expenditure of funds. Settled also is the rule that
the Executive is not allowed to veto a condition or proviso of an appropriation while
allowing the appropriation itself to stand. The veto of a condition in an Appropriations
Bill which did not include a veto of the items to which the condition related was deemed
invalid and without effect whatsoever. However, for the rule to apply, restrictions should
be such in the real sense of the term, not some matters which are more properly dealt
with in a separate legislation. Restrictions or conditions in an Appropriations Bill must
exhibit a connection with money items in a budgetary sense in the schedule of
expenditures. Again, the test is appropriateness. “It is not enough that a provision be
related to the institution or agency to which funds are appropriated. Conditions and
limitations properly included in an appropriation bill must exhibit such a connexity with
money items of appropriation that they logically belong in a schedule of expenditures . .
. the ultimate test is one of appropriateness.” Tested by these criteria, Section 55 (FY
‘89) and Section 16 (FY ‘90) must also be held to be inappropriate “conditions.” While
they, particularly, Section 16 (FY ‘90), have been “artfully drafted” to appear as true
conditions or limitations, they are actually general law measures more appropriate for
substantive and, therefore, separate legislation. Further, neither of them shows the
necessary connection with a schedule of expenditures. The reason is that items
reduced or disapproved by Congress would not appear on the face of the enrolled bill or
Appropriations Act itself. They can only be detected when compared with the original
budgetary submittals of the President. In fact, Sections 55 (FY ‘89) and 16 (FY ‘90)
themselves provide that an item “shall be deemed to have been disapproved by
Congress if no corresponding appropriation for the specific purpose is provided in this
Act.” Herein, there is no condition, in the budgetary sense of the term, attached to an
appropriation or item in the appropriation bill which was struck out. For obviously,
Sections 55 (FY ‘89) and 16 (FY ‘90) partake more of a curtailment on the power to
augment from savings; in other words, “a general provision of law, which happens to be
put in an appropriation bill.”

Issue:

whether the legislature has a remedy when it believes that the veto powers by
the executive were unconstitutional

Held:

Yes. If, indeed, the legislature believed that the exercise of the veto powers
by the executive were unconstitutional, the remedy laid down by the Constitution is
crystal clear. A Presidential veto may be overridden by the votes of two-thirds of
members of Congress (1987 Constitution, Article VI, Section 27[1]). But Congress made
no attempt to override the Presidential veto. Gonzales et al.’s argument that the veto is
ineffectual so that there is “nothing to override” has lost force and effect with the
executive veto having been herein upheld. There need be no future conflict if the
legislative and executive branches of government adhere to the spirit of the
Constitution, each exercising its respective powers with due deference to the
constitutional responsibilities and functions of the other. Thereby, the delicate
equilibrium of governmental powers remains on even keel.

Note:

SC ruled that Congress cannot include in a general appropriations bill matters that
should be more properly enacted in separate legislation, and if it does that, the
inappropriate provisions inserted by it must be treated as “item,” which can be vetoed by
the President in the exercise of his item-veto power. The SC went one step further and
rules that even assuming arguendo that “provisions” are beyond the executive power to
veto, and Section 55 (FY ‘89) and Section 16 (FY ‘90) were not “provisions” in the
budgetary sense of the term, they are “inappropriate provisions” that should be treated
as “items” for the purpose of the President’s veto power.

Note: Executive Impoundment

Definition: This 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.

Argument against executive impoundment: Those who deny to the President the power
to impound argue that once Congress has set aside the fund for a specific purpose in
an appropriations act, it becomes mandatory on the part of the President to implement
the project and to spend the money appropriated therefor. The President has no
discretion on the matter, for the Constitution imposes on him the duty to faithfully
execute the laws.

Argument for executive impoundment: Proponents of impoundment have invoked at

least three principal sources of the authority of the President. Foremost is the authority
to impound given to him either expressly or impliedly by Congress. Second is the
executive power drawn from the President’s role as Commander-in-Chief. Third is the
Faithful Execution Clause which ironically is the same provisions invoked by petitioners
herein.

The proponents insist that a faithful execution of the laws requires that the President
desist from implementing the law if doing so would prejudice public interest. An example
given is when through efficient and prudent management of a project, substantial
savings are made. In such a case, it is sheer folly to expect the President to spend the
entire amount budgeted in the law.

