G.R. No.

L-42571-72 July 25, 1983
VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO
CORPUZ, TERESITA CALOT, ROSALIA FERNANDEZ, ELIZABETH
VELASCO, NANETTE VILLANUEVA, HONORATO BUENAVENTURA,
RUBEN DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO
ROMDINA, ANGELINA OBLIGACION, CONRADO GREGORIO,
TEODORO REYES, LYDIA ATRACTIVO, NAPOLEON MENDOZA,
PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA DURAN,
SOCORRO BERNARDEZ, and PEDRO GABRIEL, petitioners,
vs.
THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the
Municipal Mayor, MARIO MENDOZA as the Municipal Vice-Mayor,
and THE MUNICIPAL COUNCIL OF BOCAUE,
BULACAN, respondents.
Federico N. Alday for petitioners.
Dakila F. Castro for respondents.
FERNANDO, C.J.:
or dance halls which are now in operation including permits issued to
professional hostesses, hospitality girls and professional dancers are
hereby revoked upon the expiration of the thirty-day period given
them as provided in Section 8 hereof and thenceforth, the operation
of these establishments within the jurisdiction of the municipality
shall be illegal. Section 5.— Penalty in case of violation. — Violation
of any of the provisions of this Ordinance shall be punishable by
imprisonment not exceeding three (3) months or a fine not exceeding
P200.00 or both at the discretion of the Court. If the offense is
committed by a juridical entity, the person charged with the
management and/or operation thereof shall be liable for the penalty
provided herein. Section 6. — Separability Clause.— If, for any reason,
any section or provision of this Ordinance is held unconstitutional or
invalid, no other section or provision hereof shall be affected thereby.
Section 7.— Repealing Clause.— All ordinance, resolutions, circulars,
memoranda or parts thereof that are inconsistent with the provisions
of this Ordinance are hereby repealed. Section 8.— Effectivity.— This
Ordinance shall take effect immediately upon its approval; provided,
however, that operators of night clubs, cabarets and dance halls now
in operation including professional hostesses, hospitality girls and
professional dancers are given a period of thirty days from the
approval hereof within which to wind up their businesses and comply
with the provisions of this Ordinance." 4

The crucial question posed by this certiorari proceeding is whether or
not a municipal corporation, Bocaue, Bulacan, represented by
respondents, 1 can, prohibit the exercise of a lawful trade, the
operation of night clubs, and the pursuit of a lawful occupation, such
clubs employing hostesses. It is contended that the ordinance assailed
as invalid is tainted with nullity, the municipality being devoid of
power to prohibit a lawful business, occupation or calling, petitioners
at the same time alleging that their rights to due process and equal
protection of the laws were violated as the licenses previously given
to them was in effect withdrawn without judicial hearing. 2
The assailed ordinance 3 is worded as follows: "Section 1.— Title of
Ordinance.— This Ordinance shall be known and may be cited as the
[Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section 2.
— Definitions of Terms — (a) 'Night Club' shall include any place or
establishment selling to the public food or drinks where customers
are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall include any
place or establishment where dancing is permitted to the public and
where professional hostesses or hospitality girls and professional
dancers are employed. (c) 'Professional hostesses' or 'hospitality girls'
shall include any woman employed by any of the establishments
herein defined to entertain guests and customers at their table or to
dance with them. (d) 'Professional dancer' shall include any woman
who dances at any of the establishments herein defined for a fee or
remuneration paid directly or indirectly by the operator or by the
persons she dances with. (e) 'Operator' shall include the owner,
manager, administrator or any person who operates and is
responsible for the operation of any night club, cabaret or dance hall.
Section 3. — Prohibition in the Issuance and Renewal of Licenses,
Permits. — Being the principal cause in the decadence of morality and
because of their other adverse effects on this community as explained
above, no operator of night clubs, cabarets or dance halls shall
henceforth be issued permits/licenses to operate within the
jurisdiction of the municipality and no license/permit shall be issued
to any professional hostess, hospitality girls and professional dancer
for employment in any of the aforementioned establishments. The
prohibition in the issuance of licenses/permits to said persons and
operators of said establishments shall include prohibition in the
renewal thereof. Section 4.— Revocation of Permits and Licenses.—
The licenses and permits issued to operators of night clubs, cabarets
On November 5, 1975, two cases for prohibition with preliminary
injunction were filed with the Court of First Instance of Bulacan. 5 The
grounds alleged follow:
1. Ordinance No. 84 is null and void as a municipality has no authority
to prohibit a lawful business, occupation or calling.
2. Ordinance No. 84 is violative of the petitioners' right to due process
and the equal protection of the law, as the license previously given to
petitioners was in effect withdrawn without judicial hearing. 3. That
under Presidential Decree No. 189, as amended, by Presidential
Decree No. 259, the power to license and regulate tourist-oriented
businesses including night clubs, has been transferred to the
Department of Tourism." 6 The cases were assigned to respondent
Judge, now Associate Justice Paras of the Intermediate Appellate
Court, who issued a restraining order on November 7, 1975. The
answers were thereafter filed. It was therein alleged: " 1. That the
Municipal Council is authorized by law not only to regulate but to
prohibit the establishment, maintenance and operation of night clubs
invoking Section 2243 of the RAC, CA 601, Republic Acts Nos. 938, 978
and 1224. 2. The Ordinance No. 84 is not violative of petitioners' right
to due process and the equal protection of the law, since property
rights are subordinate to public interests. 3. That Presidential Decree
No. 189, as amended, did not deprive Municipal Councils of their
jurisdiction to regulate or prohibit night clubs." 7 There was the
admission of the following facts as having been established: "l. That
petitioners Vicente de la Cruz, et al. in Civil Case No. 4755-M had been
previously issued licenses by the Municipal Mayor of Bocaue-
petitioner Jose Torres III, since 1958; petitioner Vicente de la Cruz,
since 1960; petitioner Renato Alipio, since 1961 and petitioner
Leoncio Corpuz, since 1972; 2. That petitioners had invested large
sums of money in their businesses; 3. That the night clubs are well-
lighted and have no partitions, the tables being near each other; 4.
That the petitioners owners/operators of these clubs do not allow the
hospitality girls therein to engage in immoral acts and to go out with
customers; 5. That these hospitality girls are made to go through
periodic medical check-ups and not one of them is suffering from any
venereal disease and that those who fail to submit to a medical check-
up or those who are found to be infected with venereal disease are
not allowed to work; 6. That the crime rate there is better than in
other parts of Bocaue or in other towns of Bulacan." 8 Then came on
January 15, 1976 the decision upholding the constitutionality and
validity of Ordinance No. 84 and dismissing the cases. Hence this
petition for certiorari by way of appeal.
In an exhaustive as well as scholarly opinion, the lower court
dismissed the petitions. Its rationale is set forth in the opening
paragraph thus: "Those who lust cannot last. This in essence is why
the Municipality of Bocaue, Province of Bulacan, stigmatized as it has
been by innuendos of sexual titillation and fearful of what the
awesome future holds for it, had no alternative except to order thru
its legislative machinery, and even at the risk of partial economic
dislocation, the closure of its night clubs and/or cabarets. This in
essence is also why this Court, obedient to the mandates of good
government, and cognizant of the categorical imperatives of the
current legal and social revolution, hereby [upholds] in the name of
police power the validity and constitutionality of Ordinance No. 84,
Series of 1975, of the Municipal Council of Bocaue, Bulacan. The
restraining orders heretofore issued in these two cases are therefore
hereby rifted, effective the first day of February, 1976, the purpose of
the grace period being to enable the petitioners herein to apply to the
proper appellate tribunals for any contemplated redress."9 This Court
is, however, unable to agree with such a conclusion and for reasons
herein set forth, holds that reliance on the police power is insufficient
to justify the enactment of the assailed ordinance. It must be declared
null and void.
1. Police power is granted to municipal corporations in general terms
as follows: "General power of council to enact ordinances and make
regulations. - The municipal council shall enact such ordinances and
make such regulations, not repugnant to law, as may be necessary to
carry into effect and discharge the powers and duties conferred upon
it by law and such as shall seem necessary and proper to provide for
the health and safety, promote the prosperity, improve the morals,
peace, good order, comfort, and convenience of the municipality and
the inhabitants thereof, and for the protection of property
therein." 10 It is practically a reproduction of the former Section 39 of
Municipal Code.11 An ordinance enacted by virtue thereof, according
to Justice Moreland, speaking for the Court in the leading case
of United States v. Abendan 12 "is valid, unless it contravenes the
fundamental law of the Philippine Islands, or an Act of the Philippine
Legislature, or unless it is against public policy, or is unreasonable,
oppressive, partial, discriminating, or in derogation of common right.
Where the power to legislate upon a given subject, and the mode of
its exercise and the details of such legislation are not prescribed, the
ordinance passed pursuant thereto must be a reasonable exercise of
the power, or it will be pronounced invalid." 13 In another leading
case, United States v. Salaveria, 14 the ponente this time being Justice
Malcolm, where the present Administrative Code provision was
applied, it was stated by this Court: "The general welfare clause has
two branches: One branch attaches itself to the main trunk of
municipal authority, and relates to such ordinances and regulations
as may be necessary to carry into effect and discharge the powers and
duties conferred upon the municipal council by law. With this class we
are not here directly concerned. The second branch of the clause is
much more independent of the specific functions of the council which
are enumerated by law. It authorizes such ordinances as shall seem
necessary and proper to provide for the health and safety, promote
the prosperity, improve the morals, peace, good order, comfort, and
convenience of the municipality and the inhabitants thereof, and for
the protection of property therein.' It is a general rule that ordinances
passed by virtue of the implied power found in the general welfare
clause must be reasonable, consonant with the general powersand
purposes of the corporation, and not inconsistent with the laws or
policy of the State." 15 If night clubs were merely then regulated and
not prohibited, certainly the assailed ordinance would pass the test of
validity. In the two leading cases above set forth, this Court had
stressed reasonableness, consonant with the general powers and
purposes of municipal corporations, as well as consistency with the
laws or policy of the State. It cannot be said that such a sweeping
exercise of a lawmaking power by Bocaue could qualify under the
term reasonable. The objective of fostering public morals, a worthy
and desirable end can be attained by a measure that does not
encompass too wide a field. Certainly the ordinance on its face is
characterized by overbreadth. The purpose sought to be achieved
could have been attained by reasonable restrictions rather than by an
absolute prohibition. The admonition in Salaveria should be heeded:
"The Judiciary should not lightly set aside legislative action when
there is not a clear invasion of personal or property rights under the
guise of police regulation." 16 It is clear that in the guise of a police
regulation, there was in this instance a clear invasion of personal or
property rights, personal in the case of those individuals desirous of
patronizing those night clubs and property in terms of the
investments made and salaries to be earned by those therein
employed.
2. The decision now under review refers to Republic Act No. 938 as
amended. 17 It was originally enacted on June 20, 1953. It is entitled:
"AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE
POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND
OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR
RESPECTIVE TERRITORIAL JURISDICTIONS.' 18 Its first section insofar as
pertinent reads: "The municipal or city board or council of each
chartered city shall have the power to regulate by ordinance the
establishment, maintenance and operation of night clubs, cabarets,
dancing schools, pavilions, cockpits, bars, saloons, bowling alleys,
billiard pools, and other similar places of amusement within its
territorial jurisdiction: ... " 19Then on May 21, 1954, the first section
was amended to include not merely "the power to regulate, but
likewise "Prohibit ... " 20 The title, however, remained the same. It is
worded exactly as Republic Act No. 938. It is to be admitted that as
thus amended, if only the above portion of the Act were considered,
a municipal council may go as far as to prohibit the operation of night
clubs. If that were all, then the appealed decision is not devoid of
support in law. That is not all, however. The title was not in any way
altered. It was not changed one whit. The exact wording was
followed. The power granted remains that of regulation,
not prohibition. There is thus support for the view advanced by
petitioners that to construe Republic Act No. 938 as allowing the
prohibition of the operation of night clubs would give rise to a
constitutional question. The Constitution mandates: "Every bill shall
embrace only one subject which shall be expressed in the title
thereof. " 21 Since there is no dispute as the title limits the power to
regulating, not prohibiting, it would result in the statute being invalid
if, as was done by the Municipality of Bocaue, the operation of a night
club was prohibited. There is a wide gap between the exercise of a
regulatory power "to provide for the health and safety, promote the
prosperity, improve the morals, 22 in the language of the
Administrative Code, such competence extending to all "the great
public needs, 23 to quote from Holmes, and to interdict any calling,
occupation, or enterprise. In accordance with the well-settled
principle of constitutional construction that between two possible
interpretations by one of which it will be free from constitutional
infirmity and by the other tainted by such grave defect, the former is
to be preferred. A construction that would save rather than one that
would affix the seal of doom certainly commends itself. We have done
so before We do so again. 24
3. There is reinforcement to the conclusion reached by virtue of a invalidity, it was likewise made clear that there is no need to satisfy
specific provision of the recently-enacted Local Government such a requirement if a statute were void on its face. That it certainly
Code. 25 The general welfare clause, a reiteration of the is if the power to enact such ordinance is at the most dubious and
Administrative Code provision, is set forth in the first paragraph of under the present Local Government Code non-existent.
Section 149 defining the powers and duties of the sangguniang
bayan. It read as follows: "(a) Enact such ordinances and issue such WHEREFORE, the writ of certiorari is granted and the decision of the
regulations as may be necessary to carry out and discharge the lower court dated January 15, 1976 reversed, set aside, and nullied.
responsibilities conferred upon it by law, and such as shall be Ordinance No. 84, Series of 1975 of the Municipality of Bocaue is
necessary and proper to provide for the health, safety, comfort and declared void and unconstitutional. The temporary restraining order
convenience, maintain peace and order, improve public morals, issued by this Court is hereby made permanent. No costs.
promote the prosperity and general welfare of the municipality and
the inhabitants thereof, and insure the protection of property
therein; ..." 26 There are in addition provisions that may have a
bearing on the question now before this Court. Thus the sangguniang
bayanshall "(rr) Regulate cafes, restaurants, beer-houses, hotels,
motels, inns, pension houses and lodging houses, except travel
agencies, tourist guides, tourist transports, hotels, resorts, de luxe
restaurants, and tourist inns of international standards which shall
remain under the licensing and regulatory power of the Ministry of
Tourism which shall exercise such authority without infringing on the
taxing or regulatory powers of the municipality; (ss) Regulate public
dancing schools, public dance halls, and sauna baths or massage
parlors; (tt) Regulate the establishment and operation of billiard
pools, theatrical performances, circuses and other forms of
entertainment; ..." 27 It is clear that municipal corporations cannot
prohibit the operation of night clubs. They may be regulated, but not
prevented from carrying on their business. It would be, therefore, an
exercise in futility if the decision under review were sustained. All that
petitioners would have to do is to apply once more for licenses to
operate night clubs. A refusal to grant licenses, because no such
businesses could legally open, would be subject to judicial correction.
That is to comply with the legislative will to allow the operation and
continued existence of night clubs subject to appropriate regulations.
In the meanwhile, to compel petitioners to close their establishments,
the necessary result of an affirmance, would amount to no more than
a temporary termination of their business. During such time, their
employees would undergo a period of deprivation. Certainly, if such
an undesirable outcome can be avoided, it should be. The law should
not be susceptible to the reproach that it displays less than
sympathetic concern for the plight of those who, under a mistaken
appreciation of a municipal power, were thus left without
employment. Such a deplorable consequence is to be avoided. If it
were not thus, then the element of arbitrariness enters the picture.
That is to pay less, very much less, than full deference to the due
process clause with its mandate of fairness and reasonableness.

4. The conclusion reached by this Court is not to be interpreted as a

retreat from its resolute stand sustaining police power legislation to
promote public morals. The commitment to such an Ideal forbids such
a backward step. Legislation of that character is deserving of the
fullest sympathy from the judiciary. Accordingly, the judiciary has not
been hesitant to lend the weight of its support to measures that can
be characterized as falling within that aspect of the police power.
Reference is made by respondents to Ermita-Malate Hotel and Motel
Operators Association, Inc. v. City Mayor of Manila. 28 There is a
misapprehension as to what was decided by this Court. That was a
regulatory measure. Necessarily, there was no valid objection on due
process or equal protection grounds. It did not prohibit motels. It
merely regulated the mode in which it may conduct business in order
precisely to put an end to practices which could encourage vice and
immorality. This is an entirely different case. What was involved is a
measure not embraced within the regulatory power but an exercise
of an assumed power to prohibit. Moreover, while it was pointed out
in the aforesaid Ermita-Malate Hotel and Motel Operators
Association, Inc. decision that there must be a factual foundation of
G.R. No. 124360 November 5, 1997
FRANCISCO S. TATAD, petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE
SECRETARY OF THE DEPARTMENT OF FINANCE, respondents.
G.R. No. 127867 November 5, 1997
EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA,
WIGBERTO TANADA, FLAG HUMAN RIGHTS FOUNDATION, INC.,
FREEDOM FROM DEBT COALITION (FDC), SANLAKAS, petitioners,
vs.
HON. RUBEN TORRES in his capacity as the Executive Secretary,
HON. FRANCISCO VIRAY, in his capacity as the Secretary of Energy,
CALTEX Philippines, Inc., PETRON Corporation and PILIPINAS SHELL
Corporation, respondents.
PUNO, J.:
The petitions at bar challenge the constitutionality of Republic Act No.
8180 entitled "An Act Deregulating the Downstream Oil Industry and
For Other Purposes".1 R.A. No. 8180 ends twenty six (26) years of
government regulation of the downstream oil industry. Few cases
carry a surpassing importance on the life of every Filipino as these
petitions for the upswing and downswing of our economy materially
depend on the oscillation of oil.
First, the facts without the fat. Prior to 1971, there was no
government agency regulating the oil industry other than those
dealing with ordinary commodities. Oil companies were free to enter
and exit the market without any government interference. There
were four (4) refining companies (Shell, Caltex, Bataan Refining
Company and Filoil Refining) and six (6) petroleum marketing
companies (Esso, Filoil, Caltex, Getty, Mobil and Shell), then operating
in the country.2
In 1971, the country was driven to its knees by a crippling oil crisis.
The government, realizing that petroleum and its products are vital to
national security and that their continued supply at reasonable prices
is essential to the general welfare, enacted the Oil Industry
Commission Act.3 It created the Oil Industry Commission (OIC)
to regulate the business of importing, exporting, re-exporting,
shipping, transporting, processing, refining, storing, distributing,
marketing and selling crude oil, gasoline, kerosene, gas and other
refined petroleum products. The OIC was vested with the power to
fix the market prices of petroleum products, to regulate the
capacities of refineries, to license new refineries and to regulate the
operations and trade practices of the industry.4
In addition to the creation of the OIC, the government saw the
imperious need for a more active role of Filipinos in the oil
industry. Until the early seventies, the downstream oil industry was
controlled by multinational companies. All the oil refineries and
marketing companies were owned by foreigners whose economic
interests did not always coincide with the interest of the Filipino.
Crude oil was transported to the country by foreign-controlled
tankers. Crude processing was done locally by foreign-owned
refineries and petroleum products were marketed through foreign-
owned retail outlets. On November 9, 1973, President Ferdinand E.
Marcos boldly created the Philippine National Oil Corporation (PNOC)
to break the control by foreigners of our oil industry. 5 PNOC engaged
in the business of refining, marketing, shipping, transporting, and
storing petroleum. It acquired ownership of ESSO Philippines and
Filoil to serve as its marketing arm. It bought the controlling shares of
Bataan Refining Corporation, the largest refinery in the
country.6 PNOC later put up its own marketing subsidiary — Petrophil.
PNOC operated under the business name PETRON Corporation. For
the first time, there was a Filipino presence in the Philippine oil
market.
In 1984, President Marcos through Section 8 of Presidential Decree
No. 1956, created the Oil Price Stabilization Fund (OPSF) to cushion
the effects of frequent changes in the price of oil caused by exchange
rate adjustments or increase in the world market prices of crude oil
and imported petroleum products. The fund is used (1) to reimburse
the oil companies for cost increases in crude oil and imported
petroleum products resulting from exchange rate adjustment and/or
increase in world market prices of crude oil, and (2) to reimburse oil
companies for cost underrecovery incurred as a result of the
reduction of domestic prices of petroleum products. Under the law,
the OPSF may be sourced from:
1. any increase in the tax collection from ad valorem tax or customs
duty imposed on petroleum products subject to tax under P.D. No.
1956 arising from exchange rate adjustment,
2. any increase in the tax collection as a result of the lifting of tax
exemptions of government corporations, as may be determined by
the Minister of Finance in consultation with the Board of Energy,
3. any additional amount to be imposed on petroleum products to
augment the resources of the fund through an appropriate order that
may be issued by the Board of Energy requiring payment of persons
or companies engaged in the business of importing, manufacturing
and/or marketing petroleum products, or
4. any resulting peso costs differentials in case the actual peso costs
paid by oil companies in the importation of crude oil and petroleum
products is less than the peso costs computed using the reference
foreign exchange rate as fixed by the Board of Energy.7
By 1985, only three (3) oil companies were operating in the country
— Caltex, Shell and the government-owned PNOC.
In May, 1987, President Corazon C. Aquino signed Executive Order
No. 172 creating the Energy Regulatory Boardto regulate the business
of importing, exporting, re-exporting, shipping, transporting,
processing, refining, marketing and distributing energy resources
"when warranted and only when public necessity requires." The
Board had the following powers and functions:
1. Fix and regulate the prices of petroleum products;
2. Fix and regulate the rate schedule or prices of piped gas to be
charged by duly franchised gas companies which distribute gas by
means of underground pipe system;
3. Fix and regulate the rates of pipeline concessionaries under the
provisions of R.A. No. 387, as amended . . . ;
4. Regulate the capacities of new refineries or additional capacities of
existing refineries and license refineries that may be organized after
the issuance of (E.O. No. 172) under such terms and conditions as are
consistent with the national interest; and
5. Whenever the Board has determined that there is a shortage of any
petroleum product, or when public interest so requires, it may take
such steps as it may consider necessary, including the temporary
adjustment of the levels of prices of petroleum products and the
payment to the Oil Price Stabilization Fund . . . by persons or entities
engaged in the petroleum industry of such amounts as may be
determined by the Board, which may enable the importer to recover
its cost of importation.8
On December 9, 1992, Congress enacted R.A. No. 7638 which created
the Department of Energy to prepare, integrate, coordinate,
supervise and control all plans, programs, projects, and activities of
the government in relation to energy exploration, development,
utilization, distribution and conservation.9 The thrust of the Philippine
energy program under the law was toward privatization of
government agencies related to energy, deregulation of the power
and energy industry and reduction of dependency on oil-fired
plants.10 The law also aimed to encourage free and active
participation and investment by the private sector in all energy
activities. Section 5(e) of the law states that "at the end of four (4)
years from the effectivity of this Act, the Department shall, upon
approval of the President, institute the programs and timetable of
deregulation of appropriate energy projects and activities of the
energy industry."
Pursuant to the policies enunciated in R.A. No. 7638, the government
approved the privatization of Petron Corporation in 1993. On
December 16, 1993, PNOC sold 40% of its equity in Petron
Corporation to the Aramco Overseas Company.
In March 1996, Congress took the audacious step of deregulating the
downstream oil industry. It enacted R.A. No.8180, entitled the
"Downstream Oil Industry Deregulation Act of 1996." Under the
deregulated environment, "any person or entity may import or
purchase any quantity of crude oil and petroleum products from a
foreign or domestic source, lease or own and operate refineries and
other downstream oil facilities and market such crude oil or use the
same for his own requirement," subject only to monitoring by the
Department of
Energy.11
The deregulation process has two phases: the transition phase and the
full deregulation phase. During the transition phase, controls of the
non-pricing aspects of the oil industry were to be lifted. The following
were to be accomplished: (1) liberalization of oil importation,
exportation, manufacturing, marketing and distribution, (2)
implementation of an automatic pricing mechanism, (3)
implementation of an automatic formula to set margins of dealers
and rates of haulers, water transport operators and pipeline
concessionaires, and (4) restructuring of oil taxes. Upon full
deregulation, controls on the price of oil and the foreign exchange
cover were to be lifted and the OPSF was to be abolished.
The first phase of deregulation commenced on August 12, 1996.
On February 8, 1997, the President implemented the full deregulation
of the Downstream Oil Industry through E.O.No. 372.
The petitions at bar assail the constitutionality of various provisions
of R.A No. 8180 and E.O. No. 372.
In G.R. No. 124360, petitioner Francisco S. Tatad seeks the annulment
of section 5(b) of R.A. No. 8180. Section 5(b) provides:
b) Any law to the contrary notwithstanding and starting with the
effectivity of this Act, tariff duty shall be imposed and collected on
imported crude oil at the rate of three percent (3%) and imported
refined petroleum products at the rate of seven percent (7%), except
fuel oil and LPG, the rate for which shall be the same as that for
imported crude oil: Provided, That beginning on January 1, 2004 the
tariff rate on imported crude oil and refined petroleum products shall
be the same: Provided, further, That this provision may be amended
only by an Act of Congress.
The petition is anchored on three arguments:
First, that the imposition of different tariff rates on imported crude oil
and imported refined petroleum products violates the equal
protection clause. Petitioner contends that the 3%-7% tariff
differential unduly favors the three existing oil refineries and
discriminates against prospective investors in the downstream oil
industry who do not have their own refineries and will have to source
refined petroleum products from abroad.
Second, that the imposition of different tariff rates does not
deregulate the downstream oil industry but instead controls the oil
industry, contrary to the avowed policy of the law. Petitioner avers
that the tariff differential between imported crude oil and imported
refined petroleum products bars the entry of other players in the oil
industry because it effectively protects the interest of oil companies
with existing refineries. Thus, it runs counter to the objective of the
law "to foster a truly competitive market."
Third, that the inclusion of the tariff provision in section 5(b) of R.A.
No. 8180 violates Section 26(1) Article VI of the Constitution requiring
every law to have only one subject which shall be expressed in its title.
Petitioner contends that the imposition of tariff rates in section 5(b)
of R.A. No. 8180 is foreign to the subject of the law which is the
deregulation of the downstream oil industry.
In G.R. No. 127867, petitioners Edcel C. Lagman, Joker P. Arroyo,
Enrique Garcia, Wigberto Tanada, Flag Human Rights Foundation,
Inc., Freedom from Debt Coalition (FDC) and Sanlakas contest the
constitutionality of section 15 of R.A. No. 8180 and E.O. No. 392.
Section 15 provides:
Sec. 15. Implementation of Full Deregulation. — Pursuant to Section
5(e) of Republic Act No. 7638, the DOE shall, upon approval of the
President, implement the full deregulation of the downstream oil
industry not later than March 1997. As far as practicable, the DOE
shall time the full deregulation when the prices of crude oil and
petroleum products in the world market are declining and when the
exchange rate of the peso in relation to the US dollar is stable. Upon
the implementation of the full deregulation as provided herein, the
transition phase is deemed terminated and the following laws are
deemed repealed:
xxx xxx xxx
E.O. No. 372 states in full, viz.:
WHEREAS, Republic Act No. 7638, otherwise known as the
"Department of Energy Act of 1992," provides that, at the end of four
years from its effectivity last December 1992, "the Department (of
Energy) shall, upon approval of the President, institute the programs
and time table of deregulation of appropriate energy projects and
activities of the energy sector;"
WHEREAS, Section 15 of Republic Act No. 8180, otherwise known as
the "Downstream Oil Industry Deregulation Act of 1996," provides
that "the DOE shall, upon approval of the President, implement full
deregulation of the downstream oil industry not later than March,
1997. As far as practicable, the DOE shall time the full deregulation
when the prices of crude oil and petroleum products in the world
market are declining and when the exchange rate of the peso in
relation to the US dollar is stable;"
WHEREAS, pursuant to the recommendation of the Department of
Energy, there is an imperative need to implement the full
deregulation of the downstream oil industry because of the following
recent developments: (i) depletion of the buffer fund on or about 7
February 1997 pursuant to the Energy Regulatory Board's Order
dated 16 January 1997; (ii) the prices of crude oil had been stable at
$21-$23 per barrel since October 1996 while prices of petroleum
products in the world market had been stable since mid-December of
last year. Moreover, crude oil prices are beginning to soften for the
last few days while prices of some petroleum products had already
declined; and (iii) the exchange rate of the peso in relation to the US
dollar has been stable for the past twelve (12) months, averaging at
around P26.20 to one US dollar;
WHEREAS, Executive Order No. 377 dated 31 October 1996 provides
for an institutional framework for the administration of the
deregulated industry by defining the functions and responsibilities of
various government agencies;
WHEREAS, pursuant to Republic Act No. 8180, the deregulation of the
industry will foster a truly competitive market which can better
achieve the social policy objectives of fair prices and adequate,
continuous supply of environmentally-clean and high quality
petroleum products;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of
the Philippines, by the powers vested in me by law, do hereby declare
the full deregulation of the downstream oil industry.
In assailing section 15 of R.A. No. 8180 and E.O. No. 392, petitioners
offer the following submissions:
First, section 15 of R.A. No. 8180 constitutes an undue delegation of
legislative power to the President and the Secretary of Energy
because it does not provide a determinate or determinable standard
to guide the Executive Branch in determining when to implement the
full deregulation of the downstream oil industry. Petitioners contend
that the law does not define when it is practicable for the Secretary
of Energy to recommend to the President the full deregulation of the
downstream oil industry or when the President may consider it
practicable to declare full deregulation. Also, the law does not provide
any specific standard to determine when the prices of crude oil in the
world market are considered to be declining nor when the exchange
rate of the peso to the US dollar is considered stable.
Second, petitioners aver that E.O. No. 392 implementing the full
deregulation of the downstream oil industry is arbitrary and
unreasonable because it was enacted due to the alleged depletion of
the OPSF fund — a condition not found in R.A. No. 8180.
Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the
formation of a de facto cartel among the three existing oil companies
— Petron, Caltex and Shell — in violation of the constitutional
prohibition against monopolies, combinations in restraint of trade
and unfair competition.
Respondents, on the other hand, fervently defend the
constitutionality of R.A. No. 8180 and E.O. No. 392. In addition,
respondents contend that the issues raised by the petitions are not
justiciable as they pertain to the wisdom of the law. Respondents
further aver that petitioners have no locus standi as they did not
sustain nor will they sustain direct injury as a result of the
implementation of R.A. No. 8180.
The petitions were heard by the Court on September 30, 1997. On
October 7, 1997, the Court ordered the private respondents oil
companies "to maintain the status quo and to cease and desist from
increasing the prices of gasoline and other petroleum fuel products
for a period of thirty (30) days . . . subject to further orders as
conditions may warrant."
We shall now resolve the petitions on the merit. The petitions raise
procedural and substantive issues bearing on the constitutionality of
R.A. No. 8180 and E.O. No. 392. The procedural issues are: (1)
whether or not the petitions raise a justiciable controversy, and (2)
whether or not the petitioners have the standing to assail the validity
of the subject law and executive order. The substantive issues are: (1)
whether or not section 5 (b) violates the one title — one subject
requirement of the Constitution; (2) whether or not the same section
violates the equal protection clause of the Constitution; (3) whether
or not section 15 violates the constitutional prohibition on undue
delegation of power; (4) whether or not E.O. No. 392 is arbitrary and
unreasonable; and (5) whether or not R.A. No. 8180 violates the
constitutional prohibition against monopolies, combinations in
restraint of trade and unfair competition.
We shall first tackle the procedural issues. Respondents claim that the
avalanche of arguments of the petitioners assail the wisdom of R.A.
No. 8180. They aver that deregulation of the downstream oil industry
is a policy decision made by Congress and it cannot be reviewed,
much less be reversed by this Court. In constitutional parlance,
respondents contend that the petitions failed to raise a justiciable
controversy.
Respondents' joint stance is unnoteworthy. Judicial power includes
not only the duty of the courts to settle actual controversies involving
rights which are legally demandable and enforceable, but also the
duty to determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the government.12 The courts, as
guardians of the Constitution, have the inherent authority to
determine whether a statute enacted by the legislature transcends
the limit imposed by the fundamental law. Where a statute violates
the Constitution, it is not only the right but the duty of the judiciary
to declare such act as unconstitutional and void.13 We held in the
recent case of Tanada v. Angara:14
xxx xxx xxx
In seeking to nullify an act of the Philippine Senate on the ground that
it contravenes the Constitution, the petition no doubt raises a
justiciable controversy. Where an action of the legislative branch is
seriously alleged to have infringed the Constitution, it becomes not
only the right but in fact the duty of the judiciary to settle the dispute.
The question thus posed is judicial rather than political. The duty to
adjudicate remains to assure that the supremacy of the Constitution
is upheld. Once a controversy as to the application or interpretation
of a constitutional provision is raised before this Court, it becomes a
legal issue which the Court is bound by constitutional mandate to
decide.
Even a sideglance at the petitions will reveal that petitioners have
raised constitutional issues which deserve the resolution of this Court
in view of their seriousness and their value as precedents. Our
statement of facts and definition of issues clearly show that
petitioners are assailing R.A. No. 8180 because its provisions infringe
the Constitution and not because the law lacks wisdom. The principle
of separation of power mandates that challenges on the
constitutionality of a law should be resolved in our courts of justice
while doubts on the wisdom of a law should be debated in the halls
of Congress. Every now and then, a law may be denounced in court
both as bereft of wisdom and constitutionally infirmed. Such
denunciation will not deny this Court of its jurisdiction to resolve the
constitutionality of the said law while prudentially refusing to pass on
its wisdom.
The effort of respondents to question the locus standi of petitioners
must also fall on barren ground. In language too lucid to be
misunderstood, this Court has brightlined its liberal stance on a
petitioner's locus standi where the petitioner is able to craft an issue
of transcendental significance to the people.15 In Kapatiran ng mga
Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan,16 we stressed:
xxx xxx xxx
Objections to taxpayers' suit for lack of sufficient personality, standing
or interest are, however, in the main procedural matters. Considering
the importance to the public of the cases at bar, and in keeping with
the Court's duty, under the 1987 Constitution, to determine whether
or not the other branches of government have kept themselves within
the limits of the Constitution and the laws and that they have not
abused the discretion given to them, the Court has brushed aside
technicalities of procedure and has taken cognizance of these
petitions.
There is not a dot of disagreement between the petitioners and the
respondents on the far reaching importance of the validity of RA No.
8180 deregulating our downstream oil industry. Thus, there is no
good sense in being hypertechnical on the standing of petitioners for
they pose issues which are significant to our people and which
deserve our forthright resolution.
We shall now track down the substantive issues. In G.R. No. 124360
where petitioner is Senator Tatad, it is contended that section 5(b) of
R.A. No. 8180 on tariff differential violates the provision17 of the
Constitution requiring every law to have only one subject which
should be expressed in its title. We do not concur with this
contention. As a policy, this Court has adopted a liberal construction
of the one title — one subject rule. We have consistently ruled18 that
the title need not mirror, fully index or catalogue all contents and
minute details of a law. A law having a single general subject indicated
in the title may contain any number of provisions, no matter how
diverse they may be, so long as they are not inconsistent with or
foreign to the general subject, and may be considered in furtherance
of such subject by providing for the method and means of carrying
out the general subject.19 We hold that section 5(b) providing for
tariff differential is germane to the subject of R.A. No. 8180 which is
the deregulation of the downstream oil industry. The section is
supposed to sway prospective investors to put up refineries in our
country and make them rely less on imported petroleum.20 We shall,
however, return to the validity of this provision when we examine its
blocking effect on new entrants to the oil market.
We shall now slide to the substantive issues in G.R. No. 127867.
Petitioners assail section 15 of R.A. No. 8180 which fixes the time
frame for the full deregulation of the downstream oil industry. We
restate its pertinent portion for emphasis, viz.:
Sec. 15. Implementation of Full Deregulation — Pursuant to section
5(e) of Republic Act No. 7638, the DOE shall, upon approval of the
President, implement the full deregulation of the downstream oil
industry not later than March 1997. As far as practicable, the DOE
shall time the full deregulation when the prices of crude oil and
petroleum products in the world market are declining and when the
exchange rate of the peso in relation to the US dollar is stable . . .
Petitioners urge that the phrases "as far as practicable," "decline of
crude oil prices in the world market" and "stability of the peso
exchange rate to the US dollar" are ambivalent, unclear and
inconcrete in meaning. They submit that they do not provide the
"determinate or determinable standards" which can guide the
President in his decision to fully deregulate the downstream oil
industry. In addition, they contend that E.O. No. 392 which advanced
the date of full deregulation is void for it illegally considered the
depletion of the OPSF fund as a factor.
The power of Congress to delegate the execution of laws has long
been settled by this Court. As early as 1916 in Compania General de
Tabacos de Filipinas vs. The Board of Public Utility
Commissioners,21 this Court thru, Mr. Justice Moreland, held that "the
true distinction is between the delegation of power to make the law,
which necessarily involves a discretion as to what it shall be, and
conferring authority or discretion as to its execution, to be exercised
under and in pursuance of the law. The first cannot be done; to the
latter no valid objection can be made." Over the years, as the legal
engineering of men's relationship became more difficult, Congress
has to rely more on the practice of delegating the execution of laws
to the executive and other administrative agencies. Two tests have
been developed to determine whether the delegation of the power
to execute laws does not involve the abdication of the power to make
law itself. We delineated the metes and bounds of these tests
in Eastern Shipping Lines, Inc. VS. POEA,22 thus:
There are two accepted tests to determine whether or not there is a
valid delegation of legislative power, viz: the completeness test and
the sufficient standard test. Under the first test, the law must be
complete in all its terms and conditions when it leaves the legislative
such that when it reaches the delegate the only thing he will have to
do is to enforce it. Under the sufficient standard test, there must be
adequate guidelines or limitations in the law to map out the
boundaries of the delegate's authority and prevent the delegation
from running riot. Both tests are intended to prevent a total
transference of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and exercise a power
essentially legislative.
The validity of delegating legislative power is now a quiet area in our
constitutional landscape. As sagely observed, delegation of legislative
power has become an inevitability in light of the increasing
complexity of the task of government. Thus, courts bend as far back
as possible to sustain the constitutionality of laws which are assailed
as unduly delegating legislative powers. Citing Hirabayashi v. United
States23 as authority, Mr. Justice Isagani A. Cruz states "that even if
the law does not expressly pinpoint the standard, the courts will bend
over backward to locate the same elsewhere in order to spare the
statute, if it can, from constitutional infirmity."24
Given the groove of the Court's rulings, the attempt of petitioners to
strike down section 15 on the ground of undue delegation of
legislative power cannot prosper. Section 15 can hurdle both the
completeness test and the sufficient standard test. It will be noted
that Congress expressly provided in R.A. No. 8180 that full
deregulation will start at the end of March 1997, regardless of the
occurrence of any event. Full deregulation at the end of March 1997
is mandatory and the Executive has no discretion to postpone it for
any purported reason. Thus, the law is complete on the question of
the final date of full deregulation. The discretion given to the
President is to advance the date of full deregulation before the end of
March 1997. Section 15 lays down the standard to guide the judgment
of the President — he is to time it as far as practicable when the prices
of crude oil and petroleum products in the world market
are declining and when the exchange rate of the peso in relation to
the US dollar is stable.
Petitioners contend that the words "as far as practicable," "declining"
and "stable" should have been defined in R.A. No. 8180 as they do not
set determinate or determinable standards. The stubborn submission
deserves scant consideration. The dictionary meanings of these words
are well settled and cannot confuse men of reasonable intelligence.
Webster defines "practicable" as meaning possible to practice or
perform, "decline" as meaning to take a downward direction, and
"stable" as meaning firmly established.25 The fear of petitioners that
these words will result in the exercise of executive discretion that will
run riot is thus groundless. To be sure, the Court has sustained the
validity of similar, if not more general standards in other cases.26
It ought to follow that the argument that E.O. No. 392 is null and void
as it was based on indeterminate standards set by R.A. 8180 must
likewise fail. If that were all to the attack against the validity of E.O.
No. 392, the issue need not further detain our discourse. But
petitioners further posit the thesis that the Executive misapplied R.A.
No. 8180 when it considered the depletion of the OPSF fund as a
factor in fully deregulating the downstream oil industry in February
1997. A perusal of section 15 of R.A. No. 8180 will readily reveal that
it only enumerated two factors to be considered by the Department
of Energy and the Office of the President, viz.: (1) the time when the
prices of crude oil and petroleum products in the world market are
declining, and (2) the time when the exchange rate of the peso in
relation to the US dollar is stable. Section 15 did not mention the
depletion of the OPSF fund as a factor to be given weight by the
Executive before ordering full deregulation. On the contrary, the
debates in Congress will show that some of our legislators wanted to
impose as a pre-condition to deregulation a showing that the OPSF
fund must not be in deficit.27 We therefore hold that the Executive
department failed to follow faithfully the standards set by R.A. No.
8180 when it considered the extraneous factor of depletion of the
OPSF fund. The misappreciation of this extra factor cannot be justified
on the ground that the Executive department considered anyway the
stability of the prices of crude oil in the world market and the stability
of the exchange rate of the peso to the dollar. By considering another
factor to hasten full deregulation, the Executive department rewrote
the standards set forth in R.A. 8180. The Executive is bereft of any
right to alter either by subtraction or addition the standards set in R.A.
No. 8180 for it has no power to make laws. To cede to the Executive
the power to make law is to invite tyranny, indeed, to transgress the
principle of separation of powers. The exercise of delegated power is
given a strict scrutiny by courts for the delegate is a mere agent whose
action cannot infringe the terms of agency. In the cases at bar, the
Executive co-mingled the factor of depletion of the OPSF fund with
the factors of decline of the price of crude oil in the world market and
the stability of the peso to the US dollar. On the basis of the text of
E.O. No. 392, it is impossible to determine the weight given by the
Executive department to the depletion of the OPSF fund. It could well
be the principal consideration for the early deregulation. It could have
been accorded an equal significance. Or its importance could be nil.
In light of this uncertainty, we rule that the early deregulation under
E.O. No. 392 constitutes a misapplication of R.A. No. 8180.
We now come to grips with the contention that some provisions of
R.A. No. 8180 violate section 19 of Article XII of the 1987 Constitution.
These provisions are:
(1) Section 5 (b) which states — "Any law to the contrary
notwithstanding and starting with the effectivity of this Act, tariff duty
shall be imposed and collected on imported crude oil at the rate of
three percent (3%) and imported refined petroleum products at the
rate of seven percent (7%) except fuel oil and LPG, the rate for which
shall be the same as that for imported crude oil. Provided, that
beginning on January 1, 2004 the tariff rate on imported crude oil and
refined petroleum products shall be the same. Provided, further, that
this provision may be amended only by an Act of Congress."
(2) Section 6 which states — "To ensure the security and continuity of
petroleum crude and products supply, the DOE shall require the
refiners and importers to maintain a minimum inventory equivalent
to ten percent (10%) of their respective annual sales volume or forty
(40) days of supply, whichever is lower," and
(3) Section 9 (b) which states — "To ensure fair competition and
prevent cartels and monopolies in the downstream oil industry, the
following acts shall be prohibited:
xxx xxx xxx
(b) Predatory pricing which means selling or offering to sell any
product at a price unreasonably below the industry average cost so as
to attract customers to the detriment of competitors.
On the other hand, section 19 of Article XII of the Constitution
allegedly violated by the aforestated provisions of R.A. No. 8180
mandates: "The State shall regulate or prohibit monopolies when the
public interest so requires. No combinations in restraint of trade or
unfair competition shall be allowed."
A monopoly is a privilege or peculiar advantage vested in one or more
persons or companies, consisting in the exclusive right or power to
carry on a particular business or trade, manufacture a particular
article, or control the sale or the whole supply of a particular
commodity. It is a form of market structure in which one or only a few
firms dominate the total sales of a product or service.28 On the other
hand, a combination in restraint of trade is an agreement or
understanding between two or more persons, in the form of a
contract, trust, pool, holding company, or other form of association,
for the purpose of unduly restricting competition, monopolizing trade
and commerce in a certain commodity, controlling its, production,
distribution and price, or otherwise interfering with freedom of trade
without statutory authority.29 Combination in restraint of trade refers
to the means while monopoly refers to the end.30
Article 186 of the Revised Penal Code and Article 28 of the New Civil
Code breathe life to this constitutional policy. Article 186 of the
Revised Penal Code penalizes monopolization and creation of
combinations in restraint of
trade, 31 while Article 28 of the New Civil Code makes any person who
shall engage in unfair competition liable for damages. 32
Respondents aver that sections 5(b), 6 and 9(b) implement the
policies and objectives of R.A. No. 8180. They explain that the 4%
tariff differential is designed to encourage new entrants to invest in
refineries. They stress that the inventory requirement is meant to
guaranty continuous domestic supply of petroleum and to discourage
fly-by-night operators. They also submit that the prohibition against
predatory pricing is intended to protect prospective entrants.
Respondents manifested to the Court that new players have entered
the Philippines after deregulation and have now captured 3% — 5%
of the oil market.
The validity of the assailed provisions of R.A. No. 8180 has to be
decided in light of the letter and spirit of our Constitution, especially
section 19, Article XII. Beyond doubt, the Constitution committed us
to the free enterprise system but it is a system impressed with its own
distinctness. Thus, while the Constitution embraced free enterprise as
an economic creed, it did not prohibit per se the operation of
monopolies which can, however, be regulated in the public
interest.33 Thus too, our free enterprise system is not based on a
market of pure and unadulterated competition where the State
pursues a strict hands-off policy and follows the let-the-devil devour
the hindmost rule. Combinations in restraint of trade and unfair
competitions are absolutely proscribed and the proscription is
directed both against the State as well as the private sector.34 This
distinct free enterprise system is dictated by the need to achieve the
goals of our national economy as defined by section 1, Article XII of
the Constitution which are: more equitable distribution of
opportunities, income and wealth; a sustained increase in the amount
of goods and services produced by the nation for the benefit of the
people; and an expanding productivity as the key to raising the quality
of life for all, especially the underprivileged. It also calls for the State
to protect Filipino enterprises against unfair competition and trade
practices.
Section 19, Article XII of our Constitution is anti-trust in history and in
spirit. It espouses competition. The desirability of competition is the
reason for the prohibition against restraint of trade, the reason for
the interdiction of unfair competition, and the reason for regulation
of unmitigated monopolies. Competition is thus the underlying
principle of section 19, Article XII of our Constitution which cannot be
violated by R.A. No. 8180. We subscribe to the observation of
Prof. Gellhorn that the objective of anti-trust law is "to assure a
competitive economy, based upon the belief that through
competition producers will strive to satisfy consumer wants at the
lowest price with the sacrifice of the fewest resources. Competition
among producers allows consumers to bid for goods and services, and
thus matches their desires with society's opportunity costs."35 He
adds with appropriateness that there is a reliance upon "the
operation of the 'market' system (free enterprise) to decide what shall
be produced, how resources shall be allocated in the production
process, and to whom the various products will be distributed. The
market system relies on the consumer to decide what and how much
shall be produced, and on competition, among producers to
determine who will manufacture it."
Again, we underline in scarlet that the fundamental principle
espoused by section 19, Article XII of the Constitution is competition
for it alone can release the creative forces of the market. But the
competition that can unleash these creative forces is competition that
is fighting yet is fair. Ideally, this kind of competition requires the
presence of not one, not just a few but several players. A market
controlled by one player (monopoly) or dominated by a handful of
players (oligopoly) is hardly the market where honest-to-goodness
competition will prevail. Monopolistic or oligopolistic markets
deserve our careful scrutiny and laws which barricade the entry points
of new players in the market should be viewed with suspicion.
Prescinding from these baseline propositions, we shall proceed to
examine whether the provisions of R.A. No. 8180 on tariff differential,
inventory reserves, and predatory prices imposed substantial barriers
to the entry and exit of new players in our downstream oil industry. If
they do, they have to be struck down for they will necessarily inhibit
the formation of a truly competitive market. Contrariwise, if they are
insignificant impediments, they need not be stricken down.
In the cases at bar, it cannot be denied that our downstream oil
industry is operated and controlled by an oligopoly, a foreign
oligopoly at that. Petron, Shell and Caltex stand as the only major
league players in the oil market. All other players belong to the
lilliputian league. As the dominant players, Petron, Shell and Caltex
boast of existing refineries of various capacities. The tariff differential
of 4% therefore works to their immense benefit. Yet, this is only one
edge of the tariff differential. The other edge cuts and cuts deep in
the heart of their competitors. It erects a high barrier to the entry of
new players. New players that intend to equalize the market power
of Petron, Shell and Caltex by building refineries of their own will have
to spend billions of pesos. Those who will not build refineries but
compete with them will suffer the huge disadvantage of increasing
their product cost by 4%. They will be competing on an uneven field.
The argument that the 4% tariff differential is desirable because it will
induce prospective players to invest in refineries puts the cart before
the horse. The first need is to attract new players and they cannot be
attracted by burdening them with heavy disincentives. Without new
players belonging to the league of Petron, Shell and Caltex,
competition in our downstream oil industry is an idle dream.
The provision on inventory widens the balance of advantage of
Petron, Shell and Caltex against prospective new players. Petron, Shell
and Caltex can easily comply with the inventory requirement of R.A.
No. 8180 in view of their existing storage facilities. Prospective
competitors again will find compliance with this requirement difficult
as it will entail a prohibitive cost. The construction cost of storage
facilities and the cost of inventory can thus scare prospective players.
Their net effect is to further occlude the entry points of new players,
dampen competition and enhance the control of the market by the
three (3) existing oil companies.
Finally, we come to the provision on predatory pricing which is
defined as ". . . selling or offering to sell any product at a price
unreasonably below the industry average cost so as to attract
customers to the detriment of competitors." Respondents contend
that this provision works against Petron, Shell and Caltex and protects
new entrants. The ban on predatory pricing cannot be analyzed in
isolation. Its validity is interlocked with the barriers imposed by R.A.
No. 8180 on the entry of new players. The inquiry should be to
determine whether predatory pricing on the part of the dominant oil
companies is encouraged by the provisions in the law blocking the
entry of new players. Text-writer
Hovenkamp,36 gives the authoritative answer and we quote:
xxx xxx xxx
The rationale for predatory pricing is the sustaining of losses today
that will give a firm monopoly profits in the future. The monopoly
profits will never materialize, however, if the market is flooded with
new entrants as soon as the successful predator attempts to raise its
price. Predatory pricing will be profitable only if the market contains
significant barriers to new entry.
As aforediscsussed, the 4% tariff differential and the inventory
requirement are significant barriers which discourage new players to
enter the market. Considering these significant barriers established
by R.A. No. 8180 and the lack of players with the comparable clout of
PETRON, SHELL and CALTEX, the temptation for a dominant player to
engage in predatory pricing and succeed is a chilling reality.
Petitioners' charge that this provision on predatory pricing is anti-
competitive is not without reason.
Respondents belittle these barriers with the allegation that new
players have entered the market since deregulation. A scrutiny of the
list of the alleged new players will, however, reveal that not one
belongs to the class and category of PETRON, SHELL and CALTEX.
Indeed, there is no showing that any of these new players intends to
install any refinery and effectively compete with these dominant oil
companies. In any event, it cannot be gainsaid that the new players
could have been more in number and more impressive in might if the
illegal entry barriers in R.A. No. 8180 were not erected.
We come to the final point. We now resolve the total effect of the
untimely deregulation, the imposition of 4% tariff differential on
imported crude oil and refined petroleum products, the requirement
of inventory and the prohibition on predatory pricing on the
constitutionality of R.A. No. 8180. The question is whether these
offending provisions can be individually struck down without
invalidating the entire R.A. No. 8180. The ruling case law is well stated
by author Agpalo,37 viz.:
xxx xxx xxx
The general rule is that where part of a statute is void as repugnant to
the Constitution, while another part is valid, the valid portion, if
separable from the invalid, may stand and be enforced. The presence
of a separability clause in a statute creates the presumption that the
legislature intended separability, rather than complete nullity of the
statute. To justify this result, the valid portion must be so far
independent of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed that it
could not constitutionally enact the other. Enough must remain to
make a complete, intelligible and valid statute, which carries out the
legislative intent. . . .
The exception to the general rule is that when the parts of a statute
are so mutually dependent and connected, as conditions,
considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, the
nullity of one part will vitiate the rest. In making the parts of the
statute dependent, conditional, or connected with one another, the
legislature intended the statute to be carried out as a whole and
would not have enacted it if one part is void, in which case if some
parts are unconstitutional, all the other provisions thus dependent,
conditional, or connected must fall with them.
R.A. No. 8180 contains a separability clause. Section 23 provides that
"if for any reason, any section or provision of this Act is declared
unconstitutional or invalid, such parts not affected thereby shall
remain in full force and effect." This separability clause
notwithstanding, we hold that the offending provisions of R.A. No.
8180 so permeate its essence that the entire law has to be struck
down. The provisions on tariff differential, inventory and predatory
pricing are among the principal props of R.A. No. 8180. Congress could
not have deregulated the downstream oil industry without these
provisions. Unfortunately, contrary to their intent, these provisions
on tariff differential, inventory and predatory pricing inhibit fair
competition, encourage monopolistic power and interfere with the
free interaction of market forces. R.A. No. 8180 needs provisions to
vouchsafe free and fair competition. The need for these vouchsafing
provisions cannot be overstated. Before deregulation, PETRON, SHELL
and CALTEX had no real competitors but did not have a free run of the
market because government controls both the pricing and non-
pricing aspects of the oil industry. After deregulation, PETRON, SHELL
and CALTEX remain unthreatened by real competition yet are no
longer subject to control by government with respect to their pricing
and non-pricing decisions. The aftermath of R.A. No. 8180 is a
deregulated market where competition can be corrupted and where
market forces can be manipulated by oligopolies.
The fall out effects of the defects of R.A. No. 8180 on our people have
not escaped Congress. A lot of our leading legislators have come out
openly with bills seeking the repeal of these odious and offensive
provisions in R.A. No. 8180. In the Senate, Senator Freddie Webb has
filed S.B. No. 2133 which is the result of the hearings conducted by
the Senate Committee on Energy. The hearings revealed that (1) there
was a need to level the playing field for the new entrants in the
downstream oil industry, and (2) there was no law punishing a person
for selling petroleum products at unreasonable prices. Senator
Alberto G. Romulo also filed S.B. No. 2209 abolishing the tariff
differential beginning January 1, 1998. He declared that the
amendment ". . . would mean that instead of just three (3) big oil
companies there will be other major oil companies to provide more
competitive prices for the market and the consuming public." Senator
Heherson T . Alvarez, one of the principal proponents of R.A. No.
8180, also filed S.B. No. 2290 increasing the penalty for violation of its
section 9. It is his opinion as expressed in the explanatory note of the
bill that the present oil companies are engaged in cartelization despite
R.A. No. 8180, viz,:
xxx xxx xxx
Since the downstream oil industry was fully deregulated in February
1997, there have been eight (8) fuel price adjustments made by the
three oil majors, namely: Caltex Philippines, Inc.; Petron Corporation;
and Pilipinas Shell Petroleum Corporation. Very noticeable in the
price adjustments made, however, is the uniformity in the pump
prices of practically all petroleum products of the three oil companies.
This, despite the fact, that their selling rates should be determined by
a combination of any of the following factors: the prevailing peso-
dollar exchange rate at the time payment is made for crude
purchases, sources of crude, and inventory levels of both crude and
refined petroleum products. The abovestated factors should have
resulted in different, rather than identical prices.
The fact that the three (3) oil companies' petroleum products are
uniformly priced suggests collusion, amounting to cartelization,
among Caltex Philippines, Inc., Petron Corporation and Pilipinas Shell
Petroleum Corporation to fix the prices of petroleum products in
violation of paragraph (a), Section 9 of R.A. No. 8180.
To deter this pernicious practice and to assure that present and
prospective players in the downstream oil industry conduct their
business with conscience and propriety, cartel-like activities ought to
be severely penalized.
Senator Francisco S. Tatad also filed S.B. No. 2307 providing for a
uniform tariff rate on imported crude oil and refined petroleum
products. In the explanatory note of the bill, he declared in no
uncertain terms that ". . . the present set-up has raised serious public
concern over the way the three oil companies have uniformly
adjusted the prices of oil in the country, an indication of a possible
existence of a cartel or a cartel-like situation within the downstream
oil industry. This situation is mostly attributed to the foregoing
provision on tariff differential, which has effectively discouraged the
entry of new players in the downstream oil industry."
In the House of Representatives, the moves to rehabilitate R.A. No.
8180 are equally feverish. Representative Leopoldo E. San
Buenaventura has filed H.B. No. 9826 removing the tariff differential
for imported crude oil and imported refined petroleum products. In
the explanatory note of the bill, Rep. Buenaventura explained:
xxx xxx xxx
As we now experience, this difference in tariff rates between
imported crude oil and imported refined petroleum
products, unwittingly provided a built-in-advantage for the three
existing oil refineries in the country and eliminating competition which
is a must in a free enterprise economy. Moreover, it created a
disincentive for other players to engage even initially in the
importation and distribution of refined petroleum products and
ultimately in the putting up of refineries. This tariff differential
virtually created a monopoly of the downstream oil industry by the
existing three oil companies as shown by their uniform and capricious
pricing of their products since this law took effect, to the great
disadvantage of the consuming public.
Thus, instead of achieving the desired effects of deregulation, that of
free enterprise and a level playing field in the downstream oil
industry, R.A. 8180 has created an environment conducive to
cartelization, unfavorable, increased, unrealistic prices of petroleum
products in the country by the three existing refineries.
Representative Marcial C. Punzalan, Jr., filed H.B. No. 9981 to prevent
collusion among the present oil companies by strengthening the
oversight function of the government, particularly its ability to subject
to a review any adjustment in the prices of gasoline and other
petroleum products. In the explanatory note of the bill, Rep.
Punzalan, Jr., said:
xxx xxx xxx
To avoid this, the proposed bill seeks to strengthen the oversight
function of government, particularly its ability to review the prices set
for gasoline and other petroleum products. It grants the Energy
Regulatory Board (ERB) the authority to review prices of oil and other
petroleum products, as may be petitioned by a person, group or any
entity, and to subsequently compel any entity in the industry to
submit any and all documents relevant to the imposition of new
prices. In cases where the Board determines that there exist collusion,
economic conspiracy, unfair trade practice, profiteering and/or
overpricing, it may take any step necessary to protect the public,
including the readjustment of the prices of petroleum products.
Further, the Board may also impose the fine and penalty of
imprisonment, as prescribed in Section 9 of R.A. 8180, on any person
or entity from the oil industry who is found guilty of such prohibited
acts.
By doing all of the above, the measure will effectively provide Filipino
consumers with a venue where their grievances can be heard and
immediately acted upon by government.
Thus, this bill stands to benefit the Filipino consumer by making the
price-setting process more transparent and making it easier to
prosecute those who perpetrate such prohibited acts as collusion,
overpricing, economic conspiracy and unfair trade.
Representative Sergio A.F . Apostol filed H.B. No. 10039 to remedy an
omission in R.A. No. 8180 where there is no agency in government
that determines what is "reasonable" increase in the prices of oil
products. Representative Dente O. Tinga, one of the principal
sponsors of R.A. No. 8180, filed H.B. No. 10057 to strengthen its anti-
trust provisions. He elucidated in its explanatory note:
xxx xxx xxx
The definition of predatory pricing, however, needs to be tightened
up particularly with respect to the definitive benchmark price and the
specific anti-competitive intent. The definition in the bill at hand
which was taken from the Areeda-Turner test in the United States on
predatory pricing resolves the questions. The definition reads,
"Predatory pricing means selling or offering to sell any oil product at
a price below the average variable cost for the purpose of destroying
competition, eliminating a competitor or discouraging a competitor
from entering the market."
The appropriate actions which may be resorted to under the Rules of
Court in conjunction with the oil deregulation law are adequate. But
to stress their availability and dynamism, it is a good move to
incorporate all the remedies in the law itself. Thus, the present bill
formalizes the concept of government intervention and private suits
to address the problem of antitrust violations. Specifically, the
government may file an action to prevent or restrain any act of
cartelization or predatory pricing, and if it has suffered any loss or
damage by reason of the antitrust violation it may recover damages.
Likewise, a private person or entity may sue to prevent or restrain any
such violation which will result in damage to his business or property,
and if he has already suffered damage he shall recover treble
damages. A class suit may also be allowed.
To make the DOE Secretary more effective in the enforcement of the
law, he shall be given additional powers to gather information and to
require reports.
Representative Erasmo B. Damasing filed H.B. No. 7885 and has a
more unforgiving view of R.A. No. 8180. He wants it completely
repealed. He explained:
xxx xxx xxx
Contrary to the projections at the time the bill on the Downstream Oil
Industry Deregulation was discussed and debated upon in the plenary
session prior to its approval into law, there aren't any new players or
investors in the oil industry. Thus, resulting in practically a cartel or
monopoly in the oil industry by the three (3) big oil companies, Caltex,
Shell and Petron. So much so, that with the deregulation now being
partially implemented, the said oil companies have succeeded in
increasing the prices of most of their petroleum products with little
or no interference at all from the government. In the month of
August, there was an increase of Fifty centavos (50¢) per liter by
subsidizing the same with the OPSF, this is only temporary as in March
1997, or a few months from now, there will be full deregulation
(Phase II) whereby the increase in the prices of petroleum products
will be fully absorbed by the consumers since OPSF will already be
abolished by then. Certainly, this would make the lives of our people,
especially the unemployed ones, doubly difficult and unbearable.
The much ballyhooed coming in of new players in the oil industry is
quite remote considering that these prospective investors cannot
fight the existing and well established oil companies in the country
today, namely, Caltex, Shell and Petron. Even if these new players will
come in, they will still have no chance to compete with the said three
(3) existing big oil companies considering that there is an imposition
of oil tariff differential of 4% between importation of crude oil by the
said oil refineries paying only 3% tariff rate for the said importation
and 7% tariff rate to be paid by businessmen who have no oil
refineries in the Philippines but will import finished petroleum/oil
products which is being taxed with 7% tariff rates.
So, if only to help the many who are poor from further suffering as a
result of unmitigated increase in oil products due to deregulation, it is
a must that the Downstream Oil Industry Deregulation Act of 1996, or
R.A.8180 be repealed completely.
Various resolutions have also been filed in the Senate calling for
an immediate and comprehensive review of R.A. No. 8180 to prevent
the downpour of its ill effects on the people. Thus, S. Res. No. 574 was
filed by Senator Gloria M. Macapagal entitled Resolution "Directing
the Committee on Energy to Inquire Into The Proper Implementation
of the Deregulation of the Downstream Oil Industry and Oil Tax
Restructuring As Mandated Under R.A. Nos. 8180 and 8184, In Order
to Make The Necessary Corrections In the Apparent Misinterpretation
Of The Intent And Provision Of The Laws And Curb The Rising Tide Of
Disenchantment Among The Filipino Consumers And Bring About The
Real Intentions And Benefits Of The Said Law." Senator Blas
P. Ople filed S. Res. No. 664 entitled resolution "Directing the
Committee on Energy To Conduct An Inquiry In Aid Of Legislation To
Review The Government's Oil Deregulation Policy In Light Of The
Successive Increases In Transportation, Electricity And Power Rates,
As well As Of Food And Other Prime Commodities And Recommend
Appropriate Amendments To Protect The Consuming Public." Senator
Ople observed:
xxx xxx xxx
WHEREAS, since the passage of R.A. No. 8180, the Energy Regulatory
Board (ERB) has imposed successive increases in oil prices which has
triggered increases in electricity and power rates, transportation
fares, as well as in prices of food and other prime commodities to the
detriment of our people, particularly the poor;
WHEREAS, the new players that were expected to compete with the
oil cartel-Shell, Caltex and Petron-have not come in;
WHEREAS, it is imperative that a review of the oil deregulation policy
be made to consider appropriate amendments to the existing law
such as an extension of the transition phase before full deregulation
in order to give the competitive market enough time to develop;
WHEREAS, the review can include the advisability of providing some
incentives in order to attract the entry of new oil companies to effect
a dynamic competitive market;
WHEREAS, it may also be necessary to defer the setting up of the
institutional framework for full deregulation of the oil industry as
mandated under Executive Order No. 377 issued by President Ramos
last October 31, 1996 . . .
Senator Alberto G. Romulo filed S. Res. No. 769 entitled resolution
"Directing the Committees on Energy and Public Services In Aid Of
Legislation To Assess The Immediate Medium And Long Term Impact
of Oil Deregulation On Oil Prices And The Economy." Among the
reasons for the resolution is the finding that "the requirement of a 40-
day stock inventory effectively limits the entry of other oil firms in the
market with the consequence that instead of going down oil prices will
rise."
Parallel resolutions have been filed in the House of
Representatives. Representative Dante O. Tinga filed H. Res. No. 1311
"Directing The Committee on Energy To Conduct An Inquiry, In Aid of
Legislation, Into The Pricing Policies And Decisions Of The Oil
Companies Since The Implementation of Full Deregulation Under the
Oil Deregulation Act (R.A. No. 8180) For the Purpose of Determining
In the Context Of The Oversight Functions Of Congress Whether The
Conduct Of The Oil Companies, Whether Singly Or Collectively,
Constitutes Cartelization Which Is A Prohibited Act Under R.A. No.
8180, And What Measures Should Be Taken To Help Ensure The
Successful Implementation Of The Law In Accordance With Its Letter
And Spirit, Including Recommending Criminal Prosecution Of the
Officers Concerned Of the Oil Companies If Warranted By The
Evidence, And For Other Purposes." Representatives Marcial
C. Punzalan, Jr. Dante O. Tinga and Antonio E. Bengzon III filed H.R.
No. 894 directing the House Committee on Energy to inquire into the
proper implementation of the deregulation of the downstream oil
industry. House Resolution No. 1013 was also filed by Representatives
Edcel C. Lagman, Enrique T . Garcia, Jr. and Joker P.Arroyo urging the
President to immediately suspend the implementation of E.O. No.
392.
In recent memory there is no law enacted by the legislature afflicted
with so much constitutional deformities as R.A. No. 8180. Yet, R.A. No.
8180 deals with oil, a commodity whose supply and price affect the
ebb and flow of the lifeblood of the nation. Its shortage of supply or a
slight, upward spiral in its price shakes our economic foundation.
Studies show that the areas most impacted by the movement of oil
are food manufacture, land transport, trade, electricity and
water.38 At a time when our economy is in a dangerous downspin, the
perpetuation of R.A. No. 8180 threatens to multiply the number of our
people with bent backs and begging bowls. R.A. No. 8180 with its anti-
competition provisions cannot be allowed by this Court to stand even
while Congress is working to remedy its defects.
The Court, however, takes note of the plea of PETRON, SHELL and
CALTEX to lift our restraining order to enable them to adjust upward
the price of petroleum and petroleum products in view of the
plummeting value of the peso. Their plea, however, will now have to
be addressed to the Energy Regulatory Board as the effect of the
declaration of unconstitutionality of R.A. No. 8180 is to revive the
former laws it repealed.39 The length of our return to the regime of
regulation depends on Congress which can fasttrack the writing of a
new law on oil deregulation in accord with the Constitution.
With this Decision, some circles will chide the Court for interfering
with an economic decision of Congress. Such criticism is charmless for
the Court is annulling R.A. No. 8180 not because it disagrees with
deregulation as an economic policy but because as cobbled by
Congress in its present form, the law violates the Constitution. The
right call therefor should be for Congress to write a new oil
deregulation law that conforms with the Constitution and not for this
Court to shirk its duty of striking down a law that offends the
Constitution. Striking down R.A. No. 8180 may cost losses in
quantifiable terms to the oil oligopolists. But the loss in tolerating the
tampering of our Constitution is not quantifiable in pesos and
centavos. More worthy of protection than the supra-normal profits of
private corporations is the sanctity of the fundamental principles of
the Constitution. Indeed when confronted by a law violating the
Constitution, the Court has no option but to strike it down dead. Lest
it is missed, the Constitution is a covenant that grants and
guarantees both the political and economic rights of the people. The
Constitution mandates this Court to be the guardian not only of the
people's political rights but their economic rights as well. The
protection of the economic rights of the poor and the powerless is of
greater importance to them for they are concerned more with the
exoterics of living and less with the esoterics of liberty. Hence, for as
long as the Constitution reigns supreme so long will this Court be
vigilant in upholding the economic rights of our people especially
from the onslaught of the powerful. Our defense of the people's
economic rights may appear heartless because it cannot be half-
hearted.

IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is

declared unconstitutional and E.O. No. 372 void.

SO ORDERED.
G.R. No. 204819 April 8, 2014
JAMES M. IMBONG and LOVELY-ANN C. IMBONG, for themselves
and in behalf of their minor children, LUCIA CARLOS IMBONG and
BERNADETTE CARLOS IMBONG and MAGNIFICAT CHILD
DEVELOPMENT CENTER, INC., Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON.
FLORENCIO B. ABAD, Secretary, Department of Budget and
Management, HON. ENRIQUE T. ONA, Secretary, Department of
Health, HON. ARMIN A. LUISTRO, Secretary, Department of
Education, Culture and Sports and HON. MANUELA. ROXAS II,
Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 204934
ALLIANCE FOR THE FAMILY FOUNDATION PHILIPPINES, INC. [ALFI],
represented by its President, Maria Concepcion S. Noche, Spouses
Reynaldo S. Luistro & Rosie B . Luistro, Jose S. Sandejas & Elenita
S.A. Sandejas, Arturo M. Gorrez & Marietta C. Gorrez, Salvador S.
Mante, Jr. & Hazeleen L. Mante, Rolando M. Bautista & Maria
Felisa S. Bautista, Desiderio Racho & Traquilina Racho, F emand
Antonio A. Tansingco & Carol Anne C. Tansingco for themselves
and on behalf of their minor children, Therese Antonette C.
Tansingco, Lorenzo Jose C. Tansingco, Miguel F emando C.
Tangsingco, Carlo Josemaria C. Tansingco & Juan Paolo C.
Tansingco, Spouses Mariano V. Araneta & Eileen Z. Araneta for
themselves and on behalf of their minor children, Ramon Carlos Z.
Araneta & Maya Angelica Z. Araneta, Spouses Renato C. Castor &
Mildred C. Castor for themselves and on behalf of their minor
children, Renz Jeffrey C. Castor, Joseph Ramil C. Castor, John Paul
C. Castor & Raphael C. Castor, Spouses Alexander R. Racho & Zara
Z. Racho for themselves and on behalf of their minor children
Margarita Racho, Mikaela Racho, Martin Racho, Mari Racho &
Manolo Racho, Spouses Alfred R. Racho & Francine V. Racho for
themselves and on behalf of their minor children Michael Racho,
Mariana Racho, Rafael Racho, Maxi Racho, Chessie Racho & Laura
Racho, Spouses David R. Racho & Armilyn A. Racho for themselves
and on behalf of their minor child Gabriel Racho, Mindy M. Juatas
and on behalf of her minor children Elijah Gerald Juatas and Elian
Gabriel Juatas, Salvacion M. Monteiro, Emily R. Laws, Joseph R .
Laws & Katrina R. Laws, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. ENRIQUE
T. ONA, Secretary, Department of Health, HON. ARMIN A. LUISTRO,
Secretary, Department of Education, Culture and Sports, HON.
CORAZON SOLIMAN, Secretary, Department of Social Welfare and
Development, HON. MANUELA. ROXAS II, Secretary, Department
of Interior and Local Government, HON. FLORENCIO B. ABAD,
Secretary, Department of Budget and Management, HON. ARSENIO
M. BALISACAN, Socio-Economic Planning Secretary and NEDA
Director-General, THE PHILIPPINE COMMISSION ON WOMEN,
represented by its Chairperson, Remedios lgnacio-Rikken, THE
PHILIPPINE HEALTH INSURANCE CORPORATION, represented by its
President Eduardo Banzon, THE LEAGUE OF PROVINCES OF THE
PHILIPPINES, represented by its President Alfonso Umali, THE
LEAGUE OF CITIES OF THE PHILIPPINES, represented by its
President Oscar Rodriguez, and THE LEAGUE OF MUNICIPALITIES
OF THE PHILIPPINES, represented by its President Donato
Marcos,Respondents.
x---------------------------------x
G.R. No. 204957
TASK FORCE FOR FAMILY AND LIFE VISAYAS, INC. and VALERIANO
S. AVILA, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary; HON.
FLORENCIO B. ABAD, Secretary, Department of Budget and
Management; HON. ENRIQUE T. ONA, Secretary, Department of
Education; and HON. MANUELA. ROXAS II, Secretary, Department
of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 204988
SERVE LIFE CAGAYAN DE ORO CITY, INC., represented by Dr. Nestor
B. Lumicao, M.D., as President and in his personal capacity,
ROSEVALE FOUNDATION INC., represented by Dr. Rodrigo M.
Alenton, M.D., as member of the school board and in his personal
capacity, ROSEMARIE R. ALENTON, IMELDA G. IBARRA, CPA,
LOVENIAP. NACES, Phd., ANTHONY G. NAGAC, EARL ANTHONY C.
GAMBE and MARLON I. YAP,Petitioners,
vs.
OFFICE OF THE PRESIDENT, SENATE OF THE PHILIPPINES, HOUSE OF
REPRESENTATIVES, HON. PAQUITO N. OCHOA, JR., Executive
Secretary, HON. FLORENCIO B. ABAD, Secretary, Department of
Budget and Management; HON. ENRIQUE T. ONA, Secretary,
Department of Health; HON. ARMIN A. LUISTRO, Secretary,
Department of Education and HON. MANUELA. ROXAS II,
Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 205003
EXPEDITO A. BUGARIN, JR., Petitioner,
vs.
OFFICE OF THE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES,
HON. SENATE PRESIDENT, HON. SPEAKER OF THE HOUSE OF
REPRESENTATIVES and HON. SOLICITOR GENERAL, Respondents.
x---------------------------------x
G.R. No. 205043
EDUARDO B. OLAGUER and THE CATHOLIC XYBRSPACE
APOSTOLATE OF THE PHILIPPINES, Petitioners,
vs.
DOH SECRETARY ENRIQUE T. ONA, FDA DIRECTOR SUZETTE H.
LAZO, DBM SECRETARY FLORENCIO B. ABAD, DILG SECRETARY
MANUELA. ROXAS II, DECS SECRETARY ARMIN A.
LUISTRO, Respondents.
x---------------------------------x
G.R. No. 205138
PHILIPPINE ALLIANCE OF XSEMINARIANS, INC. (PAX), herein
represented by its National President, Atty. Ricardo M . Ribo, and
in his own behalf, Atty. Lino E.A. Dumas, Romeo B. Almonte,
Osmundo C. Orlanes, Arsenio Z. Menor, Samuel J. Yap, Jaime F.
Mateo, Rolly Siguan, Dante E. Magdangal, Michael Eugenio O.
Plana, Bienvenido C. Miguel, Jr., Landrito M. Diokno and
Baldomero Falcone, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON.
FLORENCIO B. ABAD, Secretary, Department of Budget and
Management, HON. ENRIQUE T. ONA, Secretary, Department of
Health, HON. ARMIN A. LUISTRO, Secretary, Department of
Education, HON. MANUELA. ROXAS II, Secretary, Department of
Interior and Local Government, HON. CORAZON J. SOLIMAN,
Secretary, Department of Social Welfare and Development, HON.
ARSENIO BALISACAN, Director-General, National Economic and
Development Authority, HON. SUZETTE H. LAZO, Director-General,
Food and Drugs Administration, THE BOARD OF DIRECTORS,
Philippine Health Insurance Corporation, and THE BOARD OF
COMMISSIONERS, Philippine Commission on
Women, Respondents.
x---------------------------------x
G.R. No. 205478
REYNALDO J. ECHAVEZ, M.D., JACQUELINE H. KING, M.D., CYNTHIA
T. DOMINGO, M.D., AND JOSEPHINE MILLADO-LUMITAO, M.D.,
collectively known as Doctors For Life, and ANTHONY PEREZ,
MICHAEL ANTHONY G. MAPA, CARLOS ANTONIO PALAD,
WILFREDO JOSE, CLAIRE NAVARRO, ANNA COSIO, and GABRIEL DY
LIACCO collectively known as Filipinos For Life, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary; HON.
FLORENCIO B. ABAD, Secretary of the Department of Budget and
Management; HON. ENRIQUE T. ONA, Secretary of the Department
of Health; HON. ARMIN A. LUISTRO, Secretary of the Department
of Education; and HON. MANUELA. ROXAS II, Secretary of the
Department of Interior and Local Government, Respondents.
x---------------------------------x
G.R. No. 205491
SPOUSES FRANCISCO S. TATAD AND MARIA FENNY C. TATAD & ALA
F. PAGUIA, for themselves, their Posterity, and the rest of Filipino
posterity, Petitioners,
vs.
OFFICE OF THE PRESIDENT of the Republic of the
Philippines, Respondent.
x---------------------------------x
G.R. No. 205720
PRO-LIFE PHILIPPINES FOUNDATION, Inc., represented by Loma
Melegrito, as Executive Director, and in her personal capacity,
JOSELYN B. BASILIO, ROBERT Z. CORTES, ARIEL A. CRISOSTOMO,
JEREMY I. GATDULA, CRISTINA A. MONTES, RAUL ANTONIO A.
NIDOY, WINSTON CONRAD B. PADOJINOG, RUFINO L. POLICARPIO
III, Petitioners,
vs.
OFFICE OF THE PRESIDENT, SENATE OF THE PHILIPPINES, HOUSE OF
REPRESENTATIVES, HON. PAQUITO N. OCHOA, JR., Executive
Secretary, HON. FLORENCIO B. ABAD, Secretary, Department of
Budget and Management, HON. ENRIQUE T. ONA, Secretary,
Department of Health, HON. ARMIN A. LUISTRO, Secretary,
Department of Education and HON. MANUEL A. ROXAS II,
Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 206355
MILLENNIUM SAINT FOUNDATION, INC., ATTY. RAMON PEDROSA,
ATTY. CITA BORROMEO-GARCIA, STELLAACEDERA, ATTY. BERTENI
CATALUNA CAUSING, Petitioners,
vs.
OFFICE OF THE PRESIDENT, OFFICE OF THE EXECUTIVE SECRETARY,
DEPARTMENT OF HEALTH, DEPARTMENT OF
EDUCATION, Respondents.
x---------------------------------x
G.R. No. 207111
JOHN WALTER B. JUAT, MARY M. IMBONG, ANTHONY VICTORIO B.
LUMICAO, JOSEPH MARTIN Q. VERDEJO, ANTONIA EMMA R.
ROXAS and LOTA LAT-GUERRERO, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON.
FLORENCIO ABAD, Secretary, Department of Budget and
Management, HON. ENRIQUE T. ONA, Secretary, Department of
Health, HON. ARMIN A. LUISTRO, Secretary, Department of
Education, Culture and Sports and HON. MANUEL A. ROXAS II,
Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 207172
COUPLES FOR CHRIST FOUNDATION, INC., SPOUSES JUAN CARLOS
ARTADI SARMIENTO AND FRANCESCA ISABELLE BESINGA-
SARMIENTO, AND SPOUSES LUIS FRANCIS A. RODRIGO, JR. and
DEBORAH MARIE VERONICA N. RODRIGO, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON.
FLORENCIO B. ABAD, Secretary, Department of Budget and
Management, HON. ENRIQUE T. ONA, Secretary, Department of
Health, HON. ARMIN A. LUISTRO, Secretary, Department of
Education, Culture and Sports and HON. MANUELA. ROXAS II,
Secretary, Department of Interior and Local
Government, Respondents.
x---------------------------------x
G.R. No. 207563
ALMARIM CENTI TILLAH and ABDULHUSSEIN M.
KASHIM, Petitioners,
vs.
HON. PAQUITO N. OCHOA, JR., Executive Secretary, HON. ENRIQUE
T. ONA, Secretary of the Department of Health, and HON. ARMIN
A. LUISTRO,Secretary of the Department of Budget and
Management,Respondents.
DECISION
MENDOZA, J.:
Freedom of religion was accorded preferred status by the framers of
our fundamental law. And this Court has consistently affirmed this
preferred status, well aware that it is "designed to protect the
broadest possible liberty of conscience, to allow each man to believe
as his conscience directs, to profess his beliefs , and to live as he
believes he ought to live, consistent with the liberty of others and
with the common good."1
To this day, poverty is still a major stumbling block to the nation's
emergence as a developed country, leaving our people beleaguered
in a state of hunger, illiteracy and unemployment. While
governmental policies have been geared towards the revitalization of
the economy, the bludgeoning dearth in social services remains to be
a problem that concerns not only the poor, but every member of
society. The government continues to tread on a trying path to the
realization of its very purpose, that is, the general welfare of the
Filipino people and the development of the country as a whole. The
legislative branch, as the main facet of a representative government,
endeavors to enact laws and policies that aim to remedy looming
societal woes, while the executive is closed set to fully implement
these measures and bring concrete and substantial solutions within
the reach of Juan dela Cruz. Seemingly distant is the judicial branch,
oftentimes regarded as an inert governmental body that merely casts
its watchful eyes on clashing stakeholders until it is called upon to
adjudicate. Passive, yet reflexive when called into action, the Judiciary
then willingly embarks on its solemn duty to interpret legislation vis-
a-vis the most vital and enduring principle that holds Philippine
society together - the supremacy of the Philippine Constitution.
Nothing has polarized the nation more in recent years than the issues
of population growth control, abortion and contraception. As in every
democratic society, diametrically opposed views on the subjects and
their perceived consequences freely circulate in various media. From
television debates2 to sticker campaigns,3 from rallies by socio-
political activists to mass gatherings organized by members of the
clergy4 - the clash between the seemingly antithetical ideologies of
the religious conservatives and progressive liberals has caused a deep
division in every level of the society. Despite calls to withhold support
thereto, however, Republic Act (R.A.) No. 10354, otherwise known as
the Responsible Parenthood and Reproductive Health Act of 2012 (RH
Law), was enacted by Congress on December 21, 2012.
Shortly after the President placed his imprimatur on the said law,
challengers from various sectors of society came knocking on the
doors of the Court, beckoning it to wield the sword that strikes down
constitutional disobedience. Aware of the profound and lasting
impact that its decision may produce, the Court now faces the iuris
controversy, as presented in fourteen (14) petitions and two (2)
petitions- in-intervention, to wit:
(1) Petition for Certiorari and Prohibition,5 filed by spouses Attys.
James M. Imbong and Lovely Ann C. Imbong, in their personal
capacities as citizens, lawyers and taxpayers and on behalf of their
minor children; and the Magnificat Child Leaming Center, Inc., a
domestic, privately-owned educational institution (Jmbong);
(2) Petition for Prohibition,6 filed by the Alliance for the Family
Foundation Philippines, Inc., through its president, Atty. Maria
Concepcion S. Noche7 and several others8 in their personal capacities
as citizens and on behalf of the generations unborn (ALFI);
(3) Petition for Certiorari,9 filed by the Task Force for Family and Life
Visayas, Inc., and Valeriano S. Avila, in their capacities as citizens and
taxpayers (Task Force Family);
(4) Petition for Certiorari and Prohibition,10 filed by Serve Life Cagayan
De Oro City, Inc.,11 Rosevale Foundation, Inc.,12 a domestic, privately-
owned educational institution, and several others,13 in their
capacities as citizens (Serve Life);
(5) Petition,14 filed by Expedito A. Bugarin, Jr. in his capacity as a
citizen (Bugarin);
(6) Petition for Certiorari and Prohibition,15 filed by Eduardo Olaguer
and the Catholic Xybrspace Apostolate of the Philippines,16 in their
capacities as a citizens and taxpayers (Olaguer);
(7) Petition for Certiorari and Prohibition,17 filed by the Philippine
Alliance of Xseminarians Inc.,18 and several others19 in their capacities
as citizens and taxpayers (PAX);
(8) Petition,20 filed by Reynaldo J. Echavez, M.D. and several
others,21 in their capacities as citizens and taxpayers (Echavez);
(9) Petition for Certiorari and Prohibition,22 filed by spouses Francisco
and Maria Fenny C. Tatad and Atty. Alan F. Paguia, in their capacities
as citizens, taxpayers and on behalf of those yet unborn. Atty. Alan F.
Paguia is also proceeding in his capacity as a member of the Bar
(Tatad);
(10) Petition for Certiorari and Prohibition,23 filed by Pro-Life
Philippines Foundation Inc.24 and several others,25 in their capacities
as citizens and taxpayers and on behalf of its associates who are
members of the Bar (Pro-Life);
(11) Petition for Prohibition,26 filed by Millennium Saint Foundation,
Inc.,27 Attys. Ramon Pedrosa, Cita Borromeo-Garcia, Stella Acedera,
and Berteni Catalufia Causing, in their capacities as citizens, taxpayers
and members of the Bar (MSF);
(12) Petition for Certiorari and Prohibition,28 filed by John Walter B.
Juat and several others,29 in their capacities as citizens (Juat) ;
(13) Petition for Certiorari and Prohibition,30 filed by Couples for
Christ Foundation, Inc. and several others,31in their capacities as
citizens (CFC);
(14) Petition for Prohibition32 filed by Almarim Centi Tillah and
Abdulhussein M. Kashim in their capacities as citizens and taxpayers
(Tillah); and
(15) Petition-In-Intervention,33 filed by Atty. Samson S. Alcantara in
his capacity as a citizen and a taxpayer (Alcantara); and
(16) Petition-In-Intervention,34 filed by Buhay Hayaang Yumabong (B
UHAY) , an accredited political party.
A perusal of the foregoing petitions shows that the petitioners are
assailing the constitutionality of RH Law on the following GROUNDS:
• The RH Law violates the right to life of the unborn. According to the
petitioners, notwithstanding its declared policy against abortion, the
implementation of the RH Law would authorize the purchase of
hormonal contraceptives, intra-uterine devices and injectables which
are abortives, in violation of Section 12, Article II of the Constitution
which guarantees protection of both the life of the mother and the
life of the unborn from conception.35
• The RH Law violates the right to health and the right to protection
against hazardous products. The petitioners posit that the RH Law
provides universal access to contraceptives which are hazardous to
one's health, as it causes cancer and other health problems.36
• The RH Law violates the right to religious freedom. The petitioners
contend that the RH Law violates the constitutional guarantee
respecting religion as it authorizes the use of public funds for the
procurement of contraceptives. For the petitioners, the use of public
funds for purposes that are believed to be contrary to their beliefs is
included in the constitutional mandate ensuring religious freedom.37
It is also contended that the RH Law threatens conscientious objectors
of criminal prosecution, imprisonment and other forms of
punishment, as it compels medical practitioners 1] to refer patients
who seek advice on reproductive health programs to other doctors;
and 2] to provide full and correct information on reproductive health
programs and service, although it is against their religious beliefs and
convictions.38
In this connection, Section 5 .23 of the Implementing Rules and
Regulations of the RH Law (RH-IRR),39 provides that skilled health
professionals who are public officers such as, but not limited to,
Provincial, City, or Municipal Health Officers, medical officers, medical
specialists, rural health physicians, hospital staff nurses, public health
nurses, or rural health midwives, who are specifically charged with
the duty to implement these Rules, cannot be considered as
conscientious objectors.40
It is also argued that the RH Law providing for the formulation of
mandatory sex education in schools should not be allowed as it is an
affront to their religious beliefs.41
While the petit10ners recognize that the guarantee of religious
freedom is not absolute, they argue that the RH Law fails to satisfy the
"clear and present danger test" and the "compelling state interest
test" to justify the regulation of the right to free exercise of religion
and the right to free speech.42
• The RH Law violates the constitutional provision on involuntary
servitude. According to the petitioners, the RH Law subjects medical
practitioners to involuntary servitude because, to be accredited under
the PhilHealth program, they are compelled to provide forty-eight
(48) hours of pro bona services for indigent women, under threat of
criminal prosecution, imprisonment and other forms of
punishment.43
The petitioners explain that since a majority of patients are covered
by PhilHealth, a medical practitioner would effectively be forced to
render reproductive health services since the lack of PhilHealth
accreditation would mean that the majority of the public would no
longer be able to avail of the practitioners services.44
• The RH Law violates the right to equal protection of the law. It is
claimed that the RH Law discriminates against the poor as it makes
them the primary target of the government program that promotes
contraceptive use. The petitioners argue that, rather than promoting
reproductive health among the poor, the RH Law seeks to introduce
contraceptives that would effectively reduce the number of the
poor.45
• The RH Law is "void-for-vagueness" in violation of the due process
clause of the Constitution. In imposing the penalty of imprisonment
and/or fine for "any violation," it is vague because it does not define
the type of conduct to be treated as "violation" of the RH Law.46
In this connection, it is claimed that "Section 7 of the RH Law violates
the right to due process by removing from them (the people) the right
to manage their own affairs and to decide what kind of health facility
they shall be and what kind of services they shall offer."47 It ignores
the management prerogative inherent in corporations for employers
to conduct their affairs in accordance with their own discretion and
judgment.
• The RH Law violates the right to free speech. To compel a person to
explain a full range of family planning methods is plainly to curtail his
right to expound only his own preferred way of family planning. The
petitioners note that although exemption is granted to institutions
owned and operated by religious groups, they are still forced to refer
their patients to another healthcare facility willing to perform the
service or procedure.48
• The RH Law intrudes into the zone of privacy of one's family
protected by the Constitution. It is contended that the RH Law
providing for mandatory reproductive health education intrudes
upon their constitutional right to raise their children in accordance
with their beliefs.49
It is claimed that, by giving absolute authority to the person who will
undergo reproductive health procedure, the RH Law forsakes any real
dialogue between the spouses and impedes the right of spouses to
mutually decide on matters pertaining to the overall well-being of
their family. In the same breath, it is also claimed that the parents of
a child who has suffered a miscarriage are deprived of parental
authority to determine whether their child should use
contraceptives.50
• The RH Law violates the constitutional principle of non-delegation
of legislative authority. The petitioners question the delegation by
Congress to the FDA of the power to determine whether a product is
non-abortifacient and to be included in the Emergency Drugs List
(EDL).51
• The RH Law violates the one subject/one bill rule provision under
Section 26( 1 ), Article VI of the Constitution.52
• The RH Law violates Natural Law.53
• The RH Law violates the principle of Autonomy of Local Government
Units (LGUs) and the Autonomous Region of Muslim Mindanao
{ARMM). It is contended that the RH Law, providing for reproductive
health measures at the local government level and the ARMM,
infringes upon the powers devolved to LGUs and the ARMM under
the Local Government Code and R.A . No. 9054.54
Various parties also sought and were granted leave to file their
respective comments-in-intervention in defense of the
constitutionality of the RH Law. Aside from the Office of the Solicitor
General (OSG) which commented on the petitions in behalf of the
respondents,55 Congressman Edcel C. Lagman,56 former officials of
the Department of Health Dr. Esperanza I. Cabral, Jamie Galvez-Tan,
and Dr. Alberto G. Romualdez,57 the Filipino Catholic Voices for
Reproductive Health (C4RH),58 Ana Theresa "Risa" Hontiveros,59 and
Atty. Joan De Venecia60 also filed their respective Comments-in-
Intervention in conjunction with several others. On June 4, 2013,
Senator Pia Juliana S. Cayetano was also granted leave to intervene.61
The respondents, aside from traversing the substantive arguments of
the petitioners, pray for the dismissal of the petitions for the principal
reasons that 1] there is no actual case or controversy and, therefore,
the issues are not yet ripe for judicial determination.; 2] some
petitioners lack standing to question the RH Law; and 3] the petitions
are essentially petitions for declaratory relief over which the Court
has no original jurisdiction.
Meanwhile, on March 15, 2013, the RH-IRR for the enforcement of
the assailed legislation took effect.
On March 19, 2013, after considering the issues and arguments
raised, the Court issued the Status Quo Ante Order (SQAO), enjoining
the effects and implementation of the assailed legislation for a period
of one hundred and twenty (120) days, or until July 17, 2013.62
On May 30, 2013, the Court held a preliminary conference with the
counsels of the parties to determine and/or identify the pertinent
issues raised by the parties and the sequence by which these issues
were to be discussed in the oral arguments. On July 9 and 23, 2013,
and on August 6, 13, and 27, 2013, the cases were heard on oral
argument. On July 16, 2013, the SQAO was ordered extended until
further orders of the Court.63
Thereafter, the Court directed the parties to submit their respective
memoranda within sixty (60) days and, at the same time posed
several questions for their clarification on some contentions of the
parties.64
The Status Quo Ante
(Population, Contraceptive and Reproductive Health Laws
Prior to the RH Law
Long before the incipience of the RH Law, the country has allowed the
sale, dispensation and distribution of contraceptive drugs and
devices. As far back as June 18, 1966, the country enacted R.A. No.
4729 entitled "An Act to Regu,late the Sale, Dispensation, and/or
Distribution of Contraceptive Drugs and Devices." Although
contraceptive drugs and devices were allowed, they could not be sold,
dispensed or distributed "unless such sale, dispensation and
distribution is by a duly licensed drug store or pharmaceutical
company and with the prescription of a qualified medical
practitioner."65
In addition, R.A. No. 5921,66 approved on June 21, 1969, contained
provisions relative to "dispensing of abortifacients or anti-
conceptional substances and devices." Under Section 37 thereof, it
was provided that "no drug or chemical product or device capable of
provoking abortion or preventing conception as classified by the Food
and Drug Administration shall be delivered or sold to any person
without a proper prescription by a duly licensed physician."
On December 11, 1967, the Philippines, adhering to the UN
Declaration on Population, which recognized that the population
problem should be considered as the principal element for long-term
economic development, enacted measures that promoted male
vasectomy and tubal ligation to mitigate population growth.67 Among
these measures included R.A. No. 6365, approved on August 16, 1971,
entitled "An Act Establishing a National Policy on Population, Creating
the Commission on Population and for Other Purposes. " The law
envisioned that "family planning will be made part of a broad
educational program; safe and effective means will be provided to
couples desiring to space or limit family size; mortality and morbidity
rates will be further reduced."
To further strengthen R.A. No. 6365, then President Ferdinand E .
Marcos issued Presidential Decree. (P.D.) No. 79,68 dated December
8, 1972, which, among others, made "family planning a part of a broad
educational program," provided "family planning services as a part of
over-all health care," and made "available all acceptable methods of
contraception, except abortion, to all Filipino citizens desirous of
spacing, limiting or preventing pregnancies."
Through the years, however, the use of contraceptives and family
planning methods evolved from being a component of demographic
management, to one centered on the promotion of public health,
particularly, reproductive health.69 Under that policy, the country
gave priority to one's right to freely choose the method of family
planning to be adopted, in conformity with its adherence to the
commitments made in the International Conference on Population
and Development.70 Thus, on August 14, 2009, the country enacted
R.A. No. 9710 or "The Magna Carta for Women, " which, among
others, mandated the State to provide for comprehensive health
services and programs for women, including family planning and sex
education.71
The RH Law
Despite the foregoing legislative measures, the population of the
country kept on galloping at an uncontrollable pace. From a paltry
number of just over 27 million Filipinos in 1960, the population of the
country reached over 76 million in the year 2000 and over 92 million
in 2010.72 The executive and the legislative, thus, felt that the
measures were still not adequate. To rein in the problem, the RH Law
was enacted to provide Filipinos, especially the poor and the
marginalized, access and information to the full range of modem
family planning methods, and to ensure that its objective to provide
for the peoples' right to reproductive health be achieved. To make it
more effective, the RH Law made it mandatory for health providers to
provide information on the full range of modem family planning
methods, supplies and services, and for schools to provide
reproductive health education. To put teeth to it, the RH Law
criminalizes certain acts of refusals to carry out its mandates.
Stated differently, the RH Law is an enhancement measure to fortify
and make effective the current laws on contraception, women's
health and population control.
Prayer of the Petitioners - Maintain the Status Quo
The petitioners are one in praying that the entire RH Law be declared
unconstitutional. Petitioner ALFI, in particular, argues that the
government sponsored contraception program, the very essence of
the RH Law, violates the right to health of women and the sanctity of
life, which the State is mandated to protect and promote. Thus, ALFI
prays that "the status quo ante - the situation prior to the passage of
the RH Law - must be maintained."73 It explains:
x x x. The instant Petition does not question contraception and
contraceptives per se. As provided under Republic Act No. 5921 and
Republic Act No. 4729, the sale and distribution of contraceptives are
prohibited unless dispensed by a prescription duly licensed by a
physician. What the Petitioners find deplorable and repugnant under
the RH Law is the role that the State and its agencies - the entire
bureaucracy, from the cabinet secretaries down to the barangay
officials in the remotest areas of the country - is made to play in the
implementation of the contraception program to the fullest extent
possible using taxpayers' money. The State then will be the funder
and provider of all forms of family planning methods and the
implementer of the program by ensuring the widespread
dissemination of, and universal access to, a full range of family
planning methods, devices and supplies.74
ISSUES
After a scrutiny of the various arguments and contentions of the
parties, the Court has synthesized and refined them to the following
principal issues:
I. PROCEDURAL: Whether the Court may exercise its power of judicial
review over the controversy.
1] Power of Judicial Review
2] Actual Case or Controversy
3] Facial Challenge
4] Locus Standi
5] Declaratory Relief
6] One Subject/One Title Rule
II. SUBSTANTIVE: Whether the RH law is unconstitutional:
1] Right to Life
2] Right to Health
3] Freedom of Religion and the Right to Free Speech
4] The Family
5] Freedom of Expression and Academic Freedom
6] Due Process
7] Equal Protection
8] Involuntary Servitude
9] Delegation of Authority to the FDA
10] Autonomy of Local Govemments/ARMM
DISCUSSION
Before delving into the constitutionality of the RH Law and its
implementing rules, it behooves the Court to resolve some procedural
impediments.
I. PROCEDURAL ISSUE: Whether the Court can exercise its power of
judicial review over the controversy.
The Power of Judicial Review
In its attempt to persuade the Court to stay its judicial hand, the OSG
asserts that it should submit to the legislative and political wisdom of
Congress and respect the compromises made in the crafting of the RH
Law, it being "a product of a majoritarian democratic process"75 and
"characterized by an inordinate amount of transparency." 76 The OSG
posits that the authority of the Court to review social legislation like
the RH Law by certiorari is "weak," since the Constitution vests the
discretion to implement the constitutional policies and positive norms
with the political departments, in particular, with Congress.77 It
further asserts that in view of the Court's ruling in Southern
Hemisphere v. Anti-Terrorism Council,78 the remedies of certiorari
and prohibition utilized by the petitioners are improper to assail the
validity of the acts of the legislature.79
Moreover, the OSG submits that as an "as applied challenge," it
cannot prosper considering that the assailed law has yet to be
enforced and applied to the petitioners, and that the government has
yet to distribute reproductive health devices that are abortive. It
claims that the RH Law cannot be challenged "on its face" as it is not
a speech-regulating measure.80
In many cases involving the determination of the constitutionality of
the actions of the Executive and the Legislature, it is often sought that
the Court temper its exercise of judicial power and accord due respect
to the wisdom of its co-equal branch on the basis of the principle of
separation of powers. To be clear, the separation of powers is a
fundamental principle in our system of government, which obtains
not through express provision but by actual division in our
Constitution. Each department of the government has exclusive
cognizance of matters within its jurisdiction and is supreme within its
own sphere.81
Thus, the 1987 Constitution provides that: (a) the legislative power
shall be vested in the Congress of the Philippines;82 (b) the executive
power shall be vested in the President of the Philippines;83 and (c) the
judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.84 The Constitution has truly
blocked out with deft strokes and in bold lines, the allotment of
powers among the three branches of government.85
In its relationship with its co-equals, the Judiciary recognizes the
doctrine of separation of powers which imposes upon the courts
proper restraint, born of the nature of their functions and of their
respect for the other branches of government, in striking down the
acts of the Executive or the Legislature as unconstitutional. Verily, the
policy is a harmonious blend of courtesy and caution.86
It has also long been observed, however, that in times of social
disquietude or political instability, the great landmarks of the
Constitution are apt to be forgotten or marred, if not entirely
obliterated.87 In order to address this, the Constitution impresses
upon the Court to respect the acts performed by a co-equal branch
done within its sphere of competence and authority, but at the same
time, allows it to cross the line of separation - but only at a very
limited and specific point - to determine whether the acts of the
executive and the legislative branches are null because they were
undertaken with grave abuse of discretion.88 Thus, while the Court
may not pass upon questions of wisdom, justice or expediency of the
RH Law, it may do so where an attendant unconstitutionality or grave
abuse of discretion results.89 The Court must demonstrate its
unflinching commitment to protect those cherished rights and
principles embodied in the Constitution.
In this connection, it bears adding that while the scope of judicial
power of review may be limited, the Constitution makes no
distinction as to the kind of legislation that may be subject to judicial
scrutiny, be it in the form of social legislation or otherwise. The reason
is simple and goes back to the earlier point. The Court may pass upon
the constitutionality of acts of the legislative and the executive
branches, since its duty is not to review their collective wisdom but,
rather, to make sure that they have acted in consonance with their
respective authorities and rights as mandated of them by the
Constitution. If after said review, the Court finds no constitutional
violations of any sort, then, it has no more authority of proscribing the
actions under review.90 This is in line with Article VIII, Section 1 of the
Constitution which expressly provides:
Section 1. The judicial power shall be vested in one Supreme Court
and in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government. [Emphases
supplied]
As far back as Tanada v. Angara,91 the Court has unequivocally
declared that certiorari, prohibition and mandamus are appropriate
remedies to raise constitutional issues and to review and/or
prohibit/nullify, when proper, acts of legislative and executive
officials, as there is no other plain, speedy or adequate remedy in the
ordinary course of law. This ruling was later on applied in Macalintal
v. COMELEC,92 Aldaba v. COMELEC,93 Magallona v. Ermita,94 and
countless others. In Tanada, the Court wrote:
In seeking to nullify an act of the Philippine Senate on the ground that
it contravenes the Constitution, the petition no doubt raises a
justiciable controversy. Where an action of the legislative branch is
seriously alleged to have infringed the Constitution, it becomes not
only the right but in fact the duty of the judiciary to settle the dispute.
"The question thus posed is judicial rather than political. The duty (to
adjudicate) remains to assure that the supremacy of the Constitution
is upheld. " Once a "controversy as to the application or interpretation
of constitutional provision is raised before this Court (as in the instant
case), it becomes a legal issue which the Court is bound by
constitutional mandate to decide. [Emphasis supplied]
In the scholarly estimation of former Supreme Court Justice
Florentino Feliciano, "judicial review is essential for the maintenance
and enforcement of the separation of powers and the balancing of
powers among the three great departments of government through
the definition and maintenance of the boundaries of authority and
control between them. To him, judicial review is the chief, indeed the
only, medium of participation - or instrument of intervention - of the
judiciary in that balancing operation.95
Lest it be misunderstood, it bears emphasizing that the Court does
not have the unbridled authority to rule on just any and every claim
of constitutional violation. Jurisprudence is replete with the rule that
the power of judicial review is limited by four exacting requisites, viz
: (a) there must be an actual case or controversy; (b) the petitioners
must possess locus standi; (c) the question of constitutionality must
be raised at the earliest opportunity; and (d) the issue of
constitutionality must be the lis mota of the case.96
Actual Case or Controversy
Proponents of the RH Law submit that the subj ect petitions do not
present any actual case or controversy because the RH Law has yet to
be implemented.97 They claim that the questions raised by the
petitions are not yet concrete and ripe for adjudication since no one
has been charged with violating any of its provisions and that there is
no showing that any of the petitioners' rights has been adversely
affected by its operation.98 In short, it is contended that judicial
review of the RH Law is premature.
An actual case or controversy means an existing case or controversy
that is appropriate or ripe for determination, not conjectural or
anticipatory, lest the decision of the court would amount to an
advisory opinion.99 The rule is that courts do not sit to adjudicate
mere academic questions to satisfy scholarly interest, however
intellectually challenging. The controversy must be justiciable-
definite and concrete, touching on the legal relations of parties having
adverse legal interests. In other words, the pleadings must show an
active antagonistic assertion of a legal right, on the one hand, and a
denial thereof, on the other; that is, it must concern a real, tangible
and not merely a theoretical question or issue. There ought to be an
actual and substantial controversy admitting of specific relief through
a decree conclusive in nature, as distinguished from an opinion
advising what the law would be upon a hypothetical state of facts. 100
Corollary to the requirement of an actual case or controversy is the
requirement of ripeness.101 A question is ripe for adjudication when
the act being challenged has had a direct adverse effect on the
individual challenging it. For a case to be considered ripe for
adjudication, it is a prerequisite that something has then been
accomplished or performed by either branch before a court may
come into the picture, and the petitioner must allege the existence of
an immediate or threatened injury to himself as a result of the
challenged action. He must show that he has sustained or is
immediately in danger of sustaining some direct injury as a result of
the act complained of102
In The Province of North Cotabato v. The Government of the Republic
of the Philippines,103 where the constitutionality of an
unimplemented Memorandum of Agreement on the Ancestral
Domain (MOA-AD) was put in question, it was argued that the Court
has no authority to pass upon the issues raised as there was yet no
concrete act performed that could possibly violate the petitioners'
and the intervenors' rights. Citing precedents, the Court ruled that the
fact of the law or act in question being not yet effective does not
negate ripeness. Concrete acts under a law are not necessary to
render the controversy ripe. Even a singular violation of the
Constitution and/or the law is enough to awaken judicial duty.
In this case, the Court is of the view that an actual case or controversy
exists and that the same is ripe for judicial determination. Considering
that the RH Law and its implementing rules have already taken effect
and that budgetary measures to carry out the law have already been
passed, it is evident that the subject petitions present a justiciable
controversy. As stated earlier, when an action of the legislative branch
is seriously alleged to have infringed the Constitution, it not only
becomes a right, but also a duty of the Judiciary to settle the
dispute.104
Moreover, the petitioners have shown that the case is so because
medical practitioners or medical providers are in danger of being
criminally prosecuted under the RH Law for vague violations thereof,
particularly public health officers who are threatened to be dismissed
from the service with forfeiture of retirement and other benefits.
They must, at least, be heard on the matter NOW.
Facial Challenge
The OSG also assails the propriety of the facial challenge lodged by
the subject petitions, contending that the RH Law cannot be
challenged "on its face" as it is not a speech regulating measure.105
The Court is not persuaded.
In United States (US) constitutional law, a facial challenge, also known
as a First Amendment Challenge, is one that is launched to assail the
validity of statutes concerning not only protected speech, but also all
other rights in the First Amendment.106 These include religious
freedom, freedom of the press, and the right of the people to
peaceably assemble, and to petition the Government for a redress of
grievances.107 After all, the fundamental right to religious freedom,
freedom of the press and peaceful assembly are but component rights
of the right to one's freedom of expression, as they are modes which
one's thoughts are externalized.
In this jurisdiction, the application of doctrines originating from the
U.S. has been generally maintained, albeit with some modifications.
While this Court has withheld the application of facial challenges to
strictly penal statues,108 it has expanded its scope to cover statutes
not only regulating free speech, but also those involving religious
freedom, and other fundamental rights.109 The underlying reason for
this modification is simple. For unlike its counterpart in the U.S., this
Court, under its expanded jurisdiction, is mandated by the
Fundamental Law not only to settle actual controversies involving
rights which are legally demandable and enforceable, but also to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government.110 Verily, the framers of Our
Constitution envisioned a proactive Judiciary, ever vigilant with its
duty to maintain the supremacy of the Constitution.
Consequently, considering that the foregoing petitions have seriously
alleged that the constitutional human rights to life, speech and
religion and other fundamental rights mentioned above have been
violated by the assailed legislation, the Court has authority to take
cognizance of these kindred petitions and to determine if the RH Law
can indeed pass constitutional scrutiny. To dismiss these petitions on
the simple expedient that there exist no actual case or controversy,
would diminish this Court as a reactive branch of government, acting
only when the Fundamental Law has been transgressed, to the
detriment of the Filipino people.
Locus Standi
The OSG also attacks the legal personality of the petitioners to file
their respective petitions. It contends that the "as applied challenge"
lodged by the petitioners cannot prosper as the assailed law has yet
to be enforced and applied against them,111 and the government has
yet to distribute reproductive health devices that are abortive.112
The petitioners, for their part, invariably invoke the "transcendental
importance" doctrine and their status as citizens and taxpayers in
establishing the requisite locus standi.
Locus standi or legal standing is defined as a personal and substantial
interest in a case such that the party has sustained or will sustain
direct injury as a result of the challenged governmental act.113 It
requires a personal stake in the outcome of the controversy as to
assure the concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of
difficult constitutional questions.114
In relation to locus standi, the "as applied challenge" embodies the
rule that one can challenge the constitutionality of a statute only if he
asserts a violation of his own rights. The rule prohibits one from
challenging the constitutionality of the statute grounded on a
violation of the rights of third persons not before the court. This rule
is also known as the prohibition against third-party standing.115
Transcendental Importance
Notwithstanding, the Court leans on the doctrine that "the rule on
standing is a matter of procedure, hence, can be relaxed for non-
traditional plaintiffs like ordinary citizens, taxpayers, and legislators
when the public interest so requires, such as when the matter is of
transcendental importance, of overreaching significance to society, or
of paramount public interest."116
In Coconut Oil Refiners Association, Inc. v. Torres,117 the Court held
that in cases of paramount importance where serious constitutional
questions are involved, the standing requirement may be relaxed and
a suit may be allowed to prosper even where there is no direct injury
to the party claiming the right of judicial review. In the first Emergency
Powers Cases,118 ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders although
they had only an indirect and general interest shared in common with
the public.
With these said, even if the constitutionality of the RH Law may not
be assailed through an "as-applied challenge, still, the Court has time
and again acted liberally on the locus s tandi requirement. It has
accorded certain individuals standing to sue, not otherwise directly
injured or with material interest affected by a Government act,
provided a constitutional issue of transcendental importance is
invoked. The rule on locus standi is, after all, a procedural technicality
which the Court has, on more than one occasion, waived or relaxed,
thus allowing non-traditional plaintiffs, such as concerned citizens,
taxpayers, voters or legislators, to sue in the public interest, albeit
they may not have been directly injured by the operation of a law or
any other government act. As held in Jaworski v. PAGCOR:119
Granting arguendo that the present action cannot be properly treated
as a petition for prohibition, the transcendental importance of the
issues involved in this case warrants that we set aside the technical
defects and take primary jurisdiction over the petition at bar. One
cannot deny that the issues raised herein have potentially pervasive
influence on the social and moral well being of this nation, specially
the youth; hence, their proper and just determination is an imperative
need. This is in accordance with the well-entrenched principle that
rules of procedure are not inflexible tools designed to hinder or delay,
but to facilitate and promote the administration of justice. Their strict
and rigid application, which would result in technicalities that tend to
frustrate, rather than promote substantial justice, must always be
eschewed. (Emphasis supplied)
In view of the seriousness, novelty and weight as precedents, not only
to the public, but also to the bench and bar, the issues raised must be
resolved for the guidance of all. After all, the RH Law drastically affects
the constitutional provisions on the right to life and health, the
freedom of religion and expression and other constitutional rights.
Mindful of all these and the fact that the issues of contraception and
reproductive health have already caused deep division among a broad
spectrum of society, the Court entertains no doubt that the petitions
raise issues of transcendental importance warranting immediate
court adjudication. More importantly, considering that it is the right
to life of the mother and the unborn which is primarily at issue, the
Court need not wait for a life to be taken away before taking action.
The Court cannot, and should not, exercise judicial restraint at this
time when rights enshrined in the Constitution are being imperilled
to be violated. To do so, when the life of either the mother or her child
is at stake, would lead to irreparable consequences.
Declaratory Relief
The respondents also assail the petitions because they are essentially
petitions for declaratory relief over which the Court has no original
jurisdiction.120 Suffice it to state that most of the petitions are praying
for injunctive reliefs and so the Court would just consider them as
petitions for prohibition under Rule 65, over which it has original
jurisdiction. Where the case has far-reaching implications and prays
for injunctive reliefs, the Court may consider them as petitions for
prohibition under Rule 65.121
One Subject-One Title
The petitioners also question the constitutionality of the RH Law,
claiming that it violates Section 26(1 ), Article VI of the
Constitution,122 prescribing the one subject-one title rule. According
to them, being one for reproductive health with responsible
parenthood, the assailed legislation violates the constitutional
standards of due process by concealing its true intent - to act as a
population control measure.123
To belittle the challenge, the respondents insist that the RH Law is not
a birth or population control measure, 124 and that the concepts of
"responsible parenthood" and "reproductive health" are both
interrelated as they are inseparable.125
Despite efforts to push the RH Law as a reproductive health law, the
Court sees it as principally a population control measure. The corpus
of the RH Law is geared towards the reduction of the country's
population. While it claims to save lives and keep our women and
children healthy, it also promotes pregnancy-preventing products. As
stated earlier, the RH Law emphasizes the need to provide Filipinos,
especially the poor and the marginalized, with access to information
on the full range of modem family planning products and methods.
These family planning methods, natural or modem, however, are
clearly geared towards the prevention of pregnancy.
For said reason, the manifest underlying objective of the RH Law is to
reduce the number of births in the country.
It cannot be denied that the measure also seeks to provide pre-natal
and post-natal care as well. A large portion of the law, however,
covers the dissemination of information and provisions on access to
medically-safe, non-abortifacient, effective, legal, affordable, and
quality reproductive health care services, methods, devices, and
supplies, which are all intended to prevent pregnancy.
The Court, thus, agrees with the petitioners' contention that the
whole idea of contraception pervades the entire RH Law. It is, in fact,
the central idea of the RH Law.126 Indeed, remove the provisions that
refer to contraception or are related to it and the RH Law loses its very
foundation.127 As earlier explained, "the other positive provisions
such as skilled birth attendance, maternal care including pre-and
post-natal services, prevention and management of reproductive
tract infections including HIV/AIDS are already provided for in the
Magna Carta for Women."128
Be that as it may, the RH Law does not violate the one subject/one bill
rule. In Benjamin E. Cawaling, Jr. v. The Commission on Elections and
Rep. Francis Joseph G Escudero, it was written:
It is well-settled that the "one title-one subject" rule does not require
the Congress to employ in the title of the enactment language of such
precision as to mirror, fully index or catalogue all the contents and the
minute details therein. The rule is sufficiently complied with if the title
is comprehensive enough as to include the general object which the
statute seeks to effect, and where, as here, the persons interested are
informed of the nature, scope and consequences of the proposed law
and its operation. Moreover, this Court has invariably adopted a
liberal rather than technical construction of the rule "so as not to
cripple or impede legislation." [Emphases supplied]
In this case, a textual analysis of the various provisions of the law
shows that both "reproductive health" and "responsible parenthood"
are interrelated and germane to the overriding objective to control
the population growth. As expressed in the first paragraph of Section
2 of the RH Law:
SEC. 2. Declaration of Policy. - The State recognizes and guarantees
the human rights of all persons including their right to equality and
nondiscrimination of these rights, the right to sustainable human
development, the right to health which includes reproductive health,
the right to education and information, and the right to choose and
make decisions for themselves in accordance with their religious
convictions, ethics, cultural beliefs, and the demands of responsible
parenthood.
The one subject/one title rule expresses the principle that the title of
a law must not be "so uncertain that the average person reading it
would not be informed of the purpose of the enactment or put on
inquiry as to its contents, or which is misleading, either in referring to
or indicating one subject where another or different one is really
embraced in the act, or in omitting any expression or indication of the
real subject or scope of the act."129
Considering the close intimacy between "reproductive health" and
"responsible parenthood" which bears to the attainment of the goal
of achieving "sustainable human development" as stated under its
terms, the Court finds no reason to believe that Congress intentionally
sought to deceive the public as to the contents of the assailed
legislation.
II - SUBSTANTIVE ISSUES:
1-The Right to Life
Position of the Petitioners
The petitioners assail the RH Law because it violates the right to life
and health of the unborn child under Section 12, Article II of the
Constitution. The assailed legislation allowing access to
abortifacients/abortives effectively sanctions abortion.130
According to the petitioners, despite its express terms prohibiting
abortion, Section 4(a) of the RH Law considers contraceptives that
prevent the fertilized ovum to reach and be implanted in the mother's
womb as an abortifacient; thus, sanctioning contraceptives that take
effect after fertilization and prior to implantation, contrary to the
intent of the Framers of the Constitution to afford protection to the
fertilized ovum which already has life.
They argue that even if Section 9 of the RH Law allows only "non-
abortifacient" hormonal contraceptives, intrauterine devices,
injectables and other safe, legal, non-abortifacient and effective
family planning products and supplies, medical research shows that
contraceptives use results in abortion as they operate to kill the
fertilized ovum which already has life.131
As it opposes the initiation of life, which is a fundamental human
good, the petitioners assert that the State sanction of contraceptive
use contravenes natural law and is an affront to the dignity of man.132
Finally, it is contended that since Section 9 of the RH Law requires the
Food and Drug Administration (FDA) to certify that the product or
supply is not to be used as an abortifacient, the assailed legislation
effectively confirms that abortifacients are not prohibited. Also
considering that the FDA is not the agency that will actually supervise
or administer the use of these products and supplies to prospective
patients, there is no way it can truthfully make a certification that it
shall not be used for abortifacient purposes.133
Position of the Respondents
For their part, the defenders of the RH Law point out that the intent
of the Framers of the Constitution was simply the prohibition of
abortion. They contend that the RH Law does not violate the
Constitution since the said law emphasizes that only "non-
abortifacient" reproductive health care services, methods, devices
products and supplies shall be made accessible to the public.134
According to the OSG, Congress has made a legislative determination
that contraceptives are not abortifacients by enacting the RH Law. As
the RH Law was enacted with due consideration to various studies and
consultations with the World Health Organization (WHO) and other
experts in the medical field, it is asserted that the Court afford
deference and respect to such a determination and pass judgment
only when a particular drug or device is later on determined as an
abortive.135
For his part, respondent Lagman argues that the constitutional
protection of one's right to life is not violated considering that various
studies of the WHO show that life begins from the implantation of the
fertilized ovum. Consequently, he argues that the RH Law is
constitutional since the law specifically provides that only
contraceptives that do not prevent the implantation of the fertilized
ovum are allowed.136
The Court's Position
It is a universally accepted principle that every human being enjoys
the right to life.137
Even if not formally established, the right to life, being grounded on
natural law, is inherent and, therefore, not a creation of, or
dependent upon a particular law, custom, or belief. It precedes and
transcends any authority or the laws of men.
In this jurisdiction, the right to life is given more than ample
protection. Section 1, Article III of the Constitution provides:
Section 1. No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal
protection of the laws.
As expounded earlier, the use of contraceptives and family planning
methods in the Philippines is not of recent vintage. From the
enactment of R.A. No. 4729, entitled "An Act To Regulate The Sale,
Dispensation, and/or Distribution of Contraceptive Drugs and Devices
"on June 18, 1966, prescribing rules on contraceptive drugs and
devices which prevent fertilization,138 to the promotion of male
vasectomy and tubal ligation,139 and the ratification of numerous
international agreements, the country has long recognized the need
to promote population control through the use of contraceptives in
order to achieve long-term economic development. Through the
years, however, the use of contraceptives and other family planning
methods evolved from being a component of demographic
management, to one centered on the promotion of public health,
particularly, reproductive health.140
This has resulted in the enactment of various measures promoting
women's rights and health and the overall promotion of the family's
well-being. Thus, aside from R.A. No. 4729, R.A. No. 6365 or "The
Population Act of the Philippines" and R.A. No. 9710, otherwise
known as the "The Magna Carta of Women" were legislated.
Notwithstanding this paradigm shift, the Philippine national
population program has always been grounded two cornerstone
principles: "principle of no-abortion" and the "principle of non-
coercion."141 As will be discussed later, these principles are not
merely grounded on administrative policy, but rather, originates from
the constitutional protection expressly provided to afford protection
to life and guarantee religious freedom.
When Life Begins*
Majority of the Members of the Court are of the position that the
question of when life begins is a scientific and medical issue that
should not be decided, at this stage, without proper hearing and
evidence. During the deliberation, however, it was agreed upon that
the individual members of the Court could express their own views on
this matter.
In this regard, the ponente, is of the strong view that life begins at
fertilization.
In answering the question of when life begins, focus should be made
on the particular phrase of Section 12 which reads:
Section 12. The State recognizes the sanctity of family life and shall
protect and strengthen the family as a basic autonomous social
institution. It shall equally protect the life of the mother and the life
of the unborn from conception. The natural and primary right and
duty of parents in the rearing of the youth for civic efficiency and the
development of moral character shall receive the support of the
Government.
Textually, the Constitution affords protection to the unborn from
conception. This is undisputable because before conception, there is
no unborn to speak of. For said reason, it is no surprise that the
Constitution is mute as to any proscription prior to conception or
when life begins. The problem has arisen because, amazingly, there
are quarters who have conveniently disregarded the scientific fact
that conception is reckoned from fertilization. They are waving the
view that life begins at implantation. Hence, the issue of when life
begins.
In a nutshell, those opposing the RH Law contend that conception is
synonymous with "fertilization" of the female ovum by the male
sperm.142 On the other side of the spectrum are those who assert that
conception refers to the "implantation" of the fertilized ovum in the
uterus.143
Plain and Legal Meaning
It is a canon in statutory construction that the words of the
Constitution should be interpreted in their plain and ordinary
meaning. As held in the recent case of Chavez v. Judicial Bar
Council:144
One of the primary and basic rules in statutory construction is that
where the words of a statute are clear, plain, and free from ambiguity,
it must be given its literal meaning and applied without attempted
interpretation. It is a well-settled principle of constitutional
construction that the language employed in the Constitution must be
given their ordinary meaning except where technical terms are
employed. As much as possible, the words of the Constitution should
be understood in the sense they have in common use. What it says
according to the text of the provision to be construed compels
acceptance and negates the power of the courts to alter it, based on
the postulate that the framers and the people mean what they say.
Verba legis non est recedendum - from the words of a statute there
should be no departure.
The raison d' etre for the rule is essentially two-fold: First, because it
is assumed that the words in which constitutional provisions are
couched express the objective sought to be attained; and second,
because the Constitution is not primarily a lawyer's document but
essentially that of the people, in whose consciousness it should ever
be present as an important condition for the rule of law to prevail.
In conformity with the above principle, the traditional meaning of the
word "conception" which, as described and defined by all reliable and
reputable sources, means that life begins at fertilization.
Webster's Third New International Dictionary describes it as the act
of becoming pregnant, formation of a viable zygote; the fertilization
that results in a new entity capable of developing into a being like its
parents.145
Black's Law Dictionary gives legal meaning to the term "conception"
as the fecundation of the female ovum by the male spermatozoon
resulting in human life capable of survival and maturation under
normal conditions.146
Even in jurisprudence, an unborn child has already a legal personality.
In Continental Steel Manufacturing Corporation v. Hon. Accredited
Voluntary Arbitrator Allan S. Montano,147 it was written:
Life is not synonymous with civil personality. One need not acquire
civil personality first before he/she could die. Even a child inside the
womb already has life. No less than the Constitution recognizes the
life of the unborn from conception, that the State must protect
equally with the life of the mother. If the unborn already has life, then
the cessation thereof even prior to the child being delivered, qualifies
as death. [Emphases in the original]
In Gonzales v. Carhart,148 Justice Anthony Kennedy, writing for the US
Supreme Court, said that the State "has respect for human life at all
stages in the pregnancy" and "a legitimate and substantial interest in
preserving and promoting fetal life." Invariably, in the decision, the
fetus was referred to, or cited, as a baby or a child.149
Intent of the Framers
Records of the Constitutional Convention also shed light on the
intention of the Framers regarding the term "conception" used in
Section 12, Article II of the Constitution. From their deliberations, it
clearly refers to the moment of "fertilization." The records reflect the
following:
Rev. Rigos: In Section 9, page 3, there is a sentence which reads:
"The State shall equally protect the life of the mother and the life of
the unborn from the moment of conception."
When is the moment of conception?
xxx
Mr. Villegas: As I explained in the sponsorship speech, it is when the
ovum is fertilized by the sperm that there is human life. x x x.150
xxx
As to why conception is reckoned from fertilization and, as such, the
beginning of human life, it was explained:
Mr. Villegas: I propose to review this issue in a biological manner. The
first question that needs to be answered is: Is the fertilized ovum
alive? Biologically categorically says yes, the fertilized ovum is alive.
First of all, like all living organisms, it takes in nutrients which it
processes by itself. It begins doing this upon fertilization. Secondly, as
it takes in these nutrients, it grows from within. Thirdly, it multiplies
itself at a geometric rate in the continuous process of cell division. All
these processes are vital signs of life. Therefore, there is no question
that biologically the fertilized ovum has life.
The second question: Is it human? Genetics gives an equally
categorical "yes." At the moment of conception, the nuclei of the
ovum and the sperm rupture. As this happens 23 chromosomes from
the ovum combine with 23 chromosomes of the sperm to form a total
of 46 chromosomes. A chromosome count of 46 is found only - and I
repeat, only in human cells. Therefore, the fertilized ovum is human.
Since these questions have been answered affirmatively, we must
conclude that if the fertilized ovum is both alive and human, then, as
night follows day, it must be human life. Its nature is human.151
Why the Constitution used the phrase "from the moment of
conception" and not "from the moment of fertilization" was not
because of doubt when human life begins, but rather, because:
Mr. Tingson: x x x x the phrase from the moment of conception" was
described by us here before with the scientific phrase "fertilized
ovum" may be beyond the comprehension of some people; we want
to use the simpler phrase "from the moment of conception."152
Thus, in order to ensure that the fertilized ovum is given ample
protection under the Constitution, it was discussed:
Rev. Rigos: Yes, we think that the word "unborn" is sufficient for the
purpose of writing a Constitution, without specifying "from the
moment of conception."
Mr. Davide: I would not subscribe to that particular view because
according to the Commissioner's own admission, he would leave it to
Congress to define when life begins. So, Congress can define life to
begin from six months after fertilization; and that would really be
very, very, dangerous. It is now determined by science that life begins
from the moment of conception. There can be no doubt about it. So
we should not give any doubt to Congress, too.153
Upon further inquiry, it was asked:
Mr. Gascon: Mr. Presiding Officer, I would like to ask a question on
that point. Actually, that is one of the questions I was going to raise
during the period of interpellations but it has been expressed already.
The provision, as proposed right now states:
The State shall equally protect the life of the mother and the life of
the unborn from the moment of conception.
When it speaks of "from the moment of conception," does this mean
when the egg meets the sperm?
Mr. Villegas: Yes, the ovum is fertilized by the sperm.
Mr. Gascon: Therefore that does not leave to Congress the right to
determine whether certain contraceptives that we know today are
abortifacient or not because it is a fact that some of the so-called
contraceptives deter the rooting of the ovum in the uterus. If
fertilization has already occurred, the next process is for the fertilized
ovum to travel towards the uterus and to take root. What happens
with some contraceptives is that they stop the opportunity for the
fertilized ovum to reach the uterus. Therefore, if we take the
provision as it is proposed, these so called contraceptives should be
banned.
Mr. Villegas: Yes, if that physical fact is established, then that is what
is called abortifacient and, therefore, would be unconstitutional and
should be banned under this provision.
Mr. Gascon: Yes. So my point is that I do not think it is up to Congress
to state whether or not these certain contraceptives are abortifacient.
Scientifically and based on the provision as it is now proposed, they
are already considered abortifacient.154
From the deliberations above-quoted, it is apparent that the Framers
of the Constitution emphasized that the State shall provide equal
protection to both the mother and the unborn child from the earliest
opportunity of life, that is, upon fertilization or upon the union of the
male sperm and the female ovum. It is also apparent is that the
Framers of the Constitution intended that to prohibit Congress from
enacting measures that would allow it determine when life begins.
Equally apparent, however, is that the Framers of the Constitution did
not intend to ban all contraceptives for being unconstitutional. In fact,
Commissioner Bernardo Villegas, spearheading the need to have a
constitutional provision on the right to life, recognized that the
determination of whether a contraceptive device is an abortifacient
is a question of fact which should be left to the courts to decide on
based on established evidence.155
From the discussions above, contraceptives that kill or destroy the
fertilized ovum should be deemed an abortive and thus prohibited.
Conversely, contraceptives that actually prevent the union of the
male sperm and the female ovum, and those that similarly take action
prior to fertilization should be deemed non-abortive, and thus,
constitutionally permissible.
As emphasized by the Framers of the Constitution:
xxx xxx xxx
Mr. Gascon: xx xx. As I mentioned in my speech on the US bases, I am
pro-life, to the point that I would like not only to protect the life of
the unborn, but also the lives of the millions of people in the world by
fighting for a nuclear-free world. I would just like to be assured of the
legal and pragmatic implications of the term "protection of the life of
the unborn from the moment of conception." I raised some of these
implications this afternoon when I interjected in the interpellation of
Commissioner Regalado. I would like to ask that question again for a
categorical answer.
I mentioned that if we institutionalize the term "the life of the unborn
from the moment of conception" we are also actually saying "no," not
"maybe," to certain contraceptives which are already being
encouraged at this point in time. Is that the sense of the committee
or does it disagree with me?
Mr. Azcuna: No, Mr. Presiding Officer, because contraceptives would
be preventive. There is no unborn yet. That is yet unshaped.
Mr. Gascon: Yes, Mr. Presiding Officer, but I was speaking more about
some contraceptives, such as the intra-uterine device which actually
stops the egg which has already been fertilized from taking route to
the uterus. So if we say "from the moment of conception," what really
occurs is that some of these contraceptives will have to be
unconstitutionalized.
Mr. Azcuna: Yes, to the extent that it is after the fertilization.
Mr. Gascon: Thank you, Mr. Presiding Officer.156
The fact that not all contraceptives are prohibited by the 1987
Constitution is even admitted by petitioners during the oral
arguments. There it was conceded that tubal ligation, vasectomy,
even condoms are not classified as abortifacients.157
Atty. Noche:
Before the union of the eggs, egg and the sperm, there is no life yet.
Justice Bersamin:
There is no life.
Atty. Noche:
So, there is no life to be protected.
Justice Bersamin:
Medical Meaning
That conception begins at fertilization is not bereft of medical
foundation. Mosby s Medical, Nursing, and Allied Health Dictionary
defines conception as "the beginning of pregnancy usually taken to
be the instant a spermatozoon enters an ovum and forms a viable
zygote."159
It describes fertilization as "the union of male and female gametes to
form a zygote from which the embryo develops."160
The Textbook of Obstetrics (Physiological & Pathological
Obstetrics),161 used by medical schools in the Philippines, also
concludes that human life (human person) begins at the moment of
fertilization with the union of the egg and the sperm resulting in the
formation of a new individual, with a unique genetic composition that
dictates all developmental stages that ensue.
Similarly, recent medical research on the matter also reveals that:
"Human development begins after the union of male and female
gametes or germ cells during a process known as fertilization
(conception). Fertilization is a sequence of events that begins with the
contact of a sperm (spermatozoon) with a secondary oocyte (ovum)
and ends with the fusion of their pronuclei (the haploid nuclei of the
sperm and ovum) and the mingling of their chromosomes to form a
new cell. This fertilized ovum, known as a zygote, is a large diploid cell
that is the beginning, or primordium, of a human being."162

