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Powers of the Congress

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-21897 October 22, 1963

RAMON A. GONZALES, petitioner,

vs. RUFINO G. HECHANOVA, as Executive Secretary, MACARIO PERALTA, JR., as Secretary of

Defense, PEDRO GIMENEZ, as Auditor General, CORNELIO BALMACEDA, as Secretary ofCommerce and Industry, and SALVADOR MARINO, Secretary of Justice, respondents.

Ramon A. Gonzales in his own behalf as petitioner.

Office of the Solicitor General and Estanislao Fernandez for respondents.

CONCEPCION, J.:

This is an original action for prohibition with preliminary injunction.

It is not disputed that on September 22, 1963, respondent Executive Secretary authorized the

importation of 67,000 tons of foreign rice to be purchased from private sources, and created a riceprocurement committee composed of the other respondents herein1 for the implementation ofsaid proposed importation. Thereupon, or September 25, 1963, herein petitioner, Ramon A.Gonzales — a rice planter, and president of the Iloilo Palay and Corn Planters Association, whosemembers are, likewise, engaged in the production of rice and corn — filed the petition herein,averring that, in making or attempting to make said importation of foreign rice, theaforementioned respondents "are acting without jurisdiction or in excess of jurisdiction", becauseRepublic Act No. 3452 which allegedly repeals or amends Republic Act No. 220 — explicitlyprohibits the importation of rice and corn "the Rice and Corn Administration or any other

government agency ;" that petitioner has no other plain, speedy and adequate remedy in theordinary course of law; and that a preliminary injunction is necessary for the preservation of therights of the parties during the pendency this case and to prevent the judgment therein fromcoming ineffectual. Petitioner prayed, therefore, that said petition be given due course; that a writ

of preliminary injunction be forthwith issued restraining respondent their agents or representativesfrom implementing the decision of the Executive Secretary to import the aforementioned foreignrice; and that, after due hearing, judgment be rendered making said injunction permanent.

Forthwith, respondents were required to file their answer to the petition which they did, andpetitioner's pray for a writ of preliminary injunction was set for hearing at which both partiesappeared and argued orally. Moreover, a memorandum was filed, shortly thereafter, by therespondents. Considering, later on, that the resolution said incident may require somepronouncements that would be more appropriate in a decision on the merits of the case, the samewas set for hearing on the merits thereafter. The parties, however, waived the right to argue orally,although counsel for respondents filed their memoranda.

I. Sufficiency of petitioner's interest .

Respondents maintain that the status of petitioner as a rice planter does not give him sufficientinterest to file the petition herein and secure the relief therein prayed for. We find no merit in thispretense. Apart from prohibiting the importation of rice and corn "by the Rice and CornAdministration or any other government agency". Republic Act No. 3452 declares, in Section 1thereof, that "the policy of the Government" is to "engage in the purchase of these basic foodsdirectly from those tenants, farmers, growers, producers and landowners in the Philippines whowish to dispose of their products at a price that will afford them a fair and just return for their laborand capital investment. ... ." Pursuant to this provision, petitioner, as a planter with a rice land ofsubstantial proportion,2 is entitled to a chance to sell to the Government the rice it now seeks to

buy abroad. Moreover, since the purchase of said commodity will have to be effected with publicfunds mainly raised by taxation, and as a rice producer and landowner petitioner must necessarilybe a taxpayer, it follows that he has sufficient personality and interest to seek judicial assistancewith a view to restraining what he believes to be an attempt to unlawfully disburse said funds.

II. Exhaustion of administrative remedies.

Respondents assail petitioner's right to the reliefs prayed for because he "has not exhausted alladministrative remedies available to him before coming to court". We have already held, however,that the principle requiring the previous exhaustion of administrative remedies is not applicablewhere the question in dispute is purely a legal one", 3 or where the controverted act is "patentlyillegal" or was performed without jurisdiction or in excess of jurisdiction,4 or where the respondentis a department secretary, whose acts as an alter-ego of the President bear the implied or assumed

approval of the latter,5 unless actually disapproved by him,6 or where there are circumstancesindicating the urgency of judicial intervention.7 The case at bar fails under each one of theforegoing exceptions to the general rule. Respondents' contention is, therefore, untenable.