Bengzon vs Drilon (G.R. No. 103524)

Veto Power of the President

FACTS: On 15 Jan 1992, some provisions of the Special Provision for the Supreme
Court and the Lower Court’s General Appropriations were vetoed by the President
because a resolution by the Court providing for appropriations for retired justices has
been enacted. The vetoed bill provided for the increase of the pensions of the retired
justices of the Supreme Court, and the Court of Appeals as well as members of the
Constitutional Commission.

ISSUE: Whether or not the veto of the President on that portion of the General
Appropriations bill is constitutional.

HELD: The Justices of the Court have vested rights to the accrued pension that is due
to them in accordance to Republic Act 1797. The president has no power to set aside
and override the decision of the Supreme Court neither does the president have the
power to enact or amend statutes promulgated by her predecessors much less to the
repeal of existing laws. The veto is unconstitutional since the power of the president to
disapprove any item or items in the appropriations bill does not grant the authority to
veto part of an item and to approve the remaining portion of said item.

NOTES: Pocket Veto Not Allowed

Under the Constitution, the President does not have the so-called pocket-veto power,
i.e., disapproval of a bill by inaction on his part. The failure of the President to
communicate his veto of any bill represented to him within 30 days after the receipt
thereof automatically causes the bill to become a law.
This rule corrects the Presidential practice under the 1935 Constitution of releasing veto
messages long after he should have acted on the bill. It also avoids uncertainty as to
what new laws are in force.

When is it allowed?

The exception is provided in par (2),Sec 27 of Art 6 of the Constitution which grants the
President power to veto any particular item or items in an appropriation, revenue or tariff
bill. The veto in such case shall not affect the item or items to which he does not object.

3 ways how a bill becomes a law.

1. When the President signs it

2. When the President vetoes it but the veto is overridden by 2/3 vote of all the
members of each House; and
3. When the president does not act upon the measure within 30 days after it shall have
been presented to him.

SECTION 28
KAPATIRAN NG MGA NAGLILINGKOD SA PAMAHALAAN NG PILIPINAS, INC.,
HERMINIGILDO C. DUMLAO, GERONIMO Q. QUADRA, and MARIO C. VILLANUEVA
v. HON. BIENVENIDO TAN G.R. No. 81311. June 30, 1988
FACTS:

The four consolidated cases questions the validity of the VAT (Executive Order 273) for
being unconstitutional in that its enactment is not allegedly within the powers of the
President; that the VAT is oppressive, discriminatory, regressive, and violates the due
process and equal protection clauses and other provisions of the 1987 Constitution.

The Solicitor General prays for the dismissal of the petitions on the ground that the
petitioners have failed to show justification for the exercise of its judicial powers. He also
questions the legal standing of the petitioners who, he contends, are merely asking for
an advisory opinion from the Court, there being no justiciable controversy for resolution.

ISSUE: Whether VAT is unconstitutional.

RULING:
No. First, the Court held that the President had authority to issue EO 273 as it was
provided in the Provisional constitution that the President shall have legislative powers.

Second, petitioners have failed to show that EO 273 was issued capriciously and
whimsically or in an arbitrary or despotic manner by reason of passion or personal
hostility. It appears that a comprehensive study of the VAT had been extensively
discussed by this framers and other government agencies involved in its
implementation, even under the past administration.
Lastly, petitioners also failed to prove that EO 273 is oppressive, discriminatory, unjust
and regressive, in violation of the equal protection clause. Petitioners merely rely upon
newspaper articles which are actually hearsay and have evidentiary value. To justify the
nullification of a law. there must be a clear and unequivocal breach of the Constitution,
not a doubtful and argumentative implication. As the Court sees it, EO 273 satisfies all
the requirements of a valid tax.

In any event, if petitioners seriously believe that the adoption and continued application
of the VAT are prejudicial to the general welfare or the interests of the majority of the
people, they should seek recourse and relief from the political branches of the
government. The Court, following the time-honored doctrine of separation of powers,
cannot substitute its judgment for that of the President as to the wisdom, justice and
advisability of the adoption of the VAT. The Court can only look into and determine
whether or not EO 273 was enacted and made effective as law, in the manner required
by, and consistent with, the Constitution, and to make sure that it was not issued in
grave abuse of discretion amounting to lack or excess of jurisdiction; and, in this regard,
the Court finds no reason to impede its application or continued implementation.

