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Montejovs commission on elections

Montejo vs. COMELEC242 SCRA 415March 16, 1995

Facts: 

Petitioner Cerilo Roy Montejo, representative of the first district of Leyte, pleads for the annulment of Section 1 of Resolution no. 2736, redistricting certain municipalities in Leyte, on the ground that it violates the principle of equality of representation.

The province of Leyte with the cities of Tacloban and Ormoc is composed of 5 districts. The 3rd district is composed of: Almeria, Biliran, Cabucgayan, Caibiran, Calubian, Culaba, Kawayan, Leyte, Maripipi,

Naval, San Isidro, Tabango and Villaba. 

Biliran, located in the 3rd district of Leyte, was made its subprovince by virtue of Republic Act No. 2141 Section 1 enacted on 1959. Said section spelled out the municipalities comprising the subprovince: Almeria, Biliran, Cabucgayan, Caibiran, Culaba, Kawayan, Maripipi and Naval and all the territories comprised therein.

On 1992, the Local Government Code took effect and the subprovince of Biliran became a regular province. (The conversion of Biliran into a regular province was approved by a majority of the votes cast in a plebiscite.) As a consequence of the conversion, eight municipalities of the 3rd district composed the new province of Biliran. A further consequence was to reduce the 3rd district to five municipalities (underlined above) with a total population of 146,067 as per the 1990 census. 

To remedy the resulting inequality in the distribution of inhabitants, voters and municipalities in the province of Leyte, respondent COMELEC held consultation meetings with the incumbent representatives of the province and other interested parties and on December 29, 1994, it promulgated the assailed resolution where, among others, it transferred the municipality of Capoocan of the 2nd district and the municipality of Palompon of the 4th district to the 3rd district of Leyte.

Issue: 

Whether the unprecedented exercise by the COMELEC of the legislative power of redistricting and reapportionment is valid or not.

Held: 

Section 1 of Resolution no. 2736 is annulled and set aside. 

The deliberations of the members of the Constitutional Commission shows that COMELEC was denied the major power of legislative apportionment as it itself exercised the power. Regarding the first elections after the enactment of the 1987 constitution, it is the Commission who did the reapportionment of the legislative districts and for the subsequent elections, the power was given to the Congress. 

Also, respondent COMELEC relied on the ordinance appended to the 1987 constitution as the source of its power of redistricting which is traditionally regarded as part of the power to make laws. Said ordinance states that: 

Section 2: The Commission on Elections is hereby empowered to make minor adjustments to the reapportionment herein made.” 

Section 3 : Any province that may hereafter be created…The number of Members apportioned to the province out of which such new province was created or where the city, whose population has so increases, is geographically located shall be correspondingly adjusted by the Commission on Elections but such adjustment shall not be made within one hundred and twenty days before the election.

Minor adjustments does not involve change in the allocations per district. Examples include error in the correct name of a particular municipality or when a municipality in between which is still in the territory of one assigned district is forgotten. And consistent with the limits of its power to make minor adjustments, section 3 of the Ordinance did not also give the respondent COMELEC any authority to transfer municipalities from one legislative district to another district. The power granted by section 3 to the respondent is to adjust the number of members (not municipalities.)

Notes: 

Petitioner also prayed for the transfer of the municipality of Tolosa from the 1st district to the 2nd district. It is likewise denied.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 118702 March 16, 1995

CIRILO ROY G. MONTEJO, petitioner, vs.COMMISSION ON ELECTIONS, respondent.

SERGIO A.F. APOSTOL, intervenor.

 

PUNO, J.:

More than political fortunes are at stake in the case at bench. Petitioner Cirilo Roy G. Montejo, representing the First District of Leyte, pleads for the annulment of section 1 of Resolution No. 2736 of the COMELEC, redistricting certain municipalities in Leyte, on the ground that it violates the principle of equality of representation. To remedy the alleged inequity, petitioner seeks to transfer the municipality of Tolosa from his district to the Second District of the province. Intervenor Sergio A.F. Apostol, representing the Second District, vigorously opposed the inclusion ofTolosa in his district. We gave due course to the petition considering that, at bottom, it involves the validity of the unprecedented exercise by the COMELEC of the legislative power of redistricting and reapportionment.

The province of Leyte with the cities of Tacloban and Ormoc is composed of five (5) legislative districts.  1

The first district 2 covers Tacloban City and the municipalities of Alangalang, Babatngon, Palo, San Miguel, Sta. Fe, Tanauan and Tolosa.

The second district 3 is composed of the municipalities of Barugo, Barauen, Capoocan, Carigara, Dagami, Dulag, Jaro, Julita, La Pat, Mayorga, MacArthur, Pastrana, Tabontabon, and Tunga.

The third district 4 is composed of the municipalities of Almeria, Biliran, Cabucgayan, Caibiran, Calubian, Culaba, Kawayan, Leyte, Maripipi, Naval, San Isidro, Tabango, and Villaba.

The fourth district 5 is composed of Ormoc City and the municipalities of Albuera, Isabel, Kananga, Matagob, Merida, and Palompon.

The fifth district 6 is composed of the municipalities of Abuyog, Bate, Baybay, Hilongos, Hindang, Inopacan, Javier, Mahaplag, and Matalom.

Biliran, located in the third district of Leyte , was made its sub-province by virtue of Republic Act No. 2141 Section 1 of the law spelled out enacted on April 8, 1959. 7

Section 1 of the law spelled out the municipalities comprising the sub-province, viz.: "Almeria, Biliran, Cabucgayan, Caibiran, Culaba, Kawayan, Maripipi and Naval and all the territories comprised therein."

On January 1, 1992, the Local Government Code took effect. Pursuant to its Section 462, the sub-province of Biliran became a regular province. It provides:

Existing sub-provinces are hereby converted into regular provinces upon approval by a majority of the votes cast in a plebiscite to be held in the sub-provinces and the original provinces directly affected. The plebiscite shall be conducted by the COMELEC simultaneously with the national elections following the effectivity of this code. The new legislative districts created as a result of such conversion shall continue to be represented in Congress by the duly-elected representatives of the original districts out of which said new provinces or districts were created until their own representatives shall have been elected in the next regular congressional elections and qualified.

The conversion of Biliran into a regular province was approved by a majority of the votes cast in a plebiscite held on May 11, 1992. As a consequence of the conversion, eight (8) municipalities of the Third District composed the new province of Biliran, i.e., Almeria, Biliran, Cabucgayan, Caibiran, Culaba, Kawayan, Maripipi, and Naval. A further consequence was to reduce the Third District to five (5) municipalities with a total population of 145,067 as per the 1990 census.

To remedy the resulting inequality in the distribution of inhabitants, voters and municipalities in the province of Leyte, respondent COMELEC held consultation meetings with the incumbent representatives of the province and other interested parties. On December 29, 1994, it promulgated Resolution No. 2736 where, among others, it transferred the municipality of Capoocan of the Second District and the municipality of Palompon of the Fourth District to the Third District of Leyte. The composition of the First District which includes the municipality of Tolosaand the composition of the Fifth District were not disturbed. After the movement of municipalities, the composition of the five (5) legislative districts appeared as follows:

First District: Population RegisteredVoters(1990) (1994)

1. Tacloban City, 137,190 81,6792. Alangalang, 33,375 20,5433. Babatngon, 17,795 9,9294. Palo, 38,100 20,8165. San Miguel, 13,438 8,1676. Sta. Fe, 12,119 7,4977. Tanauan and, 38,033 22,3578. Tolosa; 13,299 7,700———— ————TOTAL 303,349 178,688

Second District: Population RegisteredVoters(1990) (1994)

1. Barugo, 23,817 13,2372. Barauen, 46,029 23,3073. Carigara 38,863 22,0364. Dagami, 25,606 16,5195. Dulag, 33,020 19,3756. Jaro, 31,727 17,1397. Julita, 9,944 6,1968. La Paz, 14,311 9,0039. Mayorga, 10,530 5,86810. Mac Arthur, 13,159 8,62811. Pastrana, 12,565 7,34812. Tabontabon, and 7,183 4,41913. Tunga; 5,413 3,387———— ————TOTAL 272,167 156,462

Third District: Population RegisteredVoters(1990) (1994)

1. Calubian, 25,968 16,6492. Leyte, 32,575 16,4153. San Isidro, 24,442 14,9164. Tabango, 29,743 15,485. Villaba, 32,339 21,2276. Capoocan, and 23,687 13,5957. Palompon; 45,745 27,474———— ————TOTAL 214,499 125,763

Fourth District: Population RegisteredVoters(1990) (1994)

1. Ormoc City, 129,456 75,1402. Albuera, 32,395 17,4933. Isabel, 33,389 21,8894. Kananga, 36,288 19,8735. Matagob, 15,474 9,4076. Merida, and 22,345 12,474———— ————TOTAL 269,347 155,995

Fifth District: Population RegisteredVoters(1990) (1994)

1. Abuyog, 47,265 28,6822. Bato, 28,197 116,133. Baybay, 82,281 47,9234. Hilongos, 48,617 26,8715. Hindang, 16,272 9,6596. Inopacan, 16,894 10,4017. Javier, 18,658 11,7138. Mahaplag, and 22,673 13,6169. Matalom 28,291 16,247———— ————TOTAL 309,148 181,242

Petitioner Montejo filed a motion for reconsideration calling the attention of respondent COMELEC, among others, to the inequitable distribution of inhabitants and voters between the First and Second Districts. He alleged that the First District has 178,688 registered voters while the Second District has 156,462 registered voters or a difference of 22,226 registered voters. To diminish the difference, he proposed that the municipality of Tolosa with 7,7000 registered voters be transferred from the First to the Second District. The motion was opposed by intervenor, Sergio A.F. Apostol. Respondent Commission denied the motion ruling that: (1) its adjustment of municipalities involved the least disruption of the territorial composition of each district; and (2) said adjustment complied with the constitutional requirement that each legislative district shall comprise, as far as practicable, contiguous, compact and adjacent territory.

In this petition, petitioner insists that Section I of Resolution No. 2736 violates the principle of equality of representation ordained in the Constitution. Citing Wesberry v. Sanders, 8 he argues that respondent COMELEC violated "the constitutional precept that as much as practicable one man's vote in a congressional election is to be worth as much as another's." The Solicitor General, in his Comment, concurred with the views of the petitioner. The intervenor, however, opposed the petition on two (2) grounds: (1) COMELEC has no jurisdiction to promulgate Resolution No. 2736; and (2) assuming it has jurisdiction, said Resolution is in accord with the Constitution. Respondent COMELEC filed its own Comment alleging that it acted within the parameters of the Constitution.

We find section 1 of Resolution No. 2736 void.

While the petition at bench presents a significant issue, our first inquiry will relate to the constitutional power of the respondent COMELEC 9 to transfer municipalities from one legislative district to another legislative district in the province of Leyte. The basic powers of respondent COMELEC, as enforcer and

administrator of our election laws, are spelled out in black and white in section 2(c), Article IX of the Constitution. Rightly, respondent COMELEC does not invoke this provision but relies on the Ordinance appended to the 1987 Constitution as the source of its power of redistricting which is traditionally regarded as part of the power to make laws. The Ordinance is entitled "Apportioning the Seats of the House of Representatives of the Congress of the Philippines to the Different Legislative Districts in Provinces and Cities and the Metropolitan Manila Area." Its substantive sections state:

Sec. 1. For purposes of the election of Members of the House of Representatives of the First Congress of the Philippines under the Constitution proposed by the 1986 Constitutional Commission and subsequent elections, and until otherwise provided by law, the Members thereof shall be elected from legislative districts apportioned among the provinces, cities, and the Metropolitan Manila Area as follows:

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Sec. 2. The Commission on Elections is hereby empowered to make minor adjustments of the reapportionment herein made.

Sec. 3. Any province that may hereafter be created, or any city whose population may hereafter increase to more than two hundred fifty thousand shall be entitled in the immediately following election to at least one Member or such number of Members as it may be entitled to on the basis of the number of its inhabitants and according to the standards set forth in paragraph (3), Section 5 of Article VI of the Constitution. The number of Members apportioned to the province out of which such new province was created or where the city, whose population has so increased, is geographically located shall be correspondingly adjusted by the Commission on Elections but such adjustment shall not be made within one hundred and twenty days before the election. (Emphasis supplied)

The Ordinance was made necessary because Proclamation No. 3 10 of President Corazon C. Aquino, ordaining the Provisional Constitution of the Republic of the Philippines, abolished the BatasangPambansa. 11 She then exercised legislative powers under the Provisional Constitution. 12

The Ordinance was the principal handiwork of then Commissioner Hilario G. Davide, Jr., 13 now a distinguished member of this Court. The records reveal that the Constitutional Commission had to resolve several prejudicial issues before authorizing the first congressional elections under the 1987 Constitution. Among the vital issues were: whether the members of the House of Representatives would be elected by district or by province; who shall undertake the apportionment of the legislative districts; and, how the apportionment should be made. 14 Commissioner Davide, Jr. offered three (3) options for the Commission to consider: (1) allow President Aquino to do the apportionment by law; (2) empower the COMELEC to make the apportionment; or (3) let the Commission exercise the power by way of an Ordinance appended to the Constitution.15 The different dimensions of the options were discussed by Commissioners Davide, Felicitas S. Aquino and Blas F. Ople. We quote the debates in extenso, viz.: 16

xxx xxxxxx

MR. PADILLA. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir). Commissioner Padilla is recognized.

MR. PADILLA. I think I have filed a very simple motion by way of amendment by substitution and this was, I believe, a prior or a proposed amendment. Also, the chairman of the Committee on the Legislative said that he was proposing a vote first by the Chamber on the concept of whether the election is by province and cities on the one hand, or by legislative districts on the other. So I propose this simple formulation which reads: "FOR THE FIRST ELECTION UNDER THIS CONSTITUTION THE LEGISLATIVE DISTRICTS SHALL BE APPORTIONED BY THE COMMISSION ON ELECTIONS." I hope the chairman will accept the proposed amendment.

SUSPENSION OF SESSION

MR. DAVIDE. The effect is, more or less, the same insofar as the apportionment is concerned, but the Bernas-Sarmiento et al. proposal would also provide for a mandate for the apportionment later, meaning after the first election, which will in effect embody what the Commission had approved, reading as follows: "Within three years following the return of every census, the Congress shall make a reapportionment of legislative districts based on the standards provided in this section."

So, Mr. Presiding Officer, may I request for a suspension of the session, so that all the proponents can work together.

THE PRESIDING OFFICER (Mr. Jamir). The session is suspended.

It was 3:33 p.m.

RESUMPTION OF SESSION

At 3:40 p.m., the session was resumed.

THE PRESIDING OFFICER (Mr. Jamir). The session is resumed.

Commissioner Davide is recognized.

MR. DAVIDE. Mr. Presiding Officer, as a compromise, I wonder if the Commission will allow this. We will just delete the proposed subparagraph (4) and all the capitalized words in paragraph (5). So that in paragraph (5), what would be left would only be the following: "Within three years following the return of every census, the Congress shall make a reapportionment of legislative districts based on the standards provided in this section."

But we shall have an ordinance appended to the new Constitution indicating specifically the following: "FOR PURPOSES OF THE ELECTION OF MEMBERS OF THE HOUSE OF REPRESENTATIVES IN THE FIRST CONGRESSIONAL ELECTION IMMEDIATELY FOLLOWING THE RATIFICATION OF THIS CONSTITUTION PROPOSED BY THE 1986 CONSTITUTIONAL COMMISSION AND SUBSEQUENT ELECTIONS AND UNTIL OTHERWISE PROVIDED BY LAW, THE MEMBERS OF THE HOUSE OF REPRESENTATIVES SHALL BE ELECTED FROM LEGISLATIVE DISTRICTS APPORTIONED AMONG THE PROVINCES, CITIES AND THE METROPOLITAN MANILA AREA AS FOLLOWS."

And what will follow will be the allocation of seats to Metropolitan Manila Area, to the provinces and to the cities, without indicating the municipalities comprising each of the districts. Then, under Section 2, we will mandate the COMELEC to make the actual apportionment on the basis of the number of seats provided for and allocated to each province by us.

MS. AQUINO. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir). Commissioner Aquino is recognized.

MS. AQUINO. I have to object to the provision which will give mandate to COMELEC to do the redistricting. Redistricting is vitally linked to the baneful practices of cutting up areas or spheres of influence; in other words, gerrymandering. This Commission, being a nonpartisan, a nonpolitical deliberative body, is in the best possible situation under the circumstances to undertake that responsibility. We are not wanting in expertise and in time because in the first place, the Committee on the Legislative has prepared the report on the basis of the recommendation of the COMELEC.

MR. OPLE. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir). Commissioner Ople is recognized.

MR. OPLE. I would like to support the position taken by Commissioner Aquino in this respect. We know that the reapportionment of provinces and cities for the purpose of redistricting is generally inherent in the constituent power or in the legislative power. And I would feel very uncertain about delegating this to a quasi-judicial body even if it is one of the constitutional offices created under this Constitution. We have the assurance of Commissioner Davide, as chairman of the Committee on the Legislative, that even given the very short time remaining in the life of this Commission, there is no reason why we cannot complete the work of reapportionment on the basis of the COMELEC plan which the committee has already thoroughly studied and which remains available to the Constitutional Commission.

So, I support the position taken by Commissioner Aquino, Mr. Presiding Officer. I think, it is the safest, the most reasonable, and the most workable approach that is available to this Commission.

THE PRESIDING OFFICER (Mr. Jamir). What does Commissioner Davide say:

MR. DAVIDE. The issue now is whether this body will make the apportionment itself or whether we will leave it to the COMELEC. So, there arises, therefore, a prejudicial question for the body to decide. I would propose that the Commission should now decide what body should make the apportionment. Should it be the Commission or should it be the COMELEC? And the Committee on the Legislative will act accordingly on the basis of the decision.

