LEGAL RESEARCH ACJUCO 1

STATTUE LAW be filled, as provided by law, by selection or

election from the labor, peasant, urban poor,
ARTICLE VI indigenous cultural communities, women, youth,
THE LEGISLATIVE DEPARTMENT and such other sectors as may be provided by
law, except the religious sector.
Section 1. The legislative power shall be vested
in the Congress of the Philippines which shall (3) Each legislative district shall comprise, as far
consist of a Senate and a House of as practicable, contiguous, compact, and
Representatives, except to the extent reserved adjacent territory. Each city with a population of
to the people by the provision on initiative and at least two hundred fifty thousand, or each
referendum. province, shall have at least one representative.

Section 2. The Senate shall be composed of (4) Within three years following the return of
twenty-four Senators who shall be elected at every census, the Congress shall make a
large by the qualified voters of the Philippines, reapportionment of legislative districts based on
as may be provided by law. the standards provided in this section.

Section 3. No person shall be a Senator unless Section 6. No person shall be a Member of the
he is a natural-born citizen of the Philippines House of Representatives unless he is a natural-
and, on the day of the election, is at least thirty- born citizen of the Philippines and, on the day of
five years of age, able to read and write, a the election, is at least twenty-five years of age,
registered voter, and a resident of the able to read and write, and, except the party-list
Philippines for not less than two years representatives, a registered voter in the district
immediately preceding the day of the election. in which he shall be elected, and a resident
thereof for a period of not less than one year
Section 4. The term of office of the Senators immediately preceding the day of the election.
shall be six years and shall commence, unless
otherwise provided by law, at noon on the Section 7. The Members of the House of
thirtieth day of June next following their election. Representatives shall be elected for a term of
No Senator shall serve for more than two three years which shall begin, unless otherwise
consecutive terms. Voluntary renunciation of the provided by law, at noon on the thirtieth day of
office for any length of time shall not be June next following their election. No Member
considered as an interruption in the continuity of of the House of Representatives shall serve for
his service for the full term of which he was more than three consecutive terms. Voluntary
elected. renunciation of the office for any length of time
shall not be considered as an interruption in the
Section 5. (1) The House of Representatives continuity of his service for the full term for which
shall be composed of not more than two hundred he was elected.
and fifty members, unless otherwise fixed by
law, who shall be elected from legislative Section 8. Unless otherwise provided by law, the
districts apportioned among the provinces, regular election of the Senators and the
cities, and the Metropolitan Manila area in Members of the House of Representatives shall
accordance with the number of their respective be held on the second Monday of May.
inhabitants, and on the basis of a uniform and
progressive ratio, and those who, as provided by Section 9. In case of vacancy in the Senate or in
law, shall be elected through a party-list system the House of Representatives, a special election
of registered national, regional, and sectoral may be called to fill such vacancy in the manner
parties or organizations. prescribed by law, but the Senator or Member of
the House of Representatives thus elected shall
(2) The party-list representatives shall constitute serve only for the unexpired term.
twenty per centum of the total number of
representatives including those under the party Section 10. The salaries of Senators and
list. For three consecutive terms after the Members of the House of Representatives shall
ratification of this Constitution, one-half of the be determined by law. No increase in said
seats allocated to party-list representatives shall compensation shall take effect until after the
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expiration of the full term of all the Members of legal holidays. The President may call a special
the Senate and the House of Representatives session at any time.
approving such increase.
Section 16. (1). The Senate shall elect its
Section 11. A Senator or Member of the House President and the House of Representatives, its
of Representatives shall, in all offenses Speaker, by a majority vote of all its respective
punishable by not more than six years Members. Each House shall choose such other
imprisonment, be privileged from arrest while the officers as it may deem necessary.
Congress is in session. No Member shall be
questioned nor be held liable in any other place (2) A majority of each House shall constitute a
for any speech or debate in the Congress or in quorum to do business, but a smaller number
any committee thereof. may adjourn from day to day and may compel
the attendance of absent Members in such
Section 12. All Members of the Senate and the manner, and under such penalties, as such
House of Representatives shall, upon House may provide.
assumption of office, make a full disclosure of
their financial and business interests. They shall (3) Each House may determine the rules of its
notify the House concerned of a potential conflict proceedings, punish its Members for disorderly
of interest that may arise from the filing of a behavior, and, with the concurrence of two-thirds
proposed legislation of which they are authors. of all its Members, suspend or expel a Member.
A penalty of suspension, when imposed, shall
Section 13. No Senator or Member of the House not exceed sixty days.
of Representatives may hold any other office or
employment in the Government, or any (4) Each House shall keep a Journal of its
subdivision, agency, or instrumentality thereof, proceedings, and from time to time publish the
including government-owned or controlled same, excepting such parts as may, in its
corporations or their subsidiaries, during his judgment, affect national security; and
term without forfeiting his seat. Neither shall he the yeas and nays on any question shall, at the
be appointed to any office which may have been request of one-fifth of the Members present, be
created or the emoluments thereof increased entered in the Journal. Each House shall also
during the term for which he was elected. keep a Record of its proceedings.

Section 14. No Senator or Member of the House (5) Neither House during the sessions of the
of Representatives may personally appear as Congress shall, without the consent of the other,
counsel before any court of justice or before the adjourn for more than three days, nor to any
Electoral Tribunals, or quasi-judicial and other other place than that in which the two Houses
administrative bodies. Neither shall he, directly shall be sitting.
or indirectly, be interested financially in any
contract with, or in any franchise or special Section 17. The Senate and the House of
privilege granted by the Government, or any Representatives shall each have an Electoral
subdivision, agency, or instrumentality thereof, Tribunal which shall be the sole judge of all
including any government-owned or controlled contests relating to the election, returns, and
corporation, or its subsidiary, during his term of qualifications of their respective Members. Each
office. He shall not intervene in any matter Electoral Tribunal shall be composed of nine
before any office of the Government for his Members, three of whom shall be Justices of the
pecuniary benefit or where he may be called Supreme Court to be designated by the Chief
upon to act on account of his office. Justice, and the remaining six shall be Members
of the Senate or the House of Representatives,
Section 15. The Congress shall convene once as the case may be, who shall be chosen on the
every year on the fourth Monday of July for its basis of proportional representation from the
regular session, unless a different date is fixed political parties and the parties or organizations
by law, and shall continue to be in session for registered under the party-list system
such number of days as it may determine until represented therein. The senior Justice in the
thirty days before the opening of its next regular Electoral Tribunal shall be its Chairman.
session, exclusive of Saturdays, Sundays, and
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Section 18. There shall be a Commission on matters related thereto. When the security of the
Appointments consisting of the President of the State or the public interest so requires and the
Senate, as ex officio Chairman, twelve Senators, President so states in writing, the appearance
and twelve Members of the House of shall be conducted in executive session.
Representatives, elected by each House on the
basis of proportional representation from the Section 23. (1) The Congress, by a vote of two-
political parties and parties or organizations thirds of both Houses in joint session
registered under the party-list system assembled, voting separately, shall have the
represented therein. The chairman of the sole power to declare the existence of a state of
Commission shall not vote, except in case of a war.
tie. The Commission shall act on all
appointments submitted to it within thirty session (2) In times of war or other national emergency,
days of the Congress from their submission. The the Congress may, by law, authorize the
Commission shall rule by a majority vote of all President, for a limited period and subject to
the Members. such restrictions as it may prescribe, to exercise
powers necessary and proper to carry out a
Section 19. The Electoral Tribunals and the declared national policy. Unless sooner
Commission on Appointments shall be withdrawn by resolution of the Congress, such
constituted within thirty days after the Senate powers shall cease upon the next adjournment
and the House of Representatives shall have thereof.
been organized with the election of the President
and the Speaker. The Commission on Section 24. All appropriation, revenue or tariff
Appointments shall meet only while the bills, bills authorizing increase of the public debt,
Congress is in session, at the call of its bills of local application, and private bills, shall
Chairman or a majority of all its Members, to originate exclusively in the House of
discharge such powers and functions as are Representatives, but the Senate may propose or
herein conferred upon it. concur with amendments.

Section 20. The records and books of accounts Section 25. (1) The Congress may not increase
of the Congress shall be preserved and be open the appropriations recommended by the
to the public in accordance with law, and such President for the operation of the Government
books shall be audited by the Commission on as specified in the budget. The form, content,
Audit which shall publish annually an itemized and manner of preparation of the budget shall be
list of amounts paid to and expenses incurred for prescribed by law.
each Member.
(2) No provision or enactment shall be embraced
Section 21. The Senate or the House of in the general appropriations bill unless it relates
Representatives or any of its respective specifically to some particular appropriation
committees may conduct inquiries in aid of therein. Any such provision or enactment shall
legislation in accordance with its duly published be limited in its operation to the appropriation to
rules of procedure. The rights of persons which it relates.
appearing in, or affected by, such inquiries shall
be respected. (3) The procedure in approving appropriations
for the Congress shall strictly follow the
Section 22. The heads of departments may, procedure for approving appropriations for other
upon their own initiative, with the consent of the departments and agencies.
President, or upon the request of either House,
as the rules of each House shall provide, appear (4) A special appropriations bill shall specify the
before and be heard by such House on any purpose for which it is intended, and shall be
matter pertaining to their departments. Written supported by funds actually available as certified
questions shall be submitted to the President of by the National Treasurer, or to be raised by a
the Senate or the Speaker of the House of corresponding revenue proposal therein.
Representatives at least three days before their
scheduled appearance. Interpellations shall not (5) No law shall be passed authorizing any
be limited to written questions, but may cover transfer of appropriations; however, the
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President, the President of the Senate, the by yeas or nays, and the names of the Members
Speaker of the House of Representatives, the voting for or against shall be entered in its
Chief Justice of the Supreme Court, and the Journal. The President shall communicate his
heads of Constitutional Commissions may, by veto of any bill to the House where it originated
law, be authorized to augment any item in the within thirty days after the date of receipt thereof,
general appropriations law for their respective otherwise, it shall become a law as if he had
offices from savings in other items of their signed it.
respective appropriations.
(2) The President shall have the power to veto
(6) Discretionary funds appropriated for any particular item or items in an appropriation,
particular officials shall be disbursed only for revenue, or tariff bill, but the veto shall not affect
public purposes to be supported by appropriate the item or items to which he does not object.
vouchers and subject to such guidelines as may
be prescribed by law. Section 28. (1) The rule of taxation shall be
uniform and equitable. The Congress shall
(7) If, by the end of any fiscal year, the Congress evolve a progressive system of taxation.
shall have failed to pass the general
appropriations bill for the ensuing fiscal year, the (2) The Congress may, by law, authorize the
general appropriations law for the preceding President to fix within specified limits, and
fiscal year shall be deemed re-enacted and shall subject to such limitations and restrictions as it
remain in force and effect until the general may impose, tariff rates, import and export
appropriations bill is passed by the Congress. quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the
Section 26. (1) Every bill passed by the national development program of the
Congress shall embrace only one subject which Government.
shall be expressed in the title thereof.
(3) Charitable institutions, churches and
(2) No bill passed by either House shall become personages or convents appurtenant thereto,
a law unless it has passed three readings on mosques, non-profit cemeteries, and all lands,
separate days, and printed copies thereof in its buildings, and improvements, actually, directly,
final form have been distributed to its Members and exclusively used for religious, charitable, or
three days before its passage, except when the educational purposes shall be exempt from
President certifies to the necessity of its taxation.
immediate enactment to meet a public calamity
or emergency. Upon the last reading of a bill, no (4) No law granting any tax exemption shall be
amendment thereto shall be allowed, and the passed without the concurrence of a majority of
vote thereon shall be taken immediately all the Members of the Congress.
thereafter, and the yeas and nays entered in the
Journal. Section 29. (1) No money shall be paid out of the
Treasury except in pursuance of an
Section 27. (1) Every bill passed by the appropriation made by law.
Congress shall, before it becomes a law, be
presented to the President. If he approves the (2) No public money or property shall be
same he shall sign it; otherwise, he shall veto it appropriated, applied, paid, or employed,
and return the same with his objections to the directly or indirectly, for the use, benefit, or
House where it originated, which shall enter the support of any sect, church, denomination,
objections at large in its Journal and proceed to sectarian institution, or system of religion, or of
reconsider it. If, after such reconsideration, two- any priest, preacher, minister, other religious
thirds of all the Members of such House shall teacher, or dignitary as such, except when such
agree to pass the bill, it shall be sent, together priest, preacher, minister, or dignitary is
with the objections, to the other House by which assigned to the armed forces, or to any penal
it shall likewise be reconsidered, and if approved institution, or government orphanage or
by two-thirds of all the Members of that House, it leprosarium.
shall become a law. In all such cases, the votes
of each House shall be determined
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(3) All money collected on any tax levied for a Section 3. Definition of Terms. — For
special purpose shall be treated as a special purposes of this Act, the following terms shall
fund and paid out for such purpose only. If the mean:
purpose for which a special fund was created
has been fulfilled or abandoned, the balance, if (a) "Initiative" is the power of the people to
any, shall be transferred to the general funds of propose amendments to the Constitution or to
the Government. propose and enact legislations through an
election called for the purpose.
Section 30. No law shall be passed increasing
the appellate jurisdiction of the Supreme Court There are three (3) systems of initiative, namely:
as provided in this Constitution without its advice
and concurrence. a.1 Initiative on the Constitution which refers to
a petition proposing amendments to the
Section 31. No law granting a title of royalty or Constitution;
nobility shall be enacted.
a.2. Initiative on statutes which refers to a
Section 32. The Congress shall, as early as petition proposing to enact a national legislation;
possible, provide for a system of initiative and and
referendum, and the exceptions therefrom,
whereby the people can directly propose and a.3. Initiative on local legislation which refers to
enact laws or approve or reject any act or law or a petition proposing to enact a regional,
part thereof passed by the Congress or local provincial, city, municipal, or barangay law,
legislative body after the registration of a petition resolution or ordinance.
therefor signed by at least ten per centum of the
total number of registered voters, of which every (b) "Indirect initiative" is exercise of initiative by
legislative district must be represented by at the people through a proposition sent to
least three per centum of the registered voters Congress or the local legislative body for action.
thereof.
(c) "Referendum" is the power of the electorate
REPUBLIC ACT NO. 6735 AUGUST to approve or reject a legislation through an
4, 1989 election called for the purpose. It may be of two
classes, namely:
AN ACT PROVIDING FOR A SYSTEM OF
INITIATIVE AND REFERENDUM AND c.1. Referendum on statutes which refers to a
APPROPRIATING FUNDS THEREFOR petition to approve or reject an act or law, or part
thereof, passed by Congress; and
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress c.2. Referendum on local law which refers to a
assembled:: petition to approve or reject a law, resolution or
ordinance enacted by regional assemblies and
I. — General Provisions local legislative bodies.

Section 1. Title. — This Act shall be known as (d) "Proposition" is the measure proposed by the
"The Initiative and Referendum Act." voters.

Section 2. Statement of Policy. — The power (e) "Plebiscite" is the electoral process by which
of the people under a system of initiative and an initiative on the Constitution is approved or
referendum to directly propose, enact, approve rejected by the people.
or reject, in whole or in part, the Constitution,
laws, ordinances, or resolutions passed by any (f) "Petition" is the written instrument containing
legislative body upon compliance with the the proposition and the required number of
requirements of this Act is hereby affirmed, signatories. It shall be in a form to be determined
recognized and guaranteed. by and submitted to the Commission on
Elections, hereinafter referred to as the
Commission.
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(g) "Local government units" refers to provinces, c.6. an abstract or summary in not more than
cities, municipalities and barangays. one hundred (100) words which shall be legibly
written or printed at the top of every page of the
(h) "Local legislative bodies" refers to the petition.
Sangguniang Panlalawigan, Sangguniang
Panlungsod, Sangguniang Bayan, and (d) A referendum or initiative affecting a law,
Sangguniang Nayon. resolution or ordinance passed by the legislative
assembly of an autonomous region, province or
(i) "Local executives" refers to the Provincial city is deemed validly initiated if the petition
Governors, City or Municipal Mayors and thereof is signed by at least ten per centum
Punong Barangay, as the case may be. (10%) of the registered voters in the province or
city, of which every legislative district must be
Section 4. Who may exercise. — The power of represented by at least three per centum (3%) of
initiative and referendum may be exercised by the registered voters therein; Provided,
all registered voters of the country, autonomous however, That if the province or city is composed
regions, provinces, cities, municipalities and only of one (1) legislative district, then at least
barangays. each municipality in a province or each
barangay in a city should be represented by at
Section 5. Requirements. — (a) To exercise least three per centum (3%) of the registered
the power of initiative or referendum, at least ten voters therein.
per centum (10%) of the total number of the
registered voters, of which every legislative (e) A referendum of initiative on an ordinance
district is represented by at least three per passed in a municipality shall be deemed validly
centum (3%) of the registered voters thereof, initiated if the petition therefor is signed by at
shall sign a petition for the purpose and register least ten per centum (10%) of the registered
the same with the Commission. voters in the municipality, of which every
barangay is represented by at least three per
(b) A petition for an initiative on the 1987 centum (3%) of the registered voters therein.
Constitution must have at least twelve per
centum (12%) of the total number of registered (f) A referendum or initiative on a barangay
voters as signatories, of which every legislative resolution or ordinance is deemed validly
district must be represented by at least three per initiated if signed by at least ten per centum
centum (3%) of the registered voters therein. (10%) of the registered voters in said barangay.
Initiative on the Constitution may be exercised
only after five (5) years from the ratification of the Section 6. Special Registration. — The
1987 Constitution and only once every five (5) Commission on Election shall set a special
years thereafter. registration day at least three (3) weeks before a
scheduled initiative or referendum.
(c) The petition shall state the following:
Section 7. Verification of Signatures. — The
c.1. contents or text of the proposed law sought Election Registrar shall verify the signatures on
to be enacted, approved or rejected, amended the basis of the registry list of voters, voters'
or repealed, as the case may be; affidavits and voters identification cards used in
the immediately preceding election.
c.2. the proposition;
II. — National Initiative and Referendum
c.3. the reason or reasons therefor;
SECTION 8. Conduct and Date of Initiative or
c.4. that it is not one of the exceptions provided Referendum. — The Commission shall call and
herein; supervise the conduct of initiative or referendum.

c.5. signatures of the petitioners or registered Within a period of thirty (30) days from receipt of
voters; and the petition, the Commission shall, upon
determining the sufficiency of the petition,
publish the same in Filipino and English at least
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twice in newspapers of general and local (b) Statutes involving emergency measures, the
circulation and set the date of the initiative or enactment of which are specifically vested in
referendum which shall not be earlier than forty- Congress by the Constitution, cannot be subject
five (45) days but not later than ninety (90) days to referendum until ninety (90) days after its
from the determination by the Commission of the effectivity.
sufficiency of the petition.
Section 11. Indirect Initiative. — Any duly
Section 9. Effectivity of Initiative or accredited people's organization, as defined by
Referendum Proposition. — (a) The law, may file a petition for indirect initiative with
Proposition of the enactment, approval, the House of Representatives, and other
amendment or rejection of a national law shall legislative bodies. The petition shall contain a
be submitted to and approved by a majority of summary of the chief purposes and contents of
the votes cast by all the registered voters of the the bill that the organization proposes to be
Philippines. enacted into law by the legislature.

If, as certified to by the Commission, the The procedure to be followed on the initiative bill
proposition is approved by a majority of the votes shall be the same as the enactment of any
cast, the national law proposed for enactment, legislative measure before the House of
approval, or amendment shall become effective Representatives except that the said initiative bill
fifteen (15) days following completion of its shall have precedence over the pending
publication in the Official Gazette or in a legislative measures on the committee.
newspaper of general circulation in the
Philippines. If, as certified by the Commission, Section 12. Appeal. — The decision of the
the proposition to reject a national law is Commission on the findings of the sufficiency or
approved by a majority of the votes cast, the said insufficiency of the petition for initiative or
national law shall be deemed repealed and the referendum may be appealed to the Supreme
repeal shall become effective fifteen (15) days Court within thirty (30) days from notice thereof.
following the completion of publication of the
proposition and the certification by the III. — Local Initiative and Referendum
Commission in the Official Gazette or in a
newspaper of general circulation in the SECTION 13. Procedure in Local Initiative. —
Philippines. (a) Not less than two thousand (2,000)
registered voters in case of autonomous
However, if the majority vote is not obtained, the regions, one thousand (1,000) in case of
national law sought to be rejected or amended provinces and cities, one hundred (100) in case
shall remain in full force and effect. of municipalities, and fifty (50) in case of
barangays, may file a petition with the Regional
(b) The proposition in an initiative on the Assembly or local legislative body, respectively,
Constitution approved by a majority of the votes proposing the adoption, enactment, repeal, or
cast in the plebiscite shall become effective as amendment, of any law, ordinance or resolution.
to the day of the plebiscite.
(b) If no favorable action thereon is made by
(c) A national or local initiative proposition local legislative body within (30) days from its
approved by majority of the votes cast in an presentation, the proponents through their duly
election called for the purpose shall become authorized and registered representative may
effective fifteen (15) days after certification and invoke their power of initiative, giving notice
proclamation by the Commission. thereof to the local legislative body concerned.

Section 10. Prohibited Measures. — The (c) The proposition shall be numbered serially
following cannot be the subject of an initiative or starting from one (1). The Secretary of Local
referendum petition: Government or his designated representative
shall extend assistance in the formulation of the
(a) No petition embracing more than one (1) proposition.
subject shall be submitted to the electorate; and
 LEGAL RESEARCH ACJUCO 8

(d) Two or more propositions may be submitted Section 15. Limitations on Local
in an initiative. Initiatives. — (a) The power of local initiative
shall not be exercised more than once a year.
(e) Proponents shall have one hundred twenty
(120) days in case of autonomous regions, (b) Initiative shall extend only to subjects or
ninety (90) days in case of provinces and cities, matters which are within the legal powers of the
sixty (60) days in case of municipalities, and local legislative bodies to enact.
thirty (30) days in case of barangays, from notice
mentioned in subsection (b) hereof to collect the (c) If at any time before the initiative is held, the
required number of signatures. local legislative body shall adopt in toto the
proposition presented, the initiative shall be
(f) The petition shall be signed before the cancelled. However, those against such action
Election Registrar, or his designated may, if they so desire, apply for initiative in the
representative, in the presence of a manner herein provided.
representative of the proponent, and a
representative of the regional assemblies and Section 16. Limitations Upon Local
local legislative bodies concerned in a public Legislative Bodies. — Any proposition or
place in the autonomous region or local ordinance or resolution approved through the
government unit, as the case may be. Signature system of initiative and referendum as herein
stations may be established in as many places provided shall not be repealed, modified or
as may be warranted. amended, by the local legislative body
concerned within six (6) months from the date
(g) Upon the lapse of the period herein provided, therefrom, and may be amended, modified or
the Commission on Elections, through its office repealed by the local legislative body within
in the local government unit concerned shall three (3) years thereafter by a vote of three-
certify as to whether or not the required number fourths (3/4) of all its members: Provided,
of signatures has been obtained. Failure to however, that in case of barangays, the period
obtain the required number is a defeat of the shall be one (1) year after the expiration of the
proposition. first six (6) months.

(h) If the required number of the signatures is Section 17. Local Referendum. —
obtained, the Commission shall then set a date Notwithstanding the provisions of Section 4
for the initiative at which the proposition shall be hereof, any local legislative body may submit to
submitted to the registered voters in the local the registered voters of autonomous region,
government unit concerned for their approval provinces, cities, municipalities and barangays
within ninety (90) days from the date of for the approval or rejection, any ordinance or
certification by the Commission, as provided in resolution duly enacted or approved.
subsection (g) hereof, in case of autonomous
regions, sixty (60) days in case of the provinces Said referendum shall be held under the control
and cities, forty-five (45) days in case of and direction of the Commission within sixty (60)
municipalities, and thirty (30) days in case of days in case of provinces and cities, forty-five
barangays. The initiative shall then be held on (45) days in case of municipalities and thirty (30)
the date set, after which the results thereof shall days in case of barangays.
be certified and proclaimed by the Commission
on Elections. The Commission shall certify and proclaim the
results of the said referendum.
Section 14. Effectivity of Local
Propositions. — If the proposition is approved Section 18. Authority of Courts. — Nothing in
by a majority of the votes cast, it shall take effect this Act shall prevent or preclude the proper
fifteen (15) days after certification by the courts from declaring null and void any
Commission as if affirmative action thereon had proposition approved pursuant to this Act for
been made by the local legislative body and local violation of the Constitution or want of capacity
executive concerned. If it fails to obtain said of the local legislative body to enact the said
number of votes, the proposition is considered measure.
defeated.
 LEGAL RESEARCH ACJUCO 9

IV. — Final Provisions contribute to the formulation and enactment of

appropriate legislation that will benefit the nation
SECTION 19. Applicability of the Omnibus as a whole, to become members of the House of
Election Code. — The Omnibus Election Code Representatives. Towards this end, the State
and other election laws, not inconsistent with the shall develop and guarantee a full, free and open
provisions of this Act, shall apply to all initiatives party system in order to attain the broadcast
and referenda. possible representation of party, sectoral or
group interests in the House of Representatives
Section 20. Rules and Regulations. — The by enhancing their chances to compete for and
Commission is hereby empowered to win seats in the legislature, and shall provide the
promulgate such rules and regulations as may simplest scheme possible.
be necessary to carry out the purposes of this
Act. Section 3. Definition of Terms. (a) The party-list
system is a mechanism of proportional
Section 21. Appropriations. — The amount representation in the election of representatives
necessary to defray the cost of the initial to the House of Representatives from national,
implementation of this Act shall be charged regional and sectoral parties or organizations or
against the Contingent Fund in the General coalitions thereof registered with the
Appropriations Act of the current year. Commission on Elections (COMELEC).
Thereafter, such sums as may be necessary for Component parties or organizations of a
the full implementation of this Act shall be coalition may participate independently provided
included in the annual General Appropriations the coalition of which they form part does not
Act. participate in the party-list system.

Section 22. Separability Clause. — If any part (b) A party means either a political party or a
or provision of this Act is held invalid or sectoral party or a coalition of parties.
unconstitutional, the other parts or provisions
thereof shall remain valid and effective. (c) A political party refers to an organized group
of citizens advocating an ideology or platform,
Section 23. Effectivity. — This Act shall take principles and policies for the general conduct of
effect fifteen (15) days after its publication in a government and which, as the most immediate
newspaper of general circulation. means of securing their adoption, regularly
nominates and supports certain of its leaders
Approved: August 4, 1989 and members as candidates for public office.