Abra vs Hernando (1981)

February 15, 2013 markerwins Tax Law
Facts: The provincial assessor made a tax assessment on the properties of the Roman
Catholic Bishop of Bangued. The bishop claims tax exemption from real estate tax,
through an action for declaratory relief. A summary judgment was made granting the
exemption without hearing the side of the Province of Abra.

Issue: Whether the properties of the Bishop of Bangued are tax-exempt.

Held: The 1935 and the 1973 Constitutions differ in language as to the exemption of
religious property from taxes as tehy should not only be “exclusively” but also “actually”
and “directly” used for religious purposes. Herein, the judge accepted at its face the
allegation of the Bishop instead of demonstrating that there is compliance with the
constitutional provision that allows an exemption. There was an allegation of lack of
jurisdiction and of lack of cause of action, which should have compelled the judge to
accord a hearing to the province rather than deciding the case immediately in favor of
the Bishop. Exemption from taxation is not favored and is never presumed, so that if
granted, it must be strictly construed against the taxpayer. There must be proof of the
actual and direct use of the lands, buildings, and improvements for religious (or
charitable) purposes to be exempted from taxation.

The case was remanded to the lower court for a trial on merits.

ABRA VALLEY COLLEGE, INC vs Aquino Case Digest

ABRA VALLEY COLLEGE, INC. represented by PEDRO V. BORGONIA, petitioner, vs.
HON. JUAN P. AQUINO, Judge, Court of First Instance, Abra; ARMIN M. CARIAGA,
Provincial Treasurer, Abra; GASPAR V. BOSQUE, Municipal Treasurer, Bangued,
Abra; HEIRS OF PATERNO MILLARE, respondents.

FACTS: On June 8, 1972 the properties of the Abra Valley Junior College, Inc. was sold
at public auction for the satisfaction of the unpaid real property taxes thereon and the
same was sold to Paterno Millare who offered the highest bid of P6,000.00 and a
Certificate of Sale in his favor was issued by the defendant Municipal Treasurer.

(a) that the school is recognized by the government and is offering Primary, High School
and College Courses, and has a school population of more than one thousand students
all in all; (b) that it is located right in the heart of the town of Bangued, a few meters from
the plaza and about 120 meters from the Court of First Instance building; (c) that the
elementary pupils are housed in a two-storey building across the street; (d) that the high
school and college students are housed in the main building; (e) that the Director with
his family is in the second floor of the main building; and (f) that the annual gross
income of the school reaches more than one hundred thousand pesos.

The only issue left for the Court to determine and as agreed by the parties, is whether or
not the lot and building in question are used exclusively for educational purposes.

ISSUE: Whether or not the properties are exclusively for education purposes?

HELD: Petitioner contends that the primary use of the lot and building for educational
purposes, and not the incidental use thereof, determines and exemption from property
taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence, the seizure and
sale of subject college lot and building, which are contrary thereto as well as to the
provision of Commonwealth Act No. 470, otherwise known as the Assessment Law, are
without legal basis and therefore void.

On the other hand, private respondents maintain that the college lot and building in
question which were subjected to seizure and sale to answer for the unpaid tax are
used: (1) for the educational purposes of the college; (2) as the permanent residence of
the President and Director thereof, Mr. Pedro V. Borgonia, and his family including the
in-laws and grandchildren; and (3) for commercial purposes because the ground floor of
the college building is being used and rented by a commercial establishment, the
Northern Marketing Corporation

The phrase “exclusively used for educational purposes” was further clarified by this
Court, thus““Moreover, the exemption in favor of property used exclusively for charitable
or educational purposes is ‘not limited to property actually indispensable’ therefor, but
extends to facilities which are incidental to and reasonably necessary for the
accomplishment of said purposes, such as in the case of hospitals, ‘a school for training
nurses, a nurses’ home, property use to provide housing facilities for interns, resident
doctors, superintendents, and other members of the hospital staff, and recreational
facilities for student nurses, interns, and residents’ (84 CJS 6621), such as ‘athletic
fields’ including ‘a firm used for the inmates of the institution.’ ”

