Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 2005 > September 2005 Decisions > SEPARATE OPINION : PANGANIBAN, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.:




SEPARATE OPINION : PANGANIBAN, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.

PHILIPPINE SUPREME COURT DECISIONS

EN BANC

[G.R. NO. 168056 : September 01, 2005]

ABAKADA GURO PARTY LIST (FORMERLY AASJAS) OFFICERS SAMSON S. ALCANTARA AND ED VINCENT S. ALBANO, Petitioners, v. THE HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE SECRETARY OF THE DEPARTMENT OF FINANCE CESAR PURISIMA; AND HONORABLE COMMISSIONER OF INTERNAL REVENUE GUILLERMO PARAYNO, JR., Respondents.

[G.R. NO. 168207]

AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY E. ESTRADA, PANFILO M. LACSON, ALFREDO S. LIM, JAMBY A.S. MADRIGAL, AND SERGIO R. OSMEÑA III, Petitioners, v. EXECUTIVE SECRETARY EDUARDO R. ERMITA, CESAR V. PURISIMA, SECRETARY OF FINANCE, GUILLERMO L. PARAYNO, JR., COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE, Respondents.

[G.R. NO. 168461]

ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. REPRESENTED BY ITS PRESIDENT, ROSARIO ANTONIO; PETRON DEALERS' ASSOCIATION REPRESENTED BY ITS PRESIDENT, RUTH E. BARBIBI; ASSOCIATION OF CALTEX DEALERS' OF THE PHILIPPINES REPRESENTED BY ITS PRESIDENT, MERCEDITAS A. GARCIA; ROSARIO ANTONIO DOING BUSINESS UNDER THE NAME AND STYLE OF "ANB NORTH SHELL SERVICE STATION”; LOURDES MARTINEZ DOING BUSINESS UNDER THE NAME AND STYLE OF "SHELL GATE - N. DOMINGO”; BETHZAIDA TAN DOING BUSINESS UNDER THE NAME AND STYLE OF "ADVANCE SHELL STATION”; REYNALDO P. MONTOYA DOING BUSINESS UNDER THE NAME AND STYLE OF "NEW LAMUAN SHELL SERVICE STATION”; EFREN SOTTO DOING BUSINESS UNDER THE NAME AND STYLE OF "RED FIELD SHELL SERVICE STATION”; DONICA CORPORATION REPRESENTED BY ITS PRESIDENT, DESI TOMACRUZ; RUTH E. MARBIBI DOING BUSINESS UNDER THE NAME AND STYLE OF "R&R PETRON STATION”; PETER M. UNGSON DOING BUSINESS UNDER THE NAME AND STYLE OF "CLASSIC STAR GASOLINE SERVICE STATION”; MARIAN SHEILA A. LEE DOING BUSINESS UNDER THE NAME AND STYLE OF "NTE GASOLINE & SERVICE STATION”; JULIAN CESAR P. POSADAS DOING BUSINESS UNDER THE NAME AND STYLE OF "STARCARGA ENTERPRISES”; ADORACION MAÑEBO DOING BUSINESS UNDER THE NAME AND STYLE OF "CMA MOTORISTS CENTER”; SUSAN M. ENTRATA DOING BUSINESS UNDER THE NAME AND STYLE OF "LEONA'S GASOLINE STATION AND SERVICE CENTER”; CARMELITA BALDONADO DOING BUSINESS UNDER THE NAME AND STYLE OF "FIRST CHOICE SERVICE CENTER”; MERCEDITAS A. GARCIA DOING BUSINESS UNDER THE NAME AND STYLE OF "LORPED SERVICE CENTER”; RHEAMAR A. RAMOS DOING BUSINESS UNDER THE NAME AND STYLE OF "RJRAM PTT GAS STATION”; MA. ISABEL VIOLAGO DOING BUSINESS UNDER THE NAME AND STYLE OF "VIOLAGO-PTT SERVICE CENTER”; MOTORISTS' HEART CORPORATION REPRESENTED BY ITS VICE-PRESIDENT FOR OPERATIONS, JOSELITO F. FLORDELIZA; MOTORISTS' HARVARD CORPORATION REPRESENTED BY ITS VICE-PRESIDENT FOR OPERATIONS, JOSELITO F. FLORDELIZA; MOTORISTS' HERITAGE CORPORATION REPRESENTED BY ITS VICE-PRESIDENT FOR OPERATIONS, JOSELITO F. FLORDELIZA; PHILIPPINE STANDARD OIL CORPORATION REPRESENTED BY ITS VICE-PRESIDENT FOR OPERATIONS, JOSELITO F. FLORDELIZA; ROMEO MANUEL DOING BUSINESS UNDER THE NAME AND STYLE OF "ROMMAN GASOLINE STATION”; ANTHONY ALBERT CRUZ III DOING BUSINESS UNDER THE NAME AND STYLE OF "TRUE SERVICE STATION”, Petitioners, v. CESAR V. PURISIMA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FINANCE AND GUILLERMO L. PARAYNO, JR., IN HIS CAPACITY AS COMMISSIONER OF INTERNAL REVENUE, Respondents.

[G.R. NO. 168463]

FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL JOEL J. VILLANUEVA, RODOLFO G. PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G. MALAPITAN, BENJAMIN C. AGARAO, JR. JUAN EDGARDO M. ANGARA, JUSTIN MARC SB. CHIPECO, FLORENCIO G. NOEL, MUJIV S. HATAMAN, RENATO B. MAGTUBO, JOSEPH A. SANTIAGO, TEOFISTO DL. GUINGONA III, RUY ELIAS C. LOPEZ, RODOLFO Q. AGBAYANI AND TEODORO A. CASIÑO, Petitioners, v. CESAR V. PURISIMA, IN HIS CAPACITY AS SECRETARY OF FINANCE, GUILLERMO L. PARAYNO, JR., IN HIS CAPACITY AS COMMISSIONER OF INTERNAL REVENUE, AND EDUARDO R. ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, Respondents.

[G.R. NO. 168730]

BATAAN GOVERNOR ENRIQUE T. GARCIA, JR., Petitioner, v. HON. EDUARDO R. ERMITA, IN HIS CAPACITY AS THE EXECUTIVE SECRETARY; HON. MARGARITO TEVES, IN HIS CAPACITY AS SECRETARY OF FINANCE; HON. JOSE MARIO BUNAG, IN HIS CAPACITY AS THE OIC COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE; AND HON. ALEXANDER AREVALO, IN HIS CAPACITY AS THE OIC COMMISSIONER OF THE BUREAU OF CUSTOMS, Respondents.



SEPARATE OPINION

PANGANIBAN, J.:


The ponencia written by the esteemed Madame Justice Ma. Alicia Austria-Martinez declares that the enrolled bill doctrine has been historically and uniformly upheld in our country. Cited as recent reiterations of this doctrine are the two Tolentino v. Secretary of Finance judgments1 and Fariñas v. Executive Secretary.2

Precedence of Mandatory
Constitutional Provisions
Over the Enrolled Bill Doctrine


I believe, however, that the enrolled bill doctrine3 is not absolute. It may be all-encompassing in some countries like Great Britain,4 but as applied to our jurisdiction, it must yield to mandatory provisions of our 1987 Constitution. The Court can take judicial notice of the form of government5 in Great Britain.6 It is unlike that in our country and, therefore, the doctrine from which it originated7 could be modified accordingly by our Constitution.

In fine, the enrolled bill doctrine applies mainly to the internal rules and processes followed by Congress in its principal duty of lawmaking. However, when the Constitution imposes certain conditions, restrictions or limitations on the exercise of congressional prerogatives, the judiciary has both the power and the duty to strike down congressional actions that are done in plain contravention of such conditions, restrictions or limitations.8 Insofar as the present case is concerned, the three most important restrictions or limitations to the enrolled bill doctrine are the "origination," "no-amendment" and "three-reading" rules which I will discuss later.

Verily, these restrictions or limitations to the enrolled bill doctrine are safeguarded by the expanded9 constitutional mandate of the judiciary "to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.”10 Even the ponente of Tolentino,11 the learned Mr. Justice Vicente V. Mendoza, concedes in another decision that each house "may not by its rules ignore constitutional restraints or violate fundamental rights, and there should be a reasonable relation between the mode or method of proceeding established by the rule and the result which is sought to be attained.”12

The Bicameral Conference Committee (BCC) created by Congress to iron out differences between the Senate and the House of Representatives versions of the E-VAT bills13 is one such "branch or instrumentality of the government," over which this Court may exercise certiorari review to determine whether or not grave abuse of discretion has been committed; and, specifically, to find out whether the constitutional conditions, restrictions and limitations on law-making have been violated.

In general, the BCC has at least five options in performing its functions: (1) adopt the House version in part or in toto, (2) adopt the Senate version in part or in toto, (3) consolidate the two versions, (4) reject non-conflicting provisions, and (5) adopt completely new provisions not found in either version. This, therefore, is the simple question: In the performance of its function of reconciling conflicting provisions, has the Committee blatantly violated the Constitution?

My short answer is: No, except those relating to income taxes referred to in Sections 1, 2 and 3 of Republic Act (RA) No. 9337. Let me explain.

Adopting the House
Version in Part or
in Toto


First, the BCC had the option of adopting the House bills either in part or in toto, endorsing them without changes. Since these bills had passed the three-reading requirement14 under the Constitution,15 it readily becomes apparent that no procedural impediment would arise. There would also be no question as to their origination,16 because the bills originated exclusively from the House of Representatives itself.

In the present case, the BCC did not ignore the Senate and adopt any of the House bills in part or in toto. Therefore, this option was not taken by the BCC.

Adopting the Senate
Version in Part or
in Toto

Second, the BCC may choose to adopt the Senate version either in part or in toto, endorsing it also without changes. In so doing, the question of origination arises. Under the 1987 Constitution, all "revenue x x x bills x x x shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.”17

If the revenue bill originates exclusively from the Senate, then obviously the origination provision18 of the Constitution would be violated. If, however, it originates exclusively from the House and presumably passes the three-reading requirement there, then the question to contend with is whether the Senate amendments complied with the "germane" principle.