MR. BENGZON. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir). Commissioner Bengzon is recognized.

MR. BENGZON. Apropos of that, I would like to inform the body that I believe the Committee on the Legislative has precisely worked on this matter and they are ready with a list of apportionment. They have, in fact, apportioned the whole country into various districts based on the recommendation of the COMELEC. So they are ready with the list and if this body would wish to apportion the whole country by district itself, then I believe we have the time to do it because the Committee on the Legislative is ready with that particular report which need only to be appended to the Constitution. So if this body is ready to accept the work of the Committee on the Legislative we would have no problem. I just would like to give that information so that the people here would be guided accordingly when they vote.

MR. RODRIGO. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir) Commissioner Rodrigo is recognized.

MR. RODRIGO. I just would like to ask Commissioner Davide some questions.

THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide may yield if he so desires.

MR. DAVIDE. Gladly.

MR. RODRIGO. Will this apportionment which we are considering apply only to the first election after the enactment of the Constitution?

MR. DAVIDE. On the basis of the Padilla proposal, it will be for the first election; on the basis of the Sarmiento proposal, it will only apply to the first election.

MR. RODRIGO. And after that, Congress will have the power to reapportion.

MR. DAVIDE. Yes.

MR. RODRIGO. So, if we attach this to the Constitution — the reapportionment based on the COMELEC study and between the approval of the Constitution and the first election — the COMELEC no longer has the power to change that even a bit.

xxx xxxxxx

THE PRESIDING OFFICER (Mr. Jamir) Commissioner Regalado is recognized.

MR. REGALADO. May I address a clarificatory question to Commissioner Davide?

THE PRESIDING OFFICER (Mr. Jamir). Gentleman will please proceed.

MR. REGALADO. On the basis of the Commissioner's proposed apportionment and considering the fact that there will be a corresponding reduction to 183 seats, would there be instances representation of under non-representation?

MR. DAVIDE. None at all, Mr. Presiding Officer. I can assure the Commission that there will be no case of inequitable distribution. It will come out to be one for every 350 to 400,000 inhabitants.

MR. REGALADO. And that would be within the standard that we refer.

MR. DAVIDE. Yes, Mr. Presiding Officer.

MR. REGALADO. Thank you.

MR. RAMA. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir). The Floor Leader is recognized.

MR. RAMA. The parliamentary situation is that there was a motion by Commissioner Sarmiento to mandate COMELEC to do the redistricting. This was also almost the same motion by Commissioner Padilla and I think we have had some kind of meeting of minds. On the other hand, there seems to be a prejudicial question, an amendment to the amendment as suggested by Commissioner Aquino, that instead of the COMELEC, it should be this Commission that shall make the redistricting. So may I ask Commissioner Aquino, if she insists on that idea, to please formulate it into a motion so we can vote on that first as an amendment to the amendment.

THE PRESIDING OFFICER (Mr. Jamir).Commissioner Aquino is recognized.

MS . AQUINO. The motion is for this Commission to undertake the apportionment of the legislative districts instead of the proposal that COMELEC be given the mandate to undertake the responsibility.

xxx xxxxxx

MR. SARMIENTO. May I be clarified, Mr. Presiding Officer. Is it the motion or the proposed amendment?

THE PRESIDING OFFICER (Mr. Jamir). The proposed amendment.

MR. SARMIENTO. May we move for the approval of this proposed amendment which we substitute for paragraphs 4 and 5.

MR. DAVIDE. May I request that it should be treated merely as a motion to be followed by a deletion of paragraph 4 because that should not really appear as a paragraph in Section 5; otherwise, it will appear very ugly in the Constitution where we mandate a Commission that will become functusofficioto have the authority. As a matter of fact, we cannot exercise that authority until after the ratification of the new Constitution.

THE PRESIDING OFFICER (Mr. Jamir). What does Commissioner Sarmiento say?

MR. SARMIENTO. It is accepted, Mr. Presiding Officer. So, may I move for the approval of this proposed amendment.

MS. AQUINO. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir). Commissioner Aquino is recognized.

MS. AQUINO. Would that require a two-thirds vote or a simple plurality to adopt that motion?

THE PRESIDING OFFICER (Mr. Jamir). That will require a two-thirds vote.

MS. AQUINO. Thank you. Mr. Presiding Officer.

MR. SARMIENTO. May I restate the motion, Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir) The Gentleman may proceed.

MR. SARMIENTO. May I move that this Commission do the reapportionment legislative districts.

MS. AQUINO. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Jamir). What is the pleasure of Commissioner Aquino?

MS. AQUINO. May I be clarified again on the motion. Is Commissioner Sarmiento, therefore, adopting my motion? Would it not be right for him to move that the COMELEC be mandated?

MR. SARMIENTO. No, we accepted the amendment. It is already the Commission that will be mandated.

MS. AQUINO. So, the Gentlemen has accepted the amendment the amendment.

Thank you.

MR. SARMIENTO. I am voting that this Commission do the reapportionment.

VOTING

THE PRESIDING OFFICER (Mr. Jamir). Let us proceed to vote.

As many as are in favor, please raise their hand. (Several Members raised their hand.)

As many as are against, please raise their hand. (No Member raised his hand.)

The results show 30 votes in favor and none against; the motion is approved.

Clearly then, the Constitutional Commission denied to the COMELEC the major power of legislative apportionment as it itself exercised the power. Section 2 of the Ordinance only empowered the

COMELEC "to make minoradjustments of the reapportionment herein made." The meaning of the phrase "minor adjustments was again clarified in the debates 17 of the Commission, viz.:

xxx xxxxxx

MR. GUINGONA. This is just clarificatory, Mr. Presiding Officer. In Section 2, the Commission on Elections is empowered to make minor adjustments on the apportionment made here.

MR. DAVIDE. Yes, Mr. Presiding Officer.

MR. GUINGONA. We have not set any time limit for this.

MR. DAVIDE. We should not set a time limit unless during the period of amendments a proposal is made. The authority conferred would be on minor corrections or amendments, meaning to say, for instance, that we may have forgotten an intervening municipality in the enumeration, which ought to be included in one district. That we shall consider a minor amendment.

MR. GUINGONA. Thank you.

xxx xxxxxx

THE PRESIDING OFFICER (Mr. Romulo). Commissioner de Castro is recognized.

MR. DE CASTRO. Thank you.

I was about to ask the committee the meaning of minor adjustment. Can it be possible that one municipality in a district be transferred to another district and call it a minor adjustment?

MR. DAVIDE. That cannot be done, Mr. Presiding Officer. Minor, meaning, that there should be no change in the allocations per district. However, it may happen that we have forgotten a municipality in between which is still in the territory of one assigned district, or there may be an error in the correct name of a particular municipality because of changes made by the interim BatasangPambansa and the Regular BatasangPambansa. There were many bataspambansa enacted by both the interim and the Regular BatasangPambansa changing the names of municipalities.

MR. DE CASTRO. So, the minor adjustment may be made only if one of the municipalities is not mentioned in the ordinance appended to, and it will be up for the COMELEC now to adjust or to put such municipality to a certain district.

MR. DAVIDE. Yes, Mr. Presiding Officer. For instance, we may not have the data regarding a division of a municipality by the interim BatasangPambansa or the Regular BatasangPambansa into two municipalities, meaning, a mother municipality and the new municipality, but still actually these are within the geographical district area.

MR. DE CASTRO. So the minor adjustment which the COMELEC cannot do is that, if, for example, my municipality is in the First District of Laguna, they cannot put that in any other district.

MR. DAVIDE. That is not even a minor correction. It is a substantive one.

MR. DE CASTRO. Thank you.

Consistent with the limits of its power to make minor adjustments, Section 3 of the Ordinance did not also give the respondent COMELEC any authority to transfer municipalities from one legislative district to another district. The power granted by Section 3 to the respondent COMELEC is to adjust the number of members (not municipalities) "apportioned to the province out of which such new province was created. . . ."

Prescinding from these premises, we hold that respondent COMELEC committed grave abuse of discretion amounting to lack of jurisdiction when it promulgated section 1 of its Resolution No. 2736 transferring the municipality of Capoocan of the Second District and the municipality of Palompon of the Fourth District to the Third District of Leyte.

It may well be that the conversion of Biliran from a sub-province to a regular province brought about an imbalance in the distribution of voters and inhabitants in the five (5) legislative districts of the province of Leyte. This imbalance, depending on its degree, could devalue a citizen's vote in violation of the equal protection clause of the Constitution. Be that as it may, it is not proper at this time for petitioner to raise this issue using the case at bench as his legal vehicle. The issue involves a problem of reapportionment of legislative districts and petitioner's remedy lies with Congress. Section 5(4), Article VI of the Constitution categorically gives Congress the power to reapportion, thus: "Within three (3) years following the return of every census, the Congress shall make a reapportionment of legislative districts based on the standards provided in this section." In Macias v. COMELEC, 18 we ruled that the validity of a legislative apportionment is a justiciable question. But while this Court can strike down an unconstitutional reapportionment, it cannot itself make the reapportionment as petitioner would want us to do by directing respondent COMELEC to transfer the municipality of Tolosa from the First District to the Second District of the province of Leyte.

IN VIEW WHEREOF, section 1 of Resolution No. 2736 insofar as it transferred the municipality of Capoocan of the Second District and the municipality of Palompon of the Fourth District to the Third District of the province of Leyte, is annulled and set aside. We also deny the Petition praying for the transfer of the municipality of Tolosa from the First District to the Second District of the province of Leyte. No costs.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.

THIRD DIVISION

[G.R. No. 144109.  February 17, 2003]

ASSOCIATED COMMUNICATIONS & WIRELESS SERVICES – UNITED BROADCASTING NETWORKS, petitioner, vs.NATIONAL TELECOMMUNICATIONS COMMISSION, respondent.

D E C I S I O N

PUNO, J.:

For many years now, there has been a “pervading confusion in the state of affairs of the broadcast industry brought about by conflicting laws, decrees, executive orders and other pronouncements promulgated during the Martial Law regime.”[1] The question that has taken a long life is whether the operation of a radio or television station requires a congressional franchise.  The Court shall now lay to rest the issue.

This is a petition for review on certiorari of the Court of Appeals’ January 31, 2000 decision and February 21, 2000 resolution affirming the January 13, 1999 decision of the National Telecommunications Commission (NTC for brevity).

First, the facts.

On November 11, 1931, Act No. 3846, entitled “An Act Providing for the Regulation of Radio Stations and Radio Communications in the Philippines and for Other Purposes,” was enacted.   Sec. 1 of the law reads, viz:

“Sec. 1. No person, firm, company, association, or corporation shall construct, install, establish, or operate a radio transmitting station, or a radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines...”

Pursuant to the above provision, Congress enacted in 1965 R.A. No. 4551, entitled “An Act Granting Marcos J. Villaverde, Jr. and Winfred E. Villaverde a Franchise to Construct, Install, Maintain and Operate Public Radiotelephone and Radiotelegraph Coastal Stations, and Public Fixed and Public Based and Land Mobile Stations within the Philippines for the Reception and Transmission of Radiotelephone and Radiotelegraph for Domestic Communications and Provincial Telephone Systems in Certain Provinces.”  It gave the grantees a 50-year franchise.[2]  In 1969, the franchise was transferred to petitioner Associated Communications & Wireless Services – United Broadcasting Network, Inc. (ACWS for brevity) through Congress’ Concurrent Resolution No. 58.[3]  Petitioner ACWS then engaged in the installation and operation of several radio stations around the country.

In 1974, P.D. No. 576-A, “Regulating the Ownership and Operation of Radio and Television Stations and for other Purposes” was issued, with the following pertinent provisions on franchise of radio and television broadcasting systems:

“Sec. 1.  No radio station or television channel may obtain a franchise unless it has sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment.

x xx              xxx                 xxx

Sec. 6.  All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31, 1981.  Thereafter, irrespective of any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting system; Provided, however, that any conflict over, or disagreement with a decision of the aforementioned authorities may be appealed finally to the Office of the President within fifteen days from the date the decision is received by the party in interest.”

A few years later or in 1979, E.O. No. 546[4] was issued.  It integrated the Board of Communications and the Telecommunications Control Bureau under the Integrated Reorganization Plan of 1972 into the NTC.  Among the powers vested in the NTC under Sec. 15 of E.O. No. 546 are the following:

“a.  Issue Certificate of Public Convenience for the operation of communication utilities and services, radio communications systems, wire or wireless telephone or telegraph system, radio and television broadcasting system and other similar public utilities;

x xx             xxx                 xxx

c.  Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio communication systems including amateur radio stations and radio and television broadcasting systems; . . . ”

Upon termination of petitioner’s franchise on December 31, 1981 pursuant to P.D. No. 576-A, it continued operating its radio stations under permits granted by the NTC.

As these presidential issuances relating to the radio and television broadcasting industry brought about confusion as to whether the NTC could issue permits to radio and television broadcast stations without legislative franchise, the NTC sought the opinion of the Department of Justice (DOJ) on the matter.  On June 20, 1991, the DOJ rendered Opinion No. 98, Series of 1991, viz:

“We believe that under P.D. No. 576-A dated November 11, 1974 and prior to the issuance of E.O No. 546 dated July 23, 1979, the NTC, then Board of Communications, had no authority to issue permits or authorizations to operate radio and television broadcasting systems without a franchise first being obtained pursuant to Section 1 of Act No. 3846, as amended.  A close reading of the provisions of Sections 1 and 6 of P.D. No. 576-A, supra, does not reveal any indication of a legislative intent to do away with the franchising requirement under Section 1 of Act No. 3846.  In fact, a mere reading of Section 1 would readily indicate that a franchise was necessary for the operation of radio and television broadcasting systems as it expressly provided that no such franchise may be obtained unless the radio station or television channel has ‘sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment.’

It is believed that the termination of all franchises granted for the operation of radio and television broadcasting systems effective December 31, 1981 and the vesting of the power to authorize the operation of any radio or television station upon the Board of Communications and the Secretary of Public Works and Communications and their successors under Section 6 of P.D. No. 576-A does not necessarily imply the abrogation of the requirement of obtaining a franchise under Section 1 of Act No. 3846, as amended, in the absence of a clear provision in P.D. No. 576-A providing to this effect.

It should be noted that under Act No. 3846, as amended, a person, firm or entity desiring to operate a radio broadcasting station must obtain the following: (a) a franchise from Congress (Sec. 1); (b) a permit to construct or install a station from the Secretary of Commerce and Industry (Sec. 2); and (c) a license to operate the station also from the Secretary of Commerce and Industry (id.).  The franchise is the privilege granted by the State through its legislative body and is subject to regulation by the State itself by virtue of its police power through its administrative agencies (RCPI vs. NTC, 150 SCRA 450).  The permit and license are the administrative authorizations issued by the administrative agency in the exercise of regulation.  It is clear that what was transferred to the Board of Communications and the Secretary of Commerce and Industry under Section 6 of P.D. No. 576-A was merely the regulatory powers vested solely in the Secretary of Commerce and Industry under Section 2 of Act No. 3846, as amended.  The

franchising authority was retained by the then incumbent President as repository of legislative power under Martial Law, as is clearly indicated in the first WHEREAS clause of P.D. No. 576-A to wit:

‘WHEREAS, the President of the Philippines is empowered under the Constitution to review and approve franchises for public utilities.’

Of course, under the Constitution, said power (the power to review and approve franchises), belongs to the lawmaking body (Sec. 5, Art. XIV, 1973 Constitution; Sec. 11, Art. XII, 1987 Constitution).

The corollary question to be resolved is:  Has E.O. No 546 (which is a law issued pursuant to P.D. No. 1416, as amended by P.D. No. 1771, granting the then President continuing authority to reorganize the administrative structure of the national government) modified the franchising and licensing arrangement for radio and television broadcasting systems under P.D. No. 576-A?

We believe so.

E.O. No. 546 integrated the Board of Communications and the Telecommunications Bureau into a single entity known as the NTC (See Sec. 14), and vested the new body with broad powers, among them, the power to issue Certificates of Public Convenience for the operation of communications utilities, including radio and televisions broadcasting systems and the power to grant permits for the use of radio frequencies (Sec. 14[a] and [c], supra).  Additionally, NTC was vested with broad rule making authority ‘to encourage a larger and more effective use of communications, radio and television broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the Commission finds it reasonably feasible’ (Sec. 15[f]).

In the recent case of Albano vs. Reyes (175 SCRA 264), the Supreme Court held that ‘franchises issued by Congress are not required before each and every public utility may operate.’  Administrative agencies may be empowered by law ‘to grant licenses for or to authorize the operation of certain public utilities.’  The Supreme Court stated that the provision in the Constitution (Art. XII, Sec. 11) ‘that the issuance of a franchise, certificate or other form of authorization for the operation of a public utility shall be subject to amendment, alteration or repeal by Congress, does not necessarily imply . . . that only Congress has the power to grant such authorization.  Our statute books are replete with laws granting specified agencies in the Executive Branch the power to issue such authorization for certain classes of public utilities.’

We believe that E.O. No. 546 is one law which authorizes an administrative agency, the NTC, to issue authorizations for the operation of radio and television broadcasting systems without need of a prior franchise issued by Congress.

Based on all the foregoing, we hold the view that NTC is empowered under E.O. No. 546 to issue authorization and permits to operate radio and television broadcasting system.”[5]

However, on May 3, 1994, the NTC, the Committee on Legislative Franchises of Congress, and the KapisananngmgaBrodkastersaPilipinas of which petitioner is a member of good standing, entered into a Memorandum of Understanding (MOU) that requires a congressional franchise to operate radio and television stations.  The MOU states, viz:

“WHEREAS, under the provisions of Section 1 of Act No. 3846 (Radio Laws of the Philippines, as amended), only radio and television broadcast stations with legislative franchise are authorized to operate.