The exemption extends to facilities which are incidental to and reasonably necessary for
the accomplishment of the main purpose the lease of the first floor to the Northern
Marketing Corporation cannot by any stretch of the imagination be considered incidental
to the purposes of education; Case at bar.—It must be stressed however, that while this
Court allows a more liberal and non-restrictive interpretation of the phrase “exclusively
used for educational purposes” as provided for in Article VI, Section 22, paragraph 3 of
the 1935 Philippine Constitution, reasonable emphasis has always been made that
exemption extends to facilities which are incidental to and reasonably necessary for the
accomplishment of the main purposes. Otherwise stated, the use of the school building
or lot for commercial purposes is neither contemplated by law, nor by jurisprudence.
Thus, while the use of the second floor of the main building in the case at bar for
residential purposes of the Director and his family, may find justification under the
concept of incidental use, which is complimentary to the main or primary pur-pose—
educational, the lease of the first floor thereof to the Northern Marketing Corporation
cannot by any stretch of the imagination be considered incidental to the purposes of
education.
Trial Court correct in imposing the tax not because the second floor is being used by the
Director and his family for residential purposes but because the first floor is being used
for commercial purposes.—Under the 1935 Constitution, the trial court correctly arrived
at the conclusion that the school building as well as the lot where it is built, should be
taxed, not because the second floor of the same is being used by the Director and his
family for residential purposes, but because the first floor thereof is being used for
commercial purposes. However, since only a portion is used for purposes of commerce,
it is only fair that half of the assessed tax be returned to the school involved.

Section 29
Wenceslao Pascual vs Secretary of Public Works and Communications
In 1953, Republic Act No. 920 was passed. This law appropriated P85,000.00 “for the
construction, reconstruction, repair, extension and improvement Pasig feeder road terminals”.
Wenceslao Pascual, then governor of Rizal, assailed the validity of the law. He claimed that
the appropriation was actually going to be used for private use for the terminals sought to be
improved were part of the Antonio Subdivision. The said Subdivision is owned by Senator
Jose Zulueta who was a member of the same Senate that passed and approved the same
RA. Pascual claimed that Zulueta misrepresented in Congress the fact that he owns those
terminals and that his property would be unlawfully enriched at the expense of the taxpayers
if the said RA would be upheld. Pascual then prayed that the Secretary of Public Works and
Communications be restrained from releasing funds for such purpose. Zulueta, on the other
hand, perhaps as an afterthought, donated the said property to the City of Pasig.
ISSUE: Whether or not the appropriation is valid.
HELD: No, the appropriation is void for being an appropriation for a private purpose. The
subsequent donation of the property to the government to make the property public does not
cure the constitutional defect. The fact that the law was passed when the said property was
still a private property cannot be ignored. “In accordance with the rule that the taxing power
must be exercised for public purposes only, money raised by taxation can be expanded only
for public purposes and not for the advantage of private individuals.” Inasmuch as the land
on which the projected feeder roads were to be constructed belonged then to Zulueta, the
result is that said appropriation sought a private purpose, and, hence, was null and void.

CASE DIGEST : AGLIPAY VS RUIZ

G.R. No. L-45459 March 13, 1937 GREGORIO AGLIPAY, petitioner, vs. JUAN RUIZ,
respondent.

Facts : 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 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 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.

ISSUE : WON the stamp is constitutional

HELD : 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 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 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 legislation. The main purpose should not be frustrated by its subordinate to
mere incidental results not contemplated 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.

CASE DIGEST: Guingona, Jr. vs. Carague

G.R. No. 94571. April 22, 1991

FACTS:

The 1990 budget consists of P98.4 Billion in automatic appropriation (with P86.8 Billion
for debt service) and P155.3 Billion appropriated under RA 6831, otherwise known as
the General Approriations Act, or a total of P233.5 Billion, while the appropriations for
the DECS amount to P27,017,813,000.00.

The said automatic appropriation for debt service is authorized by PD No. 18, entitled “
Amending Certain Provisions of Republic Act Numbered Four Thousand Eight Hundred
Sixty, as Amended (Re: Foreign Borrowing Act), “by PD No. 1177, entitled “Revising the
Budget Process in Order to Institutionalize the Budgetary Innovations of the New
Society,” and by PD No.1967, entitled “An Act Strengthening the Guarantee and
Payment Positions of the Republic of the Philippines on its Contingent Liabilities Arising
out of Relent and Guaranteed Loans by Appropriating Funds For The Purpose.”