While in the Senate, the House version may, per Tolentino, undergo extensive changes, such that the Senate may rewrite not only portions of it but even all of it.19 I believe that such rewriting is limited by the "germane" principle: although "relevant”20 or "related”21 to the general subject of taxation, the Senate version is not necessarily "germane" all the time. The "germane" principle requires a legal -- not necessarily an economic22 or political -- interpretation. There must be an "inherent logical connection.”23 What may be germane in an economic or political sense is not necessarily germane in the legal sense. Otherwise, any provision in the Senate version that is entirely new and extraneous, or that is remotely or even slightly connected, to the vast and perplexing subject of taxation, would always be germane. Under this interpretation, the origination principle would surely be rendered inutile.

To repeat, in Tolentino, the Court said that the Senate may even write its own version, which in effect would be an amendment by substitution.24 The Court went further by saying that "the Constitution does not prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House, so long as action by the Senate as a body is withheld pending receipt of the House bill.”25 After all, the initiative for filing a revenue bill must come from the House26 on the theory that, elected as its members are from their respective districts, the House is more sensitive to local needs and problems. By contrast, the Senate whose members are elected at large approaches the matter from a national perspective,27 with a broader and more circumspect outlook.28

Even if I have some reservations on the foregoing sweeping pronouncements in Tolentino, I shall not comment any further, because the BCC, in reconciling conflicting provisions, also did not take the second option of ignoring the House bills completely and of adopting only the Senate version in part or in toto. Instead, the BCC used or applied the third option as will be discussed below.

Compromising
by Consolidating


As a third option, the BCC may reach a compromise by consolidating both the Senate and the House versions. It can adopt some parts and reject other parts of both bills, and craft new provisions or even a substitute bill. I believe this option is viable, provided that there is no violation of the origination and germane principles, as well as the three-reading rule. After all, the report generated by the BCC will not become a final valid act of the Legislative Department until the BCC obtains the approval of both houses of Congress.29

Standby Authority. I believe that the BCC did not exceed its authority when it crafted the so-called "standby authority" of the President. The originating bills from the House imposed a 12 percent VAT rate,30 while the bill from the Senate retained the original 10 percent.31 The BCC opted to initially use the 10 percent Senate provision and to increase this rate to the 12 percent House provision, effective January 1, 2006, upon the occurrence of a predetermined factual scenario as follows:
"(i)
[VAT] collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%) or


(ii)
National Government Deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1 1/2%).”32
In the computation of the percentage requirements in the alternative conditions under the law, the amounts of the VAT collection, National Deficit,33 and GDP34 -- as well as the interrelationship among them -- can easily be derived by the finance secretary from the proper government bodies charged with their determination. The law is complete and standards have been fixed.35 Only the fact-finding mathematical computation for its implementation on January 1, 2006, is necessary.

Once either of the factual and mathematical events provided in the law takes place, the President has no choice but to implement the increase of the VAT rate to 12 percent.36 This eventuality has been predetermined by Congress.37

The taxing power has not been delegated by Congress to either or both the President and the finance secretary. What was delegated was only the power to ascertain the facts in order to bring the law into operation. In fact, there was really no "delegation' to speak of; there was merely a declaration of an administrative, not a legislative, function.38

I concur with the ponencia in that there was no undue delegation of legislative power in the increase from 10 percent to 12 percent of the VAT rate. I respectfully disagree, however, with the statements therein that, first, the secretary of finance is "acting as the agent of the legislative department" or an "agent of Congress" in determining and declaring the event upon which its expressed will is to take effect; and, second, that the secretary's personality "is in reality but a projection of that of Congress.”

The secretary of finance is not an alter ego of Congress, but of the President. The mandate given by RA 9337 to the secretary is not equipollent to an authority to make laws. In passing this law, Congress did not restrict or curtail the constitutional power of the President to retain control and supervision over the entire Executive Department. The law should be construed to be merely asking the President, with a recommendation from the President's alter ego in finance matters, to determine the factual bases for making the increase in VAT rate operative.39 Indeed, as I have mentioned earlier, the fact-finding condition is a mere administrative, not legislative, function.

The ponencia states that Congress merely delegates the implementation of the law to the secretary of finance. How then can the latter be its agent? Making a law is different from implementing it. While the first (the making of laws) may be delegated under certain conditions and only in specific instances provided under the Constitution, the second (the implementation of laws) may not be done by Congress. After all, the legislature does not have the power to implement laws. Therefore, congressional agency arises only in the first, not in the second. The first is a legislative function; the second, an executive one.

Petitioners' argument is that because the GDP does not account for the economic effects of so-called underground businesses, it is an inaccurate indicator of either economic growth or slowdown in transitional economies.40 Clearly, this matter is within the confines of lawmaking. This Court is neither a substitute for the wisdom, or lack of it, in Congress,41 nor an arbiter of flaws within the latter's internal rules.42 Policy matters lie within the domain of the political branches of government,43 outside the range of judicial cognizance.44 "[T]he right to select the measure and objects of taxation devolves upon the Congress, and not upon the courts, and such selections are valid unless constitutional limitations are overstepped.”45 Moreover, each house of Congress has the power and authority to determine the rules of its proceedings.46 The contention that this case is not ripe for determination because there is no violation yet of the Constitution regarding the exercise of the President's standby authority has no basis. The question raised is whether the BCC, in passing the law, committed grave abuse of discretion, not whether the provision in question had been violated. Hence, this case is not premature and is, in fact, subject to judicial determination.

Amendments on Income Taxes. I respectfully submit that the amendments made by the BCC (that were culled from the Senate version) regarding income taxes47 are not legally germane to the subject matter of the House bills. Revising the income tax rates on domestic, resident foreign and nonresident foreign corporations; increasing the tax credit against taxes due from nonresident foreign corporations on intercorporate dividends; and reducing the allowable deduction for interest expense are legally unrelated and not germane to the subject matter contained in the House bills; they violate the origination principle.48 The reasons are as follows:

One, an income tax is a direct tax imposed on actual or presumed income --gross or net -- realized by a taxpayer during a given taxable year,49 while a VAT is an indirect tax not in the context of who is directly and legally liable for its payment, but in terms of its nature as "a tax on consumption.”50 The former cannot be passed on to the consumer, but the latter can.51 It is too wide a stretch of the imagination to even relate one concept with the other. In like manner, it is inconceivable how the provisions that increase corporate income taxes can be considered as mitigating measures for increasing the VAT and, as I will explain later, for effectively imposing a maximum of 3 percent tax on gross sales or revenues because of the 70 percent cap. Even the argument that the corporate income tax rates will be reduced to 30 percent does not hold water. This reduction will take effect only in 2009, not 2006 when the 12 percent VAT rate will have been implemented.

Two, taxes on intercorporate dividends are final, but the input VAT is generally creditable. Under a final withholding tax system, the amount of income tax that is withheld by a withholding agent is constituted as a full and final payment of the income tax due from the payee on said income.52 The liability for the tax primarily rests upon the payor as a withholding agent.53 Under a creditable withholding tax system, taxes withheld on certain payments are meant to approximate the tax that is due of the payee on said payments.54 The liability for the tax rests upon the payee who is mandated by law to still file a tax return, report the tax base, and pay the difference between the tax withheld and the tax due.55

From this observation alone, it can already be seen that not only are dividends alien to the tax base upon which the VAT is imposed, but their respective methods of withholding are totally different. VAT-registered persons may not always be nonresident foreign corporations that declare and pay dividends, while intercorporate dividends are certainly not goods or properties for sale, barter, exchange, lease or importation. Certainly, input VAT credits are different from tax credits on dividends received by nonresident foreign corporations.

Three, itemized deductions from gross income partake of the nature of a tax exemption.56 Interest -- which is among such deductions -- refers to the amount paid by a debtor to a creditor for the use or forbearance of money.57 It is an expense item that is paid or incurred within a given taxable year on indebtedness in connection with a taxpayer's trade, business or exercise of profession.58 In order to reduce revenue losses, Congress enacted RA 842459 which reduces the amount of interest expense deductible by a taxpayer from gross income, equal to the applicable percentage of interest income subject to final tax.60 To assert that reducing the allowable deduction in interest expense is a matter that is legally related to the proposed VAT amendments is too far-fetched. Interest expenses are not allowed as credits against output VAT. Neither are VAT-registered persons always liable for interest.

Having argued on the unconstitutionality (non-germaneness) of the BCC insertions on income taxes, let me now proceed to the other provisions that were attacked by petitioners.

No Pass-on Provisions. I agree with the ponencia that the BCC did not exceed its authority when it deleted the no pass-on provisions found in the congressional bills. Its authority to make amendments not only implies the power to make insertions, but also deletions, in order to resolve conflicting provisions.

The no pass-on provision in House Bill (HB) No. 3705 referred to the petroleum products subject to excise tax (and the raw materials used in the manufacture of such products), the sellers of petroleum products, and the generation companies.61 The analogous provision in Senate Bill (SB) No. 1950 dealt with electricity, businesses other than generation companies, and services of franchise grantees of electric utilities.62 In contrast, there was a marked absence of the no pass-on provision in HB 3555. Faced with such variances, the BCC had the option of retaining or modifying the no pass-on provisions and determining their extent, or of deleting them altogether. In opting for deletion to resolve the variances, it was merely acting within its discretion. No grave abuse may be imputed to the BCC.

The 70 Percent Cap on Input Tax and the 5 Percent Final Withholding VAT. Deciding on the 70 percent cap and the 5 percent final withholding VAT in the consolidated bill is also within the power of the BCC. While HB 3555 included limits of 5 percent and 11 percent on input tax,63 SB 1950 proposed an even spread over 60 months.64 The decision to put a cap and fix its rate, so as to harmonize or to find a compromise in settling the apparent differences in these versions,65 was within the sound discretion of the BCC.

In like manner, HB 3555 contained provisions on the withholding of creditable VAT at the rates of 5 percent, 8 percent, 10.5 percent, and 12 percent.66 HB 3705 had no such equivalent amendment, and SB 1950 pegged the rates at only 5 percent and 10 percent.67 I believe that the decision to impose a final (not creditable) VAT and to fix the rates at 5 percent and 10 percent, so as to harmonize the apparent differences in all three versions, was also within the sound discretion of the BCC.

Indeed, the tax credit method under our VAT system is not only practical, but also principally used in almost all taxing jurisdictions. This does not mean, however, that in the eyes of Congress through the BCC, our country can neither deviate from this method nor modify its application to suit our fiscal requirements. The VAT is usually collected through the tax credit method (and in the past, even through the cost deduction method or a mixture of these two methods),68 but there is no hard and fast rule that 100 percent of the input taxes will always be allowed as a tax credit.