WHEREAS, Executive Order No. 546, which created the National Telecommunications Commission (NTC) and abolished the Board of Communications (BOC) and the Telecommunications Control Bureau (TCB), and integrated the functions and prerogative of the latter two agencies into the National Telecommunications Commission (NTC);

WHEREAS, the National Telecommunications Commission (NTC) is authorized to issue certificate of public convenience for the operation of radio and television broadcast stations;

WHEREAS, there is a pervading confusion in the state of affairs of the broadcast industry brought about by conflicting laws, decrees, executive orders and other pronouncements promulgated during the Martial Law regime, the parties in their common desire to rationalize the broadcast industry, promote the interest of public welfare, avoid a vacuum in the delivery of broadcast services, and foremost to better serve the ends of press freedom, the parties hereto have agreed as follows:

‘The NTC shall continue to issue and grant permits or authorizations to operate radio and television broadcast stations within their mandate under Section 15 of Executive Order No. 546, provided that such temporary permits or authorization to operate shall be valid for two (2) years within which the permittee shall be required to file an application for legislative franchise with Congress not later than December 31, 1994; provided finally, that if the permittee of the temporary permit or authorization to operate fails to secure the legislative franchise with Congress within this period, the NTC shall not extend or renew its permit or authorization to operate any further.’”[6]

Prior to the December 31, 1994 deadline set by the MOU, petitioner filed with Congress an application for a franchise on December 20, 1994. Pending its approval, the NTC issued to petitioner a temporary permit dated July 7, 1995 to operate a television station via Channel 25 of the UHF Band from June 29, 1995 to June 28, 1997.[7] In 1996, the NTC authorized petitioner to increase the power output of Channel 25 from 1.0 kilowatt to 25 kilowatts after finding it financially and technically capable; [8] it also granted petitioner a permit to purchase radio transmitters/transceivers for use in its television Channel 25 broadcasting.[9]  Shortly before the expiration of its temporary permit, petitioner applied for its renewal on May 14, 1997.[10]

On October 28, 1997, the House Committee on Legislative Franchises of Congress replied to an inquiry of the NTC’s Broadcast Division Chief regarding the franchise application of ACWS filed on December 20, 1994.  The Committee certified that petitioner’s franchise application was not deliberated on by the 9th Congress because petitioner failed to submit the required supporting documents.  In the next Congress, petitioner did not re-file its application.[11]

The following month or on November 17, 1997, the NTC’s Broadcast Service Department wrote to petitioner ordering it to submit a new congressional franchise for the operation of its seven radio stations and informing it that pending compliance, its application for temporary permits to operate these radio stations would be held in abeyance.[12] Petitioner failed to comply with the franchise requirement; it claims that it did not receive the November 17, 1997 letter.

Despite the absence of a congressional franchise, the NTC notified petitioner on January 19, 1998 that its May 14, 1997 application for renewal of its temporary permit to operate television Channel 25 was approved and would be released upon payment of the prescribed fee of  P3,600.00.[13]  After paying said amount,[14] however, the NTC refused to release to petitioner its renewed permit.  Instead, the NTC commenced against petitioner Administrative Case No. 98-009 based on the November 17, 1997 letter.  On February 26, 1998, the NTC issued an Order directing petitioner to show cause why its assigned frequency, television Channel 25, should not be recalled for lack of the required congressional franchise.  Petitioner was also directed to cease and desist from operating Channel 25 unless subsequently authorized by the NTC.[15]

In compliance with the February 26, 1998 Order, petitioner filed its Answer on March 17, 1998.[16]  In a hearing on April 22, 1998, petitioner presented evidence and asked for continuance of the presentation to May 20, 1998.[17]  On May 4, 1998, however, petitioner filed before the Court of Appeals a Petition for Mandamus, Prohibition, and Damages to compel the NTC to release its temporary permit to operate Channel 25 which was approved in January 1998.  The appellate court denied the petition on September 30, 1998.

Meantime, on August 17, 1998, the NTC issued Memorandum Circular No. 14-10-98 which reads, viz:

“SUBJECT: Guidelines in the Renewal/Extension of Temporary Permit of Radio/TV Broadcast operators who failed to secure a legislative franchise conformably with the Memorandum of Understanding (MOU) dated May 3, 1994, entered into by and between the National Telecommunications and the Committee on Legislative Franchises, House of Representatives, and the KapisananngmgaBrodkastersaPilipinas (KBP).

In compliance with the MOU and in order to clear the ambiguity surrounding the operation of broadcast operators who were not able to have their legislative franchise approved during the last congress, the following guidelines are hereby issued:

1. Existing broadcast operators who were not able to secure a legislative franchise up to this date are given up to December 31, 1999 within which to have their application for a legislative franchise bill approved by Congress.  The franchise bill must be filed immediately but not later than November 30th of this year to give both Houses time to deliberate upon and recommend approval/disapproval thereof.

2. Broadcast operators affected by this circular must file their respective applications for renewal/extension of their Temporary Permits in the prescribed form together with the certification from the Committee on Legislative Franchises, House of Representatives that a franchise bill has indeed been filed prior to 30 November 1998.

3. In the event the permittee will not be able to have its franchise bill approved within the prescribed period, the NTC will no longer renew/extend its Temporary Permit and the Commission shall initiate the recall of its assigned frequency provided that due process of law is observed.

4. Henceforth, no application/petition for Certificate of Public Convenience (CPC) to establish, maintain and operate a broadcast station in the broadcast service shall be accepted for filing without showing that the applicant has an approved Legislative Franchise.

This Memorandum Circular shall be published in one (1) newspaper of general circulation in the Philippines and shall take effect thirty (30) days from its publication.

August 17, 1998, Quezon City, Philippines.”[18]

The Memorandum Circular was published in the Philippine Star on October 15, 1998.

Well within the November 30, 1998 deadline under the Memorandum Circular, House Bill No. 3216, entitled “An Act Granting the ACWS-United Broadcasting Network, Inc. a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations within the Philippines, and for other Purposes,” was filed with the Legislative Calendar Section, Bills and Index Division on September 2, 1998.[19]

On January 13, 1999, the NTC rendered a decision on Administrative Case No. 98-009 against petitioner, the dispositive portion of which reads:

“WHEREFORE, for lack of a legal personality to justify the issuance of any permit or license to the respondent (ACWS), the respondent not having a valid legislative franchise, the Commission hereby renders judgment as follows:

1) Channel 25 assigned to herein respondent ACWS is hereby RECALLED;

2) Respondent’s application for renewal of its temporary permit to operate Channel 25 is hereby DENIED; and

3) Respondent is hereby ordered to CEASE and DESIST from further operating Channel 25.”[20]

Petitioner sought recourse at the Court of Appeals which affirmed the NTC decision.

Hence, this petition for review on certiorari on the following grounds:

“I.

THE COURT OF APPEALS ERRED IN UPHOLDING THE RULING OF THE NTC THAT A CONGRESSIONAL FRANCHISE IS A CONDITION SINE QUA NON IN THE OPERATION OF A RADIO AND TELEVISION BROADCASTING SYSTEM.

II.

THE COURT OF APPEALS ERRED IN NOT CONSIDERING OPINION 98 SERIES OF 1991 DATED JUNE 20, 1991 OF THE SECRETARY OF JUSTICE HOLDING THAT THE NTC MAY ISSUE AUTHORIZATION FOR THE OPERATION OF RADIO AND TELEVISION BROADCASTING SYSTEMS, WITHOUT THE NEED OF A PRIOR FRANCHISE ISSUED BY CONGRESS, AS BINDING ON THE NTC WHO REQUESTED FOR SAID OPINION AND IS NOT MERELY ADVISORY, AS IT IS PREDICATED ON A DECISION OF THIS HONORABLE COURT.

III.

THE COURT OF APPEALS ERRED IN CONSIDERING ACT NO. 3846 AS REQUIRING A FRANCHISE FROM CONGRESS FOR THE LAWFUL OPERATION OF RADIO OR TELEVISION BROADCASTING STATIONS WHEN CLEARLY ITS PROVISIONS COVER ONLY RADIO BUT IT DOES NOT INCLUDE TELEVISION STATIONS.

IV.

THE COURT OF APPEALS ERRED IN UPHOLDING THE RECALL OF THE FREQUENCY CHANNEL 25 PREVIOUSLY ASSIGNED TO THE PETITIONER AND/OR THE CANCELLATION OF ITS PERMIT TO OPERATE WHICH IS UNREASONABLE, UNFAIR, OPPRESSIVE, WHIMSICAL AND CONFISCATORY WHEN IT PREVIOUSLY ISSUED THE SAID PERMIT WITHOUT REQUIRING A LEGISLATIVE FRANCHISE.

V.

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT NTC CASE NO. 98-009 HAD BEEN RENDERED MOOT AND ACADEMIC WITH THE ADOPTION AND PROMULGATION BY THE NTC OF MEMORANDUM CIRCULAR NO. 14-10-98 DATED AUGUST 17, 1998 AS PETITIONER FILED THE APPLICATION FOR LEGISLATIVE FRANCHISE PURSUANT THERETO.”[21]

The petition is devoid of merit.

We shall discuss together the first three assigned errors as they are interrelated.

Petitioner stresses that Act. No. 3846 covers only the operation of radio and not television stations as Section 1 of the said law does not mention television stations in its coverage, viz:

“Sec. 1. No person, firm, company, association or corporation shall construct, install, establish, or operate a radio transmitting station, or a radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines…”

Petitioner observes that quite understandably, television stations were not included in Act No. 3846 because the law was enacted in 1931 when there was yet no television station in the Philippines.  Following the rule in statutory construction that what is not included in the law is deemed excluded, petitioner avers that television stations are not covered by Act No. 3846.  Petitioner notes that in fact, the NTC previously issued to it a temporary permit dated July 7, 1995 to operate Channel 25 from June 29, 1995 to June 28, 1997 without requiring a congressional franchise.   Likewise, in 1996, the NTC issued to it a permit to increase its television operating power and to purchase a radio transmitter/transceiver for use in its television broadcasting, again without requiring a congressional franchise.  Petitioner thus argues that, contrary to the January 19, 1999 decision of the NTC, its application for renewal of its temporary permit to operate television Channel 25 does not require a congressional franchise.

In upholding the NTC decision, the Court of Appeals held that a congressional franchise is required for the operation of radio and television broadcasting stations as this requirement under Act No. 3846 was not expressly repealed by P.D. No. 576-A nor E.O. No. 546.  Citing Berces, Sr. v. Guingona,[22] it ruled that without an express repeal, a subsequent law cannot be construed as repealing a prior law unless there is an irreconcilable inconsistency and repugnancy in the language of the new and old laws, which petitioner was not able to show.[23]

The appellate court correctly ruled that a congressional franchise is necessary for petitioner to operate television Channel 25.  Even assuming that Act No. 3846 applies only to radio stations and not to television stations as petitioner adamantly insists, the subsequent P.D. No. 576-A clearly shows in Section 1 that a franchise is required to operate radio as well as television stations, viz:

“Sec. 1.  No radio station or television channel may obtain a franchise unless it has sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment.” (emphasis supplied)

As pointed out in DOJ Opinion No. 98, there is nothing in P.D. No. 576-A that reveals any intention to do away with the requirement of a franchise for the operation of radio and television stations.   Section 6 of P.D. No. 576-A merely identifies the regulatory agencies from whom authorizations, in addition to the required congressional franchise, must be secured after December 31, 1981, viz:

“Sec. 6.  All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31, 1981.  Thereafter, irrespective of

any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting system . . .” (emphasis supplied)

To understand why it was necessary to identify these agencies, we turn a heedful eye on the laws regarding authorizations for the operation of radio and television stations that preceded P.D. No. 576-A.

Act No. 3846 of 1931 provides, viz:

“Sec. 1.  No person, firm, company, association, or corporation shall construct, install, establish, or operate a radio transmitting station, or a radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines:

x xx              xxx                 xxx

Sec. 1-A.  No person, firm, company, association or corporation shall possess or own transmitters or transceivers (combination transmitter-receiver), without registering the same with the Secretary of Public Works and Communications . . . and no person, firm, company, association or corporation shall construct or manufacture, or purchase radio transmitters or transceivers without a permit issued by the Secretary of Public Works and Communications.

x xx              xxx                 xxx

Sec. 3.  The Secretary of Public Works and Communications is hereby empowered to regulate the construction or manufacture, possession, control, sale and transfer of radio transmitters or transceivers (combination transmitter-receiver) and the establishment, use, the operation of all radio stations and of all forms of radio communications and transmissions within the Philippines.  In addition to the above, he shall have the following specific powers and duties:

x xx              xxx                 xxx

(c)  He shall assign call letter and assign frequencies for each station licensed by him and for each station established by virtue of a franchise granted by the Congress of the Philippines and specify the stations to which each of such frequencies may be used;. . .”

Shortly after the declaration of Martial Law, then President Marcos issued P.D. No. 1 dated September 24, 1972, through which the Integrated Reorganization Plan for the executive branch was adopted.  Under the Plan, the Public Service Commission was abolished and its functions transferred to special regulatory boards, among which was the Board of Communications with the following functions:

“5a. Issue Certificates of Public Convenience for the operation of communications utilities and services, radio communications systems . . ., radio and television broadcasting systems and other similar public utilities;

x xx              xxx                 xxx

c.  Grant permits for the use of radio frequencies for . . . radio and television broadcasting systems including amateur radio stations.”

With the creation of the Board of Communications under the Plan, it was no longer sufficient to secure authorization from the Secretary of Public Works and Communications as provided in Act No. 3846.  The Board’s authorization was also necessary.  Thus, P.D. No. 576-A provides in Section 6 that radio and television station operators must secure authorization from both the Secretary of Public Works and Communications and the Board of Communications.

Dispensing with the requirement of a congressional franchise is not in line with the declared purposes of P.D. No. 576-A, viz:

“WHEREAS, it has been observed that some public utilities, especially radio and television stations, have a tendency toward monopoly in ownership and operation to such an extent that a region or section of the country may be covered by any number of such broadcast stations, all or most of which are owned, operated or managed by one person or corporation;

x xx              xxx                 xxx

WHEREAS, on account of the limited number of frequencies available for broadcasting in the Philippines, it is necessary to regulate the ownership and operation of radio and television stations and provide measures that would enhance quality and viability in broadcasting and help serve the public interests; . . .”

A textual interpretation of Section 6 of P.D. No. 576-A yields the same interpretation that after December 31, 1981, a franchise is still necessary to operate radio and television stations.   Were it the intention of the law to do away with the requirement of a franchise after said date, then the phrase “(t)hereafter, irrespective of any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person (emphasis supplied)” would not have been necessary because the first sentence of Section 6 already states that “(a)ll franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31, 1981.”  It is therefore already understood that these forms of authority have no more force and effect after December 31, 1981.  If the intention were to do away with the franchise requirement, Section 6 would have simply laid down after the first sentence the requirements to operate radio and television stations after December 31, 1981, i.e., “no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications.”  Instead, however, the phrase “irrespective of any franchise,…” was inserted to emphasize that a franchise or any other form of authorization from any office, agency or person does not suffice to operate radio and television stations because the authorizations of both the Board of Communications and the Secretary of Public Works and Communications are required as well.  This interpretation adheres to the rule in statutory construction that words in a statute should not be construed as surplusage if a reasonable construction which will give them some force and meaning is possible.[24]

Contrary to the opinion of the Secretary of Justice in DOJ Opinion No. 98, Series of 1991, the appellate court was correct in ruling that E.O. No. 546 which came after P.D. No. 576-A did not dispense with the requirement of a congressional franchise.  It merely abolished the Board of Communications and the Telecommunications Control Bureau under the Reorganization Plan and transferred their functions to the NTC,[25] including the power to issue Certificates of Public Convenience (CPC) and grant permits for the use of frequencies, viz:

“Sec. 15. a.  Issue Certificate of Public Convenience for the operation of communication utilities and services, radio communications systems, wire or wireless telephone or telegraph system, radio and television broadcasting system and other similar public utilities;

x xx              xxx                 xxx

c.  Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio communication systems including amateur radio stations and radio and television broadcasting systems; . . . ”

E.O. No. 546 defines the regulatory and technical aspect of the legal process preparatory to the full exercise of the privilege to operate radio and television stations, which is different from the grant of a franchise from Congress, viz:

“The statutory functions of NTC may then be given effect as Congress’ prerogative to grant franchises under Act No. 3846 is upheld for they are distinct forms of authority.  The former covers matters dealing mostly with the technical side of radio or television broadcasting, while the latter involves the exercise by the legislature of an exclusive power resulting in a franchise or a grant under authority of government, conferring a special right to do an act or series of acts of public concern (37 C.J.S., secs. 1, 14, pp. 144, 157).