The petitioners were questioning the constitutionality of the automatic appropriation for
debt service, it being higher than the budget for education, therefore it is against Section
5(5), Article XIV of the Constitution which mandates to “assign the highest budgetary
priority to education.”

ISSUE:
Whether or not the automatic appropriation for debt service is unconstitutional; it being
higher than the budget for education.

HELD:

No. While it is true that under Section 5(5), Article XIV of the Constitution Congress is
mandated to “assign the highest budgetary priority to education,” it does not thereby
follow that the hands of Congress are so hamstrung as to deprive it the power to
respond to the imperatives of the national interest and for the attainment of other state
policies or objectives.

Congress is certainly not without any power, guided only by its good judgment, to
provide an appropriation, that can reasonably service our enormous debt…It is not only
a matter of honor and to protect the credit standing of the country. More especially, the
very survival of our economy is at stake. Thus, if in the process Congress appropriated
an amount for debt service bigger than the share allocated to education, the Court finds
and so holds that said appropriation cannot be thereby assailed as unconstitutional

Osmeña vs. Orbos

OSMEÑA vs. ORBOS
220 SCRA 703
GR No. 99886, March 31, 1993

" To avoid the taint of unlawful delegation of the power to tax, there must be a standard
which implies that the legislature determines matter of principle and lays down
fundamental policy."

FACTS: Senator John Osmeña assails the constitutionality of paragraph 1c of PD 1956,

as amended by EO 137, empowering the Energy Regulatory Board (ERB) to approve
the increase of fuel prices or impose additional amounts on petroleum products which
proceeds shall accrue to the Oil Price Stabilization Fund (OPSF) established for the
reimbursement to ailing oil companies in the event of sudden price increases. The
petitioner avers that the collection on oil products establishments is an undue and
invalid delegation of legislative power to tax. Further, the petitioner points out that since
a 'special fund' consists of monies collected through the taxing power of a State, such
amounts belong to the State, although the use thereof is limited to the special
purpose/objective for which it was created. It thus appears that the challenge posed by
the petitioner is premised primarily on the view that the powers granted to the ERB
under P.D. 1956, as amended, partake of the nature of the taxation power of the State.

ISSUE: Is there an undue delegation of the legislative power of taxation?

HELD: None. It seems clear that while the funds collected may be referred to as taxes,
they are exacted in the exercise of the police power of the State. Moreover, that the
OPSF as a special fund is plain from the special treatment given it by E.O. 137. It is
segregated from the general fund; and while it is placed in what the law refers to as a
"trust liability account," the fund nonetheless remains subject to the scrutiny and review
of the COA. The Court is satisfied that these measures comply with the constitutional
description of a "special fund." With regard to the alleged undue delegation of
legislative power, the Court finds that the provision conferring the authority upon the
ERB to impose additional amounts on petroleum products provides a sufficient standard
by which the authority must be exercised. In addition to the general policy of the law to
protect the local consumer by stabilizing and subsidizing domestic pump rates, P.D.
1956 expressly authorizes the ERB to impose additional amounts to augment the
resources of the Fund.
Philconsa vs Enriquez - Supra
Section 30
First Lepanto Ceramics v. CA Digest

First Lepanto Ceramic v CA

Facts:

1. Petitioner assailed the conflicting provisions of B.P. 129, EO 226 (Art. 82) and a
circular, 1-91 issued by the Supreme Court which deals with the jurisdiction of courts for
appeal of cases decided by quasi-judicial agencies such as the Board of Investments
(BOI).

2. BOI granted petitioner First Lepanto Ceramics, Inc.'s application to amend its BOI
certificate of registration by changing the scope of its registered product from "glazed
floor tiles" to "ceramic tiles." Oppositor Mariwasa filed a motion for reconsideration of
the said BOI decision while oppositor Fil-Hispano Ceramics, Inc. did not move to
reconsider the same nor appeal therefrom. Soon rebuffed in its bid for reconsideration,
Mariwasa filed a petition for review with CA.

4. CA temporarily restrained the BOI from implementing its decision. The TRO lapsed
by its own terms twenty (20) days after its issuance, without respondent court issuing
any preliminary injunction.