III. Merits of petitioner's cause of action.

Respondents question the sufficiency of petitioner's cause of action upon the theory that theproposed importation in question is not governed by Republic Acts Nos. 2207 and 3452, but wasauthorized by the President as Commander-in-Chief "for military stock pile purposes" in theexercise of his alleged authority under Section 2 of Commonwealth Act No. 1; 8 that in cases ofnecessity, the President "or his subordinates may take such preventive measure for the restorationof good order and maintenance of peace"; and that, as Commander-in-Chief of our armed forces,"the President ... is duty-bound to prepare for the challenge of threats of war or emergency withoutwaiting for any special authority ".

Regardless of whether Republic Act No. 3452 repeals Republic Act No. 2207, as contended bypetitioner herein - on which our view need not be expressed — we are unanimously of the opinion -assuming that said Republic Act No. 2207 is still in force — that the two Acts are applicable to theproposed importation in question because the language of said laws is such as to include withinthe purview thereof all importations of rice and corn into the Philippines". Pursuant to Republic ActNo. 2207, "it shall be unlawful for any person, association, corporation or government agency toimport rice and corn into any point in the Philippines", although, by way of exception, it adds, that"the President of the Philippines may authorize the importation of these commodities through anygovernment agency that he may designate", is the conditions prescribed in Section 2 of said Actare present. Similarly, Republic Act No. 3452 explicitly enjoins "the Rice and Corn Administration or

any government agency " from importing rice and corn.




Respondents allege, however, that said provisions of Republic Act Nos. 2207 and 3452, prohibitingthe importation of rice and corn by any "government agency", do not apply to importations "madeby the Government itself", because the latter is not a "government agency". This theory is devoidof merit. The Department of National Defense and the Armed Forces of the Philippines, as well asrespondents herein, and each and every officer and employee of our Government, ourgovernment agencies and/or agents. The applicability of said laws even to importations by theGovernment as such, becomes more apparent when we consider that:

1. The importation permitted in Republic Act No. 2207 is to be authorized by the "President of the

Philippines" and, hence, by or on behalf of the Government of the Philippines;

2. Immediately after enjoining the Rice and Corn administration and any other government agencyfrom importing rice and corn, Section 10 of Republic Act No. 3452 adds "that the importation of

rice and corn is left to private parties upon payment of the corresponding taxes", thus indicatingthat only "private parties" may import rice under its provisions; and

3. Aside from prescribing a fine not exceeding P10,000.00 and imprisonment of not more than five(5) years for those who shall violate any provision of Republic Act No. 3452 or any rule andregulation promulgated pursuant thereto, Section 15 of said Act provides that "if the offender is a

public official and/or employees", he shall be subject to the additional penalty specified therein. Apublic official is an officer of the Government itself , as distinguished from officers or employees ofinstrumentalities of the Government. Hence, the duly authorized acts of the former are those of the

Government , unlike those of a government instrumentality which may have a personality of its own,distinct and separate from that of the Government, as such. The provisions of Republic Act No.2207 are, in this respect, even more explicit. Section 3 thereof provides a similar additional penaltyfor any "officer or employee of the Government " who "violates, abets or tolerates the violation ofany provision" of said Act. Hence, the intent to apply the same to transactions made by the very

government is patent.