In fine, there being no clear showing that the laws here involved cannot stand together, the presumption is against inconsistency or repugnance, hence, against implied repeal of the earlier law by the later statute (Agujetas v. Court of Appeals, 261 SCRA 17, 1996).”[26]

As we held in Radio Communication of the Philippines, Inc. v. National Telecommunications Commission,[27] a franchise is distinguished from a CPC in that the former is a grant or privilege from the sovereign power, while the latter is a form of regulation through the administrative agencies, viz:

“A franchise started out as a “royal privilege or (a) branch of the King’s prerogative, subsisting in the hands of a subject.” This definition was given by Finch, adopted by Blackstone, and accepted by every authority since (State v. Twin Village Water Co., 98 Me 214, 56 A 763 [1903]).  Today, a franchise, being merely a privilege emanating from the sovereign power of the state and owing its existence to a grant, is subject to regulation by the state itself by virtue of its police power through its administrative agencies.”[28]

Even prior to E.O. No. 546, the NTC’s precursor, i.e., the Board of Communications, already had the function of issuing CPC under the Integrated Reorganization Plan.  The CPC was required by the Board at the same time that P.D. No. 576-A required a franchise to operate radio and television stations.   The function of the NTC to issue CPC under E.O. No. 546 is thus nothing new and exists alongside the requirement of a congressional franchise under P.D. No. 576-A.  There is no conflict between E.O. No. 546 and P.D. No 576-A; Section 15 of the former does not dispense with the franchise requirement in the latter.  We adhere to the cardinal rule in statutory construction that statutes in pare materia, although in apparent conflict, or containing apparent inconsistencies, should, as far as reasonably possible, be construed in harmony with each other, so as to give force and effect to each. [29] The ruling of this Court in Crusaders Broadcasting System, Inc. v. National Telecommunications Commission ,[30] buttresses the interpretation that the requirement of a congressional franchise for the operation of radio and television stations exists alongside the requirement of a CPC.  In that case, we held that under E.O. No. 546, the regulation of radio communications is a function assigned to and performed by the NTC and at the same time recognized the requirement of a congressional franchise for the operation of a radio station

under Act No. 3846.  We did not interpret E.O. No. 546 to have repealed the congressional franchise requirement under Act No. 3846 as these two laws are not inconsistent and can both be given effect.  Likewise, in Radio Communication of the Philippines, Inc. v. National Telecommunications Commission,[31] we recognized the necessity of both a congressional franchise under Act No. 3846 and a CPC under E.O. No. 546 to operate a radio communications system.

In buttressing its position that a congressional franchise is not required to operate its television station, petitioner banks on DOJ Opinion No. 98, Series of 1991 which states that under E.O. No. 546, the NTC may issue a permit or authorization for the operation of radio and television broadcasting systems without a prior franchise issued by Congress.  Petitioner argues that the opinion is binding and conclusive upon the NTC as the NTC itself requested the advisory from the Secretary of Justice who is the legal adviser of government.  Petitioner claims that it was precisely because of the above DOJ Opinion No. 98 that the NTC did not previously require a congressional franchise in all of its applications for permits with the NTC.

Petitioner, however, cannot rely on DOJ Opinion No. 98 as this opinion is merely persuasive and not necessarily controlling.[32]  As shown above, the opinion is erroneous insofar as it holds that E.O. No. 546 dispenses with the requirement of a congressional franchise to operate radio and television stations.  The case of Albano v. Reyes[33] cited in the DOJ opinion, which allegedly makes it binding upon the NTC, does not lend support to petitioner’s cause.  In that case, we held, viz:

“Franchises issued by Congress are not required before each and every public utility may operate.  Thus, the law has granted certain administrative agencies the power to grant licenses for or to authorize the operation of certain public utilities.  (See E.O. Nos. 172 and 202)

That the Constitution provides in Art. XII, Sec. 11 that the issuance of a franchise, certificate or other form of authorization for the operation of a public utility shall be subject to amendment, alteration or repeal by Congress does not necessarily imply, as petitioner posits, that only Congress has the power to grant such authorization. Our statute books are replete with laws granting specified agencies in the Executive Branch the power to issue such authorization for certain classes of public utilities. (footnote omitted)”[34]

Our ruling in Albano that a congressional franchise is not required before “each and every public utility may operate” should be viewed in its proper light.  Where there is a law such as P.D. No. 576-A which requires a franchise for the operation of radio and television stations, that law must be followed until subsequently repealed.  As we have earlier shown, however, there is nothing in the subsequent E.O. No. 546 which evinces an intent to dispense with the franchise requirement.  In contradistinction with the case at bar, the law applicable in Albano, i.e., E.O. No. 30, did not require a franchise for the Philippine Ports Authority to take over, manage and operate the Manila International Port Complex and undertake the providing of cargo handling and port related services thereat.  Similarly, in Philippine Airlines, Inc. v. Civil Aeronautics Board, et al . ,[35] we ruled that a legislative franchise is not necessary for the operation of domestic air transport because “there is nothing in the law nor in the Constitution which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator.”[36] Thus, while it is correct to say that specified agencies in the Executive Branch have the power to issue authorization for certain classes of public utilities, this does not mean that the authorization or CPC issued by the NTC dispenses with the requirement of a franchise as this is clearly required under P.D. No. 576-A.

Petitioner contends that the NTC erroneously denied its application for renewal of its temporary permit to operate Channel 25 and recalled its Channel 25 frequency based on the May 3, 1994 MOU that requires a congressional franchise for the operation of television broadcast stations.  The MOU is not an

act of Congress and thus cannot amend Act No. 3846 which requires a congressional franchise for the operation of radio stations alone, and not television stations.

We find no merit in petitioner’s contention.  As we have shown, even assuming that Act No. 3846 requires only radio stations to secure a congressional franchise for its operation, P.D. No. 576-A was subsequently issued in 1974, which clearly requires a franchise for both radio and television stations.  Thus, the 1994 MOU did not amend any law, but merely clarified the existing law that requires a franchise.

That the legislative intent is to continue requiring a franchise for the operation of radio and television broadcasting stations is clear from the franchises granted by Congress after the effectivity of E.O. No. 546 in 1979 for the operation of radio and television stations.  Among these are: (1) R.A. No. 9131 dated April 24, 2001, entitled “An Act Granting the Iddes Broadcast Group, Inc., a Franchise to Construct, Install, Establish, Operate and Maintain Radio and Television Broadcasting Stations in the Philippines;” (2) R.A. No. 9148 dated July 31, 2001, entitled “An Act Granting the Hypersonic Broadcasting Center, Inc., a Franchise to Construct, Install, Establish, Operate and Maintain Radio Broadcasting Stations in the Philippines;” and (3) R.A. No. 7678 dated February 17, 1994, entitled “An Act Granting the Digital Telecommunication Philippines, Incorporated, a Franchise to Install, Operate and Maintain Telecommunications Systems Throughout the Philippines.”  All three franchises require the grantees to secure a CPCN/license/permit to construct and operate their stations/systems.  Likewise, the Tax Reform Act of 1997 provides in Section 119 for tax on franchise of radio and/or television broadcasting companies, viz:

“Sec. 119.  Tax on Franchises. – Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises on radio and/or television broadcasting companies whose annual gross receipts of the preceding year does not exceed Ten million pesos (P10,000,000), subject to Section 236 of this Code, a tax of three percent (3%) and on electric, gas and water utilities, a tax of two percent (2%) on the gross receipts derived from the business covered by the law granting the franchise. . . “ (emphasis supplied)

Undeniably, petitioner is aware that a congressional franchise is necessary to operate its television station Channel 25 as shown by its actuations. Shortly before the December 31, 1994 deadline set in the MOU, petitioner filed an application for a franchise with Congress.   It was not, however, acted upon in the 9th Congress for petitioner’s failure to submit the necessary supporting documents; petitioner failed to re-file the application in the following Congress.  Petitioner also filed an application for a franchise with Congress on September 2, 1998, before the November 30, 1998 deadline under Memorandum Circular No. 14-10-98.[37]

We now come to the fourth assigned error.  Petitioner avers that the Court of Appeals erred in upholding the recall of frequency Channel 25 previously assigned to it and the cancellation of its permit to operate which was already approved in January 1998.  It claims that these acts of the NTC were unreasonable, unfair, oppressive, whimsical and confiscatory considering that the NTC previously issued petitioner a temporary permit without requiring a congressional franchise.

On February 26, 1998, the NTC issued a show cause order to petitioner with the following decretal portion:

“IN VIEW THEREOF, respondents are hereby directed to show cause in writing within ten (10) days from receipt of this order why their assigned frequency, more specifically Channel 25 in the UHF Band, should not be recalled for lack of the necessary Congressional Franchise as required by Section 1, Act No. 3846, as amended.

Moreover, respondent is hereby directed to cease and desist from operating DWQH-TV, unless subsequently authorized by the Commission.”[38]

The order was supposedly based on a letter of the NTC dated November 17, 1997 informing petitioner that its application for renewal of temporary permits of its seven radio stations were being held in abeyance pending submission of its new congressional franchise.  Petitioner was directed to submit the franchise within thirty days from expiration of its temporary permits to be renewed and informed that its failure to do so might constitute denial of its application.

Petitioner is correct that the November 17, 1997 letter referred only to its radio stations and not to its television Channel 25.  Thus, it could not serve as basis for the February 26, 1998 show cause order which referred solely to its television Channel 25.  Besides, petitioner claims that it did not receive the letter.  Be that as it may, the NTC’s February 26, 1998 order for petitioner to cease and desist from operating Channel 25 was not unreasonable, unfair, oppressive, whimsical and confiscatory.  The 1994 MOU states in unmistakable terms that petitioner’s temporary permit to operate Channel 25 would be valid for only two years, i.e., from June 29, 1995 to June 28, 1997.  During these two years, petitioner was supposed to have secured a congressional franchise, otherwise “the NTC shall not extend or renew its permit or authorization to operate any further.”[39] Apparently, petitioner did not submit a congressional franchise to the NTC in applying for renewal of this temporary permit on May 14, 1997.   The NTC’s approval of petitioner’s application to renew its temporary permit in January 1998 was thus erroneous because under the 1994 MOU, the NTC could not renew petitioner’s temporary permit to operate Channel 25 without a congressional franchise.  In the absence of a renewed temporary permit, the NTC was correct in ordering petitioner to cease and desist from operating Channel 25, regardless of whether or not petitioner received the November 17, 1997 letter.  The NTC’s erroneous approval of petitioner’s application in January 1998 did not estop the NTC from ordering petitioner on February 26, 1998 to cease and desist from operating Channel 25 for failure to comply with the franchise requirement as estoppel does not work against the government.[40]

Likewise, the NTC’s denial of petitioner’s application for renewal of its temporary permit to operate Channel 25 and recall of its Channel 25 frequency in its January 13, 1999 decision were not unreasonable, unfair, oppressive, whimsical and confiscatory so as to offend petitioner’s right to due process.  In Crusaders Broadcasting System, Inc. v. National Telecommunications Commission,[41] the Court ruled that although a particular ground for suspending operations of the broadcasting company was not reflected in the show cause order, the NTC could nevertheless raise said ground if any basis therefore was gleaned during the administrative proceedings.  In the instant case, the lack of congressional franchise as ground for denial of petitioner’s application for renewal of temporary permit and recall of its Channel 25 frequency was raised not only during the administrative proceedings against it, but was even stated in the February 26, 1998 show cause order, viz:

“IN VIEW THEREOF, respondents are hereby directed to show cause in writing within ten (10) days from receipt of this order why their assigned frequency, more specifically Channel 25 in the UHF Band, should not be recalled for lack of the necessary Congressional Franchise as required by Section 1, Act No. 3846, as amended.

Moreover, respondent is hereby directed to cease and desist from operating DWQH-TV, unless subsequently authorized by the Commission.” [42] (emphasis supplied)

In Eastern Broadcasting Corporation v. Dans, Jr., et al.,[43] we held that the requirements of due process in administrative proceedings laid down by this Court in AngTibay v. Court of Industrial Relations[44] should be satisfied before a broadcast station may be closed or its operations curtailed.  We enumerated these requirements, viz:

“. . . (1) the right to a hearing which includes the right to present one’s case and submit evidence in support thereof; (2) the tribunal must consider the evidence presented; (3) the decision must have something to support itself; (4) the evidence must be substantial.  Substantial evidence means such reasonable evidence as a reasonable mind might accept as adequate to support a conclusion; (5) the decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; (6) the tribunal or body or any of its judges must act on its own independent consideration of the law and facts of the controversy and not simply accept the views of a subordinate; (7) the board or body should, in all controversial questions, render its decisions in such a manner that the parties to the proceeding can know the various issues involved, and the reasons for the decision rendered.”[45]

Petitioner had the opportunity to present its case and submit evidence on why its assigned frequency Channel 25 should not be recalled and its application for renewal denied.   Petitioner filed its Answer to the show cause order on March 17, 1998.[46]  A hearing was held on April 22, 1998 wherein petitioner presented its evidence in compliance with the show cause order.  Based on the NTC’s findings that petitioner failed to comply with the requirement of a congressional franchise, the NTC denied its application for renewal of its temporary permit to operate Channel 25 and recalled its assigned Channel 25 frequency.  The requirements of due process in AngTibay were satisfied, thus petitioner cannot say that the NTC’s actions were unreasonable, unfair, oppressive, whimsical and confiscatory.

Finally, petitioner contends that the Court of Appeals erred in not holding that Administrative Case No. 98-009, the administrative proceeding against it for failure to secure a congressional franchise to operate its television Channel 25, has been rendered moot and academic by the adoption and promulgation of NTC Memorandum Circular No. 14-10-98 dated August 17, 1998 which took effect on November 15, 1998.  The Memorandum Circular states, viz:

“In compliance with the MOU and in order to clear the ambiguity surrounding the operation of broadcast operators who were not able to have their legislative franchise approved during the last Congress, the following guidelines are hereby issued:

1. Existing broadcast operators who were not able to secure a legislative franchise up to this date (August 17, 1998) are given up to December 31, 1999 within which to have their application for a legislative franchise bill approved by Congress.  The franchise bill must be filed immediately but not later than November 30th of this year . . .”

Petitioner avers that the NTC erroneously held that this Memorandum Circular is not applicable to it because the words of the circular are clear that it covers “existing broadcasting operators” including petitioner.  In compliance with the Memorandum Circular, petitioner filed House Bill No. 32 on September 2, 1998, well within the November 30, 1998 deadline.  Thus, petitioner argues that the NTC erred in denying its application for renewal of permit to operate Channel 25 and recalling its assigned Channel 25 frequency on January 13, 1999, long before the Memorandum Circular’s December 31, 1999 deadline to secure a congressional franchise.  Petitioner posits that the NTC’s premature and arbitrary promulgation of its January 13, 1999 decision “slammed the door for the petitioner to secure its legislative franchise.  The pending application for legislative franchise of petitioner was effectively struck out by said NTC decision.”[47]

Whether or not the benefits of the Memorandum Circular extend to petitioner, the fact is, as correctly pointed out by the appellate court, petitioner failed to secure a legislative franchise by December 31, 1999.  Consequently, the NTC’s recall of petitioner’s assigned frequency Channel 25 and denial of its application for renewal of its permit to operate the said television channel were proper as the Memorandum Circular provides, viz:

“1.     Existing broadcast operators who are not able to secure a legislative franchise up to this date (August 17, 1998) are given up to December 31, 1999 within which to have their application for a legislative franchise approved by Congress.  The franchise bill must be filed immediately but not later than November 30th of this year . . .

x xx              xxx                 xxx

3.       In the event the permittee will not be able to have its franchise bill approved within the prescribed period, the NTC will no longer renew/extend its temporary permit and the Commission shall initiate the recall of its assigned frequency provided that due process of law is observed.

4.       Henceforth, no application/petition for Certificate of Public Convenience (CPC) to establish, maintain and operate a broadcast station in the broadcast service shall be accepted for filing without showing that the applicant has an approved legislative franchise.”(emphasis supplied)

Petitioner’s argument is flawed when it states that the January 13, 1999 decision of the NTC “slammed the door” on its application for a congressional franchise as the process of securing a congressional franchise is separate and distinct from the process of applying for renewal of a temporary permit with the NTC.  The latter is not a prerequisite to the former.  In fact, in the normal course of securing authorizations to operate a television and radio station, the application for a CPC with the NTC comes after securing a franchise from Congress.[48]  The CPC is not a condition for the grant of a congressional franchise.[49]

The Court is not unmindful that there is a trend towards delegating the legislative power to authorize the operation of certain public utilities to administrative agencies and dispensing with the requirement of a congressional franchise as in the Albano case which involved the provision of cargo handling and port related services at the Manila International Port Complex and the PAL case involving the operation of domestic air transport.  The rationale for this trend was explained in the PAL case, viz:

“. . . With the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the delegation of greater powers by the legislature, and towards the approval of the practice by the courts.  (Pangasinan Transportation Co., Inc. vs. The Public Service Commission, G.R. No. 47065, June 26, 1940, 70 Phil 221.)  It is generally recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative nature. (Dyer vs. Tuskaloosa Bridge Co., 2 Port. 296, 27 Am. D. 655; Christian-Todd Tel. Co. vs. Commonwealth, 161 S.W. 543, 156 Ky. 557, 37 C.J.S. 158)  In pursuance of this, it has been held that privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the Legislature. (Superior Water, Light and Power Co. vs. City of Superior, 181 N.W. 113, 174 Wis. 257, affirmed 183 N.W. 254, 37 C.J.S. 158.)

The trend of modern legislation is to vest the Public Service Commissioner with the power to regulate and control the operation of public services under reasonable rules and regulations, and as a general rule, courts will not interfere with the exercise of that discretion when it is just and reasonable and founded upon a legal right.”[50]

The criticism against the requirement of a congressional franchise is incisively expressed by a public utilities lawyer, viz:

“As will be noted, a legislative franchise is required to install and operate a radio station before an applicant can apply for a Certificate of Public Convenience to operate a radio station based in any part of the country.  Under Act No. 3846 of 1929, Sec. 1, it was provided that no one may install and operate a radio station ‘without having first obtained a franchise therefore from the Congress of the Philippines.’  Since then, this has been strictly followed.  And this holds true with respect to application for electric, telephone and many other telecommunications services.  Before, even mere application for authority to operate an ice plant must have prior congressional franchise.  But this was not strictly followed until ice plant operations were eventually deregulated.  Right now, the both houses of the legislature are saddled with House Bill Nos. etc. for the grant of legislative franchise to operate this and that public utility services in various places in the Philippines.  We hear during sessions in both houses the time wasted on reports and considerations of these house bills for grant of franchises.  The legislature is empowered and has created respective regulatory bodies with requisite expertise to handle franchising and regulation of such types of public utility services, why not just entrust all these functions to them?