To be protected. The authors of Human Embryology & Teratology163 mirror the same
position. They wrote: "Although life is a continuous process,
Atty. Noche: fertilization is a critical landmark because, under ordinary
circumstances, a new, genetically distinct human organism is thereby
Under Section 12, yes. formed.... The combination of 23 chromosomes present in each
pronucleus results in 46 chromosomes in the zygote. Thus the diploid
number is restored and the embryonic genome is formed. The
Justice Bersamin:
embryo now exists as a genetic unity."

So you have no objection to condoms?

In support of the RH Bill, The Philippine Medical Association came out
with a "Paper on the Reproductive Health Bill (Responsible
Atty. Noche: Parenthood Bill)" and therein concluded that:

Not under Section 12, Article II. CONCLUSION

Justice Bersamin: The PMA throws its full weight in supporting the RH Bill at the same
time that PMA maintains its strong position that fertilization is sacred
Even if there is already information that condoms sometimes have because it is at this stage that conception, and thus human life,
porosity? begins. Human lives are sacred from the moment of conception, and
that destroying those new lives is never licit, no matter what the
Atty. Noche: purported good outcome would be. In terms of biology and human
embryology, a human being begins immediately at fertilization and
after that, there is no point along the continuous line of human
Well, yes, Your Honor, there are scientific findings to that effect, Your
embryogenesis where only a "potential" human being can be posited.
Honor, but I am discussing here Section 12, Article II, Your Honor, yes.
Any philosophical, legal, or political conclusion cannot escape this
objective scientific fact.
Justice Bersamin:
The scientific evidence supports the conclusion that a zygote is a
Alright. human organism and that the life of a new human being commences
at a scientifically well defined "moment of conception." This
Atty. Noche: conclusion is objective, consistent with the factual evidence, and
independent of any specific ethical, moral, political, or religious view
And it's not, I have to admit it's not an abortifacient, Your Honor.158 of human life or of human embryos.164
Conclusion: The Moment of Conception is Reckoned from
Fertilization
In all, whether it be taken from a plain meaning, or understood under
medical parlance, and more importantly, following the intention of
the Framers of the Constitution, the undeniable conclusion is that a
zygote is a human organism and that the life of a new human being
commences at a scientifically well-defined moment of conception,
that is, upon fertilization.
For the above reasons, the Court cannot subscribe to the theory
advocated by Hon. Lagman that life begins at
implantation.165 According to him, "fertilization and conception are
two distinct and successive stages in the reproductive process. They
are not identical and synonymous."166 Citing a letter of the WHO, he
wrote that "medical authorities confirm that the implantation of the
fertilized ovum is the commencement of conception and it is only
after implantation that pregnancy can be medically detected."167
This theory of implantation as the beginning of life is devoid of any
legal or scientific mooring. It does not pertain to the beginning of life
but to the viability of the fetus. The fertilized ovum/zygote is not an
inanimate object - it is a living human being complete with DNA and
46 chromosomes.168 Implantation has been conceptualized only for
convenience by those who had population control in mind. To adopt
it would constitute textual infidelity not only to the RH Law but also
to the Constitution.
Not surprisingly, even the OSG does not support this position.
If such theory would be accepted, it would unnervingly legitimize the
utilization of any drug or device that would prevent the implantation
of the fetus at the uterine wall. It would be provocative and further
aggravate religious-based divisiveness.
It would legally permit what the Constitution proscribes - abortion
and abortifacients.
The RH Law and Abortion
The clear and unequivocal intent of the Framers of the 1987
Constitution in protecting the life of the unborn from conception was
to prevent the Legislature from enacting a measure legalizing
abortion. It was so clear that even the Court cannot interpret it
otherwise. This intent of the Framers was captured in the record of
the proceedings of the 1986 Constitutional Commission.
Commissioner Bernardo Villegas, the principal proponent of the
protection of the unborn from conception, explained:
The intention .. .is to make sure that there would be no pro-abortion
laws ever passed by Congress or any pro-abortion decision passed by
the Supreme Court.169
A reading of the RH Law would show that it is in line with this intent
and actually proscribes abortion. While the Court has opted not to
make any determination, at this stage, when life begins, it finds that
the RH Law itself clearly mandates that protection be afforded from
the moment of fertilization. As pointed out by Justice Carpio, the RH
Law is replete with provisions that embody the policy of the law to
protect to the fertilized ovum and that it should be afforded safe
travel to the uterus for implantation.170
Moreover, the RH Law recognizes that abortion is a crime under
Article 256 of the Revised Penal Code, which penalizes the destruction
or expulsion of the fertilized ovum. Thus:
1] xx x.
Section 4. Definition of Terms. - For the purpose of this Act, the
following terms shall be defined as follows:
xxx.
(q) Reproductive health care refers to the access to a full range of
methods, facilities, services and supplies that contribute to
reproductive health and well-being by addressing reproductive
health-related problems. It also includes sexual health, the purpose
of which is the enhancement of life and personal relations. The
elements of reproductive health care include the following:
xxx.
(3) Proscription of abortion and management of abortion
complications;
xxx.
2] xx x.
Section 4. x x x.
(s) Reproductive health rights refers to the rights of individuals and
couples, to decide freely and responsibly whether or not to have
children; the number, spacing and timing of their children; to make
other decisions concerning reproduction, free of discrimination,
coercion and violence; to have the information and means to do so;
and to attain the highest standard of sexual health and reproductive
health: Provided, however, That reproductive health rights do not
include abortion, and access to abortifacients.
3] xx x.
SEC. 29. Repealing Clause. - Except for prevailing laws against
abortion, any law, presidential decree or issuance, executive order,
letter of instruction, administrative order, rule or regulation contrary
to or is inconsistent with the provisions of this Act including Republic
Act No. 7392, otherwise known as the Midwifery Act, is hereby
repealed, modified or amended accordingly.
The RH Law and Abortifacients
In carrying out its declared policy, the RH Law is consistent in
prohibiting abortifacients. To be clear, Section 4(a) of the RH Law
defines an abortifacient as:
Section 4. Definition of Terms - x x x x
(a) Abortifacient refers to any drug or device that induces abortion or
the destruction of a fetus inside the mother's womb or the prevention
of the fertilized ovum to reach and be implanted in the mother's
womb upon determination of the FDA.
As stated above, the RH Law mandates that protection must be
afforded from the moment of fertilization. By using the word " or,"
the RH Law prohibits not only drugs or devices that prevent
implantation, but also those that induce abortion and those that
induce the destruction of a fetus inside the mother's womb. Thus, an
abortifacient is any drug or device that either:
(a) Induces abortion; or
(b) Induces the destruction of a fetus inside the mother's
womb; or
(c) Prevents the fertilized ovum to reach and be implanted
in the mother's womb, upon determination of the FDA.
Contrary to the assertions made by the petitioners, the Court finds
that the RH Law, consistent with the Constitution, recognizes that the
fertilized ovum already has life and that the State has a bounden duty
to protect it. The conclusion becomes clear because the RH Law, first,
prohibits any drug or device that induces abortion (first kind), which,
as discussed exhaustively above, refers to that which induces the
killing or the destruction of the fertilized ovum, and, second, prohibits
any drug or device the fertilized ovum to reach and be implanted in
the mother's womb (third kind).
By expressly declaring that any drug or device that prevents the
fertilized ovum to reach and be implanted in the mother's womb is an
abortifacient (third kind), the RH Law does not intend to mean at all
that life only begins only at implantation, as Hon. Lagman suggests. It
also does not declare either that protection will only be given upon
implantation, as the petitioners likewise suggest. Rather, it recognizes
that: one, there is a need to protect the fertilized ovum which already
has life, and two, the fertilized ovum must be protected the moment
it becomes existent - all the way until it reaches and implants in the
mother's womb. After all, if life is only recognized and afforded
protection from the moment the fertilized ovum implants - there is
nothing to prevent any drug or device from killing or destroying the
fertilized ovum prior to implantation.
From the foregoing, the Court finds that inasmuch as it affords
protection to the fertilized ovum, the RH Law does not sanction
abortion. To repeat, it is the Court's position that life begins at
fertilization, not at implantation. When a fertilized ovum is implanted
in the uterine wall , its viability is sustained but that instance of
implantation is not the point of beginning of life. It started earlier. And
as defined by the RH Law, any drug or device that induces abortion,
that is, which kills or destroys the fertilized ovum or prevents the
fertilized ovum to reach and be implanted in the mother's womb, is
an abortifacient.
Proviso Under Section 9 of the RH Law
This notwithstanding, the Court finds that the proviso under Section
9 of the law that "any product or supply included or to be included in
the EDL must have a certification from the FDA that said product and
supply is made available on the condition that it is not to be used as
an abortifacient" as empty as it is absurd. The FDA, with all its
expertise, cannot fully attest that a drug or device will not all be used
as an abortifacient, since the agency cannot be present in every
instance when the contraceptive product or supply will be used. 171
Pursuant to its declared policy of providing access only to safe, legal
and non-abortifacient contraceptives, however, the Court finds that
the proviso of Section 9, as worded, should bend to the legislative
intent and mean that "any product or supply included or to be
included in the EDL must have a certification from the FDA that said
product and supply is made available on the condition that it cannot
be used as abortifacient." Such a construction is consistent with the
proviso under the second paragraph of the same section that
provides:
Provided, further, That the foregoing offices shall not purchase or
acquire by any means emergency contraceptive pills, postcoital pills,
abortifacients that will be used for such purpose and their other forms
or equivalent.
Abortifacients under the RH-IRR
At this juncture, the Court agrees with ALFI that the authors of the
RH-IRR gravely abused their office when they redefined the meaning
of abortifacient. The RH Law defines "abortifacient" as follows:
SEC. 4. Definition of Terms. - For the purpose of this Act, the following
terms shall be defined as follows:
(a) Abortifacient refers to any drug or device that induces abortion or
the destruction of a fetus inside the mother's womb or the prevention
of the fertilized ovum to reach and be implanted in the mother's
womb upon determination of the FDA.
Section 3.0l (a) of the IRR, however, redefines "abortifacient" as:
Section 3.01 For purposes of these Rules, the terms shall be defined
as follows:
a) Abortifacient refers to any drug or device that primarily induces
abortion or the destruction of a fetus inside the mother's womb or
the prevention of the fertilized ovum to reach and be implanted in the
mother's womb upon determination of the Food and Drug
Administration (FDA). [Emphasis supplied]
Again in Section 3.0lG) of the RH-IRR, "contraceptive," is redefined,
viz:
j) Contraceptive refers to any safe, legal, effective and scientifically
proven modern family planning method, device, or health product,
whether natural or artificial, that prevents pregnancy but does not
primarily destroy a fertilized ovum or prevent a fertilized ovum from
being implanted in the mother's womb in doses of its approved
indication as determined by the Food and Drug Administration (FDA).
The above-mentioned section of the RH-IRR allows "contraceptives"
and recognizes as "abortifacient" only those that primarily induce
abortion or the destruction of a fetus inside the mother's womb or
the prevention of the fertilized ovum to reach and be implanted in the
mother's womb.172
This cannot be done.
In this regard, the observations of Justice Brion and Justice Del Castillo
are well taken. As they pointed out, with the insertion of the word
"primarily," Section 3.0l(a) and G) of the RH-IRR173 must be struck
down for being ultra vires.
Evidently, with the addition of the word "primarily," in Section 3.0l(a)
and G) of the RH-IRR is indeed ultra vires. It contravenes Section 4(a)
of the RH Law and should, therefore, be declared invalid. There is
danger that the insertion of the qualifier "primarily" will pave the way
for the approval of contraceptives which may harm or destroy the life
of the unborn from conception/fertilization in violation of Article II,
Section 12 of the Constitution. With such qualification in the RH-IRR,
it appears to insinuate that a contraceptive will only be considered as
an "abortifacient" if its sole known effect is abortion or, as pertinent
here, the prevention of the implantation of the fertilized ovum.
For the same reason, this definition of "contraceptive" would permit
the approval of contraceptives which are actually abortifacients
because of their fail-safe mechanism.174
Also, as discussed earlier, Section 9 calls for the certification by the
FDA that these contraceptives cannot act as abortive. With this,
together with the definition of an abortifacient under Section 4 (a) of
the RH Law and its declared policy against abortion, the undeniable
conclusion is that contraceptives to be included in the PNDFS and the
EDL will not only be those contraceptives that do not have the primary
action of causing abortion or the destruction of a fetus inside the
mother's womb or the prevention of the fertilized ovum to reach and
be implanted in the mother's womb, but also those that do not have
the secondary action of acting the same way.
Indeed, consistent with the constitutional policy prohibiting abortion,
and in line with the principle that laws should be construed in a
manner that its constitutionality is sustained, the RH Law and its
implementing rules must be consistent with each other in prohibiting
abortion. Thus, the word " primarily" in Section 3.0l(a) and G) of the
RH-IRR should be declared void. To uphold the validity of Section
3.0l(a) and G) of the RH-IRR and prohibit only those contraceptives
that have the primary effect of being an abortive would effectively
"open the floodgates to the approval of contraceptives which may
harm or destroy the life of the unborn from conception/fertilization
in violation of Article II, Section 12 of the Constitution."175
To repeat and emphasize, in all cases, the "principle of no abortion"
embodied in the constitutional protection of life must be upheld.
2-The Right to Health
The petitioners claim that the RH Law violates the right to health
because it requires the inclusion of hormonal contraceptives,
intrauterine devices, injectables and family products and supplies in
the National Drug Formulary and the inclusion of the same in the
regular purchase of essential medicines and supplies of all national
hospitals.176Citing various studies on the matter, the petitioners posit
that the risk of developing breast and cervical cancer is greatly
increased in women who use oral contraceptives as compared to
women who never use them. They point out that the risk is decreased
when the use of contraceptives is discontinued. Further, it is
contended that the use of combined oral contraceptive pills is
associated with a threefold increased risk of venous
thromboembolism, a twofold increased risk of ischematic stroke, and
an indeterminate effect on risk of myocardial infarction.177 Given the
definition of "reproductive health" and "sexual health" under
Sections 4(p)178 and (w)179 of the RH Law, the petitioners assert that
the assailed legislation only seeks to ensure that women have
pleasurable and satisfying sex lives.180
The OSG, however, points out that Section 15, Article II of the
Constitution is not self-executory, it being a mere statement of the
administration's principle and policy. Even if it were self-executory,
the OSG posits that medical authorities refute the claim that
contraceptive pose a danger to the health of women.181
The Court's Position
A component to the right to life is the constitutional right to health.
In this regard, the Constitution is replete with provisions protecting
and promoting the right to health. Section 15, Article II of the
Constitution provides:
Section 15. The State shall protect and promote the right to health of
the people and instill health consciousness among them.
A portion of Article XIII also specifically provides for the States' duty
to provide for the health of the people, viz:
HEALTH
Section 11. The State shall adopt an integrated and comprehensive
approach to health development which shall endeavor to make
essential goods, health and other social services available to all the
people at affordable cost. There shall be priority for the needs of the
underprivileged, sick, elderly, disabled, women, and children. The
State shall endeavor to provide free medical care to paupers.
Section 12. The State shall establish and maintain an effective food
and drug regulatory system and undertake appropriate health,
manpower development, and research, responsive to the country's
health needs and problems.
Section 13. The State shall establish a special agency for disabled
person for their rehabilitation, self-development, and self-reliance,
and their integration into the mainstream of society.
Finally, Section 9, Article XVI provides:
Section 9. The State shall protect consumers from trade malpractices
and from substandard or hazardous products.
Contrary to the respondent's notion, however, these provisions are
self-executing. Unless the provisions clearly express the contrary, the
provisions of the Constitution should be considered self-executory.
There is no need for legislation to implement these self-executing
provisions.182 In Manila Prince Hotel v. GSIS,183 it was stated:
x x x Hence, unless it is expressly provided that a legislative act is
necessary to enforce a constitutional mandate, the presumption now
is that all provisions of the constitution are self-executing. If the
constitutional provisions are treated as requiring legislation instead
of self-executing, the legislature would have the power to ignore and
practically nullify the mandate of the fundamental law. This can be
cataclysmic. That is why the prevailing view is, as it has always been,
that –
... in case of doubt, the Constitution should be considered self-
executing rather than non-self-executing. . . . Unless the contrary is
clearly intended, the provisions of the Constitution should be
considered self-executing, as a contrary rule would give the
legislature discretion to determine when, or whether, they shall be
effective. These provisions would be subordinated to the will of the
lawmaking body, which could make them entirely meaningless by
simply refusing to pass the needed implementing statute. (Emphases
supplied)
This notwithstanding, it bears mentioning that the petitioners,
particularly ALFI, do not question contraception and contraceptives
per se.184 In fact, ALFI prays that the status quo - under R.A. No. 5921
and R.A. No. 4729, the sale and distribution of contraceptives are not
prohibited when they are dispensed by a prescription of a duly
licensed by a physician - be maintained.185
The legislative intent in the enactment of the RH Law in this regard is
to leave intact the provisions of R.A. No. 4729. There is no intention
at all to do away with it. It is still a good law and its requirements are
still in to be complied with. Thus, the Court agrees with the
observation of respondent Lagman that the effectivity of the RH Law
will not lead to the unmitigated proliferation of contraceptives since
the sale, distribution and dispensation of contraceptive drugs and
devices will still require the prescription of a licensed physician. With
R.A. No. 4729 in place, there exists adequate safeguards to ensure the
public that only contraceptives that are safe are made available to the
public. As aptly explained by respondent Lagman:
D. Contraceptives cannot be
dispensed and used without
prescription
108. As an added protection to voluntary users of contraceptives, the
same cannot be dispensed and used without prescription.
109. Republic Act No. 4729 or "An Act to Regulate the Sale,
Dispensation, and/ or Distribution of Contraceptive Drugs and
Devices" and Republic Act No. 5921 or "An Act Regulating the Practice
of Pharmacy and Setting Standards of Pharmaceutical Education in
the Philippines and for Other Purposes" are not repealed by the RH
Law and the provisions of said Acts are not inconsistent with the RH
Law.
110. Consequently, the sale, distribution and dispensation of
contraceptive drugs and devices are particularly governed by RA No.
4729 which provides in full:
"Section 1. It shall be unlawful for any person, partnership, or
corporation, to sell, dispense or otherwise distribute whether for or
without consideration, any contraceptive drug or device, unless such
sale, dispensation or distribution is by a duly licensed drug store or
pharmaceutical company and with the prescription of a qualified
medical practitioner.
"Sec. 2 . For the purpose of this Act:
"(a) "Contraceptive drug" is any medicine, drug, chemical,
or portion which is used exclusively for the purpose of
preventing fertilization of the female ovum: and
"(b) "Contraceptive device" is any instrument, device,
material, or agent introduced into the female reproductive
system for the primary purpose of preventing conception.
"Sec. 3 Any person, partnership, or corporation, violating the
provisions of this Act shall be punished with a fine of not more than
five hundred pesos or an imprisonment of not less than six months or
more than one year or both in the discretion of the Court.
"This Act shall take effect upon its approval.
"Approved: June 18, 1966"
111. Of the same import, but in a general manner, Section 25 of RA
No. 5921 provides:
"Section 25. Sale of medicine, pharmaceuticals, drugs and devices. No
medicine, pharmaceutical, or drug of whatever nature and kind or
device shall be compounded, dispensed, sold or resold, or otherwise
be made available to the consuming public except through a
prescription drugstore or hospital pharmacy, duly established in
accordance with the provisions of this Act.
112. With all of the foregoing safeguards, as provided for in the RH
Law and other relevant statutes, the pretension of the petitioners
that the RH Law will lead to the unmitigated proliferation of
contraceptives, whether harmful or not, is completely unwarranted
and baseless.186 [Emphases in the Original. Underlining supplied.]
In Re: Section 10 of the RH Law:
The foregoing safeguards should be read in connection with Section
10 of the RH Law which provides:
SEC. 10. Procurement and Distribution of Family Planning Supplies. -
The DOH shall procure, distribute to LGUs and monitor the usage of
family planning supplies for the whole country. The DOH shall
coordinate with all appropriate local government bodies to plan and
implement this procurement and distribution program. The supply
and budget allotments shall be based on, among others, the current
levels and projections of the following:
(a) Number of women of reproductive age and couples who
want to space or limit their children;
(b) Contraceptive prevalence rate, by type of method used;
and
(c) Cost of family planning supplies.
Provided, That LGUs may implement its own procurement,
distribution and monitoring program consistent with the overall
provisions of this Act and the guidelines of the DOH.
Thus, in the distribution by the DOH of contraceptive drugs and
devices, it must consider the provisions of R.A. No. 4729, which is still
in effect, and ensure that the contraceptives that it will procure shall
be from a duly licensed drug store or pharmaceutical company and
that the actual dispensation of these contraceptive drugs and devices
will done following a prescription of a qualified medical practitioner.
The distribution of contraceptive drugs and devices must not be
indiscriminately done. The public health must be protected by all
possible means. As pointed out by Justice De Castro, a heavy
responsibility and burden are assumed by the government in
supplying contraceptive drugs and devices, for it may be held
accountable for any injury, illness or loss of life resulting from or
incidental to their use.187
At any rate, it bears pointing out that not a single contraceptive has
yet been submitted to the FDA pursuant to the RH Law. It behooves
the Court to await its determination which drugs or devices are
declared by the FDA as safe, it being the agency tasked to ensure that
food and medicines available to the public are safe for public
consumption. Consequently, the Court finds that, at this point, the
attack on the RH Law on this ground is premature. Indeed, the various
kinds of contraceptives must first be measured up to the
constitutional yardstick as expounded herein, to be determined as the
case presents itself.
At this point, the Court is of the strong view that Congress cannot
legislate that hormonal contraceptives and intra-uterine devices are
safe and non-abortifacient. The first sentence of Section 9 that
ordains their inclusion by the National Drug Formulary in the EDL by
using the mandatory "shall" is to be construed as operative only after
they have been tested, evaluated, and approved by the FDA. The FDA,
not Congress, has the expertise to determine whether a particular
hormonal contraceptive or intrauterine device is safe and non-
abortifacient. The provision of the third sentence concerning the
requirements for the inclusion or removal of a particular family
planning supply from the EDL supports this construction.
Stated differently, the provision in Section 9 covering the inclusion of
hormonal contraceptives, intra-uterine devices, injectables, and
other safe, legal, non-abortifacient and effective family planning
products and supplies by the National Drug Formulary in the EDL is
not mandatory. There must first be a determination by the FDA that
they are in fact safe, legal, non-abortifacient and effective family
planning products and supplies. There can be no predetermination by
Congress that the gamut of contraceptives are "safe, legal, non-
abortifacient and effective" without the proper scientific
examination.
3 -Freedom of Religion
and the Right to Free Speech
Position of the Petitioners:
1. On Contraception
While contraceptives and procedures like vasectomy and tubal
ligation are not covered by the constitutional proscription, there are
those who, because of their religious education and background,
sincerely believe that contraceptives, whether abortifacient or not,
are evil. Some of these are medical practitioners who essentially claim
that their beliefs prohibit not only the use of contraceptives but also
the willing participation and cooperation in all things dealing with
contraceptive use. Petitioner PAX explained that "contraception is
gravely opposed to marital chastity, it is contrary to the good of the
transmission of life, and to the reciprocal self-giving of the spouses; it
harms true love and denies the sovereign rule of God in the
transmission of Human life."188
The petitioners question the State-sponsored procurement of
contraceptives, arguing that the expenditure of their taxes on
contraceptives violates the guarantee of religious freedom since
contraceptives contravene their religious beliefs.189
2. On Religious Accommodation and
The Duty to Refer
Petitioners Imbong and Luat note that while the RH Law attempts to
address religious sentiments by making provisions for a conscientious
objector, the constitutional guarantee is nonetheless violated
because the law also imposes upon the conscientious objector the
duty to refer the patient seeking reproductive health services to
another medical practitioner who would be able to provide for the
patient's needs. For the petitioners, this amounts to requiring the
conscientious objector to cooperate with the very thing he refuses to
do without violating his/her religious beliefs.190
They further argue that even if the conscientious objector's duty to
refer is recognized, the recognition is unduly limited, because
although it allows a conscientious objector in Section 23 (a)(3) the
option to refer a patient seeking reproductive health services and
information - no escape is afforded the conscientious objector in
Section 23 (a)(l) and (2), i.e. against a patient seeking reproductive
health procedures. They claim that the right of other individuals to
conscientiously object, such as: a) those working in public health
facilities referred to in Section 7; b) public officers involved in the
implementation of the law referred to in Section 23(b ); and c)
teachers in public schools referred to in Section 14 of the RH Law, are
also not recognize.191
Petitioner Echavez and the other medical practitioners meanwhile,
contend that the requirement to refer the matter to another health
care service provider is still considered a compulsion on those
objecting healthcare service providers. They add that compelling
them to do the act against their will violates the Doctrine of
Benevolent Neutrality. Sections 9, 14 and 1 7 of the law are too
secular that they tend to disregard the religion of Filipinos.
Authorizing the use of contraceptives with abortive effects,
mandatory sex education, mandatory pro-bono reproductive health
services to indigents encroach upon the religious freedom of those
upon whom they are required.192
Petitioner CFC also argues that the requirement for a conscientious
objector to refer the person seeking reproductive health care services
to another provider infringes on one's freedom of religion as it forces
the objector to become an unwilling participant in the commission of
a serious sin under Catholic teachings. While the right to act on one's
belief may be regulated by the State, the acts prohibited by the RH
Law are passive acts which produce neither harm nor injury to the
public.193
Petitioner CFC adds that the RH Law does not show compelling state
interest to justify regulation of religious freedom because it mentions
no emergency, risk or threat that endangers state interests. It does
not explain how the rights of the people (to equality, non-
discrimination of rights, sustainable human development, health,
education, information, choice and to make decisions according to
religious convictions, ethics, cultural beliefs and the demands of
responsible parenthood) are being threatened or are not being met
as to justify the impairment of religious freedom.194
Finally, the petitioners also question Section 15 of the RH Law
requiring would-be couples to attend family planning and responsible
parenthood seminars and to obtain a certificate of compliance. They
claim that the provision forces individuals to participate in the
implementation of the RH Law even if it contravenes their religious
beliefs.195 As the assailed law dangles the threat of penalty of fine
and/or imprisonment in case of non-compliance with its provisions,
the petitioners claim that the RH Law forcing them to provide, support
and facilitate access and information to contraception against their
beliefs must be struck down as it runs afoul to the constitutional
guarantee of religious freedom.
The Respondents' Positions
The respondents, on the other hand, contend that the RH Law does
not provide that a specific mode or type of contraceptives be used,
be it natural or artificial. It neither imposes nor sanctions any religion
or belief.196 They point out that the RH Law only seeks to serve the
public interest by providing accessible, effective and quality
reproductive health services to ensure maternal and child health, in
line with the State's duty to bring to reality the social justice health
guarantees of the Constitution,197 and that what the law only
prohibits are those acts or practices, which deprive others of their
right to reproductive health.198 They assert that the assailed law only
seeks to guarantee informed choice, which is an assurance that no
one will be compelled to violate his religion against his free will. 199
The respondents add that by asserting that only natural family
planning should be allowed, the petitioners are effectively going
against the constitutional right to religious freedom, the same right
they invoked to assail the constitutionality of the RH Law.200 In other
words, by seeking the declaration that the RH Law is unconstitutional,
the petitioners are asking that the Court recognize only the Catholic
Church's sanctioned natural family planning methods and impose this
on the entire citizenry.201
With respect to the duty to refer, the respondents insist that the same
does not violate the constitutional guarantee of religious freedom, it
being a carefully balanced compromise between the interests of the
religious objector, on one hand, who is allowed to keep silent but is
required to refer -and that of the citizen who needs access to
information and who has the right to expect that the health care
professional in front of her will act professionally. For the
respondents, the concession given by the State under Section 7 and
23(a)(3) is sufficient accommodation to the right to freely exercise
one's religion without unnecessarily infringing on the rights of
others.202
Whatever burden is placed on the petitioner's religious freedom is
minimal as the duty to refer is limited in duration, location and
impact.203
Regarding mandatory family planning seminars under Section 15 , the
respondents claim that it is a reasonable regulation providing an
opportunity for would-be couples to have access to information
regarding parenthood, family planning, breastfeeding and infant
nutrition. It is argued that those who object to any information
received on account of their attendance in the required seminars are
not compelled to accept information given to them. They are
completely free to reject any information they do not agree with and
retain the freedom to decide on matters of family life without
intervention of the State.204
For their part, respondents De Venecia et al., dispute the notion that
natural family planning is the only method acceptable to Catholics and
the Catholic hierarchy. Citing various studies and surveys on the
matter, they highlight the changing stand of the Catholic Church on
contraception throughout the years and note the general acceptance
of the benefits of contraceptives by its followers in planning their
families.
The Church and The State
At the outset, it cannot be denied that we all live in a heterogeneous
society. It is made up of people of diverse ethnic, cultural and religious
beliefs and backgrounds. History has shown us that our government,
in law and in practice, has allowed these various religious, cultural,
social and racial groups to thrive in a single society together. It has
embraced minority groups and is tolerant towards all - the religious
people of different sects and the non-believers. The undisputed fact
is that our people generally believe in a deity, whatever they
conceived Him to be, and to whom they call for guidance and
enlightenment in crafting our fundamental law. Thus, the preamble
of the present Constitution reads:
We, the sovereign Filipino people, imploring the aid of Almighty God,
in order to build a just and humane society, and establish a
Government that shall embody our ideals and aspirations, promote
the common good, conserve and develop our patrimony, and secure
to ourselves and our posterity, the blessings of independence and
democracy under the rule of law and a regime of truth, justice,
freedom, love, equality, and peace, do ordain and promulgate this
Constitution.
The Filipino people in "imploring the aid of Almighty God " manifested
their spirituality innate in our nature and consciousness as a people,
shaped by tradition and historical experience. As this is embodied in
the preamble, it means that the State recognizes with respect the
influence of religion in so far as it instills into the mind the purest
principles of morality.205 Moreover, in recognition of the
contributions of religion to society, the 1935, 1973 and 1987
constitutions contain benevolent and accommodating provisions
towards religions such as tax exemption of church property, salary of
religious officers in government institutions, and optional religious
instructions in public schools.
The Framers, however, felt the need to put up a strong barrier so that
the State would not encroach into the affairs of the church, and vice-
versa. The principle of separation of Church and State was, thus,
enshrined in Article II, Section 6 of the 1987 Constitution, viz:
Section 6. The separation of Church and State shall be inviolable.
Verily, the principle of separation of Church and State is based on
mutual respect.1âwphi1 Generally, the State cannot meddle in the
internal affairs of the church, much less question its faith and dogmas
or dictate upon it. It cannot favor one religion and discriminate
against another. On the other hand, the church cannot impose its
beliefs and convictions on the State and the rest of the citizenry. It
cannot demand that the nation follow its beliefs, even if it sincerely
believes that they are good for the country.
Consistent with the principle that not any one religion should ever be
preferred over another, the Constitution in the above-cited provision
utilizes the term "church" in its generic sense, which refers to a
temple, a mosque, an iglesia, or any other house of God which
metaphorically symbolizes a religious organization. Thus, the
"Church" means the religious congregations collectively.
Balancing the benefits that religion affords and the need to provide
an ample barrier to protect the State from the pursuit of its secular
objectives, the Constitution lays down the following mandate in
Article III, Section 5 and Article VI, Section 29 (2), of the 1987
Constitution:
Section. 5. No law shall be made respecting an establishment of
religion, or prohibiting the free exercise thereof. The free exercise and
enjoyment of religious profession and worship, without
discrimination or preference, shall forever be allowed. No religious
test shall be required for the exercise of civil or political rights.
Section 29.
xxx.
No public money or property shall be appropriated, applied, paid, or
employed, directly or indirectly, for the use, benefit, or support of any
sect, church, denomination, sectarian institution, or system of
religion, or of any priest, preacher, minister, other religious teacher,
or dignitary as such, except when such priest, preacher, minister, or
dignitary is assigned to the armed forces, or to any penal institution,
or government orphanage or leprosarium.
In short, the constitutional assurance of religious freedom provides
two guarantees: the Establishment Clause and the Free Exercise
Clause.
The establishment clause "principally prohibits the State from
sponsoring any religion or favoring any religion as against other
religions. It mandates a strict neutrality in affairs among religious
groups."206 Essentially, it prohibits the establishment of a state
religion and the use of public resources for the support or prohibition
of a religion.
On the other hand, the basis of the free exercise clause is the respect
for the inviolability of the human conscience. 207 Under this part of
religious freedom guarantee, the State is prohibited from unduly
interfering with the outside manifestations of one's belief and
faith.208 Explaining the concept of religious freedom, the Court, in
Victoriano v. Elizalde Rope Workers Union209 wrote:
The constitutional provisions not only prohibits legislation for the
support of any religious tenets or the modes of worship of any sect,
thus forestalling compulsion by law of the acceptance of any creed or
the practice of any form of worship (U.S. Ballard, 322 U.S. 78, 88 L. ed.
1148, 1153), but also assures the free exercise of one's chosen form
of religion within limits of utmost amplitude. It has been said that the
religion clauses of the Constitution are all designed to protect the
broadest possible liberty of conscience, to allow each man to believe
as his conscience directs, to profess his beliefs, and to live as he
believes he ought to live, consistent with the liberty of others and
with the common good. Any legislation whose effect or purpose is to
impede the observance of one or all religions, or to discriminate
invidiously between the religions, is invalid, even though the burden
may be characterized as being only indirect. (Sherbert v. Verner, 374
U.S. 398, 10 L.ed.2d 965, 83 S. Ct. 1970) But if the state regulates
conduct by enacting, within its power, a general law which has for its
purpose and effect to advance the state's secular goals, the statute is
valid despite its indirect burden on religious observance, unless the
state can accomplish its purpose without imposing such burden.
(Braunfeld v. Brown, 366 U.S. 599, 6 Led. 2d. 563, 81 S. Ct. 144;
McGowan v. Maryland, 366 U.S. 420, 444-5 and 449).
As expounded in Escritor,
The establishment and free exercise clauses were not designed to
serve contradictory purposes. They have a single goal-to promote
freedom of individual religious beliefs and practices. In simplest
terms, the free exercise clause prohibits government from inhibiting
religious beliefs with penalties for religious beliefs and practice, while
the establishment clause prohibits government from inhibiting
religious belief with rewards for religious beliefs and practices. In
other words, the two religion clauses were intended to deny
government the power to use either the carrot or the stick to
influence individual religious beliefs and practices.210
Corollary to the guarantee of free exercise of one's religion is the
principle that the guarantee of religious freedom is comprised of two
parts: the freedom to believe, and the freedom to act on one's belief.
The first part is absolute. As explained in Gerona v. Secretary of
Education:211
The realm of belief and creed is infinite and limitless bounded only by
one's imagination and thought. So is the freedom of belief, including
religious belief, limitless and without bounds. One may believe in
most anything, however strange, bizarre and unreasonable the same
may appear to others, even heretical when weighed in the scales of
orthodoxy or doctrinal standards. But between the freedom of belief
and the exercise of said belief, there is quite a stretch of road to
travel.212
The second part however, is limited and subject to the awesome
power of the State and can be enjoyed only with proper regard to the
rights of others. It is "subject to regulation where the belief is
translated into external acts that affect the public welfare."213
Legislative Acts and the
Free Exercise Clause
Thus, in case of conflict between the free exercise clause and the
State, the Court adheres to the doctrine of benevolent neutrality. This
has been clearly decided by the Court in Estrada v. Escritor,
(Escritor)214 where it was stated "that benevolent neutrality-
accommodation, whether mandatory or permissive, is the spirit,
intent and framework underlying the Philippine Constitution."215 In
the same case, it was further explained that"
The benevolent neutrality theory believes that with respect to these
governmental actions, accommodation of religion may be allowed,
not to promote the government's favored form of religion, but to
allow individuals and groups to exercise their religion without
hindrance. "The purpose of accommodation is to remove a burden
on, or facilitate the exercise of, a person's or institution's
religion."216 "What is sought under the theory of accommodation is
not a declaration of unconstitutionality of a facially neutral law, but
an exemption from its application or its 'burdensome effect,' whether
by the legislature or the courts."217
In ascertaining the limits of the exercise of religious freedom, the
compelling state interest test is proper.218Underlying the compelling
state interest test is the notion that free exercise is a fundamental
right and that laws burdening it should be subject to strict
scrutiny.219 In Escritor, it was written:
Philippine jurisprudence articulates several tests to determine these
limits. Beginning with the first case on the Free Exercise Clause,
American Bible Society, the Court mentioned the "clear and present
danger" test but did not employ it. Nevertheless, this test continued
to be cited in subsequent cases on religious liberty. The Gerona case
then pronounced that the test of permissibility of religious freedom is
whether it violates the established institutions of society and law. The
Victoriano case mentioned the "immediate and grave danger" test as
well as the doctrine that a law of general applicability may burden
religious exercise provided the law is the least restrictive means to
accomplish the goal of the law. The case also used, albeit
inappropriately, the "compelling state interest" test. After Victoriano
, German went back to the Gerona rule. Ebralinag then employed the
"grave and immediate danger" test and overruled the Gerona test.
The fairly recent case of Iglesia ni Cristo went back to the " clear and
present danger" test in the maiden case of A merican Bible Society.
Not surprisingly, all the cases which employed the "clear and present
danger" or "grave and immediate danger" test involved, in one form
or another, religious speech as this test is often used in cases on
freedom of expression. On the other hand, the Gerona and German
cases set the rule that religious freedom will not prevail over
established institutions of society and law. Gerona, however, which
was the authority cited by German has been overruled by Ebralinag
which employed the "grave and immediate danger" test . Victoriano
was the only case that employed the "compelling state interest" test,
but as explained previously, the use of the test was inappropriate to
the facts of the case.
The case at bar does not involve speech as in A merican Bible Society,
Ebralinag and Iglesia ni Cristo where the "clear and present danger"
and "grave and immediate danger" tests were appropriate as speech
has easily discernible or immediate effects. The Gerona and German
doctrine, aside from having been overruled, is not congruent with the
benevolent neutrality approach, thus not appropriate in this
jurisdiction. Similar to Victoriano, the present case involves purely
conduct arising from religious belief. The "compelling state interest"
test is proper where conduct is involved for the whole gamut of
human conduct has different effects on the state's interests: some
effects may be immediate and short-term while others delayed and
far-reaching. A test that would protect the interests of the state in
preventing a substantive evil, whether immediate or delayed, is
therefore necessary. However, not any interest of the state would
suffice to prevail over the right to religious freedom as this is a
fundamental right that enjoys a preferred position in the hierarchy of
rights - "the most inalienable and sacred of all human rights", in the
words of Jefferson. This right is sacred for an invocation of the Free
Exercise Clause is an appeal to a higher sovereignty. The entire
constitutional order of limited government is premised upon an
acknowledgment of such higher sovereignty, thus the Filipinos
implore the "aid of Almighty God in order to build a just and humane
society and establish a government." As held in Sherbert, only the
gravest abuses, endangering paramount interests can limit this
fundamental right. A mere balancing of interests which balances a
right with just a colorable state interest is therefore not appropriate.
Instead, only a compelling interest of the state can prevail over the
fundamental right to religious liberty. The test requires the state to
carry a heavy burden, a compelling one, for to do otherwise would
allow the state to batter religion, especially the less powerful ones
until they are destroyed. In determining which shall prevail between
the state's interest and religious liberty, reasonableness shall be the
guide. The "compelling state interest" serves the purpose of revering
religious liberty while at the same time affording protection to the
paramount interests of the state. This was the test used in Sherbert
which involved conduct, i.e. refusal to work on Saturdays. In the end,
the "compelling state interest" test, by upholding the paramount
interests of the state, seeks to protect the very state, without which,
religious liberty will not be preserved. [Emphases in the original.
Underlining supplied.]
The Court's Position
In the case at bench, it is not within the province of the Court to
determine whether the use of contraceptives or one's participation in
the support of modem reproductive health measures is moral from a
religious standpoint or whether the same is right or wrong according
to one's dogma or belief. For the Court has declared that matters
dealing with "faith, practice, doctrine, form of worship, ecclesiastical
law, custom and rule of a church ... are unquestionably ecclesiastical
matters which are outside the province of the civil courts." 220 The
jurisdiction of the Court extends only to public and secular morality.
Whatever pronouncement the Court makes in the case at bench
should be understood only in this realm where it has authority. Stated
otherwise, while the Court stands without authority to rule on
ecclesiastical matters, as vanguard of the Constitution, it does have
authority to determine whether the RH Law contravenes the
guarantee of religious freedom.
At first blush, it appears that the RH Law recognizes and respects
religion and religious beliefs and convictions. It is replete with
assurances the no one can be compelled to violate the tenets of his
religion or defy his religious convictions against his free will.
Provisions in the RH Law respecting religious freedom are the
following:
1. The State recognizes and guarantees the human rights of all
persons including their right to equality and nondiscrimination of
these rights, the right to sustainable human development, the right
to health which includes reproductive health, the right to education
and information, and the right to choose and make decisions for
themselves in accordance with their religious convictions, ethics,
cultural beliefs, and the demands of responsible parenthood. [Section
2, Declaration of Policy]
2 . The State recognizes marriage as an inviolable social institution and
the foundation of the family which in turn is the foundation of the
nation. Pursuant thereto, the State shall defend:
(a) The right of spouses to found a family in accordance with their
religious convictions and the demands of responsible parenthood."
[Section 2, Declaration of Policy]
3. The State shall promote and provide information and access,
without bias, to all methods of family planning, including effective
natural and modern methods which have been proven medically safe,
legal, non-abortifacient, and effective in accordance with scientific
and evidence-based medical research standards such as those
registered and approved by the FDA for the poor and marginalized as
identified through the NHTS-PR and other government measures of
identifying marginalization: Provided, That the State shall also provide
funding support to promote modern natural methods of family
planning, especially the Billings Ovulation Method, consistent with
the needs of acceptors and their religious convictions. [Section 3(e),
Declaration of Policy]
4. The State shall promote programs that: (1) enable individuals and
couples to have the number of children they desire with due
consideration to the health, particularly of women, and the resources
available and affordable to them and in accordance with existing laws,
public morals and their religious convictions. [Section 3CDJ
5. The State shall respect individuals' preferences and choice of family
planning methods that are in accordance with their religious
convictions and cultural beliefs, taking into consideration the State's
obligations under various human rights instruments. [Section 3(h)]
6. Active participation by nongovernment organizations (NGOs) ,
women's and people's organizations, civil society, faith-based
organizations, the religious sector and communities is crucial to
ensure that reproductive health and population and development
policies, plans, and programs will address the priority needs of
women, the poor, and the marginalized. [Section 3(i)]
7. Responsible parenthood refers to the will and ability of a parent to
respond to the needs and aspirations of the family and children. It is
likewise a shared responsibility between parents to determine and
achieve the desired number of children, spacing and timing of their
children according to their own family life aspirations, taking into
account psychological preparedness, health status, sociocultural and
economic concerns consistent with their religious convictions.
[Section 4(v)] (Emphases supplied)
While the Constitution prohibits abortion, laws were enacted
allowing the use of contraceptives. To some medical practitioners,
however, the whole idea of using contraceptives is an anathema.
Consistent with the principle of benevolent neutrality, their beliefs
should be respected.
The Establishment Clause
and Contraceptives
In the same breath that the establishment clause restricts what the
government can do with religion, it also limits what religious sects can
or cannot do with the government. They can neither cause the
government to adopt their particular doctrines as policy for everyone,
nor can they not cause the government to restrict other groups. To
do so, in simple terms, would cause the State to adhere to a particular
religion and, thus, establishing a state religion.
Consequently, the petitioners are misguided in their supposition that
the State cannot enhance its population control program through the
RH Law simply because the promotion of contraceptive use is
contrary to their religious beliefs. Indeed, the State is not precluded
to pursue its legitimate secular objectives without being dictated
upon by the policies of any one religion. One cannot refuse to pay his
taxes simply because it will cloud his conscience. The demarcation line
between Church and State demands that one render unto Caesar the
things that are Caesar's and unto God the things that are God's.221
The Free Exercise Clause and the Duty to Refer
While the RH Law, in espousing state policy to promote reproductive
health manifestly respects diverse religious beliefs in line with the
Non-Establishment Clause, the same conclusion cannot be reached
with respect to Sections 7, 23 and 24 thereof. The said provisions
commonly mandate that a hospital or a medical practitioner to
immediately refer a person seeking health care and services under the
law to another accessible healthcare provider despite their
conscientious objections based on religious or ethical beliefs.
In a situation where the free exercise of religion is allegedly burdened
by government legislation or practice, the compelling state interest
test in line with the Court's espousal of the Doctrine of Benevolent
Neutrality in Escritor, finds application. In this case, the conscientious
objector's claim to religious freedom would warrant an exemption
from obligations under the RH Law, unless the government succeeds
in demonstrating a more compelling state interest in the
accomplishment of an important secular objective. Necessarily so, the
plea of conscientious objectors for exemption from the RH Law
deserves no less than strict scrutiny.
In applying the test, the first inquiry is whether a conscientious
objector's right to religious freedom has been burdened. As in
Escritor, there is no doubt that an intense tug-of-war plagues a
conscientious objector. One side coaxes him into obedience to the
law and the abandonment of his religious beliefs, while the other
entices him to a clean conscience yet under the pain of penalty. The
scenario is an illustration of the predicament of medical practitioners
whose religious beliefs are incongruent with what the RH Law
promotes.
The Court is of the view that the obligation to refer imposed by the
RH Law violates the religious belief and conviction of a conscientious
objector. Once the medical practitioner, against his will, refers a
patient seeking information on modem reproductive health products,
services, procedures and methods, his conscience is immediately
burdened as he has been compelled to perform an act against his
beliefs. As Commissioner Joaquin A. Bernas (Commissioner Bernas)
has written, "at the basis of the free exercise clause is the respect for
the inviolability of the human conscience.222
Though it has been said that the act of referral is an opt-out clause, it
is, however, a false compromise because it makes pro-life health
providers complicit in the performance of an act that they find morally
repugnant or offensive. They cannot, in conscience, do indirectly what
they cannot do directly. One may not be the principal, but he is
equally guilty if he abets the offensive act by indirect participation.
Moreover, the guarantee of religious freedom is necessarily
intertwined with the right to free speech, it being an externalization
of one's thought and conscience. This in turn includes the right to be
silent. With the constitutional guarantee of religious freedom follows
the protection that should be afforded to individuals in
communicating their beliefs to others as well as the protection for
simply being silent. The Bill of Rights guarantees the liberty of the
individual to utter what is in his mind and the liberty not to utter what
is not in his mind.223 While the RH Law seeks to provide freedom of
choice through informed consent, freedom of choice guarantees the
liberty of the religious conscience and prohibits any degree of
compulsion or burden, whether direct or indirect, in the practice of
one's religion.224
In case of conflict between the religious beliefs and moral convictions
of individuals, on one hand, and the interest of the State, on the other,
to provide access and information on reproductive health products,
services, procedures and methods to enable the people to determine
the timing, number and spacing of the birth of their children, the
Court is of the strong view that the religious freedom of health
providers, whether public or private, should be accorded primacy.
Accordingly, a conscientious objector should be exempt from
compliance with the mandates of the RH Law. If he would be
compelled to act contrary to his religious belief and conviction, it
would be violative of "the principle of non-coercion" enshrined in the
constitutional right to free exercise of religion.
Interestingly, on April 24, 2013, Scotland's Inner House of the Court
of Session, found in the case of Doogan and Wood v. NHS Greater
Glasgow and Clyde Health Board,225 that the midwives claiming to be
conscientious objectors under the provisions of Scotland's Abortion
Act of 1967, could not be required to delegate, supervise or support
staff on their labor ward who were involved in abortions.226 The Inner
House stated "that if 'participation' were defined according to
whether the person was taking part 'directly' or ' indirectly' this would
actually mean more complexity and uncertainty."227
While the said case did not cover the act of referral, the applicable
principle was the same - they could not be forced to assist abortions
if it would be against their conscience or will.
Institutional Health Providers
The same holds true with respect to non-maternity specialty hospitals
and hospitals owned and operated by a religious group and health
care service providers. Considering that Section 24 of the RH Law
penalizes such institutions should they fail or refuse to comply with
their duty to refer under Section 7 and Section 23(a)(3), the Court
deems that it must be struck down for being violative of the freedom
of religion. The same applies to Section 23(a)(l) and (a)(2) in relation
to Section 24, considering that in the dissemination of information
regarding programs and services and in the performance of
reproductive health procedures, the religious freedom of health care
service providers should be respected.
In the case of Islamic Da'wah Council of the Philippines, Inc. v. Office
of the Executive Secretary228 it was stressed:
Freedom of religion was accorded preferred status by the framers of
our fundamental law. And this Court has consistently affirmed this
preferred status, well aware that it is "designed to protect the
broadest possible liberty of conscience, to allow each man to believe
as his conscience directs, to profess his beliefs, and to live as he
believes he ought to live, consistent with the liberty of others and
with the common good."10
The Court is not oblivious to the view that penalties provided by law
endeavour to ensure compliance. Without set consequences for
either an active violation or mere inaction, a law tends to be toothless
and ineffectual. Nonetheless, when what is bartered for an effective
implementation of a law is a constitutionally-protected right the
Court firmly chooses to stamp its disapproval. The punishment of a
healthcare service provider, who fails and/or refuses to refer a patient
to another, or who declines to perform reproductive health
procedure on a patient because incompatible religious beliefs, is a
clear inhibition of a constitutional guarantee which the Court cannot
allow.
The Implementing Rules and Regulation (RH-IRR)
The last paragraph of Section 5.24 of the RH-IRR reads:
Provided, That skilled health professional such as provincial, city or
municipal health officers, chiefs of hospital, head nurses, supervising
midwives, among others, who by virtue of their office are specifically
charged with the duty to implement the provisions of the RPRH Act
and these Rules, cannot be considered as conscientious objectors.
This is discriminatory and violative of the equal protection clause. The
conscientious objection clause should be equally protective of the
religious belief of public health officers. There is no perceptible
distinction why they should not be considered exempt from the
mandates of the law. The protection accorded to other conscientious
objectors should equally apply to all medical practitioners without
distinction whether they belong to the public or private sector. After
all, the freedom to believe is intrinsic in every individual and the
protective robe that guarantees its free exercise is not taken off even
if one acquires employment in the government.
It should be stressed that intellectual liberty occupies a place inferior
to none in the hierarchy of human values. The mind must be free to
think what it wills, whether in the secular or religious sphere, to give
expression to its beliefs by oral discourse or through the media and,
thus, seek other candid views in occasions or gatherings or in more
permanent aggrupation. Embraced in such concept then are freedom
of religion, freedom of speech, of the press, assembly and petition,
and freedom of association.229
The discriminatory provision is void not only because no such
exception is stated in the RH Law itself but also because it is violative
of the equal protection clause in the Constitution. Quoting
respondent Lagman, if there is any conflict between the RH-IRR and
the RH Law, the law must prevail.
Justice Mendoza:
I'll go to another point. The RH law .. .in your Comment- in-
Intervention on page 52, you mentioned RH Law is replete with
provisions in upholding the freedom of religion and respecting
religious convictions. Earlier, you affirmed this with qualifications.
Now, you have read, I presumed you have read the IRR-Implementing
Rules and Regulations of the RH Bill?
Congressman Lagman:
Yes, Your Honor, I have read but I have to admit, it's a long IRR and I
have not thoroughly dissected the nuances of the provisions.
Justice Mendoza:
I will read to you one provision. It's Section 5.24. This I cannot find in
the RH Law. But in the IRR it says: " .... skilled health professionals such
as provincial, city or municipal health officers, chief of hospitals, head
nurses, supervising midwives, among others, who by virtue of their
office are specifically charged with the duty to implement the
provisions of the RPRH Act and these Rules, cannot be considered as
conscientious objectors." Do you agree with this?
Congressman Lagman:
I will have to go over again the provisions, Your Honor.
Justice Mendoza:
In other words, public health officers in contrast to the private
practitioners who can be conscientious objectors, skilled health
professionals cannot be considered conscientious objectors. Do you
agree with this? Is this not against the constitutional right to the
religious belief?
Congressman Lagman:
Your Honor, if there is any conflict between the IRR and the law, the
law must prevail.230
Compelling State Interest
The foregoing discussion then begets the question on whether the
respondents, in defense of the subject provisions, were able to: 1]
demonstrate a more compelling state interest to restrain
conscientious objectors in their choice of services to render; and 2]
discharge the burden of proof that the obligatory character of the law
is the least intrusive means to achieve the objectives of the law.
Unfortunately, a deep scrutiny of the respondents' submissions
proved to be in vain. The OSG was curiously silent in the
establishment of a more compelling state interest that would
rationalize the curbing of a conscientious objector's right not to
adhere to an action contrary to his religious convictions. During the
oral arguments, the OSG maintained the same silence and evasion.
The Transcripts of the Stenographic Notes disclose the following:
Justice De Castro:
Let's go back to the duty of the conscientious objector to refer. ..
Senior State Solicitor Hilbay:
Yes, Justice.
Justice De Castro:
... which you are discussing awhile ago with Justice Abad. What is the
compelling State interest in imposing this duty to refer to a
conscientious objector which refuses to do so because of his religious
belief?
Senior State Solicitor Hilbay:
Ahh, Your Honor, ..
Justice De Castro:
What is the compelling State interest to impose this burden?
Senior State Solicitor Hilbay:
In the first place, Your Honor, I don't believe that the standard is a
compelling State interest, this is an ordinary health legislation
involving professionals. This is not a free speech matter or a pure free
exercise matter. This is a regulation by the State of the relationship
between medical doctors and their patients.231
Resultantly, the Court finds no compelling state interest which would
limit the free exercise clause of the conscientious objectors, however
few in number. Only the prevention of an immediate and grave
danger to the security and welfare of the community can justify the
infringement of religious freedom. If the government fails to show the
seriousness and immediacy of the threat, State intrusion is
constitutionally unacceptable.232
Freedom of religion means more than just the freedom to believe. It
also means the freedom to act or not to act according to what one
believes. And this freedom is violated when one is compelled to act
against one's belief or is prevented from acting according to one's
belief.233
Apparently, in these cases, there is no immediate danger to the life or
health of an individual in the perceived scenario of the subject
provisions. After all, a couple who plans the timing, number and
spacing of the birth of their children refers to a future event that is
contingent on whether or not the mother decides to adopt or use the
information, product, method or supply given to her or whether she
even decides to become pregnant at all. On the other hand, the
burden placed upon those who object to contraceptive use is
immediate and occurs the moment a patient seeks consultation on
reproductive health matters.
Moreover, granting that a compelling interest exists to justify the
infringement of the conscientious objector's religious freedom, the
respondents have failed to demonstrate "the gravest abuses,
endangering paramount interests" which could limit or override a
person's fundamental right to religious freedom. Also, the
respondents have not presented any government effort exerted to
show that the means it takes to achieve its legitimate state objective
is the least intrusive means.234 Other than the assertion that the act
of referring would only be momentary, considering that the act of
referral by a conscientious objector is the very action being contested
as violative of religious freedom, it behooves the respondents to
demonstrate that no other means can be undertaken by the State to
achieve its objective without violating the rights of the conscientious
objector. The health concerns of women may still be addressed by
other practitioners who may perform reproductive health-related
procedures with open willingness and motivation. Suffice it to say, a
person who is forced to perform an act in utter reluctance deserves
the protection of the Court as the last vanguard of constitutional
freedoms.
At any rate, there are other secular steps already taken by the
Legislature to ensure that the right to health is protected. Considering
other legislations as they stand now, R.A . No. 4 729 or the
Contraceptive Act, R.A. No. 6365 or "The Population Act of the
Philippines" and R.A. No. 9710, otherwise known as "The Magna Carta
of Women," amply cater to the needs of women in relation to health
services and programs. The pertinent provision of Magna Carta on
comprehensive health services and programs for women, in fact,
reads:
Section 17. Women's Right to Health. - (a) Comprehensive Health
Services. - The State shall, at all times, provide for a comprehensive,
culture-sensitive, and gender-responsive health services and
programs covering all stages of a woman's life cycle and which
addresses the major causes of women's mortality and morbidity:
Provided, That in the provision for comprehensive health services,
due respect shall be accorded to women's religious convictions, the
rights of the spouses to found a family in accordance with their
religious convictions, and the demands of responsible parenthood,
and the right of women to protection from hazardous drugs, devices,
interventions, and substances.
Access to the following services shall be ensured:
(1) Maternal care to include pre- and post-natal services to address
pregnancy and infant health and nutrition;
(2) Promotion of breastfeeding;
(3) Responsible, ethical, legal, safe, and effective methods of family
planning;
(4) Family and State collaboration in youth sexuality education and
health services without prejudice to the primary right and duty of
parents to educate their children;
(5) Prevention and management of reproductive tract infections,
including sexually transmitted diseases, HIV, and AIDS;
(6) Prevention and management of reproductive tract cancers like
breast and cervical cancers, and other gynecological conditions and
disorders;
(7) Prevention of abortion and management of pregnancy-related
complications;
(8) In cases of violence against women and children, women and
children victims and survivors shall be provided with comprehensive
health services that include psychosocial, therapeutic, medical, and
legal interventions and assistance towards healing, recovery, and
empowerment;
(9) Prevention and management of infertility and sexual dysfunction
pursuant to ethical norms and medical standards;
(10) Care of the elderly women beyond their child-bearing years; and
(11) Management, treatment, and intervention of mental health
problems of women and girls. In addition, healthy lifestyle activities
are encouraged and promoted through programs and projects as
strategies in the prevention of diseases.
(b) Comprehensive Health Information and Education. - The State
shall provide women in all sectors with appropriate, timely, complete,
and accurate information and education on all the above-stated
aspects of women's health in government education and training
programs, with due regard to the following:
(1) The natural and primary right and duty of parents in the rearing of
the youth and the development of moral character and the right of
children to be brought up in an atmosphere of morality and rectitude
for the enrichment and strengthening of character;
(2) The formation of a person's sexuality that affirms human dignity;
and
(3) Ethical, legal, safe, and effective family planning methods
including fertility awareness.
As an afterthought, Asst. Solicitor General Hilbay eventually replied
that the compelling state interest was "Fifteen maternal deaths per
day, hundreds of thousands of unintended pregnancies, lives
changed, x x x."235 He, however, failed to substantiate this point by
concrete facts and figures from reputable sources.
The undisputed fact, however, is that the World Health Organization
reported that the Filipino maternal mortality rate dropped to 48
percent from 1990 to 2008, 236 although there was still no RH Law at
that time. Despite such revelation, the proponents still insist that such
number of maternal deaths constitute a compelling state interest.
Granting that there are still deficiencies and flaws in the delivery of
social healthcare programs for Filipino women, they could not be
solved by a measure that puts an unwarrantable stranglehold on
religious beliefs in exchange for blind conformity.
Exception: Life Threatening Cases
All this notwithstanding, the Court properly recognizes a valid
exception set forth in the law. While generally healthcare service
providers cannot be forced to render reproductive health care
procedures if doing it would contravene their religious beliefs, an
exception must be made in life-threatening cases that require the
performance of emergency procedures. In these situations, the right
to life of the mother should be given preference, considering that a
referral by a medical practitioner would amount to a denial of service,
resulting to unnecessarily placing the life of a mother in grave danger.
Thus, during the oral arguments, Atty. Liban, representing CFC,
manifested: "the forced referral clause that we are objecting on
grounds of violation of freedom of religion does not contemplate an
emergency."237
In a conflict situation between the life of the mother and the life of a
child, the doctor is morally obliged always to try to save both lives. If,
however, it is impossible, the resulting death to one should not be
deliberate. Atty. Noche explained:
Principle of Double-Effect. - May we please remind the principal
author of the RH Bill in the House of Representatives of the principle
of double-effect wherein intentional harm on the life of either the
mother of the child is never justified to bring about a "good" effect.
In a conflict situation between the life of the child and the life of the
mother, the doctor is morally obliged always to try to save both lives.
However, he can act in favor of one (not necessarily the mother) when
it is medically impossible to save both, provided that no direct harm
is intended to the other. If the above principles are observed, the loss
of the child's life or the mother's life is not intentional and, therefore,
unavoidable. Hence, the doctor would not be guilty of abortion or
murder. The mother is never pitted against the child because both
their lives are equally valuable.238
Accordingly, if it is necessary to save the life of a mother, procedures
endangering the life of the child may be resorted to even if is against
the religious sentiments of the medical practitioner. As quoted above,
whatever burden imposed upon a medical practitioner in this case
would have been more than justified considering the life he would be
able to save.
Family Planning Seminars
Anent the requirement imposed under Section 15239 as a condition for
the issuance of a marriage license, the Court finds the same to be a
reasonable exercise of police power by the government. A cursory
reading of the assailed provision bares that the religious freedom of
the petitioners is not at all violated. All the law requires is for would-
be spouses to attend a seminar on parenthood, family planning
breastfeeding and infant nutrition. It does not even mandate the type
of family planning methods to be included in the seminar, whether
they be natural or artificial. As correctly noted by the OSG, those who
receive any information during their attendance in the required
seminars are not compelled to accept the information given to them,
are completely free to reject the information they find unacceptable,
and retain the freedom to decide on matters of family life without the
intervention of the State.
4-The Family and the Right to Privacy
Petitioner CFC assails the RH Law because Section 23(a) (2) (i) thereof
violates the provisions of the Constitution by intruding into marital
privacy and autonomy. It argues that it cultivates disunity and fosters
animosity in the family rather than promote its solidarity and total
development.240
The Court cannot but agree.
The 1987 Constitution is replete with provisions strengthening the
family as it is the basic social institution. In fact, one article, Article XV,
is devoted entirely to the family.
ARTICLE
THE FAMILY
Section 1. The State recognizes the Filipino family as the foundation
of the nation. Accordingly, it shall strengthen its solidarity and actively
promote its total development.
Section 2. Marriage, as an inviolable social institution, is the
foundation of the family and shall be protected by the State.
Section 3. The State shall defend:
The right of spouses to found a family in accordance with their
religious convictions and the demands of responsible parenthood;
The right of children to assistance, including proper care and
nutrition, and special protection from all forms of neglect, abuse,
cruelty, exploitation and other conditions prejudicial to their
development;
The right of the family to a family living wage and income; and
The right of families or family assoc1at1ons to participate in the
planning and implementation of policies and programs that affect
them.
In this case, the RH Law, in its not-so-hidden desire to control
population growth, contains provisions which tend to wreck the
family as a solid social institution. It bars the husband and/or the
father from participating in the decision making process regarding
their common future progeny. It likewise deprives the parents of their
authority over their minor daughter simply because she is already a
parent or had suffered a miscarriage.
The Family and Spousal Consent
Section 23(a) (2) (i) of the RH Law states:
The following acts are prohibited:
(a) Any health care service provider, whether public or private, who
shall: ...
(2) refuse to perform legal and medically-safe reproductive health
procedures on any person of legal age on the ground of lack of
consent or authorization of the following persons in the following
instances:
(i) Spousal consent in case of married persons: provided, That in case
of disagreement, the decision of the one undergoing the procedures
shall prevail. [Emphasis supplied]
The above provision refers to reproductive health procedures like
tubal litigation and vasectomy which, by their very nature, should
require mutual consent and decision between the husband and the
wife as they affect issues intimately related to the founding of a
family. Section 3, Art. XV of the Constitution espouses that the State
shall defend the "right of the spouses to found a family." One person
cannot found a family. The right, therefore, is shared by both spouses.
In the same Section 3, their right "to participate in the planning and
implementation of policies and programs that affect them " is equally
recognized.
XV
The RH Law cannot be allowed to infringe upon this mutual decision-
making. By giving absolute authority to the spouse who would
undergo a procedure, and barring the other spouse from participating
in the decision would drive a wedge between the husband and wife,
possibly result in bitter animosity, and endanger the marriage and the
family, all for the sake of reducing the population. This would be a
marked departure from the policy of the State to protect marriage as
an inviolable social institution.241
Decision-making involving a reproductive health procedure is a
private matter which belongs to the couple, not just one of them. Any
decision they would reach would affect their future as a family
because the size of the family or the number of their children
significantly matters. The decision whether or not to undergo the
procedure belongs exclusively to, and shared by, both spouses as one
cohesive unit as they chart their own destiny. It is a constitutionally
guaranteed private right. Unless it prejudices the State, which has not
shown any compelling interest, the State should see to it that they
chart their destiny together as one family.
As highlighted by Justice Leonardo-De Castro, Section 19( c) of R.A.
No. 9710, otherwise known as the "Magna Carta for Women,"
provides that women shall have equal rights in all matters relating to
marriage and family relations, including the joint decision on the
number and spacing of their children. Indeed, responsible
parenthood, as Section 3(v) of the RH Law states, is a shared
responsibility between parents. Section 23(a)(2)(i) of the RH Law
should not be allowed to betray the constitutional mandate to protect
and strengthen the family by giving to only one spouse the absolute
authority to decide whether to undergo reproductive health
procedure.242
The right to chart their own destiny together falls within the protected
zone of marital privacy and such state intervention would encroach
into the zones of spousal privacy guaranteed by the Constitution. In
our jurisdiction, the right to privacy was first recognized in Marje v.
Mutuc,243 where the Court, speaking through Chief Justice Fernando,
held that "the right to privacy as such is accorded recognition
independently of its identification with liberty; in itself, it is fully
deserving of constitutional protection."244 Marje adopted the ruling
of the US Supreme Court in Griswold v. Connecticut,245 where Justice
William O. Douglas wrote:
We deal with a right of privacy older than the Bill of Rights -older than
our political parties, older than our school system. Marriage is a
coming together for better or for worse, hopefully enduring, and
intimate to the degree of being sacred. It is an association that
promotes a way of life, not causes; a harmony in living, not political
faiths; a bilateral loyalty, not commercial or social projects. Yet it is an
association for as noble a purpose as any involved in our prior
decisions.
Ironically, Griswold invalidated a Connecticut statute which made the
use of contraceptives a criminal offense on the ground of its
amounting to an unconstitutional invasion of the right to privacy of
married persons. Nevertheless, it recognized the zone of privacy
rightfully enjoyed by couples. Justice Douglas in Grisworld wrote that
"specific guarantees in the Bill of Rights have penumbras, formed by
emanations from those guarantees that help give them life and
substance. Various guarantees create zones of privacy."246
At any rate, in case of conflict between the couple, the courts will
decide.
The Family and Parental Consent
Equally deplorable is the debarment of parental consent in cases
where the minor, who will be undergoing a procedure, is already a
parent or has had a miscarriage. Section 7 of the RH law provides:
SEC. 7. Access to Family Planning. – x x x.
No person shall be denied information and access to family planning
services, whether natural or artificial: Provided, That minors will not
be allowed access to modern methods of family planning without
written consent from their parents or guardian/s except when the
minor is already a parent or has had a miscarriage.
There can be no other interpretation of this provision except that
when a minor is already a parent or has had a miscarriage, the parents
are excluded from the decision making process of the minor with
regard to family planning. Even if she is not yet emancipated, the
parental authority is already cut off just because there is a need to
tame population growth.
It is precisely in such situations when a minor parent needs the
comfort, care, advice, and guidance of her own parents. The State
cannot replace her natural mother and father when it comes to
providing her needs and comfort. To say that their consent is no
longer relevant is clearly anti-family. It does not promote unity in the
family. It is an affront to the constitutional mandate to protect and
strengthen the family as an inviolable social institution.
More alarmingly, it disregards and disobeys the constitutional
mandate that "the natural and primary right and duty of parents in
the rearing of the youth for civic efficiency and the development of
moral character shall receive the support of the Government." 247 In
this regard, Commissioner Bernas wrote:
The 1987 provision has added the adjective "primary" to modify the
right of parents. It imports the assertion that the right of parents is
superior to that of the State.248 [Emphases supplied]
To insist on a rule that interferes with the right of parents to exercise
parental control over their minor-child or the right of the spouses to
mutually decide on matters which very well affect the very purpose
of marriage, that is, the establishment of conjugal and family life,
would result in the violation of one's privacy with respect to his family.
It would be dismissive of the unique and strongly-held Filipino
tradition of maintaining close family ties and violative of the
recognition that the State affords couples entering into the special
contract of marriage to as one unit in forming the foundation of the
family and society.
The State cannot, without a compelling state interest, take over the
role of parents in the care and custody of a minor child, whether or
not the latter is already a parent or has had a miscarriage. Only a
compelling state interest can justify a state substitution of their
parental authority.
First Exception: Access to Information
Whether with respect to the minor referred to under the exception
provided in the second paragraph of Section 7 or with respect to the
consenting spouse under Section 23(a)(2)(i), a distinction must be
made. There must be a differentiation between access to information
about family planning services, on one hand, and access to the
reproductive health procedures and modern family planning methods
themselves, on the other. Insofar as access to information is
concerned, the Court finds no constitutional objection to the
acquisition of information by the minor referred to under the
exception in the second paragraph of Section 7 that would enable her
to take proper care of her own body and that of her unborn child.
After all, Section 12, Article II of the Constitution mandates the State
to protect both the life of the mother as that of the unborn child.
Considering that information to enable a person to make informed
decisions is essential in the protection and maintenance of ones'
health, access to such information with respect to reproductive
health must be allowed. In this situation, the fear that parents might
be deprived of their parental control is unfounded because they are
not prohibited to exercise parental guidance and control over their
minor child and assist her in deciding whether to accept or reject the
information received.
Second Exception: Life Threatening Cases
As in the case of the conscientious objector, an exception must be
made in life-threatening cases that require the performance of
emergency procedures. In such cases, the life of the minor who has
already suffered a miscarriage and that of the spouse should not be
put at grave risk simply for lack of consent. It should be emphasized
that no person should be denied the appropriate medical care
urgently needed to preserve the primordial right, that is, the right to
life.
In this connection, the second sentence of Section
23(a)(2)(ii)249 should be struck down. By effectively limiting the
requirement of parental consent to "only in elective surgical
procedures," it denies the parents their right of parental authority in
cases where what is involved are "non-surgical procedures." Save for
the two exceptions discussed above, and in the case of an abused
child as provided in the first sentence of Section 23(a)(2)(ii), the
parents should not be deprived of their constitutional right of
parental authority. To deny them of this right would be an affront to
the constitutional mandate to protect and strengthen the family.
5 - Academic Freedom
It is asserted that Section 14 of the RH Law, in relation to Section 24
thereof, mandating the teaching of Age-and Development-
Appropriate Reproductive Health Education under threat of fine
and/or imprisonment violates the principle of academic freedom .
According to the petitioners, these provisions effectively force
educational institutions to teach reproductive health education even
if they believe that the same is not suitable to be taught to their
students.250 Citing various studies conducted in the United States and
statistical data gathered in the country, the petitioners aver that the
prevalence of contraceptives has led to an increase of out-of-wedlock
births; divorce and breakdown of families; the acceptance of abortion
and euthanasia; the "feminization of poverty"; the aging of society;
and promotion of promiscuity among the youth. 251
At this point, suffice it to state that any attack on the validity of
Section 14 of the RH Law is premature because the Department of
Education, Culture and Sports has yet to formulate a curriculum on
age-appropriate reproductive health education. One can only
speculate on the content, manner and medium of instruction that will
be used to educate the adolescents and whether they will contradict
the religious beliefs of the petitioners and validate their
apprehensions. Thus, considering the premature nature of this
particular issue, the Court declines to rule on its constitutionality or
validity.
At any rate, Section 12, Article II of the 1987 Constitution provides
that the natural and primary right and duty of parents in the rearing
of the youth for civic efficiency and development of moral character
shall receive the support of the Government. Like the 1973
Constitution and the 1935 Constitution, the 1987 Constitution affirms
the State recognition of the invaluable role of parents in preparing the
youth to become productive members of society. Notably, it places
more importance on the role of parents in the development of their
children by recognizing that said role shall be "primary," that is, that
the right of parents in upbringing the youth is superior to that of the
State.252
It is also the inherent right of the State to act as parens patriae to aid
parents in the moral development of the youth. Indeed, the
Constitution makes mention of the importance of developing the
youth and their important role in nation building.253 Considering that
Section 14 provides not only for the age-appropriate-reproductive
health education, but also for values formation; the development of
knowledge and skills in self-protection against discrimination; sexual
abuse and violence against women and children and other forms of
gender based violence and teen pregnancy; physical, social and
emotional changes in adolescents; women's rights and children's
rights; responsible teenage behavior; gender and development; and
responsible parenthood, and that Rule 10, Section 11.01 of the RH-
IRR and Section 4(t) of the RH Law itself provides for the teaching of
responsible teenage behavior, gender sensitivity and physical and
emotional changes among adolescents - the Court finds that the legal
mandate provided under the assailed provision supplements, rather
than supplants, the rights and duties of the parents in the moral
development of their children.
Furthermore, as Section 14 also mandates that the mandatory
reproductive health education program shall be developed in
conjunction with parent-teacher-community associations, school
officials and other interest groups, it could very well be said that it will
be in line with the religious beliefs of the petitioners. By imposing such
a condition, it becomes apparent that the petitioners' contention that
Section 14 violates Article XV, Section 3(1) of the Constitution is
without merit.254
While the Court notes the possibility that educators might raise their
objection to their participation in the reproductive health education
program provided under Section 14 of the RH Law on the ground that
the same violates their religious beliefs, the Court reserves its
judgment should an actual case be filed before it.
6 - Due Process
The petitioners contend that the RH Law suffers from vagueness and,
thus violates the due process clause of the Constitution. According to
them, Section 23 (a)(l) mentions a "private health service provider"
among those who may be held punishable but does not define who is
a "private health care service provider." They argue that confusion
further results since Section 7 only makes reference to a "private
health care institution."
The petitioners also point out that Section 7 of the assailed legislation
exempts hospitals operated by religious groups from rendering
reproductive health service and modern family planning methods. It
is unclear, however, if these institutions are also exempt from giving
reproductive health information under Section 23(a)(l), or from
rendering reproductive health procedures under Section 23(a)(2).
Finally, it is averred that the RH Law punishes the withholding,
restricting and providing of incorrect information, but at the same
time fails to define "incorrect information."
The arguments fail to persuade.
A statute or act suffers from the defect of vagueness when it lacks
comprehensible standards that men of common intelligence must
necessarily guess its meaning and differ as to its application. It is
repugnant to the Constitution in two respects: (1) it violates due
process for failure to accord persons, especially the parties targeted
by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers
unbridled discretion in carrying out its provisions and becomes an
arbitrary flexing of the Government muscle.255 Moreover, in
determining whether the words used in a statute are vague, words
must not only be taken in accordance with their plain meaning alone,
but also in relation to other parts of the statute. It is a rule that every
part of the statute must be interpreted with reference to the context,
that is, every part of it must be construed together with the other
parts and kept subservient to the general intent of the whole
enactment.256
As correctly noted by the OSG, in determining the definition of
"private health care service provider," reference must be made to
Section 4(n) of the RH Law which defines a "public health service
provider," viz:
(n) Public health care service provider refers to: (1) public health care
institution, which is duly licensed and accredited and devoted
primarily to the maintenance and operation of facilities for health
promotion, disease prevention, diagnosis, treatment and care of
individuals suffering from illness, disease, injury, disability or
deformity, or in need of obstetrical or other medical and nursing care;
(2) public health care professional, who is a doctor of medicine, a
nurse or a midvvife; (3) public health worker engaged in the delivery
of health care services; or (4) barangay health worker who has
undergone training programs under any accredited government and
NGO and who voluntarily renders primarily health care services in the
community after having been accredited to function as such by the
local health board in accordance with the guidelines promulgated by
the Department of Health (DOH) .
Further, the use of the term "private health care institution" in
Section 7 of the law, instead of "private health care service provider,"
should not be a cause of confusion for the obvious reason that they
are used synonymously.
The Court need not belabor the issue of whether the right to be
exempt from being obligated to render reproductive health service
and modem family planning methods, includes exemption from being
obligated to give reproductive health information and to render
reproductive health procedures. Clearly, subject to the qualifications
and exemptions earlier discussed, the right to be exempt from being
obligated to render reproductive health service and modem family
planning methods, necessarily includes exemption from being
obligated to give reproductive health information and to render
reproductive health procedures. The terms "service" and "methods"
are broad enough to include the providing of information and the
rendering of medical procedures.
The same can be said with respect to the contention that the RH Law
punishes health care service providers who intentionally withhold,
restrict and provide incorrect information regarding reproductive
health programs and services. For ready reference, the assailed
provision is hereby quoted as follows:
SEC. 23. Prohibited Acts. - The following acts are prohibited:
(a) Any health care service provider, whether public or private, who
shall:
(1) Knowingly withhold information or restrict the dissemination
thereof, and/ or intentionally provide incorrect information regarding
programs and services on reproductive health including the right to
informed choice and access to a full range of legal, medically-safe,
non-abortifacient and effective family planning methods;
From its plain meaning, the word "incorrect" here denotes failing to
agree with a copy or model or with established rules; inaccurate,
faulty; failing to agree with the requirements of duty, morality or
propriety; and failing to coincide with the truth. 257 On the other hand,
the word "knowingly" means with awareness or deliberateness that
is intentional.258 Used together in relation to Section 23(a)(l), they
connote a sense of malice and ill motive to mislead or misrepresent
the public as to the nature and effect of programs and services on
reproductive health. Public health and safety demand that health care
service providers give their honest and correct medical information in
accordance with what is acceptable in medical practice. While health
care service providers are not barred from expressing their own
personal opinions regarding the programs and services on
reproductive health, their right must be tempered with the need to
provide public health and safety. The public deserves no less.
7-Egual Protection
The petitioners also claim that the RH Law violates the equal
protection clause under the Constitution as it discriminates against
the poor because it makes them the primary target of the government
program that promotes contraceptive use . They argue that, rather
than promoting reproductive health among the poor, the RH Law
introduces contraceptives that would effectively reduce the number
of the poor. Their bases are the various provisions in the RH Law
dealing with the poor, especially those mentioned in the guiding
principles259 and definition of terms260 of the law.
They add that the exclusion of private educational institutions from
the mandatory reproductive health education program imposed by
the RH Law renders it unconstitutional.
In Biraogo v. Philippine Truth Commission,261 the Court had the
occasion to expound on the concept of equal protection. Thus:
One of the basic principles on which this government was founded is
that of the equality of right which is embodied in Section 1, Article III
of the 1987 Constitution. The equal protection of the laws is
embraced in the concept of due process, as every unfair
discrimination offends the requirements of justice and fair play. It has
been embodied in a separate clause, however, to provide for a more
specific guaranty against any form of undue favoritism or hostility
from the government. Arbitrariness in general may be challenged on
the basis of the due process clause. But if the particular act assailed
partakes of an unwarranted partiality or prejudice, the sharper
weapon to cut it down is the equal protection clause.
"According to a long line of decisions, equal protection simply
requires that all persons or things similarly situated should be treated
alike, both as to rights conferred and responsibilities imposed." It
"requires public bodies and inst itutions to treat similarly situated
individuals in a similar manner." "The purpose of the equal protection
clause is to secure every person within a state's jurisdiction against
intentional and arbitrary discrimination, whether occasioned by the
express terms of a statue or by its improper execution through the
state's duly constituted authorities." "In other words, the concept of
equal justice under the law requires the state to govern impartially,
and it may not draw distinctions between individuals solely on
differences that are irrelevant to a legitimate governmental
objective."
The equal protection clause is aimed at all official state actions, not
just those of the legislature. Its inhibitions cover all the departments
of the government including the political and executive departments,
and extend to all actions of a state denying equal protection of the
laws, through whatever agency or whatever guise is taken.
It, however, does not require the universal application of the laws to
all persons or things without distinction. What it simply requires is
equality among equals as determined according to a valid
classification. Indeed, the equal protection clause permits
classification. Such classification, however, to be valid must pass the
test of reasonableness. The test has four requisites: (1) The
classification rests on substantial distinctions; (2) It is germane to the
purpose of the law; (3) It is not limited to existing conditions only; and
(4) It applies equally to all members of the same class. "Superficial
differences do not make for a valid classification."
For a classification to meet the requirements of constitutionality, it
must include or embrace all persons who naturally belong to the class.
"The classification will be regarded as invalid if all the members of the
class are not similarly treated, both as to rights conferred and
obligations imposed. It is not necessary that the classification be
made with absolute symmetry, in the sense that the members of the
class should possess the same characteristics in equal degree.
Substantial similarity will suffice; and as long as this is achieved, all
those covered by the classification are to be treated equally. The mere
fact that an individual belonging to a class differs from the other
members, as long as that class is substantially distinguishable from all
others, does not justify the non-application of the law to him."
The classification must not be based on existing circumstances only,
or so constituted as to preclude addition to the number included in
the class. It must be of such a nature as to embrace all those who may
thereafter be in similar circumstances and conditions. It must not
leave out or "underinclude" those that should otherwise fall into a
certain classification. [Emphases supplied; citations excluded]
To provide that the poor are to be given priority in the government's
reproductive health care program is not a violation of the equal
protection clause. In fact, it is pursuant to Section 11, Article XIII of
the Constitution which recognizes the distinct necessity to address
the needs of the underprivileged by providing that they be given
priority in addressing the health development of the people. Thus:
Section 11. The State shall adopt an integrated and comprehensive
approach to health development which shall endeavor to make
essential goods, health and other social services available to all the
people at affordable cost. There shall be priority for the needs of the
underprivileged, sick, elderly, disabled, women, and children. The
State shall endeavor to provide free medical care to paupers.
It should be noted that Section 7 of the RH Law prioritizes poor and
marginalized couples who are suffering from fertility issues and desire
to have children. There is, therefore, no merit to the contention that
the RH Law only seeks to target the poor to reduce their number.
While the RH Law admits the use of contraceptives, it does not, as
elucidated above, sanction abortion. As Section 3(1) explains, the
"promotion and/or stabilization of the population growth rate is
incidental to the advancement of reproductive health."
Moreover, the RH Law does not prescribe the number of children a
couple may have and does not impose conditions upon couples who
intend to have children. While the petitioners surmise that the
assailed law seeks to charge couples with the duty to have children
only if they would raise them in a truly humane way, a deeper look
into its provisions shows that what the law seeks to do is to simply
provide priority to the poor in the implementation of government
programs to promote basic reproductive health care.
With respect to the exclusion of private educational institutions from
the mandatory reproductive health education program under Section
14, suffice it to state that the mere fact that the children of those who
are less fortunate attend public educational institutions does not
amount to substantial distinction sufficient to annul the assailed
provision. On the other hand, substantial distinction rests between
public educational institutions and private educational institutions,
particularly because there is a need to recognize the academic
freedom of private educational institutions especially with respect to
religious instruction and to consider their sensitivity towards the
teaching of reproductive health education.
8-Involuntary Servitude
The petitioners also aver that the RH Law is constitutionally infirm as
it violates the constitutional prohibition against involuntary servitude.
They posit that Section 17 of the assailed legislation requiring private
and non-government health care service providers to render forty-
eight (48) hours of pro bono reproductive health services, actually
amounts to involuntary servitude because it requires medical
practitioners to perform acts against their will.262
The OSG counters that the rendition of pro bono services envisioned
in Section 17 can hardly be considered as forced labor analogous to
slavery, as reproductive health care service providers have the
discretion as to the manner and time of giving pro bono services.
Moreover, the OSG points out that the imposition is within the
powers of the government, the accreditation of medical practitioners
with PhilHealth being a privilege and not a right.
The point of the OSG is well-taken.
It should first be mentioned that the practice of medicine is
undeniably imbued with public interest that it is both a power and a
duty of the State to control and regulate it in order to protect and
promote the public welfare. Like the legal profession, the practice of
medicine is not a right but a privileged burdened with conditions as it
directly involves the very lives of the people. A fortiori, this power
includes the power of Congress263 to prescribe the qualifications for
the practice of professions or trades which affect the public welfare,
the public health, the public morals, and the public safety; and to
regulate or control such professions or trades, even to the point of
revoking such right altogether.264
Moreover, as some petitioners put it, the notion of involuntary
servitude connotes the presence of force, threats, intimidation or
other similar means of coercion and compulsion. 265 A reading of the
assailed provision, however, reveals that it only encourages private
and non- government reproductive healthcare service providers to
render pro bono service. Other than non-accreditation with
PhilHealth, no penalty is imposed should they choose to do otherwise.
Private and non-government reproductive healthcare service
providers also enjoy the liberty to choose which kind of health service
they wish to provide, when, where and how to provide it or whether
to provide it all. Clearly, therefore, no compulsion, force or threat is
made upon them to render pro bono service against their will. While
the rendering of such service was made a prerequisite to
accreditation with PhilHealth, the Court does not consider the same
to be an unreasonable burden, but rather, a necessary incentive
imposed by Congress in the furtherance of a perceived legitimate
state interest.
Consistent with what the Court had earlier discussed, however, it
should be emphasized that conscientious objectors are exempt from
this provision as long as their religious beliefs and convictions do not
allow them to render reproductive health service, pro bona or
otherwise.
9-Delegation of Authority to the FDA
The petitioners likewise question the delegation by Congress to the
FDA of the power to determine whether or not a supply or product is
to be included in the Essential Drugs List (EDL).266
The Court finds nothing wrong with the delegation. The FDA does not
only have the power but also the competency to evaluate, register
and cover health services and methods. It is the only government
entity empowered to render such services and highly proficient to do
so. It should be understood that health services and methods fall
under the gamut of terms that are associated with what is ordinarily
understood as "health products."
In this connection, Section 4 of R.A. No. 3 720, as amended by R.A.
No. 9711 reads:
SEC. 4. To carry out the provisions of this Act, there is hereby created
an office to be called the Food and Drug Administration (FDA) in the
Department of Health (DOH). Said Administration shall be under the
Office of the Secretary and shall have the following functions, powers
and duties:
"(a) To administer the effective implementation of this Act and of the
rules and regulations issued pursuant to the same;
"(b) To assume primary jurisdiction in the collection of samples of
health products;
"(c) To analyze and inspect health products in connection with the
implementation of this Act;
"(d) To establish analytical data to serve as basis for the preparation
of health products standards, and to recommend standards of
identity, purity, safety, efficacy, quality and fill of container;
"(e) To issue certificates of compliance with technical requirements
to serve as basis for the issuance of appropriate authorization and
spot-check for compliance with regulations regarding operation of
manufacturers, importers, exporters, distributors, wholesalers, drug
outlets, and other establishments and facilities of health products, as
determined by the FDA;
"x x x
"(h) To conduct appropriate tests on all applicable health products
prior to the issuance of appropriate authorizations to ensure safety,
efficacy, purity, and quality;
"(i) To require all manufacturers, traders, distributors, importers,
exporters, wholesalers, retailers, consumers, and non-consumer
users of health products to report to the FDA any incident that
reasonably indicates that said product has caused or contributed to
the death, serious illness or serious injury to a consumer, a patient, or
any person;
"(j) To issue cease and desist orders motu propio or upon verified
complaint for health products, whether or not registered with the
FDA Provided, That for registered health products, the cease and
desist order is valid for thirty (30) days and may be extended for sixty
( 60) days only after due process has been observed;
"(k) After due process, to order the ban, recall, and/or withdrawal of
any health product found to have caused death, serious illness or
serious injury to a consumer or patient, or is found to be imminently
injurious, unsafe, dangerous, or grossly deceptive, and to require all
concerned to implement the risk management plan which is a
requirement for the issuance of the appropriate authorization;
x x x.
As can be gleaned from the above, the functions, powers and duties
of the FDA are specific to enable the agency to carry out the mandates
of the law. Being the country's premiere and sole agency that ensures
the safety of food and medicines available to the public, the FDA was
equipped with the necessary powers and functions to make it
effective. Pursuant to the principle of necessary implication, the
mandate by Congress to the FDA to ensure public health and safety
by permitting only food and medicines that are safe includes "service"
and "methods." From the declared policy of the RH Law, it is clear that
Congress intended that the public be given only those medicines that
are proven medically safe, legal, non-abortifacient, and effective in
accordance with scientific and evidence-based medical research
standards. The philosophy behind the permitted delegation was
explained in Echagaray v. Secretary of Justice,267 as follows:
The reason is the increasing complexity of the task of the government
and the growing inability of the legislature to cope directly with the
many problems demanding its attention. The growth of society has
ramified its activities and created peculiar and sophisticated problems
that the legislature cannot be expected reasonably to comprehend.
Specialization even in legislation has become necessary. To many of
the problems attendant upon present day undertakings, the
legislature may not have the competence, let alone the interest and
the time, to provide the required direct and efficacious, not to say
specific solutions.
10- Autonomy of Local Governments and the Autonomous Region
of Muslim Mindanao (ARMM)
As for the autonomy of local governments, the petitioners claim that
the RH Law infringes upon the powers devolved to local government
units (LGUs) under Section 17 of the Local Government Code. Said
Section 17 vested upon the LGUs the duties and functions pertaining
to the delivery of basic services and facilities, as follows:
SECTION 17. Basic Services and Facilities. –
(a) Local government units shall endeavor to be self-reliant and shall
continue exercising the powers and discharging the duties and
functions currently vested upon them. They shall also discharge the
functions and responsibilities of national agencies and offices
devolved to them pursuant to this Code. Local government units shall
likewise exercise such other powers and discharge such other
functions and responsibilities as are necessary, appropriate, or
incidental to efficient and effective provision of the basic services and
facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, x
x x.
While the aforementioned provision charges the LGUs to take on the
functions and responsibilities that have already been devolved upon
them from the national agencies on the aspect of providing for basic
services and facilities in their respective jurisdictions, paragraph (c) of
the same provision provides a categorical exception of cases involving
nationally-funded projects, facilities, programs and services.268 Thus:
(c) Notwithstanding the provisions of subsection (b) hereof, public
works and infrastructure projects and other facilities, programs and
services funded by the National Government under the annual
General Appropriations Act, other special laws, pertinent executive
orders, and those wholly or partially funded from foreign sources, are
not covered under this Section, except in those cases where the local
government unit concerned is duly designated as the implementing
agency for such projects, facilities, programs and services. [Emphases
supplied]
The essence of this express reservation of power by the national
government is that, unless an LGU is particularly designated as the
implementing agency, it has no power over a program for which
funding has been provided by the national government under the
annual general appropriations act, even if the program involves the
delivery of basic services within the jurisdiction of the LGU.269 A
complete relinquishment of central government powers on the
matter of providing basic facilities and services cannot be implied as
the Local Government Code itself weighs against it.270
In this case, a reading of the RH Law clearly shows that whether it
pertains to the establishment of health care facilities,271 the hiring of
skilled health professionals,272 or the training of barangay health
workers,273 it will be the national government that will provide for the
funding of its implementation. Local autonomy is not absolute. The
national government still has the say when it comes to national
priority programs which the local government is called upon to
implement like the RH Law.
Moreover, from the use of the word "endeavor," the LG Us are merely
encouraged to provide these services. There is nothing in the wording
of the law which can be construed as making the availability of these
services mandatory for the LGUs. For said reason, it cannot be said
that the RH Law amounts to an undue encroachment by the national
government upon the autonomy enjoyed by the local governments.
The ARMM
The fact that the RH Law does not intrude in the autonomy of local
governments can be equally applied to the ARMM. The RH Law does
not infringe upon its autonomy. Moreover, Article III, Sections 6, 10
and 11 of R.A. No. 9054, or the organic act of the ARMM, alluded to
by petitioner Tillah to justify the exemption of the operation of the
RH Law in the autonomous region, refer to the policy statements for
the guidance of the regional government. These provisions relied
upon by the petitioners simply delineate the powers that may be
exercised by the regional government, which can, in no manner, be
characterized as an abdication by the State of its power to enact
legislation that would benefit the general welfare. After all, despite
the veritable autonomy granted the ARMM, the Constitution and the
supporting jurisprudence, as they now stand, reject the notion of
imperium et imperio in the relationship between the national and the
regional governments.274 Except for the express and implied
limitations imposed on it by the Constitution, Congress cannot be
restricted to exercise its inherent and plenary power to legislate on
all subjects which extends to all matters of general concern or
common interest.275
11 - Natural Law
With respect to the argument that the RH Law violates natural
law,276 suffice it to say that the Court does not duly recognize it as a
legal basis for upholding or invalidating a law. Our only guidepost is
the Constitution. While every law enacted by man emanated from
what is perceived as natural law, the Court is not obliged to see if a
statute, executive issuance or ordinance is in conformity to it. To
begin with, it is not enacted by an acceptable legitimate body.
Moreover, natural laws are mere thoughts and notions on inherent
rights espoused by theorists, philosophers and theologists. The jurists
of the philosophical school are interested in the law as an abstraction,
rather than in the actual law of the past or present.277 Unless, a
natural right has been transformed into a written law, it cannot serve
as a basis to strike down a law. In Republic v. Sandiganbayan,278 the
very case cited by the petitioners, it was explained that the Court is
not duty-bound to examine every law or action and whether it
conforms with both the Constitution and natural law. Rather, natural
law is to be used sparingly only in the most peculiar of circumstances
involving rights inherent to man where no law is applicable.279
At any rate, as earlier expounded, the RH Law does not sanction the
taking away of life. It does not allow abortion in any shape or form. It
only seeks to enhance the population control program of the
government by providing information and making non-abortifacient
contraceptives more readily available to the public, especially to the
poor.
Facts and Fallacies
and the Wisdom of the Law
In general, the Court does not find the RH Law as unconstitutional
insofar as it seeks to provide access to medically-safe, non-
abortifacient, effective, legal, affordable, and quality reproductive
healthcare services, methods, devices, and supplies. As earlier
pointed out, however, the religious freedom of some sectors of
society cannot be trampled upon in pursuit of what the law hopes to
achieve. After all, the Constitutional safeguard to religious freedom is
a recognition that man stands accountable to an authority higher than
the State.
In conformity with the principle of separation of Church and State,
one religious group cannot be allowed to impose its beliefs on the rest
of the society. Philippine modem society leaves enough room for
diversity and pluralism. As such, everyone should be tolerant and
open-minded so that peace and harmony may continue to reign as we
exist alongside each other.
As healthful as the intention of the RH Law may be, the idea does not
escape the Court that what it seeks to address is the problem of rising
poverty and unemployment in the country. Let it be said that the
cause of these perennial issues is not the large population but the
unequal distribution of wealth. Even if population growth is
controlled, poverty will remain as long as the country's wealth
remains in the hands of the very few.
At any rate, population control may not be beneficial for the country
in the long run. The European and Asian countries, which embarked
on such a program generations ago , are now burdened with ageing
populations. The number of their young workers is dwindling with
adverse effects on their economy. These young workers represent a
significant human capital which could have helped them invigorate,
innovate and fuel their economy. These countries are now trying to
reverse their programs, but they are still struggling. For one,
Singapore, even with incentives, is failing.
And in this country, the economy is being propped up by remittances
from our Overseas Filipino Workers. This is because we have an ample
supply of young able-bodied workers. What would happen if the
country would be weighed down by an ageing population and the
fewer younger generation would not be able to support them? This
would be the situation when our total fertility rate would go down
below the replacement level of two (2) children per woman.280
Indeed, at the present, the country has a population problem, but the
State should not use coercive measures (like the penal provisions of
the RH Law against conscientious objectors) to solve it. Nonetheless,
the policy of the Court is non-interference in the wisdom of a law.
x x x. But this Court cannot go beyond what the legislature has laid 6) Section 23(b) and the corresponding provision in the RH-IRR,
down. Its duty is to say what the law is as enacted by the lawmaking particularly Section 5 .24 thereof, insofar as they punish any public
body. That is not the same as saying what the law should be or what officer who refuses to support reproductive health programs or shall
is the correct rule in a given set of circumstances. It is not the province do any act that hinders the full implementation of a reproductive
of the judiciary to look into the wisdom of the law nor to question the health program, regardless of his or her religious beliefs;
policies adopted by the legislative branch. Nor is it the business of this
Tribunal to remedy every unjust situation that may arise from the 7) Section 17 and the corresponding prov1s10n in the RH-IRR
application of a particular law. It is for the legislature to enact regarding the rendering of pro bona reproductive health service in so
remedial legislation if that would be necessary in the premises. But as far as they affect the conscientious objector in securing PhilHealth
always, with apt judicial caution and cold neutrality, the Court must accreditation; and
carry out the delicate function of interpreting the law, guided by the
Constitution and existing legislation and mindful of settled
8) Section 3.0l(a) and Section 3.01 G) of the RH-IRR, which added the
jurisprudence. The Court's function is therefore limited, and
qualifier "primarily" in defining abortifacients and contraceptives, as
accordingly, must confine itself to the judicial task of saying what the
they are ultra vires and, therefore, null and void for contravening
law is, as enacted by the lawmaking body.281
Section 4(a) of the RH Law and violating Section 12, Article II of the
Constitution.
Be that as it may, it bears reiterating that the RH Law is a mere
compilation and enhancement of the prior existing contraceptive and
The Status Quo Ante Order issued by the Court on March 19, 2013 as
reproductive health laws, but with coercive measures. Even if the
extended by its Order, dated July 16, 2013 , is hereby LIFTED, insofar
Court decrees the RH Law as entirely unconstitutional, there will still
as the provisions of R.A. No. 10354 which have been herein declared
be the Population Act (R.A. No. 6365), the Contraceptive Act (R.A. No.
as constitutional.
4729) and the reproductive health for women or The Magna Carta of
Women (R.A. No. 9710), sans the coercive provisions of the assailed
legislation. All the same, the principle of "no-abortion" and "non- SO ORDERED.
coercion" in the adoption of any family planning method should be
maintained.

WHEREFORE, the petitions are PARTIALLY GRANTED. Accordingly, the

Court declares R.A. No. 10354 as NOT UNCONSTITUTIONAL except
with respect to the following provisions which are declared
UNCONSTITUTIONAL:

1) Section 7 and the corresponding provision in the RH-IRR insofar as

they: a) require private health facilities and non-maternity specialty
hospitals and hospitals owned and operated by a religious group to
refer patients, not in an emergency or life-threatening case, as
defined under Republic Act No. 8344, to another health facility which
is conveniently accessible; and b) allow minor-parents or minors who
have suffered a miscarriage access to modem methods of family
planning without written consent from their parents or guardian/s;

2) Section 23(a)(l) and the corresponding provision in the RH-IRR,

particularly Section 5 .24 thereof, insofar as they punish any
healthcare service provider who fails and or refuses to disseminate
information regarding programs and services on reproductive health
regardless of his or her religious beliefs.

3) Section 23(a)(2)(i) and the corresponding provision in the RH-IRR

insofar as they allow a married individual, not in an emergency or life-
threatening case, as defined under Republic Act No. 8344, to undergo
reproductive health procedures without the consent of the spouse;

4) Section 23(a)(2)(ii) and the corresponding provision in the RH-IRR

insofar as they limit the requirement of parental consent only to
elective surgical procedures.

