FACTS
- These are original actions in SC. Certiorari and prohibition, challenging the constitutionality of RA 7716.
- RA 7716 seeks to widen the tax base of the existing VAT system by amending National Internal Revenue Code.
- Bet Jul 22, 1992 and Aug 31, 1993, bills were introduced in House of Reps to amend NIRC relative to VAT. These were referred to House Ways and Means Committee w/c recommended for approval H No 11197.
- H No. 11197 was considered on second rdg and was approved by House of Reps after third and final rdg.
- It was sent to Senate and was referred to the Senate Committee on Ways and Means. The Committee submitted report recommending approval of S No 1630, submitted in substitution of S No 1129, taking into consideration PS Res No 734 and H No 11197
- Senate approved S No 1630 on second rdg, and on third rdg by affirmative votes of 13 and 1 abstention.
- H No 11197 and S No 1630 were referred to conference committee w/c after meeting 4 times, recommended that HB in consolidation w/ SB be approved in accordance w/ bill as reconciled and approved by the conferees.
- The Conference Committee Bill was approved by House of Reps and Senate. The enrolled bill was presented to President who, on May 5, 1994 signed it. It became RA 7716. On May 12, it was published in 2 newspapers of gen circulation and it took effect on May 28.
- RA 7716 amended § 103 and made print media subject to VAT in all aspect of operations. However, Sec of Finance issued Revenue Regulations No. 11-94 exempting circulation income of print media.
Income fr advertisements are still subject to VAT.
- Implementation was suspended until Jun 30 to allow time for registration of businesses. Implementation was stopped by TRO fr Court, by vote of 11 to 4.
- Petitioners contend:
Re: Art VI Sec 24
1. Although H No 11197 originated fr House of Reps, it was not passed by Senate but was consolidated w/ Senate version in the Conference Committee to produce the bill. The verb “shall originate” is qualified by the word “exclusively”.
2. The constitutional design is to limit Senate’s power in revenue bills to compensate for the grant to the Senate of treaty-ratifying power.
3. S No 1630 was passed no in substitution of H No 11197 but of another Senate bill (S No 1129). Senate merely took H No 11197 into consideration in enacting S No 1630.
Re: Art VI Sec 26(2)
1. The second and third rdgs were on the same day, Mar 24, 1994.
2. The certification of urgency was invalid bec there was no emergency. The growing budget deficit was not an unusual condition in this country.
3. Also, it was S No 1630 that was certified urgent, not H No 11197.
Re: BCC acted within its power
1. RA 7716 is the bill which the BCC prepared. BCC included provisions not found in the HB or SB and these were
“surreptitiously” inserted. BCC met behind closed doors.
2. Incomplete remarks of members are marked in the stenographic notes by ellipses.
3. The Rules of the two chambers were disregarded in preparation of BCC Report because Report didn’t contain
“detailed and explicit statement of changes”
4. It is required that the Committee’s report undergo three rdgs in the two houses.
- Petitioner Philippine Airlines Inc contends:
Re: Art VI Sec 26(1)
1. Neither H No 11197 nor S No 1630 provided for removal of exemption of PAL transactions fr payment of VAT and this was made only by the BCC. This was not reflected in the title.
2. Besides, amendment of PAL’s franchise may be made only by special law which will expressly amend the franchise (§24 of PD 1590).
- Petitioner Cooperative Union of the Philippines contends:
Re: Art III Sec 1
1. Withdrawal of exemption of some cooperatives while maintaining that granted to electric cooperatives not only goes against policy to promote cooperatives but also violate equal protection of law.
Petitioner Chamber of Real Estate and Builders Association contends:
2. VAT will reduce mark up of its members by as much as 90%.
Petitioner Philippine Press Institute contends:
3. VAT will drive some of its members out of circulation.
- Petitioner Philippine Press Institute contends:
Re: Art III Sec 4
1. It questions law bec exemption previously granted to press under NIRC was withdrawn. Although exemption was subsequently restored, PPI says there’s possibility that exemption may still be removed by mere revocation by Secretary of Finance.