In fact, it was Maurice Laur, a French engineer,69 who invented the VAT. In 1954, he had the idea of imposing an indirect tax on consumption, called taxe sur la valeur ajoute,70 which was quickly adopted by the Direction Gnrale des Impost, the new French tax authority of which he became joint director. Consequently, taxpayers at all levels in the production process, rather than retailers or tax authorities, were forced to administer and account for the tax themselves.71

Since the unutilized input VAT can be carried over to succeeding quarters, there is no undue deprivation of property. Alternatively, it can be passed on to the consumers;72 there is no law prohibiting that. Merely speculative and unproven, therefore, is the contention that the law is arbitrary and oppressive.73 Laws that impose taxes are necessarily burdensome, compulsory, and involuntary.

The deferred input tax account -- which accumulates the unutilized input VAT -- remains an asset in the accounting records of a business. It is not at all confiscated by the government. By deleting Section 112(B) of the Tax Code,74 Congress no longer made available tax credit certificates for such asset account until retirement from or cessation of business, or changes in or cessation of VAT-registered status.75 This is a matter of policy, not legality. The Court cannot step beyond the confines of its constitutional power, if there is absolutely no clear showing of grave abuse of discretion in the enactment of the law.

That the unutilized input VAT would be rendered useless is merely speculative.76 Although it is recorded as a deferred asset in the books of a company, it remains to be a mere privilege. It may be written off or expensed outright; it may also be denied as a tax credit.

There is no vested right in a deferred input tax account; it is a mere statutory privilege.77 The State may modify or withdraw such privilege, which is merely an asset granted by operation of law.78 Moreover, there is no vested right in generally accepted accounting principles.79 These refer to accounting concepts, measurement techniques, and standards of presentation in a company's financial statements, and are not rooted in laws of nature, as are the laws of physical science, for these are merely developed and continually modified by local and international regulatory accounting bodies.80 To state otherwise and recognize such asset account as a vested right is to limit the taxing power of the State. Unlimited, plenary, comprehensive and supreme, this power cannot be unduly restricted by mere creations of the State.

That the unutilized input VAT would also have an unequal effect on businesses --some with low, others with high, input-output ratio -- is not a legal ground for invalidating the law. Profit margins are a variable of sound business judgment, not of legal doctrine. The law applies equally to all businesses; it is up to each of them to determine the best formula for selling their goods or services in the face of stiffer competition. There is, thus, no violation of the equal protection clause. If the implementation of the 70 percent cap would cause an ad infinitum deferment of input taxes or an unequal effect upon different types of businesses with varying profit margins and capital requirements, then the remedy would be an amendment of the law -- not an unwarranted and outright declaration of unconstitutionality.

The matter of business establishments shouldering 30 percent of output tax and remitting the amount, as computed, to the government is in effect imposing a tax that is equivalent to a maximum of 3 percent of gross sales or revenues.81 This imposition is arguably another tax on gross -- not net -- income and thus a deviation from the concept of VAT as a tax on consumption; it also assumes that sales or revenues are on cash basis or, if on credit, given credit terms shorter than a quarter of a year. However, such additional imposition and assumption are also arguably within the power of Congress to make. The State may in fact choose to impose an additional 3 percent tax on gross income, in lieu of the 70 percent cap, and thus subject the income of businesses to two types of taxes -- one on gross, the other on net. These impositions may constitute double taxation,82 which is not constitutionally proscribed.83

Besides, prior to the amendments introduced by the BCC, already extant in the Tax Code was a 3 percent percentage tax on the gross quarterly sales or receipts of persons who were not VAT-registered, and whose sales or receipts were exempt from VAT.84 This is another type of tax imposed by the Tax Code, in addition to the tax on their respective incomes. No question as to its validity was raised before; none is being brought now. More important, there is a presumption in favor of constitutionality,85 "rooted in the doctrine of separation of powers which enjoins upon the three coordinate departments of the Government a becoming courtesy for each other's acts.”86

As to the argument that Section 8 of RA 9337 contravenes Section 1 of Article III and Section 20 of Article II of the 1987 Constitution, I respectfully disagree.

One, petitioners have not been denied due process or, as I have illustrated earlier, equal protection. In the exercise of its inherent power to tax, the State validly interferes with the right to property of persons, natural or artificial. Those similarly situated are affected in the same way and treated alike, "both as to privileges conferred and liabilities enforced.”87

RA 9337 was enacted precisely to achieve the objective of raising revenues to defray the necessary expenses of government.88 The means that this law employs are reasonably related to the accomplishment of such objective, and not unduly oppressive. The reduction of tax credits is a question of economic policy, not of legal perlustration. Its determination is vested in Congress, not in this Court. Since the purpose of the law is to raise revenues, it cannot be denied that the means employed is reasonably related to the achievement of that purpose. Moreover, the proper congressional procedure for its enactment was followed;89 neither public notice nor public hearings were denied.

Two, private enterprises are not discouraged. Tax burdens are never delightful, but with the imposition of the 70 percent cap, there will be an assurance of a steady cash flow to the government, which can be translated to the production of improved goods, rendition of better services, and construction of better facilities for the people, including all private enterprises. Perhaps, Congress deems it best to make our economy depend more on businesses that are easier to monitor, so there will be a more efficient collection of taxes. Whatever is expected of the outcome of the law, or its wisdom, should be the sole responsibility of the representatives chosen by the electorate.

The profit margin rates of various industries generally do not change. However, the profit margin figures do, because these are obviously monetary variables that affect business, along with the level of competition, the quality of goods and services offered, and the cost of their production. And there will inevitably be a conscious desire on the part of those who engage in business and those who consume their output to adapt or adjust accordingly to any congressional modification of the VAT system.

In addition, it is contended that the VAT should be proportional in nature. I submit that this proportionality pertains to the rate imposable, not the credit allowable. Private enterprises are subjected to a proportional VAT rate, but VAT credits need not be. The VAT is, after all, a human concept that is neither immutable nor invariable. In fact, it has changed after it was adopted as a system of indirect taxation by other countries. Again unlike the laws of physical science, the VAT system can always be modified to suit modern fiscal demands. The State, through the Legislative Department, may even choose to do away with it and revert to our previous system of turnover taxes, sales taxes and compensating taxes, in which credits may be disallowed altogether.

Not expensed, but amortized over its useful life, is capital equipment, which is purchased or treated as capital leases by private enterprises. Aimed at achieving the twin objectives of profitability and solvency, such purchase or lease is a matter of prudence in business decision-making.

Hence, business judgments, sales volume, and their effect on competition are for businesses to determine and for Congress to regulate -- not for this Court to interfere with, absent a clear showing that constitutional provisions have been violated. Tax collection and administrative feasibility are for the executive branch to focus on, again not for this Court to dwell upon.

The Transcript of the Oral Arguments on July 14, 2005 clearly point out in a long line of relevant questioning that, absent a violation of constitutional provisions, the Court cannot interfere with the 70 percent cap, the 5 percent final withholding tax, and the 60-month amortization, there being other extra-judicial remedies available to petitioners, thus:
"Atty. Baniqued:
But if your profit margin is low as i[n] the case of the petroleum dealers, x x x then we would have a serious problem, Your Honor.

"Justice Panganiban:
Isn't the solution to increase the price then?

"Atty. Baniqued:
If you increase the price which you can very well do, Your Honor, then that [will] be deflationary and it [will] have a cascading effect on all other basic commodities[, especially] because what is involved here is petroleum, Your Honor.

"Justice Panganiban:
That may be true[,] but it's not unconstitutional?

"Atty. Baniqued:
That may be true, Your Honor, but the very limitation of the [seventy percent] input [VAT], when applied to the case of the petroleum dealers[,] is oppressive[.] [I]t's unjust and it's unreasonable, Your Honor.

"Justice Panganiban:
But it can be passed as a part of sales, sales costs rather.

"Atty. Baniqued:
But the petroleum dealers here themselves…… interrupted

"Justice Panganiban:
In your [b]alance [s]heet, it could be reflected as Cost of Sales and therefore the price will go up?

"Atty. Baniqued:
Even if it were to be reflected as part of the Cost of Sales, Your Honor, the [input VAT] that you cannot claim, the benefit to you is only to the extent of the corporate tax rate which is 32 now 35 [percent].

"Justice Panganiban
Yes.

"Atty. Baniqued:
It's not 100 [percent] credi[ta]bility[,] unlike if it were applied against your [output VAT], you get to claim 100 [percent] of it, Your Honor.

"Justice Panganiban:
That might be true, but we are talking about whether that particular provision would be unconstitutional. You say it's oppressive, but you have a remedy, you just pass it on to the customer. I am not sayin[g] it's good[.] [N]either am I saying it's wise[.] [A]ll I'm talking about is, whether it's constitutional or not.

"Atty. Baniqued:
Yes, in fact we acknowledge, Your Honor, that that is a remedy available to the petroleum dealers, but considering the impact of that limitation[,] and were just talking of the 70 [percent cap] on [input VAT] in the level of the petroleum dealers. Were not even talking yet of the limitation on the [input VAT] available to the manufacturers, so, what if they pass that on as well?

"Justice Panganiban:
Yes.

"Atty. Baniqued:
Then, it would complicate… interrupted

"Justice Panganiban:
What I am saying is, there is a remedy, which is business in character. The mere fact that the government is imposing that [seventy percent] cap does not make the law unconstitutional, isn't it?

"Atty. Baniqued:
It does, Your Honor, if it can be shown. And as we have shown, it is oppressive and unreasonable, it is excessive, Your Honor… interrupted

"Justice Panganiban:
If you have no way of recouping it. If you have no way of recouping that amount, then it will be oppressive, but you have a business way of recouping it[.] I am saying that, not advising that it's good. All I am saying is, is it constitutional or not[?] We're not here to determine the wisdom of the law, that's up for Congress. As pointed out earlier, if the law is not wise, the law makers will be changed by the people[.] [T]hat is their solution t[o] the lack of wisdom of a law. If the law is unconstitutional[,] then the Supreme Court will declare it unconstitutional and void it, but[,] in this case[,] there seems to be a business remedy in the same manner that Congress may just impose that tax straight without saying it's [VAT]. If Congress will just say all petroleum will pay 3 [percent] of their Gross Sales, but you don't bear that, you pass that on, isn't it?