Indeed, the restrictions imposed in said Republic Acts are merely additional to those prescribed inCommonwealth Act No. 138, entitled "An Act to give native products and domestic entities thepreference in the purchase of articles for the Government ." Pursuant to Section 1 thereof:

The Purchase and Equipment Division of the Government of the Philippines and other officers andemployees of the municipal and provincial governments and the Government of the Philippines and of chartered cities, boards, commissions, bureaus, departments, offices, agencies, branches,and bodies of any description, including government-owned companies, authorized to requisition,purchase, or contract or make disbursements for articles, materials, and supplies for public use,public buildings, or public works shall give preference to materials ... produced ... in the Philippines or in the United States, and to domestic entities, subject to the conditions hereinbelow specified.(Emphasis supplied.)

Under this provision, in all purchases by the Government , including those made by and/or for thearmed forces, preference shall be given to materials produced in the Phil ippines. The importationinvolved in the case at bar violates this general policy of our Government, aside from theprovisions of Republic Acts Nos. 2207 and 3452.

The attempt to justify the proposed importation by invoking reasons of national security —predicated upon the "worsening situation in Laos and Vietnam", and "the recent tension createdby the Malaysia problem" - and the alleged powers of the President as Commander-in-Chief of all

armed forces in the Philippines, under Section 2 of the National Defense Act (Commonwealth ActNo. 1), overlooks the fact that the protection of local planters of rice and corn in a manner thatwould foster and accelerate self-sufficiency in the local production of said commodities constitutesa factor that is vital to our ability to meet possible national emergency. Even if the intent inimporting goods in anticipation of such emergency were to bolster up that ability, the latter would,instead, be impaired if the importation were so made as to discourage our farmers from engagingin the production of rice.

Besides, the stockpiling of rice and corn for purpose of national security and/or national

emergency is within the purview of Republic Act No. 3452. Section 3 thereof expressly authorizesthe Rice and Corn Administration "to accumulate stocks as a national reserve in such quantities as itmay deem proper and necessary to meet any contingencies". Moreover, it ordains that "the buffer

stocks held as a national reserve ... be deposited by the administration throughout the country

under the proper dispersal plans ... and may be released only upon the occurrence of calamities oremergencies ...". (Emphasis applied.)

Again, the provisions of Section 2 of Commonwealth Act No. 1, upon which respondents rely somuch, are not self-executory. They merely outline the general objectives of said legislation. Themeans for the attainment of those objectives are subject to congressional legislation. Thus, theconditions under which the services of citizens, as indicated in said Section 2, may be availed of,are provided for in Sections 3, 4 and 51 to 88 of said Commonwealth Act No. 1. Similarly, Section 5thereof specifies the manner in which resources necessary for our national defense may be

secured by the Government of the Philippines, but only "during a national mobilization",9 whichdoes not exist. Inferentially, therefore, in the absence of a national mobilization, said resourcesshall be produced in such manner as Congress may by other laws provide from time to time.Insofar as rice and corn are concerned, Republic Acts Nos. 2207 and 3452, and CommonwealthAct No. 138 are such laws.

Respondents cite Corwin in support of their pretense, but in vain. An examination of the workcited10 shows that Corwin referred to the powers of the President during "war time"11 or when hehas placed the country or a part thereof under "martial law".12 Since neither condition obtains inthe case at bar, said work merely proves that respondents' theory, if accepted, would, in effect,place the Philippines under martial law, without a declaration of the Executive to that effect. What isworse, it would keep us perpetually under martial law.

It has been suggested that even if the proposed importation violated Republic Acts Nos. 2207 and3452, it should, nevertheless, be permitted because "it redounds to the benefit of the people".Salus populi est suprema lex , it is said.

If there were a local shortage of rice, the argument might have some value. But the respondents, asofficials of this Government, have expressly affirmed again and again that there is no rice shortage.And the importation is avowedly for stockpile of the Army — not the civilian population.

But let us follow the respondents' trend of thought. It has a more serious implication that appearson the surface. It implies that if an executive officer believes that compliance with a certain statutewill not benefit the people, he is at liberty to disregard it. That idea must be rejected - we still liveunder a rule of law.