What exactly is the reason or rationale for imposing a prior congressional franchise?  There seems to be no valid reason for it except to impose added burden and expenses on the part of the applicant.  The justification appears to be simply because this was required in the past so it is now.  We are reminded of the forceful denunciation of Justice Holmes of a stubborn adherence to an anachronistic rule of law:

‘It is revolting to have no better reason for a rule of law that so it was laid down in the time of Henry IV.  It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past. (The Path of the Law, Collected Legal Papers [1920] 210, 212 quoted from The Justice Holmes Reader, Julius N. Marke, 1955 ed., p. 278.)’”[51]

The call to dispense with the requisite legislative franchise must, however, be addressed to Congress as the lawmaker of the land for the Court’s function is to interpret and not to rewrite the law.   As long as the law remains unchanged, the requirement of a franchise to operate a television station must be upheld.

WHEREFORE, the petition is DENIED and the Court of Appeals’ January 13, 2000 decision and February 21, 2000 resolution are AFFIRMED.  Nocosts.

SO ORDERED.

Panganiban, Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 115863 March 31, 1995

AIDA D. EUGENIO, petitioner, vs.CIVIL SERVICE COMMISSION, HON. TEOFISTO T. GUINGONA, JR. & HON. SALVADOR ENRIQUEZ, JR.,respondents.

 

PUNO, J.:

The power of the Civil Service Commission to abolish the Career Executive Service Board is challenged in this petition for certiorari and prohibition.

First the facts. Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She applied for a Career Executive Service (CES) Eligibility and a CESO rank on August 2, 1993, she was given a CES eligibility. On September 15, 1993, she was recommended to the President for a CESO rank by the Career Executive Service Board. 1

All was not to turn well for petitioner. On October 1, 1993, respondent Civil Service Commission  2 passed Resolution No. 93-4359, viz:

RESOLUTION NO. 93-4359

WHEREAS, Section 1(1) of Article IX-B provides that Civil Service shall be administered by the Civil Service Commission, . . .;

WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution provides that "The Civil Service Commission, as the central personnel agency of the government, is mandated to establish a career service and adopt measures to promote morale, efficiency, integrity, responsiveness, progresiveness and courtesy in the civil service, . . .";

WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the Administrative Code of 1987 grants the Commission the power, among others, to administer and enforce the constitutional and statutory provisions on the merit system for all levels and ranks in the Civil Service;

WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative Code of 1987 Provides, among others, that The Career Service shall be characterized by (1) entrance based on merit and fitness to be determined as far as practicable by competitive examination, or based highly technical qualifications; (2) opportunity for advancement to higher career positions; and (3) security of tenure;

WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the administrative Code of 1987 provides that "The third level shall cover Positions in the Career Executive Service";

WHEREAS, the Commission recognizes the imperative need to consolidate, integrate and unify the administration of all levels of positions in the career service.

WHEREAS, the provisions of Section 17, Title I, Subtitle A. Book V of the Administrative Code of 1987 confers on the Commission the power and authority to effect changes in its organization as the need arises.

WHEREAS, Section 5, Article IX-A of the Constitution provides that the Civil Service Commission shall enjoy fiscal autonomy and the necessary implications thereof;

NOW THEREFORE, foregoing premises considered, the Civil Service Commission hereby resolves to streamline reorganize and effect changes in its organizational

structure. Pursuant thereto, the Career Executive Service Board, shall now be known as the Office for Career Executive Service of the Civil Service Commission. Accordingly, the existing personnel, budget, properties and equipment of the Career Executive Service Board shall now form part of the Office for Career Executive Service.

The above resolution became an impediment. to the appointment of petitioner as Civil Service Officer, Rank IV. In a letter to petitioner, dated June 7, 1994, the Honorable Antonio T. Carpio, Chief Presidential legal Counsel, stated:

xxx xxxxxx

On 1 October 1993 the Civil Service Commission issued CSC Resolution No. 93-4359 which abolished the Career Executive Service Board.

Several legal issues have arisen as a result of the issuance of CSC Resolution No. 93-4359, including whether the Civil Service Commission has authority to abolish the Career Executive Service Board. Because these issues remain unresolved, the Office of the President has refrained from considering appointments of career service eligibles to career executive ranks.

xxx xxxxxx

You may, however, bring a case before the appropriate court to settle the legal issues arising from issuance by the Civil Service Commission of CSC Resolution No. 93-4359, for guidance of all concerned.

Thank You.

Finding herself bereft of further administrative relief as the Career Executive Service Board which recommended her CESO Rank IV has been abolished, petitioner filed the petition at bench to annul, among others, resolution No. 93-4359. The petition is anchored on the following arguments:

A.

IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION USURPED THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ABOLISHED THE CESB, AN OFFICE CREATED BY LAW, THROUGH THE ISSUANCE OF CSC: RESOLUTION NO. 93-4359;

B.

ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC USURPED THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ILLEGALLY AUTHORIZED THE TRANSFER OF PUBLIC MONEY, THROUGH THE ISSUANCE OF CSC RESOLUTION NO. 93-4359.

Required to file its Comment, the Solicitor General agreed with the contentions of petitioner. Respondent Commission, however, chose to defend its ground. It posited the following position:

ARGUMENTS FOR PUBLIC RESPONDENT-CSC

I. THE INSTANT PETITION STATES NO CAUSE OF ACTION AGAINST THE PUBLIC RESPONDENT-CSC.

II. THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR APPOINTMENT TO A CESO RANK OF PETITIONER EUGENIO WAS A VALID ACT OF THE CAREER EXECUTIVE SERVICE BOARD OF THE CIVIL SERVICE COMMISSION AND IT DOES NOT HAVE ANY DEFECT.

III. THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING THE VALIDITY OF THE RECOMMENDATION OF THE CESB IN FAVOR OF PETITIONER EUGENIO SINCE THE PRESIDENT HAS PREVIOUSLY APPOINTED TO CESO RANK FOUR (4) OFFICIALS SIMILARLY SITUATED AS SAID PETITIONER. FURTHERMORE, LACK OF MEMBERS TO CONSTITUTE A QUORUM. ASSUMING THERE WAS NO QUORUM, IS NOT THE FAULT OF PUBLIC RESPONDENT CIVIL SERVICE COMMISSION BUT OF THE PRESIDENT WHO HAS THE POWER TO APPOINT THE OTHER MEMBERS OF THE CESB.

IV. THE INTEGRATION OF THE CESB INTO THE COMMISSION IS AUTHORIZED BY LAW (Sec. 12 (1), Title I, Subtitle A, Book V of the Administrative Code of the 1987). THIS PARTICULAR ISSUE HAD ALREADY BEEN SETTLED WHEN THE HONORABLE COURT DISMISSED THE PETITION FILED BY THE HONORABLE MEMBERS OF THE HOUSE OF REPRESENTATIVES, NAMELY: SIMEON A. DATUMANONG, FELICIANO R. BELMONTE, JR., RENATO V. DIAZ, AND MANUEL M. GARCIA IN G.R. NO. 114380. THE AFOREMENTIONED PETITIONERS ALSO QUESTIONED THE INTEGRATION OF THE CESB WITH THE COMMISSION.

We find merit in the petition. 3

The controlling fact is that the Career Executive Service Board (CESB) was created in the Presidential Decree (P.D.) No. 1 on September 1, 1974 4 which adopted the Integrated Plan. Article IV, Chapter I, Part of the III of the said Plan provides:

Article IV — Career Executive Service

1. A Career Executive Service is created to form a continuing pool of well-selected and development oriented career administrators who shall provide competent and faithful service.

2. A Career Executive Service hereinafter referred to in this Chapter as the Board, is created to serve as the governing body of the Career Executive Service. The Board shall consist of the Chairman of the Civil Service Commission as presiding officer, the Executive Secretary and the Commissioner of the Budget as ex-officio members and two other members from the private sector and/or the academic community who are familiar with the principles and methods of personnel administration.

xxx xxxxxx

5. The Board shall promulgate rules, standards and procedures on the selection, classification, compensation and career development of members of the Career Executive Service. The Board shall set up the organization and operation of the service. (Emphasis supplied)

It cannot be disputed, therefore, that as the CESB was created by law, it can only be abolished by the legislature. This follows an unbroken stream of rulings that the creation and abolition of public offices is primarily a legislative function. As aptly summed up in AM JUR 2d on Public Officers and Employees, 5 viz:

Except for such offices as are created by the Constitution, the creation of public offices is primarily a legislative function. In so far as the legislative power in this respect is not restricted by constitutional provisions, it supreme, and the legislature may decide for itself what offices are suitable, necessary, or convenient. When in the exigencies of government it is necessary to create and define duties, the legislative department has the discretion to determine whether additional offices shall be created, or whether these duties shall be attached to and become ex-officio duties of existing offices. An office created by the legislature is wholly within the power of that body, and it may prescribe the mode of filling the office and the powers and duties of the incumbent, and if it sees fit, abolish the office.

In the petition at bench, the legislature has not enacted any law authorizing the abolition of the CESB. On the contrary, in all the General Appropriations Acts from 1975 to 1993, the legislature has set aside funds for the operation of CESB. Respondent Commission, however, invokes Section 17, Chapter 3, Subtitle A. Title I, Book V of the Administrative Code of 1987 as the source of its power to abolish the CESB. Section 17 provides:

Sec. 17. Organizational Structure. — Each office of the Commission shall be headed by a Director with at least one Assistant Director, and may have such divisions as are necessary independent constitutional body, the Commission may effect changes in the organization as the need arises.

But as well pointed out by petitioner and the Solicitor General, Section 17 must be read together with Section 16 of the said Code which enumerates the offices under the respondent Commission, viz:

Sec. 16. Offices in the Commission. — The Commission shall have the following offices:

(1) The Office of the Executive Director headed by an Executive Director, with a Deputy Executive Director shall implement policies, standards, rules and regulations promulgated by the Commission; coordinate the programs of the offices of the Commission and render periodic reports on their operations, and perform such other functions as may be assigned by the Commission.

(2) The Merit System Protection Board composed of a Chairman and two (2) members shall have the following functions:

xxx xxxxxx

(3) The Office of Legal Affairs shall provide the Chairman with legal advice and assistance; render counselling services; undertake legal studies and researches; prepare

opinions and ruling in the interpretation and application of the Civil Service law, rules and regulations; prosecute violations of such law, rules and regulations; and represent the Commission before any court or tribunal.

(4) The Office of Planning and Management shall formulate development plans, programs and projects; undertake research and studies on the different aspects of public personnel management; administer management improvement programs; and provide fiscal and budgetary services.

(5) The Central Administrative Office shall provide the Commission with personnel, financial, logistics and other basic support services.

(6) The Office of Central Personnel Records shall formulate and implement policies, standards, rules and regulations pertaining to personnel records maintenance, security, control and disposal; provide storage and extension services; and provide and maintain library services.

(7) The Office of Position Classification and Compensation shall formulate and implement policies, standards, rules and regulations relative to the administration of position classification and compensation.

(8) The Office of Recruitment, Examination and Placement shall provide leadership and assistance in developing and implementing the overall Commission programs relating to recruitment, execution and placement, and formulate policies, standards, rules and regulations for the proper implementation of the Commission's examination and placement programs.

(9) The Office of Career Systems and Standards shall provide leadership and assistance in the formulation and evaluation of personnel systems and standards relative to performance appraisal, merit promotion, and employee incentive benefit and awards.

(10) The Office of Human Resource Development shall provide leadership and assistance in the development and retention of qualified and efficient work force in the Civil Service; formulate standards for training and staff development; administer service-wide scholarship programs; develop training literature and materials; coordinate and integrate all training activities and evaluate training programs.

(11) The Office of Personnel Inspection and Audit shall develop policies, standards, rules and regulations for the effective conduct or inspection and audit personnel and personnel management programs and the exercise of delegated authority; provide technical and advisory services to Civil Service Regional Offices and government agencies in the implementation of their personnel programs and evaluation systems.

(12) The Office of Personnel Relations shall provide leadership and assistance in the development and implementation of policies, standards, rules and regulations in the accreditation of employee associations or organizations and in the adjustment and settlement of employee grievances and management of employee disputes.

(13) The Office of Corporate Affairs shall formulate and implement policies, standards, rules and regulations governing corporate officials and employees in the areas of

recruitment, examination, placement, career development, merit and awards systems, position classification and compensation, performing appraisal, employee welfare and benefit, discipline and other aspects of personnel management on the basis of comparable industry practices.

(14) The Office of Retirement Administration shall be responsible for the enforcement of the constitutional and statutory provisions, relative to retirement and the regulation for the effective implementation of the retirement of government officials and employees.

(15) The Regional and Field Offices. — The Commission shall have not less than thirteen (13) Regional offices each to be headed by a Director, and such field offices as may be needed, each to be headed by an official with at least the rank of an Assistant Director.

As read together, the inescapable conclusion is that respondent Commission's power to reorganize is limited to offices under its control as enumerated in Section 16, supra. From its inception, the CESB was intended to be an autonomous entity, albeit administratively attached to respondent Commission. As conceptualized by the Reorganization Committee "the CESB shall be autonomous. It is expected to view the problem of building up executive manpower in the government with a broad and positive outlook." 6 The essential autonomous character of the CESB is not negated by its attachment to respondent Commission. By said attachment, CESB was not made to fall within the control of respondent Commission. Under the Administrative Code of 1987, the purpose of attaching one functionally inter-related government agency to another is to attain "policy and program coordination." This is clearly etched out in Section 38(3), Chapter 7, Book IV of the aforecited Code, to wit:

(3) Attachment. — (a) This refers to the lateral relationship between the department or its equivalent and attached agency or corporation for purposes of policy and program coordination. The coordination may be accomplished by having the department represented in the governing board of the attached agency or corporation, either as chairman or as a member, with or without voting rights, if this is permitted by the charter; having the attached corporation or agency comply with a system of periodic reporting which shall reflect the progress of programs and projects; and having the department or its equivalent provide general policies through its representative in the board, which shall serve as the framework for the internal policies of the attached corporation or agency.

Respondent Commission also relies on the case of Datumanong, et al., vs. Civil Service Commission, G. R. No. 114380 where the petition assailing the abolition of the CESB was dismissed for lack of cause of action. Suffice to state that the reliance is misplaced considering that the cited case was dismissed for lack of standing of the petitioner, hence, the lack of cause of action.

IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the respondent Commission is hereby annulled and set aside. No costs.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Vitug, Kapunan and Mendoza, JJ., concur.

Tolentinovs secretary of finance

Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the Expanded Value Added Tax (EVAT) Law. Tolentino averred that this revenue bill did not exclusively originate from the House of Representatives as required by Section 24, Article 6 of the Constitution. Even though RA 7716 originated as HB 11197 and that it passed the 3 readings in the HoR, the same did not complete the 3 readings in Senate for after the 1st reading it was referred to the Senate Ways & Means Committee thereafter Senate passed its own version known as Senate Bill 1630. Tolentino averred that what Senate could have done is amend HB 11197 by striking out its text and substituting it with the text of SB 1630 in that way “the bill remains a House Bill and the Senate version just becomes the text (only the text) of the HB”. (It’s ironic however to note that  Tolentino and co-petitioner Raul Roco even signed the said Senate Bill.)ISSUE: Whether or not the EVAT law is procedurally infirm.HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such consolidation was consistent with the power of the Senate to propose or concur with amendments to the version originated in the HoR. What the Constitution simply means, according to the 9 justices, is that the initiative must come from the HoR. Note also that there were several instances before where Senate passed its own version rather than having the HoR version as far as revenue and other such bills are concerned. This practice of amendment by substitution has always been accepted. The proposition of Tolentino concerns a

mere matter of form. There is no showing that it would make a significant difference if Senate were to adopt his over what has been done.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 115455 October 30, 1995

ARTURO M. TOLENTINO, petitioner, vs.THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE, respondents.

G.R. No. 115525 October 30, 1995

JUAN T. DAVID, petitioner, vs.TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE OCAMPO, as Secretary of Finance; LIWAYWAY VINZONS-CHATO, as Commissioner of Internal Revenue; and their AUTHORIZED AGENTS OR REPRESENTATIVES, respondents.

G.R. No. 115543 October 30, 1995

RAUL S. ROCO and the INTEGRATED BAR OF THE PHILIPPINES, petitioners, vs.THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND BUREAU OF CUSTOMS, respondents.

G.R. No. 115544 October 30, 1995

PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; KAMAHALAN PUBLISHING CORPORATION; PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L. DIMALANTA, petitioners, vs.HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal Revenue; HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B. DE OCAMPO, in his capacity as Secretary of Finance, respondents.

G.R. No. 115754 October 30, 1995

CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner, vs.THE COMMISSIONER OF INTERNAL REVENUE, respondent.

G.R. No. 115781 October 30, 1995

KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. ("MABINI"), FREEDOM FROM DEBT COALITION, INC., and PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO TAÑADA,petitioners, vs.THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE COMMISSIONER OF INTERNAL REVENUE and THE COMMISSIONER OF CUSTOMS, respondents.

G.R. No. 115852 October 30, 1995

PHILIPPINE AIRLINES, INC., petitioner, vs.THE SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE, respondents.

G.R. No. 115873 October 30, 1995

COOPERATIVE UNION OF THE PHILIPPINES, petitioner, vs.HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, and HON. ROBERTO B. DE OCAMPO, in his capacity as Secretary of Finance, respondents.

G.R. No. 115931 October 30, 1995

PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and ASSOCIATION OF PHILIPPINE BOOK SELLERS, petitioners, vs.HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON. LIWAYWAY V. CHATO, as the Commissioner of Internal Revenue; and HON. GUILLERMO PARAYNO, JR., in his capacity as the Commissioner of Customs, respondents.