REPUBLIC ACT No. 7941 It is a national party when its constituency is

spread over the geographical territory of at least
AN ACT PROVIDING FOR THE ELECTION OF a majority of the regions. It is a regional party
PARTY-LIST REPRESENTATIVES THROUGH when its constituency is spread over the
THE PARTY-LIST SYSTEM, AND geographical territory of at least a majority of the
APPROPRIATING FUNDS THEREFOR cities and provinces comprising the region.

Section 1. Title. This Act shall be known as the (d) A sectoral party refers to an organized group
"Party-List System Act." of citizens belonging to any of the sectors
enumerated in Section 5 hereof whose principal
Section 2. Declaration of part y. The State shall advocacy pertains to the special interest and
promote proportional representation in the concerns of their sector,
election of representatives to the House of
Representatives through a party-list system of (e) A sectoral organization refers to a group of
registered national, regional and sectoral parties citizens or a coalition of groups of citizens who
or organizations or coalitions thereof, which will share similar physical attributes or
enable Filipino citizens belonging to characteristics, employment, interests or
marginalized and under-represented sectors, concerns.
organizations and parties, and who lack well-
defined political constituencies but who could
 LEGAL RESEARCH ACJUCO 10

(f) A coalition refers to an aggrupation of duly (2) It advocates violence or unlawful means to
registered national, regional, sectoral parties or seek its goal;
organizations for political and/or election
purposes. (3) It is a foreign party or organization;

Section 4. Manifestation to Participate in the (4) It is receiving support from any foreign
Party-List System. Any party, organization, or government, foreign political party, foundation,
coalition already registered with the Commission organization, whether directly or through any of
need not register anew. However, such party, its officers or members or indirectly through third
organization, or coalition shall file with the parties for partisan election purposes;
Commission, not later than ninety (90) days
before the election, a manifestation of its desire (5) It violates or fails to comply with laws, rules
to participate in the party-list system. or regulations relating to elections;

Section 5. Registration. Any organized group of (6) It declares untruthful statements in its
persons may register as a party, organization or petition;
coalition for purposes of the party-list system by
filing with the COMELEC not later than ninety (7) It has ceased to exist for at least one (1) year;
(90) days before the election a petition verified or
by its president or secretary stating its desire to
participate in the party-list system as a national, (8) It fails to participate in the last two (2)
regional or sectoral party or organization or a preceding elections or fails to obtain at least two
coalition of such parties or organizations, per centum (2%) of the votes cast under the
attaching thereto its constitution, by-laws, party-list system in the two (2) preceding
platform or program of government, list of elections for the constituency in which it has
officers, coalition agreement and other relevant registered.
information as the COMELEC may require:
Provided, That the sectors shall include labor, Section 7. Certified List of Registered
peasant, fisherfolk, urban poor, indigenous Parties. The COMELEC shall, not later than sixty
cultural communities, elderly, handicapped, (60) days before election, prepare a certified list
women, youth, veterans, overseas workers, and of national, regional, or sectoral parties,
professionals. organizations or coalitions which have applied or
who have manifested their desire to participate
The COMELEC shall publish the petition in at under the party-list system and distribute copies
least two (2) national newspapers of general thereof to all precincts for posting in the polling
circulation. places on election day. The names of the part y-
list nominees shall not be shown on the certified
The COMELEC shall, after due notice and list.
hearing, resolve the petition within fifteen (15)
days from the date it was submitted for decision Section 8. Nomination of Party-List
but in no case not later than sixty (60) days Representatives. Each registered party,
before election. organization or coalition shall submit to the
COMELEC not later than forty-five (45) days
Section 6. Refusal and/or Cancellation of before the election a list of names, not less than
Registration. The COMELEC may, motu propio five (5), from which party-list representatives
or upon verified complaint of any interested shall be chosen in case it obtains the required
party, refuse or cancel, after due notice and number of votes.
hearing, the registration of any national, regional
or sectoral party, organization or coalition on any A person may be nominated in one (1) list only.
of the following grounds: Only persons who have given their consent in
writing may be named in the list. The list shall
(1) It is a religious sect or denomination, not include any candidate for any elective office
organization or association, organized for or a person who has lost his bid for an elective
religious purposes; office in the immediately preceding election. No
change of names or alteration of the order of
 LEGAL RESEARCH ACJUCO 11

nominees shall be allowed after the same shall For purposes of the May 1998 elections, the first
have been submitted to the COMELEC except in five (5) major political parties on the basis of
cases where the nominee dies, or withdraws in party representation in the House of
writing his nomination, becomes incapacitated in Representatives at the start of the Tenth
which case the name of the substitute nominee Congress of the Philippines shall not be entitled
shall be placed last in the list. Incumbent sectoral to participate in the party-list system.
representatives in the House of Representatives
who are nominated in the party-list system shall In determining the allocation of seats for the
not be considered resigned. second vote, the following procedure shall be
observed:
Section 9. Qualifications of Party-List
Nominees. No person shall be nominated as (a) The parties, organizations, and coalitions
party-list representative unless he is a natural- shall be ranked from the highest to the lowest
born citizen of the Philippines, a registered voter, based on the number of votes they garnered
a resident of the Philippines for a period of not during the elections.
less than one (1)year immediately preceding the
day of the election, able to read and write, a (b) The parties, organizations, and coalitions
bona fide member of the party or organization receiving at least two percent (2%) of the total
which he seeks to represent for at least ninety votes cast for the party-list system shall be
(90) days preceding the day of the election, and entitled to one seat each: Provided, That those
is at least twenty-five (25) years of age on the garnering more than two percent (2%) of the
day of the election. votes shall be entitled to additional seats in
proportion to their total number of votes :
In case of a nominee of the youth sector, he Provided, finally, That each party, organization,
must at least be twenty-five (25) but not more or coalition shall be entitled to not more than
than thirty (30) years of age on the day of the three (3) seats.
election. Any youth sectoral representative who
attains the age of thirty (30) during his term shall Section 12. Procedure in Allocating Seats for
be allowed to continue in office until the Party-List Representatives. The COMELEC
expiration of his term. shall tally all the votes for the parties,
organizations, or coalitions on a nationwide
Section 10. Manner of Voting. Every voter shall basis, rank them according to the number of
be entitled to two (2) votes: the first is a vote for votes received and allocate party-list
candidate for member of the House of representatives proportionately according to the
Representatives in his legislative district, and the percentage of votes obtained by each party,
second, a vote for the party, organizations, or organization, or coalition as against the total
coalition he wants represented in the house of nationwide votes cast for the party-list system.
Representatives: Provided, That a vote cast for
a party, sectoral organization, or coalition not Section 13. How Party-List Representatives are
entitled to be voted for shall not be counted: Chosen. Party-list representatives shall be
Provided, finally, That the first election under the proclaimed by the COMELEC based on the list
party-list system shall be held in May 1998. of names submitted by the respective parties,
organizations, or coalitions to the COMELEC
The COMELEC shall undertake the necessary according to their ranking in said list.
information campaign for purposes of educating
the electorate on the matter of the party-list Section 14. Term of Office. Party-list
system. representatives shall be elected for a term of
three (3) years which shall begin, unless
Section 11. Number of Party-List otherwise provided by law, at noon on the
Representatives. The party-list representatives thirtieth day of June next following their election.
shall constitute twenty per centum (20%) of the No party-list representatives shall serve for more
total number of the members of the House of than three (3) consecutive terms. Voluntary
Representatives including those under the party- renunciation of the office for any length of time
list. shall not be considered as an interruption in the
 LEGAL RESEARCH ACJUCO 12

continuity his service for the full term for which Section 22. Effectivity. This Act shall take effect
he was elected. fifteen (15) days after its publication in a
newspaper of general circulation.
Section 15. Change of Affiliation; Effect. Any
elected party-list representative who changes Approved, March 3, 1995.
his political party or sectoral affiliation during his
term of office shall forfeit his seat: Provided, That
if he changes his political party or sectoral
affiliation within six (6) months before an
election, he shall not be eligible for nomination
as party-list representative under his new party
or organization.

Section 16. Vacancy. In case of vacancy in the

seats reserved for party-list representatives, the
vacancy shall be automatically filled by the next
representative from the list of nominees in the
order submitted to the COMELEC by the same
party, organization, or coalition, who shall serve
for the unexpired term. If the list is exhausted,
the party, organization coalition concerned shall
submit additional nominees.

Section 17. Rights of Party-List

Representatives. Party-List Representatives
shall be entitled to the same salaries and
emoluments as regular members of the House
of Representatives.

Section 18. Rules and Regulations. The

COMELEC shall promulgate the necessary rules
and regulations as may be necessary to carry
out the purposes of this Act.

Section 19. Appropriations. The amount

necessary for the implementation of this Act
shall be provided in the regular appropriations
for the Commission on Elections starting fiscal
year 1996 under the General Appropriations Act.

Starting 1995, the COMELEC is hereby

authorized to utilize savings and other available
funds for purposes of its information campaign
on the party-list system.

Section 20. Separability Clause. If any part of

this Act is held invalid or unconstitutional, the
other parts or provisions thereof shall remain
valid and effective.

Section 21. Repealing Clause. All laws,

decrees, executive orders, rules and
regulations, or parts thereof, inconsistent with
the provisions of this Act are hereby repealed.
 LEGAL RESEARCH ACJUCO 13

G.R. No. L-11530 August 12, 1916 greatly multiplied by their reiteration in a
somewhat changed form of statement under the
THE UNITED STATES, plaintiff-appellee, many propositions embraced in the elaborate
vs. printed brief, but their essence, when correctly
JUAN PONS, defendant-appellant. understood, are these: The court erred (a) in
denying this appellant's motion, dated May 6,
Jose Varela y Calderon for appellant. 1915, and reproduced on July 27, 1915, and (b)
Attorney-General Avanceña for appellee. in finding that the legal evidence of record
establishes the guilt of the appellant, Juan Pons,
TRENT, J.: beyond a reasonable doubt.

The information in this case reads: In his motion above mentioned, counsel alleged
and offered to prove that the last day of the
The undersigned charges Gabino Beliso, Juan special session of the Philippine Legislature for
Pons, and Jacinto Lasarte with the crime of 1914 was the 28th day of February; that Act No.
illegal importation of opium, committed as 2381, under which Pons must be punished if
follows: found guilty, was not passed or approved on the
28th of February but on March 1 of that year; and
That on or about the 10th day of April, 1915, the that, therefore, the same is null and void. The
said accused, conspiring together and plotting validity of the Act is not otherwise questioned. As
among themselves, did, knowingly, willfully, it is admitted that the last day of the special
unlawfully, feloniously and fraudulently, bring session was, under the Governor-General's
from a foreign country, to wit, that of Spain, on proclamation, February 28 and that the appellant
board the steamer Lopez y Lopez, and import is charged with having violated the provisions of
and introduce into the city of Manila, Philippine Act No. 2381, the vital question is the date of
Islands, and within the jurisdiction of the court, adjournment of the Legislature, and this reduces
520 tins containing 125 kilograms of opium of the itself to two others, namely, (1) how that is to be
value of P62,400, Philippine currency; and that, proved, whether by the legislative journals or
then and there, the said accused, also extraneous evidence and (2) whether the court
conspiring together and plotting among can take judicial notice of the journals. These
themselves, did receive and conceal the said questions will be considered in the reversed
quantity of opium and aided each other in the order.
transportation, receipt and concealment of the
same after the said opium had been imported, Act No. 1679 provides that the Secretary of the
knowing that said drug had been unlawfully Commission shall perform the duties which
brought, imported and illegally introduced into would properly be required of the Recorder of
the Philippine Islands from a foreign country; an the Commission under the existing law. And
act committed in violation of law." rules 15 and 16 of the Legislative Procedure of
the Philippine Commission provides, among
On motion of counsel Juan Pons and Gabino other things, "that the proceedings of the
Beliso were tried separately. (Jacinto Lasarte Commission shall be briefly and accurately
had not yet been arrested.) Each were found stated on the journal," and that it shall be the
guilty of the crime charged and sentenced duty of the Secretary "to keep a correct journal
accordingly, the former to be confined in Bilibid of the proceedings of the Commission." On page
Prison for the period of two years, to pay a fine 793 of volume 7 of the Commission Journal for
of P1,000, to suffer the corresponding subsidiary the ordinary and special sessions of the Third
imprisonment in case of insolvency, and to the Philippine Legislature, the following appears:
payment of one-half of the costs. The same
penalties were imposed upon the latter, except The Journal for Saturday, February 28, 1914,
that he was sentenced to pay a fine of P3,000. was approved. Adjournment sine die of the
Both appealed. Beliso later withdrew his appeal Commission as a Chamber of the Philippine
and the judgment as to him has become final. Legislature. The hour of midnight having arrived,
on motion of Commissioner Palma, the
The contentions for reversal are numerous Commission, as a Chamber of the Philippine
(twenty-five assignments of error) and are Legislature, adjourned sine die.
 LEGAL RESEARCH ACJUCO 14

The Act of Congress, approved July 1, 1902, 1914. These journals are not ambiguous or
provides, among other things, in section 7, that contradictory as to the actual time of the
the Philippine Assembly "shall keep in journal of adjournment. They show, with absolute
its proceedings, which shall be published . . . ." certainty, that the Legislature adjourned sine die
In obedience to this mandate, the journal of the at 12 o'clock midnight on February 28, 1914.
Assembly's proceedings for the sessions of
1914 was duly published and it appears therein Passing over the question whether the printed
(vol. 9, p. 1029), that the Assembly Act (No. 2381), published by authority of law, is
adjourned sine die at 12 o'clock midnight on conclusive evidence as to the date when it was
February 28, 1914. passed, we will inquire whether the courts may
go behind the legislative journals for the purpose
Section 275 of the Code of Civil Procedure of determining the date of adjournment when
provides that the existence of the "official acts of such journals are clear and explicit. From the
the legislative, executive, and judicial foregoing it is clear that this investigation
departments of the United States and of the belongs entirely to that branch of legal science
Philippine Islands ... shall be judicially which embraces and illustrates the laws of
recognized by the court without the introduction evidence. On the one hand, it is maintained that
of proof; but the court may receive evidence the Legislature did not, as we have indicated,
upon any of the subjects in this section states, adjourn at midnight on February 28, 1914, but on
when it shall find it necessary for its own March 1st, and that this allegation or alleged fact
information, and may resort for its aid to may be established by extraneous evidence;
appropriate books, documents, or evidence." while, on the other hand, it is urged that the
And section 313 [as amended by sec. 1 of Act contents of the legislative journals are
No. 2210], of the same Code also provides that: conclusive evidence as to the date of
adjournment. In order to understand these
Official documents may be proved as follows: . . opposing positions, it is necessary to consider
.. the nature and character of the evidence thus
involved. Evidence is understood to be that
(2) The proceedings of the Philippine which proves or disproves "any matter in
Commission, or of any legislative body that may question or to influence the belief respecting it,"
be provided for the Philippine Islands, or of and "conclusive evidence is that which
Congress, by the journals of those bodies or of establishes the fact, as in the instance of
either house thereof, or by published statutes or conclusive presumptions." (Bouvier's Law
resolutions, or by copies certified by the clerk or Dictionary, vol. 1, p. 701 et seq.) Counsel for the
secretary or printed by their order: Provided, appellant, in order to establish his contention,
That in the case of Acts of the Philippine must necessarily depend upon the memory or
Commission or the Philippine Legislature when recollection of witnesses, while the legislative
there is in existence a copy signed by the journals are the acts of the Government or
presiding officers and the secretaries of said sovereign itself. From their very nature and
bodies, it shall be conclusive proof of the object the records of the Legislature are as
provisions of such Act and of the due enactment important as those of the judiciary, and to inquiry
thereof. into the veracity of the journals of the Philippine
Legislature, when they are, as we have said,
While there are no adjudicated cases in this clear and explicit, would be to violate both the
jurisdiction upon the exact question whether the letter and the spirit of the organic laws by which
courts may take judicial notice of the legislative the Philippine Government was brought into
journals, it is well settled in the United States that existence, to invade a coordinate and
such journals may be noticed by the courts in independent department of the Government,
determining the question whether a particular bill and to interfere with the legitimate powers and
became a law or not. (The State ex rel. Herron functions of the Legislature. But counsel in his
vs. Smith, 44 Ohio, 348, and cases cited argument says that the public knows that the
therein.) The result is that the law and the Assembly's clock was stopped on February 28,
adjudicated cases make it our duty to take 1914, at midnight and left so until the
judicial notice of the legislative journals of the determination of the discussion of all pending
special session of the Philippine Legislature of matters. Or, in other words, the hands of the
clock were stayed in order to enable the
 LEGAL RESEARCH ACJUCO 15

Assembly to effect an adjournment apparently point. As the Constitution of the Philippine

within the time fixed by the Governor's Government is modeled after those of the
proclamation for the expiration of the special Federal Government and the various states, we
session, in direct violation of the Act of Congress do not hesitate to follow the courts in that country
of July 1, 1902. If the clock was, in fact, stopped, in the matter now before us. The journals say
as here suggested, "the resultant evil might be that the Legislature adjourned at 12 midnight on
slight as compared with that of altering the February 28, 1914. This settles the question,
probative force and character of legislative and the court did not err in declining to go behind
records, and making the proof of legislative these journals.
action depend upon uncertain oral evidence,
liable to loss by death or absence, and so On or about the 5th or 6th of April, 1915, the
imperfect on account of the treachery of Spanish mail steamer Lopez y Lopez arrived at
memory. Long, long centuries ago, these Manila from Spain, bringing, among other cargo,
considerations of public policy led to the twenty-five barrels which were manifested as
adoption of the rule giving verity and "wine" and consigned to Jacinto Lasarte. Gabino
unimpeachability to legislative records. If that Beliso had been, prior to the arrival of this cargo,
character is to be taken away for one purpose, it engaged in the business of a wine merchant,
must be taken away for all, and the evidence of with an office and warehouse located at 203
the laws of the state must rest upon a foundation Calle San Anton in this city. The shipper's
less certain and durable than that afforded by the invoice and bill of lading for the twenty-five
law to many contracts between private barrels were delivered to Gregorio Cansipit, a
individuals concerning comparatively trifling customs broker, by Beliso. These documents
matters." (Capito vs. Topping, W. Va., 22 L. R. were indorsed as follows: "Deliver to Don
A. [N. S.], 1089.) Upon the same point the court, Gabino Beliso" and signed "Jacinto Lasarte."
in the State ex rel. Herron vs. Smith (44 Ohio, Cansipit conducted the negotiations incident to
348), decided in 1886, said: the release of the merchandise from the
customhouse and the twenty-five barrels were
Counsel have exhibited unusual industry in delivered in due course to the warehouse of
looking up the various cases upon this question; Beliso at the aforementioned street and number.
and, out of a multitude of citations, not one is Beliso signed the paper acknowledging delivery.
found in which any court has assumed to go Shortly thereafter the custom authorities, having
beyond the proceedings of the legislature, as noticed that shipments of merchandise
recorded in the journals required to be kept in manifested as "wine" had been arriving in Manila
each of its branches, on the question whether a from Spain, consigned to persons whose names
law has been adopted. And if reasons for the were not listed as merchants, and having some
limitation upon judicial inquiry in such matters doubt as to the nature of the merchandise so
have not generally been stated, in doubtless consigned, instituted an investigation and traced
arises from the fact that they are apparent. on the 10th of April, 1915, the twenty-five barrels
Imperative reasons of public policy require that to Beliso's warehouse, being aided by the
the authenticity of laws should rest upon public customs registry number of the shipment, the
memorials of the most permanent character. entry number, and the serial number of each
They should be public, because all are required barrel. It was found that the twenty-five barrels
to conform to them; they should be permanent, began to arrive on bull carts at Beliso's
that right acquired to-day upon the faith of what warehouse about 11 o'clock on the morning of
has been declared to be law shall not be April 9. Before the merchandise arrived at that
destroyed to-morrow, or at some remote period place, the appellant, Juan Pons, went to Beliso's
of time, by facts resting only in the memory of warehouse and joined Beliso in the latter's office,
individuals. where the two engaged in conversation. Pons
then left and shortly thereafter several of the
In the case from which this last quotation is barrels arrived and were unloaded in Beliso's
taken, the court cited numerous decisions of the bodega. He called one of his employees,
various states in the American Union in support Cornelius Sese, and directed him to go out and
of the rule therein laid down, and we have been get a bull cart. This Sese did and returned with
unable to find a single case of a later date where the vehicle. Beliso then carefully selected five
the rule has been in the least changed or barrels out of the shipment of twenty-five and
modified when the legislative journals cover the told Sese to load these five on the cart and to
 LEGAL RESEARCH ACJUCO 16

deliver them to Juan Pons at No. 144 Calle While the customs officers were still at the office
General Solano. This order was complied with and warehouse of Beliso on the morning of April
by Sese and the barrels delivered to Pons at the 10, Pons, apparently unaware that anything
place designated. Pursuing their investigation, unusual was going on, arrived there and was
which started on the 10th, the customs secret placed under arrest, and taken to the office of
service agents entered Beliso's bodega on that Captain Hawkins, chief of the customs secret
date before the office was opened and awaited service, and according to Hawkins, voluntarily
the arrival of Beliso. Sese was found in the confessed his participation in the smuggling of
bodega and placed under arrest. The agents the opium. He maintained, however, that the 77
then proceeded to separate the recent shipment tins of opium found at 144 Calle General Solano
from the other merchandise stored in the represented the entire importation. Pons, being
warehouse, identifying the barrels by the at the customhouse under arrest at the time the
customs registry and entry numbers. Only three barrels were opened and the customs
twenty of the twenty-five barrels could be found officers appearing to be no doubt as to which
on Beliso's premises. Upon being questioned or end of the barrels contained the opium, Pons
interrogated, Sese informed the customs agents showed the officers how to open the barrels and
that the five missing barrels had been delivered pointed out that the end of the barrel, which had
by him to Pons at 144 Calle General Solano by the impression of a bottle stamped in the wood,
order of Beliso. The agents, accompanied by contained the opium. On seeing the 195 tins of
Sese, proceeded to 144 Calle General Solano opium taken from the three barrels, Pons further
and here found the five missing barrels, which stated that he had delivered some 250 tins of
were identified by the registry and entry numbers opium of this shipment to a Chinaman at 7.30 a.
as well as by the serial numbers. The five barrels m. on the morning of April 10, following the
were empty, the staves having been sprung and instructions given him by Beliso. On being
the iron hoops removed. Five empty tins, each further questioned, Pons stated that he and
corresponding in size to the heads of the five Beliso had been partners in several opium
barrels, were found on the floor nearby. The transactions; that the house at No. 144 Calle
customs officers noticed several baskets of lime General Solano had been leased by him at the
scattered about the basement of the house and suggestion of Beliso for the purpose of handling
on further search they found 77 tins of opium in the prohibited drug; and that he and Beliso had
one of these baskets. There was no one in the shared the profits of a previous importation of
house when this search was made, but some opium. Sese testified that he had delivered a
clothing was discovered which bore the initials previous shipment to 144 Calle General Solano.
"J. P." It then became important to the customs The customs agents then went with Pons to his
agents to ascertain the owner and occupant of house and found in his yard several large tin
house No. 144 on Calle General Solano where receptacles, in every way similar to those found
the five barrels were delivered. The owner was at 144 Calle General Solano and those taken
found, upon investigation, to be Mariano Limjap, from the barrels at the customhouse. At first
and from the latter's agent it was learned that the Pons stated that F. C. Garcia was a tobacco
house was rented by one F. C. Garcia. When the merchant traveling in the between the Provinces
lease of the house was produced by the agent of of Isabela and Cagayan, and later he retracted
the owner, the agents saw that the same was this statement and admitted that Garcia was a
signed "F. C. Garcia, by Juan Pons." After fictitious person. But during the trial of this case
discovering these facts they returned to the in the court below Pons testified that Garcia was
house of Beliso and selected three of the twenty a wine merchant and a resident of Spain, and
barrels and ordered them returned to the that Garcia had written him a letter directing him
customhouse. Upon opening these three barrels to rent a house for him (Garcia) and retain it until
each was found to contain a large tin fitted into the arrival in the Philippine Islands of Garcia.
the head of the barrel with wooden cleats and According to Pons this letter arrived on the same
securely nailed. Each large tin contained 75 steamer which brought the 25 barrels of "wine,"
small tins of opium. A comparison of the large but that he had destroyed it because he feared
tins taken out of the three barrels with the empty that it would compromise him. On being asked
ones found at 144 Calle General Solano show, during the trial why he insisted, in purchasing
says the trial court, "that they were in every way wine from Beliso, in receiving a part of the wine
identical in size, form, etc." which had just arrived on the Lopez y Lopez,
answered, "Naturally because F. C. Garcia told
 LEGAL RESEARCH ACJUCO 17

me in this letter that this opium was coming in

barrels of wine sent to Beliso by a man the name
of Jacinto Lasarte, and that is the reason I
wanted to get these barrels of wine."

The foregoing are substantially the fats found by

the trial court and these fats establish the guilt of
the appellant beyond any question of a doubt,
notwithstanding his feeble attempt to show that
the opium as shipped to him from Spain by a
childhood fried named Garcia. The appellant
took a direct part in this huge smuggling
transaction and profited thereby. The penalty
imposed by the trial court is in accordance with
la and the decisions of this court in similar cases.