"Atty. Baniqued:
We acknowledge your concern, Your Honor, but we should not forget that when the petroleum dealers pass these financial burden or this tax differential to the consumers, they themselves are consumers in their own right. As a matter of fact, they filed this case both as petroleum dealer[s] and as taxpayers. If they pass if on, they themselves would ultimately bear the burden[, especially] in increase[d] cost of electricity, land transport, food, everything, Your Honor.

"Justice Panganiban:
Yes, but the issue here in this Court, is whether that act of Congress is unconstitutional.

"Atty. Baniqued:
Yes, we believe it is unconstitutional, Your Honor.

"Justice Panganiban:
You have a right to complain that it is oppressive, it is excessive, it burdens the people too much, but is it unconstitutional?

"Atty. Baniqued:
Besides, passing it on, Your Honor, may not be as simple as it may seem. As a matter of fact, at the strike of midnight on June 30, when petroleum prices were being changed upward, the [s]ecretary of [the] Department of Energy was going around[.] [H]e was seen on TV going around just to check that prices don't go up. And as a matter of fact, he had pronouncements that, the increase in petroleum price should only be limited to the effect of 10 [percent] E-VAT.

"Justice Panganiban:
It's becaus[e] the implementing rules were not clear and were not extensive enough to cover how much really should be the increase for various oil products, refined oil products. It's up for the dealers to guess, and the dealers were guessing to their advantage by saying plus 10 [percent] anyway, right?

"Atty. Baniqued:
In fact, the petroleum dealers, Your Honors, are not only faced with constitutional issues before this Court. They are also faced with a possibility of the Department of Energy not allowing them to pass it on[,] because this would be an unreasonable price increase. And so, they are being hit from both sides…interrupted

"Justice Panganiban:
That's why I say, that there is need to refine the implementing rules so that everyone will know, the customers will know how much to pay for gasoline, not only gasoline, gasoline, and so on, diesel and all kinds of products, so there'll be no confusion and there'll be no undue taking advantage. There will be a smooth implementation[,] if the law were to be upheld by the Court. In your case, as I said, it may be unwise to pass that on to the customers, but definitely, the dealers will not bear that [--] to suffer the loss that you mentioned in your consolidated balance sheets. Certainly, the dealers will not bear that [cost], isn't it?

"Atty. Baniqued:
It will be a very hard decision to make, Your Honor.

"Justice Panganiban:
Why, you will not pass it on?

"Atty. Baniqued:
I cannot speak for the dealers…. interrupted.

"Justice Panganiban:
As a consumer, I will thank you if you don't pass it on[;] but you or your clients as businessm[e]n, I know, will pass it on.

"Atty. Baniqued:
As I have said, Your Honor, there are many constraints on their ability to do that[,] and that is why the first step that we are seeking is to seek redress from this Honorable Court[,] because we feel that the imposition is excessive and oppressive….. interrupted

"Justice Panganiban:
You can find redress here, only if you can show that the law is unconstitutional.

"Atty. Baniqued:
We realized that, Your Honor.

"Justice Panganiban:
Alright. Let's talk about the 5 [percent] [d]epreciation rate, but that applies only to the capital equipment worth over a million?

"Atty. Baniqued:
Yes, Your Honor.

"Justice Panganiban:
And that doesn't apply at all times, isn't it?

"Atty. Baniqued:
Well……

"Justice Panganiban:
That doesn't at all times?

"Atty. Baniqued:
For capital goods costing less than 1 million, Your Honor, then….

"Justice Panganiban:
That will not apply?

"Atty. Baniqued:
That will not apply, but you will have the 70 [percent] cap on input [VAT], Your Honor.

"Justice Panganiban:
Yes, but we talked already about the 70 [percent].

"Atty. Baniqued:
Yes, Your Honor.

"Justice Panganiban:
When you made your presentation on the balance sheet, it is as if every capital expenditure you made is subject to the 5 [percent,] rather the [five year] depreciation schedule[.] [T]hat's not so. So, the presentation you made is a little inaccurate and misleading.

"Atty. Baniqued:
At the start of our presentation, Your Honor[,] we stated clearly that this applies only to capital goods costing more than one [million].

"Justice Panganiban
Yes, but you combined it later on with the 70 [percent] cap to show that the dealers are so disadvantaged. But you didn't tell us that that will apply only when capital equipment or goods is one million or more. And in your case, what kind of capital goods will be worth one million or more in your existing gas stations?

"Atty. Baniqued:
Well, you would have petroleum dealers, Your Honor, who would have[,] aside from sale of petroleum[,] they would have their service centers[,] like[…] to service cars and they would have those equipments, they are, Your Honor.

"Justice Panganiban:
But that's a different profit center, that's not from the sale of…

"Atty. Baniqued:
No, they would form part of their [VATable] sale, Your Honor.

"Justice Panganiban:
It's a different profit center[;] it's not in the sale of petroleum products. In fact the mode now is to put up super stores in huge gas stations. I do not begrudge the gas station[.] [A]ll I am saying is it should be presented to us in perspective. Neither am I siding with the government. All I am saying is, when I saw your complicated balance sheet and mathematics, I saw that you were to put in all the time the depreciation that should be spread over [five] years. But we have agreed that that applies only to capital equipment [--]not to any kind of goods [--] but to capital equipment costing over 1 million pesos.

"Atty. Baniqued:
Yes, Your Honor, we apologize if it has caused a little confusion….

"Justice Panganiban:
Again the solution could b[e] to pass that on, because that's an added cost, isn't it?

"Atty. Baniqued:
Well, yes, you can pass it on….

"Justice Panganiban:
I am not teaching you, I am just saying that you have a remedy… I am not saying either that the remedy is wise or should be done, because[,] as a consumer[,] I wouldn't want that to be done to me.

"Atty. Baniqued:
We realiz[e] that, Your Honor, but the fact remain[s] that whether it is in the hands of the petroleum dealers or in the hands of the consumers[,] if this imposition is unreasonable and oppressive, it will remain so, even after it is passed on, Your Honor.

"Justice Panganiban:
Alright. Let's go to the third. The 5 [percent] withholding tax, [f]inal [w]ithholding [t]ax, but this applies to sales to government?

"Atty. Baniqued:
Yes, Your Honor.

"Justice Panganiban:
So, you can pass on this 5 [percent] to the [g]overnment. After all, that 5 [percent] will still go back to the government.

"Atty. Baniqued:
Then it will come back to haunt us, Your Honor…..

"Justice Panganiban:
Why?

"Atty. Baniqued:
By way of, for example sales to NAPOCOR or NTC…. interrupted

"Justice Panganiban:
Sales of petroleum products….

"Atty. Baniqued:
………… in the case of NTC, Your Honor, it would come back to us by way of increase[d] cost, Your Honor.

"Justice Panganiban:
Okay, let's see. You sell, let's say[,] your petroleum products to the Supreme Court, as a gas station that sells gasoline to us here. Under this law, the 5 [percent] withholding tax will have to be charged, right?

"Atty. Baniqued:
Yes, Your Honor.

"Justice Panganiban:
You will charge that[.] [T]herefore[,] the sales to the Supreme Court by that gas station will effectively be higher?

"Atty. Baniqued:
Yes, Your Honor.

"Justice Panganiban:
So, the Supreme Court will pay more, you will not [be] going to [absorb] that 5 [percent], will you?

"Atty. Baniqued:
If it is passed on, Your Honor, that's of course we agree…. Interrupted.

"Justice Panganiban:
Not if, you can pass it on….

"Atty. Baniqued:
Yes, we can…. interrupted

"Justice Panganiban
There is no prohibition to passing it on[.] [P]robably the gas station will simply pass it on to the Supreme Court and say[,] well[,] there is this 5 [percent] final VAT on you so[,] therefore, for every tank full you buy[,] we'll just have to [charge] you 5 [percent] more. Well, the Supreme Court will probably say, well, anyway, that 5 [percent] that we will pay the gas dealer, will be paid back to the government, isn't it[?] So, how [will] you be affected?

"Atty. Baniqued:
I hope the passing on of the burden, Your Honor, doesn't come back to party litigants by way of increase in docket fees, Your Honor.

"Justice Panganiban:
But that's quite another m[a]tter, though…(laughs) [W]hat I am saying, Mr. [C]ounsel is, you still have to show to us that your remedy is to declare the law unconstitutional[,] and it's not business in character.

"Atty. Baniqued:
Yes, Your Honor, it is our submission that this limitation in the input [VAT] credit as well as the amortization…….

"Justice Panganiban:
All you talk about is equal protection clause, about due process, depreciation of property without observance of due process[,] could really be a remedy than a business way.

"Atty. Baniqued:
Business in the level of the petroleum dealers, Your Honor, or in the level of Congress, Your Honor.

"Justice Panganiban:
Yes, you can pass them on to customers[,] in other words. It's the customers who should [complain].

"Atty. Baniqued:
Yes, Your Honor… interrupted

"Justice Panganiban:
And perhaps will not elect their representatives anymore[.]

"Atty. Baniqued:
Yes, Your Honor…..

"Justice Panganiban:
For agreeing to it, because the wisdom of a law is not for the Supreme Court to pass upon.

"Atty. Baniqued:
It just so happens, Your Honor, that what is [involved] here is a commodity that when it goes up, it affects everybody….

"Justice Panganiban:
Yes, inflationary and inflammatory….

"Atty. Baniqued:
…just like what Justice Puno says it shakes the entire economic foundation, Your Honor.

"Justice Panganiban:
Yes, it's inflationary[,] brings up the prices of everything…

"Atty. Baniqued:
And it is our submission that[,] if the petroleum dealers cannot absorb it and they pass it on to the customers, a lot of consumers would neither be in a position to absorb it too and that['s] why we patronize, Your Honor.

"Justice Panganiban:
There might be wisdom in what you're saying, but is that unconstitutional?

"Atty. Baniqued:
Yes, because as I said, Your Honor, there are even constraints in the petroleum dealers to pass it on, and we[‘]re not even sure whether….interrupted

"Justice Panganiban
Are these constraints [--] legal constraints?

"Atty. Baniqued:
Well, it would be a different story, Your Honor[.] [T]hat's something we probably have to take up with the Department of Energy, lest [we may] be accused of …..

"Justice Panganiban:
In other words, that's your remedy
[--] to take it up with the Department of Energy

"Atty. Baniqued:
…..unreasonable price increases, Your Honor.