R E S O L U T I O N

 

MENDOZA, J.:

These are motions seeking reconsideration of our decision dismissing the petitions filed in these cases for the declaration of unconstitutionality of R.A. No. 7716, otherwise known as the Expanded Value-Added Tax Law. The motions, of which there are 10 in all, have been filed by the several petitioners in these cases, with the exception of the Philippine Educational Publishers Association, Inc. and the Association of Philippine Booksellers, petitioners in G.R. No. 115931.

The Solicitor General, representing the respondents, filed a consolidated comment, to which the Philippine Airlines, Inc., petitioner in G.R. No. 115852, and the Philippine Press Institute, Inc., petitioner in G.R. No. 115544, and Juan T. David, petitioner in G.R. No. 115525, each filed a reply. In turn the Solicitor General filed on June 1, 1995 a rejoinder to the PPI's reply.

On June 27, 1995 the matter was submitted for resolution.

I. Power of the Senate to propose amendments to revenue bills. Some of the petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL), Roco, and Chamber of Real Estate and Builders Association (CREBA)) reiterate previous claims made by them that R.A. No. 7716 did not "originate exclusively" in the House of Representatives as required by Art. VI, §24 of the Constitution. Although they admit that H. No. 11197 was filed in the House of Representatives where it passed three readings and that afterward it was sent to the Senate where after first reading it was referred to the Senate Ways and Means Committee, they complain that the Senate did not pass it on second and third readings. Instead what the Senate did was to pass its own version (S. No. 1630) which it approved on May 24, 1994. Petitioner Tolentino adds that what the Senate committee should have done was to amend H. No. 11197 by striking out the text of the bill and substituting it with the text of S. No. 1630. That way, it is said, "the bill remains a House bill and the Senate version just becomes the text (only the text) of the House bill."

The contention has no merit.

The enactment of S. No. 1630 is not the only instance in which the Senate proposed an amendment to a House revenue bill by enacting its own version of a revenue bill. On at least two occasions during the Eighth Congress, the Senate passed its own version of revenue bills, which, in consolidation with House bills earlier passed, became the enrolled bills. These were:

R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE OF 1987 BY EXTENDING FROM FIVE (5) YEARS TO TEN YEARS THE PERIOD FOR TAX AND DUTY EXEMPTION AND TAX CREDIT ON CAPITAL EQUIPMENT) which was approved by the President on April 10, 1992. This Act is actually a consolidation of H. No. 34254, which was approved by the House on January 29, 1992, and S. No. 1920, which was approved by the Senate on February 3, 1992.

R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL GIVE REWARD TO ANY FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC GAMES) which was approved by the President on May 22, 1992. This Act is a consolidation of H. No. 22232, which was approved by the House of Representatives on August 2, 1989, and S. No. 807, which was approved by the Senate on October 21, 1991.

On the other hand, the Ninth Congress passed revenue laws which were also the result of the consolidation of House and Senate bills. These are the following, with indications of the dates on which the laws were approved by the President and dates the separate bills of the two chambers of Congress were respectively passed:

1. R.A. NO. 7642

AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING FOR THIS PURPOSE THE PERTINENT SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992).

House Bill No. 2165, October 5, 1992

Senate Bill No. 32, December 7, 1992

2. R.A. NO. 7643

AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO REQUIRE THE PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH AND TO ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN VAT REVENUE, AMENDING FOR THIS PURPOSE CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992)

House Bill No. 1503, September 3, 1992

Senate Bill No. 968, December 7, 1992

3. R.A. NO. 7646

AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO PRESCRIBE THE PLACE FOR PAYMENT OF INTERNAL REVENUE TAXES BY LARGE TAXPAYERS, AMENDING FOR THIS PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED (February 24, 1993)

House Bill No. 1470, October 20, 1992

Senate Bill No. 35, November 19, 1992

4. R.A. NO. 7649

AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL SUBDIVISIONS, INSTRUMENTALITIES OR AGENCIES INCLUDING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCS) TO DEDUCT AND WITHHOLD THE VALUE-ADDED TAX DUE AT THE RATE OF THREE PERCENT (3%) ON GROSS PAYMENT FOR THE PURCHASE OF GOODS AND SIX PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES RENDERED BY CONTRACTORS (April 6, 1993)

House Bill No. 5260, January 26, 1993

Senate Bill No. 1141, March 30, 1993

5. R.A. NO. 7656

AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS TO DECLARE DIVIDENDS UNDER CERTAIN CONDITIONS TO THE NATIONAL GOVERNMENT, AND FOR OTHER PURPOSES (November 9, 1993)

House Bill No. 11024, November 3, 1993

Senate Bill No. 1168, November 3, 1993

6. R.A. NO. 7660

AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION OF THE DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, ALLOCATING FUNDS FOR SPECIFIC PROGRAMS, AND FOR OTHER PURPOSES (December 23, 1993)

House Bill No. 7789, May 31, 1993

Senate Bill No. 1330, November 18, 1993

7. R.A. NO. 7717

AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES OF STOCK LISTED AND TRADED THROUGH THE LOCAL STOCK EXCHANGE OR THROUGH INITIAL PUBLIC OFFERING, AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, BY INSERTING A NEW SECTION AND REPEALING CERTAIN SUBSECTIONS THEREOF (May 5, 1994)

House Bill No. 9187, November 3, 1993

Senate Bill No. 1127, March 23, 1994

Thus, the enactment of S. No. 1630 is not the only instance in which the Senate, in the exercise of its power to propose amendments to bills required to originate in the House, passed its own version of a House revenue measure. It is noteworthy that, in the particular case of S. No. 1630, petitioners Tolentino and Roco, as members of the Senate, voted to approve it on second and third readings.

On the other hand, amendment by substitution, in the manner urged by petitioner Tolentino, concerns a mere matter of form. Petitioner has not shown what substantial difference it would make if, as the Senate actually did in this case, a separate bill like S. No. 1630 is instead enacted as a substitute measure, "taking into Consideration . . . H.B.11197."

Indeed, so far as pertinent, the Rules of the Senate only provide:

RULE XXIX

AMENDMENTS

xxx xxxxxx

§68. Not more than one amendment to the original amendment shall be considered.

No amendment by substitution shall be entertained unless the text thereof is submitted in writing.

Any of said amendments may be withdrawn before a vote is taken thereon.

§69. No amendment which seeks the inclusion of a legislative provision foreign to the subject matter of a bill (rider) shall be entertained.

xxx xxxxxx

§70-A. A bill or resolution shall not be amended by substituting it with another which covers a subject distinct from that proposed in the original bill or resolution. (emphasis added).

Nor is there merit in petitioners' contention that, with regard to revenue bills, the Philippine Senate possesses less power than the U.S. Senate because of textual differences between constitutional provisions giving them the power to propose or concur with amendments.

Art. I, §7, cl. 1 of the U.S. Constitution reads:

All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.

Art. VI, §24 of our Constitution reads:

All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

The addition of the word "exclusively" in the Philippine Constitution and the decision to drop the phrase "as on other Bills" in the American version, according to petitioners, shows the intention of the framers of our Constitution to restrict the Senate's power to propose amendments to revenue bills. Petitioner Tolentino contends that the word "exclusively" was inserted to modify "originate" and "the words 'as in any other bills' (sic) were eliminated so as to show that these bills were not to be like other bills but must be treated as a special kind."

The history of this provision does not support this contention. The supposed indicia of constitutional intent are nothing but the relics of an unsuccessful attempt to limit the power of the Senate. It will be recalled that the 1935 Constitution originally provided for a unicameral National Assembly. When it was decided in 1939 to change to a bicameral legislature, it became necessary to provide for the procedure for lawmaking by the Senate and the House of Representatives. The work of proposing amendments to the Constitution was done by the National Assembly, acting as a constituent assembly, some of whose members, jealous of preserving the Assembly's lawmaking powers, sought to curtail the powers of the proposed Senate. Accordingly they proposed the following provision:

All bills appropriating public funds, revenue or tariff bills, bills of local application, and private bills shall originate exclusively in the Assembly, but the Senate may propose or concur with amendments. In case of disapproval by the Senate of any such bills, the Assembly may repass the same by a two-thirds vote of all its members, and thereupon, the bill so repassed shall be deemed enacted and may be submitted to the President for corresponding action. In the event that the Senate should fail to finally act on any such bills, the Assembly may, after thirty days from the opening of the next regular session of the same legislative term, reapprove the same with a vote of two-thirds of all the

members of the Assembly. And upon such reapproval, the bill shall be deemed enacted and may be submitted to the President for corresponding action.

The special committee on the revision of laws of the Second National Assembly vetoed the proposal. It deleted everything after the first sentence. As rewritten, the proposal was approved by the National Assembly and embodied in Resolution No. 38, as amended by Resolution No. 73. (J. ARUEGO, KNOW YOUR CONSTITUTION 65-66 (1950)). The proposed amendment was submitted to the people and ratified by them in the elections held on June 18, 1940.

This is the history of Art. VI, §18 (2) of the 1935 Constitution, from which Art. VI, §24 of the present Constitution was derived. It explains why the word "exclusively" was added to the American text from which the framers of the Philippine Constitution borrowed and why the phrase "as on other Bills" was not copied. Considering the defeat of the proposal, the power of the Senate to propose amendments must be understood to be full, plenary and complete "as on other Bills." Thus, because revenue bills are required to originate exclusively in the House of Representatives, the Senate cannot enact revenue measures of its own without such bills. After a revenue bill is passed and sent over to it by the House, however, the Senate certainly can pass its own version on the same subject matter. This follows from the coequality of the two chambers of Congress.

That this is also the understanding of book authors of the scope of the Senate's power to concur is clear from the following commentaries:

The power of the Senate to propose or concur with amendments is apparently without restriction. It would seem that by virtue of this power, the Senate can practically re-write a bill required to come from the House and leave only a trace of the original bill. For example, a general revenue bill passed by the lower house of the United States Congress contained provisions for the imposition of an inheritance tax . This was changed by the Senate into a corporation tax. The amending authority of the Senate was declared by the United States Supreme Court to be sufficiently broad to enable it to make the alteration. [Flint v. Stone Tracy Company, 220 U.S. 107, 55 L. ed. 389].

(L. TAÑADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES 247 (1961))

The above-mentioned bills are supposed to be initiated by the House of Representatives because it is more numerous in membership and therefore also more representative of the people. Moreover, its members are presumed to be more familiar with the needs of the country in regard to the enactment of the legislation involved.

The Senate is, however, allowed much leeway in the exercise of its power to propose or concur with amendments to the bills initiated by the House of Representatives. Thus, in one case, a bill introduced in the U.S. House of Representatives was changed by the Senate to make a proposed inheritance tax a corporation tax. It is also accepted practice for the Senate to introduce what is known as an amendment by substitution, which may entirely replace the bill initiated in the House of Representatives.

(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).

In sum, while Art. VI, §24 provides that all appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills must "originate exclusively in the House of

Representatives," it also adds, "but the Senate may propose or concur with amendments." In the exercise of this power, the Senate may propose an entirely new bill as a substitute measure. As petitioner Tolentino states in a high school text, a committee to which a bill is referred may do any of the following:

(1) to endorse the bill without changes; (2) to make changes in the bill omitting or adding sections or altering its language; (3) to make and endorse an entirely new bill as a substitute, in which case it will be known as a committee bill; or (4) to make no report at all.

(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950))

To except from this procedure the amendment of bills which are required to originate in the House by prescribing that the number of the House bill and its other parts up to the enacting clause must be preserved although the text of the Senate amendment may be incorporated in place of the original body of the bill is to insist on a mere technicality. At any rate there is no rule prescribing this form. S. No. 1630, as a substitute measure, is therefore as much an amendment of H. No. 11197 as any which the Senate could have made.

II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error is that they assume that S. No. 1630 is an independent and distinct bill. Hence their repeated references to its certification that it was passed by the Senate "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197," implying that there is something substantially different between the reference to S. No. 1129 and the reference to H. No. 11197. From this premise, they conclude that R.A. No. 7716 originated both in the House and in the Senate and that it is the product of two "half-baked bills because neither H. No. 11197 nor S. No. 1630 was passed by both houses of Congress."

In point of fact, in several instances the provisions of S. No. 1630, clearly appear to be mere amendments of the corresponding provisions of H. No. 11197. The very tabular comparison of the provisions of H. No. 11197 and S. No. 1630 attached as Supplement A to the basic petition of petitioner Tolentino, while showing differences between the two bills, at the same time indicates that the provisions of the Senate bill were precisely intended to be amendments to the House bill.

Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the Senate bill was a mere amendment of the House bill, H. No. 11197 in its original form did not have to pass the Senate on second and three readings. It was enough that after it was passed on first reading it was referred to the Senate Committee on Ways and Means. Neither was it required that S. No. 1630 be passed by the House of Representatives before the two bills could be referred to the Conference Committee.

There is legislative precedent for what was done in the case of H. No. 11197 and S. No. 1630. When the House bill and Senate bill, which became R.A. No. 1405 (Act prohibiting the disclosure of bank deposits), were referred to a conference committee, the question was raised whether the two bills could be the subject of such conference, considering that the bill from one house had not been passed by the other and vice versa. As Congressman Duran put the question:

MR. DURAN. Therefore, I raise this question of order as to procedure: If a House bill is passed by the House but not passed by the Senate, and a Senate bill of a similar nature is passed in the Senate but never passed in the House, can the two bills be the subject of a conference, and can a law be enacted from these two bills? I understand that the Senate bill in this particular instance does not refer to investments in government securities, whereas the bill in the House, which was introduced by the Speaker, covers two subject

matters: not only investigation of deposits in banks but also investigation of investments in government securities. Now, since the two bills differ in their subject matter, I believe that no law can be enacted.

Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.) said:

THE SPEAKER. The report of the conference committee is in order. It is precisely in cases like this where a conference should be had. If the House bill had been approved by the Senate, there would have been no need of a conference; but precisely because the Senate passed another bill on the same subject matter, the conference committee had to be created, and we are now considering the report of that committee.

(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))

III. The President's certification. The fallacy in thinking that H. No. 11197 and S. No. 1630 are distinct and unrelated measures also accounts for the petitioners' (Kilosbayan's and PAL's) contention that because the President separately certified to the need for the immediate enactment of these measures, his certification was ineffectual and void. The certification had to be made of the version of the same revenue bill which at the moment was being considered. Otherwise, to follow petitioners' theory, it would be necessary for the President to certify as many bills as are presented in a house of Congress even though the bills are merely versions of the bill he has already certified. It is enough that he certifies the bill which, at the time he makes the certification, is under consideration. Since on March 22, 1994 the Senate was considering S. No. 1630, it was that bill which had to be certified. For that matter on June 1, 1993 the President had earlier certified H. No. 9210 for immediate enactment because it was the one which at that time was being considered by the House. This bill was later substituted, together with other bills, by H. No. 11197.

As to what Presidential certification can accomplish, we have already explained in the main decision that the phrase "except when the President certifies to the necessity of its immediate enactment, etc." in Art. VI, §26 (2) qualifies not only the requirement that "printed copies [of a bill] in its final form [must be] distributed to the members three days before its passage" but also the requirement that before a bill can become a law it must have passed "three readings on separate days." There is not only textual support for such construction but historical basis as well.

Art. VI, §21 (2) of the 1935 Constitution originally provided:

(2) No bill shall be passed by either House unless it shall have been printed and copies thereof in its final form furnished its Members at least three calendar days prior to its passage, except when the President shall have certified to the necessity of its immediate enactment. Upon the last reading of a bill, no amendment thereof shall be allowed and the question upon its passage shall be taken immediately thereafter, and the yeas and nays entered on the Journal.

When the 1973 Constitution was adopted, it was provided in Art. VIII, §19 (2):

(2) No bill shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to the Members three days before its passage, except when the Prime Minister certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a

bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal.

This provision of the 1973 document, with slight modification, was adopted in Art. VI, §26 (2) of the present Constitution, thus:

(2) No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal.

The exception is based on the prudential consideration that if in all cases three readings on separate days are required and a bill has to be printed in final form before it can be passed, the need for a law may be rendered academic by the occurrence of the very emergency or public calamity which it is meant to address.

Petitioners further contend that a "growing budget deficit" is not an emergency, especially in a country like the Philippines where budget deficit is a chronic condition. Even if this were the case, an enormous budget deficit does not make the need for R.A. No. 7716 any less urgent or the situation calling for its enactment any less an emergency.

Apparently, the members of the Senate (including some of the petitioners in these cases) believed that there was an urgent need for consideration of S. No. 1630, because they responded to the call of the President by voting on the bill on second and third readings on the same day. While the judicial department is not bound by the Senate's acceptance of the President's certification, the respect due coequal departments of the government in matters committed to them by the Constitution and the absence of a clear showing of grave abuse of discretion caution a stay of the judicial hand.

At any rate, we are satisfied that S. No. 1630 received thorough consideration in the Senate where it was discussed for six days. Only its distribution in advance in its final printed form was actually dispensed with by holding the voting on second and third readings on the same day (March 24, 1994). Otherwise, sufficient time between the submission of the bill on February 8, 1994 on second reading and its approval on March 24, 1994 elapsed before it was finally voted on by the Senate on third reading.

The purpose for which three readings on separate days is required is said to be two-fold: (1) to inform the members of Congress of what they must vote on and (2) to give them notice that a measure is progressing through the enacting process, thus enabling them and others interested in the measure to prepare their positions with reference to it. (1 J. G. SUTHERLAND, STATUTES AND STATUTORY CONSTRUCTION §10.04, p. 282 (1972)). These purposes were substantially achieved in the case of R.A. No. 7716.

IV. Power of Conference Committee. It is contended (principally by Kilosbayan, Inc. and the Movement of Attorneys for Brotherhood, Integrity and Nationalism, Inc. (MABINI)) that in violation of the constitutional policy of full public disclosure and the people's right to know (Art. II, §28 and Art. III, §7) the Conference Committee met for two days in executive session with only the conferees present.

