Consti2Digest – PN-012B Tolentino Vs Secretary, 235 SCRA 632 (1994)

Facts:
There are various suits challenging the constitutionality of RA 7716 on various grounds. 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.

Among the Petitioners was the Philippine Press Institute which claim that R.A.7716 violates their
press freedom and religious liberty, having removed them from the exemption to pay Value
Added Tax. 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." PPI argued that the VAT is in the nature of a license tax. One contention is that
RA 7716 did not originate exclusively in the House of Representatives as required by Art. VI, Sec.
24 of the Constitution, because it is in fact the result of the consolidation of 2 distinct bills, H. No.
11197 and S. No. 1630.

Issues:
1. Whether or not, the purpose of the VAT is the same as that of a license tax.
2. Whether or not R, A 7716 violates Art. VI, Secs. 24 and 26(2) of the Constitution

Held:
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.

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.

The argument that RA 7716 did not originate exclusively in the House of Representatives as
required by Art. VI, Sec. 24 of the Constitution 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. 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

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propose amendments. 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.

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