Also, there is still unconstitutional abridgment of press freedom because of VAT on gross receipts on advertisements.
2. RA 7716 singled out press for discriminatory treatment, giving broadcast media favored treatment.
3. Imposing VAT only on print media whose gross sales exceeds P480,000 but not more than P750,000 is discriminatory.
4. The registration provision of the law is invalid when applied to the press.
- Petitioner Philippine Bible Society contends:
Re: Art III Sec 5
1. Secretary of Finance has no power to grant tax exemption because that power is vested in Congress and the Secretary’s duty is to execute the law and the removal of exemption of religious articles violates freedom of thought/conscience.
- Petitioner Chamber of Real Estate and Builders Association contends:
Re: Art III Sec 10
1. Imposition of VAT violates constitutional provision on no law impairing obligation of contracts
- Petitioner Philippine Educational Publishers Association contends:
Re: Art II Sec 17
1. Increase in price of books and educ materials will violate govt mandate to prioritize education
ISSUES Procedural
1. WON there’s violation of Art VI § 24 of Consti (revenue bill originating exclusively fr House of Reps)
2. WON there’s violation of Art VI § 26(2) of Consti (three readings on separate days)
3. WON the Bicameral Conference Committee acted within its power
4. WON there’s violation of Art VI § 26(1) of Consti (only one subject which is expressed in title) / WON amendment of § 103 of NIRC is fairly embraced in title of RA 7716 although no mention is made therein
Substantive:
5. WON Art III § 1 (deprivation of life/liberty/property; equal protection) is violated
6. WON Art III § 4 (freedom of speech/expression/press) is violated 7. WON Art III § 5 (free exercise of religion) is violated
8. WON Art III § 10 (no law impairing obligation of contracts) is violated
9. WON Art VI § 28(1) (uniform/equitable; evolve progressive system of taxation) is violated
10. WON Art VI § 28(3) (church/parsonage etc. for religious purpose exempt) is violated
11. WON Art II § 17 (gov’t priority on education, science and tech) is violated
HELD
- Not all are judicially cognizable, bec not all Consti provisions are self executing. Other govt depts. are also charged w/ enforcement of Consti.
Procedural
Whatever doubts there may be as to the formal validity of the RA must be resolved in its favor. An enrolled copy of a bill is conclusive not only of its provisions but also of its due enactment.
This is not to say that the enrolled bill doctrine is absolute. But where allegations are nothing more than “surreptitiously” inserting provisions, SC declines going behind enrolled copy of bill. SC gives due respect to other branches of gov’t.
1. NO there is no violation of Art VI Sec 24
a. It’s not the law but the revenue bill which is required to originate exclusively in the House of Reps. A bill originating in House may undergo extensive changes in Senate. To insist that a revenue statute (and not the bill) must be the same as the House bill would deny the Senate’s power to concur with and propose amendments.
It would violate coequality of the legislative power of the two houses.
b. Legislative power is issue here. Treaty-ratifying power is not legislative power but an exercise of check on executive power.
c. There’s no difference bet Senate preserving house bill then writing its own version on one hand and on the other hand, separately presenting a bill of its own on the subject matter. Consti simply says that it’s the initiative for filing the bill that must come fr House of Reps. The Reps are expected to be more sensitive to the local needs.
Nor does Consti prohibit filing in Senate of substitute bill in anticipation of its receipt of bill fr House so long as action by Senate is withheld pending receipt of House bill. It was only after Senate rcvd H No 11197 that legislation in respect of it began w/
referral to Senate Committee on Ways and Means.