5) Section 23(a)(3) and the corresponding provision in the RH-IRR,

particularly Section 5.24 thereof, insofar as they punish any
healthcare service provider who fails and/or refuses to refer a patient
not in an emergency or life-threatening case, as defined under
Republic Act No. 8344, to another health care service provider within
the same facility or one which is conveniently accessible regardless of
his or her religious beliefs;
G.R. No. 168056 September 1, 2005
ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON
S. ALCANTARA and ED VINCENT S. ALBANO, Petitioners,
vs.
THE HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA;
HONORABLE SECRETARY OF THE DEPARTMENT OF FINANCE CESAR
PURISIMA; and HONORABLE COMMISSIONER OF INTERNAL
REVENUE GUILLERMO PARAYNO, JR., Respondent.
x-------------------------x
G.R. No. 168207
AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY
E. ESTRADA, PANFILO M. LACSON, ALFREDO S. LIM, JAMBY A.S.
MADRIGAL, AND SERGIO R. OSMEÑA III, Petitioners,
vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, CESAR V. PURISIMA,
SECRETARY OF FINANCE, GUILLERMO L. PARAYNO, JR.,
COMMISSIONER OF THE BUREAU OF INTERNAL
REVENUE, Respondent.
x-------------------------x
G.R. No. 168461
ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its
President, ROSARIO ANTONIO; PETRON DEALERS’ ASSOCIATION
represented by its President, RUTH E. BARBIBI; ASSOCIATION OF
CALTEX DEALERS’ OF THE PHILIPPINES represented by its President,
MERCEDITAS A. GARCIA; ROSARIO ANTONIO doing business under
the name and style of "ANB NORTH SHELL SERVICE STATION";
LOURDES MARTINEZ doing business under the name and style of
"SHELL GATE – N. DOMINGO"; BETHZAIDA TAN doing business
under the name and style of "ADVANCE SHELL STATION";
REYNALDO P. MONTOYA doing business under the name and style
of "NEW LAMUAN SHELL SERVICE STATION"; EFREN SOTTO doing
business under the name and style of "RED FIELD SHELL SERVICE
STATION"; DONICA CORPORATION represented by its President,
DESI TOMACRUZ; RUTH E. MARBIBI doing business under the name
and style of "R&R PETRON STATION"; PETER M. UNGSON doing
business under the name and style of "CLASSIC STAR GASOLINE
SERVICE STATION"; MARIAN SHEILA A. LEE doing business under
the name and style of "NTE GASOLINE & SERVICE STATION";
JULIAN CESAR P. POSADAS doing business under the name and
style of "STARCARGA ENTERPRISES"; ADORACION MAÑEBO doing
business under the name and style of "CMA MOTORISTS CENTER";
SUSAN M. ENTRATA doing business under the name and style of
"LEONA’S GASOLINE STATION and SERVICE CENTER"; CARMELITA
BALDONADO doing business under the name and style of "FIRST
CHOICE SERVICE CENTER"; MERCEDITAS A. GARCIA doing business
under the name and style of "LORPED SERVICE CENTER";
RHEAMAR A. RAMOS doing business under the name and style of
"RJRAM PTT GAS STATION"; MA. ISABEL VIOLAGO doing business
under the name and style of "VIOLAGO-PTT SERVICE CENTER";
MOTORISTS’ HEART CORPORATION represented by its Vice-
President for Operations, JOSELITO F. FLORDELIZA; MOTORISTS’
HARVARD CORPORATION represented by its Vice-President for
Operations, JOSELITO F. FLORDELIZA; MOTORISTS’ HERITAGE
CORPORATION represented by its Vice-President for Operations,
JOSELITO F. FLORDELIZA; PHILIPPINE STANDARD OIL
CORPORATION represented by its Vice-President for Operations,
JOSELITO F. FLORDELIZA; ROMEO MANUEL doing business under
the name and style of "ROMMAN GASOLINE STATION"; ANTHONY
ALBERT CRUZ III doing business under the name and style of "TRUE
SERVICE STATION", Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of the Department
of Finance and GUILLERMO L. PARAYNO, JR., in his capacity as
Commissioner of Internal Revenue, Respondent.
x-------------------------x
G.R. No. 168463
FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL
JOEL J. VILLANUEVA, RODOLFO G. PLAZA, DARLENE ANTONINO-
CUSTODIO, OSCAR G. MALAPITAN, BENJAMIN C. AGARAO, JR.
JUAN EDGARDO M. ANGARA, JUSTIN MARC SB. CHIPECO,
FLORENCIO G. NOEL, MUJIV S. HATAMAN, RENATO B. MAGTUBO,
JOSEPH A. SANTIAGO, TEOFISTO DL. GUINGONA III, RUY ELIAS C.
LOPEZ, RODOLFO Q. AGBAYANI and TEODORO A. CASIÑO,
Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of Finance,
GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of
Internal Revenue, and EDUARDO R. ERMITA, in his capacity as
Executive Secretary,Respondent.
x-------------------------x
G.R. No. 168730
BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. Petitioner,
vs.
HON. EDUARDO R. ERMITA, in his capacity as the Executive
Secretary; HON. MARGARITO TEVES, in his capacity as Secretary of
Finance; HON. JOSE MARIO BUNAG, in his capacity as the OIC
Commissioner of the Bureau of Internal Revenue; and HON.
ALEXANDER AREVALO, in his capacity as the OIC Commissioner of
the Bureau of Customs, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The expenses of government, having for their object the interest of
all, should be borne by everyone, and the more man enjoys the
advantages of society, the more he ought to hold himself honored in
contributing to those expenses.
-Anne Robert Jacques Turgot (1727-1781)
French statesman and economist
Mounting budget deficit, revenue generation, inadequate fiscal
allocation for education, increased emoluments for health workers,
and wider coverage for full value-added tax benefits … these are the
reasons why Republic Act No. 9337 (R.A. No. 9337)1 was enacted.
Reasons, the wisdom of which, the Court even with its extensive
constitutional power of review, cannot probe. The petitioners in these
cases, however, question not only the wisdom of the law, but also
perceived constitutional infirmities in its passage.
Every law enjoys in its favor the presumption of constitutionality.
Their arguments notwithstanding, petitioners failed to justify their
call for the invalidity of the law. Hence, R.A. No. 9337 is not
unconstitutional.
LEGISLATIVE HISTORY
R.A. No. 9337 is a consolidation of three legislative bills namely, House
Bill Nos. 3555 and 3705, and Senate Bill No. 1950.
House Bill No. 35552 was introduced on first reading on January 7,
2005. The House Committee on Ways and Means approved the bill,
in substitution of House Bill No. 1468, which Representative (Rep.)
Eric D. Singson introduced on August 8, 2004. The President certified
the bill on January 7, 2005 for immediate enactment. On January 27,
2005, the House of Representatives approved the bill on second and
third reading.
House Bill No. 37053 on the other hand, substituted House Bill No.
3105 introduced by Rep. Salacnib F. Baterina, and House Bill No. 3381
introduced by Rep. Jacinto V. Paras. Its "mother bill" is House Bill No.
3555. The House Committee on Ways and Means approved the bill on
February 2, 2005. The President also certified it as urgent on February
8, 2005. The House of Representatives approved the bill on second
and third reading on February 28, 2005.
Meanwhile, the Senate Committee on Ways and Means
approved Senate Bill No. 19504 on March 7, 2005, "in substitution of
Senate Bill Nos. 1337, 1838 and 1873, taking into consideration House
Bill Nos. 3555 and 3705." Senator Ralph G. Recto sponsored Senate
Bill No. 1337, while Senate Bill Nos. 1838 and 1873 were both
sponsored by Sens. Franklin M. Drilon, Juan M. Flavier and Francis N.
Pangilinan. The President certified the bill on March 11, 2005, and was
approved by the Senate on second and third reading on April 13,
2005.
On the same date, April 13, 2005, the Senate agreed to the request of
the House of Representatives for a committee conference on the
disagreeing provisions of the proposed bills.
Before long, the Conference Committee on the Disagreeing Provisions
of House Bill No. 3555, House Bill No. 3705, and Senate Bill No. 1950,
"after having met and discussed in full free and conference,"
recommended the approval of its report, which the Senate did on
May 10, 2005, and with the House of Representatives agreeing
thereto the next day, May 11, 2005.
On May 23, 2005, the enrolled copy of the consolidated House and
Senate version was transmitted to the President, who signed the
same into law on May 24, 2005. Thus, came R.A. No. 9337.
July 1, 2005 is the effectivity date of R.A. No. 9337.5 When said date
came, the Court issued a temporary restraining order, effective
immediately and continuing until further orders, enjoining
respondents from enforcing and implementing the law.
Oral arguments were held on July 14, 2005. Significantly, during the
hearing, the Court speaking through Mr. Justice Artemio V.
Panganiban, voiced the rationale for its issuance of the temporary
restraining order on July 1, 2005, to wit:
J. PANGANIBAN : . . . But before I go into the details of your
presentation, let me just tell you a little background. You know when
the law took effect on July 1, 2005, the Court issued a TRO at about 5
o’clock in the afternoon. But before that, there was a lot of complaints
aired on television and on radio. Some people in a gas station were
complaining that the gas prices went up by 10%. Some people were
complaining that their electric bill will go up by 10%. Other times
people riding in domestic air carrier were complaining that the prices
that they’ll have to pay would have to go up by 10%. While all that
was being aired, per your presentation and per our own
understanding of the law, that’s not true. It’s not true that the e-vat
law necessarily increased prices by 10% uniformly isn’t it?
ATTY. BANIQUED : No, Your Honor.
J. PANGANIBAN : It is not?
ATTY. BANIQUED : It’s not, because, Your Honor, there is an Executive
Order that granted the Petroleum companies some subsidy . . .
interrupted
J. PANGANIBAN : That’s correct . . .
ATTY. BANIQUED : . . . and therefore that was meant to temper the
impact . . . interrupted
J. PANGANIBAN : . . . mitigating measures . . .
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : As a matter of fact a part of the mitigating measures
would be the elimination of the Excise Tax and the import duties. That
is why, it is not correct to say that the VAT as to petroleum dealers
increased prices by 10%.
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : And therefore, there is no justification for increasing
the retail price by 10% to cover the E-Vat tax. If you consider the
excise tax and the import duties, the Net Tax would probably be in the
neighborhood of 7%? We are not going into exact figures I am just
trying to deliver a point that different industries, different products,
different services are hit differently. So it’s not correct to say that all
prices must go up by 10%.
ATTY. BANIQUED : You’re right, Your Honor.
J. PANGANIBAN : Now. For instance, Domestic Airline companies, Mr.
Counsel, are at present imposed a Sales Tax of 3%. When this E-Vat
law took effect the Sales Tax was also removed as a mitigating
measure. So, therefore, there is no justification to increase the fares
by 10% at best 7%, correct?
ATTY. BANIQUED : I guess so, Your Honor, yes.
J. PANGANIBAN : There are other products that the people were
complaining on that first day, were being increased arbitrarily by 10%.
And that’s one reason among many others this Court had to issue TRO
because of the confusion in the implementation. That’s why we added
as an issue in this case, even if it’s tangentially taken up by the
pleadings of the parties, the confusion in the implementation of the
E-vat. Our people were subjected to the mercy of that confusion of an
across the board increase of 10%, which you yourself now admit and
I think even the Government will admit is incorrect. In some cases, it
should be 3% only, in some cases it should be 6% depending on these
mitigating measures and the location and situation of each product,
of each service, of each company, isn’t it?
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : Alright. So that’s one reason why we had to issue a
TRO pending the clarification of all these and we wish the government
will take time to clarify all these by means of a more detailed
implementing rules, in case the law is upheld by this Court. . . .6
The Court also directed the parties to file their respective
Memoranda.
G.R. No. 168056
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party
List, et al., filed a petition for prohibition on May 27, 2005. They
question the constitutionality of Sections 4, 5 and 6 of R.A. No. 9337,
amending Sections 106, 107 and 108, respectively, of the National
Internal Revenue Code (NIRC). Section 4 imposes a 10% VAT on sale
of goods and properties, Section 5 imposes a 10% VAT on importation
of goods, and Section 6 imposes a 10% VAT on sale of services and use
or lease of properties. These questioned provisions contain a
uniform proviso authorizing the President, upon recommendation of
the Secretary of Finance, to raise the VAT rate to 12%, effective
January 1, 2006, after any of the following conditions have been
satisfied, to wit:
. . . That the President, upon the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise the rate of value-added
tax to twelve percent (12%), after any of the following conditions has
been satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic
Product (GDP) of the previous year exceeds two and four-fifth percent
(2 4/5%); or
(ii) National government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1 ½%).
Petitioners argue that the law is unconstitutional, as it constitutes
abandonment by Congress of its exclusive authority to fix the rate of
taxes under Article VI, Section 28(2) of the 1987 Philippine
Constitution.
G.R. No. 168207
On June 9, 2005, Sen. Aquilino Q. Pimentel, Jr., et al., filed a petition
for certiorari likewise assailing the constitutionality of Sections 4, 5
and 6 of R.A. No. 9337.
Aside from questioning the so-called stand-by authority of the
President to increase the VAT rate to 12%, on the ground that it
amounts to an undue delegation of legislative power, petitioners also
contend that the increase in the VAT rate to 12% contingent on any
of the two conditions being satisfied violates the due process clause
embodied in Article III, Section 1 of the Constitution, as it imposes an
unfair and additional tax burden on the people, in that: (1) the 12%
increase is ambiguous because it does not state if the rate would be
returned to the original 10% if the conditions are no longer satisfied;
(2) the rate is unfair and unreasonable, as the people are unsure of
the applicable VAT rate from year to year; and (3) the increase in the
VAT rate, which is supposed to be an incentive to the President to
raise the VAT collection to at least 2 4/5 of the GDP of the previous
year, should only be based on fiscal adequacy.
Petitioners further claim that the inclusion of a stand-by
authority granted to the President by the Bicameral Conference
Committee is a violation of the "no-amendment rule" upon last
reading of a bill laid down in Article VI, Section 26(2) of the
Constitution.
G.R. No. 168461
Thereafter, a petition for prohibition was filed on June 29, 2005, by
the Association of Pilipinas Shell Dealers, Inc., et al., assailing the
following provisions of R.A. No. 9337:
1) Section 8, amending Section 110 (A)(2) of the NIRC, requiring that
the input tax on depreciable goods shall be amortized over a 60-
month period, if the acquisition, excluding the VAT components,
exceeds One Million Pesos (₱1, 000,000.00);
2) Section 8, amending Section 110 (B) of the NIRC, imposing a 70%
limit on the amount of input tax to be credited against the output tax;
and
3) Section 12, amending Section 114 (c) of the NIRC, authorizing the
Government or any of its political subdivisions, instrumentalities or
agencies, including GOCCs, to deduct a 5% final withholding tax on
gross payments of goods and services, which are subject to 10% VAT
under Sections 106 (sale of goods and properties) and 108 (sale of
services and use or lease of properties) of the NIRC.
Petitioners contend that these provisions are unconstitutional for
being arbitrary, oppressive, excessive, and confiscatory.
Petitioners’ argument is premised on the constitutional right of non-
deprivation of life, liberty or property without due process of law
under Article III, Section 1 of the Constitution. According to
petitioners, the contested sections impose limitations on the amount
of input tax that may be claimed. Petitioners also argue that the input
tax partakes the nature of a property that may not be confiscated,
appropriated, or limited without due process of law. Petitioners
further contend that like any other property or property right, the
input tax credit may be transferred or disposed of, and that by limiting
the same, the government gets to tax a profit or value-added even if
there is no profit or value-added.
Petitioners also believe that these provisions violate the
constitutional guarantee of equal protection of the law under Article
III, Section 1 of the Constitution, as the limitation on the creditable
input tax if: (1) the entity has a high ratio of input tax; or (2) invests in
capital equipment; or (3) has several transactions with the
government, is not based on real and substantial differences to meet
a valid classification.
Lastly, petitioners contend that the 70% limit is anything but
progressive, violative of Article VI, Section 28(1) of the Constitution,
and that it is the smaller businesses with higher input tax to output
tax ratio that will suffer the consequences thereof for it wipes out
whatever meager margins the petitioners make.
G.R. No. 168463
Several members of the House of Representatives led by Rep. Francis
Joseph G. Escudero filed this petition for certiorari on June 30, 2005.
They question the constitutionality of R.A. No. 9337 on the following
grounds:
1) Sections 4, 5, and 6 of R.A. No. 9337 constitute an undue delegation
of legislative power, in violation of Article VI, Section 28(2) of the
Constitution;
2) The Bicameral Conference Committee acted without jurisdiction in
deleting the no pass on provisions present in Senate Bill No. 1950 and
House Bill No. 3705; and
3) Insertion by the Bicameral Conference Committee of Sections 27,
28, 34, 116, 117, 119, 121, 125,7 148, 151, 236, 237 and 288, which
were present in Senate Bill No. 1950, violates Article VI, Section 24(1)
of the Constitution, which provides that all appropriation, revenue or
tariff bills shall originate exclusively in the House of Representatives
G.R. No. 168730
On the eleventh hour, Governor Enrique T. Garcia filed a petition
for certiorari and prohibition on July 20, 2005, alleging
unconstitutionality of the law on the ground that the limitation on the
creditable input tax in effect allows VAT-registered establishments to
retain a portion of the taxes they collect, thus violating the principle
that tax collection and revenue should be solely allocated for public
purposes and expenditures. Petitioner Garcia further claims that
allowing these establishments to pass on the tax to the consumers is
inequitable, in violation of Article VI, Section 28(1) of the Constitution.
RESPONDENTS’ COMMENT
The Office of the Solicitor General (OSG) filed a Comment in behalf of
respondents. Preliminarily, respondents contend that R.A. No. 9337
enjoys the presumption of constitutionality and petitioners failed to
cast doubt on its validity.
Relying on the case of Tolentino vs. Secretary of Finance, 235 SCRA
630 (1994), respondents argue that the procedural issues raised by
petitioners, i.e., legality of the bicameral proceedings, exclusive
origination of revenue measures and the power of the Senate
concomitant thereto, have already been settled. With regard to the
issue of undue delegation of legislative power to the President,
respondents contend that the law is complete and leaves no
discretion to the President but to increase the rate to 12% once any
of the two conditions provided therein arise.
Respondents also refute petitioners’ argument that the increase to
12%, as well as the 70% limitation on the creditable input tax, the 60-
month amortization on the purchase or importation of capital goods
exceeding ₱1,000,000.00, and the 5% final withholding tax by
government agencies, is arbitrary, oppressive, and confiscatory, and
that it violates the constitutional principle on progressive taxation,
among others.
Finally, respondents manifest that R.A. No. 9337 is the anchor of the
government’s fiscal reform agenda. A reform in the value-added
system of taxation is the core revenue measure that will tilt the
balance towards a sustainable macroeconomic environment
necessary for economic growth.
ISSUES
The Court defined the issues, as follows:
PROCEDURAL ISSUE
Whether R.A. No. 9337 violates the following provisions of the
Constitution:
a. Article VI, Section 24, and
b. Article VI, Section 26(2)
SUBSTANTIVE ISSUES
1. Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections
106, 107 and 108 of the NIRC, violate the following provisions of the
Constitution:
a. Article VI, Section 28(1), and
b. Article VI, Section 28(2)
2. Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2)
and 110(B) of the NIRC; and Section 12 of R.A. No. 9337, amending
Section 114(C) of the NIRC, violate the following provisions of the
Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
RULING OF THE COURT
As a prelude, the Court deems it apt to restate the general principles
and concepts of value-added tax (VAT), as the confusion and
inevitably, litigation, breeds from a fallacious notion of its nature.
The VAT is a tax on spending or consumption. It is levied on the sale,
barter, exchange or lease of goods or properties and services.8 Being
an indirect tax on expenditure, the seller of goods or services may
pass on the amount of tax paid to the buyer,9 with the seller acting
merely as a tax collector.10 The burden of VAT is intended to fall on
the immediate buyers and ultimately, the end-consumers.
In contrast, a direct tax is a tax for which a taxpayer is directly liable
on the transaction or business it engages in, without transferring the
burden to someone else.11 Examples are individual and corporate
income taxes, transfer taxes, and residence taxes.12
In the Philippines, the value-added system of sales taxation has long
been in existence, albeit in a different mode. Prior to 1978, the system
was a single-stage tax computed under the "cost deduction method"
and was payable only by the original sellers. The single-stage system
was subsequently modified, and a mixture of the "cost deduction
method" and "tax credit method" was used to determine the value-
added tax payable.13 Under the "tax credit method," an entity can
credit against or subtract from the VAT charged on its sales or outputs
the VAT paid on its purchases, inputs and imports.14
It was only in 1987, when President Corazon C. Aquino issued
Executive Order No. 273, that the VAT system was rationalized by
imposing a multi-stage tax rate of 0% or 10% on all sales using the "tax
credit method."15
E.O. No. 273 was followed by R.A. No. 7716 or the Expanded VAT
Law,16 R.A. No. 8241 or the Improved VAT Law,17 R.A. No. 8424 or the
Tax Reform Act of 1997,18 and finally, the presently beleaguered R.A.
No. 9337, also referred to by respondents as the VAT Reform Act.
The Court will now discuss the issues in logical sequence.
PROCEDURAL ISSUE
I.
Whether R.A. No. 9337 violates the following provisions of the
Constitution:
a. Article VI, Section 24, and
b. Article VI, Section 26(2)
A. The Bicameral Conference Committee
Petitioners Escudero, et al., and Pimentel, et al., allege that the
Bicameral Conference Committee exceeded its authority by:
1) Inserting the stand-by authority in favor of the President in
Sections 4, 5, and 6 of R.A. No. 9337;
2) Deleting entirely the no pass-on provisions found in both the House
and Senate bills;
3) Inserting the provision imposing a 70% limit on the amount of input
tax to be credited against the output tax; and
4) Including the amendments introduced only by Senate Bill No. 1950
regarding other kinds of taxes in addition to the value-added tax.
Petitioners now beseech the Court to define the powers of the
Bicameral Conference Committee.
It should be borne in mind that the power of internal regulation and
discipline are intrinsic in any legislative body for, as unerringly
elucidated by Justice Story, "[i]f the power did not exist, it would be
utterly impracticable to transact the business of the nation, either
at all, or at least with decency, deliberation, and order."19 Thus,
Article VI, Section 16 (3) of the Constitution provides that "each House
may determine the rules of its proceedings." Pursuant to this inherent
constitutional power to promulgate and implement its own rules of
procedure, the respective rules of each house of Congress provided
for the creation of a Bicameral Conference Committee.
Thus, Rule XIV, Sections 88 and 89 of the Rules of House of
Representatives provides as follows:
Sec. 88. Conference Committee. – In the event that the House does
not agree with the Senate on the amendment to any bill or joint
resolution, the differences may be settled by the conference
committees of both chambers.
In resolving the differences with the Senate, the House panel shall, as
much as possible, adhere to and support the House Bill. If the
differences with the Senate are so substantial that they materially
impair the House Bill, the panel shall report such fact to the House for
the latter’s appropriate action.
Sec. 89. Conference Committee Reports. – . . . Each report shall
contain a detailed, sufficiently explicit statement of the changes in or
amendments to the subject measure.
...
The Chairman of the House panel may be interpellated on the
Conference Committee Report prior to the voting thereon. The House
shall vote on the Conference Committee Report in the same manner
and procedure as it votes on a bill on third and final reading.
Rule XII, Section 35 of the Rules of the Senate states:
Sec. 35. In the event that the Senate does not agree with the House
of Representatives on the provision of any bill or joint resolution, the
differences shall be settled by a conference committee of both
Houses which shall meet within ten (10) days after their composition.
The President shall designate the members of the Senate Panel in the
conference committee with the approval of the Senate.
Each Conference Committee Report shall contain a detailed and
sufficiently explicit statement of the changes in, or amendments to
the subject measure, and shall be signed by a majority of the
members of each House panel, voting separately.
A comparative presentation of the conflicting House and Senate
provisions and a reconciled version thereof with the explanatory
statement of the conference committee shall be attached to the
report.
...
The creation of such conference committee was apparently in
response to a problem, not addressed by any constitutional provision,
where the two houses of Congress find themselves in disagreement
over changes or amendments introduced by the other house in a
legislative bill. Given that one of the most basic powers of the
legislative branch is to formulate and implement its own rules of
proceedings and to discipline its members, may the Court then delve
into the details of how Congress complies with its internal rules or
how it conducts its business of passing legislation? Note that in the
present petitions, the issue is not whether provisions of the rules of
both houses creating the bicameral conference committee are
unconstitutional, but whether the bicameral conference committee
has strictly complied with the rules of both houses, thereby
remaining within the jurisdiction conferred upon it by Congress.
In the recent case of Fariñas vs. The Executive Secretary,20 the
Court En Banc, unanimously reiterated and emphasized its
adherence to the "enrolled bill doctrine," thus, declining therein
petitioners’ plea for the Court to go behind the enrolled copy of the
bill. Assailed in said case was Congress’s creation of two sets of
bicameral conference committees, the lack of records of said
committees’ proceedings, the alleged violation of said committees of
the rules of both houses, and the disappearance or deletion of one of
the provisions in the compromise bill submitted by the bicameral
conference committee. It was argued that such irregularities in the
passage of the law nullified R.A. No. 9006, or the Fair Election Act.
Striking down such argument, the Court held thus:
Under the "enrolled bill doctrine," the signing of a bill by the Speaker
of the House and the Senate President and the certification of the
Secretaries of both Houses of Congress that it was passed are
conclusive of its due enactment. A review of cases reveals the Court’s
consistent adherence to the rule. The Court finds no reason to
deviate from the salutary rule in this case where the irregularities
alleged by the petitioners mostly involved the internal rules of
Congress, e.g., creation of the 2nd or 3rd Bicameral Conference
Committee by the House. This Court is not the proper forum for the
enforcement of these internal rules of Congress, whether House or
Senate. Parliamentary rules are merely procedural and with their
observance the courts have no concern. Whatever doubts there may
be as to the formal validity of Rep. Act No. 9006 must be resolved in
its favor.The Court reiterates its ruling in Arroyo vs. De Venecia, viz.:
Moreover, as far back as 1994 or more than ten years ago, in the case
of Tolentino vs. Secretary of Finance,23 the Court already made the
pronouncement that "[i]f a change is desired in the practice [of the
Bicameral Conference Committee] it must be sought in Congress
since this question is not covered by any constitutional provision but
is only an internal rule of each house." 24 To date, Congress has not
seen it fit to make such changes adverted to by the Court. It seems,
therefore, that Congress finds the practices of the bicameral
conference committee to be very useful for purposes of prompt and
efficient legislative action.
Nevertheless, just to put minds at ease that no blatant irregularities
tainted the proceedings of the bicameral conference committees, the
Court deems it necessary to dwell on the issue. The Court observes
that there was a necessity for a conference committee because a
comparison of the provisions of House Bill Nos. 3555 and 3705 on one
hand, and Senate Bill No. 1950 on the other, reveals that there were
indeed disagreements. As pointed out in the petitions, said
disagreements were as follows:

But the cases, both here and abroad, in varying forms of expression,
all deny to the courts the power to inquire into allegations that, in
enacting a law, a House of Congress failed to comply with its own
rules, in the absence of showing that there was a violation of a
constitutional provision or the rights of private
individuals. In Osmeña v. Pendatun, it was held: "At any rate, courts
have declared that ‘the rules adopted by deliberative bodies are
subject to revocation, modification or waiver at the pleasure of the
body adopting them.’ And it has been said that "Parliamentary rules
are merely procedural, and with their observance, the courts have
no concern. They may be waived or disregarded by the legislative
body." Consequently, "mere failure to conform to parliamentary
usage will not invalidate the action (taken by a deliberative body)
when the requisite number of members have agreed to a particular
measure."21 (Emphasis supplied)

The foregoing declaration is exactly in point with the present cases,

where petitioners allege irregularities committed by the conference
committee in introducing changes or deleting provisions in the House
and Senate bills. Akin to the Fariñas case,22 the present petitions also
raise an issue regarding the actions taken by the conference
committee on matters regarding Congress’ compliance with its own
internal rules. As stated earlier, one of the most basic and inherent
power of the legislature is the power to formulate rules for its
proceedings and the discipline of its members. Congress is the best The disagreements between the provisions in the House bills and the
judge of how it should conduct its own business expeditiously and in Senate bill were with regard to (1) what rate of VAT is to be imposed;
the most orderly manner. It is also the sole (2) whether only the VAT imposed on electricity generation,
transmission and distribution companies should not be passed on to
consumers, as proposed in the Senate bill, or both the VAT imposed
concern of Congress to instill discipline among the members of its
on electricity generation, transmission and distribution companies
conference committee if it believes that said members violated any
and the VAT imposed on sale of petroleum products should not be
of its rules of proceedings. Even the expanded jurisdiction of this
passed on to consumers, as proposed in the House bill; (3) in what
Court cannot apply to questions regarding only the internal operation
manner input tax credits should be limited; (4) and whether the NIRC
of Congress, thus, the Court is wont to deny a review of the internal
provisions on corporate income taxes, percentage, franchise and
proceedings of a co-equal branch of government.
excise taxes should be amended.
There being differences and/or disagreements on the foregoing
provisions of the House and Senate bills, the Bicameral Conference
Committee was mandated by the rules of both houses of Congress to
act on the same by settling said differences and/or disagreements.
The Bicameral Conference Committee acted on the disagreeing
provisions by making the following changes:
1. With regard to the disagreement on the rate of VAT to be imposed,
it would appear from the Conference Committee Report that the
Bicameral Conference Committee tried to bridge the gap in the
difference between the 10% VAT rate proposed by the Senate, and
the various rates with 12% as the highest VAT rate proposed by the
House, by striking a compromise whereby the present 10% VAT rate
would be retained until certain conditions arise, i.e., the value-added
tax collection as a percentage of gross domestic product (GDP) of the
previous year exceeds 2 4/5%, or National Government deficit as a
percentage of GDP of the previous year exceeds 1½%, when the
President, upon recommendation of the Secretary of Finance shall
raise the rate of VAT to 12% effective January 1, 2006.
2. With regard to the disagreement on whether only the VAT imposed
on electricity generation, transmission and distribution companies
should not be passed on to consumers or whether both the VAT
imposed on electricity generation, transmission and distribution
companies and the VAT imposed on sale of petroleum products may
be passed on to consumers, the Bicameral Conference Committee
chose to settle such disagreement by altogether deleting from its
Report any no pass-on provision.
3. With regard to the disagreement on whether input tax credits
should be limited or not, the Bicameral Conference Committee
decided to adopt the position of the House by putting a limitation on
the amount of input tax that may be credited against the output tax,
although it crafted its own language as to the amount of the limitation
on input tax credits and the manner of computing the same by
providing thus:
(A) Creditable Input Tax. – . . .
...
Provided, The input tax on goods purchased or imported in a calendar
month for use in trade or business for which deduction for
depreciation is allowed under this Code, shall be spread evenly over
the month of acquisition and the fifty-nine (59) succeeding months if
the aggregate acquisition cost for such goods, excluding the VAT
component thereof, exceeds one million Pesos (₱1,000,000.00):
PROVIDED, however, that if the estimated useful life of the capital
good is less than five (5) years, as used for depreciation purposes,
then the input VAT shall be spread over such shorter period: . . .
(B) Excess Output or Input Tax. – If at the end of any taxable quarter
the output tax exceeds the input tax, the excess shall be paid by the
VAT-registered person. If the input tax exceeds the output tax, the
excess shall be carried over to the succeeding quarter or quarters:
PROVIDED that the input tax inclusive of input VAT carried over from
the previous quarter that may be credited in every quarter shall not
exceed seventy percent (70%) of the output VAT: PROVIDED,
HOWEVER, THAT any input tax attributable to zero-rated sales by a
VAT-registered person may at his option be refunded or credited
against other internal revenue taxes, . . .
4. With regard to the amendments to other provisions of the NIRC on
corporate income tax, franchise, percentage and excise taxes, the
conference committee decided to include such amendments and
basically adopted the provisions found in Senate Bill No. 1950, with
some changes as to the rate of the tax to be imposed.
Under the provisions of both the Rules of the House of
Representatives and Senate Rules, the Bicameral Conference
Committee is mandated to settle the differences between the
disagreeing provisions in the House bill and the Senate bill. The term
"settle" is synonymous to "reconcile" and "harmonize."25 To reconcile
or harmonize disagreeing provisions, the Bicameral Conference
Committee may then (a) adopt the specific provisions of either the
House bill or Senate bill, (b) decide that neither provisions in the
House bill or the provisions in the Senate bill would
be carried into the final form of the bill, and/or (c) try to arrive at a
compromise between the disagreeing provisions.
In the present case, the changes introduced by the Bicameral
Conference Committee on disagreeing provisions were meant only to
reconcile and harmonize the disagreeing provisions for it did not
inject any idea or intent that is wholly foreign to the subject embraced
by the original provisions.
The so-called stand-by authority in favor of the President, whereby
the rate of 10% VAT wanted by the Senate is retained until such time
that certain conditions arise when the 12% VAT wanted by the House
shall be imposed, appears to be a compromise to try to bridge the
difference in the rate of VAT proposed by the two houses of Congress.
Nevertheless, such compromise is still totally within the subject of
what rate of VAT should be imposed on taxpayers.
The no pass-on provision was deleted altogether. In the transcripts of
the proceedings of the Bicameral Conference Committee held on May
10, 2005, Sen. Ralph Recto, Chairman of the Senate Panel, explained
the reason for deleting the no pass-on provision in this wise:
. . . the thinking was just to keep the VAT law or the VAT bill simple.
And we were thinking that no sector should be a beneficiary of
legislative grace, neither should any sector be discriminated on. The
VAT is an indirect tax. It is a pass on-tax. And let’s keep it plain and
simple. Let’s not confuse the bill and put a no pass-on provision. Two-
thirds of the world have a VAT system and in this two-thirds of the
globe, I have yet to see a VAT with a no pass-though provision. So, the
thinking of the Senate is basically simple, let’s keep the VAT
simple.26 (Emphasis supplied)
Rep. Teodoro Locsin further made the manifestation that the no pass-
on provision "never really enjoyed the support of either House."27
With regard to the amount of input tax to be credited against output
tax, the Bicameral Conference Committee came to a compromise on
the percentage rate of the limitation or cap on such input tax credit,
but again, the change introduced by the Bicameral Conference
Committee was totally within the intent of both houses to put a cap
on input tax that may be
credited against the output tax. From the inception of the subject
revenue bill in the House of Representatives, one of the major
objectives was to "plug a glaring loophole in the tax policy and
administration by creating vital restrictions on the claiming of input
VAT tax credits . . ." and "[b]y introducing limitations on the claiming
of tax credit, we are capping a major leakage that has placed our
collection efforts at an apparent disadvantage."28
As to the amendments to NIRC provisions on taxes other than the
value-added tax proposed in Senate Bill No. 1950, since said
provisions were among those referred to it, the conference
committee had to act on the same and it basically adopted the version
of the Senate.
Thus, all the changes or modifications made by the Bicameral
Conference Committee were germane to subjects of the provisions
referred
to it for reconciliation. Such being the case, the Court does not see
any grave abuse of discretion amounting to lack or excess of
jurisdiction committed by the Bicameral Conference Committee. In
the earlier cases of Philippine Judges Association vs.
Prado29 and Tolentino vs. Secretary of Finance,30 the Court recognized
the long-standing legislative practice of giving said conference
committee ample latitude for compromising differences between the
Senate and the House. Thus, in the Tolentino case, it was held that:
. . . it is within the power of a conference committee to include in its
report an entirely new provision that is not found either in the House
bill or in the Senate bill. If the committee can propose an amendment
consisting of one or two provisions, there is no reason why it cannot
propose several provisions, collectively considered as an
"amendment in the nature of a substitute," so long as such
amendment is germane to the subject of the bills before the
committee. After all, its report was not final but needed the approval
of both houses of Congress to become valid as an act of the legislative
department. The charge that in this case the Conference Committee
acted as a third legislative chamber is thus without any
basis.31 (Emphasis supplied)
B. R.A. No. 9337 Does Not Violate Article VI, Section 26(2) of the
Constitution on the "No-Amendment Rule"
Article VI, Sec. 26 (2) of the Constitution, states:
No bill passed by either House shall become a law unless it has passed
three readings on separate days, and printed copies thereof in its final
form have been distributed to its Members three days before its
passage, except when the President certifies to the necessity of its
immediate enactment to meet a public calamity or emergency. Upon
the last reading of a bill, no amendment thereto shall be allowed, and
the vote thereon shall be taken immediately thereafter, and the yeas
and nays entered in the Journal.
Petitioners’ argument that the practice where a bicameral conference
committee is allowed to add or delete provisions in the House bill and
the Senate bill after these had passed three readings is in effect a
circumvention of the "no amendment rule" (Sec. 26 (2), Art. VI of the
1987 Constitution), fails to convince the Court to deviate from its
ruling in the Tolentino case that:
Nor is there any reason for requiring that the Committee’s Report in
these cases must have undergone three readings in each of the two
houses. If that be the case, there would be no end to negotiation since
each house may seek modification of the compromise bill. . . .
Art. VI. § 26 (2) must, therefore, be construed as referring only to
bills introduced for the first time in either house of Congress, not to
the conference committee report.32 (Emphasis supplied)
The Court reiterates here that the "no-amendment rule" refers only
to the procedure to be followed by each house of Congress with
regard to bills initiated in each of said respective houses, before said
bill is transmitted to the other house for its concurrence or
amendment. Verily, to construe said provision in a way as to proscribe
any further changes to a bill after one house has voted on it would
lead to absurdity as this would mean that the other house of Congress
would be deprived of its constitutional power to amend or introduce
changes to said bill. Thus, Art. VI, Sec. 26 (2) of the Constitution cannot
be taken to mean that the introduction by the Bicameral Conference
Committee of amendments and modifications to disagreeing
provisions in bills that have been acted upon by both houses of
Congress is prohibited.
C. R.A. No. 9337 Does Not Violate Article VI, Section 24 of the
Constitution on Exclusive Origination of Revenue Bills
Coming to the issue of the validity of the amendments made
regarding the NIRC provisions on corporate income taxes and
percentage, excise taxes. Petitioners refer to the following provisions,
to wit:
Section 27 Rates of Income Tax on Domestic Corporation
28(A)(1) Tax on Resident Foreign Corporation
28(B)(1) Inter-corporate Dividends
34(B)(1) Inter-corporate Dividends
116 Tax on Persons Exempt from VAT
117 Percentage Tax on domestic carriers and keepers of Garage
119 Tax on franchises
121 Tax on banks and Non-Bank Financial Intermediaries
148 Excise Tax on manufactured oils and other fuels
151 Excise Tax on mineral products
236 Registration requirements
237 Issuance of receipts or sales or commercial invoices
288 Disposition of Incremental Revenue
Petitioners claim that the amendments to these provisions of the
NIRC did not at all originate from the House. They aver that House Bill
No. 3555 proposed amendments only regarding Sections 106, 107,
108, 110 and 114 of the NIRC, while House Bill No. 3705 proposed
amendments only to Sections 106, 107,108, 109, 110 and 111 of the
NIRC; thus, the other sections of the NIRC which the Senate amended
but which amendments were not found in the House bills are not
intended to be amended by the House of Representatives. Hence,
they argue that since the proposed amendments did not originate
from the House, such amendments are a violation of Article VI,
Section 24 of the Constitution.
The argument does not hold water.
Article VI, Section 24 of the Constitution reads:
Sec. 24. All appropriation, revenue or tariff bills, bills authorizing
increase of the public debt, bills of local application, and private bills
shall originate exclusively in the House of Representatives but the
Senate may propose or concur with amendments.
In the present cases, petitioners admit that it was indeed House Bill
Nos. 3555 and 3705 that initiated the move for amending provisions
of the NIRC dealing mainly with the value-added tax. Upon transmittal
of said House bills to the Senate, the Senate came out with Senate Bill
No. 1950 proposing amendments not only to NIRC provisions on the
value-added tax but also amendments to NIRC provisions on other
kinds of taxes. Is the introduction by the Senate of provisions not
dealing directly with the value- added tax, which is the only kind of
tax being amended in the House bills, still within the purview of the
constitutional provision authorizing the Senate to propose or concur
with amendments to a revenue bill that originated from the House?
The foregoing question had been squarely answered in
the Tolentino case, wherein the Court held, thus:
. . . To begin with, it is not the law – but the revenue bill – which is
required by the Constitution to "originate exclusively" in the House of
Representatives. It is important to emphasize this, because a bill
originating in the House may undergo such extensive changes in the
Senate that the result may be a rewriting of the whole. . . . At this
point, what is important to note is that, as a result of the Senate
action, a distinct bill may be produced. To insist that a revenue
statute – and not only the bill which initiated the legislative process
culminating in the enactment of the law – must substantially be the
same as the House bill would be to deny the Senate’s power not only
to "concur with amendments" but also to "propose amendments." It
would be to violate the coequality of legislative power of the two
houses of Congress and in fact make the House superior to the
Senate.
… existing tax rates, evaluating the relevance given our present
…Given, then, the power of the Senate to propose amendments, the
Senate can propose its own version even with respect to bills which
are required by the Constitution to originate in the House.
...
Indeed, what the Constitution simply means is that the initiative for
filing revenue, tariff or tax bills, bills authorizing an increase of the
public debt, private bills and bills of local application must come from
the House of Representatives on the theory that, elected as they are
from the districts, the members of the House can be expected to be
more sensitive to the local needs and problems. On the other hand,
the senators, who are elected at large, are expected to approach the
same problems from the national perspective. Both views are
thereby made to bear on the enactment of such laws.33 (Emphasis
supplied)
Since there is no question that the revenue bill exclusively originated
in the House of Representatives, the Senate was acting within its
constitutional power to introduce amendments to the House bill
when it included provisions in Senate Bill No. 1950 amending
corporate income taxes, percentage, excise and franchise taxes.
Verily, Article VI, Section 24 of the Constitution does not contain any
prohibition or limitation on the extent of the amendments that may
be introduced by the Senate to the House revenue bill.
Furthermore, the amendments introduced by the Senate to the NIRC
provisions that had not been touched in the House bills are still in
furtherance of the intent of the House in initiating the subject
revenue bills. The Explanatory Note of House Bill No. 1468, the very
first House bill introduced on the floor, which was later substituted by
House Bill No. 3555, stated:
One of the challenges faced by the present administration is the
urgent and daunting task of solving the country’s serious financial
problems. To do this, government expenditures must be strictly
monitored and controlled and revenues must be significantly
increased. This may be easier said than done, but our fiscal authorities
are still optimistic the government will be operating on a balanced
budget by the year 2009. In fact, several measures that will result to
significant expenditure savings have been identified by the
administration. It is supported with a credible package of revenue
measures that include measures to improve tax administration and
control the leakages in revenues from income taxes and the value-
added tax (VAT). (Emphasis supplied)
Rep. Eric D. Singson, in his sponsorship speech for House Bill No. 3555,
declared that:
In the budget message of our President in the year 2005, she
reiterated that we all acknowledged that on top of our agenda must
be the restoration of the health of our fiscal system.
In order to considerably lower the consolidated public sector deficit
and eventually achieve a balanced budget by the year 2009, we need
to seize windows of opportunities which might seem poignant in the
beginning, but in the long run prove effective and beneficial to the
overall status of our economy. One such opportunity is a review of
conditions.34 (Emphasis supplied)
Notably therefore, the main purpose of the bills emanating from the
House of Representatives is to bring in sizeable revenues for the
government
to supplement our country’s serious financial problems, and improve
tax administration and control of the leakages in revenues from
income taxes and value-added taxes. As these house bills were
transmitted to the Senate, the latter, approaching the measures from
the point of national perspective, can introduce amendments within
the purposes of those bills. It can provide for ways that would soften
the impact of the VAT measure on the consumer, i.e., by distributing
the burden across all sectors instead of putting it entirely on the
shoulders of the consumers. The sponsorship speech of Sen. Ralph
Recto on why the provisions on income tax on corporation were
included is worth quoting:
All in all, the proposal of the Senate Committee on Ways and Means
will raise ₱64.3 billion in additional revenues annually even while by
mitigating prices of power, services and petroleum products.
However, not all of this will be wrung out of VAT. In fact, only ₱48.7
billion amount is from the VAT on twelve goods and services. The rest
of the tab – ₱10.5 billion- will be picked by corporations.
What we therefore prescribe is a burden sharing between corporate
Philippines and the consumer. Why should the latter bear all the pain?
Why should the fiscal salvation be only on the burden of the
consumer?
The corporate world’s equity is in form of the increase in the
corporate income tax from 32 to 35 percent, but up to 2008 only. This
will raise ₱10.5 billion a year. After that, the rate will slide back, not
to its old rate of 32 percent, but two notches lower, to 30 percent.
Clearly, we are telling those with the capacity to pay, corporations, to
bear with this emergency provision that will be in effect for 1,200
days, while we put our fiscal house in order. This fiscal medicine will
have an expiry date.
For their assistance, a reward of tax reduction awaits them. We intend
to keep the length of their sacrifice brief. We would like to assure
them that not because there is a light at the end of the tunnel, this
government will keep on making the tunnel long.
The responsibility will not rest solely on the weary shoulders of the
small man. Big business will be there to share the burden. 35
As the Court has said, the Senate can propose amendments and in
fact, the amendments made on provisions in the tax on income of
corporations are germane to the purpose of the house bills which is
to raise revenues for the government.
Likewise, the Court finds the sections referring to other percentage
and excise taxes germane to the reforms to the VAT system, as these
sections would cushion the effects of VAT on consumers. Considering
that certain goods and services which were subject to percentage tax
and excise tax would no longer be VAT-exempt, the consumer would
be burdened more as they would be paying the VAT in addition to
these taxes. Thus, there is a need to amend these sections to soften
the impact of VAT. Again, in his sponsorship speech, Sen. Recto said:
However, for power plants that run on oil, we will reduce to zero the
present excise tax on bunker fuel, to lessen the effect of a VAT on this
product.
For electric utilities like Meralco, we will wipe out the franchise tax in
exchange for a VAT.
And in the case of petroleum, while we will levy the VAT on oil
products, so as not to destroy the VAT chain, we will however bring
down the excise tax on socially sensitive products such as diesel,
bunker, fuel and kerosene.
...
What do all these exercises point to? These are not contortions of
giving to the left hand what was taken from the right. Rather, these
sprang from our concern of softening the impact of VAT, so that the
people can cushion the blow of higher prices they will have to pay as
a result of VAT.36
The other sections amended by the Senate pertained to matters of
tax administration which are necessary for the implementation of the
changes in the VAT system.
To reiterate, the sections introduced by the Senate are germane to
the subject matter and purposes of the house bills, which is to
supplement our country’s fiscal deficit, among others. Thus, the
Senate acted within its power to propose those amendments.
SUBSTANTIVE ISSUES
I.
Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106,
107 and 108 of the NIRC, violate the following provisions of the
Constitution:
a. Article VI, Section 28(1), and
b. Article VI, Section 28(2)
A. No Undue Delegation of Legislative Power
Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and
Escudero, et al. contend in common that Sections 4, 5 and 6 of R.A.
No. 9337, amending Sections 106, 107 and 108, respectively, of the
NIRC giving the President the stand-by authority to raise the VAT rate
from 10% to 12% when a certain condition is met, constitutes undue
delegation of the legislative power to tax.
The assailed provisions read as follows:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further
amended to read as follows:
SEC. 106. Value-Added Tax on Sale of Goods or Properties. –
(A) Rate and Base of Tax. – There shall be levied, assessed and
collected on every sale, barter or exchange of goods or properties, a
value-added tax equivalent to ten percent (10%) of the gross selling
price or gross value in money of the goods or properties sold, bartered
or exchanged, such tax to be paid by the seller or
transferor: provided, that the President, upon the recommendation
of the Secretary of Finance, shall, effective January 1, 2006, raise the
rate of value-added tax to twelve percent (12%), after any of the
following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic
Product (GDP) of the previous year exceeds two and four-fifth
percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1 ½%).
SEC. 5. Section 107 of the same Code, as amended, is hereby further
amended to read as follows:
SEC. 107. Value-Added Tax on Importation of Goods. –
(A) In General. – There shall be levied, assessed and collected on every
importation of goods a value-added tax equivalent to ten percent
(10%) based on the total value used by the Bureau of Customs in
determining tariff and customs duties, plus customs duties, excise
taxes, if any, and other charges, such tax to be paid by the importer
prior to the release of such goods from customs custody: Provided,
That where the customs duties are determined on the basis of the
quantity or volume of the goods, the value-added tax shall be based
on the landed cost plus excise taxes, if any: provided, further, that
the President, upon the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise the rate of value-
added tax to twelve percent (12%) after any of the following
conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic
Product (GDP) of the previous year exceeds two and four-fifth
percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1 ½%).
SEC. 6. Section 108 of the same Code, as amended, is hereby further
amended to read as follows:
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of
Properties –
(A) Rate and Base of Tax. – There shall be levied, assessed and
collected, a value-added tax equivalent to ten percent (10%) of gross
receipts derived from the sale or exchange of services: provided, that
the President, upon the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise the rate of value-
added tax to twelve percent (12%), after any of the following
conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic
Product (GDP) of the previous year exceeds two and four-fifth
percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1 ½%). (Emphasis
supplied)
Petitioners allege that the grant of the stand-by authority to the
President to increase the VAT rate is a virtual abdication by Congress
of its exclusive power to tax because such delegation is not within the
purview of Section 28 (2), Article VI of the Constitution, which
provides:
The Congress may, by law, authorize the President to fix within
specified limits, and may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts
within the framework of the national development program of the
government.
They argue that the VAT is a tax levied on the sale, barter or exchange
of goods and properties as well as on the sale or exchange of services,
which cannot be included within the purview of tariffs under the
exempted delegation as the latter refers to customs duties, tolls or
tribute payable upon merchandise to the government and usually
imposed on goods or merchandise imported or exported.
Petitioners ABAKADA GURO Party List, et al., further contend that
delegating to the President the legislative power to tax is contrary to
republicanism. They insist that accountability, responsibility and
transparency should dictate the actions of Congress and they should
not pass to the President the decision to impose taxes. They also
argue that the law also effectively nullified the President’s power of
control, which includes the authority to set aside and nullify the acts
of her subordinates like the Secretary of Finance, by mandating the
fixing of the tax rate by the President upon the recommendation of
the Secretary of Finance.
Petitioners Pimentel, et al. aver that the President has ample powers
to cause, influence or create the conditions provided by the law to
bring about either or both the conditions precedent.
On the other hand, petitioners Escudero, et al. find bizarre and
revolting the situation that the imposition of the 12% rate would be
subject to the whim of the Secretary of Finance, an unelected
bureaucrat, contrary to the principle of no taxation without
representation. They submit that the Secretary of Finance is not
mandated to give a favorable recommendation and he may not even
give his recommendation. Moreover, they allege that no guiding
standards are provided in the law on what basis and as to how he will
make his recommendation. They claim, nonetheless, that any
recommendation of the Secretary of Finance can easily be brushed
aside by the President since the former is a mere alter ego of the
latter, such that, ultimately, it is the President who decides whether
to impose the increased tax rate or not.
A brief discourse on the principle of non-delegation of powers is
instructive.
The principle of separation of powers ordains that each of the three
great branches of government has exclusive cognizance of and is
supreme in matters falling within its own constitutionally allocated
sphere.37 A logical
corollary to the doctrine of separation of powers is the principle of
non-delegation of powers, as expressed in the Latin maxim: potestas
delegata non delegari potest which means "what has been delegated,
cannot be delegated."38 This doctrine is based on the ethical principle
that such as delegated power constitutes not only a right but a duty
to be performed by the delegate through the instrumentality of his
own judgment and not through the intervening mind of another.39
With respect to the Legislature, Section 1 of Article VI of the
Constitution provides that "the Legislative power shall be vested in the
Congress of the Philippines which shall consist of a Senate and a House
of Representatives." The powers which Congress is prohibited from
delegating are those which are strictly, or inherently and exclusively,
legislative. Purely legislative power, which can never be delegated,
has been described as the authority to make a complete law –
complete as to the time when it shall take effect and as to whom it
shall be applicable – and to determine the expediency of its
enactment.40 Thus, the rule is that in order that a court may be
justified in holding a statute unconstitutional as a delegation of
legislative power, it must appear that the power involved is purely
legislative in nature – that is, one appertaining exclusively to the
legislative department. It is the nature of the power, and not the
liability of its use or the manner of its exercise, which determines the
validity of its delegation.
Nonetheless, the general rule barring delegation of legislative powers
is subject to the following recognized limitations or exceptions:
(1) Delegation of tariff powers to the President under Section 28 (2)
of Article VI of the Constitution;
(2) Delegation of emergency powers to the President under Section
23 (2) of Article VI of the Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies.
In every case of permissible delegation, there must be a showing that
the delegation itself is valid. It is valid only if the law (a) is complete in
itself, setting forth therein the policy to be executed, carried out, or
implemented by the delegate;41 and (b) fixes a standard — the limits
of which are sufficiently determinate and determinable — to which
the delegate must conform in the performance of his functions.42 A
sufficient standard is one which defines legislative policy, marks its
limits, maps out its boundaries and specifies the public agency to
apply it. It indicates the circumstances under which the legislative
command is to be effected.43 Both tests are intended to prevent a
total transference of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and exercise a power
essentially legislative.44
In People vs. Vera,45 the Court, through eminent Justice Jose P. Laurel,
expounded on the concept and extent of delegation of power in this
wise:
In testing whether a statute constitutes an undue delegation of
legislative power or not, it is usual to inquire whether the statute was
complete in all its terms and provisions when it left the hands of the
legislature so that nothing was left to the judgment of any other
appointee or delegate of the legislature.
...
‘The true distinction’, says Judge Ranney, ‘is between the delegation
of power to make the law, which necessarily involves a discretion as
to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The
first cannot be done; to the latter no valid objection can be made.’
...
It is contended, however, that a legislative act may be made to the
effect as law after it leaves the hands of the legislature. It is true that
laws may be made effective on certain contingencies, as by
proclamation of the executive or the adoption by the people of a
particular community. In Wayman vs. Southard, the Supreme Court of
the United States ruled that the legislature may delegate a power not
legislative which it may itself rightfully exercise. The power to
ascertain facts is such a power which may be delegated. There is
nothing essentially legislative in ascertaining the existence of facts
or conditions as the basis of the taking into effect of a law. That is a
mental process common to all branches of the
government. Notwithstanding the apparent tendency, however, to
relax the rule prohibiting delegation of legislative authority on
account of the complexity arising from social and economic forces at
work in this modern industrial age, the orthodox pronouncement of
Judge Cooley in his work on Constitutional Limitations finds
restatement in Prof. Willoughby's treatise on the Constitution of the
United States in the following language — speaking of declaration of
legislative power to administrative agencies: The principle which
permits the legislature to provide that the administrative agent may
determine when the circumstances are such as require the
application of a law is defended upon the ground that at the time
this authority is granted, the rule of public policy, which is the
essence of the legislative act, is determined by the legislature. In
other words, the legislature, as it is its duty to do, determines that,
under given circumstances, certain executive or administrative
action is to be taken, and that, under other circumstances, different
or no action at all is to be taken. What is thus left to the
administrative official is not the legislative determination of what
public policy demands, but simply the ascertainment of what the
facts of the case require to be done according to the terms of the
law by which he is governed. The efficiency of an Act as a declaration
of legislative will must, of course, come from Congress, but the
ascertainment of the contingency upon which the Act shall take
effect may be left to such agencies as it may designate. The
legislature, then, may provide that a law shall take effect upon the
happening of future specified contingencies leaving to some other
person or body the power to determine when the specified
contingency has arisen. (Emphasis supplied).46
In Edu vs. Ericta,47 the Court reiterated:
What cannot be delegated is the authority under the Constitution to
make laws and to alter and repeal them; the test is the completeness
of the statute in all its terms and provisions when it leaves the hands
of the legislature. To determine whether or not there is an undue
delegation of legislative power, the inquiry must be directed to the
scope and definiteness of the measure enacted. The legislative does
not abdicate its functions when it describes what job must be done,
who is to do it, and what is the scope of his authority. For a complex
economy, that may be the only way in which the legislative process
can go forward. A distinction has rightfully been made between
delegation of power to make the laws which necessarily involves a
discretion as to what it shall be, which constitutionally may not be
done, and delegation of authority or discretion as to its execution to
be exercised under and in pursuance of the law, to which no valid
objection can be made. The Constitution is thus not to be regarded
as denying the legislature the necessary resources of flexibility and
practicability. (Emphasis supplied).48
Clearly, the legislature may delegate to executive officers or bodies
the power to determine certain facts or conditions, or the happening
of contingencies, on which the operation of a statute is, by its terms,
made to depend, but the legislature must prescribe sufficient
standards, policies or limitations on their authority.49 While the
power to tax cannot be delegated to executive agencies, details as to
the enforcement and administration of an exercise of such power may
be left to them, including the power to determine the existence of
facts on which its operation depends.50
The rationale for this is that the preliminary ascertainment of facts as
basis for the enactment of legislation is not of itself a legislative
function, but is simply ancillary to legislation. Thus, the duty of
correlating information and making recommendations is the kind of
subsidiary activity which the legislature may perform through its
members, or which it may delegate to others to perform. Intelligent
legislation on the complicated problems of modern society is
impossible in the absence of accurate information on the part of the
legislators, and any reasonable method of securing such information
is proper.51 The Constitution as a continuously operative charter of
government does not require that Congress find for itself
every fact upon which it desires to base legislative action or that it
make for itself detailed determinations which it has declared to be
prerequisite to application of legislative policy to particular facts and
circumstances impossible for Congress itself properly to investigate.52
In the present case, the challenged section of R.A. No. 9337 is the
common proviso in Sections 4, 5 and 6 which reads as follows:
That the President, upon the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise the rate of value-added
tax to twelve percent (12%), after any of the following conditions has
been satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic
Product (GDP) of the previous year exceeds two and four-fifth percent
(2 4/5%); or
(ii) National government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1 ½%).
The case before the Court is not a delegation of legislative power. It is
simply a delegation of ascertainment of facts upon which
enforcement and administration of the increase rate under the law is
contingent. The legislature has made the operation of the 12% rate
effective January 1, 2006, contingent upon a specified fact or
condition. It leaves the entire operation or non-operation of the 12%
rate upon factual matters outside of the control of the executive.
No discretion would be exercised by the President. Highlighting the
absence of discretion is the fact that the word shall is used in the
common proviso. The use of the word shall connotes a mandatory
order. Its use in a statute denotes an imperative obligation and is
inconsistent with the idea of discretion.53 Where the law is clear and
unambiguous, it must be taken to mean exactly what it says, and
courts have no choice but to see to it that the mandate is obeyed.54
Thus, it is the ministerial duty of the President to immediately impose
the 12% rate upon the existence of any of the conditions specified by
Congress. This is a duty which cannot be evaded by the President.
Inasmuch as the law specifically uses the word shall, the exercise of
discretion by the President does not come into play. It is a clear
directive to impose the 12% VAT rate when the specified conditions
are present. The time of taking into effect of the 12% VAT rate is based
on the happening of a certain specified contingency, or upon the
ascertainment of certain facts or conditions by a person or body other
than the legislature itself.
The Court finds no merit to the contention of petitioners ABAKADA
GURO Party List, et al. that the law effectively nullified the President’s
power of control over the Secretary of Finance by mandating the
fixing of the tax rate by the President upon the recommendation of
the Secretary of Finance. The Court cannot also subscribe to the
position of petitioners
Pimentel, et al. that the word shall should be interpreted to
mean may in view of the phrase "upon the recommendation of the
Secretary of Finance." Neither does the Court find persuasive the
submission of petitioners Escudero, et al. that any recommendation
by the Secretary of Finance can easily be brushed aside by the
President since the former is a mere alter ego of the latter.
When one speaks of the Secretary of Finance as the alter ego of the
President, it simply means that as head of the Department of Finance
he is the assistant and agent of the Chief Executive. The multifarious
executive and administrative functions of the Chief Executive are
performed by and through the executive departments, and the acts
of the secretaries of such departments, such as the Department of
Finance, performed and promulgated in the regular course of
business, are, unless disapproved or reprobated by the Chief
Executive, presumptively the acts of the Chief Executive. The
Secretary of Finance, as such, occupies a political position and holds
office in an advisory capacity, and, in the language of Thomas
Jefferson, "should be of the President's bosom confidence" and, in the
language of Attorney-General Cushing, is "subject to the direction of
the President."55
In the present case, in making his recommendation to the President
on the existence of either of the two conditions, the Secretary of
Finance is not acting as the alter ego of the President or even her
subordinate. In such instance, he is not subject to the power of
control and direction of the President. He is acting as the agent of the
legislative department, to determine and declare the event upon
which its expressed will is to take effect.56 The Secretary of Finance
becomes the means or tool by which legislative policy is determined
and implemented, considering that he possesses all the facilities to
gather data and information and has a much broader perspective to
properly evaluate them. His function is to gather and collate statistical
data and other pertinent information and verify if any of the two
conditions laid out by Congress is present. His personality in such
instance is in reality but a projection of that of Congress. Thus, being
the agent of Congress and not of the President, the President cannot
alter or modify or nullify, or set aside the findings of the Secretary of
Finance and to substitute the judgment of the former for that of the
latter.
Congress simply granted the Secretary of Finance the authority to
ascertain the existence of a fact, namely, whether by December 31,
2005, the value-added tax collection as a percentage of Gross
Domestic Product (GDP) of the previous year exceeds two and four-
fifth percent (24/5%) or the national government deficit as a
percentage of GDP of the previous year exceeds one and one-half
percent (1½%). If either of these two instances has occurred, the
Secretary of Finance, by legislative mandate, must submit such
information to the President. Then the 12% VAT rate must be imposed
by the President effective January 1, 2006. There is no undue
delegation of legislative power but only of the discretion as to the
execution of a law. This is constitutionally permissible.57 Congress
does not abdicate its functions or unduly delegate power when it
describes what job must be done, who must do it, and what is the
scope of his authority; in our complex economy that is frequently the
only way in which the legislative process can go forward.58
As to the argument of petitioners ABAKADA GURO Party List, et
al. that delegating to the President the legislative power to tax is
contrary to the principle of republicanism, the same deserves scant
consideration. Congress did not delegate the power to tax but the
mere implementation of the law. The intent and will to increase the
VAT rate to 12% came from Congress and the task of the President is
to simply execute the legislative policy. That Congress chose to do so
in such a manner is not within the province of the Court to inquire
into, its task being to interpret the law.59
The insinuation by petitioners Pimentel, et al. that the President has
ample powers to cause, influence or create the conditions to bring
about either or both the conditions precedent does not deserve any
merit as this argument is highly speculative. The Court does not rule
on allegations which are manifestly conjectural, as these may not
exist at all. The Court deals with facts, not fancies; on realities, not
appearances. When the Court acts on appearances instead of
realities, justice and law will be short-lived.
B. The 12% Increase VAT Rate Does Not Impose an Unfair and
Unnecessary Additional Tax Burden
Petitioners Pimentel, et al. argue that the 12% increase in the VAT
rate imposes an unfair and additional tax burden on the people.
Petitioners also argue that the 12% increase, dependent on any of the
2 conditions set forth in the contested provisions, is ambiguous
because it does not state if the VAT rate would be returned to the
original 10% if the rates are no longer satisfied. Petitioners also argue
that such rate is unfair and unreasonable, as the people are unsure of
the applicable VAT rate from year to year.
Under the common provisos of Sections 4, 5 and 6 of R.A. No. 9337, if
any of the two conditions set forth therein are satisfied, the President
shall increase the VAT rate to 12%. The provisions of the law are clear.
It does not provide for a return to the 10% rate nor does it empower
the President to so revert if, after the rate is increased to 12%, the
VAT collection goes below the 24/5 of the GDP of the previous year or
that the national government deficit as a percentage of GDP of the
previous year does not exceed 1½%.
Therefore, no statutory construction or interpretation is needed.
Neither can conditions or limitations be introduced where none is
provided for. Rewriting the law is a forbidden ground that only
Congress may tread upon.60
Thus, in the absence of any provision providing for a return to the 10%
rate, which in this case the Court finds none, petitioners’ argument is,
at best, purely speculative. There is no basis for petitioners’ fear of a
fluctuating VAT rate because the law itself does not provide that the
rate should go back to 10% if the conditions provided in Sections 4, 5
and 6 are no longer present. The rule is that where the provision of
the law is clear and unambiguous, so that there is no occasion for the
court's seeking the legislative intent, the law must be taken as it is,
devoid of judicial addition or subtraction.61
Petitioners also contend that the increase in the VAT rate, which was
allegedly an incentive to the President to raise the VAT collection to
at least 2 4/5 of the GDP of the previous year, should be based on fiscal
adequacy.
Petitioners obviously overlooked that increase in VAT collection is not
the only condition. There is another condition, i.e., the national
government deficit as a percentage of GDP of the previous year
exceeds one and one-half percent (1 ½%).
Respondents explained the philosophy behind these alternative
conditions:
1. VAT/GDP Ratio > 2.8%
The condition set for increasing VAT rate to 12% have economic or
fiscal meaning. If VAT/GDP is less than 2.8%, it means that
government has weak or no capability of implementing the VAT or
that VAT is not effective in the function of the tax collection.
Therefore, there is no value to increase it to 12% because such action
will also be ineffectual.
2. Nat’l Gov’t Deficit/GDP >1.5%
The condition set for increasing VAT when deficit/GDP is 1.5% or less
means the fiscal condition of government has reached a relatively
sound position or is towards the direction of a balanced budget
position. Therefore, there is no need to increase the VAT rate since
the fiscal house is in a relatively healthy position. Otherwise stated, if
the ratio is more than 1.5%, there is indeed a need to increase the
VAT rate.62
That the first condition amounts to an incentive to the President to
increase the VAT collection does not render it unconstitutional so long
as there is a public purpose for which the law was passed, which in
this case, is mainly to raise revenue. In fact, fiscal adequacy dictated
the need for a raise in revenue.
The principle of fiscal adequacy as a characteristic of a sound tax
system was originally stated by Adam Smith in his Canons of
Taxation (1776), as:
IV. Every tax ought to be so contrived as both to take out and to keep
out of the pockets of the people as little as possible over and above
what it brings into the public treasury of the state.63
It simply means that sources of revenues must be adequate to meet
government expenditures and their variations.64
The dire need for revenue cannot be ignored. Our country is in a
quagmire of financial woe. During the Bicameral Conference
Committee hearing, then Finance Secretary Purisima bluntly depicted
the country’s gloomy state of economic affairs, thus:
First, let me explain the position that the Philippines finds itself in
right now. We are in a position where 90 percent of our revenue is
used for debt service. So, for every peso of revenue that we currently
raise, 90 goes to debt service. That’s interest plus amortization of our
debt. So clearly, this is not a sustainable situation. That’s the first fact.
The second fact is that our debt to GDP level is way out of line
compared to other peer countries that borrow money from that
international financial markets. Our debt to GDP is approximately
equal to our GDP. Again, that shows you that this is not a sustainable
situation.
The third thing that I’d like to point out is the environment that we
are presently operating in is not as benign as what it used to be the
past five years.
What do I mean by that?
In the past five years, we’ve been lucky because we were operating in
a period of basically global growth and low interest rates. The past
few months, we have seen an inching up, in fact, a rapid increase in
the interest rates in the leading economies of the world. And,
therefore, our ability to borrow at reasonable prices is going to be
challenged. In fact, ultimately, the question is our ability to access the
financial markets.
When the President made her speech in July last year, the
environment was not as bad as it is now, at least based on the forecast
of most financial institutions. So, we were assuming that raising 80
billion would put us in a position where we can then convince them
to improve our ability to borrow at lower rates. But conditions have
changed on us because the interest rates have gone up. In fact, just
within this room, we tried to access the market for a billion dollars
because for this year alone, the Philippines will have to borrow 4
billion dollars. Of that amount, we have borrowed 1.5 billion. We
issued last January a 25-year bond at 9.7 percent cost. We were trying
to access last week and the market was not as favorable and up to
now we have not accessed and we might pull back because the
conditions are not very good.
So given this situation, we at the Department of Finance believe that
we really need to front-end our deficit reduction. Because it is deficit
that is causing the increase of the debt and we are in what we call a
debt spiral. The more debt you have, the more deficit you have
because interest and debt service eats and eats more of your revenue.
We need to get out of this debt spiral. And the only way, I think, we
can get out of this debt spiral is really have a front-end adjustment in
our revenue base.65
The image portrayed is chilling. Congress passed the law hoping for
rescue from an inevitable catastrophe. Whether the law is indeed
sufficient to answer the state’s economic dilemma is not for the Court
to judge. In the Fariñas case, the Court refused to consider the various
arguments raised therein that dwelt on the wisdom of Section 14 of
R.A. No. 9006 (The Fair Election Act), pronouncing that:
. . . policy matters are not the concern of the Court. Government
policy is within the exclusive dominion of the political branches of the
government. It is not for this Court to look into the wisdom or
propriety of legislative determination. Indeed, whether an enactment
is wise or unwise, whether it is based on sound economic theory,
whether it is the best means to achieve the desired results, whether,
in short, the legislative discretion within its prescribed limits should
be exercised in a particular manner are matters for the judgment of
the legislature, and the serious conflict of opinions does not suffice to
bring them within the range of judicial cognizance.66
In the same vein, the Court in this case will not dawdle on the purpose
of Congress or the executive policy, given that it is not for the judiciary
to "pass upon questions of wisdom, justice or expediency of
legislation."67
II.
Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and
110(B) of the NIRC; and Section 12 of R.A. No. 9337, amending Section
114(C) of the NIRC, violate the following provisions of the
Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
A. Due Process and Equal Protection Clauses
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. argue that
Section 8 of R.A. No. 9337, amending Sections 110 (A)(2), 110 (B), and
Section 12 of R.A. No. 9337, amending Section 114 (C) of the NIRC are
arbitrary, oppressive, excessive and confiscatory. Their argument is
premised on the constitutional right against deprivation of life, liberty
of property without due process of law, as embodied in Article III,
Section 1 of the Constitution.
Petitioners also contend that these provisions violate the
constitutional guarantee of equal protection of the law.
The doctrine is that where the due process and equal protection
clauses are invoked, considering that they are not fixed rules but
rather broad standards, there is a need for proof of such persuasive
character as would lead to such a conclusion. Absent such a showing,
the presumption of validity must prevail.68
Section 8 of R.A. No. 9337, amending Section 110(B) of the NIRC
imposes a limitation on the amount of input tax that may be credited
against the output tax. It states, in part: "[P]rovided, that the input tax
inclusive of the input VAT carried over from the previous quarter that
may be credited in every quarter shall not exceed seventy percent
(70%) of the output VAT: …"
Input Tax is defined under Section 110(A) of the NIRC, as amended, as
the value-added tax due from or paid by a VAT-registered person on
the importation of goods or local purchase of good and services,
including lease or use of property, in the course of trade or business,
from a VAT-registered person, and Output Tax is the value-added
tax due on the sale or lease of taxable goods or properties or services
by any person registered or required to register under the law.
Petitioners claim that the contested sections impose limitations on
the amount of input tax that may be claimed. In effect, a portion of
the input tax that has already been paid cannot now be credited
against the output tax.
Petitioners’ argument is not absolute. It assumes that the input tax
exceeds 70% of the output tax, and therefore, the input tax in excess
of 70% remains uncredited. However, to the extent that the input tax
is less than 70% of the output tax, then 100% of such input tax is still
creditable.
More importantly, the excess input tax, if any, is retained in a
business’s books of accounts and remains creditable in the
succeeding quarter/s. This is explicitly allowed by Section 110(B),
which provides that "if the input tax exceeds the output tax, the
excess shall be carried over to the succeeding quarter or quarters." In
addition, Section 112(B) allows a VAT-registered person to apply for
the issuance of a tax credit certificate or refund for any unused input
taxes, to the extent that such input taxes have not been applied
against the output taxes. Such unused input tax may be used in
payment of his other internal revenue taxes.
The non-application of the unutilized input tax in a given quarter is
not ad infinitum, as petitioners exaggeratedly contend. Their analysis
of the effect of the 70% limitation is incomplete and one-sided. It ends
at the net effect that there will be unapplied/unutilized inputs VAT for
a given quarter. It does not proceed further to the fact that such
unapplied/unutilized input tax may be credited in the subsequent
periods as allowed by the carry-over provision of Section 110(B) or
that it may later on be refunded through a tax credit certificate under
Section 112(B).
Therefore, petitioners’ argument must be rejected.
On the other hand, it appears that petitioner Garcia failed to
comprehend the operation of the 70% limitation on the input tax.
According to petitioner, the limitation on the creditable input tax in
effect allows VAT-registered establishments to retain a portion of the
taxes they collect, which violates the principle that tax collection and
revenue should be for public purposes and expenditures
As earlier stated, the input tax is the tax paid by a person, passed on
to him by the seller, when he buys goods. Output tax meanwhile is
the tax due to the person when he sells goods. In computing the VAT
payable, three possible scenarios may arise:
First, if at the end of a taxable quarter the output taxes charged by
the seller are equal to the input taxes that he paid and passed on by
the suppliers, then no payment is required;
Second, when the output taxes exceed the input taxes, the person
shall be liable for the excess, which has to be paid to the Bureau of
Internal Revenue (BIR);69 and
Third, if the input taxes exceed the output taxes, the excess shall be
carried over to the succeeding quarter or quarters. Should the input
taxes result from zero-rated or effectively zero-rated transactions,
any excess over the output taxes shall instead be refunded to the
taxpayer or credited against other internal revenue taxes, at the
taxpayer’s option.70
Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the
input tax. Thus, a person can credit his input tax only up to the extent
of 70% of the output tax. In layman’s term, the value-added taxes that
a person/taxpayer paid and passed on to him by a seller can only be
credited up to 70% of the value-added taxes that is due to him on a
taxable transaction. There is no retention of any tax collection
because the person/taxpayer has already previously paid the input
tax to a seller, and the seller will subsequently remit such input tax to
the BIR. The party directly liable for the payment of the tax is the
seller.71 What only needs to be done is for the person/taxpayer to
apply or credit these input taxes, as evidenced by receipts, against his
output taxes.
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue
that the input tax partakes the nature of a property that may not be
confiscated, appropriated, or limited without due process of law.
The input tax is not a property or a property right within the
constitutional purview of the due process clause. A VAT-registered
person’s entitlement to the creditable input tax is a mere statutory
privilege.
Provided, That the input tax on goods purchased or imported in a
calendar month for use in trade or business for which deduction for
depreciation is allowed under this Code, shall be spread evenly over
the month of acquisition and the fifty-nine (59) succeeding months if
the aggregate acquisition cost for such goods, excluding the VAT
component thereof, exceeds One million pesos
(₱1,000,000.00): Provided, however, That if the estimated useful life
of the capital goods is less than five (5) years, as used for depreciation
purposes, then the input VAT shall be spread over such a shorter
period: Provided, finally, That in the case of purchase of services,
lease or use of properties, the input tax shall be creditable to the
purchaser, lessee or license upon payment of the compensation,
rental, royalty or fee.
The foregoing section imposes a 60-month period within which to
amortize the creditable input tax on purchase or importation of
capital goods with acquisition cost of ₱1 Million pesos, exclusive of
the VAT component. Such spread out only poses a delay in the
crediting of the input tax. Petitioners’ argument is without basis
because the taxpayer is not permanently deprived of his privilege to
credit the input tax.
It is worth mentioning that Congress admitted that the spread-out of
the creditable input tax in this case amounts to a 4-year interest-free
loan to the government.76 In the same breath, Congress also justified
its move by saying that the provision was designed to raise an annual
revenue of 22.6 billion.77 The legislature also dispelled the fear that
the provision will fend off foreign investments, saying that foreign
investors have other tax incentives provided by law, and citing the
case of China, where despite a 17.5% non-creditable VAT, foreign
investments were not deterred.78 Again, for whatever is the purpose
of the 60-month amortization, this involves executive economic
policy and legislative wisdom in which the Court cannot intervene.
With regard to the 5% creditable withholding tax imposed on
payments made by the government for taxable transactions, Section
12 of R.A. No. 9337, which amended Section 114 of the NIRC, reads:

The distinction between statutory privileges and vested rights must

SEC. 114. Return and Payment of Value-added Tax. –
be borne in mind for persons have no vested rights in statutory
privileges. The state may change or take away rights, which were
created by the law of the state, although it may not take away (C) Withholding of Value-added Tax. – The Government or any of its
property, which was vested by virtue of such rights.72 political subdivisions, instrumentalities or agencies, including
government-owned or controlled corporations (GOCCs) shall, before
making payment on account of each purchase of goods and services
Under the previous system of single-stage taxation, taxes paid at
which are subject to the value-added tax imposed in Sections 106 and
every level of distribution are not recoverable from the taxes payable,
108 of this Code, deduct and withhold a final value-added tax at the
although it becomes part of the cost, which is deductible from the
rate of five percent (5%) of the gross payment thereof: Provided, That
gross revenue. When Pres. Aquino issued E.O. No. 273 imposing a 10%
the payment for lease or use of properties or property rights to
multi-stage tax on all sales, it was then that the crediting of the input
nonresident owners shall be subject to ten percent (10%) withholding
tax paid on purchase or importation of goods and services by VAT-
tax at the time of payment. For purposes of this Section, the payor or
registered persons against the output tax was introduced.73 This was
person in control of the payment shall be considered as the
adopted by the Expanded VAT Law (R.A. No. 7716), 74 and The Tax
withholding agent.
Reform Act of 1997 (R.A. No. 8424).75 The right to credit input tax as
against the output tax is clearly a privilege created by law, a privilege
that also the law can remove, or in this case, limit. The value-added tax withheld under this Section shall be remitted
within ten (10) days following the end of the month the withholding
was made.
Petitioners also contest as arbitrary, oppressive, excessive and
confiscatory, Section 8 of R.A. No. 9337, amending Section 110(A) of
the NIRC, which provides: Section 114(C) merely provides a method of collection, or as stated
by respondents, a more simplified VAT withholding system. The
government in this case is constituted as a withholding agent with
SEC. 110. Tax Credits. –
respect to their payments for goods and services.

(A) Creditable Input Tax. – …

Prior to its amendment, Section 114(C) provided for different rates of
value-added taxes to be withheld -- 3% on gross payments for
purchases of goods; 6% on gross payments for services supplied by
contractors other than by public works contractors; 8.5% on gross
payments for services supplied by public work contractors; or 10% on
payment for the lease or use of properties or property rights to
nonresident owners. Under the present Section 114(C), these
different rates, except for the 10% on lease or property rights
payment to nonresidents, were deleted, and a uniform rate of 5% is
applied.
The Court observes, however, that the law the used the word final. In
tax usage, final, as opposed to creditable, means full. Thus, it is
provided in Section 114(C): "final value-added tax at the rate of five
percent (5%)."
In Revenue Regulations No. 02-98, implementing R.A. No. 8424 (The
Tax Reform Act of 1997), the concept of final withholding tax on
income was explained, to wit:
SECTION 2.57. Withholding of Tax at Source
(A) Final Withholding Tax. – Under the final withholding tax system
the amount of income tax withheld by the withholding agent is
constituted as full and final payment of the income tax due from the
payee on the said income. The liability for payment of the tax rests
primarily on the payor as a withholding agent. Thus, in case of his
failure to withhold the tax or in case of underwithholding, the
deficiency tax shall be collected from the payor/withholding agent. …
(B) Creditable Withholding Tax. – Under the creditable withholding
tax system, taxes withheld on certain income payments are intended
to equal or at least approximate the tax due of the payee on said
income. … Taxes withheld on income payments covered by the
expanded withholding tax (referred to in Sec. 2.57.2 of these
regulations) and compensation income (referred to in Sec. 2.78 also
of these regulations) are creditable in nature.
As applied to value-added tax, this means that taxable transactions
with the government are subject to a 5% rate, which constitutes as
full payment of the tax payable on the transaction. This represents
the net VAT payable of the seller. The other 5% effectively accounts
for the standard input VAT (deemed input VAT), in lieu of the actual
input VAT directly or attributable to the taxable transaction.79
The Court need not explore the rationale behind the provision. It is
clear that Congress intended to treat differently taxable transactions
with the government.80 This is supported by the fact that under the
old provision, the 5% tax withheld by the government remains
creditable against the tax liability of the seller or contractor, to wit:
SEC. 114. Return and Payment of Value-added Tax. –
(C) Withholding of Creditable Value-added Tax. – The Government
or any of its political subdivisions, instrumentalities or agencies,
including government-owned or controlled corporations (GOCCs)
shall, before making payment on account of each purchase of goods
from sellers and services rendered by contractors which are subject
to the value-added tax imposed in Sections 106 and 108 of this Code,
deduct and withhold the value-added tax due at the rate of three
percent (3%) of the gross payment for the purchase of goods and six
percent (6%) on gross receipts for services rendered by contractors
on every sale or installment payment which shall be creditable
against the value-added tax liability of the seller or contractor:
Provided, however, That in the case of government public works
contractors, the withholding rate shall be eight and one-half percent
(8.5%): Provided, further, That the payment for lease or use of
properties or property rights to nonresident owners shall be subject
to ten percent (10%) withholding tax at the time of payment. For this
purpose, the payor or person in control of the payment shall be
considered as the withholding agent.
The valued-added tax withheld under this Section shall be remitted
within ten (10) days following the end of the month the withholding
was made. (Emphasis supplied)
As amended, the use of the word final and the deletion of the
word creditable exhibits Congress’s intention to treat transactions
with the government differently. Since it has not been shown that the
class subject to the 5% final withholding tax has been unreasonably
narrowed, there is no reason to invalidate the provision. Petitioners,
as petroleum dealers, are not the only ones subjected to the 5% final
withholding tax. It applies to all those who deal with the government.
Moreover, the actual input tax is not totally lost or uncreditable, as
petitioners believe. Revenue Regulations No. 14-2005 or the
Consolidated Value-Added Tax Regulations 2005 issued by the BIR,
provides that should the actual input tax exceed 5% of gross
payments, the excess may form part of the cost. Equally, should the
actual input tax be less than 5%, the difference is treated as income.81
Petitioners also argue that by imposing a limitation on the creditable
input tax, the government gets to tax a profit or value-added even if
there is no profit or value-added.
Petitioners’ stance is purely hypothetical, argumentative, and again,
one-sided. The Court will not engage in a legal joust where premises
are what ifs, arguments, theoretical and facts, uncertain. Any
disquisition by the Court on this point will only be, as Shakespeare
describes life in Macbeth,82 "full of sound and fury, signifying
nothing."
What’s more, petitioners’ contention assumes the proposition that
there is no profit or value-added. It need not take an astute
businessman to know that it is a matter of exception that a business
will sell goods or services without profit or value-added. It cannot be
overstressed that a business is created precisely for profit.
The equal protection clause under the Constitution means that "no
person or class of persons shall be deprived of the same protection of
laws which is enjoyed by other persons or other classes in the same
place and in like circumstances."83
The power of the State to make reasonable and natural classifications
for the purposes of taxation has long been established. Whether it
relates to the subject of taxation, the kind of property, the rates to be
levied, or the amounts to be raised, the methods of assessment,
valuation and collection, the State’s power is entitled to presumption
of validity. As a rule, the judiciary will not interfere with such power
absent a clear showing of unreasonableness, discrimination, or
arbitrariness.84
Petitioners point out that the limitation on the creditable input tax if
the entity has a high ratio of input tax, or invests in capital equipment,
or has several transactions with the government, is not based on real
and substantial differences to meet a valid classification.
The argument is pedantic, if not outright baseless. The law does not
make any classification in the subject of taxation, the kind of property,
the rates to be levied or the amounts to be raised, the methods of
assessment, valuation and collection. Petitioners’ alleged distinctions
are based on variables that bear different consequences. While the
implementation of the law may yield varying end results depending
on one’s profit margin and value-added, the Court cannot go beyond
what the legislature has laid down and interfere with the affairs of
business.
The equal protection clause does not require the universal application
of the laws on all persons or things without distinction. This might in
fact sometimes result in unequal protection. What the clause requires
is equality among equals as determined according to a valid
classification. By classification is meant the grouping of persons or
things similar to each other in certain particulars and different from
all others in these same particulars.85
Petitioners brought to the Court’s attention the introduction of
Senate Bill No. 2038 by Sens. S.R. Osmeña III and Ma. Ana Consuelo
A.S. – Madrigal on June 6, 2005, and House Bill No. 4493 by Rep. Eric
D. Singson. The proposed legislation seeks to amend the 70%
limitation by increasing the same to 90%. This, according to
petitioners, supports their stance that the 70% limitation is arbitrary
and confiscatory. On this score, suffice it to say that these are still
proposed legislations. Until Congress amends the law, and absent any
unequivocal basis for its unconstitutionality, the 70% limitation stays.
B. Uniformity and Equitability of Taxation
Article VI, Section 28(1) of the Constitution reads:
The rule of taxation shall be uniform and equitable. The Congress shall
evolve a progressive system of taxation.
Uniformity in taxation means that all taxable articles or kinds of
property of the same class shall be taxed at the same rate. Different
articles may be taxed at different amounts provided that the rate is
uniform on the same class everywhere with all people at all times.86
In this case, the tax law is uniform as it provides a standard rate of 0%
or 10% (or 12%) on all goods and services. Sections 4, 5 and 6 of R.A.
No. 9337, amending Sections 106, 107 and 108, respectively, of the
NIRC, provide for a rate of 10% (or 12%) on sale of goods and
properties, importation of goods, and sale of services and use or lease
of properties. These same sections also provide for a 0% rate on
certain sales and transaction.
Neither does the law make any distinction as to the type of industry
or trade that will bear the 70% limitation on the creditable input tax,
5-year amortization of input tax paid on purchase of capital goods or
the 5% final withholding tax by the government. It must be stressed
that the rule of uniform taxation does not deprive Congress of the
power to classify subjects of taxation, and only demands uniformity
within the particular class.87
R.A. No. 9337 is also equitable. The law is equipped with a threshold
margin. The VAT rate of 0% or 10% (or 12%) does not apply to sales of
goods or services with gross annual sales or receipts not exceeding
₱1,500,000.00.88Also, basic marine and agricultural food products in
their original state are still not subject to the tax,89 thus ensuring that
prices at the grassroots level will remain accessible. As was stated
in Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs.
Tan:90
The disputed sales tax is also equitable. It is imposed only on sales of
goods or services by persons engaged in business with an aggregate
gross annual sales exceeding ₱200,000.00. Small corner sari-
sari stores are consequently exempt from its application. Likewise
exempt from the tax are sales of farm and marine products, so that
the costs of basic food and other necessities, spared as they are from
the incidence of the VAT, are expected to be relatively lower and
within the reach of the general public.
It is admitted that R.A. No. 9337 puts a premium on businesses with
low profit margins, and unduly favors those with high profit margins.
Congress was not oblivious to this. Thus, to equalize the weighty
burden the law entails, the law, under Section 116, imposed a 3%
percentage tax on VAT-exempt persons under Section 109(v), i.e.,
transactions with gross annual sales and/or receipts not exceeding
₱1.5 Million. This acts as a equalizer because in effect, bigger
businesses that qualify for VAT coverage and VAT-exempt taxpayers
stand on equal-footing.
Moreover, Congress provided mitigating measures to cushion the
impact of the imposition of the tax on those previously exempt. Excise
taxes on petroleum products91 and natural gas92 were reduced.
Percentage tax on domestic carriers was removed.93 Power producers
are now exempt from paying franchise tax.94
Aside from these, Congress also increased the income tax rates of
corporations, in order to distribute the burden of taxation. Domestic,
foreign, and non-resident corporations are now subject to a 35%
income tax rate, from a previous 32%.95 Intercorporate dividends of
non-resident foreign corporations are still subject to 15% final
withholding tax but the tax credit allowed on the corporation’s
domicile was increased to 20%.96 The Philippine Amusement and
Gaming Corporation (PAGCOR) is not exempt from income taxes
anymore.97 Even the sale by an artist of his works or services
performed for the production of such works was not spared.
All these were designed to ease, as well as spread out, the burden of
taxation, which would otherwise rest largely on the consumers. It
cannot therefore be gainsaid that R.A. No. 9337 is equitable.
C. Progressivity of Taxation
Lastly, petitioners contend that the limitation on the creditable input
tax is anything but regressive. It is the smaller business with higher
input tax-output tax ratio that will suffer the consequences.
Progressive taxation is built on the principle of the taxpayer’s ability
to pay. This principle was also lifted from Adam Smith’s Canons of
Taxation, and it states:
I. The subjects of every state ought to contribute towards the support
of the government, as nearly as possible, in proportion to their
respective abilities; that is, in proportion to the revenue which they
respectively enjoy under the protection of the state.
Taxation is progressive when its rate goes up depending on the
resources of the person affected.98
The VAT is an antithesis of progressive taxation. By its very nature, it and that, for official wrong-doing, each may be brought to account,
is regressive. The principle of progressive taxation has no relation with either by impeachment, trial or by the ballot box.100
the VAT system inasmuch as the VAT paid by the consumer or
business for every goods bought or services enjoyed is the same The words of the Court in Vera vs. Avelino101 holds true then, as it still
regardless of income. In holds true now. All things considered, there is no raison d'être for the
unconstitutionality of R.A. No. 9337.
other words, the VAT paid eats the same portion of an income,
whether big or small. The disparity lies in the income earned by a WHEREFORE, Republic Act No. 9337 not being unconstitutional, the
person or profit margin marked by a business, such that the higher petitions in G.R. Nos. 168056, 168207, 168461, 168463, and 168730,
the income or profit margin, the smaller the portion of the income or are hereby DISMISSED.
profit that is eaten by VAT. A converso, the lower the income or profit
margin, the bigger the part that the VAT eats away. At the end of the
There being no constitutional impediment to the full enforcement
day, it is really the lower income group or businesses with low-profit
and implementation of R.A. No. 9337, the temporary restraining
margins that is always hardest hit.
order issued by the Court on July 1, 2005 is LIFTED upon finality of
herein decision.
Nevertheless, the Constitution does not really prohibit the imposition
of indirect taxes, like the VAT. What it simply provides is that Congress
SO ORDERED.
shall "evolve a progressive system of taxation." The Court stated in
the Tolentino case, thus:

The Constitution does not really prohibit the imposition of indirect

taxes which, like the VAT, are regressive. What it simply provides is
that Congress shall ‘evolve a progressive system of taxation.’ The
constitutional provision has been interpreted to mean simply that
‘direct taxes are . . . to be preferred [and] as much as possible, indirect
taxes should be minimized.’ (E. FERNANDO, THE CONSTITUTION OF
THE PHILIPPINES 221 (Second ed. 1977)) Indeed, the mandate to
Congress is not to prescribe, but to evolve, a progressive tax system.
Otherwise, sales taxes, which perhaps are the oldest form of indirect
taxes, would have been prohibited with the proclamation of Art. VIII,
§17 (1) of the 1973 Constitution from which the present Art. VI, §28
(1) was taken. Sales taxes are also regressive.

Resort to indirect taxes should be minimized but not avoided entirely

because it is difficult, if not impossible, to avoid them by imposing
such taxes according to the taxpayers' ability to pay. In the case of the
VAT, the law minimizes the regressive effects of this imposition by
providing for zero rating of certain transactions (R.A. No. 7716, §3,
amending §102 (b) of the NIRC), while granting exemptions to other
transactions. (R.A. No. 7716, §4 amending §103 of the NIRC)99

CONCLUSION

It has been said that taxes are the lifeblood of the government. In this
case, it is just an enema, a first-aid measure to resuscitate an
economy in distress. The Court is neither blind nor is it turning a deaf
ear on the plight of the masses. But it does not have the panacea for
the malady that the law seeks to remedy. As in other cases, the Court
cannot strike down a law as unconstitutional simply because of its
yokes.

Let us not be overly influenced by the plea that for every wrong there
is a remedy, and that the judiciary should stand ready to afford relief.
There are undoubtedly many wrongs the judicature may not correct,
for instance, those involving political questions. . . .

