Digest Author: S. J.

Lora and Migs

Tolentino vs. Secretary of Finance, G.R. 1154559 Petition: Original actions in the Supreme Court. Certiorari and prohibition. Petitioner: Arturo Tolentino, et al. Respondent: The Secretary of Finance and the Commissioner of Internal Revenue, et al. Ponente: . !endo"a Date: August #$, %&&' Facts: On various dates bet(een uly %&&# and August %&&), several bills (ere introduced in the *OR see+ing to amend certain provisions of the ,ational Internal Revenue Code relative to the -AT. o These bills (ere referred to the *ouse .ays and !eans Committee (hich recommended for approval a substitute measure/ *. ,o. %%%&0 1see *. ,o. %%%&02. The bill (as considered on #nd reading3 it (as later approved by the *OR after )rd and final reading. o It (as sent to the Senate and later referred by that body to its Committee on .ays and !eans. The Senate Committee submitted its report recommending approval of S. ,o. %4)5 1see S. ,o. %4)52, in substitution of Senate 6ill ,o. %%#&, ta+ing into consideration 7.S. Res. ,o. 0)' and *. ,o. %%%&0. On the same day, the Senate approved the bill on #nd and )rd readings. o *. ,o. %%%&0 and S. ,o. %4)5 (ere referred to a Conference Committee (hich recommended that the bill be approved. This Conference Committee 1CC2 6ill 1see Conference Committee 6ill2 (as approved by the *OR and Senate, and signed by the 7resident it became RA 00%4 1e-AT 8a(2 RA 00%4/ see+s to (iden the ta9 base of the e9isting -AT system and enhance its administration by amending the ,ational Internal Revenue Code. -arious suits for certiorari and prohibition (ere filed challenging the constitutionality of RA 00%4 on various grounds. :-AT; o 8evied on the sale, barter or e9change of goods and properties as (ell as on the sale or e9change of services. o <=uivalent to %5> of the gross selling price or gross value in money or goofs or properties sold, bartered or e9changed or of the gross receipts from the sale or e9change of services.

Pertinent laws provisions: !ills R" *. ,o. %%%&0 1*OR 6ill2 ?An Act Restructuring the -alue Added Ta9 1-AT2 System to .iden its Ta9 6ase and <nhance its Administration, Amending for these 7urposes Sections &&, %55, %5#, %5), %5', %5$, %54, %50, %5@ and %%5 of Title I-, %%#, %%$ and %%4 of Title -, and #)4, #)0 and #)@ of Title IA, and Repealing Sections %%) and %%' of Title -, All of the ,ational Internal Revenue Code, as AmendedB S. ,o. %4)5 1Senate 6ill2 ?An Act Restructuring the -alue Added Ta9 1-AT2 System to .iden its Ta9 6ase and <nhance its Administration, Amending for these 7urposes Sections &&, %55, %5#, %5), %5',

Digest Author: S. J. Lora and Migs

%5$, %54, %50, %5@ and %%5 of Title I-, %%#, %%$ and %%4 of Title -, and #)4, #)0 and #)@ of Title IA, and Repealing Sections %%) and %%' and %%4 of Title -, All of the ,ational Internal Revenue Code, as Amended, and for Other 7urposesB Conference Committee 6ill 1CC 6ill2 ?An Act Restructuring the -alue Added Ta9 1-AT2 System, .idening its Ta9 6ase and <nhancing its Administration and for these 7urposes Amending and Repealing the Relevant 7rovisions of the ,ational Internal Revenue Code, as Amended, and for Other 7urposesB RA 00%4 1e-AT 8a(2 ?An Act Restructuring the -alue Added Ta9 1-AT2 System, .idening its Ta9 6ase and <nhancing its Administration and for these 7urposes Amending and Repealing the Relevant 7rovisions of the ,ational Internal Revenue Code, as Amended, and for Other 7urposesB