2. NO there is no violation of Art VI Sec 26(2)
a. It was because Pres certified S No 1630 as urgent. This certification dispensed w/ printing and rdg the bill on separate days. The phrase “except when the President certifies to the necessity…” qualifies two stated conditions: (1) the bill has passed 3 rdgs on separate days and (2) it has been printed in final form and distributed 3 days before finally approved. To construe that the “except” clause dispenses only with printing would violate grammar rules and would also negate the necessity of the immediate enactment of the bill.
Example is RA 5440 which had 2nd and 3rd rdgs on the same day after bill had been certified urgent.
b. No Senator controverted factual basis of the certification and this should not be rvwd by the Court.
c. It was S No 1630 that Senate was considering. When matter was before the House, Pres likewise certified H No 9210 then pending.
3. YES the BCC acted within its power
a. “Give and take” often marks the proceedings of BCC. There was also nothing unusual in the executive sessions of the BCC.
Under congressional rules, BCCs are not expected to make material changes but this is a difficult provision to enforce. The result could be a third version, considered an amendment in nature of substitute, the only requirement that the 3rd version be germane to subject of the HB and SB. It is w/in power of BCC to include an
entirely new provision. After all, report of BCC is not final and still needed approval of both houses to be valid.
b. This could have been caused by stenographer’s limitations or to incoherence that sometimes characterize conversations.
c. Report used brackets and capital letters to indicate the changes.
This is standard practice in bill-drafting.
Also, SC is not proper forum for these internal rules.
d. If this were the case, there would be no end to negotiation since each house may seek modifications of the compromise bill. That requirement must be construed only to mean bills introduced for the first time in either house, not the BCC report.
4. NO, there is no violation of Art VI Sec 26(1)
a. Since the title states that the purpose is to expand the VAT system, one way is to widen the base by withdrawing some exemptions. To insist that PD 1590 in addition to § 103 of NIRC be mentioned in title, would be to insist that title of a bill be a complete index of its content.
b. That was just to prevent amendment by an inconsistent statute.
And under Consti, grant of franchise for operation of public utility is subject to amendment, alteration, repeal by Congress when common good requires.
Substantive
- as RA 7716 merely expands base of VAT as provided in the orig VAT law, debate on wisdom of law should be in Congress.
5. NO there is no clear showing that Art III Sec 1 is violated
- When freedom of the mind is imperiled by law, it is freedom that commands respect; when property is imperiled, lawmakers’
judgment prevails.
a. This is actually a policy argument.
b. This is a mere allegation.
c. This is also short of evidence.
6. NO Art III Sec a is not violated
a. There’s no violation of press freedom. The press is not immune fr general regulation by the State.
b. It’s not that it is being singled out, but only because of removal of exemption previously granted to it by law. Also, the law would be discriminatory if the only privilege withdrawn is that to the press. But that is not the case. The statute applies to a wide range of goods and services.
c. It has not been shown that the class subject to tax has been unreasonably narrowed. This limit does not apply to press alone but to all sales.
d. The fixed amount of P1000 is for defraying part of the cost of registration. Registration is a central feature of the VAT system.
It is a mere administrative fee, not a fee on exercise of privilege or right.
7. NO Art III Sec 5 is not violated
a. Consti does not prohibit imposing generally applicable sales and use tax on sale of religious materials by religious org.
8. NO Art III Sec 10 is not violated
a. Parties to a contract can’t fetter exercise of taxing power of State. Essential attributes of sovereign is read into contracts as a basic postulate of legal order.
9. VAT distributes tax burden to as many goods and svcs as possible, particularly to those w/in reach of higher income grps.
Business establishments with annual gross sales of < P500,000 are exempted.
Also, regressivity is not a negative standard. What is required is that we “evolve” a progressive taxation system.
10. Consti does not prohibit imposing generally applicable sales and use tax on sale of religious materials by religious org.
11. NO there is no violation of Art II Sec 17
a. Same reason/ratio under issues on free speech/press.
Decision Petitions are dismissed.
Notes VAT is levied on sale, barter/exchange of goods and svcs.