For the foregoing reasons, the judgment

appealed from is affirmed, with costs. So
ordered.
 LEGAL RESEARCH ACJUCO 18

G.R. No. L-17931 February 28, 1963 refund of said amounts, the Auditor of the Bank
refused to pass in audit and approve said
CASCO PHILIPPINE CHEMICAL CO., vouchers, upon the ground that the exemption
INC., petitioner, granted by the Monetary Board for petitioner's
vs. separate importations of urea and formaldehyde
HON. PEDRO GIMENEZ, in his capacity as is not in accord with the provisions of section 2,
Auditor General of the Philippines, paragraph XVIII of Republic Act No. 2609. On
and HON. ISMAEL MATHAY, in his capacity appeal taken by petitioner, the Auditor General
as Auditor of the Central Bank, respondents. subsequently affirmed said action of the Auditor
of the Bank. Hence, this petition for review.
Jalandoni & Jamir for petitioner.
Officer of the Solicitor General for respondents. The only question for determination in this case
is whether or not "urea" and "formaldehyde" are
CONCEPCION, J.: exempt by law from the payment of the aforesaid
margin fee. The pertinent portion of Section 2 of
This is a petition for review of a decision of the Republic Act No. 2609 reads:
Auditor General denying a claim for refund of
petitioner Casco Philippine Chemical Co., Inc. The margin established by the Monetary Board
pursuant to the provision of section one hereof
The main facts are not disputed. Pursuant to the shall not be imposed upon the sale of foreign
provisions of Republic Act No. 2609, otherwise exchange for the importation of the following:.
known as the Foreign Exchange Margin Fee
Law, the Central Bank of the Philippines issued xxx xxx xxx
on July 1, 1959, its Circular No. 95. fixing a
uniform margin fee of 25% on foreign exchange XVIII. Urea formaldehyde for the manufacture of
transactions. To supplement the circular, the plywood and hardboard when imported by and
Bank later promulgated a memorandum for the exclusive use of end-users.
establishing the procedure for applications for
exemption from the payment of said fee, as Wherefore, the parties respectfully pray that the
provided in said Republic Act No. 2609. Several foregoing stipulation of facts be admitted and
times in November and December 1959, approved by this Honorable Court, without
petitioner Casco Philippine Chemical Co., Inc. — prejudice to the parties adducing other evidence
which is engaged in the manufacture of synthetic to prove their case not covered by this stipulation
resin glues, used in bonding lumber and veneer of facts. 1äwphï1.ñët
by plywood and hardwood producers — bought
foreign exchange for the importation of urea and Petitioner maintains that the term "urea
formaldehyde — which are the main raw formaldehyde" appearing in this provision
materials in the production of said glues — and should be construed as "urea andformaldehyde"
paid therefor the aforementioned margin fee (emphasis supplied) and that respondents
aggregating P33,765.42. In May, 1960, herein, the Auditor General and the Auditor of
petitioner made another purchase of foreign the Central Bank, have erred in holding
exchange and paid the sum of P6,345.72 as otherwise. In this connection, it should be noted
margin fee therefor. that, whereas "urea" and "formaldehyde" are the
principal raw materials in the manufacture of
Prior thereto, petitioner had sought the refund of synthetic resin glues, the National Institute of
the first sum of P33,765.42, relying upon Science and Technology has expressed,
Resolution No. 1529 of the Monetary Board of through its Commissioner, the view that:
said Bank, dated November 3, 1959, declaring
that the separate importation of urea and Urea formaldehyde is not a chemical solution. It
formaldehyde is exempt from said fee. Soon is the synthetic resin formed as a condensation
after the last importation of these products, product from definite proportions of urea and
petitioner made a similar request for refund of formaldehyde under certain conditions relating
the sum of P6,345.72 paid as margin fee to temperature, acidity, and time of reaction.
therefor. Although the Central Bank issued the This produce when applied in water solution and
corresponding margin fee vouchers for the extended with inexpensive fillers constitutes a
 LEGAL RESEARCH ACJUCO 19

fairly low cost adhesive for use in the

manufacture of plywood.

Hence, "urea formaldehyde" is clearly a finished

product, which is patently distinct and different
from urea" and "formaldehyde", as separate
articles used in the manufacture of the synthetic
resin known as "urea formaldehyde". Petitioner
contends, however, that the bill approved in
Congress contained the copulative conjunction
"and" between the terms "urea" and
"formaldehyde", and that the members of
Congress intended to exempt "urea" and
"formaldehyde" separately as essential
elements in the manufacture of the synthetic
resin glue called "urea" formaldehyde", not the
latter as a finished product, citing in support of
this view the statements made on the floor of the
Senate, during the consideration of the bill
before said House, by members thereof. But,
said individual statements do not necessarily
reflect the view of the Senate. Much less do they
indicate the intent of the House of
Representatives (see Song Kiat Chocolate
Factory vs. Central Bank, 54 Off. Gaz., 615;
Mayon Motors Inc. vs. Acting Commissioner of
Internal Revenue, L-15000 [March 29, 1961];
Manila Jockey Club, Inc. vs. Games &
Amusement Board, L-12727 [February 29,
1960]). Furthermore, it is well settled that the
enrolled bill — which uses the term "urea
formaldehyde" instead of "urea and
formaldehyde" — is conclusive upon the courts
as regards the tenor of the measure passed by
Congress and approved by the President
(Primicias vs. Paredes, 61 Phil. 118, 120;
Mabanag vs. Lopez Vito, 78 Phil. 1; Macias vs.
Comm. on Elections, L-18684, September 14,
1961). If there has been any mistake in the
printing ofthe bill before it was certified by the
officers of Congress and approved by the
Executive — on which we cannot speculate,
without jeopardizing the principle of separation
of powers and undermining one of the
cornerstones of our democratic system — the
remedy is by amendment or curative legislation,
not by judicial decree.

WHEREFORE, the decision appealed from is

hereby affirmed, with costs against the
petitioner. It is so ordered.
 LEGAL RESEARCH ACJUCO 20

G.R. No. L-23475 April 30, 1974 Numbered Four Hundred Nine, as Amended,
Otherwise Known as the Revised Charter of the
HERMINIO A. ASTORGA, in his capacity as City of Manila."
Vice-Mayor of Manila, petitioner,
vs. The facts as set forth in the pleadings appear
ANTONIO J. VILLEGAS, in his capacity as undisputed:
Mayor of Manila, THE HON., THE EXECUTIVE
SECRETARY, ABELARDO SUBIDO, in his On March 30, 1964 House Bill No. 9266, a bill of
capacity as Commissioner of Civil Service, local application, was filed in the House of
EDUARDO QUINTOS, in his capacity as Chief Representatives. It was there passed on third
of Police of Manila, MANUEL CUDIAMAT, in reading without amendments on April 21, 1964.
his capacity as City Treasurer of Manila, CITY Forthwith the bill was sent to the Senate for its
OF MANILA, JOSE SEMBRANO, FRANCISCO concurrence. It was referred to the Senate
GATMAITAN, MARTIN ISIDRO, CESAR Committee on Provinces and Municipal
LUCERO, PADERES TINOCO, LEONARDO Governments and Cities headed by Senator
FUGOSO, FRANCIS YUSECO, APOLONIO Gerardo M. Roxas. The committee favorably
GENER, AMBROCIO LORENZO, JR., recommended approval with a minor
ALFONSO MENDOZA, JR., SERGIO amendment, suggested by Senator Roxas, that
LOYOLA, GERINO TOLENTINO, MARIANO instead of the City Engineer it be the President
MAGSALIN, EDUARDO QUINTOS, JR., Protempore of the Municipal Board who should
AVELINO VILLACORTA, PABLO OCAMPO, succeed the Vice-Mayor in case of the latter's
FELICISIMO CABIGAO, JOSE BRILLANTES, incapacity to act as Mayor.
JOSE VILLANUEVA and MARINA
FRANCISCO, in their capacities as members When the bill was discussed on the floor of the
of the Municipal Board, respondents. Senate on second reading on May 20, 1964,
substantial amendments to Section 11 were
Artemio V. Panganiban and Renito V. Saguisag introduced by Senator Arturo Tolentino. Those
and Crispin D. Baizas and Associates for amendments were approved in toto by the
petitioner. Senate. The amendment recommended by
Senator Roxas does not appear in the journal of
Paredes Poblador, Cruz and Nazareno and the Senate proceedings as having been acted
Antonio Barredo for respondent Mayor of upon.
Manila.
On May 21, 1964 the Secretary of the Senate
Romeo L. Kahayon for respondents City sent a letter to the House of Representatives that
Treasurer of Manila, etc., et al. House Bill No. 9266 had been passed by the
Senate on May 20, 1964 "with amendments."
Office of the Solicitor General Arturo A. Alafriz, Attached to the letter was a certification of the
Assistant Solicitor General Pacifico P. de amendment, which was the one recommended
Castro, Solicitor Jorge R. Coquia and Solicitor by Senator Roxas and not the Tolentino
Ricardo L. Pronove, Jr. for respondents The amendments which were the ones actually
Executive Secretary and Commissioner of Civil approved by the Senate. The House of
Service. Representatives thereafter signified its approval
of House Bill No. 9266 as sent back to it, and
Fortunato de Leon and Antonio V. Raquiza as copies thereof were caused to be printed. The
amici curiae. printed copies were then certified and attested
by the Secretary of the House of
MAKALINTAL, C.J.:p Representatives, the Speaker of the House of
Representatives, the Secretary of the Senate
The present controversy revolves around the and the Senate President. On June 16, 1964 the
passage of House Bill No. 9266, which became Secretary of the House transmitted four printed
Republic Act 4065, "An Act Defining the Powers, copies of the bill to the President of the
Rights and Duties of the Vice-Mayor of the City Philippines, who affixed his signatures thereto
of Manila, Further Amending for the Purpose by way of approval on June 18, 1964. The bill
Sections Ten and Eleven of Republic Act thereupon became Republic Act No. 4065.
 LEGAL RESEARCH ACJUCO 21

The furor over the Act which ensued as a result Injunction" to compel respondents Mayor of
of the public denunciation mounted by Manila, the Executive Secretary, the
respondent City Mayor drew immediate reaction Commissioner of Civil Service, the Manila Chief
from Senator Tolentino, who on July 5, 1964 of Police, the Manila City Treasurer and the
issued a press statement that the enrolled copy members of the municipal board to comply with
of House Bill No. 9266 signed into law by the the provisions of Republic Act 4065.
President of the Philippines was a wrong version
of the bill actually passed by the Senate because Respondents' position is that the so-called
it did not embody the amendments introduced by Republic Act 4065 never became law since it
him and approved on the Senate floor. As a was not the bill actually passed by the Senate,
consequence the Senate President, through the and that the entries in the journal of that body
Secretary of the Senate, addressed a letter and not the enrolled bill itself should be decisive
dated July 11, 1964 to the President of the in the resolution of the issue.
Philippines, explaining that the enrolled copy of
House Bill No. 9266 signed by the secretaries of On April 28, 1965, upon motion of respondent
both Houses as well as by the presiding officers Mayor, who was then going abroad on an official
thereof was not the bill duly approved by trip, this Court issued a restraining order, without
Congress and that he considered his signature bond, "enjoining the petitioner Vice-Mayor
on the enrolled bill as invalid and of no effect. A Herminio Astorga from exercising any of the
subsequent letter dated July 21, 1964 made the powers of an Acting Mayor purportedly
further clarification that the invalidation by the conferred upon the Vice-Mayor of Manila under
Senate President of his signature meant that the the so-called Republic Act 4065 and not
bill on which his signature appeared had never otherwise conferred upon said Vice-Mayor
been approved by the Senate and therefore the under any other law until further orders from this
fact that he and the Senate Secretary had signed Court."
it did not make the bill a valid enactment.
The original petitioner, Herminio A. Astorga, has
On July 31, 1964 the President of the Philippines since been succeeded by others as Vice-Mayor
sent a message to the presiding officers of both of Manila. Attorneys Fortunato de Leon and
Houses of Congress informing them that in view Antonio Raquiza, with previous leave of this
of the circumstances he was officially Court, appeared as amici curiae, and have filed
withdrawing his signature on House Bill No. extensive and highly enlightening memoranda
9266 (which had been returned to the Senate the on the issues raised by the parties.
previous July 3), adding that "it would be
untenable and against public policy to convert Lengthy arguments, supported by copious
into law what was not actually approved by the citations of authorities, principally decisions of
two Houses of Congress." United States Federal and State Courts, have
been submitted on the question of whether the
Upon the foregoing facts the Mayor of Manila, "enrolled bill" doctrine or the "journal entry" rule
Antonio Villegas, issued circulars to the should be adhered to in this jurisdiction. A similar
department heads and chiefs of offices of the city question came up before this Court and elicited
government as well as to the owners, operators differing opinions in the case of Mabanag, et al.
and/or managers of business establishments in vs. Lopez Vito, et al. (March 5, 1947), 78 Phil.
Manila to disregard the provisions of Republic Reports 1. While the majority of the Court in that
Act 4065. He likewise issued an order to the case applied the "enrolled bill" doctrine, it cannot
Chief of Police to recall five members of the city be truly said that the question has been laid to
police force who had been assigned to the Vice- rest and that the decision therein constitutes a
Mayor presumably under authority of Republic binding precedent.
Act 4065.
The issue in that case was whether or not a
Reacting to these steps taken by Mayor Villegas, resolution of both Houses of Congress
the then Vice-Mayor, Herminio A. Astorga, filed proposing an amendment to the (1935)
a petition with this Court on September 7, 1964 Constitution to be appended as an ordinance
for "Mandamus, Injunction and/or Prohibition thereto (the so-called parity rights provision) had
with Preliminary Mandatory and Prohibitory been passed by "a vote of three-fourths of all the
 LEGAL RESEARCH ACJUCO 22

members of the Senate and of the House of approval or rejection.4 The function of an
Representatives" pursuant to Article XV of the attestation is therefore not of approval, because
Constitution. a bill is considered approved after it has passed
both Houses. Even where such attestation is
The main opinion, delivered by Justice Pedro provided for in the Constitution authorities are
Tuason and concurred in by Justices Manuel V. divided as to whether or not the signatures are
Moran, Guillermo F. Pablo and Jose M. mandatory such that their absence would render
Hontiveros, held that the case involved a political the statute invalid.5 The affirmative view, it is
question which was not within the province of the pointed out, would be in effect giving the
judiciary in view of the principle of separation of presiding officers the power of veto, which in
powers in our government. The "enrolled bill" itself is a strong argument to the contrary6 There
theory was relied upon merely to bolster the is less reason to make the attestation a requisite
ruling on the jurisdictional question, the for the validity of a bill where the Constitution
reasoning being that "if a political question does not even provide that the presiding officers
conclusively binds the judges out of respect to should sign the bill before it is submitted to the
the political departments, a duly certified law or President.
resolution also binds the judges under the
"enrolled bill rule" born of that respect." In one case in the United States, where the
(State)Constitution required the presiding
Justice Cesar Bengzon wrote a separate officers to sign a bill and this provision was
opinion, concurred in by Justice Sabino Padilla, deemed mandatory, the duly authenticated
holding that the Court had jurisdiction to resolve enrolled bill was considered as conclusive proof
the question presented, and affirming of its due enactment.7 Another case however,
categorically that "the enrolled copy of the under the same circumstances, held that the
resolution and the legislative journals are enrolled bill was not conclusive evidence.8 But in
conclusive upon us," specifically in view of the case of Field vs. Clark,9 the U.S. Supreme
Section 313 of Act 190, as amended by Act No. Court held that the signatures of the presiding
2210. This provision in the Rules of Evidence in officers on a bill, although not required by the
the old Code of Civil Procedure appears indeed Constitution, is conclusive evidence of its
to be the only statutory basis on which the passage. The authorities in the United States
"enrolled bill" theory rests. It reads: are thus not unanimous on this point.

The proceedings of the Philippine Commission, The rationale of the enrolled bill theory is set
or of any legislative body that may be provided forth in the said case of Field vs. Clark as
for in the Philippine Islands, or of Congress (may follows:
be proved) by the journals of those bodies or of
either house thereof, or by published statutes or The signing by the Speaker of the House of
resolutions, or by copies certified by the clerk or Representatives, and, by the President of the
secretary, printed by their order; provided, that in Senate, in open session, of an enrolled bill, is an
the case of acts of the Philippine Commission or official attestation by the two houses of such bill
the Philippine Legislature, when there is in as one that has passed Congress. It is a
existence a copy signed by the presiding officers declaration by the two houses, through their
and secretaries of said bodies, it shall presiding officers, to the President, that a bill,
be conclusive proof of the provisions of such thus attested, has received, in due form, the
acts and of the due enactment thereof. sanction of the legislative branch of the
government, and that it is delivered to him in
Congress devised its own system of obedience to the constitutional requirement that
authenticating bills duly approved by both all bills which pass Congress shall be presented
Houses, namely, by the signatures of their to him. And when a bill, thus attested, receives
respective presiding officers and secretaries on his approval, and is deposited in the public
the printed copy of the approved bill.2 It has been archives, its authentication as a bill that has
held that this procedure is merely a mode of passed Congress should be deemed complete
authentication,3 to signify to the Chief Executive and unimpeachable. As the President has no
that the bill being presented to him has been duly authority to approve a bill not passed by
approved by Congress and is ready for his Congress, an enrolled Act in the custody of the
 LEGAL RESEARCH ACJUCO 23

Secretary of State, and having the official amendment thereof shall be allowed, and the
attestations of the Speaker of the House of question upon its passage shall be taken
Representatives, of the President of the Senate, immediately thereafter, and
and of the President of the United States, the yeas and nays entered on the Journal."
carries, on its face, a solemn assurance by the
legislative and executive departments of the Petitioner's argument that the attestation of the
government, charged, respectively, with the duty presiding officers of Congress is conclusive
of enacting and executing the laws, that it was proof of a bill's due enactment, required, it is
passed by Congress. The respect due to said, by the respect due to a co-equal
coequal and independent departments requires department of the government, 11 is neutralized
the judicial department to act upon that in this case by the fact that the Senate President
assurance, and to accept, as having passed declared his signature on the bill to be invalid
Congress, all bills authenticated in the manner and issued a subsequent clarification that the
stated; leaving the courts to determine, when the invalidation of his signature meant that the bill he
question properly arises, whether the Act, so had signed had never been approved by the
authenticated, is in conformity with the Senate. Obviously this declaration should be
Constitution. accorded even greater respect than the
attestation it invalidated, which it did for a reason
It may be noted that the enrolled bill theory is that is undisputed in fact and indisputable in
based mainly on "the respect due to coequal and logic.
independent departments," which requires the
judicial department "to accept, as having passed As far as Congress itself is concerned, there is
Congress, all bills authenticated in the manner nothing sacrosanct in the certification made by
stated." Thus it has also been stated in other the presiding officers. It is merely a mode of
cases that if the attestation is absent and the authentication. The lawmaking process in
same is not required for the validity of a statute, Congress ends when the bill is approved by both
the courts may resort to the journals and other Houses, and the certification does not add to the
records of Congress for proof of its due validity of the bill or cure any defect already
enactment. This was the logical conclusion present upon its passage. In other words it is the
reached in a number of decisions, 10 although approval by Congress and not the signatures of
they are silent as to whether the journals may the presiding officers that is essential. Thus the
still be resorted to if the attestation of the (1935) Constitution says that "[e] very bill passed
presiding officers is present. by the Congress shall, before it becomes law, be
presented to the President. 12 In Brown vs.
The (1935) Constitution is silent as to what shall Morris, supra, the Supreme Court of Missouri,
constitute proof of due enactment of a bill. It interpreting a similar provision in the State
does not require the presiding officers to certify Constitution, said that the same "makes it clear
to the same. But the said Constitution does that the indispensable step is the final passage
contain the following provisions: and it follows that if a bill, otherwise fully enacted
as a law, is not attested by the presiding officer,
Sec. 10 (4). "Each House shall keep a Journal of of the proof that it has "passed both houses" will
its proceedings, and from time to time publish satisfy the constitutional requirement."
the same, excepting such parts as may in its
judgment require secrecy; and the yeas and Petitioner agrees that the attestation in the bill is
nays on any question shall, at the request of not mandatory but argues that the disclaimer
one-fifth of the Members present, be entered in thereof by the Senate President, granting it to
the Journal." have been validly made, would only mean that
there was no attestation at all, but would not
Sec. 21 (2). "No bill shall be passed by either affect the validity of the statute. Hence, it is
House unless it shall have been printed and pointed out, Republic Act No. 4065 would
copies thereof in its final form furnished its remain valid and binding. This argument begs
Members at least three calendar days prior to its the issue. It would limit the court's inquiry to the
passage, except when the President shall have presence or absence of the attestation and to the
certified to the necessity of its immediate effect of its absence upon the validity of the
enactment. Upon the last reading of a bill no statute. The inquiry, however, goes farther.
 LEGAL RESEARCH ACJUCO 24

Absent such attestation as a result of the

disclaimer, and consequently there being no
enrolled bill to speak of, what evidence is there
to determine whether or not the bill had been
duly enacted? In such a case the entries in the
journal should be consulted.

The journal of the proceedings of each House of

Congress is no ordinary record. The Constitution
requires it. While it is true that the journal is not
authenticated and is subject to the risks of
misprinting and other errors, the point is
irrelevant in this case. This Court is merely
asked to inquire whether the text of House Bill
No. 9266 signed by the Chief Executive was the
same text passed by both Houses of Congress.
Under the specific facts and circumstances of
this case, this Court can do this and resort to the
Senate journal for the purpose. The journal
discloses that substantial and lengthy
amendments were introduced on the floor and
approved by the Senate but were not
incorporated in the printed text sent to the
President and signed by him. This Court is not
asked to incorporate such amendments into the
alleged law, which admittedly is a risky
undertaking, 13 but to declare that the bill was not
duly enacted and therefore did not become law.
This We do, as indeed both the President of the
Senate and the Chief Executive did, when they
withdrew their signatures therein. In the face of
the manifest error committed and subsequently
rectified by the President of the Senate and by
the Chief Executive, for this Court to perpetuate
that error by disregarding such rectification and
holding that the erroneous bill has become law
would be to sacrifice truth to fiction and bring
about mischievous consequences not intended
by the law-making body.

In view of the foregoing considerations, the

petition is denied and the so-called Republic Act
No. 4065 entitled "AN ACT DEFINING THE
POWERS, RIGHTS AND DUTIES OF THE
VICE-MAYOR OF THE CITY OF MANILA,
FURTHER AMENDING FOR THE PURPOSE
SECTIONS TEN AND ELEVEN OF REPUBLIC
ACT NUMBERED FOUR HUNDRED NINE, AS
AMENDED, OTHERWISE KNOWN AS THE
REVISED CHARTER OF THE CITY OF
MANILA" is declared not to have been duly
enacted and therefore did not become law. The
temporary restraining order dated April 28, 1965
is hereby made permanent. No pronouncement
as to costs.
 LEGAL RESEARCH ACJUCO 25

G.R. No. L-16197 March 12, 1920 limited in its application to agricultural lands of
the public domain, or whether its provisions also
CENTRAL CAPIZ, a corporation, petitioner, extend to agricultural lands held in private
vs. ownership.
ANA RAMIREZ, respondent.
Inasmuch as the wording of certain sections of
Williams and Ferrier for petitioner. said Act (secs. 23, 24, 121 and 122) give rise to
Cohn, Fisher and Dewit for respondent. a possible construction that private lands are
included within its terms, and inasmuch as said
JOHNSON, J.: Act specifically provides that any land coming
within its purview cannot be encumbered,
This is an original action brought in the Supreme alienated or transferred to corporations in which
Court. Its purpose is to obtain an interpretation at least 61 per cent of the capital stock does not
and application of the intent, purpose and scope belong wholly to citizens of the Philippine Islands
of Act No. 2874 of the Philippine Legislature, or of the United States, the respondent, while not
known as the "Public Land Act," so far as it desiring to evade her contract, fears to assume
affects agricultural lands, privately owned. the risk of giving effect to her said contract in
view of the drastic penalty prescribed, should
The only question presented is, whether or not her action prove unlawful. The penalty provided
said Act No. 2874 is applicable to agricultural in section 122 of said Act includes not only a
lands, in the Philippine Islands which are nullity of the contract but also a reversion of the
privately owned. property and its improvements to the
Government.
There is not dispute about the facts. They are
admitted. The petitioner alleges and respondent On behalf of the plaintiff it is argued, first, that
admits that on or about July 1, 1919, the latter the intent of the Legislature, gathered from a
contracted with the petitioner to supply to it for a reading of Act No. 2874 in its entirety, is to
term of thirty years all sugar cane produced upon provide simply for the sale, lease and other
her plantation, which said contract, by disposition of lands of the public domain; that
agreement, was to be converted later into a lands held in private ownership are not affected
right in rem and recorded in the Registry of thereby; and, second, that even had the
Property as an encumbrance upon the land, and Legislature intended to include private as well as
to be binding upon all future owners of the same. public land within the scope of the Act, this intent
In the interim the execution of said contract and fails because under the Act as entitled such
its conversion into a right in rem upon the attempt would be in direct violation of section
respondent's property, said Act No. 2874 three of the Act of Congress of August 29, 1916,
became effective. The respondent, while which provides that: "No bill which may be
admitting said contract and her obligation enacted into law shall embrace more than one
thereunder to execute a deed pursuant thereto, subject, and that subject shall be expressed in
bases her refusal so to do upon the fact that the title of the bill."
more than 61 per cent of the capital stock of the
petitioner is held and owned by persons who are Examining Act No. 2874 in detail, there can be
not citizens of the Philippine Islands or of the little question but that it was intended to apply to
United States. and regulate the sale, lease and other
disposition of public lands only. The title of the
It is conceded by the parties that the land Act, always indicative of legislative intent, reads:
involved is private agricultural land, that is, land "an Act to amend and compile the laws relating
which is held and owned by the respondent, for to lands of the public domain, and for other
which she holds a Torrens title. purposes." Section one of such act provides:
"That short title of this Act shall be 'The public
The defendant answered the petition. To the Land Act.' " Section two, wherein the purpose of
defendant's answer the petitioner demurred. the Act is expressly stated, reads: " The
From an examination of the petition, the answer provisions of this Act shall apply to lands of the
and the demurrer, it appears that the real issue public domain." Section three provides:
presented is, whether the said Act (No. 2874) is
 LEGAL RESEARCH ACJUCO 26