#onstit$tional Provisions Sec. #', Art. -I of the Constitution 16ills of revenue shall originate e9clusively from the *OR2 ?All appropriation, revenue or tariff bills, bills authori"ing increase of the public debt, bills of local application, and private bills, shall originate e9clusively in the *ouse of Representatives, but the Senate may propose or concur (ith amendments.B Sec. #41#2, Art. -I of the Constitution 1,o bill shall be passed unless it has passed three readings on separate daysC2 ?,o bill passed by either *ouse shall become a la( unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its !embers three days before its passage, e9cept (hen the 7resident certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Dpon the last reading of a bill, no amendment thereto shall be allo(ed, and the vote thereon shall be ta+en immediately thereafter, and the yeas and nays entered in the ournal.B Sec. #41%2, Art. -I of the Constitution 16ill shall embrace only one subEect in title2 ?<very bill passed by the Congress shall embrace only one subEect (hich shall be e9pressed in the title thereof.B Sec. %, Art. III 1Fue process and e=ual protection2 ?,o person shall be deprived of life, liberty, or property (ithout due process of la(, nor shall any person be denied the e=ual protection of the la(s.B Sec. ', Art. III 1Freedom of speech2 ?,o la( shall be passed abridging the freedom of speech, of e9pression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievancesB Sec. $, Art. III 1Free e9ercise of religion2 ?,o la( shall be made respecting an establishment of religion, or prohibiting the free e9ercise thereof. The free e9ercise and enEoyment of religious profession and (orship, (ithout discrimination or preference, shall forever be allo(ed. ,o religious test shall be re=uired for the e9ercise of civil or political rights.B Sec. %5, Art. III 1,on/impairment of the obligation of contracts2 ?,o la( impairing the obligation of contracts shall be passed.B Sec. #@1%2, Art. -I 1Dniform and e=uitable ta9ation2 ?The rule of ta9ation shall be uniform and e=uitable. The Congress shall evolve a progressive system of ta9ation.B Sec. #@1)2, Art. -I 1<9emption from ta9ation of religions2 ?Charitable institutions, churches and personages or convents appurtenant thereto, mos=ues, non/profit cemeteries, and all lands, buildings, and improvements, actually, directly, and e9clusively used for religious, charitable, or educational purposes shall be

Digest Author: S. J. Lora and Migs

e9empt from ta9ation.B %ss$es: %. 7rocedural Issues a. .O, RA 00%4 violates Art. -I, Sec. #' of the Constitution b. .O, RA 00%4 violates Art. -I, Sec. #41#2 of the Constitution c. .O, the 6icameral Conference Committee committed a grave abuse of discretion amounting to lac+ of or e9cess of Eurisdiction (hen it ?reconciledB S6 %4)5 and *6 %%%&0 d. .O, RA 00%4 violates Art. -I, Sec. #41%2 of the Constitution #. Substantive Issues a. .O, the la( violates the follo(ing provisions in the 6ill of Rights; i. Sec. %, Art. III ii. Sec. ', Art. III iii. Sec. $, Art. III iv. Sec. %5, Art. III b. .O, the la( violates the follo(ing other provisions in the Constitution; i. Sec. #@1%2, Art. -I ii. Sec. #@1)2, Art. -I R$lin&: %. 7rocedural Issues a. '(. RA 00%4 does not violate Art. -I, Sec. #' of the Constitution G originate in house b. '(. RA 00%4 does not violate Art. -I, Sec. #41#2 of the Constitution G passed in ) separate readings c. '(. The 6icameral Conference Committee did not commit a grave abuse of discretion amounting to lac+ of or e9cess of Eurisdiction (hen it ?reconciledB S6 %4)5 and *6 %%%&0 G to reviseH add inconsistencies d. '(. RA 00%4 does not violate Art. -I, Sec. #41%2 #. Substantive Issues a. '(. The la( does not violate the follo(ing provisions in the 6ill of Rights; i. Sec. %, Art. III Glife, liberty and property ii. Sec. ', Art. III G freedom of speech iii. Sec. $, Art. III G freedom of religion iv. Sec. %5, Art. III/ obligation of contracts b. '(. The la( does not violate the follo(ing other provisions in the Constitution; i. Sec. #@1%2, Art. -I G uniform and e=uitable progressive system ii. Sec. #@1)2, Art. -I/ e9empt from ta9; non/profit organi"ations, charities, religious institutions, etc. Ratio Decidendi: %. 7rocedural Issues a. RA 00%4 does not violate Art. -I, Sec. #' of the Constitution 7etitioner SC %. RA 00%%4 did not ?originate %. It is not the la( but the revenue bill e9clusivelyB in the *OR because it is (hich is re=uired to ?originate the result of the consolidation of # e9clusivelyB in the *OR distinct bills. A bill originating at the *OR may This means that to be considered as undergo amendments at the Senate