And then, "the people" are either producers or consumers. Now — as respondents explicitly admit— Republic Acts Nos. 2207 and 3452 were approved by the Legislature for the benefit of producers




and consumers, i.e., the people, it must follow that the welfare of the people lies precisely in thecompliance with said Acts.

It is not for respondent executive officers now to set their own opinions against that of theLegislature, and adopt means or ways to set those Acts at naught. Anyway, those laws permitimportation — but under certain conditions, which have not been, and should be complied with.

IV. The contracts with Vietnam and Burma —

It is lastly contended that the Government of the Philippines has already entered into two (2)contracts for the Purchase of rice, one with the Republic of Vietnam, and another with theGovernment of Burma; that these contracts constitute valid executive agreements underinternational law; that such agreements became binding effective upon the signing thereof byrepresentatives the parties thereto; that in case of conflict between Republic Acts Nos. 2207 and3452 on the one hand, and aforementioned contracts, on the other, the latter should prevail,because, if a treaty and a statute are inconsistent with each other, the conflict must be resolved —under the American jurisprudence — in favor of the one which is latest in point of time; thatpetitioner herein assails the validity of acts of the Executive relative to foreign relations in theconduct of which the Supreme Court cannot interfere; and the aforementioned contracts havealready been consummated, the Government of the Philippines having already paid the price ofthe rice involved therein through irrevocable letters of credit in favor of the sell of the saidcommodity. We find no merit in this pretense.

The Court is not satisfied that the status of said tracts as alleged executive agreements has beensufficiently established. The parties to said contracts do not pear to have regarded the same asexecutive agreements. But, even assuming that said contracts may properly considered asexecutive agreements, the same are unlawful, as well as null and void, from a constitutionalviewpoint, said agreements being inconsistent with the provisions of Republic Acts Nos. 2207 and3452. Although the President may, under the American constitutional system enter into executiveagreements without previous legislative authority, he may not , by executive agreement, enter intoa transaction which is prohibited by statutes enacted prior thereto. Under the Constitution, themain function of the Executive is to enforce laws enacted by Congress. The former may notinterfere in the performance of the legislative powers of the latter, except in the exercise of his vetopower. He may not defeat legislative enactments that have acquired the status of law, by indirectly

repealing the same through an executive agreement providing for the performance of the very act

prohibited by said laws.

The American theory to the effect that, in the event of conflict between a treaty and a statute, theone which is latest in point of time shall prevail, is not applicable to the case at bar, for respondentsnot only admit, but, also insist that the contracts adverted to are not treaties. Said theory may be

justified upon the ground that treaties to which the United States is signatory require the adviceand consent of its Senate, and, hence, of a branch of the legislative department. No such

justification can be given as regards executive agreements not authorized by previous legislation,without completely upsetting the principle of separation of powers and the system of checks andbalances which are fundamental in our constitutional set up and that of the United States.

As regards the question whether an international agreement may be invalidated by our courts,

suffice it to say that the Constitution of the Philippines has clearly settled it in the affirmative, byproviding, in Section 2 of Article VIII thereof, that the Supreme Court may not be deprived "of its jurisdiction to review, revise, reverse, modify, or affirm on appeal, certiorari, or writ of error as the

law or the rules of court may provide, final judgments and decrees of inferior courts in — (1) Allcases in which the constitutionality or validity of any treaty , law, ordinance, or executive order orregulation is in question". In other words, our Constitution authorizes the nullification of a treaty,not only when it conflicts with the fundamental law, but, also, when it runs counter to an act of

Congress.

The alleged consummation of the aforementioned contracts with Vietnam and Burma does not render this case academic, Republic Act No. 2207 enjoins our Government not from entering into

contracts for the purchase of rice, but from importing rice, except under the conditions Prescribed

in said Act. Upon the other hand, Republic Act No. 3452 has two (2) main features, namely: (a) itrequires the Government to purchase rice and corn directly from our local planters, growers orlandowners; and (b) it prohibits importations of rice by the Government, and leaves suchimportations to private parties. The pivotal issue in this case is whether the proposed importation —which has not been consummated as yet — is legally feasible.