"Justice Panganiban:
Not for us to declare those provisions unconstitutional.

"Atty. Baniqued:
We, again, wish to stress that the petroleum dealers went to this Court[,] both as businessmen and as consumers. And as consumers, [we're] also going to bear the burden of whatever they themselves pass on.

"Justice Panganiban:
You know[,] as a consumer, I wish you can really show that the laws are unconstitutional, so I don't have to pay it. But as a magistrate of this Court, I will have to pass upon judgment on the basis of [--] whether the law is unconstitutional or not. And I hope you can in your memorandum show that.

"Atty. Baniqued:
We recognized that, Your Honor." (boldface supplied, pp. 386-410).
Amendments on Other Taxes and Administrative Matters. Finally, the BCC's amendments regarding other taxes90 are both germane in a legal sense and reasonably necessary in an economic sense. This fact is evident, considering that the proposed changes in the VAT law will have inevitable implications and repercussions on such taxes, as well as on the procedural requirements and the disposition of incremental revenues, in the Tax Code. Either mitigating measures91 have to be put in place or increased rates imposed, in order to achieve the purpose of the law, cushion the impact of increased taxation, and still maintain the equitability desired of any other revenue law.92 Directly related to the proposed VAT changes, these amendments are expected also to have a salutary effect on the national economy.

The no-amendment rule93 in the Constitution was not violated by the BCC, because no completely new provision was inserted in the approved bill. The amendments may be unpopular or even work hardship upon everyone (this writer included). If so, the remedy cannot be prescribed by this Court, but by Congress.

Rejecting Non-Conflicting
Provisions


Fourth, the BCC may choose neither to adopt nor to consolidate the versions presented to it by both houses of Congress, but instead to reject non-conflicting provisions in those versions. In other words, despite the lack of conflict in them, such provisions are still eliminated entirely from the consolidated bill. There may be a constitutional problem here.

The no pass-on provisions in the congressional bills are the only item raised by petitioners concerning deletion.94 As I have already mentioned earlier, these provisions were in conflict. Thus, the BCC exercised its prerogative to remove them. In fact, congressional rules give the BCC the power to reconcile disagreeing provisions, and in the process of reconciliation, to delete them. No other non-conflicting provision was deleted.

At this point, and after the extensive discussion above, it can readily be seen no non-conflicting provisions of the E-VAT bills were rejected indiscriminately by the BCC.

Approving and Inserting
Completely New Provisions


Fifth, the BCC had the option of inserting completely new provisions not found in any of the provisions of the bills of either house of Congress, or make and endorse an entirely new bill as a substitute. Taking this option may be a blatant violation of the Constitution, for not only will the surreptitious insertion or unwarranted creation contravene the "origination" principle; it may likewise desecrate the three-reading requirement and the no-amendment rule.95

Fortunately, however, the BCC did not approve or insert completely new provisions. Thus, no violation of the Constitution was committed in this regard.

Summary

The enrolled bill doctrine is said to be conclusive not only as to the provisions of a law, but also to its due enactment. It is not absolute, however, and must yield to mandatory provisions of the 1987 Constitution. Specifically, this Court has the duty of striking down provisions of a law that in their enactment violate conditions, restrictions or limitations imposed by the Constitution.96 The Bicameral Conference Committee (BCC) is a mere creation of Congress. Hence, the BCC may resolve differences only in conflicting provisions of congressional bills that are referred to it; and it may do so only on the condition that such resolution does not violate the origination, the three-reading, and the no-amendment rules of the Constitution.

In crafting RA 9337, the BCC opted to reconcile the conflicting provisions of the Senate and House bills, particularly those on the 70 percent cap on input tax; the 5 percent final withholding tax; percentage taxes on domestic carriers, keepers of garages and international carriers; franchise taxes; amusement taxes; excise taxes on manufactured oils and other fuels; registration requirements; issuance of receipts or sales or commercial invoices; and disposition of incremental revenues. To my mind, these changes do not violate the origination or the germaneness principles.

Neither is there undue delegation of legislative power in the standby authority given by Congress to the President. The law is complete, and the standards are fixed. While I concur with the ponencia's view that the President was given merely the power to ascertain the facts to bring the law into operation -- clearly an administrative, not a legislative, function -- I stress that the finance secretary remains the Chief Executive's alter ego, not an agent of Congress.

The BCC exercised its prerogative to delete the no pass-on provisions, because these were in conflict. I believe, however, that it blatantly violated the origination and the germaneness principles when it inserted provisions not found in the House versions of the E-VAT Law: (1) increasing the tax rates on domestic, resident foreign and nonresident foreign corporations; (2) increasing the tax credit against taxes due from nonresident foreign corporations on intercorporate dividends; and (3) reducing the allowable deduction for interest expense. Hence, I find these insertions unconstitutional.

Some have criticized the E-VAT Law as oppressive to our already suffering people. On the other hand, respondents have justified it by comparing it to bitter medicine that patients must endure to be healed eventually of their maladies. The advantages and disadvantages of the E-VAT Law, as well as its long-term effects on the economy, are beyond the reach of judicial review. The economic repercussions of the statute are policy in nature and are beyond the power of the courts to pass upon.

I have combed through the specific points raised in the Petitions. Other than the three items on income taxes that I respectfully submit are unconstitutional, I cannot otherwise attribute grave abuse of discretion to the BCC, or Congress for that matter, for passing the law.
"[T]he Court -- as a rule -- is deferential to the actions taken by the other branches of government that have primary responsibility for the economic development of our country.”97 Thus, in upholding the Philippine ratification of the treaty establishing the World Trade Organization (WTO), Tañada v. Angara held that "this Court never forgets that the Senate, whose act is under review, is one of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a constitutional body, independent and coordinate, and thus its actions are presumed regular and done in good faith. Unless convincing proof and persuasive arguments are presented to overthrow such presumption, this Court will resolve every doubt in its favor.”98 As pointed our in Cawaling Jr. v. Comelec, the grounds for nullity of the law "must be beyond reasonable doubt, for to doubt is to sustain.”99 Indeed, "there must be clear and unequivocal showing that what the Constitutions prohibits, the statute permits.”100
WHEREFORE, I vote to GRANT the Petitions in part and to declare Sections 1, 2, and 3 of Republic Act No. 9337 unconstitutional, insofar as these sections (a) amend the rates of income tax on domestic, resident foreign, and nonresident foreign corporations; (b) amend the tax credit against taxes due from nonresident foreign corporations on intercorporate dividends; and (c) reduce the allowable deduction for interest expense. The other provisions are constitutional, and as to these I vote to DISMISS the Petitions.

Endnotes:


1 235 SCRA 630, August 25, 1994; and 249 SCRA 628, October 30, 1995. The second case is an en banc Resolution on the Motions for Reconsideration of the first case.

2 417 SCRA 503, December 10, 2003.

3 "[I]t is well settled that the enrolled bill doctrine is conclusive upon the courts as regards the tenor of the measure passed by Congress and approved by the President." Resins Inc. v. Auditor General, 134 Phil. 697, 700, October 29, 1968, per Fernando, J., later CJ.; (citing Casco Philippine Chemical Co., Inc. v. Gimenez, 117 Phil. 363, 366, February 28, 1963, per Concepción, J., later CJ.). It is a doctrine that flows as a corollary to the separation of powers, and by which due respect is given by one branch of government to the actions of the others. See Morales v. Subido, 136 Phil. 405, 412, February 27, 1969.

Following Field v. Clark (143 US 649, 12 S.Ct. 495, February 29, 1892), such conclusiveness refers not only to the provisions of the law, but also to its due enactment. Mabanag v. Lopez Vito, 78 Phil. 1, 13-18, March 5, 1947.

"[T]he signing of a bill by the Speaker of the House and the Senate President and the certification of the Secretaries of both [h]ouses of Congress that it was passed are conclusive of its due enactment." Fariñas v. Executive Secretary, supra, p. 529, per Callejo Sr., J.

4Mabanag v. Lopez Vito, supra, p. 12.

5 1 of Rule 129 of the Rules of Court.

6 The United Kingdom has an uncodified Constitution, consisting of both written and unwritten sources, capable of evolving to be responsive to political and social change, and found partly in conventions and customs and partly in statute. Its Parliament has the power to change or abolish any written or unwritten element of the Constitution. There is neither separation of powers nor formal checks and balances. Every bill drafted has to be approved by both the House of Commons and the House of Lords, before it receives the Royal Assent and becomes an Act of Parliament. The House of Lords is the second chamber that complements the work of the Commons, whose members are elected to represent their constituents. The first is the House of Commons that alone may start bills to raise taxes or authorize expenditures. Each bill goes through several stages in each House. The first stage, called the first reading, is a mere formality. The second -- the second reading -- is when general principles of the bill are debated upon. At the second reading, the House may vote to reject the bill. Once the House considers the bill, the third reading follows. In the House of Commons, no further amendments may be made, and the passage of the motion amounts to passage of the whole bill. The House of Lords, however, may not amend a bill so as to insert a provision relating to taxation. http://en.wikipedia.org/wiki/Constitution_of_the_United_Kingdom; http:// www.oefre.unibe.ch/law/icl/uk00000_.html; www.parliament.uk; and http://encyclopedia.thefreedictionary.com/British+Parliament (Last visited August 4, 2005, 11:30am PST).

7See Dissenting Opinion of Puno, J. in Tolentino v. Secretary of Finance, supra, p. 818.

8 Cf. Francisco Jr. v. House of Representatives, 415 SCRA 44, November 10, 2003.

9Tolentino v. Secretary of Finance, supra.

10 2nd paragraph, 1 of Article VIII of the 1987 Constitution.

11Tolentino v. Secretary of Finance, supra.

12Arroyo v. De Venecia, 343 Phil. 42, 61-62, August 14, 1997, per Mendoza, J.

13 These refer to House Bill Nos. 3555 & 3705; and Senate Bill No. 1950.

14 26(2) of Article VI of the 1987 Constitution.

15 "The purpose for which three readings on separate days is required is said to be two-fold: (1) to inform the members of Congress of what they must vote on and (2) to give them notice that a measure is progressing through the enacting process, thus enabling them and others interested in the measure to prepare their positions with reference to it." Tolentino v. Secretary of Finance, supra, p. 647, October 30, 1995, per Mendoza, J.