Digest Author: S. J. Lora and Migs

having originated in the *ouse, RA 00%4 must retain the essence of *. ,o. %%%&0. that (ould result to a bill that is entirely different from that passed by the *OR. Senate may go as far as changing the entire bill that originated in the house #. The treaty/ratifying po(er is a non/ legislative po(er by the Senate and is not comparable to the po(er to legislate The legislative po(er is conferred on both the *OR and Senate and no preference is given to any single chamber. To insist the statute to be the same as the *ouse bill (ould mean to deprive the Senators to concur or propose amendments ). There is nothing (rong if a substitute bill (as passed in Senate in anticipation of its receipt of the bill from the *ouse, as long as it is not acted upon by the Senate (hile (aiting for the receipt of the *ouse 6ill. Constitution only states the initiative for the filing of revenue, tariff or ta9 bills coming from *OR. Senate never seemed to consider the 6ill/ it (as only loo+ed into after receiving the proposed bill by the *OR on ,ov #) %&&)

#. The SenateIs po(er is supposed to be limited in respect of revenue bills in order to compensate for the grant to the Senate of the treaty/ratifying po(er.

). Senate 6ill %4)5 (as passed not in substitution of *ouse 6ill %%%&0 but of another Senate 6ill

b. ,O. RA 00%4 does not violate Art. -I, Sec. #41#2 of the Constitution G passed after ) readings of separate days and final form has been printed and distributed three days before it is finally approved 7etitioner SC %. S. ,o. %405 did not pass ) reading %. Sec. #41#2 allo(s the Congress to do days. a(ay (ith the re=uirement of ) separate reading days, if the 7resident %st; Feb @, %&&' certifies that it is urgent. #nd; !arch ##, %&&' )rd; !arch ##, %&&' #. The certification of the bill (as invalid #. ,o member of the Senate controverted because the condition stated as urgent the reality of the factual basis of the Jgro(ing budget deficitJis not an certification. unusual condition in this country. c. ,O. The 6icameral CC did not commit a grave abuse of discretion amounting to lac+ of or e9cess of Eurisdiction (hen it ?reconciledB S6 %4)5 and *6 %%%&0 7etitioner SC

Digest Author: S. J. Lora and Migs

%. The bill, (hich became RA 00%4, included provisions not found in either the *6 or S63 these provisions (ere surreptitiously inserted by the CC. %. ,othing unusual (ith the ?closed door meetingsB of the CC in order to avoid any compromise and reach an agreement on the conflicting provisions. It is possible for the CC to draft an entirely ne( bill since; - The only re=uirement is that it should be germane to the subEect of the * and S bills. - The final bill passed in the CC (ould still be approved by the *ouse and the Senate.

d. ,O. RA 00%4 does not violate Art. -I, Sec. #41%2 of the Constitution 7etitioner SC %. 7A8; Title did not indicate that there is %. The title is not an inde9 of its contents3 an amendment that (ould affect the it is enough that it provides the general e9emption previously enEoyed by 7A8 purpose and that all provisions are on ta9es. germane to the general subEect. Special la(s cannot be amended by The provision (ithdra(ing the ta9 general la(/ 7A8Is ta9 e9empt is a e9emption previously enEoyed by special la( 1precedent to !anila 7A8 is germane to the general Railroad Co. v. Rafferty2 subEect, (hich is to (iden the scope of the -AT system. Dnder Article AII Section %%; Congress, after giving grant to franchise for operation of public utility, is subEect to amendment, alteration or repeal by Congress (hen the common good so re=uires :<nrolled bill theory/ .hatever doubts there may be as to the formal validity of RA 00%4 must be resolved in its favor. #. Substantive Issues a. .O, the la( violates the follo(ing provisions in the 6ill of Rights; i. Sec. %, ', $, %5 of Art. III b. .O, the la( violates the follo(ing other provisions in the Constitution; i. Sec. #@1%2, Art. -I ii. Sec. #@1)2, Art. -I 7etitioner %. Claims of 7ress Freedom, Freedom of Thought, and Religious Freedom 7hilippine 7ress Institute 177I2; - RA 00%4 has (ithdra(n the e9emption previously granted to the press under Sec. %5) of the ,IRC. - <ven though the e9emption (as SC %. Attac+ on RA 00%4 on the ground that it offends the free speech, press, and freedom of religion G (ithout merit. 7ublishers of ne(spapers have no immunity from the application of general la(s. Cases cited by the 77I sho( the differential treatment of the press3