While title to lands of the public domain remains acquire any land available under this Act. This
in the Government, the Secretary of Agriculture provision would be altogether anomalous had it
and Natural Resources shall be the executive been the intent to apply Act No. 2874 to lands
officer charged with carrying out the provisions held in private ownership.
of this Act, through the Director of Lands, who
shall act under his immediate control. Referring again to section two of said Act, we
find the following:
It cannot be contemplated that these officers,
charged "with carrying out the provisions of the That nothing in this Act provided shall be
Act," were intended to exercise authority and understood or construed to change or modify the
control over the sale or other disposition of lands government and disposition of the lands
hold in private ownership. commonly known as "friar lands" and those
which, being privately owned, have reverted to
To the same effect are sections four, five, and or become the property of the Philippine
eighty-seven of the Act, wherein executive Government, which administration and
control is vested in the Director of Lands with disposition shall be governed by the laws at
respect to the survey, appraisal, classification, present in force or which may hereafter be
etc., of lands of the public domain, with authority enacted by the Legislature.
to prepare rules and regulations for carrying into
effect the provisions of the Act, and to receive all The purpose of said provision is obvious.
applications filed pursuant thereto, etc. Inasmuch as these friar estates and other real
property purchased or owned by the
Sections 105 contains another indication that Government are subject to its control and
said Act does not apply to privately owned disposition equally with lands of the public
agricultural lands. Said section provides: "All domain, it could be reasonably argued that they
patents or certificates for lands granted under should be subject to and governed by the laws
this Act . . . shall issue in the name of the applicable to public lands. Through the insertion
Government of the Philippine Islands, under the of the provision above quoted, however, this
signature of the Governor-General, construction of the Act is avoided. If said Act, by
countersigned by the Secretary of Agriculture express provisions, does not apply to
and Natural Resources." The Legislature lands privately owned by the Government, it
certainly did not intend that all sales, leases, etc. could hardly have been the intent of the
of privately owned agricultural lands should Legislature to make the Act applicable to lands
hereafter be "issued in the name of the held in private ownership by individuals.
Government of the Philippine Islands, under the
signature of the Government of the Philippine The Act nowhere contains any direct
Islands, under the signature of the Governor- or express provision applying its terms to
General," etc. privately owned lands. The doubts of defendant
in that regard are caused by inferences drawn
Section 23, after describing the persons and from the language used in sections 24 and 121
corporations authorized to purchase any tract of the Act. The first paragraph of section 24
of public agricultural lands "disposable under provides:
this Act," proceeds:
No . . . corporation . . . other than those
Provided, further, That citizens of countries the mentioned in the last preceding section may
laws of which grant to citizens of the Philippine acquire or own agricultural public land or land of
Islands the same right to acquire public lands as any other denomination or classification, not
to their own citizens, may, while such laws are in used for industrial or residence purposes, that is
force, but not thereafter . . . purchase any parcel at the time or was originally, really or
of agricultural land . . . available under this Act. presumptively, of the public domain, or any
permanent improvement thereon, or any real
In other words, it is only necessary for other right on such land and improvement.
countries to grant to citizens of the Philippine
Islands the right to acquire "public lands," in Said section as worded, and standing alone,
order that their citizens may have the right to presents come question as to the character of
 LEGAL RESEARCH ACJUCO 27

land sought to be included therein. This doubt is Identical provisions to the above are contained
dispelled, however, when its provisions are read in most of the State Constitutions, and have
in connection with other sections of the same been repeatedly construed. In the States of
chapter. Chapter five, in which section 24 is Alabama, California, Georgia, Idaho, Illinois,
found, deals with "Sales," and section 25 thereof Indiana, Iowa, Kansas, Kentucky, Louisiana,
specifically provides that: "Lands sold under the Maryland, Michigan, Minnesota, Missouri,
provisions of this chapter must be appraised in Montana, Nebraska, Nevada, New Jersey, New
accordance with section 114 of this Act." Section York, Ohio, Oregon, Pennsylvania, South
114 confers authority upon the Director of Carolina, Texas, Tennessee, Virginia, West
Lands, with the approval of the Secretary of Virginia, Wisconsin and Wyoming, identical
Agriculture and Natural Resources, to appraise provisions are found in the Constitution.
lands or improvements subject to concession or
disposition under the provisions of this Act. The purpose of this legislative restriction, and
Inasmuch as the Legislature cannot vest the evils sought to be remedied thereby, are
authority in the Director of Lands to "appraise" or clearly stated by Surtherland in his valuable
"sell" lands held in private ownership, it is not work on Statutory Construction. In Section 111
presumed it was the intention to include private he says that:
lands in the Act or subject them in the manner
indicated to any such authority. The same In the construction and application of this
observations and the same conclusions apply to constitutional restriction the courts have kept
section 121 of the Act, where much the same steadily in view the correction of the mischief
language is used as found in section 24 above against which it was aimed. The object is to
quoted. prevent the practice, which was common in all
legislative bodies where no such restrictions
Whatever interpretation said sections 24 and existed, of embracing in the same bill
121 might receive if standing alone, it is clear incongruous matters having no relation to each
they cannot prevail against the general intent of other or to the subject specified in the title, by
the Act, derived not only from the language used which measures were often adopted without
but from the machinery adopted for giving effect attracting attention. Such distinct subjects
to its provisions. (See secs. 87, 88, 90, 93, 94, represented diverse interests, and were
99, 103, 105, and 115.) combined in order to unite the members of the
legislature who favor either in support of all.
We hold, therefore, that the purpose of the These combinations were corruptive of the
Legislature in adopting Act No. 2874 was and is legislature and dangerous to the State.
to limit its application to lands of the public Such omnibus bills sometimes included more
domain, and that lands held in private ownership than a hundred sections on as many different
are not included therein and are not affected in subjects, with a title appropriate to the first
any manner whatsoever thereby. section, "and for other purposes."

Even should the holding of the court upon this The failure to indicate in the title of the bill the
question of intent be different, it would not affect object intended to be accomplished by the
the final outcome of the case. Under the Act as legislation often resulted in members voting
entitled, any attempt by the Legislature to insert ignorantly for measures which they would not
provisions in the body thereof relating to lands of knowingly have approved; and not only were
private ownership would be in violation of the legislators thus misled, but the public also; so
provisions of the Jones Law and therefore, null that legislative provisions were steadily pushed
and void. through in the closing hours of a session, which,
having no merit to commend them, would have
It is provided in section 3 of the Jones Law (Act been made odious by popular discussion and
of Congress of August 29, 1916): "That no bill remonstrance if their pendency had been
which may be enacted into law shall embrace seasonably announced. The constitutional
more than one subject, and that subject shall be clause under discussion is intended to correct
expressed in the title of the bill." these evils; to prevent such corrupting
aggregations of incongruous measures, by
confining each act to one subject or object; to
 LEGAL RESEARCH ACJUCO 28

prevent surprise and inadvertence by requiring legislative observance of it. The exposition of
that subject or object to be expressed in the title. these purposes by Judge Cooley is accepted,
we believe, in all the states in which alike
In the case of Walker vs. State (49 Ala., 329), limitation prevails. (Then follows quotation from
the Supreme Court of Alabama stated the Cooley, supra.)
proposition as follows — citing and quoting from
Cooley's Constitutional Limitations; p. 143: In the case of People vs. Parks (58 Cal., 624)
where, in the body of an act, provision was made
The object sought to be accomplished and the for something not included in the title, the
mischief proposed to be remedied by this Supreme Court of California said:
provision are well known. Legislative
assemblies, for the dispatch of business, often At least, then, two heterogeneous subjects are
pass bills by their titles only without requiring embraced in the act, one of which is not
them to be read. A specious title sometimes expressed in the title, and they cannot be
covers legislation which, if real character had segregated. The title does not express the
been disclosed, would not have commanded objects of legislation embodied in the provisions
assent. To prevent surprise and fraud on the of the act. It is, therefore, narrower than the body
legislature is one of the purposes this provision of the act, and fails to impart that notice of the
was intended to accomplish. Before the adoption measures enacted, which the Constitution
of this provision the title of a statute was often no requires. To prohibit such legislation was the
indication of its subject or contents. sole end and aim of the constitutional
requirement. 'The practice,' says the Supreme
An evil this constitutional requirement was Court of Missouri, 'of comprising in one bill
intended to correct was the blending in one and subjects of a diverse and antogonistic nature, in
the same statute of such things as were diverse order to combine in their support members who
in their nature, and were connected only to were in favor of particular measures, but neither
combine in favor of all the advocates of each, of which could command the requisite majority
thus often securing the passage of several on its own merits, was found to be not a
measures no one of which could have corruptive influence in the Legislature itself, but
succeeded on its own merits. Mr. Cooley thus destructive of the best interests of the State. But
sums up in his review of the authorities defining this was not more detrimental than that other
the objects of this provision: "It may therefore be pernicious practice, by which, through dexterous
assumed as settled that the purpose of this and unscrupulous management, designing men
provision was: First, to prevent hodge-podge or inserted clauses in the bodies of bills, of the true
log-rolling legislation; second, to prevent meaning of which the titles gave no indication,
surprise or fraud upon the legislature by means and by skillful maneuvering urged them on to
of provisions in bills of which the titles gave no their passage. These things led to fraud and
information, and which might therefore be injury, and it was found necessary to apply a
overlooked and carelessly and unintentionally corrective in the shape of a constitutional
adopted; and , third, to fairly apprise the people, provision.' (City of St. Louis vs. Tiefel, 42 Mo.,
through such publication of legislative 590.) This provision has been framed in the
proceedings as is usually made, of the subjects constitutions of may of the States of the Union;
of legislation that are being considered, in order and courts, whenever it has come before the,
that they may have opportunity of being heard have liberally construed it as the will of the
thereon by petition or otherwise if they shall so people in the interests of honest legislation.
desire.' (Cooley's Constitutional Limitations, p.
143.) The authorities are to all intents uniform that this
constitutional requirement is mandatory and not
To the same effect, in the case of Lindsay vs. U. directory. Sutherland on Statutory Construction,
S. Say. & Loan Ass'n. (120 Ala., 156 [42 L. R. A., section 112, states the rule correctly as follows:
N. S., 783]), the court said:
The efficiency of this constitutional remedy to
The purposes of the constitutional requirement cure the evil and mischief which has been
must be borne steadily in mind when it becomes pointed out, depends on judicial enforcement; on
necessary to determine whether there has been this constitutional injunction being regarded
 LEGAL RESEARCH ACJUCO 29

as mandatory, and compliance with it essential and compile laws relative to lands of the public
to the validity of legislation. The mischief existed domain, and for other purposes."
notwithstanding the sworn official obligation of
legislators; it might be expected to continue In our interpretation of said Act, the words "and
notwithstanding that that obligation is formulated for other purposes" contained in its title, must be
and emphasized in this constitutional injunction treated as non-existent. Under all the authorities
if it be construed as addressed exclusively to wherein the requirement — "That no bill shall
them and only directory. It would in a general embrace more than one subject, which subject
sense be a dangerous doctrine to announce that shall be expressed in the title of the bill" — has
any of the provisions of the constitution may be been considered, the words "and for other
obeyed or disregarded at the mere will or purposes" when found in the title, have been
pleasure of the legislature unless it is clear held to be without force or effect whatsoever and
beyond all question that such was the intention have been altogether discarded in construing
of the framers of that instrument. It would seem the Act.
to be a lowering of the proper dignity of the
fundamental law to say that it descends to Upon this point, Justice Cooley in his
prescribing rules of order in unessential matters Constitutional Limitations, 6th ed., pp. 173 - 173,
which may be followed or disregarded at states as follows:
pleasure. The fact is this: That whatever
constitutional provision can be looked upon as One thing, however, is very plain: That the use
directory merely is very likely to be treated by the of the words "other purposes," which has
legislature as if it was devoid of moral obligation, heretofore been so common in the title to acts,
and to be therefore habitually disregarded. with a view to cover any and everything whether
connect with the main purpose indicated by the
In the case of Cannon vs. Mathes (8 Heisk. title or not, can no longer be of any avail where
[Tenn.], 504) Nicholson, C. J., referring to the these provisions exist. As was said by the
provision that "No bill shall become a law which Supreme Court of New York in a case where
embraces more than one subject," said: these words had been made use of in the title to
a local bill: "The words "for other purposes" must
This is a direct, positive and imperative limitation be laid out of consideration. They express
upon the power of the legislature. It matters not nothing and amount to nothing as a compliance
that a bill has passed through three readings in with this constitutional requirement. Nothing
each house on three different days and has which the act could not embrace without them
received the approval of the governor, still it is can be brought in by their aid."
not a law of the State if it embraces more than
one subject. Sutherland on Statutory Construction, section
122 says:
In the case of Walker vs. State (49 Ala.,
329) supra, the court said: The phrase "and for other purposes" expresses
no specific purpose and imports indefinitely
It is the settled law of this court, founded on something different from that which precedes it
reasoning which seems to us unanswerable that in the title. It is, therefore, universally rejected as
this provision of the constitution is not a mere having no force or effect wherever this
rule of legislative procedure, directory to the constitutional restriction operates. (Citing
general assembly, but that it is mandatory, and numerous cases).
it is the duty of courts to declare void any statute
not conforming to it. In the case of Ryerson vs. Utley (16 Mich., 269),
an Act was construed by the court reading: "An
Justice Cooley, in his work on Constitutional Act to provide for the preservation of the
Limitations (pp. 179-180) states that our courts Muskegon river improvements, and for other
have held, without exception, that such purposes." Cooley, C. J., who wrote the opinion,
constitutional provision is mandatory. said:

As heretofore noted, the title of Act 2874, here The Constitution (of Michigan) provides that no
under constructions, reads: "An Act to amend law shall embrace more than one subject, which
 LEGAL RESEARCH ACJUCO 30

shall be expressed in its title. We have Another case where the same conclusion is
heretofore had occasion to consider this section, forcibly expressed is that of Spier vs. Baker, (120
and have said of it that it ought to be construed Ca., 370). There the court construed an Act
reasonably and not in so narrow and technical a reading: "An Act providing for general primary
sense as unnecessarily to embarrass legislation. elections within the State of California and to
But the only object mentioned in the title of this promote the purity thereof by regulating the
Act is the preservation of the Muskegon River conduct thereof, and to support the privileges of
Improvements, for which purpose the act free suffrage thereat, by prohibiting certain acts
authorizes tools to be levied and expended. and practices in relation thereto, and providing
for the punishment thereof, and for other
The payment of Beard's claim is in no way purposes." the California State Constitution
connected with this object and the title to the act provides: "Every Act shall embrace but one
would apprise neither the legislature nor the subject, which shall be expressed in its title; but,
public that it covered provisions under which a if any subject shall be embraced in an act which
large sum was to be collected and disbursed to shall not be expressed in its title, such act shall
pay for the original construction of the work. The be void only as to so much thereof as shall not
words "other purposes" in the title can have no be expressed in its title." The court, after citing
force whatever under the constitutional provision this constitutional provision, said:
which has been quoted.
Let us test the title of this act in the crucible
In the case of Board of Education vs. Barlow (49 furnished by the foregoing provision of the
Ga., 232) the title of the Act under consideration constitution. The legislature, in framing this title,
read: "An Act to establish a permanent Board of was above all things candid. Upon its very face
Education for the City of Americus and to the law-making power challenged the sound
incorporate the same, and for other purposes." policy of this provision of the constitution, and
The State constitution prohibited any law which avowedly disregarding it, declared that the
referred to more than one subject, or contained purpose of the act was the creation of a primary
matter different from that expressed in the title of election law and "other purposes." Under the
the act. The court said: cloak of "other purposes," all and every
conceivable kind of legislation could hide and
Does this not close the door to any force and thrive in the body of the act, and thus the
effect being given the words "for other constitutional provision be set at naught. In this
purposes?" If these words were once necessary state, when these words "for other purposes" are
to permit the introduction of matter in the bill, found in the title of an act of the state legislature
different from what was expressed in the order they accomplish nothing, and in reading the
portion of the title, would not that every thing title our eyes are closed to them. We then have
show now that the bill would thereby become before us, tested by its title, an act dealing solely
obnoxious to the other clause prohibiting more with general primary elections, and providing
than one subject matter? The necessity of such penalties for violating the law relating thereto.
words under the provision as it formerly stood to Any matters of legislation contained in the body
prevent the bill from containing matter different of the act not bearing upon primary elections
from the title could only arise because such must go out; the constitutional provision quoted
matter is something different from what had so declares. Weighing and measuring the
already been expressed. It shows that legislation found in the act by this test, very many
something more than one subject-matter is provisions have no place there. It would seem
intended. If so, although it was allowed under the that the legislature, in using the words "for other
clause as it was formerly, it cannot now be done. purposes" in the title, used those words
advisedly, and in good faith lived up to them fully.
Equally may it be said of the Act of the Philippine For the legislation found in section after section
Legislature here involved, the addition of the of the act can find no justification in its title, save
words "and for other purposes," contained in its under these words of boundless meaning, "for
title, can only be explained on the theory other purposes."
that something different was to be included
therein from that previously expressed, i. e., The court, after referring to various matters
"lands of the public domain." included in the bill but not specified in the title,
said:
 LEGAL RESEARCH ACJUCO 31

Many of these things are totally foreign to any In the case of Bardon vs. Nor. Pac. R. R. Co.
question relating to primary elections, and others (145 U. S., 535), the court said:
are so remotely connected with that subject as
to clearly come within the prohibition of the . . . It has long been settled . . . that all land to
constitutional provision. These matters of which any claims or rights of others have
legislation, not being embraced within the attached does not fall within the designation of
purview of the title, are void and fall to the public lands.
ground.
The Attorney-General of the Philippine Islands,
Applying the doctrine of the above cases to the in a very elucidated opinion in which the
Act before us for interpretation, its title must be Attorney-General of the United States agreed,
considered and treated as though reading: "An held that "friar lands" purchased by the Insular
Act to amend and compile the laws relative to Government formed no part of the "public
lands of the public domain." domain" and were not affected by nor subject to
the restrictions of the Act relating to public lands.
Inasmuch as agricultural lands in the Philippine
Islands held in private ownership, under fee title, Section 2 of the Act before us exempts not only
constitute no part of "the public domain." they "friar lands" from its operation but also all lands
cannot come within the purview of Act No. 2874 which have reverted to, or become the property
as it is entitled. of, the Philippine Government.

The words "public land" are habitually used in It is clearly evident, therefore, that under no
our legislation to described such as are subject possible construction of the law can the words
to sale or other disposal under general laws. "lands of the public domain," used in the title of
Act No. 2874, be held to include, or be
In the case of Wilcox vs. Jackson (13 Peters, authorized to include, lands held in freehold.
498 [10 L. ed., 264]) the court, in dealing with the While this is true generally, it is peculiarly
matter of public lands, stated: applicable to lands held and owned under
Torrens title — as are the lands of the defendant
Whensoever a tract of land shall have once been herein — in which all interest of the Government
legally appropriated to any purpose, from that is expressly eliminated. Section 38 of the Land
moment the land thus appropriated becomes Registration Act (No. 496) provides that such
severed from the mass of public lands; and no registered title "shall be conclusive upon and
subsequent law, or proclamation, or sale, would against all persons, including the Insular
be construed to embrace it, or to operate upon Government and all branches thereof, whether
it, although no reservation were made of it. mentioned by name in the application, notice or
citation, or included in the general description
The above case is quoted and applied in the 'To all whom it may concern.' "
case of United States vs. Blendoner (122 Feb.
Rep., 703, 708). In U. S. vs. Garreston (42 Feb., The judicial department of the government
22), the court said: hesitates to pronounce invalid the Acts of the
legislative department, and will not do so until
Such lands comprise the general public domain; and unless it is shown that the same exceed the
unappropriated lands; lands not held back or authority conferred upon said department or
reserved for any special governmental or public contravene some express or necessarily implied
purpose. provision of the Organic Law of the state.
(Case vs. Board of Health, and Heiser, 24 Phil.,
In the case of Yakima County vs. Tuller (3 250; U. S. vs. Joson, 26 Phil., 1, 64; U.
Wash., T., 393), the court said that the term S. vs. Gomez Jesus, 31 Phil., 218, 225, 228;
"public lands" in a grant of public lands for roads, Tajanlangit vs. Peñaranda, 37 Phil., 155.)
etc., shall be construed to mean strictly public
lands, such as are open to entry and settlement, In the interpretation and construction of statutes
and not those in which the rights of the public the court should give them the meaning and
have passed and which have become subject to effect which the legislature intended, unless that
some individual right of a settler. meaning and effect is in conflict with the organic
 LEGAL RESEARCH ACJUCO 32

law of the land. The question of the validity of the 5. That it is the uniform holding of the United
statutes is first determined by the legislative States Supreme Court, and of other courts
department of the government, and the courts interpreting the phrase "public lands," that once
will resolved every presumption in its favor. The such lands have been "legally appropriated" by
wisdom or advisability of a particular statute is the Government or by individuals, they become
within the constitutional powers of the segregated from the mass of public lands, and
legislature, it will be sustained, whether the no law or proclamation thereafter made or
courts agree or not in the wisdom of its issued relating to "public lands" operate upon
enactment. If the statute covers a subject not them.
authorized by the fundamental laws of the state,
or by the constitution, then the courts are not 6. That whatever right or authority the
only authorized but are justified in pronouncing Government of the Philippine Islands may have
the same illegal and void, no matter how wise had at any time to assert any right, title, or
and beneficent such legislation may seem to be. interest in and to the lands involved in this
The courts are not justified in measuring their proceeding, whether as a part of the "public
opinion with the opinion of the legislative domain" or otherwise, was absolutely divested
department of the government, as expressed in by virtue of the provisions of section 38 of Act
statutes, upon the question of the wisdom, No. 496, after such lands were registered in the
justice and advisability of a particular law. The court of land registration under the Torrens
courts have no right to dictate what law shall be system.
adopted by the legislative department of the
government, so long as a well defined public 7. That under said Act (No. 2874) as entitled any
policy or an organic act is not violated. provisions or provisions in the body thereof
(Case vs.Board of Health, and Heiser, 24 Phil., applicable to lands held under fee title is null and
250; U. S. vs. Gomez Jesus, 31 Phil., 218.) void and of no effect.

Our conclusions, therefore, from all of the 8. That inasmuch as said Act (No. 2874) cannot
foregoing are: be interpreted to apply to, nor include, lands held
in fee title, the penal provisions thereof cannot
1. That it was the purpose and intent of the be held to apply to leases, sales, concessions,
legislature to comply with the provisions of the nor any other transaction by the holders.
Jones Law and to limit the application of Act No.
2874 to lands of the public domain; 9. That by virtue of the provisions of section 127,
as well as the general jurisprudence upon that
2. That the phrase "and for other purposes," subject our conclusions herein shall not be held
found in the title of said Act (No. 2874), by virtue to affect any of the provisions of said Act No.
of the provisions of section 3 of the Act of 2874 except those provisions which relate to
Congress of August 29, 1916 (the Jones Law), private agricultural lands, or lands held in private
cannot be interpreted to include, nor be made ownership, in contradistinction to lands of the
applicable to any lands not public; public domain.

3. That eliminating the phrase 'and for other Therefore, having demonstrated that said Act
purposes" from the title of said Act, the same No. 2874 does not apply to lands of the
must be considered and treated as though respondent, and there being no objection to the
reading: "An Act to amend and compile the laws form of the remedy prayed for, the same is
relative to lands of the public domain;" hereby granted, without any finding as to costs.
So ordered.
4. That lands held in freehold or fee title, or
private ownership, constitute no part of the Arellano, C.J., Malcolm and Avanceña, JJ.,
public domain and cannot possibly come within concur.
the purview of said Act No. 2874, inasmuch as
the "subject" of such freehold or private land is
not embraced in nay manner in the title of the
Act.
 LEGAL RESEARCH ACJUCO 33

Separate Opinions

TORRES, J., concurring:

Inasmuch as it does not appear what action or

remedy is prayed for and the petition is only
concerned with the interpretation of Act No.
2874, I concur with the foregoing decision.

Araullo, J., concurs.