16 24 of Article VI of the 1987 Constitution.

17 24 of Article VI of the 1987 Constitution.

The power of the Senate to propose or concur with amendments is, apparently, without restriction. By virtue of this power, the Senate can practically rewrite a bill that is required to come from the House and leave only a trace of the original bill. See Flint v. Stone Tracy Co., 220 US 107, 31 S.Ct. 342, March 13, 1911.

18 24 of Article VI of the 1987 Constitution.

19Tolentino v. Secretary of Finance, supra, p. 661, August 25, 1994.

20 Garner (ed. in chief), Black's Law Dictionary (8th ed., 2004), p. 708.

21 Statsky, West's Legal Thesaurus/Dictionary (1986), p. 348.

22 To argue that the raising of revenues makes the non-VAT provisions of a VAT bill automatically germane is to bring legal analysis within the penumbra of economic scrutiny. The burden or impact of any tax depends on the relative elasticities of supply and demand and is chiefly a matter of policy confined within the august halls of Congress. See Pindyck and Rubinfeld, Microeconomics (5th ed., 2003), pp. 314-317.

23Exxon Mobil Corp. v. Allapattah Services, Inc., 125 S.Ct. 2611, 2622, June 23, 2005, per Kennedy, J.

24Tolentino v. Secretary of Finance, supra, p. 663, August 25, 1994. See Cruz, Philippine Political Law (2002), p. 154.

25Tolentino v. Secretary of Finance, supra, August 25, 1994, per Mendoza, J.

26 Cruz, Philippine Political Law (2002), p. 155.

27Tolentino v. Secretary of Finance, supra, August 25, 1994.

28 Cruz, Philippine Political Law (2002), p. 111.

29Tolentino v. Secretary of Finance, supra, p. 668, August 25, 1994.

There is no allegation in any of the memoranda submitted to this Court that the consolidated bill was not approved. In fact, both houses of Congress voted separately and majority of each house approved it.

30 On the one hand, 1-3 of House Bill (HB) No. 3555 seek to amend 106, 107 & 108 the Tax Code by increasing the VAT rate to 12% on every sale, barter or exchange of goods or properties; importation of goods; and sale or exchange of services, including the use or lease of properties.

1-3 of HB 3705, on the other, seek to amend 106, 107 & 108 the Tax Code by also increasing the VAT rate to 12% on every sale, barter or exchange of goods or properties; importation of goods; and sale or exchange of services, including the use or lease of properties, but decreasing such rate to 8% on every importation of certain goods; 6% on the sale, barter or exchange of certain locally manufactured goods; and 4% on the sale, barter or exchange, as well as importation, of petroleum products subject to excise tax and raw materials to be used in their manufacture (subject to subsequent increases of such reduced rates), and on the gross receipts derived from services rendered on the sale of generated power.

The Tax Code referred to in this case is RA 8424, otherwise known as the "Tax Reform Act of 1997.”

31 4-5 of Senate Bill (SB) No. 1950 seek to amend 106 & 108 of the Tax Code by retaining the VAT rate of 10% on every sale, barter or exchange of goods or properties; and on the sale or exchange of services, including the use or lease of properties, and the sale of electricity by generation, transmission, and distribution companies.

32 4-6 of the consolidated bill amending 106-108 of the Tax Code, respectively. Conference Committee Report on HBs 3555 & 3705, and SB 1950, pp. 4-7.

The predetermined factual scenario in the above-cited sections of the consolidated bill also appears in 4-6 of Republic Act (RA) No. 9337, amending the same provisions of the Tax Code. Mathematically, it is expressed as follows:

VAT Collection > 2.8%
GDP or
National Government Deficit > 1.5%
GDP


33 A negative budget surplus, or an excess of expenditure over revenues, is a budget deficit. Dornbusch, Fischer, and Startz, Macroeconomics (9th ed., 2005), p. 231.

34 GDP refers to the value of all goods and services produced domestically; the sum of gross value added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the values of their outputs). www.nscb.gov.ph/sna/default.asp (Last visited July 14, 2005 10am PST).

35 See Pelaez v. Auditor General, 122 Phil. 965, 974, December 24, 1965.

36 The acts of retroactively implementing the 12 percent VAT rate, should the finance secretary be able to make recommendation only weeks or months after the end of fiscal year 2005, or reverting to 10 percent if both conditions are not met, are best addressed to the political branches of government.

The following excerpts from the Transcript of the Oral Arguments in GR Nos. 168461, 168463, 168056, and 168207, held on July 14, 2005 at the Supreme Court Session Hall, are instructive on the position of petitioners:
"Atty. Gorospe:
[It's] supposed to be 2005, Your Honor, but apparently, it [will] be impossible to determine GDP the first day of 2006, Your Honor." (p. 57);

x x x

"Justice Panganiban:
Now [let's see] when it is possible then to determine this formula. It cannot be on the first day of January 2006, because the year [2005] ended just the midnight before, isn't it?

"Atty. Gorospe:
Yes, Your Honor.

"Justice Panganiban:
x x x if it's only determined on March 1[,] then how can the law become effective January 1[.] In other words, how will the [people be] able to pay the tax if ever that formula is exceeded x x x?" (pp. 59-60);

x x x

"Atty. Gana:
Well, x x x it would take a grace period of 6 to 8 months[,] because obviously, determination could not be made on January 1, 2006. Yes, they were under the impression that at the earliest it would take 30 days.

"Justice Panganiban:
Historically, when [will] these figures [be] available[:] the GDP, [VAT] collection?" (p. 192);

x x x

"Justice Panganiban:
But certainly not on January 1. Therefore, by January 1, people would not know whether the rate would be increased or not, even if there is no discretion?

"Atty. Gana:
That's true, Your Honor, even if there is no discretion.

"Justice Panganiban:
It will take weeks, or months to be able to determine that?

"Atty. Gana:
Well, they anticipated it, would take at most by March." (p. 193); and

x x x

"Justice Panganiban:
March, I will ask the government later on when they argue.

"Atty. Gana:
As early as January but not later than 60 to 90 days." (boldface supplied; p. 194).
Culled from the same record, the following excerpts show the position of public respondents:
"Justice Panganiban:
It will be based on actual figures?

"Usec. Bonoan: It will be based on actual figures.

"Justice Panganiban:
That creates a problem[,] because where do you get the actual figures[?]

"Usec. Bonoan:
I understand that[,] traditionally[,] we can come in March, but there is no impediment to speeding up the gathering.

"Justice Panganiban:
Speed it up. February 15?

"Usec. Bonoan:
Even within January, Your Honor, I think this can be….

"Justice Panganiban:
Alright at the end of January, it's just estimate to get the figures in January.

"Usec. Bonoan:
Yes, Your Honor (pp. 661-662); and

x x x

"Justice Panganiban:
My only point is, I raised this earlier and I promised counsel for the petitioner whom I was questionin[g] that I will raise it with you, whether the date January 1, 2006 would present an impossibility of a condition happening.

"Usec. Bonoan:
It will not, Your Honor.

"Justice Panganiban:
So, your position [is] it will not present an impossibility. Elaborate on it in your memorandum.

"Usec. Bonoan:
Yes, Your Honor.

"Justice Panganiban:
Because it is important. The administrative regulations are important[,] because they clarify the law and it will guide taxpayers. So[,] by January 1[,] [taxpayers] would not be wondering. Do we charge the end consumers 10 [percent] or 12 [percent]? The regulations should be able to spell that out [i]n the same manner that even now the various consumers of various products and services must be able to get from your regulations how much they [would] be charged, how much should gasoline stations charge in addition to their correct prices, how much carriers should charge[,] so there [would] be no confusion.

"Usec. Bonoan:
Yes, Your Honor." (boldface supplied; pp. 665-666).
37 Using available statistics, it is approximated that the 2 4/5 percent has been reached. VAT collection (in million pesos) for the first quarter alone of 2004 is 83,542.83, or 83 percent of revenue collections amounting to 100,654.01. Divided into GDP of 13,053, the quotient is already 6.4 percent. http://www.nscb.gov.ph/sna/2005/1stQ2005/2005per1.asp; and the 2003 Bureau of Internal Revenue (BIR) Annual Report found on www.bir.gov.ph (Last visited July 14, 2005, 10:45am PST).

38 Besides, the use of the word "shall" in 106(A), 107(A) & 108(A) of the Tax Code, as amended respectively by 4, 5 & 6 of RA 9337, is mandatory, imperative and compulsory. See Agpalo, Statutory Construction (4th ed., 1998), p. 333.

39See Separate Opinion (Concurring and Dissenting) of Panganiban, J., in Southern Cross Cement Corp. v. Philippine Cement Manufacturers Corp., GR No. 158540, August 3, 2005, p. 31.

40 Escudero Memorandum, pp. 38-39.

GDP data are far from perfect measures of either economic output or welfare. There are three major problems: (1) some outputs are poorly measured because they are not traded in the market, and government services are not directly priced by such market; (2) some activities measured as additions to GDP in fact only represent the use of resources in order to avoid crime or risks to national security; and (3) it is difficult to account correctly for improvements in the quality of goods. Dornbusch, Fischer, and Startz, Macroeconomics (9th ed., 2005), pp. 35-36.

41Fariñas v. Executive Secretary, 417 SCRA, 503, 530, December 10, 2003.

42 "Any meaningful change in the method and procedures of Congress or its committees must x x x be sought in that body itself." Tolentino v. Secretary of Finance, supra, p. 650, October 30, 1995, per Mendoza, J.

43 The necessity, desirability or expediency of a law must be addressed to Congress as the body that is responsible to the electorate, for "legislators are the ultimate guardians of the liberties and welfare of the people in quite as great a degree [as the] courts." Tolentino v. Secretary of Finance, supra, p. 650, October 30, 1995, per Mendoza, J.; (citing Missouri, K. & T. Ry. Co. v. May, 194 US 267, 270, 24 S.Ct. 638, 639, May 2, 1904, per Holmes, J.)

44Fariñas v. Executive Secretary, 417 SCRA, 503, 524, December 10, 2003.

45Flint v. Stone Tracy Co., 220 US 107, 167, 31 S.Ct. 342, 355, March 13, 1911, per Day, J.

46 16(3) of Article VI of the 1987 Constitution.