Let us likewise disabuse our minds from the notion that the judiciary
is the repository of remedies for all political or social ills; We should
not forget that the Constitution has judiciously allocated the powers
of government to three distinct and separate compartments; and that
judicial interpretation has tended to the preservation of the
independence of the three, and a zealous regard of the prerogatives
of each, knowing full well that one is not the guardian of the others
G.R. No. 115455 August 25, 1994
ARTURO M. TOLENTINO, petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE, respondents.
G.R. No. 115525 August 25, 1994
JUAN T. DAVID, petitioner,
vs.
TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE
OCAMPO, as Secretary of Finance; LIWAYWAY VINZONS-CHATO, as
Commissioner of Internal Revenue; and their AUTHORIZED AGENTS
OR REPRESENTATIVES, respondents.
G.R. No. 115543 August 25, 1994
RAUL S. ROCO and the INTEGRATED BAR OF THE
PHILIPPINES, petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE
COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND
BUREAU OF CUSTOMS, respondents.
G.R. No. 115544 August 25, 1994
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.;
PUBLISHING CORPORATION; PHILIPPINE JOURNALISTS, INC.; JOSE
L. PAVIA; and OFELIA L. DIMALANTA, petitioners,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of
Internal Revenue; HON. TEOFISTO T. GUINGONA, JR., in his
capacity as Executive Secretary; and HON. ROBERTO B. DE
OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115754 August 25, 1994
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC.,
(CREBA), petitioner,
vs.
THE COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 115781 August 25, 1994
KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME
CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM
TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN,
FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO,
JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF
ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM,
INC. ("MABINI"), FREEDOM FROM DEBT COALITION, INC.,
PHILIPPINE BIBLE SOCIETY, INC., and WIGBERTO
TAÑADA, petitioners,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE
COMMISSIONER OF INTERNAL REVENUE and THE COMMISSIONER
OF CUSTOMS, respondents.
G.R. No. 115852 August 25, 1994
PHILIPPINE AIRLINES, INC., petitioner,
vs.
THE SECRETARY OF FINANCE, and COMMISSIONER OF INTERNAL
REVENUE, respondents.
G.R. No. 115873 August 25, 1994
COOPERATIVE UNION OF THE PHILIPPINES, petitioners,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of
Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his
capacity as Executive Secretary, and HON. ROBERTO B. DE
OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115931 August 25, 1994
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC., and
ASSOCIATION OF PHILIPPINE BOOK-SELLERS, petitioners,
vs.
HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON.
LIWAYWAY V. CHATO, as the Commissioner of Internal Revenue
and HON. GUILLERMO PARAYNO, JR., in his capacity as the
Commissioner of Customs, respondents.
Arturo M. Tolentino for and in his behalf.
Donna Celeste D. Feliciano and Juan T. David for petitioners in G.R.
No. 115525.
Roco, Bunag, Kapunan, Migallos and Jardeleza for petitioner R.S.
Roco.
Villaranza and Cruz for petitioners in G.R. No. 115544.
Carlos A. Raneses and Manuel M. Serrano for petitioner in G.R. No.
115754.
Salonga, Hernandez & Allado for Freedon From Debts Coalition, Inc.
& Phil. Bible Society.
Estelito P. Mendoza for petitioner in G.R. No. 115852.
Panganiban, Benitez, Parlade, Africa & Barinaga Law Offices for
petitioners in G.R. No. 115873.
R.B. Rodriguez & Associates for petitioners in G.R. No. 115931.
Reve A.V. Saguisag for MABINI.
MENDOZA, J.:
The value-added tax (VAT) is levied on the sale, barter or exchange of
goods and properties as well as on the sale or exchange of services. It
is equivalent to 10% of the gross selling price or gross value in money
of goods or properties sold, bartered or exchanged or of the gross
receipts from the sale or exchange of services. Republic Act No. 7716
seeks to widen the tax base of the existing VAT system and enhance
its administration by amending the National Internal Revenue Code.
These are various suits for certiorari and prohibition, challenging the
constitutionality of Republic Act No. 7716 on various grounds
summarized in the resolution of July 6, 1994 of this Court, as follows:
I. Procedural Issues:
A. Does Republic Act No. 7716 violate Art. VI, § 24 of the Constitution?
B. Does it violate Art. VI, § 26(2) of the Constitution?
C. What is the extent of the power of the Bicameral Conference
Committee?
II. Substantive Issues:
A. Does the law violate the following provisions in the Bill of Rights
(Art. III)?
1. §1
2. § 4
3. § 5
4. § 10
B. Does the law violate the following other provisions of the
Constitution?
1. Art. VI, § 28(1)
2. Art. VI, § 28(3)
These questions will be dealt in the order they are stated above. As
will presently be explained not all of these questions are judicially
cognizable, because not all provisions of the Constitution are self
executing and, therefore, judicially enforceable. The other
departments of the government are equally charged with the
enforcement of the Constitution, especially the provisions relating to
them.
I. PROCEDURAL ISSUES
The contention of petitioners is that in enacting Republic Act No.
7716, or the Expanded Value-Added Tax Law, Congress violated the
Constitution because, although H. No. 11197 had originated in the
House of Representatives, it was not passed by the Senate but was
simply consolidated with the Senate version (S. No. 1630) in the
Conference Committee to produce the bill which the President signed
into law. The following provisions of the Constitution are cited in
support of the proposition that because Republic Act No. 7716 was
passed in this manner, it did not originate in the House of
Representatives and it has not thereby become a law:
Art. VI, § 24: All appropriation, revenue or tariff bills, bills authorizing
increase of the public debt, bills of local application, and private bills
shall originate exclusively in the House of Representatives, but the
Senate may propose or concur with amendments.
Id., § 26(2): No bill passed by either House shall become a law unless
it has passed three readings on separate days, and printed copies
thereof in its final form have been distributed to its Members three
days before its passage, except when the President certifies to the
necessity of its immediate enactment to meet a public calamity or
emergency. Upon the last reading of a bill, no amendment thereto
shall be allowed, and the vote thereon shall be taken immediately
thereafter, and the yeas and nays entered in the Journal.
It appears that on various dates between July 22, 1992 and August 31,
1993, several bills 1 were introduced in the House of Representatives
seeking to amend certain provisions of the National Internal Revenue
Code relative to the value-added tax or VAT. These bills were referred
to the House Ways and Means Committee which recommended for
approval a substitute measure, H. No. 11197, entitled
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM TO
WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION,
AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104,
105, 106, 107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE
V, AND 236, 237 AND 238 OF TITLE IX, AND REPEALING SECTIONS 113
AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE
CODE, AS AMENDED
The bill (H. No. 11197) was considered on second reading starting
November 6, 1993 and, on November 17, 1993, it was approved by
the House of Representatives after third and final reading.
It was sent to the Senate on November 23, 1993 and later referred by
that body to its Committee on Ways and Means.
On February 7, 1994, the Senate Committee submitted its report
recommending approval of S. No. 1630, entitled
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM TO
WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION,
AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104,
105, 107, 108, AND 110 OF TITLE IV, 112 OF TITLE V, AND 236, 237,
AND 238 OF TITLE IX, AND REPEALING SECTIONS 113, 114 and 116 OF
TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED, AND FOR OTHER PURPOSES
It was stated that the bill was being submitted "in substitution of
Senate Bill No. 1129, taking into consideration P.S. Res. No. 734 and
H.B. No. 11197."
On February 8, 1994, the Senate began consideration of the bill (S.
No. 1630). It finished debates on the bill and approved it on second
reading on March 24, 1994. On the same day, it approved the bill on
third reading by the affirmative votes of 13 of its members, with one
abstention.
H. No. 11197 and its Senate version (S. No. 1630) were then referred
to a conference committee which, after meeting four times (April 13,
19, 21 and 25, 1994), recommended that "House Bill No. 11197, in
consolidation with Senate Bill No. 1630, be approved in accordance
with the attached copy of the bill as reconciled and approved by the
conferees."
The Conference Committee bill, entitled "AN ACT RESTRUCTURING
THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND
ENHANCING ITS ADMINISTRATION AND FOR THESE PURPOSES
AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES," was thereafter approved by the House of
Representatives on April 27, 1994 and by the Senate on May 2, 1994.
The enrolled bill was then presented to the President of the
Philippines who, on May 5, 1994, signed it. It became Republic Act No.
7716. On May 12, 1994, Republic Act No. 7716 was published in two
newspapers of general circulation and, on May 28, 1994, it took
effect, although its implementation was suspended until June 30,
1994 to allow time for the registration of business entities. It would
have been enforced on July 1, 1994 but its enforcement was stopped
because the Court, by the vote of 11 to 4 of its members, granted a
temporary restraining order on June 30, 1994.
First. Petitioners' contention is that Republic Act No. 7716 did not
"originate exclusively" in the House of Representatives as required by
Art. VI, §24 of the Constitution, because it is in fact the result of the
consolidation of two distinct bills, H. No. 11197 and S. No. 1630. In
this connection, petitioners point out that although Art. VI, SS 24 was
adopted from the American Federal Constitution, 2 it is notable in two
respects: the verb "shall originate" is qualified in the Philippine
Constitution by the word "exclusively" and the phrase "as on other
bills" in the American version is omitted. This means, according to
them, that to be considered as having originated in the House,
Republic Act No. 7716 must retain the essence of H. No. 11197.
This argument will not bear analysis. To begin with, it is not the law —
but the revenue bill — which is required by the Constitution to
"originate exclusively" in the House of Representatives. It is important
to emphasize this, because a bill originating in the House may undergo
such extensive changes in the Senate that the result may be a
rewriting of the whole. The possibility of a third version by the
conference committee will be discussed later. At this point, what is
important to note is that, as a result of the Senate action, a distinct
bill may be produced. To insist that a revenue statute — and not only
the bill which initiated the legislative process culminating in the
enactment of the law — must substantially be the same as the House
bill would be to deny the Senate's power not only to "concur with
amendments" but also to "propose amendments." It would be to
violate the coequality of legislative power of the two houses of
Congress and in fact make the House superior to the Senate.
The contention that the constitutional design is to limit the Senate's
power in respect of revenue bills in order to compensate for the grant
to the Senate of the treaty-ratifying power 3 and thereby equalize its
powers and those of the House overlooks the fact that the powers
being compared are different. We are dealing here with the legislative
power which under the Constitution is vested not in any particular
chamber but in the Congress of the Philippines, consisting of "a
Senate and a House of Representatives." 4 The exercise of the treaty-
ratifying power is not the exercise of legislative power. It is the
exercise of a check on the executive power. There is, therefore, no
justification for comparing the legislative powers of the House and of
the Senate on the basis of the possession of such nonlegislative power
by the Senate. The possession of a similar power by the U.S.
Senate 5 has never been thought of as giving it more legislative
powers than the House of Representatives.
In the United States, the validity of a provision (§ 37) imposing an ad
valorem tax based on the weight of vessels, which the U.S. Senate had
inserted in the Tariff Act of 1909, was upheld against the claim that
the provision was a revenue bill which originated in the Senate in
contravention of Art. I, § 7 of the U.S. Constitution. 6 Nor is the power
to amend limited to adding a provision or two in a revenue bill
emanating from the House. The U.S. Senate has gone so far as
changing the whole of bills following the enacting clause and
substituting its own versions. In 1883, for example, it struck out
everything after the enacting clause of a tariff bill and wrote in its
place its own measure, and the House subsequently accepted the
amendment. The U.S. Senate likewise added 847 amendments to
what later became the Payne-Aldrich Tariff Act of 1909; it dictated the
schedules of the Tariff Act of 1921; it rewrote an extensive tax revision
bill in the same year and recast most of the tariff bill of 1922. 7 Given,
then, the power of the Senate to propose amendments, the Senate
can propose its own version even with respect to bills which are
required by the Constitution to originate in the House.
It is insisted, however, that S. No. 1630 was passed not in substitution
of H. No. 11197 but of another Senate bill (S. No. 1129) earlier filed
and that what the Senate did was merely to "take [H. No. 11197] into
consideration" in enacting S. No. 1630. There is really no difference
between the Senate preserving H. No. 11197 up to the enacting clause
and then writing its own version following the enacting clause (which,
it would seem, petitioners admit is an amendment by substitution),
and, on the other hand, separately presenting a bill of its own on the
same subject matter. In either case the result are two bills on the
same subject.
Indeed, what the Constitution simply means is that the initiative for
filing revenue, tariff, or tax bills, bills authorizing an increase of the
public debt, private bills and bills of local application must come from
the House of Representatives on the theory that, elected as they are
from the districts, the members of the House can be expected to be
more sensitive to the local needs and problems. On the other hand,
the senators, who are elected at large, are expected to approach the
same problems from the national perspective. Both views are thereby
made to bear on the enactment of such laws.
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. The Court cannot, therefore, understand the alarm
expressed over the fact that on March 1, 1993, eight months before
the House passed H. No. 11197, S. No. 1129 had been filed in the
Senate. After all it does not appear that the Senate ever considered
it. It was only after the Senate had received H. No. 11197 on
November 23, 1993 that the process of legislation in respect of it
began with the referral to the Senate Committee on Ways and Means
of H. No. 11197 and the submission by the Committee on February 7,
1994 of S. No. 1630. For that matter, if the question were simply the
priority in the time of filing of bills, the fact is that it was in the House
that a bill (H. No. 253) to amend the VAT law was first filed on July 22,
1992. Several other bills had been filed in the House before S. No.
1129 was filed in the Senate, and H. No. 11197 was only a substitute
of those earlier bills.
Second. Enough has been said to show that it was within the power
of the Senate to propose S. No. 1630. We now pass to the next
argument of petitioners that S. No. 1630 did not pass three readings
on separate days as required by the Constitution 8 because the
second and third readings were done on the same day, March 24,
1994. But this was because on February 24, 1994 9 and again on
March 22, 1994, 10 the President had certified S. No. 1630 as urgent.
The presidential certification dispensed with the requirement not
only of printing but also that of reading the bill on separate days. The
phrase "except when the President certifies to the necessity of its
immediate enactment, etc." in Art. VI, § 26(2) qualifies the two stated
conditions before a bill can become a law: (i) the bill has passed three
readings on separate days and (ii) it has been printed in its final form
and distributed three days before it is finally approved.
In other words, the "unless" clause must be read in relation to the
"except" clause, because the two are really coordinate clauses of the
same sentence. To construe the "except" clause as simply dispensing
with the second requirement in the "unless" clause (i.e., printing and
distribution three days before final approval) would not only violate
the rules of grammar. It would also negate the very premise of the
"except" clause: the necessity of securing the immediate enactment
of a bill which is certified in order to meet a public calamity or
emergency. For if it is only the printing that is dispensed with by
presidential certification, the time saved would be so negligible as to
be of any use in insuring immediate enactment. It may well be
doubted whether doing away with the necessity of printing and
distributing copies of the bill three days before the third reading
would insure speedy enactment of a law in the face of an emergency
requiring the calling of a special election for President and Vice-
President. Under the Constitution such a law is required to be made
within seven days of the convening of Congress in emergency
session. 11
That upon the certification of a bill by the President the requirement
of three readings on separate days and of printing and distribution
can be dispensed with is supported by the weight of legislative
practice. For example, the bill defining the certiorari jurisdiction of
this Court which, in consolidation with the Senate version, became
Republic Act No. 5440, was passed on second and third readings in
the House of Representatives on the same day (May 14, 1968) after
the bill had been certified by the President as urgent. 12
There is, therefore, no merit in the contention that presidential
certification dispenses only with the requirement for the printing of
the bill and its distribution three days before its passage but not with
the requirement of three readings on separate days, also.
It is nonetheless urged that the certification of the bill in this case was
invalid because there was no emergency, the condition stated in the
certification of a "growing budget deficit" not being an unusual
condition in this country.
It is noteworthy that no member of the Senate saw fit to controvert
the reality of the factual basis of the certification. To the contrary, by
passing S. No. 1630 on second and third readings on March 24, 1994,
the Senate accepted the President's certification. Should such
certification be now reviewed by this Court, especially when no
evidence has been shown that, because S. No. 1630 was taken up on
second and third readings on the same day, the members of the
Senate were deprived of the time needed for the study of a vital piece
of legislation?
The sufficiency of the factual basis of the suspension of the writ
of habeas corpus or declaration of martial law under Art. VII, § 18, or
the existence of a national emergency justifying the delegation of
extraordinary powers to the President under Art. VI, § 23(2), is subject
to judicial review because basic rights of individuals may be at hazard.
But the factual basis of presidential certification of bills, which
involves doing away with procedural requirements designed to insure
that bills are duly considered by members of Congress, certainly
should elicit a different standard of review.
Petitioners also invite attention to the fact that the President certified
S. No. 1630 and not H. No. 11197. That is because S. No. 1630 was
what the Senate was considering. When the matter was before the
House, the President likewise certified H. No. 9210 the pending in the
House.
Third. Finally it is contended that the bill which became Republic Act
No. 7716 is the bill which the Conference Committee prepared by
consolidating H. No. 11197 and S. No. 1630. It is claimed that the
Conference Committee report included provisions not found in either
the House bill or the Senate bill and that these provisions were
"surreptitiously" inserted by the Conference Committee. Much is
made of the fact that in the last two days of its session on April 21 and
25, 1994 the Committee met behind closed doors. We are not told,
however, whether the provisions were not the result of the give and
take that often mark the proceedings of conference committees.
Nor is there anything unusual or extraordinary about the fact that the
Conference Committee met in executive sessions. Often the only way
to reach agreement on conflicting provisions is to meet behind closed
doors, with only the conferees present. Otherwise, no compromise is
likely to be made. The Court is not about to take the suggestion of a
cabal or sinister motive attributed to the conferees on the basis solely
of their "secret meetings" on April 21 and 25, 1994, nor read anything
into the incomplete remarks of the members, marked in the transcript
of stenographic notes by ellipses. The incomplete sentences are
probably due to the stenographer's own limitations or to the
incoherence that sometimes characterize conversations. William
Safire noted some such lapses in recorded talks even by recent past
Presidents of the United States.
In any event, in the United States conference committees had been
customarily held in executive sessions with only the conferees and
their staffs in attendance. 13 Only in November 1975 was a new rule
adopted requiring open sessions. Even then a majority of either
chamber's conferees may vote in public to close the meetings. 14
As to the possibility of an entirely new bill emerging out of a
Conference Committee, it has been explained:
Under congressional rules of procedure, conference committees are
not expected to make any material change in the measure at issue,
either by deleting provisions to which both houses have already
agreed or by inserting new provisions. But this is a difficult provision
to enforce. Note the problem when one house amends a proposal
originating in either house by striking out everything following the
enacting clause and substituting provisions which make it an entirely
new bill. The versions are now altogether different, permitting a
conference committee to draft essentially a new bill. . . . 15
The result is a third version, which is considered an "amendment in
the nature of a substitute," the only requirement for which being that
the third version be germane to the subject of the House and Senate
bills. 16
Indeed, this Court recently held that it is within the power of a
conference committee to include in its report an entirely new
provision that is not found either in the House bill or in the Senate
bill. 17 If the committee can propose an amendment consisting of one
or two provisions, there is no reason why it cannot propose several
provisions, collectively considered as an "amendment in the nature of
a substitute," so long as such amendment is germane to the subject
of the bills before the committee. After all, its report was not final but
needed the approval of both houses of Congress to become valid as
an act of the legislative department. The charge that in this case the
Conference Committee acted as a third legislative chamber is thus
without any basis. 18
Nonetheless, it is argued that under the respective Rules of the Senate
and the House of Representatives a conference committee can only
act on the differing provisions of a Senate bill and a House bill, and
that contrary to these Rules the Conference Committee inserted
provisions not found in the bills submitted to it. The following
provisions are cited in support of this contention:
Rules of the Senate
Rule XII:
§ 26. In the event that the Senate does not agree with the House of
Representatives on the provision of any bill or joint
resolution, the differences shall be settled by a conference committee
of both Houses which shall meet within ten days after their
composition.
The President shall designate the members of the conference
committee in accordance with subparagraph (c), Section 3 of Rule III.
Each Conference Committee Report shall contain a detailed and
sufficiently explicit statement of the changes in or amendments to the
subject measure, and shall be signed by the conferees.
The consideration of such report shall not be in order unless the
report has been filed with the Secretary of the Senate and copies
thereof have been distributed to the Members.
(Emphasis added)
Rules of the House of Representatives
Rule XIV:
§ 85. Conference Committee Reports. — In the event that the House
does not agree with the Senate on the amendments to any bill or joint
resolution, the differences may be settled by conference committees
of both Chambers.
The consideration of conference committee reports shall always be in
order, except when the journal is being read, while the roll is being
called or the House is dividing on any question. Each of the pages of
such reports shall be signed by the conferees. Each report shall
contain a detailed, sufficiently explicit statement of the changes in or
amendments to the subject measure.
The consideration of such report shall not be in order unless copies
thereof are distributed to the Members: Provided, That in the last
fifteen days of each session period it shall be deemed sufficient that
three copies of the report, signed as above provided, are deposited in
the office of the Secretary General.
(Emphasis added)
To be sure, nothing in the Rules limits a conference committee to a
consideration of conflicting provisions. But Rule XLIV, § 112 of the
Rules of the Senate is cited to the effect that "If there is no Rule
applicable to a specific case the precedents of the Legislative
Department of the Philippines shall be resorted to, and as a
supplement of these, the Rules contained in Jefferson's Manual." The
following is then quoted from the Jefferson's Manual:
The managers of a conference must confine themselves to the
differences committed to them. . . and may not include subjects not
within disagreements, even though germane to a question in issue.
Note that, according to Rule XLIX, § 112, in case there is no specific
rule applicable, resort must be to the legislative practice. The
Jefferson's Manual is resorted to only as supplement. It is common
place in Congress that conference committee reports include new
matters which, though germane, have not been committed to the
committee. This practice was admitted by Senator Raul S. Roco,
petitioner in G.R. No. 115543, during the oral argument in these
cases. Whatever, then, may be provided in the Jefferson's Manual
must be considered to have been modified by the legislative practice.
If a change is desired in the practice it must be sought in Congress
since this question is not covered by any constitutional provision but
is only an internal rule of each house. Thus, Art. VI, § 16(3) of the
Constitution provides that "Each House may determine the rules of its
proceedings. . . ."
This observation applies to the other contention that the Rules of the
two chambers were likewise disregarded in the preparation of the
Conference Committee Report because the Report did not contain a
"detailed and sufficiently explicit statement of changes in, or
amendments to, the subject measure." The Report used brackets and
capital letters to indicate the changes. This is a standard practice in
bill-drafting. We cannot say that in using these marks and symbols the
Committee violated the Rules of the Senate and the House.
Moreover, this Court is not the proper forum for the enforcement of
these internal Rules. To the contrary, as we have already ruled,
"parliamentary rules are merely procedural and with their observance
the courts have no concern." 19 Our concern is with the procedural
requirements of the Constitution for the enactment of laws. As far as
these requirements are concerned, we are satisfied that they have
been faithfully observed in these cases.
Nor is there any reason for requiring that the Committee's Report in
these cases must have undergone three readings in each of the two
houses. If that be the case, there would be no end to negotiation since
each house may seek modifications of the compromise bill. The
nature of the bill, therefore, requires that it be acted upon by each
house on a "take it or leave it" basis, with the only alternative that if
it is not approved by both houses, another conference committee
must be appointed. But then again the result would still be a
compromise measure that may not be wholly satisfying to both
houses.
Art. VI, § 26(2) must, therefore, be construed as referring only to bills
introduced for the first time in either house of Congress, not to the
conference committee report. For if the purpose of requiring three
readings is to give members of Congress time to study bills, it cannot
be gainsaid that H. No. 11197 was passed in the House after three
readings; that in the Senate it was considered on first reading and
then referred to a committee of that body; that although the Senate
committee did not report out the House bill, it submitted a version (S.
No. 1630) which it had prepared by "taking into consideration" the
House bill; that for its part the Conference Committee consolidated
the two bills and prepared a compromise version; that the Conference
Committee Report was thereafter approved by the House and the
Senate, presumably after appropriate study by their members. We
cannot say that, as a matter of fact, the members of Congress were
not fully informed of the provisions of the bill. The allegation that the
Conference Committee usurped the legislative power of Congress is,
in our view, without warrant in fact and in law.
Fourth. Whatever doubts there may be as to the formal validity of
Republic Act No. 7716 must be resolved in its favor. Our
cases 20 manifest firm adherence to the rule that an enrolled copy of
a bill is conclusive not only of its provisions but also of its due
enactment. Not even claims that a proposed constitutional
amendment was invalid because the requisite votes for its approval
had not been obtained 21 or that certain provisions of a statute had
been "smuggled" in the printing of the bill 22 have moved or
persuaded us to look behind the proceedings of a coequal branch of
the government. There is no reason now to depart from this rule.
No claim is here made that the "enrolled bill" rule is absolute. In fact
in one case 23 we "went behind" an enrolled bill and consulted the
Journal to determine whether certain provisions of a statute had been
approved by the Senate in view of the fact that the President of the
Senate himself, who had signed the enrolled bill, admitted a mistake
and withdrew his signature, so that in effect there was no longer an
enrolled bill to consider.
But where allegations that the constitutional procedures for the
passage of bills have not been observed have no more basis than
another allegation that the Conference Committee "surreptitiously"
inserted provisions into a bill which it had prepared, we should
decline the invitation to go behind the enrolled copy of the bill. To
disregard the "enrolled bill" rule in such cases would be to disregard
the respect due the other two departments of our government.
Fifth. An additional attack on the formal validity of Republic Act No.
7716 is made by the Philippine Airlines, Inc., petitioner in G.R. No.
11582, namely, that it violates Art. VI, § 26(1) which provides that
"Every bill passed by Congress shall embrace only one subject which
shall be expressed in the title thereof." It is contended that neither H.
No. 11197 nor S. No. 1630 provided for removal of exemption of PAL
transactions from the payment of the VAT and that this was made
only in the Conference Committee bill which became Republic Act No.
7716 without reflecting this fact in its title.
The title of Republic Act No. 7716 is:
AN ACT RESTRUCTURING THE VALUE- ADDED TAX (VAT) SYSTEM,
WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION,
AND FOR THESE PURPOSES AMENDING AND REPEALING THE
RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED, AND FOR OTHER PURPOSES.
Among the provisions of the NIRC amended is § 103, which originally
read:
§ 103. Exempt transactions. — The following shall be exempt from the
value-added tax:
....
(q) Transactions which are exempt under special laws or international
agreements to which the Philippines is a signatory. Among the
transactions exempted from the VAT were those of PAL because it
was exempted under its franchise (P.D. No. 1590) from the payment
of all "other taxes . . . now or in the near future," in consideration of
the payment by it either of the corporate income tax or a franchise
tax of 2%.
As a result of its amendment by Republic Act No. 7716, § 103 of the
NIRC now provides:
§ 103. Exempt transactions. — The following shall be exempt from the
value-added tax:
....
(q) Transactions which are exempt under special laws, except those
granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . .
The effect of the amendment is to remove the exemption granted to
PAL, as far as the VAT is concerned.
The question is whether this amendment of § 103 of the NIRC is fairly
embraced in the title of Republic Act No. 7716, although no mention
is made therein of P.D. No. 1590 as among those which the statute
amends. We think it is, since the title states that the purpose of the
statute is to expand the VAT system, and one way of doing this is to
widen its base by withdrawing some of the exemptions granted
before. To insist that P.D. No. 1590 be mentioned in the title of the
law, in addition to § 103 of the NIRC, in which it is specifically referred
to, would be to insist that the title of a bill should be a complete index
of its content.
The constitutional requirement that every bill passed by Congress
shall embrace only one subject which shall be expressed in its title is
intended to prevent surprise upon the members of Congress and to
inform the people of pending legislation so that, if they wish to, they
can be heard regarding it. If, in the case at bar, petitioner did not know
before that its exemption had been withdrawn, it is not because of
any defect in the title but perhaps for the same reason other statutes,
although published, pass unnoticed until some event somehow calls
attention to their existence. Indeed, the title of Republic Act No. 7716
is not any more general than the title of PAL's own franchise under
P.D. No. 1590, and yet no mention is made of its tax exemption. The
title of P.D. No. 1590 is:
AN ACT GRANTING A NEW FRANCHISE TO PHILIPPINE AIRLINES, INC.
TO ESTABLISH, OPERATE, AND MAINTAIN AIR-TRANSPORT SERVICES
IN THE PHILIPPINES AND BETWEEN THE PHILIPPINES AND OTHER
COUNTRIES.
The trend in our cases is to construe the constitutional requirement
in such a manner that courts do not unduly interfere with the
enactment of necessary legislation and to consider it sufficient if the
title expresses the general subject of the statute and all its provisions
are germane to the general subject thus expressed. 24
It is further contended that amendment of petitioner's franchise may
only be made by special law, in view of § 24 of P.D. No. 1590 which
provides:
This franchise, as amended, or any section or provision hereof may
only be modified, amended, or repealed expressly by a special law or
decree that shall specifically modify, amend, or repeal this franchise
or any section or provision thereof.
This provision is evidently intended to prevent the amendment of the
franchise by mere implication resulting from the enactment of a later
inconsistent statute, in consideration of the fact that a franchise is a
contract which can be altered only by consent of the parties. Thus
in Manila Railroad Co. v.
Rafferty, 25 it was held that an Act of the U.S. Congress, which
provided for the payment of tax on certain goods and articles
imported into the Philippines, did not amend the franchise of plaintiff,
which exempted it from all taxes except those mentioned in its
franchise. It was held that a special law cannot be amended by a
general law.
In contrast, in the case at bar, Republic Act No. 7716 expressly amends
PAL's franchise (P.D. No. 1590) by specifically excepting from the
grant of exemptions from the VAT PAL's exemption under P.D. No.
1590. This is within the power of Congress to do under Art. XII, § 11
of the Constitution, which provides that the grant of a franchise for
the operation of a public utility is subject to amendment, alteration
or repeal by Congress when the common good so requires.
II. SUBSTANTIVE ISSUES
A. Claims of Press Freedom, Freedom of Thought and Religious
Freedom
The Philippine Press Institute (PPI), petitioner in G.R. No. 115544, is a
nonprofit organization of newspaper publishers established for the
improvement of journalism in the Philippines. On the other hand,
petitioner in G.R. No. 115781, the Philippine Bible Society (PBS), is a
nonprofit organization engaged in the printing and distribution of
bibles and other religious articles. Both petitioners claim violations of
their rights under § § 4 and 5 of the Bill of Rights as a result of the
enactment of the VAT Law.
The PPI questions the law insofar as it has withdrawn the exemption
previously granted to the press under § 103 (f) of the NIRC. Although
the exemption was subsequently restored by administrative
regulation with respect to the circulation income of newspapers, the
PPI presses its claim because of the possibility that the exemption
may still be removed by mere revocation of the regulation of the
Secretary of Finance. On the other hand, the PBS goes so far as to
question the Secretary's power to grant exemption for two reasons:
(1) The Secretary of Finance has no power to grant tax exemption
because this is vested in Congress and requires for its exercise the
vote of a majority of all its members 26 and (2) the Secretary's duty is
to execute the law.
§ 103 of the NIRC contains a list of transactions exempted from VAT.
Among the transactions previously granted exemption were:
(f) Printing, publication, importation or sale of books and any
newspaper, magazine, review, or bulletin which appears at regular
intervals with fixed prices for subscription and sale and which is
devoted principally to the publication of advertisements.
Republic Act No. 7716 amended § 103 by deleting ¶ (f) with the result
that print media became subject to the VAT with respect to all aspects
of their operations. Later, however, based on a memorandum of the
Secretary of Justice, respondent Secretary of Finance issued Revenue
Regulations No. 11-94, dated June 27, 1994, exempting the
"circulation income of print media pursuant to § 4 Article III of the
1987 Philippine Constitution guaranteeing against abridgment of
freedom of the press, among others." The exemption of "circulation
income" has left income from advertisements still subject to the VAT.
It is unnecessary to pass upon the contention that the exemption
granted is beyond the authority of the Secretary of Finance to give, in
view of PPI's contention that even with the exemption of the
circulation revenue of print media there is still an unconstitutional
abridgment of press freedom because of the imposition of the VAT on
the gross receipts of newspapers from advertisements and on their
acquisition of paper, ink and services for publication. Even on the
assumption that no exemption has effectively been granted to print
media transactions, we find no violation of press freedom in these
cases.
To be sure, we are not dealing here with a statute that on its
face operates in the area of press freedom. The PPI's claim is simply
that, as applied to newspapers, the law abridges press freedom. Even
with due recognition of its high estate and its importance in a
democratic society, however, the press is not immune from general
regulation by the State. It has been held:
The publisher of a newspaper has no immunity from the application
of general laws. He has no special privilege to invade the rights and
liberties of others. He must answer for libel. He may be punished for
contempt of court. . . . Like others, he must pay equitable and
nondiscriminatory taxes on his business. . . . 27
The PPI does not dispute this point, either.
What it contends is that by withdrawing the exemption previously
granted to print media transactions involving printing, publication,
importation or sale of newspapers, Republic Act No. 7716 has singled
out the press for discriminatory treatment and that within the class
of mass media the law discriminates against print media by giving
broadcast media favored treatment. We have carefully examined this
argument, but we are unable to find a differential treatment of the
press by the law, much less any censorial motivation for its
enactment. If the press is now required to pay a value-added tax on
its transactions, it is not because it is being singled out, much less
targeted, for special treatment but only because of the removal of the
exemption previously granted to it by law. The withdrawal of
exemption is all that is involved in these cases. Other transactions,
likewise previously granted exemption, have been delisted as part of
the scheme to expand the base and the scope of the VAT system. The
law would perhaps be open to the charge of discriminatory treatment
if the only privilege withdrawn had been that granted to the press.
But that is not the case.
The situation in the case at bar is indeed a far cry from those cited by
the PPI in support of its claim that Republic Act No. 7716 subjects the
press to discriminatory taxation. In the cases cited, the discriminatory
purpose was clear either from the background of the law or from its
operation. For example, in Grosjean v. American Press Co., 28 the law
imposed a license tax equivalent to 2% of the gross receipts derived
from advertisements only on newspapers which had a circulation of
more than 20,000 copies per week. Because the tax was not based on
the volume of advertisement alone but was measured by the extent
of its circulation as well, the law applied only to the thirteen large
newspapers in Louisiana, leaving untaxed four papers with circulation
of only slightly less than 20,000 copies a week and 120 weekly
newspapers which were in serious competition with the thirteen
newspapers in question. It was well known that the thirteen
newspapers had been critical of Senator Huey Long, and the Long-
dominated legislature of Louisiana respondent by taxing what Long
described as the "lying newspapers" by imposing on them "a tax on
lying." The effect of the tax was to curtail both their revenue and their
circulation. As the U.S. Supreme Court noted, the tax was "a
deliberate and calculated device in the guise of a tax to limit the
circulation of information to which the public is entitled in virtue of
the constitutional guaranties." 29 The case is a classic illustration of
the warning that the power to tax is the power to destroy.
In the other case 30 invoked by the PPI, the press was also found to
have been singled out because everything was exempt from the "use
tax" on ink and paper, except the press. Minnesota imposed a tax on
the sales of goods in that state. To protect the sales tax, it enacted a
complementary tax on the privilege of "using, storing or consuming in
that state tangible personal property" by eliminating the residents'
incentive to get goods from outside states where the sales tax might
be lower. The Minnesota Star Tribune was exempted from both taxes
from 1967 to 1971. In 1971, however, the state legislature amended
the tax scheme by imposing the "use tax" on the cost of paper and ink
used for publication. The law was held to have singled out the press
because (1) there was no reason for imposing the "use tax" since the
press was exempt from the sales tax and (2) the "use tax" was laid on
an "intermediate transaction rather than the ultimate retail sale."
Minnesota had a heavy burden of justifying the differential treatment
and it failed to do so. In addition, the U.S. Supreme Court found the
law to be discriminatory because the legislature, by again amending
the law so as to exempt the first $100,000 of paper and ink used,
further narrowed the coverage of the tax so that "only a handful of
publishers pay any tax at all and even fewer pay any significant
amount of tax." 31 The discriminatory purpose was thus very clear.
More recently, in Arkansas Writers' Project, Inc. v. Ragland, 32 it was
held that a law which taxed general interest magazines but not
newspapers and religious, professional, trade and sports journals was
discriminatory because while the tax did not single out the press as a
whole, it targeted a small group within the press. What is more, by
differentiating on the basis of contents (i.e., between general interest
and special interests such as religion or sports) the law became
"entirely incompatible with the First Amendment's guarantee of
freedom of the press."
These cases come down to this: that unless justified, the differential
treatment of the press creates risks of suppression of expression. In
contrast, in the cases at bar, the statute applies to a wide range of
goods and services. The argument that, by imposing the VAT only on
print media whose gross sales exceeds P480,000 but not more than
P750,000, the law discriminates 33 is without merit since it has not
been shown that as a result the class subject to tax has been
unreasonably narrowed. The fact is that this limitation does not apply
to the press along but to all sales. Nor is impermissible motive shown
by the fact that print media and broadcast media are treated
differently. The press is taxed on its transactions involving printing
and publication, which are different from the transactions of
broadcast media. There is thus a reasonable basis for the
classification.
The cases canvassed, it must be stressed, eschew any suggestion that
"owners of newspapers are immune from any forms of ordinary
taxation." The license tax in the Grosjean case was declared invalid
because it was "one single in kind, with a long history of hostile misuse
against the freedom of the
press." 34 On the other hand, Minneapolis Star acknowledged that
"The First Amendment does not prohibit all regulation of the press
[and that] the States and the Federal Government can subject
newspapers to generally applicable economic regulations without
creating constitutional problems." 35
What has been said above also disposes of the allegations of the PBS
that the removal of the exemption of printing, publication or
importation of books and religious articles, as well as their printing
and publication, likewise violates freedom of thought and of
conscience. For as the U.S. Supreme Court unanimously held in Jimmy
Swaggart Ministries v. Board of Equalization, 36 the Free Exercise of
Religion Clause does not prohibit imposing a generally applicable
sales and use tax on the sale of religious materials by a religious
organization.
This brings us to the question whether the registration provision of
the law, 37 although of general applicability, nonetheless is invalid
when applied to the press because it lays a prior restraint on its
essential freedom. The case of American Bible Society v. City of
Manila 38 is cited by both the PBS and the PPI in support of their
contention that the law imposes censorship. There, this Court held
that an ordinance of the City of Manila, which imposed a license fee
on those engaged in the business of general merchandise, could not
be applied to the appellant's sale of bibles and other religious
literature. This Court relied on Murdock v. Pennsylvania, 39 in which it
was held that, as a license fee is fixed in amount and unrelated to the
receipts of the taxpayer, the license fee, when applied to a religious
sect, was actually being imposed as a condition for the exercise of the
sect's right under the Constitution. For that reason, it was held, the
license fee "restrains in advance those constitutional liberties of press
and religion and inevitably tends to suppress their exercise." 40
But, in this case, the fee in § 107, although a fixed amount (P1,000), is
not imposed for the exercise of a privilege but only for the purpose of
defraying part of the cost of registration. The registration
requirement is a central feature of the VAT system. It is designed to
provide a record of tax credits because any person who is subject to
the payment of the VAT pays an input tax, even as he collects an
output tax on sales made or services rendered. The registration fee is
thus a mere administrative fee, one not imposed on the exercise of a
privilege, much less a constitutional right.
For the foregoing reasons, we find the attack on Republic Act No.
7716 on the ground that it offends the free speech, press and freedom
of religion guarantees of the Constitution to be without merit. For the
same reasons, we find the claim of the Philippine Educational
Publishers Association (PEPA) in G.R. No. 115931 that the increase in
the price of books and other educational materials as a result of the
VAT would violate the constitutional mandate to the government to
give priority to education, science and technology (Art. II, § 17) to be
untenable.
B. Claims of Regressivity, Denial of Due Process, Equal Protection, and
Impairment
of Contracts
There is basis for passing upon claims that on its face the statute
violates the guarantees of freedom of speech, press and religion. The
possible "chilling effect" which it may have on the essential freedom
of the mind and conscience and the need to assure that the channels
of communication are open and operating importunately demand the
exercise of this Court's power of review.
There is, however, no justification for passing upon the claims that the
law also violates the rule that taxation must be progressive and that
it denies petitioners' right to due process and that equal protection of
the laws. The reason for this different treatment has been cogently
stated by an eminent authority on constitutional law thus: "[W]hen
freedom of the mind is imperiled by law, it is freedom that commands
a momentum of respect; when property is imperiled it is the
lawmakers' judgment that commands respect. This dual standard may
not precisely reverse the presumption of constitutionality in civil
liberties cases, but obviously it does set up a hierarchy of values
within the due process clause." 41
Indeed, the absence of threat of immediate harm makes the need for
judicial intervention less evident and underscores the essential nature
of petitioners' attack on the law on the grounds of regressivity, denial
of due process and equal protection and impairment of contracts as
a mere academic discussion of the merits of the law. For the fact is
that there have even been no notices of assessments issued to
petitioners and no determinations at the administrative levels of their
claims so as to illuminate the actual operation of the law and enable
us to reach sound judgment regarding so fundamental questions as
those raised in these suits.
Thus, the broad argument against the VAT is that it is regressive and
that it violates the requirement that "The rule of taxation shall be
uniform and equitable [and] Congress shall evolve a progressive
system of taxation." 42 Petitioners in G.R. No. 115781 quote from a
paper, entitled "VAT Policy Issues: Structure, Regressivity, Inflation
and Exports" by Alan A. Tait of the International Monetary Fund, that
"VAT payment by low-income households will be a higher proportion
of their incomes (and expenditures) than payments by higher-income
households. That is, the VAT will be regressive." Petitioners contend
that as a result of the uniform 10% VAT, the tax on consumption
goods of those who are in the higher-income bracket, which before
were taxed at a rate higher than 10%, has been reduced, while basic
commodities, which before were taxed at rates ranging from 3% to
5%, are now taxed at a higher rate.
Just as vigorously as it is asserted that the law is regressive, the
opposite claim is pressed by respondents that in fact it distributes the
tax burden to as many goods and services as possible particularly to
those which are within the reach of higher-income groups, even as
the law exempts basic goods and services. It is thus equitable. The
goods and properties subject to the VAT are those used or consumed
by higher-income groups. These include real properties held primarily
for sale to customers or held for lease in the ordinary course of
business, the right or privilege to use industrial, commercial or
scientific equipment, hotels, restaurants and similar places, tourist
buses, and the like. On the other hand, small business establishments,
with annual gross sales of less than P500,000, are exempted. This,
according to respondents, removes from the coverage of the law
some 30,000 business establishments. On the other hand, an
occasional paper 43 of the Center for Research and Communication
cities a NEDA study that the VAT has minimal impact on inflation and
income distribution and that while additional expenditure for the
lowest income class is only P301 or 1.49% a year, that for a family
earning P500,000 a year or more is P8,340 or 2.2%.
Lacking empirical data on which to base any conclusion regarding
these arguments, any discussion whether the VAT is regressive in the
sense that it will hit the "poor" and middle-income group in society
harder than it will the "rich," as the Cooperative Union of the
Philippines (CUP) claims in G.R. No. 115873, is largely an academic
exercise. On the other hand, the CUP's contention that Congress'
withdrawal of exemption of producers cooperatives, marketing
cooperatives, and service cooperatives, while maintaining that
granted to electric cooperatives, not only goes against the
constitutional policy to promote cooperatives as instruments of social
justice (Art. XII, § 15) but also denies such cooperatives the equal
protection of the law is actually a policy argument. The legislature is
not required to adhere to a policy of "all or none" in choosing the
subject of taxation. 44
Nor is the contention of the Chamber of Real Estate and Builders
Association (CREBA), petitioner in G.R. 115754, that the VAT will
reduce the mark up of its members by as much as 85% to 90% any
more concrete. It is a mere allegation. On the other hand, the claim
of the Philippine Press Institute, petitioner in G.R. No. 115544, that
the VAT will drive some of its members out of circulation because
their profits from advertisements will not be enough to pay for their
tax liability, while purporting to be based on the financial statements
of the newspapers in question, still falls short of the establishment of
facts by evidence so necessary for adjudicating the question whether
the tax is oppressive and confiscatory.
Indeed, regressivity is not a negative standard for courts to enforce.
What Congress is required by the Constitution to do is to "evolve a
progressive system of taxation." This is a directive to Congress, just
like the directive to it to give priority to the enactment of laws for the
enhancement of human dignity and the reduction of social, economic
and political inequalities (Art. XIII, § 1), or for the promotion of the
right to "quality education" (Art. XIV, § 1). These provisions are put in
the Constitution as moral incentives to legislation, not as judicially
enforceable rights.
At all events, our 1988 decision in Kapatiran 45 should have laid to rest
the questions now raised against the VAT. There similar arguments
made against the original VAT Law (Executive Order No. 273) were
held to be hypothetical, with no more basis than newspaper articles
which this Court found to be "hearsay and [without] evidentiary
value." As Republic Act No. 7716 merely expands the base of the VAT
system and its coverage as provided in the original VAT Law, further
debate on the desirability and wisdom of the law should have shifted
to Congress.
Only slightly less abstract but nonetheless hypothetical is the
contention of CREBA that the imposition of the VAT on the sales and
leases of real estate by virtue of contracts entered into prior to the
effectivity of the law would violate the constitutional provision that
"No law impairing the obligation of contracts shall be passed." It is
enough to say that the parties to a contract cannot, through the
exercise of prophetic discernment, fetter the exercise of the taxing
power of the State. For not only are existing laws read into contracts
in order to fix obligations as between parties, but the reservation of
essential attributes of sovereign power is also read into contracts as
a basic postulate of the legal order. The policy of protecting contracts
against impairment presupposes the maintenance of a government
which retains adequate authority to secure the peace and good order
of society. 46
In truth, the Contract Clause has never been thought as a limitation
on the exercise of the State's power of taxation save only where a tax
exemption has been granted for a valid consideration. 47 Such is not
the case of PAL in G.R. No. 115852, and we do not understand it to
make this claim. Rather, its position, as discussed above, is that the
removal of its tax exemption cannot be made by a general, but only
by a specific, law.
The substantive issues raised in some of the cases are presented in
abstract, hypothetical form because of the lack of a concrete record.
We accept that this Court does not only adjudicate private cases; that
public actions by "non-Hohfeldian" 48 or ideological plaintiffs are now
cognizable provided they meet the standing requirement of the
Constitution; that under Art. VIII, § 1, ¶ 2 the Court has a "special
function" of vindicating constitutional rights. Nonetheless the feeling
cannot be escaped that we do not have before us in these cases a fully
developed factual record that alone can impart to our adjudication
the impact of actuality 49 to insure that decision-making is informed
and well grounded. Needless to say, we do not have power to render
advisory opinions or even jurisdiction over petitions for declaratory
judgment. In effect we are being asked to do what the Conference
Committee is precisely accused of having done in these cases — to sit
as a third legislative chamber to review legislation.
We are told, however, that the power of judicial review is not so much
power as it is duty imposed on this Court by the Constitution and that
we would be remiss in the performance of that duty if we decline to
look behind the barriers set by the principle of separation of powers.
Art. VIII, § 1, ¶ 2 is cited in support of this view:
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government.
To view the judicial power of review as a duty is nothing new. Chief
Justice Marshall said so in 1803, to justify the assertion of this power
in Marbury v. Madison:
It is emphatically the province and duty of the judicial department to
say what the law is. Those who apply the rule to particular cases must
of necessity expound and interpret that rule. If two laws conflict with
each other, the courts must decide on the operation of each. 50
Justice Laurel echoed this justification in 1936 in Angara v. Electoral
Commission:
And when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act of the
legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and
guarantees to them. 51
This conception of the judicial power has been affirmed in several
cases 52 of this Court following Angara.
It does not add anything, therefore, to invoke this "duty" to justify this
Court's intervention in what is essentially a case that at best is not ripe
for adjudication. That duty must still be performed in the context of a
concrete case or controversy, as Art. VIII, § 5(2) clearly defines our
jurisdiction in terms of "cases," and nothing but "cases." That the
other departments of the government may have committed a grave
abuse of discretion is not an independent ground for exercising our
power. Disregard of the essential limits imposed by the case and
controversy requirement can in the long run only result in
undermining our authority as a court of law. For, as judges, what we
are called upon to render is judgment according to law, not according
to what may appear to be the opinion of the day.
_______________________________
In the preceeding pages we have endeavored to discuss, within limits,
the validity of Republic Act No. 7716 in its formal and substantive
aspects as this has been raised in the various cases before us. To sum
up, we hold:
(1) That the procedural requirements of the Constitution have been
complied with by Congress in the enactment of the statute;
(2) That judicial inquiry whether the formal requirements for the
enactment of statutes — beyond those prescribed by the Constitution
— have been observed is precluded by the principle of separation of
powers;
(3) That the law does not abridge freedom of speech, expression or
the press, nor interfere with the free exercise of religion, nor deny to
any of the parties the right to an education; and
(4) That, in view of the absence of a factual foundation of record,
claims that the law is regressive, oppressive and confiscatory and that
it violates vested rights protected under the Contract Clause are
prematurely raised and do not justify the grant of prospective relief
by writ of prohibition.
WHEREFORE, the petitions in these cases are DISMISSED.
G.R. No. 115455 October 30, 1995
ARTURO M. TOLENTINO, petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE, respondents.
G.R. No. 115525 October 30, 1995
JUAN T. DAVID, petitioner,
vs.
TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE
OCAMPO, as Secretary of Finance; LIWAYWAY VINZONS-CHATO, as
Commissioner of Internal Revenue; and their AUTHORIZED AGENTS
OR REPRESENTATIVES, respondents.
G.R. No. 115543 October 30, 1995
RAUL S. ROCO and the INTEGRATED BAR OF THE
PHILIPPINES, petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE
COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND
BUREAU OF CUSTOMS, respondents.
G.R. No. 115544 October 30, 1995
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.;
KAMAHALAN PUBLISHING CORPORATION; PHILIPPINE
JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L.
DIMALANTA, petitioners,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of
Internal Revenue; HON. TEOFISTO T. GUINGONA, JR., in his
capacity as Executive Secretary; and HON. ROBERTO B. DE
OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115754 October 30, 1995
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC.,
(CREBA), petitioner,
vs.
THE COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 115781 October 30, 1995
KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME
CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM
TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN,
FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO,
JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF
ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM,
INC. ("MABINI"), FREEDOM FROM DEBT COALITION, INC., and
PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO
TAÑADA, petitioners,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE
COMMISSIONER OF INTERNAL REVENUE and THE COMMISSIONER
OF CUSTOMS, respondents.
G.R. No. 115852 October 30, 1995
PHILIPPINE AIRLINES, INC., petitioner,
vs.
THE SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL
REVENUE, respondents.
G.R. No. 115873 October 30, 1995
COOPERATIVE UNION OF THE PHILIPPINES, petitioner,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of
Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his
capacity as Executive Secretary, and HON. ROBERTO B. DE
OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115931 October 30, 1995
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and
ASSOCIATION OF PHILIPPINE BOOK SELLERS, petitioners,
vs.
HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON.
LIWAYWAY V. CHATO, as the Commissioner of Internal Revenue;
and HON. GUILLERMO PARAYNO, JR., in his capacity as the
Commissioner of Customs, respondents.
RESOLUTION
MENDOZA, J.:
These are motions seeking reconsideration of our decision dismissing
the petitions filed in these cases for the declaration of
unconstitutionality of R.A. No. 7716, otherwise known as the
Expanded Value-Added Tax Law. The motions, of which there are 10
in all, have been filed by the several petitioners in these cases, with
the exception of the Philippine Educational Publishers Association,
Inc. and the Association of Philippine Booksellers, petitioners in G.R.
No. 115931.
The Solicitor General, representing the respondents, filed a
consolidated comment, to which the Philippine Airlines, Inc.,
petitioner in G.R. No. 115852, and the Philippine Press Institute, Inc.,
petitioner in G.R. No. 115544, and Juan T. David, petitioner in G.R. No.
115525, each filed a reply. In turn the Solicitor General filed on June
1, 1995 a rejoinder to the PPI's reply.
On June 27, 1995 the matter was submitted for resolution.
I. Power of the Senate to propose amendments to revenue bills. Some
of the petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines
(PAL), Roco, and Chamber of Real Estate and Builders Association
(CREBA)) reiterate previous claims made by them that R.A. No. 7716
did not "originate exclusively" in the House of Representatives as
required by Art. VI, §24 of the Constitution. Although they admit that
H. No. 11197 was filed in the House of Representatives where it
passed three readings and that afterward it was sent to the Senate
where after first reading it was referred to the Senate Ways and
Means Committee, they complain that the Senate did not pass it on
second and third readings. Instead what the Senate did was to pass
its own version (S. No. 1630) which it approved on May 24, 1994.
Petitioner Tolentino adds that what the Senate committee should
have done was to amend H. No. 11197 by striking out the text of the
bill and substituting it with the text of S. No. 1630. That way, it is said,
"the bill remains a House bill and the Senate version just becomes the
text (only the text) of the House bill."
The contention has no merit.
The enactment of S. No. 1630 is not the only instance in which the
Senate proposed an amendment to a House revenue bill by enacting
its own version of a revenue bill. On at least two occasions during
the Eighth Congress, the Senate passed its own version of revenue
bills, which, in consolidation with House bills earlier passed, became
the enrolled bills. These were:
R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE
OF 1987 BY EXTENDING FROM FIVE (5) YEARS TO TEN YEARS THE
PERIOD FOR TAX AND DUTY EXEMPTION AND TAX CREDIT ON CAPITAL
EQUIPMENT) which was approved by the President on April 10, 1992.
This Act is actually a consolidation of H. No. 34254, which was
approved by the House on January 29, 1992, and S. No. 1920, which
was approved by the Senate on February 3, 1992.
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER
SHALL GIVE REWARD TO ANY FILIPINO ATHLETE WINNING A MEDAL
IN OLYMPIC GAMES) which was approved by the President on May
22, 1992. This Act is a consolidation of H. No. 22232, which was
approved by the House of Representatives on August 2, 1989, and S.
No. 807, which was approved by the Senate on October 21, 1991.
On the other hand, the Ninth Congress passed revenue laws which
were also the result of the consolidation of House and Senate bills.
These are the following, with indications of the dates on which the
laws were approved by the President and dates the separate bills of
the two chambers of Congress were respectively passed:
1. R.A. NO. 7642
AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING
FOR THIS PURPOSE THE PERTINENT SECTIONS OF THE NATIONAL
INTERNAL REVENUE CODE (December 28, 1992).
House Bill No. 2165, October 5, 1992
Senate Bill No. 32, December 7, 1992
2. R.A. NO. 7643
AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE
TO REQUIRE THE PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH
AND TO ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN VAT
REVENUE, AMENDING FOR THIS PURPOSE CERTAIN SECTIONS OF THE
NATIONAL INTERNAL REVENUE CODE (December 28, 1992)
House Bill No. 1503, September 3, 1992
Senate Bill No. 968, December 7, 1992
3. R.A. NO. 7646
AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE
TO PRESCRIBE THE PLACE FOR PAYMENT OF INTERNAL REVENUE
TAXES BY LARGE TAXPAYERS, AMENDING FOR THIS PURPOSE
CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED (February 24, 1993)
House Bill No. 1470, October 20, 1992
Senate Bill No. 35, November 19, 1992
4. R.A. NO. 7649
AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL
SUBDIVISIONS, INSTRUMENTALITIES OR AGENCIES INCLUDING
GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCS)
TO DEDUCT AND WITHHOLD THE VALUE-ADDED TAX DUE AT THE
RATE OF THREE PERCENT (3%) ON GROSS PAYMENT FOR THE
PURCHASE OF GOODS AND SIX PERCENT (6%) ON GROSS RECEIPTS
FOR SERVICES RENDERED BY CONTRACTORS (April 6, 1993)
House Bill No. 5260, January 26, 1993
Senate Bill No. 1141, March 30, 1993
5. R.A. NO. 7656
AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS TO DECLARE DIVIDENDS UNDER CERTAIN
CONDITIONS TO THE NATIONAL GOVERNMENT, AND FOR OTHER
PURPOSES (November 9, 1993)
House Bill No. 11024, November 3, 1993
Senate Bill No. 1168, November 3, 1993
6. R.A. NO. 7660
AN ACT RATIONALIZING FURTHER THE STRUCTURE AND
ADMINISTRATION OF THE DOCUMENTARY STAMP TAX, AMENDING
FOR THE PURPOSE CERTAIN PROVISIONS OF THE NATIONAL
INTERNAL REVENUE CODE, AS AMENDED, ALLOCATING FUNDS FOR
SPECIFIC PROGRAMS, AND FOR OTHER PURPOSES (December 23,
1993)
House Bill No. 7789, May 31, 1993
Senate Bill No. 1330, November 18, 1993
7. R.A. NO. 7717
AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF
SHARES OF STOCK LISTED AND TRADED THROUGH THE LOCAL STOCK
EXCHANGE OR THROUGH INITIAL PUBLIC OFFERING, AMENDING FOR
THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED, BY INSERTING A NEW SECTION AND REPEALING CERTAIN
SUBSECTIONS THEREOF (May 5, 1994)
House Bill No. 9187, November 3, 1993
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which
the Senate, in the exercise of its power to propose amendments to
bills required to originate in the House, passed its own version of a
House revenue measure. It is noteworthy that, in the particular case
of S. No. 1630, petitioners Tolentino and Roco, as members of the
Senate, voted to approve it on second and third readings.
On the other hand, amendment by substitution, in the manner urged
by petitioner Tolentino, concerns a mere matter of form. Petitioner
has not shown what substantial difference it would make if, as the
Senate actually did in this case, a separate bill like S. No. 1630 is
instead enacted as a substitute measure, "taking into Consideration .
. . H.B. 11197."
Indeed, so far as pertinent, the Rules of the Senate only provide:
RULE XXIX
AMENDMENTS
xxx xxx xxx
§68. Not more than one amendment to the original amendment shall
be considered.
No amendment by substitution shall be entertained unless the text
thereof is submitted in writing.
Any of said amendments may be withdrawn before a vote is taken
thereon.
§69. No amendment which seeks the inclusion of a legislative
provision foreign to the subject matter of a bill (rider) shall be
entertained.
xxx xxx xxx
§70-A. A bill or resolution shall not be amended by substituting it with
another which covers a subject distinct from that proposed in the
original bill or resolution. (emphasis added).
Nor is there merit in petitioners' contention that, with regard to
revenue bills, the Philippine Senate possesses less power than the
U.S. Senate because of textual differences between constitutional
provisions giving them the power to propose or concur with
amendments.
Art. I, §7, cl. 1 of the U.S. Constitution reads:
All Bills for raising Revenue shall originate in the House of
Representatives; but the Senate may propose or concur with
amendments as on other Bills.
Art. VI, §24 of our Constitution reads:
All appropriation, revenue or tariff bills, bills authorizing increase of
the public debt, bills of local application, and private bills shall
originate exclusively in the House of Representatives, but the Senate
may propose or concur with amendments.
The addition of the word "exclusively" in the Philippine Constitution
and the decision to drop the phrase "as on other Bills" in the American
version, according to petitioners, shows the intention of the framers
of our Constitution to restrict the Senate's power to propose
amendments to revenue bills. Petitioner Tolentino contends that the
word "exclusively" was inserted to modify "originate" and "the words
'as in any other bills' (sic) were eliminated so as to show that these
bills were not to be like other bills but must be treated as a special
kind."
The history of this provision does not support this contention. The
supposed indicia of constitutional intent are nothing but the relics of
an unsuccessful attempt to limit the power of the Senate. It will be
recalled that the 1935 Constitution originally provided for a
unicameral National Assembly. When it was decided in 1939 to
change to a bicameral legislature, it became necessary to provide for
the procedure for lawmaking by the Senate and the House of
Representatives. The work of proposing amendments to the
Constitution was done by the National Assembly, acting as a
constituent assembly, some of whose members, jealous of preserving
the Assembly's lawmaking powers, sought to curtail the powers of the
proposed Senate. Accordingly they proposed the following provision:
All bills appropriating public funds, revenue or tariff bills, bills of local
application, and private bills shall originate exclusively in the
Assembly, but the Senate may propose or concur with amendments.
In case of disapproval by the Senate of any such bills, the Assembly
may repass the same by a two-thirds vote of all its members, and
thereupon, the bill so repassed shall be deemed enacted and may be
submitted to the President for corresponding action. In the event that
the Senate should fail to finally act on any such bills, the Assembly
may, after thirty days from the opening of the next regular session of
the same legislative term, reapprove the same with a vote of two-
thirds of all the members of the Assembly. And upon such reapproval,
the bill shall be deemed enacted and may be submitted to the
President for corresponding action.
The special committee on the revision of laws of the Second National
Assembly vetoed the proposal. It deleted everything after the first
sentence. As rewritten, the proposal was approved by the National
Assembly and embodied in Resolution No. 38, as amended by
Resolution No. 73. (J. ARUEGO, KNOW YOUR CONSTITUTION 65-66
(1950)). The proposed amendment was submitted to the people and
ratified by them in the elections held on June 18, 1940.
This is the history of Art. VI, §18 (2) of the 1935 Constitution, from
which Art. VI, §24 of the present Constitution was derived. It explains
why the word "exclusively" was added to the American text from
which the framers of the Philippine Constitution borrowed and why
the phrase "as on other Bills" was not copied. Considering the defeat
of the proposal, the power of the Senate to propose amendments
must be understood to be full, plenary and complete "as on other
Bills." Thus, because revenue bills are required to originate exclusively
in the House of Representatives, the Senate cannot enact revenue
measures of its own without such bills. After a revenue bill is passed
and sent over to it by the House, however, the Senate certainly can
pass its own version on the same subject matter. This follows from
the coequality of the two chambers of Congress.
That this is also the understanding of book authors of the scope of the
Senate's power to concur is clear from the following commentaries:
The power of the Senate to propose or concur with amendments is
apparently without restriction. It would seem that by virtue of this
power, the Senate can practically re-write a bill required to come from
the House and leave only a trace of the original bill. For example, a
general revenue bill passed by the lower house of the United States
Congress contained provisions for the imposition of an inheritance tax
. This was changed by the Senate into a corporation tax. The
amending authority of the Senate was declared by the United States
Supreme Court to be sufficiently broad to enable it to make the
alteration. [Flint v. Stone Tracy Company, 220 U.S. 107, 55 L. ed. 389].
(L. TAÑADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES
247 (1961))
The above-mentioned bills are supposed to be initiated by the House
of Representatives because it is more numerous in membership and
therefore also more representative of the people. Moreover, its
members are presumed to be more familiar with the needs of the
country in regard to the enactment of the legislation involved.
The Senate is, however, allowed much leeway in the exercise of its
power to propose or concur with amendments to the bills initiated by
the House of Representatives. Thus, in one case, a bill introduced in
the U.S. House of Representatives was changed by the Senate to make
a proposed inheritance tax a corporation tax. It is also accepted
practice for the Senate to introduce what is known as an amendment
by substitution, which may entirely replace the bill initiated in the
House of Representatives.
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).
In sum, while Art. VI, §24 provides that all appropriation, revenue or
tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills must "originate exclusively in the House
of Representatives," it also adds, "but the Senate may propose or
concur with amendments." In the exercise of this power, the Senate
may propose an entirely new bill as a substitute measure. As
petitioner Tolentino states in a high school text, a committee to which
a bill is referred may do any of the following:
(1) to endorse the bill without changes; (2) to make changes in the bill
omitting or adding sections or altering its language; (3) to make and
endorse an entirely new bill as a substitute, in which case it will be
known as a committee bill; or (4) to make no report at all.
(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950))
To except from this procedure the amendment of bills which are
required to originate in the House by prescribing that the number of
the House bill and its other parts up to the enacting clause must be
preserved although the text of the Senate amendment may be
incorporated in place of the original body of the bill is to insist on a
mere technicality. At any rate there is no rule prescribing this form. S.
No. 1630, as a substitute measure, is therefore as much an
amendment of H. No. 11197 as any which the Senate could have
made.
II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic
error is that they assume that S. No. 1630 is an independent and
distinct bill. Hence their repeated references to its certification that it
was passed by the Senate "in substitution of S.B. No. 1129, taking into
consideration P.S. Res. No. 734 and H.B. No. 11197," implying that
there is something substantially different between the reference to S.
No. 1129 and the reference to H. No. 11197. From this premise, they
conclude that R.A. No. 7716 originated both in the House and in the
Senate and that it is the product of two "half-baked bills because
neither H. No. 11197 nor S. No. 1630 was passed by both houses of
Congress."
In point of fact, in several instances the provisions of S. No. 1630,
clearly appear to be mere amendments of the corresponding
provisions of H. No. 11197. The very tabular comparison of the
provisions of H. No. 11197 and S. No. 1630 attached as Supplement A
to the basic petition of petitioner Tolentino, while showing
differences between the two bills, at the same time indicates that the
provisions of the Senate bill were precisely intended to be
amendments to the House bill.
Without H. No. 11197, the Senate could not have enacted S. No. 1630.
Because the Senate bill was a mere amendment of the House bill, H.
No. 11197 in its original form did not have to pass the Senate on
second and three readings. It was enough that after it was passed on
first reading it was referred to the Senate Committee on Ways and
Means. Neither was it required that S. No. 1630 be passed by the
House of Representatives before the two bills could be referred to the
Conference Committee.
There is legislative precedent for what was done in the case of H. No.
11197 and S. No. 1630. When the House bill and Senate bill, which
became R.A. No. 1405 (Act prohibiting the disclosure of bank
deposits), were referred to a conference committee, the question was
raised whether the two bills could be the subject of such conference,
considering that the bill from one house had not been passed by the
other and vice versa. As Congressman Duran put the question:
MR. DURAN. Therefore, I raise this question of order as to
procedure: If a House bill is passed by the House but not passed by the
Senate, and a Senate bill of a similar nature is passed in the Senate
but never passed in the House, can the two bills be the subject of a
conference, and can a law be enacted from these two bills? I
understand that the Senate bill in this particular instance does not
refer to investments in government securities, whereas the bill in the
House, which was introduced by the Speaker, covers two subject
matters: not only investigation of deposits in banks but also
investigation of investments in government securities. Now, since the
two bills differ in their subject matter, I believe that no law can be
enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel,
Jr.) said:
THE SPEAKER. The report of the conference committee is in order. It
is precisely in cases like this where a conference should be had. If the
House bill had been approved by the Senate, there would have been
no need of a conference; but precisely because the Senate passed
another bill on the same subject matter, the conference committee
had to be created, and we are now considering the report of that
committee.
(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))
III. The President's certification. The fallacy in thinking that H. No.
11197 and S. No. 1630 are distinct and unrelated measures also
accounts for the petitioners' (Kilosbayan's and PAL's) contention that
because the President separately certified to the need for the
immediate enactment of these measures, his certification was
ineffectual and void. The certification had to be made of the version
of the same revenue bill which at the moment was being considered.
Otherwise, to follow petitioners' theory, it would be necessary for the
President to certify as many bills as are presented in a house of
Congress even though the bills are merely versions of the bill he has
already certified. It is enough that he certifies the bill which, at the
time he makes the certification, is under consideration. Since on
March 22, 1994 the Senate was considering S. No. 1630, it was that
bill which had to be certified. For that matter on June 1, 1993 the
President had earlier certified H. No. 9210 for immediate enactment
because it was the one which at that time was being considered by
the House. This bill was later substituted, together with other bills, by
H. No. 11197.
As to what Presidential certification can accomplish, we have already
explained in the main decision that the phrase "except when the
President certifies to the necessity of its immediate enactment, etc."
in Art. VI, §26 (2) qualifies not only the requirement that "printed
copies [of a bill] in its final form [must be] distributed to the members
three days before its passage" but also the requirement that before a
bill can become a law it must have passed "three readings on separate
days." There is not only textual support for such construction but
historical basis as well.
Art. VI, §21 (2) of the 1935 Constitution originally provided:
(2) No bill shall be passed by either House unless it shall have been
printed and copies thereof in its final form furnished its Members at
least three calendar days prior to its passage, except when the
President shall have certified to the necessity of its immediate
enactment. Upon the last reading of a bill, no amendment thereof
shall be allowed and the question upon its passage shall be taken
immediately thereafter, and the yeas and nays entered on the
Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII,
§19 (2):
(2) No bill shall become a law unless it has passed three readings on
separate days, and printed copies thereof in its final form have been
distributed to the Members three days before its passage, except
when the Prime Minister certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon the last
reading of a bill, no amendment thereto shall be allowed, and the vote
thereon shall be taken immediately thereafter, and
the yeas and nays entered in the Journal.
This provision of the 1973 document, with slight modification, was
adopted in Art. VI, §26 (2) of the present Constitution, thus:
(2) No bill passed by either House shall become a law unless it has
passed three readings on separate days, and printed copies thereof in
its final form have been distributed to its Members three days before
its passage, except when the President certifies to the necessity of its
immediate enactment to meet a public calamity or emergency. Upon
the last reading of a bill, no amendment thereto shall be allowed, and
the vote thereon shall be taken immediately thereafter, and
the yeas and nays entered in the Journal.
The exception is based on the prudential consideration that if in all
cases three readings on separate days are required and a bill has to
be printed in final form before it can be passed, the need for a law
may be rendered academic by the occurrence of the very emergency
or public calamity which it is meant to address.
Petitioners further contend that a "growing budget deficit" is not an
emergency, especially in a country like the Philippines where budget
deficit is a chronic condition. Even if this were the case, an enormous
budget deficit does not make the need for R.A. No. 7716 any less
urgent or the situation calling for its enactment any less an
emergency.
Apparently, the members of the Senate (including some of the
petitioners in these cases) believed that there was an urgent need for
consideration of S. No. 1630, because they responded to the call of
the President by voting on the bill on second and third readings on
the same day. While the judicial department is not bound by the
Senate's acceptance of the President's certification, the respect due
coequal departments of the government in matters committed to
them by the Constitution and the absence of a clear showing of grave
abuse of discretion caution a stay of the judicial hand.
At any rate, we are satisfied that S. No. 1630 received thorough
consideration in the Senate where it was discussed for six days. Only
its distribution in advance in its final printed form was actually
dispensed with by holding the voting on second and third readings on
the same day (March 24, 1994). Otherwise, sufficient time between
the submission of the bill on February 8, 1994 on second reading and
its approval on March 24, 1994 elapsed before it was finally voted on
by the Senate on third reading.
The purpose for which three readings on separate days is required is
said to be two-fold: (1) to inform the members of Congress of what
they must vote on and (2) to give them notice that a measure is
progressing through the enacting process, thus enabling them and
others interested in the measure to prepare their positions with
reference to it. (1 J. G. SUTHERLAND, STATUTES AND STATUTORY
CONSTRUCTION §10.04, p. 282 (1972)). These purposes were
substantially achieved in the case of R.A. No. 7716.
IV. Power of Conference Committee. It is contended (principally by
Kilosbayan, Inc. and the Movement of Attorneys for Brotherhood,
Integrity and Nationalism, Inc. (MABINI)) that in violation of the
constitutional policy of full public disclosure and the people's right to
know (Art. II, §28 and Art. III, §7) the Conference Committee met for
two days in executive session with only the conferees present.
As pointed out in our main decision, even in the United States it was
customary to hold such sessions with only the conferees and their
staffs in attendance and it was only in 1975 when a new rule was
adopted requiring open sessions. Unlike its American counterpart,
the Philippine Congress has not adopted a rule prescribing open
hearings for conference committees.
It is nevertheless claimed that in the United States, before the
adoption of the rule in 1975, at least staff members were present.
These were staff members of the Senators and Congressmen,
however, who may be presumed to be their confidential men, not
stenographers as in this case who on the last two days of the
conference were excluded. There is no showing that the conferees
themselves did not take notes of their proceedings so as to give
petitioner Kilosbayan basis for claiming that even in secret diplomatic
negotiations involving state interests, conferees keep notes of their
meetings. Above all, the public's right to know was fully served
because the Conference Committee in this case submitted a report
showing the changes made on the differing versions of the House and
the Senate.
Petitioners cite the rules of both houses which provide that
conference committee reports must contain "a detailed, sufficiently
explicit statement of the changes in or other amendments." These
changes are shown in the bill attached to the Conference Committee
Report. The members of both houses could thus ascertain what
changes had been made in the original bills without the need of a
statement detailing the changes.
The same question now presented was raised when the bill which
became R.A. No. 1400 (Land Reform Act of 1955) was reported by the
Conference Committee. Congressman Bengzon raised a point of
order. He said:
MR. BENGZON. My point of order is that it is out of order to consider
the report of the conference committee regarding House Bill No.
2557 by reason of the provision of Section 11, Article XII, of the Rules
of this House which provides specifically that the conference report
must be accompanied by a detailed statement of the effects of the
amendment on the bill of the House. This conference committee
report is not accompanied by that detailed statement, Mr. Speaker.
Therefore it is out of order to consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:
MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in
connection with the point of order raised by the gentleman from
Pangasinan.
There is no question about the provision of the Rule cited by the
gentleman from Pangasinan, but this provision applies to those cases
where only portions of the bill have been amended. In this case before
us an entire bill is presented; therefore, it can be easily seen from the
reading of the bill what the provisions are. Besides, this procedure has
been an established practice.
After some interruption, he continued:
MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into
the reason for the provisions of the Rules, and the reason for the
requirement in the provision cited by the gentleman from Pangasinan
is when there are only certain words or phrases inserted in or deleted
from the provisions of the bill included in the conference report, and
we cannot understand what those words and phrases mean and their
relation to the bill. In that case, it is necessary to make a detailed
statement on how those words and phrases will affect the bill as a
whole; but when the entire bill itself is copied verbatim in the
conference report, that is not necessary. So when the reason for the
Rule does not exist, the Rule does not exist.
(2 CONG. REC. NO. 2, p. 4056. (emphasis added))
Congressman Tolentino was sustained by the chair. The record shows
that when the ruling was appealed, it was upheld by viva voce and
when a division of the House was called, it was sustained by a vote of
48 to 5. (Id.,
p. 4058)
Nor is there any doubt about the power of a conference committee
to insert new provisions as long as these are germane to the subject
of the conference. As this Court held in Philippine Judges Association
v. Prado, 227 SCRA 703 (1993), in an opinion written by then Justice
Cruz, the jurisdiction of the conference committee is not limited to
resolving differences between the Senate and the House. It may
propose an entirely new provision. What is important is that its report
is subsequently approved by the respective houses of Congress. This
Court ruled that it would not entertain allegations that, because new
provisions had been added by the conference committee, there was
thereby a violation of the constitutional injunction that "upon the last
reading of a bill, no amendment thereto shall be allowed."
Applying these principles, we shall decline to look into the petitioners'
charges that an amendment was made upon the last reading of the
bill that eventually became R.A. No. 7354 and that copies thereof in
its final form were not distributed among the members of each
House. Both the enrolled bill and the legislative journals certify that
the measure was duly enacted i.e., in accordance with Article VI, Sec.
26 (2) of the Constitution. We are bound by such official assurances
from a coordinate department of the government, to which we owe,
at the very least, a becoming courtesy.
(Id. at 710. (emphasis added))
It is interesting to note the following description of conference
committees in the Philippines in a 1979 study:
Conference committees may be of two types: free or instructed.
These committees may be given instructions by their parent bodies or
they may be left without instructions. Normally the conference
committees are without instructions, and this is why they are often
critically referred to as "the little legislatures." Once bills have been
sent to them, the conferees have almost unlimited authority to
change the clauses of the bills and in fact sometimes introduce new
measures that were not in the original legislation. No minutes are
kept, and members' activities on conference committees are difficult
to determine. One congressman known for his idealism put it this
way: "I killed a bill on export incentives for my interest group [copra]
in the conference committee but I could not have done so anywhere
else." The conference committee submits a report to both houses,
and usually it is accepted. If the report is not accepted, then the
committee is discharged and new members are appointed.
(R. Jackson, Committees in the Philippine
Congress, in COMMITTEES AND LEGISLATURES: A
COMPARATIVE ANALYSIS 163 (J. D. LEES AND M.
SHAW, eds.)).
In citing this study, we pass no judgment on the methods of
conference committees. We cite it only to say that conference
committees here are no different from their counterparts in the
United States whose vast powers we noted in Philippine Judges
Association v. Prado, supra. At all events, under Art. VI, §16(3) each
house has the power "to determine the rules of its proceedings,"
including those of its committees. Any meaningful change in the
method and procedures of Congress or its committees must therefore
be sought in that body itself.
V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A.
No. 7716 violates Art. VI, §26 (1) of the Constitution which provides
that "Every bill passed by Congress shall embrace only one subject
which shall be expressed in the title thereof." PAL contends that the
amendment of its franchise by the withdrawal of its exemption from
the VAT is not expressed in the title of the law.
Pursuant to §13 of P.D. No. 1590, PAL pays a franchise tax of 2% on
its gross revenue "in lieu of all other taxes, duties, royalties,
registration, license and other fees and charges of any kind, nature,
or description, imposed, levied, established, assessed or collected by
any municipal, city, provincial or national authority or government
agency, now or in the future."
PAL was exempted from the payment of the VAT along with other
entities by §103 of the National Internal Revenue Code, which
provides as follows:
§103. Exempt transactions. — The following shall be exempt from the
value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws or international
agreements to which the Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that
granted to PAL, by amending §103, as follows:
§103. Exempt transactions. — The following shall be exempt from the
value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws, except those
granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . .
The amendment of §103 is expressed in the title of R.A. No. 7716
which reads:
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM,
WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION,
AND FOR THESE PURPOSES AMENDING AND REPEALING THE
RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED, AND FOR OTHER PURPOSES.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-
ADDED TAX (VAT) SYSTEM [BY] WIDENING ITS TAX BASE AND
ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES
AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER
PURPOSES," Congress thereby clearly expresses its intention to
amend any provision of the NIRC which stands in the way of
accomplishing the purpose of the law.
PAL asserts that the amendment of its franchise must be reflected in
the title of the law by specific reference to P.D. No. 1590. It is
unnecessary to do this in order to comply with the constitutional
requirement, since it is already stated in the title that the law seeks
to amend the pertinent provisions of the NIRC, among which is
§103(q), in order to widen the base of the VAT. Actually, it is the bill
which becomes a law that is required to express in its title the subject
of legislation. The titles of H. No. 11197 and S. No. 1630 in fact
specifically referred to §103 of the NIRC as among the provisions
sought to be amended. We are satisfied that sufficient notice had
been given of the pendency of these bills in Congress before they
were enacted into what is now R.A.
No. 7716.
In Philippine Judges Association v. Prado, supra, a similar argument as
that now made by PAL was rejected. R.A. No. 7354 is entitled AN ACT
CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS
POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR
REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES
CONNECTED THEREWITH. It contained a provision repealing all
franking privileges. It was contended that the withdrawal of franking
privileges was not expressed in the title of the law. In holding that
there was sufficient description of the subject of the law in its title,
including the repeal of franking privileges, this Court held:
To require every end and means necessary for the accomplishment of
the general objectives of the statute to be expressed in its title would
not only be unreasonable but would actually render legislation
impossible. [Cooley, Constitutional Limitations, 8th Ed., p. 297] As has
been correctly explained:
The details of a legislative act need not be specifically stated in its title,
but matter germane to the subject as expressed in the title, and
adopted to the accomplishment of the object in view, may properly
be included in the act. Thus, it is proper to create in the same act the
machinery by which the act is to be enforced, to prescribe the
penalties for its infraction, and to remove obstacles in the way of its
execution. If such matters are properly connected with the subject as
expressed in the title, it is unnecessary that they should also have
special mention in the title. (Southern Pac. Co. v. Bartine, 170 Fed.
725)
(227 SCRA at 707-708)
VI. Claims of press freedom and religious liberty. We have held that,
as a general proposition, the press is not exempt from the taxing
power of the State and that what the constitutional guarantee of free
press prohibits are laws which single out the press or target a group
belonging to the press for special treatment or which in any way
discriminate against the press on the basis of the content of the
publication, and R.A. No. 7716 is none of these.
Now it is contended by the PPI that by removing the exemption of the
press from the VAT while maintaining those granted to others, the law
discriminates against the press. At any rate, it is averred, "even
nondiscriminatory taxation of constitutionally guaranteed freedom is
unconstitutional."
With respect to the first contention, it would suffice to say that since
the law granted the press a privilege, the law could take back the
privilege anytime without offense to the Constitution. The reason is
simple: by granting exemptions, the State does not forever waive the
exercise of its sovereign prerogative.
Indeed, in withdrawing the exemption, the law merely subjects the
press to the same tax burden to which other businesses have long ago
been subject. It is thus different from the tax involved in the cases
invoked by the PPI. The license tax in Grosjean v. American Press Co.,
297 U.S. 233, 80 L. Ed. 660 (1936) was found to be discriminatory
because it was laid on the gross advertising receipts only of
newspapers whose weekly circulation was over 20,000, with the
result that the tax applied only to 13 out of 124 publishers in
Louisiana. These large papers were critical of Senator Huey Long who
controlled the state legislature which enacted the license tax. The
censorial motivation for the law was thus evident.
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota
Comm'r of Revenue, 460 U.S. 575, 75 L. Ed. 2d 295 (1983), the tax was
found to be discriminatory because although it could have been made
liable for the sales tax or, in lieu thereof, for the use tax on the
privilege of using, storing or consuming tangible goods, the press was
not. Instead, the press was exempted from both taxes. It was,
however, later made to pay a special use tax on the cost of paper and
ink which made these items "the only items subject to the use tax that
were component of goods to be sold at retail." The U.S. Supreme
Court held that the differential treatment of the press "suggests that
the goal of regulation is not related to suppression of expression, and
such goal is presumptively unconstitutional." It would therefore
appear that even a law that favors the press is constitutionally
suspect. (See the dissent of Rehnquist, J. in that case)
Nor is it true that only two exemptions previously granted by E.O. No.
273 are withdrawn "absolutely and unqualifiedly" by R.A. No. 7716.
Other exemptions from the VAT, such as those previously granted to
PAL, petroleum concessionaires, enterprises registered with the
Export Processing Zone Authority, and many more are likewise totally
withdrawn, in addition to exemptions which are partially withdrawn,
in an effort to broaden the base of the tax.
The PPI says that the discriminatory treatment of the press is
highlighted by the fact that transactions, which are profit oriented,
continue to enjoy exemption under R.A. No. 7716. An enumeration of
some of these transactions will suffice to show that by and large this
is not so and that the exemptions are granted for a purpose. As the
Solicitor General says, such exemptions are granted, in some cases, to
encourage agricultural production and, in other cases, for the
personal benefit of the end-user rather than for profit. The exempt
transactions are:
(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their
original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn
livestock and poultry feeds) and goods or services to enhance
agriculture (milling of palay, corn, sugar cane and raw sugar, livestock,
poultry feeds, fertilizer, ingredients used for the manufacture of
feeds).
(b) Goods used for personal consumption or use (household and
personal effects of citizens returning to the Philippines) or for
professional use, like professional instruments and implements, by
persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be
used for manufacture of petroleum products subject to excise tax and
services subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary
services, and services rendered under employer-employee
relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international
agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not
exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for
Reconsideration, pp. 58-60)
The PPI asserts that it does not really matter that the law does not
discriminate against the press because "even nondiscriminatory
taxation on constitutionally guaranteed freedom is unconstitutional."
PPI cites in support of this assertion the following statement
in Murdock v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):
The fact that the ordinance is "nondiscriminatory" is immaterial. The
protection afforded by the First Amendment is not so restricted. A
license tax certainly does not acquire constitutional validity because
it classifies the privileges protected by the First Amendment along
with the wares and merchandise of hucksters and peddlers and treats
them all alike. Such equality in treatment does not save the
ordinance. Freedom of press, freedom of speech, freedom of religion
are in preferred position.
The Court was speaking in that case of a license tax, which, unlike an
ordinary tax, is mainly for regulation. Its imposition on the press is
unconstitutional because it lays a prior restraint on the exercise of its
right. Hence, although its application to others, such those selling
goods, is valid, its application to the press or to religious groups, such
as the Jehovah's Witnesses, in connection with the latter's sale of
religious books and pamphlets, is unconstitutional. As the U.S.
Supreme Court put it, "it is one thing to impose a tax on income or
property of a preacher. It is quite another thing to exact a tax on him
for delivering a sermon."
A similar ruling was made by this Court in American Bible Society
v. City of Manila, 101 Phil. 386 (1957) which invalidated a city
ordinance requiring a business license fee on those engaged in the
sale of general merchandise. It was held that the tax could not be
imposed on the sale of bibles by the American Bible Society without
restraining the free exercise of its right to propagate.
The VAT is, however, different. It is not a license tax. It is not a tax on
the exercise of a privilege, much less a constitutional right. It is
imposed on the sale, barter, lease or exchange of goods or properties
or the sale or exchange of services and the lease of properties purely
for revenue purposes. To subject the press to its payment is not to
burden the exercise of its right any more than to make the press pay
income tax or subject it to general regulation is not to violate its
freedom under the Constitution.
Additionally, the Philippine Bible Society, Inc. claims that although it
sells bibles, the proceeds derived from the sales are used to subsidize
the cost of printing copies which are given free to those who cannot
afford to pay so that to tax the sales would be to increase the price,
while reducing the volume of sale. Granting that to be the case, the
resulting burden on the exercise of religious freedom is so incidental
as to make it difficult to differentiate it from any other economic
imposition that might make the right to disseminate religious
doctrines costly. Otherwise, to follow the petitioner's argument, to
increase the tax on the sale of vestments would be to lay an
impermissible burden on the right of the preacher to make a sermon.
On the other hand the registration fee of P1,000.00 imposed by §107
of the NIRC, as amended by §7 of R.A. No. 7716, although fixed in
amount, is really just to pay for the expenses of registration and
enforcement of provisions such as those relating to accounting in
§108 of the NIRC. That the PBS distributes free bibles and therefore is
not liable to pay the VAT does not excuse it from the payment of this
fee because it also sells some copies. At any rate whether the PBS is
liable for the VAT must be decided in concrete cases, in the event it is
assessed this tax by the Commissioner of Internal Revenue.
VII. Alleged violations of the due process, equal protection and
contract clauses and the rule on taxation. CREBA asserts that R.A. No.
7716 (1) impairs the obligations of contracts, (2) classifies
transactions as covered or exempt without reasonable basis and (3)
violates the rule that taxes should be uniform and equitable and that
Congress shall "evolve a progressive system of taxation."
With respect to the first contention, it is claimed that the application
of the tax to existing contracts of the sale of real property by
installment or on deferred payment basis would result in substantial
increases in the monthly amortizations to be paid because of the 10%
VAT. The additional amount, it is pointed out, is something that the
buyer did not anticipate at the time he entered into the contract.
The short answer to this is the one given by this Court in an early case:
"Authorities from numerous sources are cited by the plaintiffs, but
none of them show that a lawful tax on a new subject, or an increased
tax on an old one, interferes with a contract or impairs its obligation,
within the meaning of the Constitution. Even though such taxation
may affect particular contracts, as it may increase the debt of one
person and lessen the security of another, or may impose additional
burdens upon one class and release the burdens of another, still the
tax must be paid unless prohibited by the Constitution, nor can it be
said that it impairs the obligation of any existing contract in its true
legal sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39
Phil. 567, 574 (1919)). Indeed not only existing laws but also "the
reservation of the essential attributes of sovereignty, is . . . read into
contracts as a postulate of the legal order." (Philippine-American Life
Ins. Co. v. Auditor General, 22 SCRA 135, 147 (1968)) Contracts must
be understood as having been made in reference to the possible
exercise of the rightful authority of the government and no obligation
of contract can extend to the defeat of that authority. (Norman v.
Baltimore and Ohio R.R., 79 L. Ed. 885 (1935)).
It is next pointed out that while §4 of R.A. No. 7716 exempts such
transactions as the sale of agricultural products, food items,
petroleum, and medical and veterinary services, it grants no
exemption on the sale of real property which is equally essential. The
sale of real property for socialized and low-cost housing is exempted
from the tax, but CREBA claims that real estate transactions of "the
less poor," i.e., the middle class, who are equally homeless, should
likewise be exempted.
The sale of food items, petroleum, medical and veterinary services,
etc., which are essential goods and services was already exempt
under §103, pars. (b) (d) (1) of the NIRC before the enactment of R.A.
No. 7716. Petitioner is in error in claiming that R.A. No. 7716 granted
exemption to these transactions, while subjecting those of petitioner
to the payment of the VAT. Moreover, there is a difference between
the "homeless poor" and the "homeless less poor" in the example
given by petitioner, because the second group or middle class can
afford to rent houses in the meantime that they cannot yet buy their
own homes. The two social classes are thus differently situated in life.
"It is inherent in the power to tax that the State be free to select the
subjects of taxation, and it has been repeatedly held that 'inequalities
which result from a singling out of one particular class for taxation, or
exemption infringe no constitutional limitation.'" (Lutz v. Araneta, 98
Phil. 148, 153 (1955). Accord, City of Baguio v. De Leon, 134 Phil. 912
(1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984); Kapatiran ng
mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA
371 (1988)).
Finally, it is contended, for the reasons already noted, that R.A. No.
7716 also violates Art. VI, §28(1) which provides that "The rule of
taxation shall be uniform and equitable. The Congress shall evolve a
progressive system of taxation."
Equality and uniformity of taxation means that all taxable articles or
kinds of property of the same class be taxed at the same rate. The
taxing power has the authority to make reasonable and natural
classifications for purposes of taxation. To satisfy this requirement it
is enough that the statute or ordinance applies equally to all persons,
forms and corporations placed in similar situation. (City of Baguio v.
De Leon, supra; Sison, Jr. v. Ancheta, supra)
Indeed, the VAT was already provided in E.O. No. 273 long before R.A.
No. 7716 was enacted. R.A. No. 7716 merely expands the base of the
tax. The validity of the original VAT Law was questioned in Kapatiran
ng Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 383
(1988) on grounds similar to those made in these cases, namely, that
the law was "oppressive, discriminatory, unjust and regressive in
violation of Art. VI, §28(1) of the Constitution." (At 382) Rejecting the
challenge to the law, this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid
tax. It is uniform. . . .
The sales tax adopted in EO 273 is applied similarly on all goods and
services sold to the public, which are not exempt, at the constant rate
of 0% or 10%.
The disputed sales tax is also equitable. It is imposed only on sales of
goods or services by persons engaged in business with an aggregate
gross annual sales exceeding P200,000.00. Small corner sari-sari
stores are consequently exempt from its application. Likewise exempt
from the tax are sales of farm and marine products, so that the costs
of basic food and other necessities, spared as they are from the
incidence of the VAT, are expected to be relatively lower and within
the reach of the general public.
(At 382-383)
The CREBA claims that the VAT is regressive. A similar claim is made
by the Cooperative Union of the Philippines, Inc. (CUP), while
petitioner Juan T. David argues that the law contravenes the mandate
of Congress to provide for a progressive system of taxation because
the law imposes a flat rate of 10% and thus places the tax burden on
all taxpayers without regard to their ability to pay.
The Constitution does not really prohibit the imposition of indirect
taxes which, like the VAT, are regressive. What it simply provides is
that Congress shall "evolve a progressive system of taxation." The
constitutional provision has been interpreted to mean simply that
"direct taxes are . . . to be preferred [and] as much as possible, indirect
taxes should be minimized." (E. FERNANDO, THE CONSTITUTION OF
THE PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to
Congress is not to prescribe, but to evolve, a progressive tax system.
Otherwise, sales taxes, which perhaps are the oldest form of indirect
taxes, would have been prohibited with the proclamation of Art. VIII,
§17(1) of the 1973 Constitution from which the present Art. VI, §28(1)
was taken. Sales taxes are also regressive.
Resort to indirect taxes should be minimized but not avoided entirely
because it is difficult, if not impossible, to avoid them by imposing
such taxes according to the taxpayers' ability to pay. In the case of the
VAT, the law minimizes the regressive effects of this imposition by
providing for zero rating of certain transactions (R.A. No. 7716, §3,
amending §102 (b) of the NIRC), while granting exemptions to other
transactions. (R.A. No. 7716, §4, amending §103 of the NIRC).
Thus, the following transactions involving basic and essential goods
and services are exempted from the VAT:
(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their
original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn
livestock and poultry feeds) and goods or services to enhance
agriculture (milling of palay, corn sugar cane and raw sugar, livestock,
poultry feeds, fertilizer, ingredients used for the manufacture of
feeds).
(b) Goods used for personal consumption or use (household and
personal effects of citizens returning to the Philippines) and or
professional use, like professional instruments and implements, by
persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be
used for manufacture of petroleum products subject to excise tax and
services subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary
services, and services rendered under employer-employee
relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international
agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not
exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for
Reconsideration, pp. 58-60)
On the other hand, the transactions which are subject to the VAT are
those which involve goods and services which are used or availed of
mainly by higher income groups. These include real properties held
primarily for sale to customers or for lease in the ordinary course of
trade or business, the right or privilege to use patent, copyright, and
other similar property or right, the right or privilege to use industrial,
commercial or scientific equipment, motion picture films, tapes and
discs, radio, television, satellite transmission and cable television
time, hotels, restaurants and similar places, securities, lending
investments, taxicabs, utility cars for rent, tourist buses, and other
common carriers, services of franchise grantees of telephone and
telegraph.
The problem with CREBA's petition is that it presents broad claims of
constitutional violations by tendering issues not at retail but at
wholesale and in the abstract. There is no fully developed record
which can impart to adjudication the impact of actuality. There is no
factual foundation to show in the concrete the application of the law
to actual contracts and exemplify its effect on property rights. For the
fact is that petitioner's members have not even been assessed the
VAT. Petitioner's case is not made concrete by a series of hypothetical
questions asked which are no different from those dealt with in
advisory opinions.
The difficulty confronting petitioner is thus apparent. He alleges
arbitrariness. A mere allegation, as here, does not suffice. There must
be a factual foundation of such unconstitutional taint. Considering
that petitioner here would condemn such a provision as void on its
face, he has not made out a case. This is merely to adhere to the
authoritative doctrine that where the due process and equal
protection clauses are invoked, considering that they are not fixed
rules but rather broad standards, there is a need for proof of such
persuasive character as would lead to such a conclusion. Absent such
a showing, the presumption of validity must prevail.
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a
concrete case. It may be that postponement of adjudication would
result in a multiplicity of suits. This need not be the case, however.
Enforcement of the law may give rise to such a case. A test case,
provided it is an actual case and not an abstract or hypothetical one,
may thus be presented.
Nor is hardship to taxpayers alone an adequate justification for
adjudicating abstract issues. Otherwise, adjudication would be no
different from the giving of advisory opinion that does not really settle
legal issues.
We are told that it is our duty under Art. VIII, §1, ¶2 to decide
whenever a claim is made that "there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the government." This duty can only
arise if an actual case or controversy is before us. Under Art . VIII, §5
our jurisdiction is defined in terms of "cases" and all that Art. VIII, §1,
¶2 can plausibly mean is that in the exercise of that jurisdiction we
have the judicial power to determine questions of grave abuse of
discretion by any branch or instrumentality of the government.
Put in another way, what is granted in Art. VIII, §1, ¶2 is "judicial
power," which is "the power of a court to hear and decide cases
pending between parties who have the right to sue and be sued in the
courts of law and equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)),
as distinguished from legislative and executive power. This power
cannot be directly appropriated until it is apportioned among several
courts either by the Constitution, as in the case of Art. VIII, §5, or by
statute, as in the case of the Judiciary Act of 1948 (R.A. No. 296) and
the Judiciary Reorganization Act of 1980 (B.P. Blg. 129). The power
thus apportioned constitutes the court's "jurisdiction," defined as
"the power conferred by law upon a court or judge to take cognizance
of a case, to the exclusion of all others." (United States v. Arceo, 6 Phil.
29 (1906)) Without an actual case coming within its jurisdiction, this
Court cannot inquire into any allegation of grave abuse of discretion
by the other departments of the government.
VIII. Alleged violation of policy towards cooperatives. On the other
hand, the Cooperative Union of the Philippines (CUP), after briefly
surveying the course of legislation, argues that it was to adopt a
definite policy of granting tax exemption to cooperatives that the
present Constitution embodies provisions on cooperatives. To subject
cooperatives to the VAT would therefore be to infringe a
constitutional policy. Petitioner claims that in 1973, P.D. No. 175 was
promulgated exempting cooperatives from the payment of income
taxes and sales taxes but in 1984, because of the crisis which menaced
the national economy, this exemption was withdrawn by P.D. No.
1955; that in 1986, P.D. No. 2008 again granted cooperatives
exemption from income and sales taxes until December 31, 1991, but,
in the same year, E.O. No. 93 revoked the exemption; and that finally
in 1987 the framers of the Constitution "repudiated the previous
actions of the government adverse to the interests of the
cooperatives, that is, the repeated revocation of the tax exemption to
cooperatives and instead upheld the policy of strengthening the
cooperatives by way of the grant of tax exemptions," by providing the
following in Art. XII:
§1. The goals of the national economy are a more equitable
distribution of opportunities, income, and wealth; a sustained
increase in the amount of goods and services produced by the nation
for the benefit of the people; and an expanding productivity as the
key to raising the quality of life for all, especially the underprivileged.
The State shall promote industrialization and full employment based
on sound agricultural development and agrarian reform, through
industries that make full and efficient use of human and natural
resources, and which are competitive in both domestic and foreign
markets. However, the State shall protect Filipino enterprises against
unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions
of the country shall be given optimum opportunity to develop. Private
enterprises, including corporations, cooperatives, and similar
collective organizations, shall be encouraged to broaden the base of
their ownership.
§15. The Congress shall create an agency to promote the viability and WHEREFORE, the motions for reconsideration are denied with finality
growth of cooperatives as instruments for social justice and economic and the temporary restraining order previously issued is hereby lifted.
development.
SO ORDERED.
Petitioner's contention has no merit. In the first place, it is not true
that P.D. No. 1955 singled out cooperatives by withdrawing their
exemption from income and sales taxes under P.D. No. 175, §5. What
P.D. No. 1955, §1 did was to withdraw the exemptions and
preferential treatments theretofore granted to private business
enterprises in general, in view of the economic crisis which then beset
the nation. It is true that after P.D. No. 2008, §2 had restored the tax
exemptions of cooperatives in 1986, the exemption was again
repealed by E.O. No. 93, §1, but then again cooperatives were not the
only ones whose exemptions were withdrawn. The withdrawal of tax
incentives applied to all, including government and private entities. In
the second place, the Constitution does not really require that
cooperatives be granted tax exemptions in order to promote their
growth and viability. Hence, there is no basis for petitioner's assertion
that the government's policy toward cooperatives had been one of
vacillation, as far as the grant of tax privileges was concerned, and
that it was to put an end to this indecision that the constitutional
provisions cited were adopted. Perhaps as a matter of policy
cooperatives should be granted tax exemptions, but that is left to the
discretion of Congress. If Congress does not grant exemption and
there is no discrimination to cooperatives, no violation of any
constitutional policy can be charged.