 LEGAL RESEARCH ACJUCO 34

G.R. No. 124360 November 5, 1997 welfare, enacted the Oil Industry Commission
Act.3 It created the Oil Industry
FRANCISCO S. TATAD, petitioner, Commission (OIC) to regulate the business of
vs. importing, exporting, re-exporting, shipping,
THE SECRETARY OF THE DEPARTMENT OF transporting, processing, refining, storing,
ENERGY AND THE SECRETARY OF THE distributing, marketing and selling crude oil,
DEPARTMENT OF FINANCE, respondents. gasoline, kerosene, gas and other refined
petroleum products. The OIC was vested with
G.R. No. 127867 November 5, 1997 the power to fix the market prices of petroleum
products, to regulate the capacities of refineries,
EDCEL C. LAGMAN, JOKER P. ARROYO, to license new refineries and to regulate the
ENRIQUE GARCIA, WIGBERTO TANADA, operations and trade practices of the industry.4
FLAG HUMAN RIGHTS FOUNDATION, INC.,
FREEDOM FROM DEBT COALITION (FDC), In addition to the creation of the OIC, the
SANLAKAS, petitioners, government saw the imperious need for a more
vs. active role of Filipinos in the oil industry. Until the
HON. RUBEN TORRES in his capacity as the early seventies, the downstream oil industry was
Executive Secretary, HON. FRANCISCO controlled by multinational companies. All the oil
VIRAY, in his capacity as the Secretary of refineries and marketing companies were owned
Energy, CALTEX Philippines, Inc., PETRON by foreigners whose economic interests did not
Corporation and PILIPINAS SHELL always coincide with the interest of the Filipino.
Corporation, respondents. 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
PUNO, J.: foreign-owned retail outlets. On November 9,
1973, President Ferdinand E. Marcos boldly
The petitions at bar challenge the created the Philippine National Oil Corporation
constitutionality of Republic Act No. 8180 (PNOC) to break the control by foreigners of our
entitled "An Act Deregulating the Downstream oil industry.5 PNOC engaged in the business of
Oil Industry and For Other Purposes".1 R.A. No. refining, marketing, shipping, transporting, and
8180 ends twenty six (26) years of government storing petroleum. It acquired ownership of
regulation of the downstream oil industry. Few ESSO Philippines and Filoil to serve as its
cases carry a surpassing importance on the life marketing arm. It bought the controlling shares
of every Filipino as these petitions for the of Bataan Refining Corporation, the largest
upswing and downswing of our economy refinery in the country.6 PNOC later put up its
materially depend on the oscillation of oil. own marketing subsidiary — Petrophil. PNOC
operated under the business name PETRON
First, the facts without the fat. Prior to 1971, Corporation. For the first time, there was a
there was no government agency regulating the Filipino presence in the Philippine oil market.
oil industry other than those dealing with
ordinary commodities. Oil companies were free In 1984, President Marcos through Section 8 of
to enter and exit the market without any Presidential Decree No. 1956, created the Oil
government interference. There were four (4) Price Stabilization Fund (OPSF) to cushion the
refining companies (Shell, Caltex, Bataan effects of frequent changes in the price of oil
Refining Company and Filoil Refining) and six caused by exchange rate adjustments or
(6) petroleum marketing companies (Esso, Filoil, increase in the world market prices of crude oil
Caltex, Getty, Mobil and Shell), then operating in and imported petroleum products. The fund is
the country.2 used (1) to reimburse the oil companies for cost
increases in crude oil and imported petroleum
In 1971, the country was driven to its knees by a products resulting from exchange rate
crippling oil crisis. The government, realizing adjustment and/or increase in world market
that petroleum and its products are vital to prices of crude oil, and (2) to reimburse oil
national security and that their continued supply companies for cost underrecovery incurred as a
at reasonable prices is essential to the general result of the reduction of domestic prices of
 LEGAL RESEARCH ACJUCO 35

petroleum products. Under the law, the OPSF 4. Regulate the capacities of new refineries or
may be sourced from: additional capacities of existing refineries and
license refineries that may be organized after the
1. any increase in the tax collection from ad issuance of (E.O. No. 172) under such terms and
valorem tax or customs duty imposed on conditions as are consistent with the national
petroleum products subject to tax under P.D. No. interest; and
1956 arising from exchange rate adjustment,
5. Whenever the Board has determined that
2. any increase in the tax collection as a result of there is a shortage of any petroleum product, or
the lifting of tax exemptions of government when public interest so requires, it may take
corporations, as may be determined by the such steps as it may consider necessary,
Minister of Finance in consultation with the including the temporary adjustment of the levels
Board of Energy, of prices of petroleum products and the payment
to the Oil Price Stabilization Fund . . . by persons
3. any additional amount to be imposed on or entities engaged in the petroleum industry of
petroleum products to augment the resources of such amounts as may be determined by the
the fund through an appropriate order that may Board, which may enable the importer to recover
be issued by the Board of Energy requiring its cost of importation.8
payment of persons or companies engaged in
the business of importing, manufacturing and/or On December 9, 1992, Congress enacted R.A.
marketing petroleum products, or No. 7638 which created the Department of
Energy to prepare, integrate, coordinate,
4. any resulting peso costs differentials in case supervise and control all plans, programs,
the actual peso costs paid by oil companies in projects, and activities of the government in
the importation of crude oil and petroleum relation to energy exploration, development,
products is less than the peso costs computed utilization, distribution and conservation.9 The
using the reference foreign exchange rate as thrust of the Philippine energy program under
fixed by the Board of Energy.7 the law was toward privatization of government
agencies related to energy, deregulation of the
By 1985, only three (3) oil companies were power and energy industry and reduction of
operating in the country — Caltex, Shell and the dependency on oil-fired plants.10 The law also
government-owned PNOC. aimed to encourage free and active participation
and investment by the private sector in all energy
In May, 1987, President Corazon C. Aquino activities. Section 5(e) of the law states that "at
signed Executive Order No. 172 creating the end of four (4) years from the effectivity of
the Energy Regulatory Boardto regulate the this Act, the Department shall, upon approval of
business of importing, exporting, re-exporting, the President, institute the programs
shipping, transporting, processing, refining, and timetable of deregulation of appropriate
marketing and distributing energy resources energy projects and activities of the energy
"when warranted and only when public necessity industry."
requires." The Board had the following powers
and functions: Pursuant to the policies enunciated in R.A. No.
7638, the government approved the privatization
1. Fix and regulate the prices of petroleum of Petron Corporation in 1993. On December 16,
products; 1993, PNOC sold 40% of its equity in Petron
Corporation to the Aramco Overseas Company.
2. Fix and regulate the rate schedule or prices of
piped gas to be charged by duly franchised gas In March 1996, Congress took the audacious
companies which distribute gas by means of step of deregulating the downstream oil industry.
underground pipe system; It enacted R.A. No.8180, entitled the
"Downstream Oil Industry Deregulation Act of
3. Fix and regulate the rates of pipeline 1996." Under the deregulated environment, "any
concessionaries under the provisions of R.A. person or entity may import or purchase any
No. 387, as amended . . . ; quantity of crude oil and petroleum products
from a foreign or domestic source, lease or own
 LEGAL RESEARCH ACJUCO 36

and operate refineries and other downstream oil clause. Petitioner contends that the 3%-7% tariff
facilities and market such crude oil or use the differential unduly favors the three existing oil
same for his own requirement," subject only to refineries and discriminates against prospective
monitoring by the Department of investors in the downstream oil industry who do
Energy.11 not have their own refineries and will have to
source refined petroleum products from abroad.
The deregulation process has two phases: the
transition phase and the full deregulation phase. Second, that the imposition of different tariff
During the transition phase, controls of the non- rates does not deregulate the downstream oil
pricing aspects of the oil industry were to be industry but instead controls the oil industry,
lifted. The following were to be accomplished: contrary to the avowed policy of the law.
(1) liberalization of oil importation, exportation, Petitioner avers that the tariff differential
manufacturing, marketing and distribution, (2) between imported crude oil and imported refined
implementation of an automatic pricing petroleum products bars the entry of other
mechanism, (3) implementation of an automatic players in the oil industry because it effectively
formula to set margins of dealers and rates of protects the interest of oil companies with
haulers, water transport operators and pipeline existing refineries. Thus, it runs counter to the
concessionaires, and (4) restructuring of oil objective of the law "to foster a truly competitive
taxes. Upon full deregulation, controls on the market."
price of oil and the foreign exchange cover were
to be lifted and the OPSF was to be abolished. Third, that the inclusion of the tariff provision in
section 5(b) of R.A. No. 8180 violates Section
The first phase of deregulation commenced on 26(1) Article VI of the Constitution requiring
August 12, 1996. every law to have only one subject which shall
be expressed in its title. Petitioner contends that
On February 8, 1997, the President the imposition of tariff rates in section 5(b) of
implemented the full deregulation of the R.A. No. 8180 is foreign to the subject of the law
Downstream Oil Industry through E.O.No. 372. which is the deregulation of the downstream oil
industry.
The petitions at bar assail the constitutionality of
various provisions of R.A No. 8180 and E.O. No. In G.R. No. 127867, petitioners Edcel C.
372. Lagman, Joker P. Arroyo, Enrique Garcia,
Wigberto Tanada, Flag Human Rights
In G.R. No. 124360, petitioner Francisco S. Foundation, Inc., Freedom from Debt Coalition
Tatad seeks the annulment of section 5(b) of (FDC) and Sanlakas contest the constitutionality
R.A. No. 8180. Section 5(b) provides: of section 15 of R.A. No. 8180 and E.O. No. 392.
Section 15 provides:
b) Any law to the contrary notwithstanding and
starting with the effectivity of this Act, tariff duty Sec. 15. Implementation of Full Deregulation. —
shall be imposed and collected on imported Pursuant to Section 5(e) of Republic Act No.
crude oil at the rate of three percent (3%) and 7638, the DOE shall, upon approval of the
imported refined petroleum products at the rate President, implement the full deregulation of the
of seven percent (7%), except fuel oil and LPG, downstream oil industry not later than March
the rate for which shall be the same as that for 1997. As far as practicable, the DOE shall time
imported crude oil: Provided, That beginning on the full deregulation when the prices of crude oil
January 1, 2004 the tariff rate on imported crude and petroleum products in the world market are
oil and refined petroleum products shall be the declining and when the exchange rate of the
same: Provided, further, That this provision may peso in relation to the US dollar is stable. Upon
be amended only by an Act of Congress. the implementation of the full deregulation as
provided herein, the transition phase is deemed
The petition is anchored on three arguments: terminated and the following laws are deemed
repealed:
First, that the imposition of different tariff rates
on imported crude oil and imported refined xxx xxx xxx
petroleum products violates the equal protection
 LEGAL RESEARCH ACJUCO 37

E.O. No. 372 states in full, viz.: NOW, THEREFORE, I, FIDEL V. RAMOS,
President of the Republic of the Philippines, by
WHEREAS, Republic Act No. 7638, otherwise the powers vested in me by law, do hereby
known as the "Department of Energy Act of declare the full deregulation of the downstream
1992," provides that, at the end of four years oil industry.
from its effectivity last December 1992, "the
Department (of Energy) shall, upon approval of In assailing section 15 of R.A. No. 8180 and E.O.
the President, institute the programs and time No. 392, petitioners offer the following
table of deregulation of appropriate energy submissions:
projects and activities of the energy sector;"
First, section 15 of R.A. No. 8180 constitutes an
WHEREAS, Section 15 of Republic Act No. undue delegation of legislative power to the
8180, otherwise known as the "Downstream Oil President and the Secretary of Energy because
Industry Deregulation Act of 1996," provides that it does not provide a determinate or
"the DOE shall, upon approval of the President, determinable standard to guide the Executive
implement full deregulation of the downstream Branch in determining when to implement the full
oil industry not later than March, 1997. As far as deregulation of the downstream oil industry.
practicable, the DOE shall time the full Petitioners contend that the law does not define
deregulation when the prices of crude oil and when it is practicable for the Secretary of Energy
petroleum products in the world market are to recommend to the President the full
declining and when the exchange rate of the deregulation of the downstream oil industry or
peso in relation to the US dollar is stable;" when the President may consider it practicable
to declare full deregulation. Also, the law does
WHEREAS, pursuant to the recommendation of not provide any specific standard to determine
the Department of Energy, there is an imperative when the prices of crude oil in the world market
need to implement the full deregulation of the are considered to be declining nor when the
downstream oil industry because of the following exchange rate of the peso to the US dollar is
recent developments: (i) depletion of the buffer considered stable.
fund on or about 7 February 1997 pursuant to
the Energy Regulatory Board's Order dated 16 Second, petitioners aver that E.O. No. 392
January 1997; (ii) the prices of crude oil had implementing the full deregulation of the
been stable at $21-$23 per barrel since October downstream oil industry is arbitrary and
1996 while prices of petroleum products in the unreasonable because it was enacted due to the
world market had been stable since mid- alleged depletion of the OPSF fund — a
December of last year. Moreover, crude oil condition not found in R.A. No. 8180.
prices are beginning to soften for the last few
days while prices of some petroleum products Third, section 15 of R.A. No. 8180 and E.O. No.
had already declined; and (iii) the exchange rate 392 allow the formation of a de facto cartel
of the peso in relation to the US dollar has been among the three existing oil companies —
stable for the past twelve (12) months, averaging Petron, Caltex and Shell — in violation of the
at around P26.20 to one US dollar; constitutional prohibition against monopolies,
combinations in restraint of trade and unfair
WHEREAS, Executive Order No. 377 dated 31 competition.
October 1996 provides for an institutional
framework for the administration of the Respondents, on the other hand, fervently
deregulated industry by defining the functions defend the constitutionality of R.A. No. 8180 and
and responsibilities of various government E.O. No. 392. In addition, respondents contend
agencies; that the issues raised by the petitions are not
justiciable as they pertain to the wisdom of the
WHEREAS, pursuant to Republic Act No. 8180, law. Respondents further aver that petitioners
the deregulation of the industry will foster a truly have no locus standi as they did not sustain nor
competitive market which can better achieve the will they sustain direct injury as a result of the
social policy objectives of fair prices and implementation of R.A. No. 8180.
adequate, continuous supply of environmentally-
clean and high quality petroleum products;
 LEGAL RESEARCH ACJUCO 38

The petitions were heard by the Court on right but the duty of the judiciary to declare such
September 30, 1997. On October 7, 1997, the act as unconstitutional and void.13 We held in the
Court ordered the private respondents oil recent case of Tanada v. Angara:14
companies "to maintain the status quo and to
cease and desist from increasing the prices of xxx xxx xxx
gasoline and other petroleum fuel products for a
period of thirty (30) days . . . subject to further In seeking to nullify an act of the Philippine
orders as conditions may warrant." Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a
We shall now resolve the petitions on the merit. justiciable controversy. Where an action of the
The petitions raise procedural and substantive legislative branch is seriously alleged to have
issues bearing on the constitutionality of R.A. infringed the Constitution, it becomes not only
No. 8180 and E.O. No. 392. The procedural the right but in fact the duty of the judiciary to
issues are: (1) whether or not the petitions raise settle the dispute. The question thus posed is
a justiciable controversy, and (2) whether or not judicial rather than political. The duty to
the petitioners have the standing to assail the adjudicate remains to assure that the supremacy
validity of the subject law and executive order. of the Constitution is upheld. Once a controversy
The substantive issues are: (1) whether or not as to the application or interpretation of a
section 5 (b) violates the one title — one subject constitutional provision is raised before this
requirement of the Constitution; (2) whether or Court, it becomes a legal issue which the Court
not the same section violates the equal is bound by constitutional mandate to decide.
protection clause of the Constitution; (3) whether
or not section 15 violates the constitutional Even a sideglance at the petitions will reveal that
prohibition on undue delegation of power; (4) petitioners have raised constitutional issues
whether or not E.O. No. 392 is arbitrary and which deserve the resolution of this Court in view
unreasonable; and (5) whether or not R.A. No. of their seriousness and their value as
8180 violates the constitutional prohibition precedents. Our statement of facts and definition
against monopolies, combinations in restraint of of issues clearly show that petitioners are
trade and unfair competition. assailing R.A. No. 8180 because its provisions
infringe the Constitution and not because the law
We shall first tackle the procedural issues. lacks wisdom. The principle of separation of
Respondents claim that the avalanche of power mandates that challenges on the
arguments of the petitioners assail the wisdom constitutionality of a law should be resolved in
of R.A. No. 8180. They aver that deregulation of our courts of justice while doubts on the wisdom
the downstream oil industry is a policy decision of a law should be debated in the halls of
made by Congress and it cannot be reviewed, Congress. Every now and then, a law may be
much less be reversed by this Court. In denounced in court both as bereft of wisdom and
constitutional parlance, respondents contend constitutionally infirmed. Such denunciation will
that the petitions failed to raise a justiciable not deny this Court of its jurisdiction to resolve
controversy. the constitutionality of the said law while
prudentially refusing to pass on its wisdom.
Respondents' joint stance is unnoteworthy.
Judicial power includes not only the duty of the The effort of respondents to question the locus
courts to settle actual controversies involving standi of petitioners must also fall on barren
rights which are legally demandable and ground. In language too lucid to be
enforceable, but also the duty to determine misunderstood, this Court has brightlined its
whether or not there has been grave abuse of liberal stance on a petitioner's locus
discretion amounting to lack or excess of standi where the petitioner is able to craft an
jurisdiction on the part of any branch or issue of transcendental significance to the
instrumentality of the government.12 The courts, people.15 In Kapatiran ng mga Naglilingkod sa
as guardians of the Constitution, have the Pamahalaan ng Pilipinas, Inc. v. Tan,16 we
inherent authority to determine whether a statute stressed:
enacted by the legislature transcends the limit
imposed by the fundamental law. Where a xxx xxx xxx
statute violates the Constitution, it is not only the
 LEGAL RESEARCH ACJUCO 39

Objections to taxpayers' suit for lack of sufficient R.A. No. 8180 which fixes the time frame for the
personality, standing or interest are, however, in full deregulation of the downstream oil industry.
the main procedural matters. Considering the We restate its pertinent portion for
importance to the public of the cases at bar, and emphasis, viz.:
in keeping with the Court's duty, under the 1987
Constitution, to determine whether or not the Sec. 15. Implementation of Full Deregulation —
other branches of government have kept Pursuant to section 5(e) of Republic Act No.
themselves within the limits of the Constitution 7638, the DOE shall, upon approval of the
and the laws and that they have not abused the President, implement the full deregulation of the
discretion given to them, the Court has brushed downstream oil industry not later than March
aside technicalities of procedure and has taken 1997. As far as practicable, the DOE shall time
cognizance of these petitions. the full deregulation when the prices of crude oil
and petroleum products in the world market
There is not a dot of disagreement between the are declining and when the exchange rate of the
petitioners and the respondents on the far peso in relation to the US dollar is stable . . .
reaching importance of the validity of RA No.
8180 deregulating our downstream oil industry. Petitioners urge that the phrases "as far as
Thus, there is no good sense in being practicable," "decline of crude oil prices in the
hypertechnical on the standing of petitioners for world market" and "stability of the peso
they pose issues which are significant to our exchange rate to the US dollar" are ambivalent,
people and which deserve our forthright unclear and inconcrete in meaning. They submit
resolution. that they do not provide the "determinate or
determinable standards" which can guide the
We shall now track down the substantive issues. President in his decision to fully deregulate the
In G.R. No. 124360 where petitioner is Senator downstream oil industry. In addition, they
Tatad, it is contended that section 5(b) of R.A. contend that E.O. No. 392 which advanced the
No. 8180 on tariff differential violates the date of full deregulation is void for it illegally
provision17 of the Constitution requiring every considered the depletion of the OPSF fund as a
law to have only one subject which should be factor.
expressed in its title. We do not concur with this
contention. As a policy, this Court has adopted a The power of Congress to delegate the
liberal construction of the one title — one subject execution of laws has long been settled by this
rule. We have consistently ruled18 that the title Court. As early as 1916 in Compania General de
need not mirror, fully index or catalogue all Tabacos de Filipinas vs. The Board of Public
contents and minute details of a law. A law Utility Commissioners,21 this Court thru, Mr.
having a single general subject indicated in the Justice Moreland, held that "the true distinction
title may contain any number of provisions, no is between the delegation of power to make the
matter how diverse they may be, so long as they law, which necessarily involves a discretion as
are not inconsistent with or foreign to the general to what it shall be, and conferring authority or
subject, and may be considered in furtherance discretion as to its execution, to be exercised
of such subject by providing for the method and under and in pursuance of the law. The first
means of carrying out the general subject.19 We cannot be done; to the latter no valid objection
hold that section 5(b) providing for tariff can be made." Over the years, as the legal
differential is germane to the subject of R.A. No. engineering of men's relationship became more
8180 which is the deregulation of the difficult, Congress has to rely more on the
downstream oil industry. The section is practice of delegating the execution of laws to
supposed to sway prospective investors to put the executive and other administrative agencies.
up refineries in our country and make them rely Two tests have been developed to determine
less on imported petroleum.20 We shall, whether the delegation of the power to execute
however, return to the validity of this provision laws does not involve the abdication of the
when we examine its blocking effect on new power to make law itself. We delineated the
entrants to the oil market. metes and bounds of these tests in Eastern
Shipping Lines, Inc. VS. POEA,22 thus:
We shall now slide to the substantive issues in
G.R. No. 127867. Petitioners assail section 15 of
 LEGAL RESEARCH ACJUCO 40

There are two accepted tests to determine Petitioners contend that the words "as far as
whether or not there is a valid delegation of practicable," "declining" and "stable" should
legislative power, viz: the completeness test and have been defined in R.A. No. 8180 as they do
the sufficient standard test. Under the first test, not set determinate or determinable standards.
the law must be complete in all its terms and The stubborn submission deserves scant
conditions when it leaves the legislative such consideration. The dictionary meanings of these
that when it reaches the delegate the only thing words are well settled and cannot confuse men
he will have to do is to enforce it. Under the of reasonable intelligence. Webster defines
sufficient standard test, there must be adequate "practicable" as meaning possible to practice or
guidelines or limitations in the law to map out the perform, "decline" as meaning to take a
boundaries of the delegate's authority and downward direction, and "stable" as meaning
prevent the delegation from running riot. Both firmly established.25 The fear of petitioners that
tests are intended to prevent a total transference these words will result in the exercise of
of legislative authority to the delegate, who is not executive discretion that will run riot is thus
allowed to step into the shoes of the legislature groundless. To be sure, the Court has sustained
and exercise a power essentially legislative. the validity of similar, if not more general
standards in other cases.26
The validity of delegating legislative power is
now a quiet area in our constitutional landscape. It ought to follow that the argument that E.O. No.
As sagely observed, delegation of legislative 392 is null and void as it was based on
power has become an inevitability in light of the indeterminate standards set by R.A. 8180 must
increasing complexity of the task of government. likewise fail. If that were all to the attack against
Thus, courts bend as far back as possible to the validity of E.O. No. 392, the issue need not
sustain the constitutionality of laws which are further detain our discourse. But petitioners
assailed as unduly delegating legislative further posit the thesis that the Executive
powers. Citing Hirabayashi v. United States23 as misapplied R.A. No. 8180 when it considered the
authority, Mr. Justice Isagani A. Cruz states "that depletion of the OPSF fund as a factor in fully
even if the law does not expressly pinpoint the deregulating the downstream oil industry in
standard, the courts will bend over backward to February 1997. A perusal of section 15 of R.A.
locate the same elsewhere in order to spare the No. 8180 will readily reveal that it only
statute, if it can, from constitutional infirmity."24 enumerated two factors to be considered by the
Department of Energy and the Office of the
Given the groove of the Court's rulings, the President, viz.: (1) the time when the prices of
attempt of petitioners to strike down section 15 crude oil and petroleum products in the world
on the ground of undue delegation of legislative market are declining, and (2) the time when the
power cannot prosper. Section 15 can hurdle exchange rate of the peso in relation to the US
both the completeness test and the sufficient dollar is stable. Section 15 did not mention the
standard test. It will be noted that Congress depletion of the OPSF fund as a factor to be
expressly provided in R.A. No. 8180 that full given weight by the Executive before ordering
deregulation will start at the end of March 1997, full deregulation. On the contrary, the debates in
regardless of the occurrence of any event. Full Congress will show that some of our legislators
deregulation at the end of March 1997 is wanted to impose as a pre-condition to
mandatory and the Executive has no discretion deregulation a showing that the OPSF fund must
to postpone it for any purported reason. Thus, not be in deficit.27 We therefore hold that the
the law is complete on the question of the final Executive department failed to follow faithfully
date of full deregulation. The discretion given to the standards set by R.A. No. 8180 when it
the President is to advance the date of full considered the extraneous factor of depletion of
deregulation before the end of March 1997. the OPSF fund. The misappreciation of this extra
Section 15 lays down the standard to guide the factor cannot be justified on the ground that the
judgment of the President — he is to time it as Executive department considered anyway the
far as practicable when the prices of crude oil stability of the prices of crude oil in the world
and petroleum products in the world market market and the stability of the exchange rate of
are declining and when the exchange rate of the the peso to the dollar. By considering another
peso in relation to the US dollar is stable. 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
 LEGAL RESEARCH ACJUCO 41

alter either by subtraction or addition the xxx xxx xxx

standards set in R.A. No. 8180 for it has no
power to make laws. To cede to the Executive (b) Predatory pricing which means selling or
the power to make law is to invite tyranny, offering to sell any product at a price
indeed, to transgress the principle of separation unreasonably below the industry average cost
of powers. The exercise of delegated power is so as to attract customers to the detriment of
given a strict scrutiny by courts for the delegate competitors.
is a mere agent whose action cannot infringe the
terms of agency. In the cases at bar, the On the other hand, section 19 of Article XII of the
Executive co-mingled the factor of depletion of Constitution allegedly violated by the aforestated
the OPSF fund with the factors of decline of the provisions of R.A. No. 8180 mandates: "The
price of crude oil in the world market and the State shall regulate or prohibit monopolies when
stability of the peso to the US dollar. On the the public interest so requires. No combinations
basis of the text of E.O. No. 392, it is impossible in restraint of trade or unfair competition shall be
to determine the weight given by the Executive allowed."
department to the depletion of the OPSF fund. It
could well be the principal consideration for the A monopoly is a privilege or peculiar advantage
early deregulation. It could have been accorded vested in one or more persons or companies,
an equal significance. Or its importance could be consisting in the exclusive right or power to carry
nil. In light of this uncertainty, we rule that the on a particular business or trade, manufacture a
early deregulation under E.O. No. 392 particular article, or control the sale or the whole
constitutes a misapplication of R.A. No. 8180. supply of a particular commodity. It is a form of
market structure in which one or only a few firms
We now come to grips with the contention that dominate the total sales of a product or
some provisions of R.A. No. 8180 violate section service.28 On the other hand, a combination in
19 of Article XII of the 1987 Constitution. These restraint of trade is an agreement or
provisions are: understanding between two or more persons, in
the form of a contract, trust, pool, holding
(1) Section 5 (b) which states — "Any law to the company, or other form of association, for the
contrary notwithstanding and starting with the purpose of unduly restricting competition,
effectivity of this Act, tariff duty shall be imposed monopolizing trade and commerce in a certain
and collected on imported crude oil at the rate of commodity, controlling its, production,
three percent (3%) and imported refined distribution and price, or otherwise interfering
petroleum products at the rate of seven percent with freedom of trade without statutory
(7%) except fuel oil and LPG, the rate for which authority.29 Combination in restraint of trade
shall be the same as that for imported crude oil. refers to the means while monopoly refers to the
Provided, that beginning on January 1, 2004 the end.30
tariff rate on imported crude oil and refined
petroleum products shall be the same. Provided, Article 186 of the Revised Penal Code and
further, that this provision may be amended only Article 28 of the New Civil Code breathe life to
by an Act of Congress." this constitutional policy. Article 186 of the
Revised Penal Code penalizes monopolization
(2) Section 6 which states — "To ensure the and creation of combinations in restraint of
security and continuity of petroleum crude and trade, 31 while Article 28 of the New Civil Code
products supply, the DOE shall require the makes any person who shall engage in unfair
refiners and importers to maintain a minimum competition liable for damages.32
inventory equivalent to ten percent (10%) of their
respective annual sales volume or forty (40) Respondents aver that sections 5(b), 6 and 9(b)
days of supply, whichever is lower," and implement the policies and objectives of R.A.
No. 8180. They explain that the 4% tariff
(3) Section 9 (b) which states — "To ensure fair differential is designed to encourage new
competition and prevent cartels and monopolies entrants to invest in refineries. They stress that
in the downstream oil industry, the following acts the inventory requirement is meant to guaranty
shall be prohibited: continuous domestic supply of petroleum and to
discourage fly-by-night operators. They also
 LEGAL RESEARCH ACJUCO 42

submit that the prohibition against predatory thus matches their desires with society's
pricing is intended to protect prospective opportunity costs."35 He adds with
entrants. Respondents manifested to the Court appropriateness that there is a reliance upon
that new players have entered the Philippines "the operation of the 'market' system (free
after deregulation and have now captured 3% — enterprise) to decide what shall be produced,
5% of the oil market. how resources shall be allocated in the
production process, and to whom the various
The validity of the assailed provisions of R.A. No. products will be distributed. The market system
8180 has to be decided in light of the letter and relies on the consumer to decide what and how
spirit of our Constitution, especially section 19, much shall be produced, and on competition,
Article XII. Beyond doubt, the Constitution among producers to determine who will
committed us to the free enterprise system but it manufacture it."
is a system impressed with its own distinctness.
Thus, while the Constitution embraced free Again, we underline in scarlet that the
enterprise as an economic creed, it did not fundamental principle espoused by section 19,
prohibit per se the operation of monopolies Article XII of the Constitution is competition for it
which can, however, be regulated in the public alone can release the creative forces of the
interest.33 Thus too, our free enterprise system market. But the competition that can unleash
is not based on a market of pure and these creative forces is competition that is
unadulterated competition where the State fighting yet is fair. Ideally, this kind of competition
pursues a strict hands-off policy and follows the requires the presence of not one, not just a few
let-the-devil devour the hindmost rule. but several players. A market controlled by one
Combinations in restraint of trade and unfair player (monopoly) or dominated by a handful of
competitions are absolutely proscribed and the players (oligopoly) is hardly the market where
proscription is directed both against the State as honest-to-goodness competition will prevail.
well as the private sector.34 This distinct free Monopolistic or oligopolistic markets deserve
enterprise system is dictated by the need to our careful scrutiny and laws which barricade the
achieve the goals of our national economy as entry points of new players in the market should
defined by section 1, Article XII of the be viewed with suspicion.
Constitution which are: more equitable
distribution of opportunities, income and wealth; Prescinding from these baseline propositions,
a sustained increase in the amount of goods and we shall proceed to examine whether the
services produced by the nation for the benefit provisions of R.A. No. 8180 on tariff differential,
of the people; and an expanding productivity as inventory reserves, and predatory prices
the key to raising the quality of life for all, imposed substantial barriers to the entry and exit
especially the underprivileged. It also calls for of new players in our downstream oil industry. If
the State to protect Filipino enterprises against they do, they have to be struck down for they will
unfair competition and trade practices. necessarily inhibit the formation of a truly
competitive market. Contrariwise, if they are
Section 19, Article XII of our Constitution is anti- insignificant impediments, they need not be
trust in history and in spirit. It espouses stricken down.
competition. The desirability of competition is the
reason for the prohibition against restraint of In the cases at bar, it cannot be denied that our
trade, the reason for the interdiction of unfair downstream oil industry is operated and
competition, and the reason for regulation of controlled by an oligopoly, a foreign oligopoly at
unmitigated monopolies. Competition is thus the that. Petron, Shell and Caltex stand as the only
underlying principle of section 19, Article XII of major league players in the oil market. All other
our Constitution which cannot be violated by players belong to the lilliputian league. As the
R.A. No. 8180. We subscribe to the observation dominant players, Petron, Shell and Caltex
of Prof. Gellhorn that the objective of anti-trust boast of existing refineries of various capacities.
law is "to assure a competitive economy, based The tariff differential of 4% therefore works to
upon the belief that through competition their immense benefit. Yet, this is only one edge
producers will strive to satisfy consumer wants of the tariff differential. The other edge cuts and
at the lowest price with the sacrifice of the fewest cuts deep in the heart of their competitors. It
resources. Competition among producers allows erects a high barrier to the entry of new players.
consumers to bid for goods and services, and
 LEGAL RESEARCH ACJUCO 43