5. Petitioner filed a motion to dismiss and to lift the restraining order contending that
CA does not have jurisdiction over the BOI case, since the same is exclusively vested
with the Supreme Court pursuant to Article 82 of the Omnibus Investments Code of
1987.

6. Petitioner argued that the Judiciary Reorganization Act of 1980 or B.P. 129 and
Circular 1-91, "Prescribing the Rules Governing Appeals to the Court of Appeals from a
Final Order or Decision of the Court of Tax Appeals and Quasi-Judicial Agencies"
cannot be the basis of Mariwasa's appeal to respondent court because the procedure
for appeal laid down therein runs contrary to Article 82 of E.O. 226, which provides that
appeals from decisions or orders of the BOI shall be filed directly with the Supreme
Court.

7. While Mariwasa maintains that whatever inconsistency there may have been
between B.P. 129 and Article 82 of E.O. 226 on the question of venue for appeal, has
already been resolved by Circular 1-91 of the Supreme Court, which was promulgated
on February 27, 1991 or four (4) years after E.O. 226 was enacted.

ISSUE: Whether or not the Court of Appeals has jurisdiction over the case

YES. Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as
the manner and method of enforcing the right to appeal from decisions of the BOI are
concerned. Appeals from decisions of the BOI, which by statute was previously allowed
to be filed directly with the Supreme Court, should now be brought to the Court of
Appeals.

Diaz v. CA
G.R. No. L-109698 December 5, 1
Bellossillo, J.

Facts:

On 23 January 1991, Davao Light and Power Company, Inc. (DLPC) filed with
the Energy Regulatory Board (ERB) an application for the approval of the sound value
appraisal of its property in service.

The Asian Appraisal Company valued the property and equipment of DLPC
as of 12 March 1990 at One Billion One Hundred Forty One Million Seven Hundred
Seventy Four Thousand Pesos (P1,141,774,000.00).

On 6 December 1992, ERB approved the application of DLPC after deducting

Fourteen Million Eight Hundred Thousand Pesos (P14,800,000.00) worth of property
and equipment which were not used by DLPC in its operation.

On 6 July 1992, petitioners filed a petition for review on certiorari before the
Supreme Court assailing the decision of ERB on the ground of lack of jurisdiction and/or
grave abuse of discretion amounting to lack of jurisdiction.

In our resolution of 8 September 1992, the Supreme Court referred the case
for proper disposition to the Court of Appeals which subsequently dismissed the petition
on the ground that (1) the filing of the petition for review with the Supreme Court was a
wrong mode of appeal, and (2) the petition did not comply with the provisions of
Supreme Court Circular 1-88 in that (a) it did not state the date when the petitioners
received notice of the ERB decision, (b) it did not state the date when the petitioners
filed a motion for reconsideration, and (c) it inconsistently alleged different dates when
petitioners supposedly received the denial of their motion by ERB.

On 18 December 1992, petitioners filed a motion for reconsideration

contending that our resolution of 8 September 1992 was a directive for the Court of
Appeals to disregard the above circular.
In its resolution of 24 March 1993, the Court of Appeals denied the motion for
reconsideration for lack of merit.

Issue:

whether or not E.O. No. 172 is violative of Section 30, Article VI of the
Constitution

Held:

Yes. Since Sec. 10 of E.O. No. 172 was enacted without the advice and
concurrence of the Supreme Court, this provision never became effective, with the
result that it cannot be deemed to have amended the Judiciary Reorganization Act of
1980. Consequently, the authority of the Court of Appeals to decide cases from the
Board of Energy, now ERB, remains.

SUBIC BAY METROPOLITAN AUTHORITY vs. COMELEC (G.R. No. 125416)

SUBIC BAY METROPOLITAN AUTHORITY vs. COMELEC
G.R. No. 125416 September 26, 1996

FACTS:

On March 13, 1992, Congress enacted RA. 7227 (The Bases Conversion and
Development Act of 1992), which created the Subic Economic Zone. RA 7227 likewise
created SBMA to implement the declared national policy of converting the Subic military
reservation into alternative productive uses.

On November 24, 1992, the American navy turned over the Subic military reservation to
the Philippines government. Immediately,petitioner commenced the implementation of
its task, particularly the preservation of the sea-ports, airport, buildings, houses and
other installations left by the American navy.
On April 1993, the Sangguniang Bayan of Morong, Bataan passed Pambayang
Kapasyahan Bilang 10, Serye 1993, expressing therein its absolute concurrence, as
required by said Sec. 12 of RA 7227, to join the Subic Special Economic Zone and
submitted such to the Office of the President.