As pointed out in our main decision, even in the United States it was customary to hold such sessions with only the conferees and their staffs in attendance and it was only in 1975 when a new rule was

adopted requiring open sessions. Unlike its American counterpart, the Philippine Congress has not adopted a rule prescribing open hearings for conference committees.

It is nevertheless claimed that in the United States, before the adoption of the rule in 1975, at least staff members were present. These were staff members of the Senators and Congressmen, however, who may be presumed to be their confidential men, not stenographers as in this case who on the last two days of the conference were excluded. There is no showing that the conferees themselves did not take notes of their proceedings so as to give petitioner Kilosbayan basis for claiming that even in secret diplomatic negotiations involving state interests, conferees keep notes of their meetings. Above all, the public's right to know was fully served because the Conference Committee in this case submitted a report showing the changes made on the differing versions of the House and the Senate.

Petitioners cite the rules of both houses which provide that conference committee reports must contain "a detailed, sufficiently explicit statement of the changes in or other amendments." These changes are shown in the bill attached to the Conference Committee Report. The members of both houses could thus ascertain what changes had been made in the original bills without the need of a statement detailing the changes.

The same question now presented was raised when the bill which became R.A. No. 1400 (Land Reform Act of 1955) was reported by the Conference Committee. Congressman Bengzon raised a point of order. He said:

MR. BENGZON. My point of order is that it is out of order to consider the report of the conference committee regarding House Bill No. 2557 by reason of the provision of Section 11, Article XII, of the Rules of this House which provides specifically that the conference report must be accompanied by a detailed statement of the effects of the amendment on the bill of the House. This conference committee report is not accompanied by that detailed statement, Mr. Speaker. Therefore it is out of order to consider it.

Petitioner Tolentino, then the Majority Floor Leader, answered:

MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in connection with the point of order raised by the gentleman from Pangasinan.

There is no question about the provision of the Rule cited by the gentleman from Pangasinan, but this provision applies to those cases where only portions of the bill have been amended. In this case before us an entire bill is presented; therefore, it can be easily seen from the reading of the bill what the provisions are. Besides, this procedure has been an established practice.

After some interruption, he continued:

MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into the reason for the provisions of the Rules, and the reason for the requirement in the provision cited by the gentleman from Pangasinan is when there are only certain words or phrases inserted in or deleted from the provisions of the bill included in the conference report, and we cannot understand what those words and phrases mean and their relation to the bill. In that case, it is necessary to make a detailed statement on how those words and phrases will affect the bill as a whole; but when the entire bill itself is copied verbatim in the conference

report, that is not necessary. So when the reason for the Rule does not exist, the Rule does not exist.

(2 CONG. REC. NO. 2, p. 4056. (emphasis added))

Congressman Tolentino was sustained by the chair. The record shows that when the ruling was appealed, it was upheld by viva voce and when a division of the House was called, it was sustained by a vote of 48 to 5. (Id., p. 4058)

Nor is there any doubt about the power of a conference committee to insert new provisions as long as these are germane to the subject of the conference. As this Court held in Philippine Judges Association v. Prado, 227 SCRA 703 (1993), in an opinion written by then Justice Cruz, the jurisdiction of the conference committee is not limited to resolving differences between the Senate and the House. It may propose an entirely new provision. What is important is that its report is subsequently approved by the respective houses of Congress. This Court ruled that it would not entertain allegations that, because new provisions had been added by the conference committee, there was thereby a violation of the constitutional injunction that "upon the last reading of a bill, no amendment thereto shall be allowed."

Applying these principles, we shall decline to look into the petitioners' charges that an amendment was made upon the last reading of the bill that eventually became R.A. No. 7354 and that copies thereof in its final form were not distributed among the members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy.

(Id. at 710. (emphasis added))

It is interesting to note the following description of conference committees in the Philippines in a 1979 study:

Conference committees may be of two types: free or instructed. These committees may be given instructions by their parent bodies or they may be left without instructions. Normally the conference committees are without instructions, and this is why they are often critically referred to as "the little legislatures." Once bills have been sent to them, the conferees have almost unlimited authority to change the clauses of the bills and in fact sometimes introduce new measures that were not in the original legislation. No minutes are kept, and members' activities on conference committees are difficult to determine. One congressman known for his idealism put it this way: "I killed a bill on export incentives for my interest group [copra] in the conference committee but I could not have done so anywhere else." The conference committee submits a report to both houses, and usually it is accepted. If the report is not accepted, then the committee is discharged and new members are appointed.

(R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND LEGISLATURES: A COMPARATIVE ANALYSIS 163 (J. D. LEES AND M. SHAW, eds.)).

In citing this study, we pass no judgment on the methods of conference committees. We cite it only to say that conference committees here are no different from their counterparts in the United States whose vast powers we noted in Philippine Judges Association v. Prado, supra. At all events, under Art. VI, §16(3) each house has the power "to determine the rules of its proceedings," including those of its committees. Any meaningful change in the method and procedures of Congress or its committees must therefore be sought in that body itself.

V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No. 7716 violates Art. VI, §26 (1) of the Constitution which provides that "Every bill passed by Congress shall embrace only one subject which shall be expressed in the title thereof." PAL contends that the amendment of its franchise by the withdrawal of its exemption from the VAT is not expressed in the title of the law.

Pursuant to §13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in lieu of all other taxes, duties, royalties, registration, license and other fees and charges of any kind, nature, or description, imposed, levied, established, assessed or collected by any municipal, city, provincial or national authority or government agency, now or in the future."

PAL was exempted from the payment of the VAT along with other entities by §103 of the National Internal Revenue Code, which provides as follows:

§103. Exempt transactions. — The following shall be exempt from the value-added tax:

xxx xxxxxx

(q) Transactions which are exempt under special laws or international agreements to which the Philippines is a signatory.

R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL, by amending §103, as follows:

§103. Exempt transactions. — The following shall be exempt from the value-added tax:

xxx xxxxxx

(q) Transactions which are exempt under special laws, except those granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . .

The amendment of §103 is expressed in the title of R.A. No. 7716 which reads:

AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES.

By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-ADDED TAX (VAT) SYSTEM [BY] WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES,"

Congress thereby clearly expresses its intention to amend any provision of the NIRC which stands in the way of accomplishing the purpose of the law.

PAL asserts that the amendment of its franchise must be reflected in the title of the law by specific reference to P.D. No. 1590. It is unnecessary to do this in order to comply with the constitutional requirement, since it is already stated in the title that the law seeks to amend the pertinent provisions of the NIRC, among which is §103(q), in order to widen the base of the VAT. Actually, it is the bill which becomes a law that is required to express in its title the subject of legislation. The titles of H. No. 11197 and S. No. 1630 in fact specifically referred to §103 of the NIRC as among the provisions sought to be amended. We are satisfied that sufficient notice had been given of the pendency of these bills in Congress before they were enacted into what is now R.A.No. 7716.

In Philippine Judges Association v. Prado, supra, a similar argument as that now made by PAL was rejected. R.A. No. 7354 is entitled AN ACT CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES CONNECTED THEREWITH. It contained a provision repealing all franking privileges. It was contended that the withdrawal of franking privileges was not expressed in the title of the law. In holding that there was sufficient description of the subject of the law in its title, including the repeal of franking privileges, this Court held:

To require every end and means necessary for the accomplishment of the general objectives of the statute to be expressed in its title would not only be unreasonable but would actually render legislation impossible. [Cooley, Constitutional Limitations, 8th Ed., p. 297] As has been correctly explained:

The details of a legislative act need not be specifically stated in its title, but matter germane to the subject as expressed in the title, and adopted to the accomplishment of the object in view, may properly be included in the act. Thus, it is proper to create in the same act the machinery by which the act is to be enforced, to prescribe the penalties for its infraction, and to remove obstacles in the way of its execution. If such matters are properly connected with the subject as expressed in the title, it is unnecessary that they should also have special mention in the title. (Southern Pac. Co. v. Bartine, 170 Fed. 725)

(227 SCRA at 707-708)

VI. Claims of press freedom and religious liberty. We have held that, as a general proposition, the press is not exempt from the taxing power of the State and that what the constitutional guarantee of free press prohibits are laws which single out the press or target a group belonging to the press for special treatment or which in any way discriminate against the press on the basis of the content of the publication, and R.A. No. 7716 is none of these.

Now it is contended by the PPI that by removing the exemption of the press from the VAT while maintaining those granted to others, the law discriminates against the press. At any rate, it is averred, "even nondiscriminatory taxation of constitutionally guaranteed freedom is unconstitutional."

With respect to the first contention, it would suffice to say that since the law granted the press a privilege, the law could take back the privilege anytime without offense to the Constitution. The reason is simple: by granting exemptions, the State does not forever waive the exercise of its sovereign prerogative.

Indeed, in withdrawing the exemption, the law merely subjects the press to the same tax burden to which other businesses have long ago been subject. It is thus different from the tax involved in the cases invoked by the PPI. The license tax in Grosjean v. American Press Co., 297 U.S. 233, 80 L. Ed. 660 (1936) was found to be discriminatory because it was laid on the gross advertising receipts only of newspapers whose weekly circulation was over 20,000, with the result that the tax applied only to 13 out of 124 publishers in Louisiana. These large papers were critical of Senator Huey Long who controlled the state legislature which enacted the license tax. The censorial motivation for the law was thus evident.

On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 75 L. Ed. 2d 295 (1983), the tax was found to be discriminatory because although it could have been made liable for the sales tax or, in lieu thereof, for the use tax on the privilege of using, storing or consuming tangible goods, the press was not. Instead, the press was exempted from both taxes. It was, however, later made to pay a special use tax on the cost of paper and ink which made these items "the only items subject to the use tax that were component of goods to be sold at retail." The U.S. Supreme Court held that the differential treatment of the press "suggests that the goal of regulation is not related to suppression of expression, and such goal is presumptively unconstitutional." It would therefore appear that even a law that favors the press is constitutionally suspect. (See the dissent of Rehnquist, J. in that case)

Nor is it true that only two exemptions previously granted by E.O. No. 273 are withdrawn "absolutely and unqualifiedly" by R.A. No. 7716. Other exemptions from the VAT, such as those previously granted to PAL, petroleum concessionaires, enterprises registered with the Export Processing Zone Authority, and many more are likewise totally withdrawn, in addition to exemptions which are partially withdrawn, in an effort to broaden the base of the tax.

The PPI says that the discriminatory treatment of the press is highlighted by the fact that transactions, which are profit oriented, continue to enjoy exemption under R.A. No. 7716. An enumeration of some of these transactions will suffice to show that by and large this is not so and that the exemptions are granted for a purpose. As the Solicitor General says, such exemptions are granted, in some cases, to encourage agricultural production and, in other cases, for the personal benefit of the end-user rather than for profit. The exempt transactions are:

(a) Goods for consumption or use which are in their original state (agricultural, marine and forest products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn, sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of feeds).

(b) Goods used for personal consumption or use (household and personal effects of citizens returning to the Philippines) or for professional use, like professional instruments and implements, by persons coming to the Philippines to settle here.

(c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum products subject to excise tax and services subject to percentage tax.

(d) Educational services, medical, dental, hospital and veterinary services, and services rendered under employer-employee relationship.

(e) Works of art and similar creations sold by the artist himself.

(f) Transactions exempted under special laws, or international agreements.

(g) Export-sales by persons not VAT-registered.

(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.

(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)

The PPI asserts that it does not really matter that the law does not discriminate against the press because "even nondiscriminatory taxation on constitutionally guaranteed freedom is unconstitutional." PPI cites in support of this assertion the following statement in Murdock v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):

The fact that the ordinance is "nondiscriminatory" is immaterial. The protection afforded by the First Amendment is not so restricted. A license tax certainly does not acquire constitutional validity because it classifies the privileges protected by the First Amendment along with the wares and merchandise of hucksters and peddlers and treats them all alike. Such equality in treatment does not save the ordinance. Freedom of press, freedom of speech, freedom of religion are in preferred position.

The Court was speaking in that case of a license tax, which, unlike an ordinary tax, is mainly for regulation. Its imposition on the press is unconstitutional because it lays a prior restraint on the exercise of its right. Hence, although its application to others, such those selling goods, is valid, its application to the press or to religious groups, such as the Jehovah's Witnesses, in connection with the latter's sale of religious books and pamphlets, is unconstitutional. As the U.S. Supreme Court put it, "it is one thing to impose a tax on income or property of a preacher. It is quite another thing to exact a tax on him for delivering a sermon."

A similar ruling was made by this Court in American Bible Society v. City of Manila, 101 Phil. 386 (1957) which invalidated a city ordinance requiring a business license fee on those engaged in the sale of general merchandise. It was held that the tax could not be imposed on the sale of bibles by the American Bible Society without restraining the free exercise of its right to propagate.

The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege, much less a constitutional right. It is imposed on the sale, barter, lease or exchange of goods or properties or the sale or exchange of services and the lease of properties purely for revenue purposes. To subject the press to its payment is not to burden the exercise of its right any more than to make the press pay income tax or subject it to general regulation is not to violate its freedom under the Constitution.

Additionally, the Philippine Bible Society, Inc. claims that although it sells bibles, the proceeds derived from the sales are used to subsidize the cost of printing copies which are given free to those who cannot afford to pay so that to tax the sales would be to increase the price, while reducing the volume of sale. Granting that to be the case, the resulting burden on the exercise of religious freedom is so incidental as to make it difficult to differentiate it from any other economic imposition that might make the right to disseminate religious doctrines costly. Otherwise, to follow the petitioner's argument, to increase the tax

on the sale of vestments would be to lay an impermissible burden on the right of the preacher to make a sermon.

On the other hand the registration fee of P1,000.00 imposed by §107 of the NIRC, as amended by §7 of R.A. No. 7716, although fixed in amount, is really just to pay for the expenses of registration and enforcement of provisions such as those relating to accounting in §108 of the NIRC. That the PBS distributes free bibles and therefore is not liable to pay the VAT does not excuse it from the payment of this fee because it also sells some copies. At any rate whether the PBS is liable for the VAT must be decided in concrete cases, in the event it is assessed this tax by the Commissioner of Internal Revenue.

VII. Alleged violations of the due process, equal protection and contract clauses and the rule on taxation. CREBA asserts that R.A. No. 7716 (1) impairs the obligations of contracts, (2) classifies transactions as covered or exempt without reasonable basis and (3) violates the rule that taxes should be uniform and equitable and that Congress shall "evolve a progressive system of taxation."

With respect to the first contention, it is claimed that the application of the tax to existing contracts of the sale of real property by installment or on deferred payment basis would result in substantial increases in the monthly amortizations to be paid because of the 10% VAT. The additional amount, it is pointed out, is something that the buyer did not anticipate at the time he entered into the contract.

The short answer to this is the one given by this Court in an early case: "Authorities from numerous sources are cited by the plaintiffs, but none of them show that a lawful tax on a new subject, or an increased tax on an old one, interferes with a contract or impairs its obligation, within the meaning of the Constitution. Even though such taxation may affect particular contracts, as it may increase the debt of one person and lessen the security of another, or may impose additional burdens upon one class and release the burdens of another, still the tax must be paid unless prohibited by the Constitution, nor can it be said that it impairs the obligation of any existing contract in its true legal sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)). Indeed not only existing laws but also "the reservation of the essential attributes of sovereignty, is . . . read into contracts as a postulate of the legal order." (Philippine-American Life Ins. Co. v. Auditor General, 22 SCRA 135, 147 (1968)) Contracts must be understood as having been made in reference to the possible exercise of the rightful authority of the government and no obligation of contract can extend to the defeat of that authority. (Norman v. Baltimore and Ohio R.R., 79 L. Ed. 885 (1935)).

It is next pointed out that while §4 of R.A. No. 7716 exempts such transactions as the sale of agricultural products, food items, petroleum, and medical and veterinary services, it grants no exemption on the sale of real property which is equally essential. The sale of real property for socialized and low-cost housing is exempted from the tax, but CREBA claims that real estate transactions of "the less poor," i.e., the middle class, who are equally homeless, should likewise be exempted.

The sale of food items, petroleum, medical and veterinary services, etc., which are essential goods and services was already exempt under §103, pars. (b) (d) (1) of the NIRC before the enactment of R.A. No. 7716. Petitioner is in error in claiming that R.A. No. 7716 granted exemption to these transactions, while subjecting those of petitioner to the payment of the VAT. Moreover, there is a difference between the "homeless poor" and the "homeless less poor" in the example given by petitioner, because the second group or middle class can afford to rent houses in the meantime that they cannot yet buy their own homes. The two social classes are thus differently situated in life. "It is inherent in the power to tax that the State be free to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153 (1955). Accord, City of Baguio v. De Leon, 134 Phil. 912

(1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984); KapatiranngmgaNaglilingkodsaPamahalaanngPilipinas, Inc. v. Tan, 163 SCRA 371 (1988)).

Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also violates Art. VI, §28(1) which provides that "The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation."

Equality and uniformity of taxation means that all taxable articles or kinds of property of the same class be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation. To satisfy this requirement it is enough that the statute or ordinance applies equally to all persons, forms and corporations placed in similar situation. (City of Baguio v. De Leon, supra; Sison, Jr. v. Ancheta, supra)

Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No. 7716 was enacted. R.A. No. 7716 merely expands the base of the tax. The validity of the original VAT Law was questioned in KapatiranngNaglilingkodsaPamahalaanngPilipinas, Inc. v. Tan, 163 SCRA 383 (1988) on grounds similar to those made in these cases, namely, that the law was "oppressive, discriminatory, unjust and regressive in violation of Art. VI, §28(1) of the Constitution." (At 382) Rejecting the challenge to the law, this Court held:

As the Court sees it, EO 273 satisfies all the requirements of a valid tax. It is uniform. . . .