Digest Author: S. J. Lora and Migs

subse=uently restored by ho(ever, RA 00%4 applies to a (ide administrative regulation (ith range of goods and services. respect to the circulation income, The registration free is a mere the e9emption may be removed by administration fee, one not imposed mere revocation of the Secretary of on the e9ercise of a privilege. Finance. 7hilippine 6ible Society 176S2; - Sec. of FinanceIs po(er to grant e9emptions is =uestionable3 po(er to grant ta9 e9emption is vested in Congress. The formerIs duty is to e9ecute the la(. #. Claims of Regressivity, Fenial of Fue #. These attac+s are mere academic 7rocess, <=ual 7rotection, and discussion of the merits of the la( Impairment of Contracts -AT is regressive and violates the Respos; -AT distributes the ta9 re=uirement that ?the rule of ta9ation burden to as many goods and services shall be uniform and e=uitable and as possible, particularly to those (hich Congress shall evolve a progressive are (ithin the reach of higher/income system of ta9ationB. groups. - -AT payment by lo(/income - The la( e9empts basic goods and households (ill be a higher services. proportion of their income than - Koods and properties subEect to the payments by higher/income -AT are usedHconsumed primarily households. by higher/income groups. - 7oor and middle/income group SC; 8ac+ of empirical data ma+es by (ill be hit harder than the rich. petitioners 1CD7, CR<6A2 claims of regressivity an academic e9ercise. Imposition of -AT violates the The Contract Clause has never been constitutional provision that ?no la( thought as a limitation on the e9ercise impairing the obligation of contracts of the StateIs po(er of ta9ation. shall be passedB - 6y imposition of -AT on sales and leases of real estate by virtue of contracts entered into prior to the effectivity of the la( 1acc to CR<6A2 Disposition: 7etition in these cases are dismissed. (pinions: #onc$rrin&: 6idin, Luiason, Mapunan #onc$r in Separate (pinions: ,arvasa, !elo Separate (pinions: Cru", 7adilla, -itug )oin *a+ority (pinion ,y *endo-a and #onc$rrin& (pinion of 'arvasa: Feliciano Dissentin&: Re&alado, Favide r., Romero, 6ellosillo, 7uno o Re&alado -oted to grant instant petition and to invalidate RA 00%4 for having been enacted in violation of Sec #', Art. -I of the Consti.

Digest Author: S. J. Lora and Migs

Onlt the invalid procedures (ere loo+ed into because as they (ere found -OIF, the substantial issues, in effect, become -OIF and becomes !OOT and ACAF<!IC as (ell. Invalid procedure; There (as no certification for *6 %%%&0 although it (as the initiating revenue bill. That 7residential certification (as erroneously made for and confined to S6 %4)5, (hich (as a ta9 bill and under the Consti could not validly originate in the Senate. There (as no opportunity for *OR to loo+ into S6 %4)5; it by/passed 8o(er *ouse and instead approved #nd and )rd readings on the same day S6 %4)5 (as approved ?in substitution of S6 %%#&,B (hile merely ?ta+ing into consideration 7SR 0)' and *6 %%%&0; S6 %4)5 (as never filed in substitution of either 7SR 0)' or *6 %%%&0. Argument of respondents are factually inaccurate and logically implausible; S6 %4)5 (as filed in substitution of S6 %%#& (hich is in derogation of the Constitution prohibition against initiation of ta9 bill in the Senate. SKIs invocation of concept of amendment by substitution falls flat; In Flint, amendment (as only of a single item. In the case at bar, there (ere several substantial amendments made on the original bill. .hen Senate passed and approved S6 %4)5, had it certified by the Chief <9ecutive and caused its consideration by the bicameral Conference Committee 16ICA!2N it violated the re=uirements of the Consti not only in the origination of the bill but in the enactment of RA 00%4. 6ICA! only comes into being (hen there are disagreements and differences bet(een the S and * (ith regard to certain provisions of a particular legislative act that need reconciliation it (as sho(n that the 6ICA! deleted and inserted material changes (hich are ,OT germane to the purpose of bill (ithin the RA N ultra vires act = VOID <nrolled bill doctrine; The presumption of validity of this doctrine is not conclusive In the case at bar, there is sufficient evidence to sho( that the constitutional re=uirements (ere not met and the principles laid do(n by the enrolled bill doctrine cannot be applied. <nrolled 6ill prevails (hen it deals (ith matters not e9pressly re=uired to be entered into the Eournal Courts may only loo+ into 7ROC<FDR< of the content of the bill through its Eournals

Principles: Ta9 8a(s O 7rocedure for the passage of bills