New players that intend to equalize the market monopoly profits in the future. The monopoly
power of Petron, Shell and Caltex by building profits will never materialize, however, if the
refineries of their own will have to spend billions market is flooded with new entrants as soon as
of pesos. Those who will not build refineries but the successful predator attempts to raise its
compete with them will suffer the huge price. Predatory pricing will be profitable only if
disadvantage of increasing their product cost by the market contains significant barriers to new
4%. They will be competing on an uneven field. entry.
The argument that the 4% tariff differential is
desirable because it will induce prospective As aforediscsussed, the 4% tariff differential and
players to invest in refineries puts the cart before the inventory requirement are significant barriers
the horse. The first need is to attract new players which discourage new players to enter the
and they cannot be attracted by burdening them market. Considering these significant barriers
with heavy disincentives. Without new players established by R.A. No. 8180 and the lack of
belonging to the league of Petron, Shell and players with the comparable clout of PETRON,
Caltex, competition in our downstream oil SHELL and CALTEX, the temptation for a
industry is an idle dream. dominant player to engage in predatory pricing
and succeed is a chilling reality. Petitioners'
The provision on inventory widens the balance charge that this provision on predatory pricing is
of advantage of Petron, Shell and Caltex against anti-competitive is not without reason.
prospective new players. Petron, Shell and
Caltex can easily comply with the inventory Respondents belittle these barriers with the
requirement of R.A. No. 8180 in view of their allegation that new players have entered the
existing storage facilities. Prospective market since deregulation. A scrutiny of the list
competitors again will find compliance with this of the alleged new players will, however, reveal
requirement difficult as it will entail a prohibitive that not one belongs to the class and category of
cost. The construction cost of storage facilities PETRON, SHELL and CALTEX. Indeed, there is
and the cost of inventory can thus scare no showing that any of these new players
prospective players. Their net effect is to further intends to install any refinery and effectively
occlude the entry points of new players, dampen compete with these dominant oil companies. In
competition and enhance the control of the any event, it cannot be gainsaid that the new
market by the three (3) existing oil companies. players could have been more in number and
more impressive in might if the illegal entry
Finally, we come to the provision on predatory barriers in R.A. No. 8180 were not erected.
pricing which is defined as ". . . selling or offering
to sell any product at a price unreasonably below We come to the final point. We now resolve
the industry average cost so as to attract the total effect of the untimely deregulation, the
customers to the detriment of competitors." imposition of 4% tariff differential on imported
Respondents contend that this provision works crude oil and refined petroleum products, the
against Petron, Shell and Caltex and protects requirement of inventory and the prohibition on
new entrants. The ban on predatory pricing predatory pricing on the constitutionality of R.A.
cannot be analyzed in isolation. Its validity is No. 8180. The question is whether these
interlocked with the barriers imposed by R.A. offending provisions can be individually struck
No. 8180 on the entry of new players. The down without invalidating the entire R.A. No.
inquiry should be to determine whether 8180. The ruling case law is well stated by
predatory pricing on the part of the dominant oil author Agpalo,37 viz.:
companies is encouraged by the provisions in
the law blocking the entry of new players. Text- xxx xxx xxx
writer
Hovenkamp,36 gives the authoritative answer The general rule is that where part of a statute is
and we quote: void as repugnant to the Constitution, while
another part is valid, the valid portion, if
xxx xxx xxx separable from the invalid, may stand and be
enforced. The presence of a separability clause
The rationale for predatory pricing is the in a statute creates the presumption that the
sustaining of losses today that will give a firm legislature intended separability, rather than
 LEGAL RESEARCH ACJUCO 44

complete nullity of the statute. To justify this competition can be corrupted and where market
result, the valid portion must be so far forces can be manipulated by oligopolies.
independent of the invalid portion that it is fair to
presume that the legislature would have enacted The fall out effects of the defects of R.A. No.
it by itself if it had supposed that it could not 8180 on our people have not escaped Congress.
constitutionally enact the other. Enough must A lot of our leading legislators have come out
remain to make a complete, intelligible and valid openly with bills seeking the repeal of these
statute, which carries out the legislative intent. . 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
The exception to the general rule is that when hearings conducted by the Senate Committee
the parts of a statute are so mutually dependent on Energy. The hearings revealed that (1) there
and connected, as conditions, considerations, was a need to level the playing field for the new
inducements, or compensations for each other, entrants in the downstream oil industry, and (2)
as to warrant a belief that the legislature there was no law punishing a person for selling
intended them as a whole, the nullity of one part petroleum products at unreasonable
will vitiate the rest. In making the parts of the prices. Senator Alberto G. Romulo also filed S.B.
statute dependent, conditional, or connected No. 2209 abolishing the tariff differential
with one another, the legislature intended the beginning January 1, 1998. He declared that the
statute to be carried out as a whole and would amendment ". . . would mean that instead of just
not have enacted it if one part is void, in which three (3) big oil companies there will be other
case if some parts are unconstitutional, all the major oil companies to provide more competitive
other provisions thus dependent, conditional, or prices for the market and the consuming
connected must fall with them. public." Senator Heherson T . Alvarez, one of
the principal proponents of R.A. No. 8180, also
R.A. No. 8180 contains a separability clause. filed S.B. No. 2290 increasing the penalty for
Section 23 provides that "if for any reason, any violation of its section 9. It is his opinion as
section or provision of this Act is declared expressed in the explanatory note of the bill
unconstitutional or invalid, such parts not that the present oil companies are engaged in
affected thereby shall remain in full force and cartelization despite R.A. No. 8180, viz,:
effect." This separability clause notwithstanding,
we hold that the offending provisions of R.A. No. xxx xxx xxx
8180 so permeate its essence that the entire law
has to be struck down. The provisions on tariff Since the downstream oil industry was fully
differential, inventory and predatory pricing are deregulated in February 1997, there have been
among the principal props of R.A. No. 8180. eight (8) fuel price adjustments made by the
Congress could not have deregulated the three oil majors, namely: Caltex Philippines, Inc.;
downstream oil industry without these Petron Corporation; and Pilipinas Shell
provisions. Unfortunately, contrary to their intent, Petroleum Corporation. Very noticeable in the
these provisions on tariff differential, inventory price adjustments made, however, is the
and predatory pricing inhibit fair competition, uniformity in the pump prices of practically all
encourage monopolistic power and interfere with petroleum products of the three oil companies.
the free interaction of market forces. R.A. No. This, despite the fact, that their selling rates
8180 needs provisions to vouchsafe free and fair should be determined by a combination of any of
competition. The need for these vouchsafing the following factors: the prevailing peso-dollar
provisions cannot be overstated. Before exchange rate at the time payment is made for
deregulation, PETRON, SHELL and CALTEX crude purchases, sources of crude, and
had no real competitors but did not have a free inventory levels of both crude and refined
run of the market because government controls petroleum products. The abovestated factors
both the pricing and non-pricing aspects of the should have resulted in different, rather than
oil industry. After deregulation, PETRON, identical prices.
SHELL and CALTEX remain unthreatened by
real competition yet are no longer subject to The fact that the three (3) oil companies'
control by government with respect to their petroleum products are uniformly priced
pricing and non-pricing decisions. The aftermath suggests collusion, amounting to cartelization,
of R.A. No. 8180 is a deregulated market where
 LEGAL RESEARCH ACJUCO 45

among Caltex Philippines, Inc., Petron Thus, instead of achieving the desired effects of
Corporation and Pilipinas Shell Petroleum deregulation, that of free enterprise and a level
Corporation to fix the prices of petroleum playing field in the downstream oil industry, R.A.
products in violation of paragraph (a), Section 9 8180 has created an environment conducive to
of R.A. No. 8180. cartelization, unfavorable, increased, unrealistic
prices of petroleum products in the country by
To deter this pernicious practice and to assure the three existing refineries.
that present and prospective players in the
downstream oil industry conduct their business Representative Marcial C. Punzalan, Jr., filed
with conscience and propriety, cartel-like H.B. No. 9981 to prevent collusion among the
activities ought to be severely penalized. present oil companies by strengthening the
oversight function of the government,
Senator Francisco S. Tatad also filed S.B. No. particularly its ability to subject to a review any
2307 providing for a uniform tariff rate on adjustment in the prices of gasoline and other
imported crude oil and refined petroleum petroleum products. In the explanatory note of
products. In the explanatory note of the bill, he the bill, Rep. Punzalan, Jr., said:
declared in no uncertain terms that ". . . the
present set-up has raised serious public concern xxx xxx xxx
over the way the three oil companies have
uniformly adjusted the prices of oil in the To avoid this, the proposed bill seeks to
country, an indication of a possible existence of strengthen the oversight function of government,
a cartel or a cartel-like situation within the particularly its ability to review the prices set for
downstream oil industry. This situation is mostly gasoline and other petroleum products. It grants
attributed to the foregoing provision on tariff the Energy Regulatory Board (ERB) the
differential, which has effectively discouraged authority to review prices of oil and other
the entry of new players in the downstream oil petroleum products, as may be petitioned by a
industry." person, group or any entity, and to subsequently
compel any entity in the industry to submit any
In the House of Representatives, the moves to and all documents relevant to the imposition of
rehabilitate R.A. No. 8180 are equally new prices. In cases where the Board
feverish. Representative Leopoldo E. San determines that there exist collusion, economic
Buenaventura has filed H.B. No. 9826 removing conspiracy, unfair trade practice, profiteering
the tariff differential for imported crude oil and and/or overpricing, it may take any step
imported refined petroleum products. In the necessary to protect the public, including the
explanatory note of the bill, Rep. Buenaventura readjustment of the prices of petroleum
explained: products. Further, the Board may also impose
the fine and penalty of imprisonment, as
xxx xxx xxx prescribed in Section 9 of R.A. 8180, on any
person or entity from the oil industry who is found
As we now experience, this difference in tariff guilty of such prohibited acts.
rates between imported crude oil and imported
refined petroleum products, unwittingly provided By doing all of the above, the measure will
a built-in-advantage for the three existing oil effectively provide Filipino consumers with a
refineries in the country and eliminating venue where their grievances can be heard and
competition which is a must in a free enterprise immediately acted upon by government.
economy. Moreover, it created a disincentive for
other players to engage even initially in the Thus, this bill stands to benefit the Filipino
importation and distribution of refined petroleum consumer by making the price-setting process
products and ultimately in the putting up of more transparent and making it easier to
refineries. This tariff differential virtually created prosecute those who perpetrate such prohibited
a monopoly of the downstream oil industry by the acts as collusion, overpricing, economic
existing three oil companies as shown by their conspiracy and unfair trade.
uniform and capricious pricing of their products
since this law took effect, to the great Representative Sergio A.F . Apostol filed H.B.
disadvantage of the consuming public. No. 10039 to remedy an omission in R.A. No.
 LEGAL RESEARCH ACJUCO 46

8180 where there is no agency in government Contrary to the projections at the time the bill on
that determines what is "reasonable" increase in the Downstream Oil Industry Deregulation was
the prices of oil products. Representative Dente discussed and debated upon in the plenary
O. Tinga, one of the principal sponsors of R.A. session prior to its approval into law, there aren't
No. 8180, filed H.B. No. 10057 to strengthen its any new players or investors in the oil industry.
anti-trust provisions. He elucidated in its Thus, resulting in practically a cartel or
explanatory note: monopoly in the oil industry by the three (3) big
oil companies, Caltex, Shell and Petron. So
xxx xxx xxx much so, that with the deregulation now being
partially implemented, the said oil companies
The definition of predatory pricing, however, have succeeded in increasing the prices of most
needs to be tightened up particularly with of their petroleum products with little or no
respect to the definitive benchmark price and the interference at all from the government. In the
specific anti-competitive intent. The definition in month of August, there was an increase of Fifty
the bill at hand which was taken from centavos (50¢) per liter by subsidizing the same
the Areeda-Turner test in the United States on with the OPSF, this is only temporary as in
predatory pricing resolves the questions. The March 1997, or a few months from now, there
definition reads, "Predatory pricing means will be full deregulation (Phase II) whereby the
selling or offering to sell any oil product at a price increase in the prices of petroleum products will
below the average variable cost for the purpose be fully absorbed by the consumers since OPSF
of destroying competition, eliminating a will already be abolished by then. Certainly, this
competitor or discouraging a competitor from would make the lives of our people, especially
entering the market." the unemployed ones, doubly difficult and
unbearable.
The appropriate actions which may be resorted
to under the Rules of Court in conjunction with The much ballyhooed coming in of new players
the oil deregulation law are adequate. But to in the oil industry is quite remote considering that
stress their availability and dynamism, it is a these prospective investors cannot fight the
good move to incorporate all the remedies in the existing and well established oil companies in
law itself. Thus, the present bill formalizes the the country today, namely, Caltex, Shell and
concept of government intervention and private Petron. Even if these new players will come in,
suits to address the problem of antitrust they will still have no chance to compete with the
violations. Specifically, the government may file said three (3) existing big oil companies
an action to prevent or restrain any act of considering that there is an imposition of oil tariff
cartelization or predatory pricing, and if it has differential of 4% between importation of crude
suffered any loss or damage by reason of the oil by the said oil refineries paying only 3% tariff
antitrust violation it may recover damages. rate for the said importation and 7% tariff rate to
Likewise, a private person or entity may sue to be paid by businessmen who have no oil
prevent or restrain any such violation which will refineries in the Philippines but will import
result in damage to his business or property, and finished petroleum/oil products which is being
if he has already suffered damage he shall taxed with 7% tariff rates.
recover treble damages. A class suit may also
be allowed. So, if only to help the many who are poor from
further suffering as a result of unmitigated
To make the DOE Secretary more effective in increase in oil products due to deregulation, it is
the enforcement of the law, he shall be given a must that the Downstream Oil Industry
additional powers to gather information and to Deregulation Act of 1996, or R.A.8180 be
require reports. repealed completely.

Representative Erasmo B. Damasing filed H.B. Various resolutions have also been filed in the
No. 7885 and has a more unforgiving view of Senate calling for an immediate and
R.A. No. 8180. He wants it completely repealed. comprehensive review of R.A. No. 8180 to
He explained: prevent the downpour of its ill effects on the
people. Thus, S. Res. No. 574 was filed
xxx xxx xxx by Senator Gloria M. Macapagal entitled
 LEGAL RESEARCH ACJUCO 47

Resolution "Directing the Committee on Energy Senator Alberto G. Romulo filed S. Res. No. 769
to Inquire Into The Proper Implementation of the entitled resolution "Directing the Committees on
Deregulation of the Downstream Oil Industry Energy and Public Services In Aid Of Legislation
and Oil Tax Restructuring As Mandated Under To Assess The Immediate Medium And Long
R.A. Nos. 8180 and 8184, In Order to Make The Term Impact of Oil Deregulation On Oil Prices
Necessary Corrections In the Apparent And The Economy." Among the reasons for the
Misinterpretation Of The Intent And Provision Of resolution is the finding that "the requirement of
The Laws And Curb The Rising Tide Of a 40-day stock inventory effectively limits the
Disenchantment Among The Filipino entry of other oil firms in the market with the
Consumers And Bring About The Real consequence that instead of going down oil
Intentions And Benefits Of The Said prices will rise."
Law." Senator Blas P. Ople filed S. Res. No. 664
entitled resolution "Directing the Committee on Parallel resolutions have been filed in the House
Energy To Conduct An Inquiry In Aid Of of Representatives. Representative Dante
Legislation To Review The Government's Oil O. Tinga filed H. Res. No. 1311 "Directing The
Deregulation Policy In Light Of The Successive Committee on Energy To Conduct An Inquiry, In
Increases In Transportation, Electricity And Aid of Legislation, Into The Pricing Policies And
Power Rates, As well As Of Food And Other Decisions Of The Oil Companies Since The
Prime Commodities And Recommend Implementation of Full Deregulation Under the
Appropriate Amendments To Protect The Oil Deregulation Act (R.A. No. 8180) For the
Consuming Public." Senator Ople observed: Purpose of Determining In the Context Of The
Oversight Functions Of Congress Whether The
xxx xxx xxx Conduct Of The Oil Companies, Whether Singly
Or Collectively, Constitutes Cartelization Which
WHEREAS, since the passage of R.A. No. 8180, Is A Prohibited Act Under R.A. No. 8180, And
the Energy Regulatory Board (ERB) has What Measures Should Be Taken To Help
imposed successive increases in oil prices Ensure The Successful Implementation Of The
which has triggered increases in electricity and Law In Accordance With Its Letter And Spirit,
power rates, transportation fares, as well as in Including Recommending Criminal Prosecution
prices of food and other prime commodities to Of the Officers Concerned Of the Oil Companies
the detriment of our people, particularly the poor; If Warranted By The Evidence, And For Other
Purposes." Representatives Marcial
WHEREAS, the new players that were expected C. Punzalan, Jr. Dante O. Tinga and Antonio
to compete with the oil cartel-Shell, Caltex and E. Bengzon III filed H.R. No. 894 directing the
Petron-have not come in; House Committee on Energy to inquire into the
proper implementation of the deregulation of the
WHEREAS, it is imperative that a review of the downstream oil industry. House Resolution No.
oil deregulation policy be made to consider 1013 was also filed by Representatives Edcel
appropriate amendments to the existing law C. Lagman, Enrique T . Garcia, Jr. and Joker
such as an extension of the transition phase P.Arroyo urging the President to immediately
before full deregulation in order to give the suspend the implementation of E.O. No. 392.
competitive market enough time to develop;
In recent memory there is no law enacted by the
WHEREAS, the review can include the legislature afflicted with so much constitutional
advisability of providing some incentives in order deformities as R.A. No. 8180. Yet, R.A. No. 8180
to attract the entry of new oil companies to effect deals with oil, a commodity whose supply and
a dynamic competitive market; price affect the ebb and flow of the lifeblood of
the nation. Its shortage of supply or a slight,
WHEREAS, it may also be necessary to defer upward spiral in its price shakes our economic
the setting up of the institutional framework for foundation. Studies show that the areas most
full deregulation of the oil industry as mandated impacted by the movement of oil are food
under Executive Order No. 377 issued by manufacture, land transport, trade, electricity
President Ramos last October 31, 1996 . . . 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
 LEGAL RESEARCH ACJUCO 48

bowls. R.A. No. 8180 with its anti-competition people's economic rights may appear heartless
provisions cannot be allowed by this Court to because it cannot be half-hearted.
stand even while Congress is working to remedy
its defects. IN VIEW WHEREOF, the petitions are granted.
R.A. No. 8180 is declared unconstitutional and
The Court, however, takes note of the plea of E.O. No. 372 void.
PETRON, SHELL and CALTEX to lift our
restraining order to enable them to adjust SO ORDERED.
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
 LEGAL RESEARCH ACJUCO 49

G.R. No. 115455 October 30, 1995 KILOSBAYAN, INC., JOVITO R. SALONGA,
CIRILO A. RIGOS, ERME CAMBA, EMILIO C.
ARTURO M. TOLENTINO, petitioner, CAPULONG, JR., JOSE T. APOLO, EPHRAIM
vs. TENDERO, FERNANDO SANTIAGO, JOSE
THE SECRETARY OF FINANCE and THE ABCEDE, CHRISTINE TAN, FELIPE L.
COMMISSIONER OF INTERNAL GOZON, RAFAEL G. FERNANDO, RAOUL V.
REVENUE, respondents. VICTORINO, JOSE CUNANAN, QUINTIN S.
DOROMAL, MOVEMENT OF ATTORNEYS
G.R. No. 115525 October 30, 1995 FOR BROTHERHOOD, INTEGRITY AND
NATIONALISM, INC. ("MABINI"), FREEDOM
JUAN T. DAVID, petitioner, FROM DEBT COALITION, INC., and
vs. PHILIPPINE BIBLE SOCIETY, INC. and
TEOFISTO T. GUINGONA, JR., as Executive WIGBERTO TAÑADA, petitioners,
Secretary; ROBERTO DE OCAMPO, as vs.
Secretary of Finance; LIWAYWAY VINZONS- THE EXECUTIVE SECRETARY, THE
CHATO, as Commissioner of Internal SECRETARY OF FINANCE, THE
Revenue; and their AUTHORIZED AGENTS COMMISSIONER OF INTERNAL REVENUE
OR REPRESENTATIVES, respondents. and THE COMMISSIONER OF
CUSTOMS, respondents.
G.R. No. 115543 October 30, 1995
G.R. No. 115852 October 30, 1995
RAUL S. ROCO and the INTEGRATED BAR
OF THE PHILIPPINES, petitioners, PHILIPPINE AIRLINES, INC., petitioner,
vs. vs.
THE SECRETARY OF THE DEPARTMENT OF THE SECRETARY OF FINANCE and
FINANCE; THE COMMISSIONERS OF THE COMMISSIONER OF INTERNAL
BUREAU OF INTERNAL REVENUE AND REVENUE, respondents.
BUREAU OF CUSTOMS, respondents.
G.R. No. 115873 October 30, 1995
G.R. No. 115544 October 30, 1995
COOPERATIVE UNION OF THE
PHILIPPINE PRESS INSTITUTE, INC.; EGP PHILIPPINES, petitioner,
PUBLISHING CO., INC.; KAMAHALAN vs.
PUBLISHING CORPORATION; PHILIPPINE HON. LIWAYWAY V. CHATO, in her capacity
JOURNALISTS, INC.; JOSE L. PAVIA; and as the Commissioner of Internal Revenue,
OFELIA L. DIMALANTA, petitioners, HON. TEOFISTO T. GUINGONA, JR., in his
vs. capacity as Executive Secretary, and HON.
HON. LIWAYWAY V. CHATO, in her capacity ROBERTO B. DE OCAMPO, in his capacity as
as Commissioner of Internal Revenue; HON. Secretary of Finance, respondents.
TEOFISTO T. GUINGONA, JR., in his capacity
as Executive Secretary; and HON. ROBERTO G.R. No. 115931 October 30, 1995
B. DE OCAMPO, in his capacity as Secretary
of Finance, respondents. PHILIPPINE EDUCATIONAL PUBLISHERS
ASSOCIATION, INC. and ASSOCIATION OF
G.R. No. 115754 October 30, 1995 PHILIPPINE BOOK SELLERS, petitioners,
vs.
CHAMBER OF REAL ESTATE AND HON. ROBERTO B. DE OCAMPO, as the
BUILDERS ASSOCIATIONS, INC., Secretary of Finance; HON. LIWAYWAY V.
(CREBA), petitioner, CHATO, as the Commissioner of Internal
vs. Revenue; and HON. GUILLERMO PARAYNO,
THE COMMISSIONER OF INTERNAL JR., in his capacity as the Commissioner of
REVENUE, respondent. Customs, respondents.