The sales tax adopted in EO 273 is applied similarly on all goods and services sold to the public, which are not exempt, at the constant rate of 0% or 10%.

The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons engaged in business with an aggregate gross annual sales exceeding P200,000.00. Small corner sari-sari stores are consequently exempt from its application. Likewise exempt from the tax are sales of farm and marine products, so that the costs of basic food and other necessities, spared as they are from the incidence of the VAT, are expected to be relatively lower and within the reach of the general public.

(At 382-383)

The CREBA claims that the VAT is regressive. A similar claim is made by the Cooperative Union of the Philippines, Inc. (CUP), while petitioner Juan T. David argues that the law contravenes the mandate of Congress to provide for a progressive system of taxation because the law imposes a flat rate of 10% and thus places the tax burden on all taxpayers without regard to their ability to pay.

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

Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not impossible, to avoid them by imposing such taxes according to the taxpayers' ability to pay. In the case of

the VAT, the law minimizes the regressive effects of this imposition by providing for zero rating of certain transactions (R.A. No. 7716, §3, amending §102 (b) of the NIRC), while granting exemptions to other transactions. (R.A. No. 7716, §4, amending §103 of the NIRC).

Thus, the following transactions involving basic and essential goods and services are exempted from the VAT:

(a) Goods for consumption or use which are in their original state (agricultural, marine and forest products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of feeds).

(b) Goods used for personal consumption or use (household and personal effects of citizens returning to the Philippines) and or professional use, like professional instruments and implements, by persons coming to the Philippines to settle here.

(c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum products subject to excise tax and services subject to percentage tax.

(d) Educational services, medical, dental, hospital and veterinary services, and services rendered under employer-employee relationship.

(e) Works of art and similar creations sold by the artist himself.

(f) Transactions exempted under special laws, or international agreements.

(g) Export-sales by persons not VAT-registered.

(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.

(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)

On the other hand, the transactions which are subject to the VAT are those which involve goods and services which are used or availed of mainly by higher income groups. These include real properties held primarily for sale to customers or for lease in the ordinary course of trade or business, the right or privilege to use patent, copyright, and other similar property or right, the right or privilege to use industrial, commercial or scientific equipment, motion picture films, tapes and discs, radio, television, satellite transmission and cable television time, hotels, restaurants and similar places, securities, lending investments, taxicabs, utility cars for rent, tourist buses, and other common carriers, services of franchise grantees of telephone and telegraph.

The problem with CREBA's petition is that it presents broad claims of constitutional violations by tendering issues not at retail but at wholesale and in the abstract. There is no fully developed record which can impart to adjudication the impact of actuality. There is no factual foundation to show in the concrete the application of the law to actual contracts and exemplify its effect on property rights. For the fact is that petitioner's members have not even been assessed the VAT. Petitioner's case is not made concrete by a series of hypothetical questions asked which are no different from those dealt with in advisory opinions.

The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as here, does not suffice. There must be a factual foundation of such unconstitutional taint. Considering that petitioner here would condemn such a provision as void on its face, he has not made out a case. This is merely to adhere to the authoritative doctrine that where the due process and equal protection clauses are invoked, considering that they are not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail.

(Sison, Jr. v. Ancheta, 130 SCRA at 661)

Adjudication of these broad claims must await the development of a concrete case. It may be that postponement of adjudication would result in a multiplicity of suits. This need not be the case, however. Enforcement of the law may give rise to such a case. A test case, provided it is an actual case and not an abstract or hypothetical one, may thus be presented.

Nor is hardship to taxpayers alone an adequate justification for adjudicating abstract issues. Otherwise, adjudication would be no different from the giving of advisory opinion that does not really settle legal issues.

We are told that it is our duty under Art. VIII, §1, ¶2 to decide whenever a claim is made that "there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government." This duty can only arise if an actual case or controversy is before us. Under Art . VIII, §5 our jurisdiction is defined in terms of "cases" and all that Art. VIII, §1, ¶2 can plausibly mean is that in the exercise of that jurisdiction we have the judicial power to determine questions of grave abuse of discretion by any branch or instrumentality of the government.

Put in another way, what is granted in Art. VIII, §1, ¶2 is "judicial power," which is "the power of a court to hear and decide cases pending between parties who have the right to sue and be sued in the courts of law and equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as distinguished from legislative and executive power. This power cannot be directly appropriated until it is apportioned among several courts either by the Constitution, as in the case of Art. VIII, §5, or by statute, as in the case of the Judiciary Act of 1948 (R.A. No. 296) and the Judiciary Reorganization Act of 1980 (B.P. Blg. 129). The power thus apportioned constitutes the court's "jurisdiction," defined as "the power conferred by law upon a court or judge to take cognizance of a case, to the exclusion of all others." (United States v. Arceo, 6 Phil. 29 (1906)) Without an actual case coming within its jurisdiction, this Court cannot inquire into any allegation of grave abuse of discretion by the other departments of the government.

VIII. Alleged violation of policy towards cooperatives. On the other hand, the Cooperative Union of the Philippines (CUP), after briefly surveying the course of legislation, argues that it was to adopt a definite policy of granting tax exemption to cooperatives that the present Constitution embodies provisions on cooperatives. To subject cooperatives to the VAT would therefore be to infringe a constitutional policy. Petitioner claims that in 1973, P.D. No. 175 was promulgated exempting cooperatives from the payment of income taxes and sales taxes but in 1984, because of the crisis which menaced the national economy, this exemption was withdrawn by P.D. No. 1955; that in 1986, P.D. No. 2008 again granted cooperatives exemption from income and sales taxes until December 31, 1991, but, in the same year, E.O. No. 93 revoked the exemption; and that finally in 1987 the framers of the Constitution "repudiated the previous actions of the government adverse to the interests of the cooperatives, that is, the repeated revocation of the tax exemption to cooperatives and instead upheld the policy of strengthening the cooperatives by way of the grant of tax exemptions," by providing the following in Art. XII:

§1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership.

§15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development.

Petitioner's contention has no merit. In the first place, it is not true that P.D. No. 1955 singled out cooperatives by withdrawing their exemption from income and sales taxes under P.D. No. 175, §5. What P.D. No. 1955, §1 did was to withdraw the exemptions and preferential treatments theretofore granted to private business enterprises in general, in view of the economic crisis which then beset the nation. It is true that after P.D. No. 2008, §2 had restored the tax exemptions of cooperatives in 1986, the exemption was again repealed by E.O. No. 93, §1, but then again cooperatives were not the only ones whose exemptions were withdrawn. The withdrawal of tax incentives applied to all, including government and private entities. In the second place, the Constitution does not really require that cooperatives be granted tax exemptions in order to promote their growth and viability. Hence, there is no basis for petitioner's assertion that the government's policy toward cooperatives had been one of vacillation, as far as the grant of tax privileges was concerned, and that it was to put an end to this indecision that the constitutional provisions cited were adopted. Perhaps as a matter of policy cooperatives should be granted tax exemptions, but that is left to the discretion of Congress. If Congress does not grant exemption and there is no discrimination to cooperatives, no violation of any constitutional policy can be charged.

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

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

We have carefully read the various arguments raised against the constitutional validity of R.A. No. 7716. We have in fact taken the extraordinary step of enjoining its enforcement pending resolution of these cases. We have now come to the conclusion that the law suffers from none of the infirmities attributed to it by petitioners and that its enactment by the other branches of the government does not constitute a

grave abuse of discretion. Any question as to its necessity, desirability or expediency must be addressed to Congress as the body which is electorally responsible, remembering that, as Justice Holmes has said, "legislators are the ultimate guardians of the liberties and welfare of the people in quite as great a degree as are the courts." (Missouri, Kansas & Texas Ry. Co. v. May, 194 U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in G.R. No. 115543 does in arguing that we should enforce the public accountability of legislators, that those who took part in passing the law in question by voting for it in Congress should later thrust to the courts the burden of reviewing measures in the flush of enactment. This Court does not sit as a third branch of the legislature, much less exercise a veto power over legislation.

WHEREFORE, the motions for reconsideration are denied with finality and the temporary restraining order previously issued is hereby lifted.

SO ORDERED.

Arroyo vs de vencia

Arroyo vs. De Venecia G.R. No. 127255, August 14, 1997Sunday, January 25, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law

Facts: A petition was filed challenging the validity of RA 8240, which amends certain provisions of the

National Internal Revenue Code. Petitioners, who are members of the House of Representatives, charged

that there is violation of the rules of the House which petitioners claim are constitutionally-mandated so

that their violation is tantamount to a violation of the Constitution.

The law originated in the House of Representatives. The Senate approvedit with certain amendments. A

bicameral conference committee was formed to reconcile the disagreeing provisions of the House and

Senate versions of the bill. The bicameral committee submitted its report to the House. During the

interpellations, Rep. Arroyo made an interruption and moved to adjourn for lack of quorum. But after a

roll call, the Chair declared the presence of a quorum. The interpellation then proceeded. After Rep.

Arroyo’s interpellation of the sponsor of the committee report, Majority Leader Albano moved for the

approval and ratification of the conference committee report. The Chair called out for objections to the

motion. Then the Chair declared: “There being none, approved.” At the same time the Chair was saying

this, Rep. Arroyo was asking, “What is that…Mr. Speaker?” The Chair and Rep. Arroyo were talking

simultaneously. Thus, although Rep. Arroyo subsequently objected to the Majority Leader’s motion, the

approval of the conference committee report had by then already been declared by the Chair.

On the same day, the bill was signed by the Speaker of the House ofRepresentatives and the President

of the Senate and certified by the respective secretaries of both Houses of Congress. The enrolled bill was

signed into law by President Ramos.

Issue: Whether or not RA 8240 is null and void because it was passed in violation of the rules of the

House 

Held:

Rules of each House of Congress are hardly permanent in character. They are subject to revocation,

modification or waiver at the pleasure of the body adopting them as they are primarily procedural. Courts

ordinarily have no concern with their observance. They may be waived or disregarded by the legislative

body. Consequently, mere failure to conform to them does not have the effect of nullifying the act taken if

the requisite number of members has agreed to a particular measure. But this is subject to qualification.

Where the construction to be given to a rule affects person other than members of the legislative body, the

question presented is necessarily judicial in character. Even its validity is open to question in a case where

private rights are involved.

In the case, no rights of private individuals are involved but only those of a member who, instead of

seeking redress in the House, chose to transfer the dispute to the Court.

The matter complained of concerns a matter of internal procedure of the House with which the Court

should not be concerned. The claim is not that there was no quorum but only that Rep. Arroyo was

effectively prevented from questioning the presence of a quorum. Rep. Arroyo’s earlier motion to adjourn

for lack of quorum had already been defeated, as the roll call established the existence of a quorum. The

question of quorum cannot be raised repeatedly especially when the quorum is obviously present for the

purpose of delaying the business of the House. 

EN BANC

G.R. No. 127255. June 26, 1998

JOKER P. ARROYO, EDCEL C. LAGMAN, JOHN HENRY R. OSMEA, WIGBERTO E. TAADA, and RONALDO B. ZAMORA, Petitioners, v. JOSE DE VENECIA, RAUL DAZA,

RODOLFO ALBANO, THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, AND THE COMMISSIONER OF INTERNAL REVENUE, Respondents.

R E S O L U T I O N

MENDOZA, J.:

Petitioners seek a rehearing and reconsideration of the Courts decision dismissing their petition for certiorari and prohibition. Basically, their contention is that when the Majority Leader (Rep. Rodolfo Albano) moved for the approval of the conference committee report on the bill that became R.A. No. 8240, leading the Chair (Deputy Speaker Raul Daza) to ask if there was any objection to the motion, and Rep. Joker P. Arroyo asked, What is that, Mr. Speaker?, the Chair allegedly ignored him and instead declared the report approved. Petitioners claim that the question What is that, Mr. Speaker? was a privileged question or a point of order which, under the rules of the House, has precedence over other matters, with the exception of motions to adjourn.

The contention has no merit. Rep. Arroyo did not have the floor. Without first drawing the attention of the Chair, he simply stood up and started talking. As a result, the Chair did not hear him and proceeded to ask if there were objections to the Majority Leaders motion. Hearing none, he declared the report approved. Rule XVI, 96 of the Rules of the House of Representatives provides:

96. Manner of Addressing the Chair.- When a member desires to speak, he shall rise and respectfully address the Chair Mr. Speaker.

The Rules of the Senate are even more emphatic. Rule XXVI, 59 says:

59. Whenever a Senator wishes to speak, he shall rise and request the President or the Presiding Officer to allow him to have the floor which consent shall be necessary before he may proceed.

If various Senators wish to have the floor, the President or Presiding Officer shall recognize the one who first made the request.

Indeed, the transcript of the proceedings of November 21, 19961 shows that after complaining that he was being hurried by the Majority Leader to finish his interpellation of the sponsor (Rep. Javier) of the conference committee report, Rep. Arroyo concluded and then sat down. However, when the Majority Leader moved for the approval of the conference committee report and the Chair asked if there was any objection to the motion, Rep. Arroyo stood up again and, without requesting to be recognized, asked, What is that, Mr. Speaker? Apparently, the Chair did not hear Rep. Arroyo since his attention was on the

Majority Leader. Thus, he proceeded to ask if there was any objection and, hearing none, declared the report approved and brought down the gavel. At that point, Rep. Arroyo shouted, No, no, no, wait a minute, and asked what the question was. Only after he had been told that the Chair had called for objection to the motion for approval of the report did Rep. Arroyo register his objection. It is not, therefore, true that Rep. Arroyo was ignored. He was simply not heard because he had not first obtained recognition from the Chair.

Nor is it correct to say that the question (What is that, Mr. Speaker?) he was raising was a question of privilege or a point of order. Rule XX, 121 of the Rules of the House defines a question of privilege as follows

SEC. 121. Definition. - Questions of privilege are those affecting the duties, conduct, rights, privileges, dignity, integrity or reputation of the House or of its members, collectively or individually.

while a point of order is defined as follows

Points of order or questions of order are legislative devices used in requiring the House or any of its Members to observe its own rules and to follow regular or established parliamentary procedure. In effect, they are either objections to pending proceedings as violative of some of those rules or demands for immediate return to the aforementioned parliamentary procedure.2cräläwvirtualibräry

Petitioners further charge that there was a disregard of Rule XIX, 112 and Rule XVII, 103 of the Rules of the House which require that the Chair should state a motion and ask for the individual votes of the members instead of merely asking whether there was any objection to the motion. As explained already in the decision in this case, the practice in cases involving the approval of a conference committee report is for the Chair simply to ask if there are objections to the motion for approval of the report. This practice is well-established and is as much a part of parliamentary law as the formal rules of the House. As then Majority Leader Arturo M. Tolentino explained in 1957 when this practice was questioned:

MR. TOLENTINO. The fact that nobody objects means a unanimous action of the House. Insofar as the matter of procedure is concerned, this has been a precedent since I came here seven years ago, and it has been the procedure in this House that if somebody objects, then a debate follows and after the debate, then the voting comes in.

. . . .

Mr. Speaker, a point of order was raised by the gentleman from Leyte, and I wonder what his attitude is now on his point of order. I should just like to state that I believe that we have had a substantial compliance with the Rules. The Rule invoked is not one that refers to statutory or constitutional requirement, and a substantial compliance, to my mind, is sufficient. When the Chair announces the vote by saying Is there any objection? and nobody objects, then the Chair announces The bill is approved on second reading. If there was any doubt as to the vote, any motion to divide would have been proper. So, if that motion is not presented, we assume that the House approves the measure. So I believe there is substantial compliance here, and if anybody wants a division of the House he can always ask for it, and the Chair can announce how many are in favor and how many are against.3cräläwvirtualibräry

At all events, Rep. Arroyo could have asked for a reconsideration of the ruling of the Chair declaring the conference committee report approved. It is not true he was prevented from doing so. The session was suspended, obviously to settle the matter amicably. From all appearances, the misunderstanding was

patched up during the nearly hour-long suspension because, after the session was resumed, Rep. Arroyo did not say anything anymore. As the Journal of November 21, 1996 of the House shows, the session was thereafter adjourned.

On the same day, the bill was signed by the Speaker of the House and the President of the Senate, and certified by the respective secretaries of both houses of Congress as having been finally passed. The following day, the bill was signed into law by the President of the Philippines.

Finally, petitioners take exception to the following statement in the decision that The question of quorum cannot be raised repeatedly especially when the quorum is obviously present for the purpose of delaying the business of the House.4 They contend that, following this ruling, even if only 10 members of the House remain in the session hall because the others have gone home, the quorum may not be questioned.

That was not the situation in this case, however. As noted in the decision, at 11:48 a.m. on November 21, 1996, Rep. Arroyo questioned the existence of a quorum, but after a roll call, it was found that there was one. After that, he announced he would again question the quorum, apparently to delay the voting on the conference report. Hence, the statement in the decision that the question of quorum cannot repeatedly be raised for the purpose of delaying the business of the House.

In sum, there is no basis for the charge that the approval of the conference committee report on what later became R.A. No. 8240 was railroaded through the House of Representatives. Nor is there any need for petitioners to invoke the power of this Court under Art. VIII, 1 of the Constitution to determine whether, in enacting R.A. No. 8240, the House of Representatives acted with grave abuse of discretion, since that is what we have precisely done, although the result of our review may not be what petitioners want. It should be added that, even if petitioners allegations are true, the disregard of the rules in this case would not affect the validity of R.A. No. 8240, the rules allegedly violated being merely internal rules of procedure of the House rather than constitutional requirements for the enactment of laws. It is well settled that a legislative act will not be declared invalid for non-compliance with internal rules.

WHEREFORE, the motion for rehearing and reconsideration is DENIED with FINALITY.

SO ORDERED.