"Parliamentary rules are merely procedural, and with their observance, the courts have no concern. They may be waived or disregarded by the legislative body." Arroyo v. De Venecia, supra, p. 61, August 14, 1997, per Mendoza, J.; (citing Osmeña Jr. v. Pendatun, 109 Phil 863, 870-871, October 28, 1960, per Bengzon, J.).

47 HBs 3555 & 3705 do not contain any provision that seeks to revise non-VAT provisions of the Tax Code, but SB 1950 has 1-3 that seek to amend the rates of income tax on domestic, resident foreign and nonresident foreign corporations at 35% (30% in 2009), with a tax credit on intercorporate dividends at 20% (15% in 2009); and to reduce the allowable deductions for interest expense by 42% (33% in 2009) of the interest income subject to final tax.

48 The amendments to income taxes also partake of the nature of taxation without representation. As I will discuss in the succeeding paragraphs of this Opinion, they did not emanate from the House of Representatives that, under 24 of Article VI of the 1987 Constitution, is the only body from which revenue bills should exclusively originate.

49 Mamalateo, Philippine Income Tax (2004), p. 1.

50Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), GR No. 152609, p. 20, June 29, 2005, per Panganiban, J. See Deoferio Jr. & Mamalateo, The Value Added Tax in the Philippines (2000), p. 36.

51 De Leon, The Fundamentals of Taxation (12th ed., 1998), pp. 92 & 132.

52 Mamalateo, Philippine Income Tax (2004), p. 379.

53 Vitug, Tax Law and Jurisprudence (2nd ed., 2000), p. 188.

54 Mamalateo, Philippine Income Tax (2004), p. 380.

55 De Leon, The Law on Transfer and Business Taxation with Illustrations, Problems, and Solutions (1998), pp. 195-196 & 222-224.

56 Mamalateo, Philippine Income Tax (2004), p. 173.

57See 78 of Revenue Regulations No. 2-1940, recommended by Bibiano L. Meer, then Collector of Internal Revenue, and promulgated by Manuel Roxas, then Secretary of Finance, later President of the Republic of the Philippines, on February 11, 1941, XXXIX OG 18, 325.

58 Mamalateo, Philippine Income Tax (2004), p. 196.

59 RA 8424 refers to the Tax Reform Act of 1997.

60 The 42 percent reduction rate under 3 of RA 9337, amending 34(B)(1) of the Tax Code, is derived by first subtracting the 20 percent tax on interest income from the increased tax rate of 35 percent imposed on domestic, resident foreign, and nonresident foreign corporations, and then dividing the difference obtained by the increased rate. Hence, it is computed as follows:

35% - 20% = 15%
15% : 35% = 42%, the amount of reduction.

61 1-3 of HB 3705.

62 5 of SB 1950. There seems to be a discrepancy between the Conference Committee Report and the various pleadings before this Court. While such report, attaching a copy of the bill as reconciled and approved by its conferees, as well as the report submitted by the Senate's Committee on Ways & Means to the Senate President on March 7, 2005, show that SB 1950 does not contain a no-pass on provision, the petitioners and respondents show that it does (Pimentel Memorandum, Annex A showing a "Matrix on the Disagreeing Provisions of the [VAT] Bills," pp. 9-11; Escudero Memorandum, p. 42; and Respondents' Memorandum, pp. 109-110). Notably, the qualified dissent of Senator Joker Arroyo to the Bicameral Conference Report states that the Senate version prohibits the power companies from passing on the VAT that they will pay.

63 4 of HB 3555 seeks to amend 110(A) of the Tax Code by limiting to 5% and 11% of their respective total amounts the claim for input tax credit of capital goods, through equal distribution of the amount of such claim over their depreciable lives; and of goods and services other than capital goods, and goods purchased by persons engaged in retail trade.

64 7 of SB 1950 seeks to amend 110 of the Tax Code by also limiting the claim for input tax credit of goods purchased or imported for use in trade or business, through an even depreciation or amortization over the month of acquisition and the 59 succeeding months, if the aggregate acquisition cost of such goods exceeds P 660,000.

The depreciation or amortization in the amendments is referred to as a "spread-out" in an unnumbered Revenue Memorandum Circular dated July 12, 2005, submitted to this Court by public respondents in their Compliance dated August 16, 2005. Such spread-out recognizes industries where capital assets are constructed or assembled.

65 No cap is found in HB 3705.

66 5 of HB 3555 seeks to amend 114 of the Tax Code by requiring that the VAT be deducted and withheld by the government or by any of its political subdivisions, instrumentalities or agencies -- including government-owned-and-controlled corporations (GOCCs) -- before making any payment on account of each purchase of goods from sellers and services rendered by contractors. The VAT deducted and withheld shall be at the rates of 5% of the gross payment for the purchase of goods and 8% of the gross receipts for services rendered by contractors on every sale or installment payment. The VAT that is deducted and withheld shall be creditable against their respective VAT liabilities -- 10.5%, in case of government public works contractors; and 12% of the payments for the lease or use of properties or property rights to nonresident owners.

67 11 of SB 1950 seeks to amend 114 of the Tax Code by requiring that the VAT be deducted and withheld by the government or by any of its political subdivisions, instrumentalities or agencies -- including government-owned or -controlled corporations (GOCCs) -- before making any payment on account of each purchase of goods from sellers and services rendered by contractors. The VAT deducted and withheld shall be at the rates of 5% of the gross payment for the purchase of goods and on the gross receipts for services rendered by contractors, including public works contractors. The VAT that is deducted and withheld shall be creditable against the VAT liability of the seller; and 10% of the gross payment for the lease or use of properties or property rights to nonresident owners.

68 Deoferio Jr. & Mamalateo, The Value Added Tax in the Philippines (2000), pp. 34-35 & 44.

69 http://explanation-guide.info/meaning/Maurice-Laurà .html (Last visited August 23, 2005, 3:25pm PST).

70 This refers to a "tax on value added" -- TVA in French and VAT in English.

71 http://en.wikipedia.org/wiki/ Maurice-Laurà (Last visited August 23, 2005, 3:20pm PST).

72 The Transcript of the Oral Arguments in GR Nos. 168461, 168463, 168056, and 168207, held on July 14, 2005 at the Supreme Court Session Hall, show that the act of passing on to consumers is a mere cash flow problem, as agreed to by counsel for petitioners in GR No. 168461:
"Justice Panganiban: So, the final consumer pays the tax?

"Atty. Baniqued: Yes, Your Honor.

"Justice Panganiban: The trade people in between the middlemen just take it as an input and then [collect] it as output, isn't it?

Atty. Baniqued: Yes, Your Honor.

"Justice Panganiban: It's just a cash flow problem for them, essentially?

"Atty. Baniqued: Yes x x x." (p. 375).
73 The 5 percent final withholding tax may also be charged as part of a supplier's Cost of Sales.

74 This refers to RA 8424, as amended.

75 In fact, 112(B) of the Tax Code, prior to and after its amendment by 10 of RA 9337, does not at all prohibit the application of unused input taxes against other internal revenue taxes. The manner of application is determined though by the BIR through 4.112-1(b) of Revenue Regulations No. 14-2005, otherwise known as the "Consolidated VAT Regulations of 2005," dated June 22, 2005.

76 That the unutilized input VAT can be considered an ordinary and necessary expense for which a corresponding deduction will be allowed against gross income under 34(A)(1) of the Tax Code --instead of a deferred asset -- is another matter to be adjudicated upon in proper cases.

77 See United Paracale Mining Co. v. De la Rosa, 221 SCRA 108, 115, April 7, 1993.

78 The law referred to is not only the Tax Code, but also RA 9298, otherwise known as the "Philippine Accountancy Act of 2004.”

79 These are based on pronouncements of recognized bodies involved in setting accounting principles. Greatest weight shall be given to their pronouncements in the order listed below:
  1. Securities and Exchange Commission (SEC);
  2. Accounting Standards Council;
  3. Standards issued by the International Accounting Standards Board (now Committee); and
  4. Accounting principles and practices for which there has been a long history of acceptance and usage.
If there appears to be a conflict between any of the bodies listed above, the pronouncements of the first listed body shall be applied. SEC Securities Regulation Code Rule 68(1)(b)(iv) as amended, cited in Appendix C of Morales, The Philippine Securities Regulation Code (Annotated), [2005], p. 578.

Recommended by the World Bank and the Asian Development Bank, and increasingly recognized worldwide, international accounting standards (IAS) have been merely adopted by Philippine regulatory bodies and accredited professional organizations. The SEC, for instance, complies with the agreement among co-members of the International Organization of Securities Commissions to adopt IAS in order to ensure high-quality and transparent financial reporting, with full disclosure as a means to promote credibility and efficiency in the capital markets. In implementing the General Agreement on Trade in Services, the Professional Regulatory Board of Accountancy (PRBOA) of the Professional Regulatory Commission supports the adoption of IAS. The Philippine Institute of Certified Public Accountants, a member of the International Accounting Standards Committee (IASC), also has the commitment to support the work of the IASC and uses best endeavors to foster compliance with IAS. http://www.picpa.com.ph/adb/index.htm (Last visited August 23, 2005, 3:15pm PST).

80 Meigs & Meigs, Accounting: The Basis for Business Decisions (1981), pp. 28 & 515.

Under 9(b) & (g) of RA 9298, the PRBOA shall supervise the practice of accountancy in the Philippines and adopt measures -- such as the promulgation of accounting and auditing standards, rules and regulations, and best practices -- that may be deemed proper for the enhancement and maintenance of high professional, ethical, accounting, and auditing standards that include international accounting and auditing standards and generally accepted best practices.

81 The VAT is collected on each sale of goods or properties or upon the actual or constructive receipt of consideration for services, starting from the production stage, followed by the intermediate stages in the distribution process, and culminating with the sale to the final consumer. This is the essence of a VAT; it is a tax on the value added, that is, on the excess of sales over purchases. See Deoferio Jr. & Mamalateo, The Value Added Tax in the Philippines (2000), pp. 33-34. With the 70 percent cap on output tax that is allowable as an input tax credit, the remaining 30 percent becomes an outright expense that is, however, immediately payable and remitted by the business establishment to the government. This amount can never be recovered or passed on to the consumer, but it can be an allowable deduction from gross income under 34(A)(1) of the Tax Code. In effect, it is a tax computed by multiplying 30 percent to the 10 percent VAT that is imposed on gross sales, receipts or revenues. It is not a tax on tax and, mathematically, it is derived as follows:

30% x 10% = 3% of gross sales, receipts or revenues.
==========================

82 "Double taxation means taxing the same property [or subject matter] twice when it should be taxed only once; that is, ‘taxing the same person twice by the same jurisdiction for the same thing.'" Commissioner of Internal Revenue v. Solidbank Corp., 416 SCRA 436, November 25, 2003, per Panganiban, J.; (citing Afisco Insurance Corp. v. CA, 361 Phil. 671, 687, January 25, 1999, per Panganiban, J.). See Commissioner of Internal Revenue v. Bank of Commerce, GR No. 149636, pp. 17-18, June 8, 2005.