G.R. No. 115781 October 30, 1995 RESOLUTION

 LEGAL RESEARCH ACJUCO 50

MENDOZA, J.: The enactment of S. No. 1630 is not the only

instance in which the Senate proposed an
These are motions seeking reconsideration of amendment to a House revenue bill by enacting
our decision dismissing the petitions filed in its own version of a revenue bill. On at least two
these cases for the declaration of occasions during the Eighth Congress, the
unconstitutionality of R.A. No. 7716, otherwise Senate passed its own version of revenue bills,
known as the Expanded Value-Added Tax Law. which, in consolidation with House bills earlier
The motions, of which there are 10 in all, have passed, became the enrolled bills. These were:
been filed by the several petitioners in these
cases, with the exception of the Philippine R.A. No. 7369 (AN ACT TO AMEND THE
Educational Publishers Association, Inc. and the OMNIBUS INVESTMENTS CODE OF 1987 BY
Association of Philippine Booksellers, petitioners EXTENDING FROM FIVE (5) YEARS TO TEN
in G.R. No. 115931. YEARS THE PERIOD FOR TAX AND DUTY
EXEMPTION AND TAX CREDIT ON CAPITAL
The Solicitor General, representing the EQUIPMENT) which was approved by the
respondents, filed a consolidated comment, to President on April 10, 1992. This Act is actually
which the Philippine Airlines, Inc., petitioner in a consolidation of H. No. 34254, which was
G.R. No. 115852, and the Philippine Press approved by the House on January 29, 1992,
Institute, Inc., petitioner in G.R. No. 115544, and and S. No. 1920, which was approved by the
Juan T. David, petitioner in G.R. No. 115525, Senate on February 3, 1992.
each filed a reply. In turn the Solicitor General
filed on June 1, 1995 a rejoinder to the PPI's R.A. No. 7549 (AN ACT GRANTING TAX
reply. EXEMPTIONS TO WHOEVER SHALL GIVE
REWARD TO ANY FILIPINO ATHLETE
On June 27, 1995 the matter was submitted for WINNING A MEDAL IN OLYMPIC GAMES)
resolution. which was approved by the President on May
22, 1992. This Act is a consolidation of H. No.
I. Power of the Senate to propose amendments 22232, which was approved by the House of
to revenue bills. Some of the petitioners Representatives on August 2, 1989, and S. No.
(Tolentino, Kilosbayan, Inc., Philippine Airlines 807, which was approved by the Senate on
(PAL), Roco, and Chamber of Real Estate and October 21, 1991.
Builders Association (CREBA)) reiterate
previous claims made by them that R.A. No. On the other hand, the Ninth Congress passed
7716 did not "originate exclusively" in the House revenue laws which were also the result of the
of Representatives as required by Art. VI, §24 of consolidation of House and Senate bills. These
the Constitution. Although they admit that H. No. are the following, with indications of the dates on
11197 was filed in the House of Representatives which the laws were approved by the President
where it passed three readings and that and dates the separate bills of the two chambers
afterward it was sent to the Senate where after of Congress were respectively passed:
first reading it was referred to the Senate Ways
and Means Committee, they complain that the 1. R.A. NO. 7642
Senate did not pass it on second and third
readings. Instead what the Senate did was to AN ACT INCREASING THE PENALTIES FOR
pass its own version (S. No. 1630) which it TAX EVASION, AMENDING FOR THIS
approved on May 24, 1994. Petitioner Tolentino PURPOSE THE PERTINENT SECTIONS OF
adds that what the Senate committee should THE NATIONAL INTERNAL REVENUE CODE
have done was to amend H. No. 11197 by (December 28, 1992).
striking out the text of the bill and substituting it
with the text of S. No. 1630. That way, it is said, House Bill No. 2165, October 5, 1992
"the bill remains a House bill and the Senate
version just becomes the text (only the text) of Senate Bill No. 32, December 7, 1992
the House bill."
2. R.A. NO. 7643
The contention has no merit.
 LEGAL RESEARCH ACJUCO 51

AN ACT TO EMPOWER THE COMMISSIONER GOVERNMENT, AND FOR OTHER

OF INTERNAL REVENUE TO REQUIRE THE PURPOSES (November 9, 1993)
PAYMENT OF THE VALUE-ADDED TAX
EVERY MONTH AND TO ALLOW LOCAL House Bill No. 11024, November 3, 1993
GOVERNMENT UNITS TO SHARE IN VAT
REVENUE, AMENDING FOR THIS PURPOSE Senate Bill No. 1168, November 3, 1993
CERTAIN SECTIONS OF THE NATIONAL
INTERNAL REVENUE CODE (December 28, 6. R.A. NO. 7660
1992)
AN ACT RATIONALIZING FURTHER THE
House Bill No. 1503, September 3, 1992 STRUCTURE AND ADMINISTRATION OF THE
DOCUMENTARY STAMP TAX, AMENDING
Senate Bill No. 968, December 7, 1992 FOR THE PURPOSE CERTAIN PROVISIONS
OF THE NATIONAL INTERNAL REVENUE
3. R.A. NO. 7646 CODE, AS AMENDED, ALLOCATING FUNDS
FOR SPECIFIC PROGRAMS, AND FOR
AN ACT AUTHORIZING THE COMMISSIONER OTHER PURPOSES (December 23, 1993)
OF INTERNAL REVENUE TO PRESCRIBE
THE PLACE FOR PAYMENT OF INTERNAL House Bill No. 7789, May 31, 1993
REVENUE TAXES BY LARGE TAXPAYERS,
AMENDING FOR THIS PURPOSE CERTAIN Senate Bill No. 1330, November 18, 1993
PROVISIONS OF THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED (February 24, 7. R.A. NO. 7717
1993)
AN ACT IMPOSING A TAX ON THE SALE,
House Bill No. 1470, October 20, 1992 BARTER OR EXCHANGE OF SHARES OF
STOCK LISTED AND TRADED THROUGH
Senate Bill No. 35, November 19, 1992 THE LOCAL STOCK EXCHANGE OR
THROUGH INITIAL PUBLIC OFFERING,
4. R.A. NO. 7649 AMENDING FOR THE PURPOSE THE
NATIONAL INTERNAL REVENUE CODE, AS
AN ACT REQUIRING THE GOVERNMENT OR AMENDED, BY INSERTING A NEW SECTION
ANY OF ITS POLITICAL SUBDIVISIONS, AND REPEALING CERTAIN SUBSECTIONS
INSTRUMENTALITIES OR AGENCIES THEREOF (May 5, 1994)
INCLUDING GOVERNMENT-OWNED OR
CONTROLLED CORPORATIONS (GOCCS) House Bill No. 9187, November 3, 1993
TO DEDUCT AND WITHHOLD THE VALUE-
ADDED TAX DUE AT THE RATE OF THREE Senate Bill No. 1127, March 23, 1994
PERCENT (3%) ON GROSS PAYMENT FOR
THE PURCHASE OF GOODS AND SIX Thus, the enactment of S. No. 1630 is not the
PERCENT (6%) ON GROSS RECEIPTS FOR only instance in which the Senate, in the
SERVICES RENDERED BY CONTRACTORS exercise of its power to propose amendments to
(April 6, 1993) bills required to originate in the House, passed
its own version of a House revenue measure. It
House Bill No. 5260, January 26, 1993 is noteworthy that, in the particular case of S. No.
1630, petitioners Tolentino and Roco, as
Senate Bill No. 1141, March 30, 1993 members of the Senate, voted to approve it on
second and third readings.
5. R.A. NO. 7656
On the other hand, amendment by substitution,
AN ACT REQUIRING GOVERNMENT-OWNED in the manner urged by petitioner Tolentino,
OR CONTROLLED CORPORATIONS TO concerns a mere matter of form. Petitioner has
DECLARE DIVIDENDS UNDER CERTAIN not shown what substantial difference it would
CONDITIONS TO THE NATIONAL make if, as the Senate actually did in this case,
a separate bill like S. No. 1630 is instead
 LEGAL RESEARCH ACJUCO 52

enacted as a substitute measure, "taking into The addition of the word "exclusively" in the
Consideration . . . H.B. 11197." Philippine Constitution and the decision to drop
the phrase "as on other Bills" in the American
Indeed, so far as pertinent, the Rules of the version, according to petitioners, shows the
Senate only provide: intention of the framers of our Constitution to
restrict the Senate's power to propose
RULE XXIX amendments to revenue bills. Petitioner
Tolentino contends that the word "exclusively"
AMENDMENTS was inserted to modify "originate" and "the
words 'as in any other bills' (sic) were eliminated
xxx xxx xxx so as to show that these bills were not to be like
other bills but must be treated as a special kind."
§68. Not more than one amendment to the
original amendment shall be considered. The history of this provision does not support this
contention. The supposed indicia of
No amendment by substitution shall be constitutional intent are nothing but the relics of
entertained unless the text thereof is submitted an unsuccessful attempt to limit the power of the
in writing. Senate. It will be recalled that the 1935
Constitution originally provided for a unicameral
Any of said amendments may be withdrawn National Assembly. When it was decided in 1939
before a vote is taken thereon. to change to a bicameral legislature, it became
necessary to provide for the procedure for
§69. No amendment which seeks the inclusion lawmaking by the Senate and the House of
of a legislative provision foreign to the subject Representatives. The work of proposing
matter of a bill (rider) shall be entertained. amendments to the Constitution was done by
the National Assembly, acting as a constituent
assembly, some of whose members, jealous of
xxx xxx xxx
preserving the Assembly's lawmaking powers,
sought to curtail the powers of the proposed
§70-A. A bill or resolution shall not be amended
Senate. Accordingly they proposed the following
by substituting it with another which covers a
provision:
subject distinct from that proposed in the original
bill or resolution. (emphasis added).
All bills appropriating public funds, revenue or
tariff bills, bills of local application, and private
Nor is there merit in petitioners' contention that,
bills shall originate exclusively in the Assembly,
with regard to revenue bills, the Philippine
but the Senate may propose or concur with
Senate possesses less power than the U.S.
amendments. In case of disapproval by the
Senate because of textual differences between
Senate of any such bills, the Assembly may
constitutional provisions giving them the power
repass the same by a two-thirds vote of all its
to propose or concur with amendments.
members, and thereupon, the bill so repassed
shall be deemed enacted and may be submitted
Art. I, §7, cl. 1 of the U.S. Constitution reads: to the President for corresponding action. In the
event that the Senate should fail to finally act on
All Bills for raising Revenue shall originate in the any such bills, the Assembly may, after thirty
House of Representatives; but the Senate may days from the opening of the next regular
propose or concur with amendments as on other session of the same legislative term, reapprove
Bills. the same with a vote of two-thirds of all the
members of the Assembly. And upon such
Art. VI, §24 of our Constitution reads: reapproval, the bill shall be deemed enacted and
may be submitted to the President for
All appropriation, revenue or tariff bills, bills corresponding action.
authorizing increase of the public debt, bills of
local application, and private bills shall originate The special committee on the revision of laws of
exclusively in the House of Representatives, but the Second National Assembly vetoed the
the Senate may propose or concur with proposal. It deleted everything after the first
amendments.
 LEGAL RESEARCH ACJUCO 53

sentence. As rewritten, the proposal was because it is more numerous in membership and
approved by the National Assembly and therefore also more representative of the
embodied in Resolution No. 38, as amended by people. Moreover, its members are presumed to
Resolution No. 73. (J. ARUEGO, KNOW YOUR be more familiar with the needs of the country in
CONSTITUTION 65-66 (1950)). The proposed regard to the enactment of the legislation
amendment was submitted to the people and involved.
ratified by them in the elections held on June 18,
1940. The Senate is, however, allowed much leeway
in the exercise of its power to propose or concur
This is the history of Art. VI, §18 (2) of the 1935 with amendments to the bills initiated by the
Constitution, from which Art. VI, §24 of the House of Representatives. Thus, in one case, a
present Constitution was derived. It explains bill introduced in the U.S. House of
why the word "exclusively" was added to the Representatives was changed by the Senate to
American text from which the framers of the make a proposed inheritance tax a corporation
Philippine Constitution borrowed and why the tax. It is also accepted practice for the Senate to
phrase "as on other Bills" was not copied. introduce what is known as an amendment by
Considering the defeat of the proposal, the substitution, which may entirely replace the bill
power of the Senate to propose amendments initiated in the House of Representatives.
must be understood to be full, plenary and
complete "as on other Bills." Thus, because (I. CRUZ, PHILIPPINE POLITICAL LAW 144-
revenue bills are required to originate 145 (1993)).
exclusively in the House of Representatives, the
Senate cannot enact revenue measures of its In sum, while Art. VI, §24 provides that all
own without such bills. After a revenue bill is appropriation, revenue or tariff bills, bills
passed and sent over to it by the House, authorizing increase of the public debt, bills of
however, the Senate certainly can pass its own local application, and private bills must "originate
version on the same subject matter. This follows exclusively in the House of Representatives," it
from the coequality of the two chambers of also adds, "but the Senate may propose or
Congress. concur with amendments." In the exercise of this
power, the Senate may propose an entirely new
That this is also the understanding of book bill as a substitute measure. As petitioner
authors of the scope of the Senate's power to Tolentino states in a high school text, a
concur is clear from the following commentaries: committee to which a bill is referred may do any
of the following:
The power of the Senate to propose or concur
with amendments is apparently without (1) to endorse the bill without changes; (2) to
restriction. It would seem that by virtue of this make changes in the bill omitting or adding
power, the Senate can practically re-write a bill sections or altering its language; (3) to make and
required to come from the House and leave only endorse an entirely new bill as a substitute, in
a trace of the original bill. For example, a general which case it will be known as a committee bill;
revenue bill passed by the lower house of the or (4) to make no report at all.
United States Congress contained provisions for
the imposition of an inheritance tax . This was (A. TOLENTINO, THE GOVERNMENT OF THE
changed by the Senate into a corporation tax. PHILIPPINES 258 (1950))
The amending authority of the Senate was
declared by the United States Supreme Court to To except from this procedure the amendment
be sufficiently broad to enable it to make the of bills which are required to originate in the
alteration. [Flint v. Stone Tracy Company, 220 House by prescribing that the number of the
U.S. 107, 55 L. ed. 389]. House bill and its other parts up to the enacting
clause must be preserved although the text of
(L. TAÑADA AND F. CARREON, POLITICAL the Senate amendment may be incorporated in
LAW OF THE PHILIPPINES 247 (1961)) place of the original body of the bill is to insist on
a mere technicality. At any rate there is no rule
The above-mentioned bills are supposed to be prescribing this form. S. No. 1630, as a
initiated by the House of Representatives substitute measure, is therefore as much an
 LEGAL RESEARCH ACJUCO 54

amendment of H. No. 11197 as any which the MR. DURAN. Therefore, I raise this question of
Senate could have made. order as to procedure: If a House bill is passed
by the House but not passed by the Senate, and
II. S. No. 1630 a mere amendment of a Senate bill of a similar nature is passed in the
H. No. 11197. Petitioners' basic error is that they Senate but never passed in the House, can the
assume that S. No. 1630 is an independent and two bills be the subject of a conference, and can
distinct bill. Hence their repeated references to a law be enacted from these two bills? I
its certification that it was passed by the Senate understand that the Senate bill in this particular
"in substitution of S.B. No. 1129, taking into instance does not refer to investments in
consideration P.S. Res. No. 734 government securities, whereas the bill in the
and H.B. No. 11197," implying that there is House, which was introduced by the Speaker,
something substantially different between the covers two subject matters: not only
reference to S. No. 1129 and the reference to H. investigation of deposits in banks but also
No. 11197. From this premise, they conclude investigation of investments in government
that R.A. No. 7716 originated both in the House securities. Now, since the two bills differ in their
and in the Senate and that it is the product of two subject matter, I believe that no law can be
"half-baked bills because neither H. No. 11197 enacted.
nor S. No. 1630 was passed by both houses of
Congress." Ruling on the point of order raised, the chair
(Speaker Jose B. Laurel, Jr.) said:
In point of fact, in several instances the
provisions of S. No. 1630, clearly appear to be THE SPEAKER. The report of the conference
mere amendments of the corresponding committee is in order. It is precisely in cases like
provisions of H. No. 11197. The very tabular this where a conference should be had. If the
comparison of the provisions of H. No. 11197 House bill had been approved by the Senate,
and S. No. 1630 attached as Supplement A to there would have been no need of a conference;
the basic petition of petitioner Tolentino, while but precisely because the Senate passed
showing differences between the two bills, at the another bill on the same subject matter, the
same time indicates that the provisions of the conference committee had to be created, and
Senate bill were precisely intended to be we are now considering the report of that
amendments to the House bill. committee.

Without H. No. 11197, the Senate could not have (2 CONG. REC. NO. 13, July 27, 1955, pp.
enacted S. No. 1630. Because the Senate bill 3841-42 (emphasis added))
was a mere amendment of the House bill, H. No.
11197 in its original form did not have to pass III. The President's certification. The fallacy in
the Senate on second and three readings. It was thinking that H. No. 11197 and S. No. 1630 are
enough that after it was passed on first reading distinct and unrelated measures also accounts
it was referred to the Senate Committee on for the petitioners' (Kilosbayan's and PAL's)
Ways and Means. Neither was it required that S. contention that because the President
No. 1630 be passed by the House of separately certified to the need for the
Representatives before the two bills could be immediate enactment of these measures, his
referred to the Conference Committee. certification was ineffectual and void. The
certification had to be made of the version of the
There is legislative precedent for what was done same revenue bill which at the moment was
in the case of H. No. 11197 and S. No. 1630. being considered. Otherwise, to follow
When the House bill and Senate bill, which petitioners' theory, it would be necessary for the
became R.A. No. 1405 (Act prohibiting the President to certify as many bills as are
disclosure of bank deposits), were referred to a presented in a house of Congress even though
conference committee, the question was raised the bills are merely versions of the bill he has
whether the two bills could be the subject of such already certified. It is enough that he certifies the
conference, considering that the bill from one bill which, at the time he makes the certification,
house had not been passed by the other and is under consideration. Since on March 22, 1994
vice versa. As Congressman Duran put the the Senate was considering S. No. 1630, it was
question: that bill which had to be certified. For that matter
 LEGAL RESEARCH ACJUCO 55

on June 1, 1993 the President had earlier (2) No bill passed by either House shall become
certified H. No. 9210 for immediate enactment a law unless it has passed three readings on
because it was the one which at that time was separate days, and printed copies thereof in its
being considered by the House. This bill was final form have been distributed to its Members
later substituted, together with other bills, by H. three days before its passage, except when the
No. 11197. President certifies to the necessity of its
immediate enactment to meet a public calamity
As to what Presidential certification can or emergency. Upon the last reading of a bill, no
accomplish, we have already explained in the amendment thereto shall be allowed, and the
main decision that the phrase "except when the vote thereon shall be taken immediately
President certifies to the necessity of its thereafter, and the yeas and nays entered in the
immediate enactment, etc." in Art. VI, §26 (2) Journal.
qualifies not only the requirement that "printed
copies [of a bill] in its final form [must be] The exception is based on the prudential
distributed to the members three days before its consideration that if in all cases three readings
passage" but also the requirement that before a on separate days are required and a bill has to
bill can become a law it must have passed "three be printed in final form before it can be passed,
readings on separate days." There is not only the need for a law may be rendered academic
textual support for such construction but by the occurrence of the very emergency or
historical basis as well. public calamity which it is meant to address.

Art. VI, §21 (2) of the 1935 Constitution originally Petitioners further contend that a "growing
provided: budget deficit" is not an emergency, especially
in a country like the Philippines where budget
(2) No bill shall be passed by either House deficit is a chronic condition. Even if this were
unless it shall have been printed and copies the case, an enormous budget deficit does not
thereof in its final form furnished its Members at make the need for R.A. No. 7716 any less urgent
least three calendar days prior to its passage, or the situation calling for its enactment any less
except when the President shall have certified to an emergency.
the necessity of its immediate enactment. Upon
the last reading of a bill, no amendment thereof Apparently, the members of the Senate
shall be allowed and the question upon its (including some of the petitioners in these
passage shall be taken immediately thereafter, cases) believed that there was an urgent need
and the yeas and nays entered on the Journal. for consideration of S. No. 1630, because they
responded to the call of the President by voting
When the 1973 Constitution was adopted, it was on the bill on second and third readings on the
provided in Art. VIII, §19 (2): same day. While the judicial department is not
bound by the Senate's acceptance of the
(2) No bill shall become a law unless it has President's certification, the respect due coequal
passed three readings on separate days, and departments of the government in matters
printed copies thereof in its final form have been committed to them by the Constitution and the
distributed to the Members three days before its absence of a clear showing of grave abuse of
passage, except when the Prime Minister discretion caution a stay of the judicial hand.
certifies to the necessity of its immediate
enactment to meet a public calamity or At any rate, we are satisfied that S. No. 1630
emergency. Upon the last reading of a bill, no received thorough consideration in the Senate
amendment thereto shall be allowed, and the where it was discussed for six days. Only its
vote thereon shall be taken immediately distribution in advance in its final printed form
thereafter, and the yeas and nays entered in the was actually dispensed with by holding the
Journal. voting on second and third readings on the same
day (March 24, 1994). Otherwise, sufficient time
This provision of the 1973 document, with slight between the submission of the bill on February
modification, was adopted in Art. VI, §26 (2) of 8, 1994 on second reading and its approval on
the present Constitution, thus: March 24, 1994 elapsed before it was finally
voted on by the Senate on third reading.
 LEGAL RESEARCH ACJUCO 56

The purpose for which three readings on changes are shown in the bill attached to the
separate days is required is said to be two-fold: Conference Committee Report. The members of
(1) to inform the members of Congress of what both houses could thus ascertain what changes
they must vote on and (2) to give them notice had been made in the original bills without the
that a measure is progressing through the need of a statement detailing the changes.
enacting process, thus enabling them and others
interested in the measure to prepare their The same question now presented was raised
positions with reference to it. (1 J. G. when the bill which became R.A. No. 1400 (Land
SUTHERLAND, STATUTES AND STATUTORY Reform Act of 1955) was reported by the
CONSTRUCTION §10.04, p. 282 (1972)). Conference Committee. Congressman Bengzon
These purposes were substantially achieved in raised a point of order. He said:
the case of R.A. No. 7716.
MR. BENGZON. My point of order is that it is out
IV. Power of Conference Committee. It is of order to consider the report of the conference
contended (principally by Kilosbayan, Inc. and committee regarding House Bill No. 2557 by
the Movement of Attorneys for Brotherhood, reason of the provision of Section 11, Article XII,
Integrity and Nationalism, Inc. (MABINI)) that in of the Rules of this House which provides
violation of the constitutional policy of full public specifically that the conference report must be
disclosure and the people's right to know (Art. II, accompanied by a detailed statement of the
§28 and Art. III, §7) the Conference Committee effects of the amendment on the bill of the
met for two days in executive session with only House. This conference committee report is not
the conferees present. accompanied by that detailed statement, Mr.
Speaker. Therefore it is out of order to consider
As pointed out in our main decision, even in the it.
United States it was customary to hold such
sessions with only the conferees and their staffs Petitioner Tolentino, then the Majority Floor
in attendance and it was only in 1975 when a Leader, answered:
new rule was adopted requiring open sessions.
Unlike its American counterpart, the Philippine MR. TOLENTINO. Mr. Speaker, I should just like
Congress has not adopted a rule prescribing to say a few words in connection with the point
open hearings for conference committees. of order raised by the gentleman from
Pangasinan.
It is nevertheless claimed that in the United
States, before the adoption of the rule in 1975, There is no question about the provision of the
at least staff members were present. These Rule cited by the gentleman from Pangasinan,
were staff members of the Senators and but this provision applies to those cases where
Congressmen, however, who may be presumed only portions of the bill have been amended. In
to be their confidential men, not stenographers this case before us an entire bill is
as in this case who on the last two days of the presented; therefore, it can be easily seen from
conference were excluded. There is no showing the reading of the bill what the provisions are.
that the conferees themselves did not take notes Besides, this procedure has been an established
of their proceedings so as to give petitioner practice.
Kilosbayan basis for claiming that even in secret
diplomatic negotiations involving state interests, After some interruption, he continued:
conferees keep notes of their meetings. Above
all, the public's right to know was fully served MR. TOLENTINO. As I was saying, Mr. Speaker,
because the Conference Committee in this case we have to look into the reason for the provisions
submitted a report showing the changes made of the Rules, and the reason for the requirement
on the differing versions of the House and the in the provision cited by the gentleman from
Senate. Pangasinan is when there are only certain words
or phrases inserted in or deleted from the
Petitioners cite the rules of both houses which provisions of the bill included in the conference
provide that conference committee reports must report, and we cannot understand what those
contain "a detailed, sufficiently explicit statement words and phrases mean and their relation to the
of the changes in or other amendments." These bill. In that case, it is necessary to make a
 LEGAL RESEARCH ACJUCO 57

detailed statement on how those words and Conference committees may be of two types:
phrases will affect the bill as a whole; but when free or instructed. These committees may be
the entire bill itself is copied verbatim in the given instructions by their parent bodies or they
conference report, that is not necessary. So may be left without instructions. Normally the
when the reason for the Rule does not exist, the conference committees are without instructions,
Rule does not exist. and this is why they are often critically referred
to as "the little legislatures." Once bills have
(2 CONG. REC. NO. 2, p. 4056. (emphasis been sent to them, the conferees have almost
added)) unlimited authority to change the clauses of the
bills and in fact sometimes introduce new
Congressman Tolentino was sustained by the measures that were not in the original
chair. The record shows that when the ruling was legislation. No minutes are kept, and members'
appealed, it was upheld by viva voce and when activities on conference committees are difficult
a division of the House was called, it was to determine. One congressman known for his
sustained by a vote of 48 to 5. (Id., idealism put it this way: "I killed a bill on export
p. 4058) incentives for my interest group [copra] in the
conference committee but I could not have done
Nor is there any doubt about the power of a so anywhere else." The conference committee
conference committee to insert new provisions submits a report to both houses, and usually it is
as long as these are germane to the subject of accepted. If the report is not accepted, then the
the conference. As this Court held in Philippine committee is discharged and new members are
Judges Association v. Prado, 227 SCRA 703 appointed.
(1993), in an opinion written by then Justice
Cruz, the jurisdiction of the conference (R. Jackson, Committees in the Philippine
committee is not limited to resolving differences Congress, in COMMITTEES AND
between the Senate and the House. It may LEGISLATURES: A COMPARATIVE
propose an entirely new provision. What is ANALYSIS 163 (J. D. LEES AND M. SHAW,
important is that its report is subsequently eds.)).
approved by the respective houses of Congress.
This Court ruled that it would not entertain In citing this study, we pass no judgment on the
allegations that, because new provisions had methods of conference committees. We cite it
been added by the conference committee, there only to say that conference committees here are
was thereby a violation of the constitutional no different from their counterparts in the United
injunction that "upon the last reading of a bill, no States whose vast powers we noted in Philippine
amendment thereto shall be allowed." Judges Association v. Prado, supra. At all
events, under Art. VI, §16(3) each house has the
Applying these principles, we shall decline to power "to determine the rules of its
look into the petitioners' charges that an proceedings," including those of its committees.
amendment was made upon the last reading of Any meaningful change in the method and
the bill that eventually became R.A. No. 7354 procedures of Congress or its committees must
and that copies thereof in its final form were not therefore be sought in that body itself.
distributed among the members of each House.
Both the enrolled bill and the legislative journals V. The titles of S. No. 1630 and H. No. 11197.
certify that the measure was duly enacted i.e., in PAL maintains that R.A. No. 7716 violates Art.
accordance with Article VI, Sec. 26 (2) of the VI, §26 (1) of the Constitution which provides
Constitution. We are bound by such official that "Every bill passed by Congress shall
assurances from a coordinate department of the embrace only one subject which shall be
government, to which we owe, at the very least, expressed in the title thereof." PAL contends that
a becoming courtesy. the amendment of its franchise by the
withdrawal of its exemption from the VAT is not
(Id. at 710. (emphasis added)) expressed in the title of the law.