On May 24, 1993, respondents Garcia filed a petition with the Sangguniang Bayan of
Morong to annul Pambayang Kapasyahan Blg.10, Serye 1993.

The petition prayed for the following: a) to nullify PambayangKapasyang Blg. 10 for
Morong to join the Subic Special Economi Zone,b) to allow Morong to join provided
conditions are met.

The Sangguniang Bayan ng Morong acted upon the petition by promulgating

Pambayang Kapasyahan Blg. 18, Serye 1993, requesting Congress of the Philippines
so amend certain provisions of RA 7227.

Not satisfied, respondents resorted to their power initiative under the LGC of 1991.

On July 6, 1993, COMELEC denied the petition for local initiative on the ground that the
subject thereof was merely a resolution and not an ordinance.

On February 1, 1995, the President issued Proclamation No. 532 defining the metes
and bounds of the SSEZ including therein the portion of the former naval base within
the territorial jurisdiction of the Municipality of Morong.

On June 18, 19956, respondent Comelec issued Resolution No. 2845and 2848,
adopting a "Calendar of Activities for local referendum and providing for "the rules and
guidelines to govern the conduct of the referendum.

On July 10, 1996, SBMA instituted a petition for certiorari contesting the validity of
Resolution No. 2848 alleging that public respondent is intent on proceeding with a local
initiative that proposes an amendment of a national law.
Issue:
1. WON Comelec committed grave abuse of discretion in promulgating Resolution No.
2848 which governs the conduct of the referendum proposing to annul or repeal
Pambayang Kapasyahan Blg. 10

2. WON the questioned local initiative covers a subject within the powersof the people
of Morong to enact; i.e., whether such initiative "seeks the amendment of a national
law."

Ruling:
1. YES. COMELEC committed grave abuse of discretion.

FIRST. The process started by private respondents was an INITIATIVE but respondent
Comelec made preparations for a REFERENDUM only.

In fact, in the body of the Resolution as reproduced in the footnote below,the word
"referendum" is repeated at least 27 times, but "initiative" is not mentioned at all. The
Comelec labeled the exercise as a "Referendum"; the counting of votes was entrusted
to a "Referendum Committee"; the documents were called "referendum returns"; the
canvassers, "Referendum Board of Canvassers" and the ballots themselves bore the
description"referendum". To repeat, not once was the word "initiative" used in said body
of Resolution No. 2848. And yet, this exercise is unquestionably an INITIATIVE.

As defined, Initiative is the power of the people to propose bills and laws,and to enact or
reject them at the polls independent of the legislative assembly. On the other hand,
referendum is the right reserved to the people to adopt or reject any act or measure
which has been passed by a legislative body and which in most cases would without
action on the part of electors become a law.

In initiative and referendum, the Comelec exercises administration and supervision of

the process itself, akin to its powers over the conduct of elections. These law-making
powers belong to the people, hence the respondent Commission cannot control or
change the substance or the content of legislation.
2. The local initiative is NOT ultra vires because the municipal resolution is still in the
proposal stage and not yet an approved law.

The municipal resolution is still in the proposal stage. It is not yet an approved law.
Should the people reject it, then there would be nothing to contest and to adjudicate. It
is only when the people have voted for it and it has become an approved ordinance or
resolution that rights and obligations can be enforced or implemented thereunder. At
this point, it is merely a proposal and the writ or prohibition cannot issue upon a mere
conjecture or possibility. Constitutionally speaking, courts may decide only actual
controversies, not hypothetical questions or cases.

In the present case, it is quite clear that the Court has authority to review Comelec
Resolution No. 2848 to determine the commission of grave abuse of discretion.
However, it does not have the same authority in regard to the proposed initiative since it
has not been promulgated or approved, or passed upon by any "branch or
instrumentality" or lower court, for that matter. The Commission on Elections itself has
made no reviewable pronouncements about the issues brought by the pleadings. The
Comelec simply included verbatim the proposal in its questioned Resolution No. 2848.
Hence, there is really no decision or action made by a branch, instrumentality or court
which this Court could take cognizance of and acquire jurisdiction over, in the exercise
of its review powers.