83 "The rule x x x is well settled that there is no constitutional prohibition against double taxation." China Banking Corp. v. CA, 403 SCRA 634, 664, June 10, 2003, per Carpio, J. Cruz, Constitutional Law (1998), p. 89.

84 116 of the Tax Code as amended.

85 "[C]ourts accord the presumption of constitutionality to legislative enactments, not only because the legislature is presumed to abide by the Constitution[,] but also because the judiciary[,] in the determination of actual cases and controversies[,] must reflect the wisdom and justice of the people as expressed through their representatives in the executive and legislative departments of the government." Angara v. Electoral Commission, 63 Phil. 139, 158-159, July 15, 1936, per Laurel, J.; (cited in Francisco Jr. v. House of Representatives, supra, pp. 121-122.)

86Cawaling Jr. v. COMELEC, 420 Phil. 524, 530, October 26, 2001, per Sandoval-Gutierrez, J.

87Ichong v. Hernandez, 101 Phil. 1155, 1164, May 31, 1957, per Labrador, J.

88 De Leon, The Fundamentals of Taxation (12th ed., 1998), p. 1.

89 Except, as earlier discussed, for Sections 1, 2 and 3 of the law.

90 13-20 of SB 1950 seek to amend Tax Code provisions on percentage taxes on domestic carriers and keepers of garages in 117, and on international carriers in 118; franchise taxes in 119; amusement taxes in 125; excise taxes on manufactured oils and other fuels in 148; registration requirements in 236; issuance of receipts or sales or commercial invoices in 237; and disposition of incremental revenues in 288.

91 "[T]he removal of the excise tax on diesel x x x and other socially sensitive products such as kerosene and fuel oil substantially lessened the impact of VAT. The reduction in import duty x x x also eased the impact of VAT." Manila Bulletin, "Impact of VAT on prices of oil products should be less than 10%, says DoE," by James A. Loyola, Business Bulletin B-3, Friday, July 1, 2005, attached as Annex A to the Memorandum filed by the Association of Pilipinas Shell Dealers, Inc.

The Transcript of the Oral Arguments in GR Nos. 168461, 168463, 168056, and 168207 on July 14, 2005 also reveals the effect of mitigating measures upon petitioners in GR No. 168461:
"Justice Panganiban:
As a matter of fact[,] a part of the mitigating measures would be the elimination of the [e]xcise [t]ax and the import duties. That is [why] it is not correct to say that the [VAT] as to petroleum dealers increase to 10 [percent].

"Atty. Baniqued:
Yes, Your Honor.

"Justice Panganiban:
And[,] therefore, there is no justification for increasing the retail price by 10 [percent] to cover the E-[VAT.] [I]f you consider the excise tax and the import duties, the [n]et [t]ax would probably be in the neighborhood of 7 [percent]? We are not going into exact figures[.] I am just trying to deliver a point that different industries, different products, different services are hit differently. So it's not correct to say that all prices must go up by 10 [percent].

"Atty. Baniqued:
You're right, Your Honor.

"Justice Panganiban:
Now. For instance, [d]omestic [a]irline companies, Mr. Counsel, are at present imposed a [s]ales [t]ax of 3 [percent]. When this E-[VAT] law took effect[,] the [s]ales [t]ax was also removed as a mitigating measure. So, therefore, there is no justification to increase the fares by 10 [percent;] at best 7 [percent], correct?

"Atty. Baniqued:
I guess so, Your Honor, yes." (pp. 367-368).
92 28(1) of Article VI of the 1987 Constitution.

93 26(2) of Article VI of the 1987 Constitution.

94 These bills refer to HB 3705 and SB 1950.

95 26(2), supra.

96 "Each house may not by its rules ignore constitutional restraints or violate fundamental rights, and there should be a reasonable relation between the mode or method of proceeding established by the rule and the result which is sought to be attained." US v. Ballin, 144 US 1, 5, 12 S.Ct. 507, 509, February 29, 1892, per Brewer, J.

97 Panganiban, Leveling the Playing Field (2004), PRINTTOWN Group of Companies, pp. 46-47.

98 338 Phil. 546, 604-605, May 2, 1997, per Panganiban, J.

99 420 Phil. 525, 531, October 26, 2001, per Sandoval-Gutierrez, J.; (citing The Philippine Judges Association v. Prado, 227 SCRA 703, 706, November 11, 1993, per Cruz, J.).

100Veterans Federation Party v. COMELEC, 396 Phil. 419, 452-453, October 6, 2000, per Panganiban, J.; (citing Garcia v. COMELEC, 227 SCRA 100, 107-108, October 5, 1993).



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  • G.R. No. 154363 - Joel P. Libuit v. People of the Philippines.

  • G.R. No. 154376 - Roberto T. Domondon v. National Labor Relations Commission, et al.

  • G.R. NO. 154475 - Republic of the Philippines, et al. v. Eno Fishpond Corporation, et al.

  • G.R. No. 154521 - Civil Service Commission v. Juliana E. Ledesma.

  • G.R. No. 154684 - Francel Realty Corporation v. Ricardo T. Sycip.

  • G.R. No. 155098 - Capitol Medical Center, Inc., et al. v. Dr. Cesar E. Meris.

  • G.R. No. 155225 - PVC Investment and Management Corporation v. Jose Borcena, et al.

  • G.R. No. 155343 - Benguet Corporation v. Cordillera Caraballo Mission, Inc., et al.

  • G.R. No. 155653 - Union Refinery Corporation v. Reynaldo C. Tolentino, Sr., et al.

  • G.R. No. 156021 - Cynthia C. Alaban, et al. v. Court of Appeals, et al.

  • G.R. No. 156379 - Emma Cordova, et al. v. Keysa's Boutique, et al.

  • G.R. No. 156559 - Rodolfo S. De Jesus, et al. v. Civil Service Commission, et al.

  • G.R. No. 156581 - Victoria R. Arambulo, et al. v. Emerenciana R. Gungab.

  • G.R. No. 156705 - Socorro Taopo-Banga v. Spouses Jose and Emiline Bello.

  • G.R. No. 157783 - Nilo Paloma v. Danilo Mora, et al.

  • G.R. No. 157845 - Philippine National Bank v. Norman Y. Pike.

  • G.R. No. 158157 - People of the Philippines, et al. v. Louel Uy, et al.

  • G.R. No. 158566 - Josephine Orola, et al. v. The Rural Bank of Pontevedra, Inc., et al.

  • G.R. No. 159212 - Navotas Industrial Corporation v. German D. Cruz, et al.

  • G.R. No. 160396 - Philippine Ports Authority (PPA) Employees Hired after July 1, 1989, v. Commission on Audit, et al.

  • G.R. No. 160703 - GMA Network, Inc. v. ABS-CBN Broadcasting Corporation, et al.

  • G.R. No. 161400 - Zenaida Ortega, et al. v. The Quezon City Government, et al.

  • G.R. No. 161223 - Virgilio A. Cadungog v. Jocelyn O. Yap.

  • G.R. No. 162846 - Republic of the Philippines v. Jose Lubis Masongsong, et al.

  • G.R. No. 161745 - Leamer Industries, Inc. v. Malayan Insurance Co., Inc.

  • G.R. No. 163410 - Concepcion R. Anceta v. Metropolitan Bank & Trust Company, Inc., et al.

  • G.R. No. 163338 - Luzon Development Bank v. Benedicto C. Conquilla, et al.

  • G.R. No. 164481 - Conrado C. Doldol v. People of the Philippines, et al.

  • G.R. No. 164250 - Office of the Ombudsman, et al. v. Atty. Gil A. Valera, et al.

  • G.R. No. 164910 - Union Bank of the Philippines v. Hon. Court of Appeals, et al.

  • G.R. No. 165005 - Spouses Roberto and Natividad Valderama v. Salvacion V. Macalde.

  • G.R. No. 165306 - Manly Sportwear Manufacturing, Inc. v. Dadodette Enterprises, et al.

  • G.R. No. 165675 - Spouses Eduardo Sobrejuanite, et al. v. ASB Development Corporation.

  • G.R. No. 165889 - Sacobia Hills Development Corporation, et al. v. Allan U. Ty.

  • G.R. No. 166273 - Metro Rail Transit Corporation v. Court of Tax Appeals, et al.

  • G.R. No. 166365 - Duty Free Philippines v. Rossano J. Mojica.

  • G.R. No. 166550 - Robert C. Casol, et al. v. Purefoods Corporation.

  • G.R. NO. 167499 - Miles Andrew Mari Roces v. House of Representatives Electoral Tribunal, et al.

  • CONCURRING AND DISSENTING OPINION : AZCUNA, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et a

  • CONCURRING AND DISSENTING OPINION : CALLEJO, SR., J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita

  • CONCURRING OPINION : CHICO-NAZARIO, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.

  • SEPARATE CONCURRING AND DISSENTING OPINION : DAVIDE, JR., C.J.: - G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Ed

  • SEPARATE OPINION : PANGANIBAN, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.

  • CONCURRING AND DISSENTING OPINION : PUNO, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.

  • RESOLUTION : G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.

  • RESOLUTION : AUSTRIA-MARTINEZ, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.

  • CONCURRING AND DISSENTING OPINION : SANDOVAL - GUTIERREZ, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduard

  • DISSENTING and CONCURRING OPINION : TINGA, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al

  • CONCURRING AND DISSENTING OPINION : YNARES-SANTIAGO, J.: G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Erm

  • G.R. No. 168168 - People of the Philippines v. Edgardo Dimaano

  • G.R. No. 168056, G.R. NO. 168207, G.R. NO. 168461, G.R. NO. 168463 and G.R. NO. 168730 - ABAKADA Guro Party List Officers Samson S. Alcantara, et al. v. The Honorable Executive Secretary Eduardo Ermita, et al.