Indeed, petitioner's theory amounts to saying that under the

Constitution cooperatives are exempt from taxation. Such theory is
contrary to the Constitution under which only the following are
exempt from taxation: charitable institutions, churches and
parsonages, by reason of Art. VI, §28 (3), and non-stock, non-profit
educational institutions by reason of Art. XIV, §4 (3).

CUP's further ground for seeking the invalidation of R.A. No. 7716 is
that it denies cooperatives the equal protection of the law because
electric cooperatives are exempted from the VAT. The classification
between electric and other cooperatives (farmers cooperatives,
producers cooperatives, marketing cooperatives, etc.) apparently
rests on a congressional determination that there is greater need to
provide cheaper electric power to as many people as possible,
especially those living in the rural areas, than there is to provide them
with other necessities in life. We cannot say that such classification is
unreasonable.

We have carefully read the various arguments raised against the

constitutional validity of R.A. No. 7716. We have in fact taken the
extraordinary step of enjoining its enforcement pending resolution of
these cases. We have now come to the conclusion that the law suffers
from none of the infirmities attributed to it by petitioners and that its
enactment by the other branches of the government does not
constitute a grave abuse of discretion. Any question as to its
necessity, desirability or expediency must be addressed to Congress
as the body which is electorally responsible, remembering that, as
Justice Holmes has said, "legislators are the ultimate guardians of the
liberties and welfare of the people in quite as great a degree as are
the courts." (Missouri, Kansas & Texas Ry. Co. v. May, 194 U.S. 267,
270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in G.R. No.
115543 does in arguing that we should enforce the public
accountability of legislators, that those who took part in passing the
law in question by voting for it in Congress should later thrust to the
courts the burden of reviewing measures in the flush of enactment.
This Court does not sit as a third branch of the legislature, much less
exercise a veto power over legislation.
G.R. No. 166715 August 14, 2008
ABAKADA GURO PARTY LIST (formerly
AASJS)1 OFFICERS/MEMBERS SAMSON S. ALCANTARA, ED VINCENT
S. ALBANO, ROMEO R. ROBISO, RENE B. GOROSPE and EDWIN R.
SANDOVAL, petitioners,
vs.
HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance,
HON. GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner
of the Bureau of Internal Revenue, and HON. ALBERTO D. LINA, in
his Capacity as Commissioner of Bureau of Customs, respondents.
DECISION
CORONA, J.:
This petition for prohibition1 seeks to prevent respondents from
implementing and enforcing Republic Act (RA) 9335 2(Attrition Act of
2005).
RA 9335 was enacted to optimize the revenue-generation capability
and collection of the Bureau of Internal Revenue (BIR) and the Bureau
of Customs (BOC). The law intends to encourage BIR and BOC officials
and employees to exceed their revenue targets by providing a system
of rewards and sanctions through the creation of a Rewards and
Incentives Fund (Fund) and a Revenue Performance Evaluation Board
(Board).3 It covers all officials and employees of the BIR and the BOC
with at least six months of service, regardless of employment status.4
The Fund is sourced from the collection of the BIR and the BOC in
excess of their revenue targets for the year, as determined by the
Development Budget and Coordinating Committee (DBCC). Any
incentive or reward is taken from the fund and allocated to the BIR
and the BOC in proportion to their contribution in the excess
collection of the targeted amount of tax revenue.5
The Boards in the BIR and the BOC are composed of the Secretary of
the Department of Finance (DOF) or his/her Undersecretary, the
Secretary of the Department of Budget and Management (DBM) or
his/her Undersecretary, the Director General of the National
Economic Development Authority (NEDA) or his/her Deputy Director
General, the Commissioners of the BIR and the BOC or their Deputy
Commissioners, two representatives from the rank-and-file
employees and a representative from the officials nominated by their
recognized organization.6
Each Board has the duty to (1) prescribe the rules and guidelines for
the allocation, distribution and release of the Fund; (2) set criteria and
procedures for removing from the service officials and employees
whose revenue collection falls short of the target; (3) terminate
personnel in accordance with the criteria adopted by the Board; (4)
prescribe a system for performance evaluation; (5) perform other
functions, including the issuance of rules and regulations and (6)
submit an annual report to Congress.7
The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission
(CSC) were tasked to promulgate and issue the implementing rules
and regulations of RA 9335,8 to be approved by a Joint Congressional
Oversight Committee created for such purpose.9
Petitioners, invoking their right as taxpayers filed this petition
challenging the constitutionality of RA 9335, a tax reform legislation.
They contend that, by establishing a system of rewards and
incentives, the law "transform[s] the officials and employees of the
BIR and the BOC into mercenaries and bounty hunters" as they will do
their best only in consideration of such rewards. Thus, the system of
rewards and incentives invites corruption and undermines the
constitutionally mandated duty of these officials and employees to
serve the people with utmost responsibility, integrity, loyalty and
efficiency.
Petitioners also claim that limiting the scope of the system of rewards
and incentives only to officials and employees of the BIR and the BOC
violates the constitutional guarantee of equal protection. There is no
valid basis for classification or distinction as to why such a system
should not apply to officials and employees of all other government
agencies.
In addition, petitioners assert that the law unduly delegates the
power to fix revenue targets to the President as it lacks a sufficient
standard on that matter. While Section 7(b) and (c) of RA 9335
provides that BIR and BOC officials may be dismissed from the service
if their revenue collections fall short of the target by at least 7.5%, the
law does not, however, fix the revenue targets to be achieved.
Instead, the fixing of revenue targets has been delegated to the
President without sufficient standards. It will therefore be easy for the
President to fix an unrealistic and unattainable target in order to
dismiss BIR or BOC personnel.
Finally, petitioners assail the creation of a congressional oversight
committee on the ground that it violates the doctrine of separation
of powers. While the legislative function is deemed accomplished and
completed upon the enactment and approval of the law, the creation
of the congressional oversight committee permits legislative
participation in the implementation and enforcement of the law.
In their comment, respondents, through the Office of the Solicitor
General, question the petition for being premature as there is no
actual case or controversy yet. Petitioners have not asserted any right
or claim that will necessitate the exercise of this Court’s jurisdiction.
Nevertheless, respondents acknowledge that public policy requires
the resolution of the constitutional issues involved in this case. They
assert that the allegation that the reward system will breed
mercenaries is mere speculation and does not suffice to invalidate the
law. Seen in conjunction with the declared objective of RA 9335, the
law validly classifies the BIR and the BOC because the functions they
perform are distinct from those of the other government agencies
and instrumentalities. Moreover, the law provides a sufficient
standard that will guide the executive in the implementation of its
provisions. Lastly, the creation of the congressional oversight
committee under the law enhances, rather than violates, separation
of powers. It ensures the fulfillment of the legislative policy and serves
as a check to any over-accumulation of power on the part of the
executive and the implementing agencies.
After a careful consideration of the conflicting contentions of the
parties, the Court finds that petitioners have failed to overcome the
presumption of constitutionality in favor of RA 9335, except as shall
hereafter be discussed.
Actual Case And Ripeness
An actual case or controversy involves a conflict of legal rights, an
assertion of opposite legal claims susceptible of judicial
adjudication.10 A closely related requirement is ripeness, that is, the
question must be ripe for adjudication. And a constitutional question
is ripe for adjudication when the governmental act being challenged
has a direct adverse effect on the individual challenging it.11 Thus, to
be ripe for judicial adjudication, the petitioner must show a personal
stake in the outcome of the case or an injury to himself that can be
redressed by a favorable decision of the Court.12
In this case, aside from the general claim that the dispute has ripened
into a judicial controversy by the mere enactment of the law even
without any further overt act,13 petitioners fail either to assert any
specific and concrete legal claim or to demonstrate any direct adverse
effect of the law on them. They are unable to show a personal stake
in the outcome of this case or an injury to themselves. On this
account, their petition is procedurally infirm.
This notwithstanding, public interest requires the resolution of the
constitutional issues raised by petitioners. The grave nature of their
allegations tends to cast a cloud on the presumption of
constitutionality in favor of the law. And where an action of the
legislative branch is alleged to have infringed the Constitution, it
becomes not only the right but in fact the duty of the judiciary to
settle the dispute.14
Accountability of
Public Officers
Section 1, Article 11 of the Constitution states:
Sec. 1. Public office is a public trust. Public officers and employees
must at all times be accountable to the people, serve them with
utmost responsibility, integrity, loyalty, and efficiency, act with
patriotism, and justice, and lead modest lives.
Public office is a public trust. It must be discharged by its holder not
for his own personal gain but for the benefit of the public for whom
he holds it in trust. By demanding accountability and service with
responsibility, integrity, loyalty, efficiency, patriotism and justice, all
government officials and employees have the duty to be responsive
to the needs of the people they are called upon to serve.
Public officers enjoy the presumption of regularity in the performance
of their duties. This presumption necessarily obtains in favor of BIR
and BOC officials and employees. RA 9335 operates on the basis
thereof and reinforces it by providing a system of rewards and
sanctions for the purpose of encouraging the officials and employees
of the BIR and the BOC to exceed their revenue targets and optimize
their revenue-generation capability and collection.15
The presumption is disputable but proof to the contrary is required to
rebut it. It cannot be overturned by mere conjecture or denied in
advance (as petitioners would have the Court do) specially in this case
where it is an underlying principle to advance a declared public policy.
Petitioners’ claim that the implementation of RA 9335 will turn BIR
and BOC officials and employees into "bounty hunters and
mercenaries" is not only without any factual and legal basis; it is also
purely speculative.
A law enacted by Congress enjoys the strong presumption of
constitutionality. To justify its nullification, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and equivocal
one.16 To invalidate RA 9335 based on petitioners’ baseless
supposition is an affront to the wisdom not only of the legislature that
passed it but also of the executive which approved it.
Public service is its own reward. Nevertheless, public officers may by
law be rewarded for exemplary and exceptional performance. A
system of incentives for exceeding the set expectations of a public
office is not anathema to the concept of public accountability. In fact,
it recognizes and reinforces dedication to duty, industry, efficiency
and loyalty to public service of deserving government personnel.
In United States v. Matthews,17 the U.S. Supreme Court validated a
law which awards to officers of the customs as well as other parties
an amount not exceeding one-half of the net proceeds of forfeitures
in violation of the laws against smuggling. Citing Dorsheimer v. United
States,18 the U.S. Supreme Court said:
The offer of a portion of such penalties to the collectors is to stimulate
and reward their zeal and industry in detecting fraudulent attempts
to evade payment of duties and taxes.
In the same vein, employees of the BIR and the BOC may by law be
entitled to a reward when, as a consequence of their zeal in the
enforcement of tax and customs laws, they exceed their revenue
targets. In addition, RA 9335 establishes safeguards to ensure that the
reward will not be claimed if it will be either the fruit of "bounty
hunting or mercenary activity" or the product of the irregular
performance of official duties. One of these precautionary measures
is embodied in Section 8 of the law:
SEC. 8. Liability of Officials, Examiners and Employees of the BIR and
the BOC. – The officials, examiners, and employees of the [BIR] and
the [BOC] who violate this Act or who are guilty of negligence, abuses
or acts of malfeasance or misfeasance or fail to exercise extraordinary
diligence in the performance of their duties shall be held liable for any
loss or injury suffered by any business establishment or taxpayer as a
result of such violation, negligence, abuse, malfeasance, misfeasance
or failure to exercise extraordinary diligence.
Equal Protection
Equality guaranteed under the equal protection clause is equality
under the same conditions and among persons similarly situated; it is
equality among equals, not similarity of treatment of persons who are
classified based on substantial differences in relation to the object to
be accomplished.19 When things or persons are different in fact or
circumstance, they may be treated in law differently. In Victoriano v.
Elizalde Rope Workers’ Union,20 this Court declared:
The guaranty of equal protection of the laws is not a guaranty of
equality in the application of the laws upon all citizens of the [S]tate.
It is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child
should be affected alike by a statute. Equality of operation of statutes
does not mean indiscriminate operation on persons merely as such,
but on persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not
forbid discrimination as to things that are different. It does not
prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or
practice because they agree with one another in certain particulars. A
law is not invalid because of simple inequality. The very idea of
classification is that of inequality, so that it goes without saying that
the mere fact of inequality in no manner determines the matter of
constitutionality. All that is required of a valid classification is that it
be reasonable, which means that the classification should be based
on substantial distinctions which make for real differences, that it
must be germane to the purpose of the law; that it must not be
limited to existing conditions only; and that it must apply equally to
each member of the class. This Court has held that the standard is
satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary.
In the exercise of its power to make classifications for the purpose of
enacting laws over matters within its jurisdiction, the state is
recognized as enjoying a wide range of discretion. It is not necessary
that the classification be based on scientific or marked differences of
things or in their relation. Neither is it necessary that the classification
be made with mathematical nicety. Hence, legislative classification
may in many cases properly rest on narrow distinctions, for the equal
protection guaranty does not preclude the legislature from
recognizing degrees of evil or harm, and legislation is addressed to
evils as they may appear.21 (emphasis supplied)
The equal protection clause recognizes a valid classification, that is, a
classification that has a reasonable foundation or rational basis and
not arbitrary.22 With respect to RA 9335, its expressed public policy is
the optimization of the revenue-generation capability and collection
of the BIR and the BOC.23 Since the subject of the law is the revenue-
generation capability and collection of the BIR and the BOC, the
incentives and/or sanctions provided in the law should logically
pertain to the said agencies. Moreover, the law concerns only the BIR
and the BOC because they have the common distinct primary function
of generating revenues for the national government through the
collection of taxes, customs duties, fees and charges.
The BIR performs the following functions:
Sec. 18. The Bureau of Internal Revenue. – The Bureau of Internal
Revenue, which shall be headed by and subject to the supervision and
control of the Commissioner of Internal Revenue, who shall be
appointed by the President upon the recommendation of the
Secretary [of the DOF], shall have the following functions:
(1) Assess and collect all taxes, fees and charges and account for all
revenues collected;
(2) Exercise duly delegated police powers for the proper performance
of its functions and duties;
(3) Prevent and prosecute tax evasions and all other illegal economic
activities;
(4) Exercise supervision and control over its constituent and
subordinate units; and
(5) Perform such other functions as may be provided by law.24
xxx xxx xxx (emphasis supplied)
On the other hand, the BOC has the following functions:
Sec. 23. The Bureau of Customs. – The Bureau of Customs which shall
be headed and subject to the management and control of the
Commissioner of Customs, who shall be appointed by the President
upon the recommendation of the Secretary[of the DOF] and
hereinafter referred to as Commissioner, shall have the following
functions:
(1) Collect custom duties, taxes and the corresponding fees, charges
and penalties;
(2) Account for all customs revenues collected;
(3) Exercise police authority for the enforcement of tariff and customs
laws;
(4) Prevent and suppress smuggling, pilferage and all other economic
frauds within all ports of entry;
(5) Supervise and control exports, imports, foreign mails and the
clearance of vessels and aircrafts in all ports of entry;
(6) Administer all legal requirements that are appropriate;
(7) Prevent and prosecute smuggling and other illegal activities in all
ports under its jurisdiction;
(8) Exercise supervision and control over its constituent units;
(9) Perform such other functions as may be provided by law.25
xxx xxx xxx (emphasis supplied)
Both the BIR and the BOC are bureaus under the DOF. They principally
perform the special function of being the instrumentalities through
which the State exercises one of its great inherent functions –
taxation. Indubitably, such substantial distinction is germane and
intimately related to the purpose of the law. Hence, the classification
and treatment accorded to the BIR and the BOC under RA 9335 fully
satisfy the demands of equal protection.
Undue Delegation
Two tests determine the validity of delegation of legislative power: (1)
the completeness test and (2) the sufficient standard test. A law is
complete when it sets forth therein the policy to be executed, carried
out or implemented by the delegate.26 It lays down a sufficient
standard when it provides adequate guidelines or limitations in the
law to map out the boundaries of the delegate’s authority and
prevent the delegation from running riot.27 To be sufficient, the
standard must specify the limits of the delegate’s authority, announce
the legislative policy and identify the conditions under which it is to
be implemented.28
RA 9335 adequately states the policy and standards to guide the
President in fixing revenue targets and the implementing agencies in
carrying out the provisions of the law. Section 2 spells out the policy
of the law:
SEC. 2. Declaration of Policy. – It is the policy of the State to optimize
the revenue-generation capability and collection of the Bureau of
Internal Revenue (BIR) and the Bureau of Customs (BOC) by providing
for a system of rewards and sanctions through the creation of a
Rewards and Incentives Fund and a Revenue Performance Evaluation
Board in the above agencies for the purpose of encouraging their
officials and employees to exceed their revenue targets.
Section 4 "canalized within banks that keep it from overflowing" 29 the
delegated power to the President to fix revenue targets:
SEC. 4. Rewards and Incentives Fund. – A Rewards and Incentives
Fund, hereinafter referred to as the Fund, is hereby created, to be
sourced from the collection of the BIR and the BOC in excess of their
respective revenue targets of the year, as determined by the
Development Budget and Coordinating Committee (DBCC), in the
following percentages:
Excess of Collection of the Excess the Revenue Targets Percent (%) ofcriteria for the
30% or below – 15%
More than 30%
– 15% of the first
The Fund shall be deemed automatically appropriated the year
immediately following the year when the revenue collection target
was exceeded and shall be released on the same fiscal year.
Revenue targets shall refer to the original estimated revenue
collection expected of the BIR and the BOC for a given fiscal year as
stated in the Budget of Expenditures and Sources of Financing (BESF)
submitted by the President to Congress. The BIR and the BOC shall
submit to the DBCC the distribution of the agencies’ revenue targets
as allocated among its revenue districts in the case of the BIR, and the
collection districts in the case of the BOC.
xxx xxx xxx (emphasis supplied)
Revenue targets are based on the original estimated revenue
collection expected respectively of the BIR and the BOC for a given
fiscal year as approved by the DBCC and stated in the BESF submitted
by the President to Congress.30 Thus, the determination of revenue
targets does not rest solely on the President as it also undergoes the
scrutiny of the DBCC.
On the other hand, Section 7 specifies the limits of the Board’s
authority and identifies the conditions under which officials and
employees whose revenue collection falls short of the target by at
least 7.5% may be removed from the service:
SEC. 7. Powers and Functions of the Board. – The Board in the agency
shall have the following powers and functions:
xxx xxx xxx
(b) To set the criteria and procedures for removing from service
officials and employees whose revenue collection falls short of the
target by at least seven and a half percent (7.5%), with due
consideration of all relevant factors affecting the level of
collection as provided in the rules and regulations promulgated under
this Act, subject to civil service laws, rules and regulations and
compliance with substantive and procedural due process: Provided,
That the following exemptions shall apply:
1. Where the district or area of responsibility is newly-created, not
exceeding two years in operation, as has no historical record of
collection performance that can be used as basis for evaluation; and
2. Where the revenue or customs official or employee is a recent
transferee in the middle of the period under consideration unless the
transfer was due to nonperformance of revenue targets or potential
nonperformance of revenue targets: Provided, however, That when
the district or area of responsibility covered by revenue or customs
officials or employees has suffered from economic difficulties brought
about by natural calamities or force majeure or economic causes as
may be determined by the Board, termination shall be considered
only after careful and proper review by the Board.
(c) To terminate personnel in accordance with the criteria adopted in
the preceding paragraph: Provided, That such decision shall be
immediately executory: Provided, further, That the application of the
the Excess separation
Collection of antoofficial
to Accrue the Fundor employee from service
under this Act shall be without prejudice to the application of other
relevant
laws20%
30% plus on of
accountability
the remainingofexcess
public officers and employees,
such as the Code of Conduct and Ethical Standards of Public Officers
and Employees and the Anti-Graft and Corrupt Practices Act;
xxx xxx xxx (emphasis supplied)
Clearly, RA 9335 in no way violates the security of tenure of officials
and employees of the BIR and the BOC. The guarantee of security of
tenure only means that an employee cannot be dismissed from the
service for causes other than those provided by law and only after due
process is accorded the employee.31 In the case of RA 9335, it lays
down a reasonable yardstick for removal (when the revenue
collection falls short of the target by at least 7.5%) with due
consideration of all relevant factors affecting the level of collection.
This standard is analogous to inefficiency and incompetence in the
performance of official duties, a ground for disciplinary action under
civil service laws.32 The action for removal is also subject to civil
service laws, rules and regulations and compliance with substantive
and procedural due process.
At any rate, this Court has recognized the following as sufficient
standards: "public interest," "justice and equity," "public convenience
and welfare" and "simplicity, economy and welfare."33 In this case,
the declared policy of optimization of the revenue-generation
capability and collection of the BIR and the BOC is infused with public
interest.
Separation Of Powers
Section 12 of RA 9335 provides:
SEC. 12. Joint Congressional Oversight Committee. – There is hereby
created a Joint Congressional Oversight Committee composed of
seven Members from the Senate and seven Members from the House
of Representatives. The Members from the Senate shall be appointed
by the Senate President, with at least two senators representing the
minority. The Members from the House of Representatives shall be
appointed by the Speaker with at least two members representing the
minority. After the Oversight Committee will have approved the
implementing rules and regulations (IRR) it shall thereafter
become functus officio and therefore cease to exist.
The Joint Congressional Oversight Committee in RA 9335 was created
for the purpose of approving the implementing rules and regulations
(IRR) formulated by the DOF, DBM, NEDA, BIR, BOC and CSC. On May
22, 2006, it approved the said IRR. From then on, it became functus
officio and ceased to exist. Hence, the issue of its alleged
encroachment on the executive function of implementing and
enforcing the law may be considered moot and academic.
This notwithstanding, this might be as good a time as any for the Court
to confront the issue of the constitutionality of the Joint
Congressional Oversight Committee created under RA 9335 (or other
similar laws for that matter).
The scholarly discourse of Mr. Justice (now Chief Justice) Puno on the
concept of congressional oversight in Macalintal v. Commission on
Elections34 is illuminating:
Concept and bases of congressional oversight
Broadly defined, the power of oversight embraces all activities
undertaken by Congress to enhance its understanding of and
influence over the implementation of legislation it has enacted.
Clearly, oversight concerns post-enactment measures undertaken
by Congress: (a) to monitor bureaucratic compliance with program
objectives, (b) to determine whether agencies are properly
administered, (c) to eliminate executive waste and dishonesty, (d)
to prevent executive usurpation of legislative authority, and (d) to
assess executive conformity with the congressional perception of
public interest.
The power of oversight has been held to be intrinsic in the grant of
legislative power itself and integral to the checks and balances
inherent in a democratic system of government. x x x x x x x x x
Over the years, Congress has invoked its oversight power with
increased frequency to check the perceived "exponential
accumulation of power" by the executive branch. By the beginning of
the 20th century, Congress has delegated an enormous amount of
legislative authority to the executive branch and the administrative
agencies. Congress, thus, uses its oversight power to make sure that
the administrative agencies perform their functions within the
authority delegated to them. x x x x x x x x x
Categories of congressional oversight functions
The acts done by Congress purportedly in the exercise of its oversight
powers may be divided into three categories,
namely: scrutiny, investigation and supervision.
a. Scrutiny
Congressional scrutiny implies a lesser intensity and continuity of
attention to administrative operations. Its primary purpose is to
determine economy and efficiency of the operation of government
activities. In the exercise of legislative scrutiny, Congress may request
information and report from the other branches of government. It can
give recommendations or pass resolutions for consideration of the
agency involved.
xxx xxx xxx
b. Congressional investigation
While congressional scrutiny is regarded as a passive process of
looking at the facts that are readily available, congressional
investigation involves a more intense digging of facts. The power of
Congress to conduct investigation is recognized by the 1987
Constitution under section 21, Article VI, xxx xxx xxx
c. Legislative supervision
The third and most encompassing form by which Congress exercises
its oversight power is thru legislative supervision. "Supervision"
connotes a continuing and informed awareness on the part of a
congressional committee regarding executive operations in a given
administrative area. While both congressional scrutiny and
investigation involve inquiry into past executive branch actions in
order to influence future executive branch
performance, congressional supervision allows Congress to scrutinize
the exercise of delegated law-making authority, and permits Congress
to retain part of that delegated authority.
Congress exercises supervision over the executive agencies through its
veto power. It typically utilizes veto provisions when granting the
President or an executive agency the power to promulgate regulations
with the force of law. These provisions require the President or an
agency to present the proposed regulations to Congress, which retains
a "right" to approve or disapprove any regulation before it takes
effect. Such legislative veto provisions usually provide that a
proposed regulation will become a law after the expiration of a
certain period of time, only if Congress does not affirmatively
disapprove of the regulation in the meantime. Less frequently, the
statute provides that a proposed regulation will become law if
Congress affirmatively approves it.
Supporters of legislative veto stress that it is necessary to maintain the
balance of power between the legislative and the executive branches
of government as it offers lawmakers a way to delegate vast power to
the executive branch or to independent agencies while retaining the
option to cancel particular exercise of such power without having to
pass new legislation or to repeal existing law. They contend that this
arrangement promotes democratic accountability as it provides
legislative check on the activities of unelected administrative
agencies. One proponent thus explains:
It is too late to debate the merits of this delegation policy: the policy
is too deeply embedded in our law and practice. It suffices to say that
the complexities of modern government have often led Congress-
whether by actual or perceived necessity- to legislate by declaring
broad policy goals and general statutory standards, leaving the choice
of policy options to the discretion of an executive officer. Congress
articulates legislative aims, but leaves their implementation to the
judgment of parties who may or may not have participated in or
agreed with the development of those aims. Consequently, absent
safeguards, in many instances the reverse of our constitutional
scheme could be effected: Congress proposes, the Executive
disposes. One safeguard, of course, is the legislative power to enact
new legislation or to change existing law. But without some means of
overseeing post enactment activities of the executive branch,
Congress would be unable to determine whether its policies have
been implemented in accordance with legislative intent and thus
whether legislative intervention is appropriate.
Its opponents, however, criticize the legislative veto as undue
encroachment upon the executive prerogatives. They urge that any
post-enactment measures undertaken by the legislative branch
should be limited to scrutiny and investigation; any measure beyond
that would undermine the separation of powers guaranteed by the
Constitution. They contend that legislative veto constitutes an
impermissible evasion of the President’s veto authority and intrusion
into the powers vested in the executive or judicial branches of
government. Proponents counter that legislative veto enhances
separation of powers as it prevents the executive branch and
independent agencies from accumulating too much power. They
submit that reporting requirements and congressional committee
investigations allow Congress to scrutinize only the exercise of
delegated law-making authority. They do not allow Congress to
review executive proposals before they take effect and they do not
afford the opportunity for ongoing and binding expressions of
congressional intent. In contrast, legislative veto permits Congress to
participate prospectively in the approval or disapproval of
"subordinate law" or those enacted by the executive branch pursuant
to a delegation of authority by Congress. They further argue that
legislative veto "is a necessary response by Congress to the accretion
of policy control by forces outside its chambers." In an era of
delegated authority, they point out that legislative veto "is the most
efficient means Congress has yet devised to retain control over the
evolution and implementation of its policy as declared by statute."
In Immigration and Naturalization Service v. Chadha, the U.S.
Supreme Court resolved the validity of legislative veto provisions.
The case arose from the order of the immigration judge suspending
the deportation of Chadha pursuant to § 244(c)(1) of the Immigration
and Nationality Act. The United States House of Representatives
passed a resolution vetoing the suspension pursuant to § 244(c)(2)
authorizing either House of Congress, by resolution, to invalidate the
decision of the executive branch to allow a particular deportable alien
to remain in the United States. The immigration judge reopened the
deportation proceedings to implement the House order and the alien
was ordered deported. The Board of Immigration Appeals dismissed
the alien’s appeal, holding that it had no power to declare
unconstitutional an act of Congress. The United States Court of
Appeals for Ninth Circuit held that the House was without
constitutional authority to order the alien’s deportation and that §
244(c)(2) violated the constitutional doctrine on separation of
powers.
On appeal, the U.S. Supreme Court declared § 244(c)(2)
unconstitutional. But the Court shied away from the issue of
separation of powers and instead held that the provision violates the
presentment clause and bicameralism. It held that the one-house
veto was essentially legislative in purpose and effect. As such, it is
subject to the procedures set out in Article I of the Constitution
requiring the passage by a majority of both Houses and presentment
to the President. x x x x x x x x x
Two weeks after the Chadha decision, the Court upheld, in
memorandum decision, two lower court decisions invalidating the
legislative veto provisions in the Natural Gas Policy Act of 1978 and
the Federal Trade Commission Improvement Act of 1980. Following
this precedence, lower courts invalidated statutes containing
legislative veto provisions although some of these provisions required
the approval of both Houses of Congress and thus met the
bicameralism requirement of Article I. Indeed, some of these veto
provisions were not even exercised.35 (emphasis supplied)
In Macalintal, given the concept and configuration of the power of
congressional oversight and considering the nature and powers of a
constitutional body like the Commission on Elections, the Court struck
down the provision in RA 9189 (The Overseas Absentee Voting Act of
2003) creating a Joint Congressional Committee. The committee was
tasked not only to monitor and evaluate the implementation of the
said law but also to review, revise, amend and approve the IRR
promulgated by the Commission on Elections. The Court held that
these functions infringed on the constitutional independence of the
Commission on Elections.36
With this backdrop, it is clear that congressional oversight is not
unconstitutional per se, meaning, it neither necessarily constitutes an
encroachment on the executive power to implement laws nor
undermines the constitutional separation of powers. Rather, it is
integral to the checks and balances inherent in a democratic system
of government. It may in fact even enhance the separation of powers
as it prevents the over-accumulation of power in the executive
branch.
However, to forestall the danger of congressional encroachment
"beyond the legislative sphere," the Constitution imposes two basic
and related constraints on Congress.37 It may not vest itself, any of its
committees or its members with either executive or judicial
power.38 And, when it exercises its legislative power, it must follow
the "single, finely wrought and exhaustively considered, procedures"
specified under the Constitution,39 including the procedure for
enactment of laws and presentment.
Thus, any post-enactment congressional measure such as this should
be limited to scrutiny and investigation. In particular, congressional
oversight must be confined to the following:
(1) scrutiny based primarily on Congress’ power of appropriation and
the budget hearings conducted in connection with it, its power to ask
heads of departments to appear before and be heard by either of its
Houses on any matter pertaining to their departments and its power
of confirmation40 and
(2) investigation and monitoring41 of the implementation of laws
pursuant to the power of Congress to conduct inquiries in aid of
legislation.42
Any action or step beyond that will undermine the separation of
powers guaranteed by the Constitution. Legislative vetoes fall in this
class.
Legislative veto is a statutory provision requiring the President or an
administrative agency to present the proposed implementing rules
and regulations of a law to Congress which, by itself or through a
committee formed by it, retains a "right" or "power" to approve or
disapprove such regulations before they take effect. As such, a
legislative veto in the form of a congressional oversight committee is
in the form of an inward-turning delegation designed to attach a
congressional leash (other than through scrutiny and investigation) to
an agency to which Congress has by law initially delegated broad
powers.43It radically changes the design or structure of the
Constitution’s diagram of power as it entrusts to Congress a direct
role in enforcing, applying or implementing its own laws.44
Congress has two options when enacting legislation to define national
policy within the broad horizons of its legislative competence.45 It can
itself formulate the details or it can assign to the executive branch the
responsibility for making necessary managerial decisions in
conformity with those standards.46 In the latter case, the law must be
complete in all its essential terms and conditions when it leaves the
hands of the legislature.47 Thus, what is left for the executive branch
or the concerned administrative agency when it formulates rules and
regulations implementing the law is to fill up details (supplementary
rule-making) or ascertain facts necessary to bring the law into actual
operation (contingent rule-making).48
Administrative regulations enacted by administrative agencies to
implement and interpret the law which they are entrusted to enforce
have the force of law and are entitled to respect. 49 Such rules and
regulations partake of the nature of a statute50and are just as binding
as if they have been written in the statute itself. As such, they have
the force and effect of law and enjoy the presumption of
constitutionality and legality until they are set aside with finality in an
appropriate case by a competent court.51 Congress, in the guise of
assuming the role of an overseer, may not pass upon their legality by
subjecting them to its stamp of approval without disturbing the
calculated balance of powers established by the Constitution. In
exercising discretion to approve or disapprove the IRR based on a
determination of whether or not they conformed with the provisions
of RA 9335, Congress arrogated judicial power unto itself, a power
exclusively vested in this Court by the Constitution.
Considered Opinion of
Mr. Justice Dante O. Tinga
Moreover, the requirement that the implementing rules of a law be
subjected to approval by Congress as a condition for their effectivity
violates the cardinal constitutional principles of bicameralism and the
rule on presentment.52
Section 1, Article VI of the Constitution states:
Section 1. The legislative power shall be vested in the Congress of
the Philippines which shall consist of a Senate and a House of
Representatives, except to the extent reserved to the people by the
provision on initiative and referendum. (emphasis supplied)
Legislative power (or the power to propose, enact, amend and repeal
laws)53 is vested in Congress which consists of two chambers, the
Senate and the House of Representatives. A valid exercise of
legislative power requires the act of both chambers. Corrollarily, it can
be exercised neither solely by one of the two chambers nor by a
committee of either or both chambers. Thus, assuming the validity of
a legislative veto, both a single-chamber legislative veto and a
congressional committee legislative veto are invalid.
Additionally, Section 27(1), Article VI of the Constitution provides:
Section 27. (1) Every bill passed by the Congress shall, before it
becomes a law, be presented to the President. If he approves the
same, he shall sign it, otherwise, he shall veto it and return the same
with his objections to the House where it originated, which shall enter
the objections at large in its Journal and proceed to reconsider it. If,
after such reconsideration, two-thirds of all the Members of such
House shall agree to pass the bill, it shall be sent, together with the
objections, to the other House by which it shall likewise be
reconsidered, and if approved by two-thirds of all the Members of
that House, it shall become a law. In all such cases, the votes of each
House shall be determined by yeas or nays, and the names of the
members voting for or against shall be entered in its Journal. The
President shall communicate his veto of any bill to the House where
it originated within thirty days after the date of receipt thereof;
otherwise, it shall become a law as if he had signed it. (emphasis
supplied)
Every bill passed by Congress must be presented to the President for
approval or veto. In the absence of presentment to the President, no
bill passed by Congress can become a law. In this sense, law-making
under the Constitution is a joint act of the Legislature and of the
Executive. Assuming that legislative veto is a valid legislative act with
the force of law, it cannot take effect without such presentment even
if approved by both chambers of Congress.
In sum, two steps are required before a bill becomes a law. First, it
must be approved by both Houses of Congress.54Second, it must be
presented to and approved by the President.55 As summarized by
Justice Isagani Cruz56 and Fr. Joaquin G. Bernas, S.J.57, the following is
the procedure for the approval of bills:
A bill is introduced by any member of the House of Representatives
or the Senate except for some measures that must originate only in
the former chamber.
The first reading involves only a reading of the number and title of the
measure and its referral by the Senate President or the Speaker to the
proper committee for study.
The bill may be "killed" in the committee or it may be recommended
for approval, with or without amendments, sometimes after public
hearings are first held thereon. If there are other bills of the same
nature or purpose, they may all be consolidated into one bill under
common authorship or as a committee bill.
Once reported out, the bill shall be calendared for second reading. It
is at this stage that the bill is read in its entirety, scrutinized, debated
upon and amended when desired. The second reading is the most
important stage in the passage of a bill.
The bill as approved on second reading is printed in its final form and
copies thereof are distributed at least three days before the third
reading. On the third reading, the members merely register their
votes and explain them if they are allowed by the rules. No further
debate is allowed.
Once the bill passes third reading, it is sent to the other chamber,
where it will also undergo the three readings. If there are differences
between the versions approved by the two chambers, a conference
committee58 representing both Houses will draft a compromise
measure that if ratified by the Senate and the House of
Representatives will then be submitted to the President for his
consideration.
The bill is enrolled when printed as finally approved by the Congress,
thereafter authenticated with the signatures of the Senate President,
the Speaker, and the Secretaries of their respective chambers… 59
The President’s role in law-making.
The final step is submission to the President for approval. Once
approved, it takes effect as law after the required publication.60
Where Congress delegates the formulation of rules to implement the
law it has enacted pursuant to sufficient standards established in the
said law, the law must be complete in all its essential terms and
conditions when it leaves the hands of the legislature. And it may be
deemed to have left the hands of the legislature when it becomes
effective because it is only upon effectivity of the statute that legal
rights and obligations become available to those entitled by the
language of the statute. Subject to the indispensable requisite of
publication under the due process clause,61 the determination as to
when a law takes effect is wholly the prerogative of Congress.62 As
such, it is only upon its effectivity that a law may be executed and the
executive branch acquires the duties and powers to execute the said
law. Before that point, the role of the executive branch, particularly
of the President, is limited to approving or vetoing the law.63
From the moment the law becomes effective, any provision of law
that empowers Congress or any of its members to play any role in the
implementation or enforcement of the law violates the principle of
separation of powers and is thus unconstitutional. Under this
principle, a provision that requires Congress or its members to
approve the implementing rules of a law after it has already taken
effect shall be unconstitutional, as is a provision that allows Congress
or its members to overturn any directive or ruling made by the
members of the executive branch charged with the implementation
of the law.
Following this rationale, Section 12 of RA 9335 should be struck down
as unconstitutional. While there may be similar provisions of other
laws that may be invalidated for failure to pass this standard, the
Court refrains from invalidating them wholesale but will do so at the
proper time when an appropriate case assailing those provisions is
brought before us.64
The separability clause of RA 9335 reveals the intention of the
legislature to isolate and detach any invalid provision from the other
provisions so that the latter may continue in force and effect. The
valid portions can stand independently of the invalid section. Without
Section 12, the remaining provisions still constitute a complete,
intelligible and valid law which carries out the legislative intent to
optimize the revenue-generation capability and collection of the BIR
and the BOC by providing for a system of rewards and sanctions
through the Rewards and Incentives Fund and a Revenue
Performance Evaluation Board.
To be effective, administrative rules and regulations must be
published in full if their purpose is to enforce or implement existing
law pursuant to a valid delegation. The IRR of RA 9335 were published
on May 30, 2006 in two newspapers of general circulation66 and
became effective 15 days thereafter.67 Until and unless the contrary
is shown, the IRR are presumed valid and effective even without the
approval of the Joint Congressional Oversight Committee.
WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12
of RA 9335 creating a Joint Congressional Oversight Committee to
approve the implementing rules and regulations of the law is
declared UNCONSTITUTIONAL and therefore NULL and VOID. The
constitutionality of the remaining provisions of RA 9335 is UPHELD.
Pursuant to Section 13 of RA 9335, the rest of the provisions remain
in force and effect.

The next question to be resolved is: what is the effect of the SO ORDERED.
unconstitutionality of Section 12 of RA 9335 on the other provisions
of the law? Will it render the entire law unconstitutional? No.

Section 13 of RA 9335 provides:

SEC. 13. Separability Clause. – If any provision of this Act is declared

invalid by a competent court, the remainder of this Act or any
provision not affected by such declaration of invalidity shall remain in
force and effect.

In Tatad v. Secretary of the Department of Energy,65 the Court laid

down the following rules:

The general rule is that where part of a statute is void as repugnant to

the Constitution, while another part is valid, the valid portion, if
separable from the invalid, may stand and be enforced. The presence
of a separability clause in a statute creates the presumption that the
legislature intended separability, rather than complete nullity of the
statute. To justify this result, the valid portion must be so far
independent of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed that it
could not constitutionally enact the other. Enough must remain to
make a complete, intelligible and valid statute, which carries out the
legislative intent. x x x

The exception to the general rule is that when the parts of a statute
are so mutually dependent and connected, as conditions,
considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, the
nullity of one part will vitiate the rest. In making the parts of the
statute dependent, conditional, or connected with one another, the
legislature intended the statute to be carried out as a whole and
would not have enacted it if one part is void, in which case if some
parts are unconstitutional, all the other provisions thus dependent,
conditional, or connected must fall with them.