Then, it’s equal to 10% of gross selling price
Narvasa, Separate Opinion Cruz, Separate Opinion Padilla, Separate Opinion Vitug, Separate Opinion Regalado, Dissenting Opinion Davide, Dissenting Opinion Romero, Dissenting Opinion Bellosillo, Dissenting Opinion Puno, Dissenting Opinion
ABAKADA GURO PARTY LIST V ERMITA AUSTRIA-MARTINEZ; September 1, 2005 FACTS
- The increasing budget problems of the government in the form of fiscal problems, revenue generation, and fiscal allocation inadequacy prompted the congress to create a law to address such problems. This gave way to the Expanded Vat Law (E-Vat Law) otherwise known as Republic Act No. 9337. The case revolves around the constitutionality of the Republic Act 9337 that increased the Value-Added Tax percentage from 10% to 12%. In this case there were 4 different petitioners: Abakada Guro Party List, Association of Pilipinas Shell Dealers/Petron/Caltex, Senators Pimentel/ Estrada, L./ Estrada, J. / Lacson/ Lim/ Madrigal/ Osmeña, Congressman Escudero, and Governor Garcia. All of them question the constitutionality of RA 9337.
- Backgrounder on Value-Added Tax (VAT):
> VAT is a tax on spending or consumption. It is levied on the sale, barter, exchange, or lease of goods or properties and services.
> It is an indirect tax on expenditure. The seller of goods or services may pass on the amount of tax paid to the buyer. VAT is intended to fall on the immediate buyers and end-consumers.
- RA 9337’s legislative history is as follows:
It originated from House Bill 3555 that was approved on the 27th of January 2005 and House Bill 3705 that was approved on the 28th of February 2005 and Senate Bill 1950 that was approved on the 13th
of April 2005. This was later consolidated the Bicameral Conference Committee. The Bicameral Conference Committee inserted and deleted some of the original provisions. The Bill was approved on the 11th of May 2005 by the Senate and 10th of May 2005 by the House of Representatives.
ISSUES Procedural
1. WON the Bicameral Conference Committee has strictly complied with the rules of both houses thereby remaining within the jurisdiction conferred upon it by congress.
2. WON the Bicameral Conference Committee violated Article VI Sec 26 that states that no amendment would be done after three readings.
3. WON there was a violation of the Origination Clause as stated in Art VI Sec 24.
Substantive
4. WON there was undue delegation to the President and Secretary of Finance.
5. WON a VAT law such as that of RA 9337 is in violation of the Constitutional provision Art VI Sec 28 (1) that requires taxation to be uniform, equitable and that the Congress shall evolve a progressive system of taxation.
HELD
1. The Supreme Court decided that it would not rule on the violation of the senate and house rules unless there is a showing that it is in clear violation of a constitutional provision or of the rights of private individuals. (favorite ratio Ü)
2. No, because the amendment rule refers only to the procedure to be followed by each house of Congress with regard to bills in each of the said respective houses before the bill is transmitted to the other house for its concurrence and amendment.
3. No, the Senate within the said provision only proposed amendments after the House Bills were approved. The Bill still originated through the House of Representatives.
4. No, because the President is just executing the law and is still working within the standard and policy of the law. The Secretary of Finance is also not given undue delegation as he is considered as an alter ego of the president thus following the same logic, he is only executing the law.
5. While the VAT is currently not yet progressive it still is directed towards a goal of a progressive taxation.
SEPARATE OPINION PANGANIBAN
Sections 1, 2, and 3 of RA 9337 is unconstitutional as 1) the increase of tax rates on domestic, resident foreign and nonresident foreign corporations, 2) the increase of tax credit against taxes due from nonresident foreign corporations on intercorporate dividends, and 3) the reduction of the allowable deduction for interest expense were not really part of the House version of the E-VAT Law therefore in violation of the origination clause in Article VI Section 24.
BENGZON V SENATE BLUE RIBBON COMMITTEE