It is interesting to note the following description Pursuant to §13 of P.D. No. 1590, PAL pays a
of conference committees in the Philippines in a franchise tax of 2% on its gross revenue "in lieu
1979 study: of all other taxes, duties, royalties, registration,
 LEGAL RESEARCH ACJUCO 58

license and other fees and charges of any kind, of the NIRC which stands in the way of
nature, or description, imposed, levied, accomplishing the purpose of the law.
established, assessed or collected by any
municipal, city, provincial or national authority or PAL asserts that the amendment of its franchise
government agency, now or in the future." must be reflected in the title of the law by specific
reference to P.D. No. 1590. It is unnecessary to
PAL was exempted from the payment of the VAT do this in order to comply with the constitutional
along with other entities by §103 of the National requirement, since it is already stated in the title
Internal Revenue Code, which provides as that the law seeks to amend the pertinent
follows: provisions of the NIRC, among which is §103(q),
in order to widen the base of the VAT. Actually,
§103. Exempt transactions. — The following it is the bill which becomes a law that is required
shall be exempt from the value-added tax: to express in its title the subject of legislation.
The titles of H. No. 11197 and S. No. 1630 in fact
xxx xxx xxx specifically referred to §103 of the NIRC as
among the provisions sought to be amended.
(q) Transactions which are exempt under special We are satisfied that sufficient notice had been
laws or international agreements to which the given of the pendency of these bills in Congress
Philippines is a signatory. before they were enacted into what is now R.A.
No. 7716.
R.A. No. 7716 seeks to withdraw certain
exemptions, including that granted to PAL, by In Philippine Judges Association
amending §103, as follows: v. Prado, supra, a similar argument as that now
made by PAL was rejected. R.A. No. 7354 is
§103. Exempt transactions. — The following entitled AN ACT CREATING THE PHILIPPINE
shall be exempt from the value-added tax: POSTAL CORPORATION, DEFINING ITS
POWERS, FUNCTIONS AND
xxx xxx xxx RESPONSIBILITIES, PROVIDING FOR
REGULATION OF THE INDUSTRY AND FOR
(q) Transactions which are exempt under special OTHER PURPOSES CONNECTED
laws, except those granted under Presidential THEREWITH. It contained a provision repealing
Decree Nos. 66, 529, 972, 1491, 1590. . . . all franking privileges. It was contended that the
withdrawal of franking privileges was not
The amendment of §103 is expressed in the title expressed in the title of the law. In holding that
of R.A. No. 7716 which reads: there was sufficient description of the subject of
the law in its title, including the repeal of franking
privileges, this Court held:
AN ACT RESTRUCTURING THE VALUE-
ADDED TAX (VAT) SYSTEM, WIDENING ITS
TAX BASE AND ENHANCING ITS To require every end and means necessary for
ADMINISTRATION, AND FOR THESE the accomplishment of the general objectives of
PURPOSES AMENDING AND REPEALING the statute to be expressed in its title would not
THE RELEVANT PROVISIONS OF THE only be unreasonable but would actually render
NATIONAL INTERNAL REVENUE CODE, AS legislation impossible. [Cooley, Constitutional
AMENDED, AND FOR OTHER PURPOSES. Limitations, 8th Ed., p. 297] As has been
correctly explained:
By stating that R.A. No. 7716 seeks to
"[RESTRUCTURE] THE VALUE-ADDED TAX The details of a legislative act need not be
(VAT) SYSTEM [BY] WIDENING ITS TAX BASE specifically stated in its title, but matter germane
AND ENHANCING ITS ADMINISTRATION, to the subject as expressed in the title, and
AND FOR THESE PURPOSES AMENDING adopted to the accomplishment of the object in
AND REPEALING THE RELEVANT view, may properly be included in the act. Thus,
PROVISIONS OF THE NATIONAL INTERNAL it is proper to create in the same act the
REVENUE CODE, AS AMENDED AND FOR machinery by which the act is to be enforced, to
OTHER PURPOSES," Congress thereby clearly prescribe the penalties for its infraction, and to
expresses its intention to amend any provision remove obstacles in the way of its execution. If
 LEGAL RESEARCH ACJUCO 59

such matters are properly connected with the to be discriminatory because although it could
subject as expressed in the title, it is have been made liable for the sales tax or, in lieu
unnecessary that they should also have special thereof, for the use tax on the privilege of using,
mention in the title. (Southern Pac. Co. v. storing or consuming tangible goods, the press
Bartine, 170 Fed. 725) was not. Instead, the press was exempted from
both taxes. It was, however, later made to pay
(227 SCRA at 707-708) a special use tax on the cost of paper and ink
which made these items "the only items subject
VI. Claims of press freedom and religious liberty. to the use tax that were component of goods to
We have held that, as a general proposition, the be sold at retail." The U.S. Supreme Court held
press is not exempt from the taxing power of the that the differential treatment of the press
State and that what the constitutional guarantee "suggests that the goal of regulation is not
of free press prohibits are laws which single out related to suppression of expression, and such
the press or target a group belonging to the goal is presumptively unconstitutional." It would
press for special treatment or which in any way therefore appear that even a law that favors the
discriminate against the press on the basis of the press is constitutionally suspect. (See the
content of the publication, and R.A. No. 7716 is dissent of Rehnquist, J. in that case)
none of these.
Nor is it true that only two exemptions previously
Now it is contended by the PPI that by removing granted by E.O. No. 273 are withdrawn
the exemption of the press from the VAT while "absolutely and unqualifiedly" by R.A. No. 7716.
maintaining those granted to others, the law Other exemptions from the VAT, such as those
discriminates against the press. At any rate, it is previously granted to PAL, petroleum
averred, "even nondiscriminatory taxation of concessionaires, enterprises registered with the
constitutionally guaranteed freedom is Export Processing Zone Authority, and many
unconstitutional." more are likewise totally withdrawn, in addition
to exemptions which are partially withdrawn, in
With respect to the first contention, it would an effort to broaden the base of the tax.
suffice to say that since the law granted the
press a privilege, the law could take back the The PPI says that the discriminatory treatment
privilege anytime without offense to the of the press is highlighted by the fact that
Constitution. The reason is simple: by granting transactions, which are profit oriented, continue
exemptions, the State does not forever waive to enjoy exemption under R.A. No. 7716. An
the exercise of its sovereign prerogative. enumeration of some of these transactions will
suffice to show that by and large this is not so
Indeed, in withdrawing the exemption, the law and that the exemptions are granted for a
merely subjects the press to the same tax purpose. As the Solicitor General says, such
burden to which other businesses have long ago exemptions are granted, in some cases, to
been subject. It is thus different from the tax encourage agricultural production and, in other
involved in the cases invoked by the PPI. The cases, for the personal benefit of the end-user
license tax in Grosjean v. American Press Co., rather than for profit. The exempt transactions
297 U.S. 233, 80 L. Ed. 660 (1936) was found to are:
be discriminatory because it was laid on the
gross advertising receipts only of newspapers (a) Goods for consumption or use which are in
whose weekly circulation was over 20,000, with their original state (agricultural, marine and
the result that the tax applied only to 13 out of forest products, cotton seeds in their original
124 publishers in Louisiana. These large papers state, fertilizers, seeds, seedlings, fingerlings,
were critical of Senator Huey Long who fish, prawn livestock and poultry feeds) and
controlled the state legislature which enacted goods or services to enhance agriculture (milling
the license tax. The censorial motivation for the of palay, corn, sugar cane and raw sugar,
law was thus evident. livestock, poultry feeds, fertilizer, ingredients
used for the manufacture of feeds).
On the other hand, in Minneapolis Star & Tribune
Co. v. Minnesota Comm'r of Revenue, 460 U.S. (b) Goods used for personal consumption or use
575, 75 L. Ed. 2d 295 (1983), the tax was found (household and personal effects of citizens
 LEGAL RESEARCH ACJUCO 60

returning to the Philippines) or for professional unconstitutional because it lays a prior restraint
use, like professional instruments and on the exercise of its right. Hence, although its
implements, by persons coming to the application to others, such those selling goods,
Philippines to settle here. is valid, its application to the press or to religious
groups, such as the Jehovah's Witnesses, in
(c) Goods subject to excise tax such as connection with the latter's sale of religious
petroleum products or to be used for books and pamphlets, is unconstitutional. As the
manufacture of petroleum products subject to U.S. Supreme Court put it, "it is one thing to
excise tax and services subject to percentage impose a tax on income or property of a
tax. preacher. It is quite another thing to exact a tax
on him for delivering a sermon."
(d) Educational services, medical, dental,
hospital and veterinary services, and services A similar ruling was made by this Court
rendered under employer-employee in American Bible Society v. City of Manila, 101
relationship. Phil. 386 (1957) which invalidated a city
ordinance requiring a business license fee on
(e) Works of art and similar creations sold by the those engaged in the sale of general
artist himself. merchandise. It was held that the tax could not
be imposed on the sale of bibles by the
(f) Transactions exempted under special laws, or American Bible Society without restraining the
international agreements. free exercise of its right to propagate.

(g) Export-sales by persons not VAT-registered. The VAT is, however, different. It is not a license
tax. It is not a tax on the exercise of a privilege,
(h) Goods or services with gross annual sale or much less a constitutional right. It is imposed on
receipt not exceeding P500,000.00. the sale, barter, lease or exchange of goods or
properties or the sale or exchange of services
(Respondents' Consolidated Comment on the and the lease of properties purely for revenue
Motions for Reconsideration, pp. 58-60) purposes. To subject the press to its payment is
not to burden the exercise of its right any more
The PPI asserts that it does not really matter that than to make the press pay income tax or subject
the law does not discriminate against the press it to general regulation is not to violate its
because "even nondiscriminatory taxation on freedom under the Constitution.
constitutionally guaranteed freedom is
unconstitutional." PPI cites in support of this Additionally, the Philippine Bible Society, Inc.
assertion the following statement in Murdock claims that although it sells bibles, the proceeds
v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 derived from the sales are used to subsidize the
(1943): cost of printing copies which are given free to
those who cannot afford to pay so that to tax the
The fact that the ordinance is sales would be to increase the price, while
"nondiscriminatory" is immaterial. The protection reducing the volume of sale. Granting that to be
afforded by the First Amendment is not so the case, the resulting burden on the exercise of
restricted. A license tax certainly does not religious freedom is so incidental as to make it
acquire constitutional validity because it difficult to differentiate it from any other
classifies the privileges protected by the First economic imposition that might make the right to
Amendment along with the wares and disseminate religious doctrines costly.
merchandise of hucksters and peddlers and Otherwise, to follow the petitioner's argument, to
treats them all alike. Such equality in treatment increase the tax on the sale of vestments would
does not save the ordinance. Freedom of press, be to lay an impermissible burden on the right of
freedom of speech, freedom of religion are in the preacher to make a sermon.
preferred position.
On the other hand the registration fee of
The Court was speaking in that case of a license P1,000.00 imposed by §107 of the NIRC, as
tax, which, unlike an ordinary tax, is mainly for amended by §7 of R.A. No. 7716, although fixed
regulation. Its imposition on the press is in amount, is really just to pay for the expenses
 LEGAL RESEARCH ACJUCO 61

of registration and enforcement of provisions the possible exercise of the rightful authority of
such as those relating to accounting in §108 of the government and no obligation of contract
the NIRC. That the PBS distributes free bibles can extend to the defeat of that authority.
and therefore is not liable to pay the VAT does (Norman v. Baltimore and Ohio R.R., 79 L. Ed.
not excuse it from the payment of this fee 885 (1935)).
because it also sells some copies. At any rate
whether the PBS is liable for the VAT must be It is next pointed out that while §4 of R.A. No.
decided in concrete cases, in the event it is 7716 exempts such transactions as the sale of
assessed this tax by the Commissioner of agricultural products, food items, petroleum, and
Internal Revenue. medical and veterinary services, it grants no
exemption on the sale of real property which is
VII. Alleged violations of the due process, equal equally essential. The sale of real property for
protection and contract clauses and the rule on socialized and low-cost housing is exempted
taxation. CREBA asserts that R.A. No. 7716 (1) from the tax, but CREBA claims that real estate
impairs the obligations of contracts, (2) classifies transactions of "the less poor," i.e., the middle
transactions as covered or exempt without class, who are equally homeless, should
reasonable basis and (3) violates the rule that likewise be exempted.
taxes should be uniform and equitable and that
Congress shall "evolve a progressive system of The sale of food items, petroleum, medical and
taxation." veterinary services, etc., which are essential
goods and services was already exempt under
With respect to the first contention, it is claimed §103, pars. (b) (d) (1) of the NIRC before the
that the application of the tax to existing enactment of R.A. No. 7716. Petitioner is in error
contracts of the sale of real property by in claiming that R.A. No. 7716 granted
installment or on deferred payment basis would exemption to these transactions, while
result in substantial increases in the monthly subjecting those of petitioner to the payment of
amortizations to be paid because of the 10% the VAT. Moreover, there is a difference
VAT. The additional amount, it is pointed out, is between the "homeless poor" and the "homeless
something that the buyer did not anticipate at the less poor" in the example given by petitioner,
time he entered into the contract. because the second group or middle class can
afford to rent houses in the meantime that they
The short answer to this is the one given by this cannot yet buy their own homes. The two social
Court in an early case: "Authorities from classes are thus differently situated in life. "It is
numerous sources are cited by the plaintiffs, but inherent in the power to tax that the State be free
none of them show that a lawful tax on a new to select the subjects of taxation, and it has been
subject, or an increased tax on an old one, repeatedly held that 'inequalities which result
interferes with a contract or impairs its from a singling out of one particular class for
obligation, within the meaning of the taxation, or exemption infringe no constitutional
Constitution. Even though such taxation may limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153
affect particular contracts, as it may increase the (1955). Accord, City of Baguio v. De Leon, 134
debt of one person and lessen the security of Phil. 912 (1968); Sison, Jr. v. Ancheta, 130
another, or may impose additional burdens upon SCRA 654, 663 (1984); Kapatiran ng mga
one class and release the burdens of another, Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v.
still the tax must be paid unless prohibited by the Tan, 163 SCRA 371 (1988)).
Constitution, nor can it be said that it impairs the
obligation of any existing contract in its true legal Finally, it is contended, for the reasons already
sense." (La Insular v. Machuca Go-Tauco and noted, that R.A. No. 7716 also violates Art. VI,
Nubla Co-Siong, 39 Phil. 567, 574 (1919)). §28(1) which provides that "The rule of taxation
Indeed not only existing laws but also "the shall be uniform and equitable. The Congress
reservation of the essential attributes of shall evolve a progressive system of taxation."
sovereignty, is . . . read into contracts as a
postulate of the legal order." (Philippine- Equality and uniformity of taxation means that all
American Life Ins. Co. v. Auditor General, 22 taxable articles or kinds of property of the same
SCRA 135, 147 (1968)) Contracts must be class be taxed at the same rate. The taxing
understood as having been made in reference to power has the authority to make reasonable and
 LEGAL RESEARCH ACJUCO 62

natural classifications for purposes of taxation. are regressive. What it simply provides is that
To satisfy this requirement it is enough that the Congress shall "evolve a progressive system of
statute or ordinance applies equally to all taxation." The constitutional provision has been
persons, forms and corporations placed in interpreted to mean simply that "direct taxes are
similar situation. (City of Baguio v. De . . . to be preferred [and] as much as possible,
Leon, supra; Sison, Jr. v. Ancheta, supra) indirect taxes should be minimized." (E.
FERNANDO, THE CONSTITUTION OF THE
Indeed, the VAT was already provided in E.O. PHILIPPINES 221 (Second ed. (1977)). Indeed,
No. 273 long before R.A. No. 7716 was enacted. the mandate to Congress is not to prescribe, but
R.A. No. 7716 merely expands the base of the to evolve, a progressive tax system. Otherwise,
tax. The validity of the original VAT Law was sales taxes, which perhaps are the oldest form
questioned in Kapatiran ng Naglilingkod sa of indirect taxes, would have been prohibited
Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA with the proclamation of Art. VIII, §17(1) of the
383 (1988) on grounds similar to those made in 1973 Constitution from which the present Art. VI,
these cases, namely, that the law was §28(1) was taken. Sales taxes are also
"oppressive, discriminatory, unjust and regressive.
regressive in violation of Art. VI, §28(1) of the
Constitution." (At 382) Rejecting the challenge to Resort to indirect taxes should be minimized but
the law, this Court held: not avoided entirely because it is difficult, if not
impossible, to avoid them by imposing such
As the Court sees it, EO 273 satisfies all the taxes according to the taxpayers' ability to pay.
requirements of a valid tax. It is uniform. . . . In the case of the VAT, the law minimizes the
regressive effects of this imposition by providing
The sales tax adopted in EO 273 is applied for zero rating of certain transactions (R.A. No.
similarly on all goods and services sold to the 7716, §3, amending §102 (b) of the NIRC), while
public, which are not exempt, at the constant granting exemptions to other transactions. (R.A.
rate of 0% or 10%. No. 7716, §4, amending §103 of the NIRC).

The disputed sales tax is also equitable. It is Thus, the following transactions involving basic
imposed only on sales of goods or services by and essential goods and services are exempted
persons engaged in business with an aggregate from the VAT:
gross annual sales exceeding P200,000.00.
Small corner sari-sari stores are consequently (a) Goods for consumption or use which are in
exempt from its application. Likewise exempt their original state (agricultural, marine and
from the tax are sales of farm and marine forest products, cotton seeds in their original
products, so that the costs of basic food and state, fertilizers, seeds, seedlings, fingerlings,
other necessities, spared as they are from the fish, prawn livestock and poultry feeds) and
incidence of the VAT, are expected to be goods or services to enhance agriculture (milling
relatively lower and within the reach of the of palay, corn sugar cane and raw sugar,
general public. livestock, poultry feeds, fertilizer, ingredients
used for the manufacture of feeds).
(At 382-383)
(b) Goods used for personal consumption or use
The CREBA claims that the VAT is regressive. A (household and personal effects of citizens
similar claim is made by the Cooperative Union returning to the Philippines) and or professional
of the Philippines, Inc. (CUP), while petitioner use, like professional instruments and
Juan T. David argues that the law contravenes implements, by persons coming to the
the mandate of Congress to provide for a Philippines to settle here.
progressive system of taxation because the law
imposes a flat rate of 10% and thus places the (c) Goods subject to excise tax such as
tax burden on all taxpayers without regard to petroleum products or to be used for
their ability to pay. manufacture of petroleum products subject to
excise tax and services subject to percentage
The Constitution does not really prohibit the tax.
imposition of indirect taxes which, like the VAT,
 LEGAL RESEARCH ACJUCO 63

(d) Educational services, medical, dental, be a factual foundation of such unconstitutional

hospital and veterinary services, and services taint. Considering that petitioner here would
rendered under employer-employee condemn such a provision as void on its face, he
relationship. has not made out a case. This is merely to
adhere to the authoritative doctrine that where
(e) Works of art and similar creations sold by the the due process and equal protection clauses
artist himself. are invoked, considering that they are not fixed
rules but rather broad standards, there is a need
(f) Transactions exempted under special laws, or for proof of such persuasive character as would
international agreements. lead to such a conclusion. Absent such a
showing, the presumption of validity must
(g) Export-sales by persons not VAT-registered. prevail.

(h) Goods or services with gross annual sale or (Sison, Jr. v. Ancheta, 130 SCRA at 661)
receipt not exceeding P500,000.00.
Adjudication of these broad claims must await
(Respondents' Consolidated Comment on the the development of a concrete case. It may be
Motions for Reconsideration, pp. 58-60) that postponement of adjudication would result
in a multiplicity of suits. This need not be the
On the other hand, the transactions which are case, however. Enforcement of the law may give
subject to the VAT are those which involve rise to such a case. A test case, provided it is an
goods and services which are used or availed of actual case and not an abstract or hypothetical
mainly by higher income groups. These include one, may thus be presented.
real properties held primarily for sale to
customers or for lease in the ordinary course of Nor is hardship to taxpayers alone an adequate
trade or business, the right or privilege to use justification for adjudicating abstract issues.
patent, copyright, and other similar property or Otherwise, adjudication would be no different
right, the right or privilege to use industrial, from the giving of advisory opinion that does not
commercial or scientific equipment, motion really settle legal issues.
picture films, tapes and discs, radio, television,
satellite transmission and cable television time, We are told that it is our duty under Art. VIII, §1,
hotels, restaurants and similar places, ¶2 to decide whenever a claim is made that
securities, lending investments, taxicabs, utility "there has been a grave abuse of discretion
cars for rent, tourist buses, and other common amounting to lack or excess of jurisdiction on the
carriers, services of franchise grantees of part of any branch or instrumentality of the
telephone and telegraph. government." This duty can only arise if an
actual case or controversy is before us. Under
The problem with CREBA's petition is that it Art . VIII, §5 our jurisdiction is defined in terms of
presents broad claims of constitutional violations "cases" and all that Art. VIII, §1, ¶2 can plausibly
by tendering issues not at retail but at wholesale mean is that in the exercise of that jurisdiction we
and in the abstract. There is no fully developed have the judicial power to determine questions
record which can impart to adjudication the of grave abuse of discretion by any branch or
impact of actuality. There is no factual instrumentality of the government.
foundation to show in the concrete the
application of the law to actual contracts and Put in another way, what is granted in Art. VIII,
exemplify its effect on property rights. For the §1, ¶2 is "judicial power," which is "the power of
fact is that petitioner's members have not even a court to hear and decide cases pending
been assessed the VAT. Petitioner's case is not between parties who have the right to sue and
made concrete by a series of hypothetical be sued in the courts of law and equity" (Lamb
questions asked which are no different from v. Phipps, 22 Phil. 456, 559 (1912)), as
those dealt with in advisory opinions. distinguished from legislative and executive
power. This power cannot be directly
The difficulty confronting petitioner is thus appropriated until it is apportioned among
apparent. He alleges arbitrariness. A mere several courts either by the Constitution, as in
allegation, as here, does not suffice. There must the case of Art. VIII, §5, or by statute, as in the
 LEGAL RESEARCH ACJUCO 64

case of the Judiciary Act of 1948 (R.A. No. 296) competitive in both domestic and foreign
and the Judiciary Reorganization Act of 1980 markets. However, the State shall protect
(B.P. Blg. 129). The power thus apportioned Filipino enterprises against unfair foreign
constitutes the court's "jurisdiction," defined as competition and trade practices.
"the power conferred by law upon a court or
judge to take cognizance of a case, to the In the pursuit of these goals, all sectors of the
exclusion of all others." (United States v. Arceo, economy and all regions of the country shall be
6 Phil. 29 (1906)) Without an actual case coming given optimum opportunity to develop. Private
within its jurisdiction, this Court cannot inquire enterprises, including corporations,
into any allegation of grave abuse of discretion cooperatives, and similar collective
by the other departments of the government. organizations, shall be encouraged to broaden
the base of their ownership.
VIII. Alleged violation of policy towards
cooperatives. On the other hand, the §15. The Congress shall create an agency to
Cooperative Union of the Philippines (CUP), promote the viability and growth of cooperatives
after briefly surveying the course of legislation, as instruments for social justice and economic
argues that it was to adopt a definite policy of development.
granting tax exemption to cooperatives that the
present Constitution embodies provisions on Petitioner's contention has no merit. In the first
cooperatives. To subject cooperatives to the place, it is not true that P.D. No. 1955 singled out
VAT would therefore be to infringe a cooperatives by withdrawing their exemption
constitutional policy. Petitioner claims that in from income and sales taxes under P.D. No.
1973, P.D. No. 175 was promulgated exempting 175, §5. What P.D. No. 1955, §1 did was to
cooperatives from the payment of income taxes withdraw the exemptions and preferential
and sales taxes but in 1984, because of the treatments theretofore granted to private
crisis which menaced the national economy, this business enterprises in general, in view of the
exemption was withdrawn by P.D. No. 1955; that economic crisis which then beset the nation. It is
in 1986, P.D. No. 2008 again granted true that after P.D. No. 2008, §2 had restored the
cooperatives exemption from income and sales tax exemptions of cooperatives in 1986, the
taxes until December 31, 1991, but, in the same exemption was again repealed by E.O. No. 93,
year, E.O. No. 93 revoked the exemption; and §1, but then again cooperatives were not the
that finally in 1987 the framers of the Constitution only ones whose exemptions were
"repudiated the previous actions of the withdrawn. The withdrawal of tax incentives
government adverse to the interests of the applied to all, including government and private
cooperatives, that is, the repeated revocation of entities. In the second place, the Constitution
the tax exemption to cooperatives and instead does not really require that cooperatives be
upheld the policy of strengthening the granted tax exemptions in order to promote their
cooperatives by way of the grant of tax growth and viability. Hence, there is no basis for
exemptions," by providing the following in Art. petitioner's assertion that the government's
XII: policy toward cooperatives had been one of
vacillation, as far as the grant of tax privileges
§1. The goals of the national economy are a was concerned, and that it was to put an end to
more equitable distribution of opportunities, this indecision that the constitutional provisions
income, and wealth; a sustained increase in the cited were adopted. Perhaps as a matter of
amount of goods and services produced by the policy cooperatives should be granted tax
nation for the benefit of the people; and an exemptions, but that is left to the discretion of
expanding productivity as the key to raising the Congress. If Congress does not grant exemption
quality of life for all, especially the and there is no discrimination to cooperatives,
underprivileged. no violation of any constitutional policy can be
charged.
The State shall promote industrialization and full
employment based on sound agricultural Indeed, petitioner's theory amounts to saying
development and agrarian reform, through that under the Constitution cooperatives are
industries that make full and efficient use of exempt from taxation. Such theory is contrary to
human and natural resources, and which are the Constitution under which only the following
 LEGAL RESEARCH ACJUCO 65

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.

WHEREFORE, the motions for reconsideration

are denied with finality and the temporary
restraining order previously issued is hereby
lifted.

SO ORDERED.