Lastly, a judicial declaration of illegality of the proposed importation would not compel ourGovernment to default in the performance of such obligations as it may have contracted with thesellers of the rice in question, because, aside from the fact that said obligations may be compliedwith without importing the commodity into the Philippines, the proposed importation may still belegalized by complying with the provisions of the aforementioned laws.

V. The writ of preliminary injunction.

The members of the Court have divergent opinions on the question whether or not respondentsherein should be enjoined from implementing the aforementioned proposed importation.However, the majority favors the negative view, for which reason the injunction prayed for cannotbe granted.

WHEREFORE, judgment is hereby rendered declaring that respondent Executive Secretary hadand has no power to authorize the importation in question; that he exceeded his jurisdiction ingranting said authority; said importation is not sanctioned by law and is contrary to its provisions;and that, for lack of the requisite majority, the injunction prayed for must be and is, accordinglydenied. It is so ordered.

Bengzon, CJ, Padilla, Labrador, Reyes, J.B.L., Dizon and Makalintal, JJ., concur.

Paredes and Regala, JJ., concur in the result.

Separate Opinions

BAUTISTA ANGELO, J., concurring:

Under Republic Act No. 2207, which took effect on May 15, 1959, it is unlawful for any person,association, corporation or government agency to import rice and corn into any point in thePhilippines. The exception is if there is an existing or imminent shortage of such commodity ofmuch gravity as to constitute national emergency in which case an importation may be authorizedby the President when so certified by the National Economic Council.




However, on June 14, 1962, Republic Act 3452 was enacted providing that the importation of riceand corn can only be made by private parties thereby prohibiting from doing so the Rice and CornAdministration or any other government agency. Republic Act 3452 does not expressly repealRepublic Act 2207, but only repeals or modified those parts thereof that are inconsistent with itsprovisions. The question that now arises is: Has the enactment of Republic Act 3452 the effect ofprohibiting completely the government from importing rice and corn into the Philippines?

My answer is in the negative. Since this Act does not in any manner provide for the importation ofrice and corn in case of national emergency, the provision of the former law on that matter should

stand, for that is not inconsistent with any provision embodied in Republic Act 3452. The Rice andCorn Administration, or any other government agency, may therefore still import rice and corn intothe Philippines as provided in Republic Act 2207 if there is a declared national emergency.

The next question that arises is: Can the government authorize the importation of rice and cornregardless of Republic Act 2207 if that is authorized by the President as Commander-in-Chief ofthe Philippine Army as a military precautionary measure for military stockpile?

Respondents answer this question in the affirmative. They advance the argument that it is thePresident's duty to see to it that the Armed Forces of the Philippines are geared to the defenses ofthe country as well as to the fulfillment of our international commitments in Southeast Asia in theevent the peace and security of the area are in danger. The stockpiling of rice, they aver, is anessential requirement of defense preparation in view of the limited local supply and the probable

disruption of trade and commerce with outside countries in the event of armed hostilities, and thismilitary precautionary measure is necessary because of the unsettled conditions in the SoutheastAsia bordering on actual threats of armed conflicts as evaluated by the Intelligence Service of theMilitary Department of our Government. This advocacy, they contend, finds support in the nationaldefense policy embodied in Section 2 of our National Defense Act (Commonwealth Act No. 1),which provides:

(a) The preservation of the State is the obligation of every citizen. The security of the Philippinesand the freedom, independence and perpetual neutrality of the Philippine Republic shall beguaranteed by the employment of all citizens, without distinction of sex or age, and all resources.

(b) The employment of the nation's citizens and resources for national defense shall be effected bya national mobilization.

(c) The national mobilization shall include the execution of all measures necessary to pass from apeace to a war footing.

(d) The civil authority shall always be supreme. The President of the Philippines as the Commander-in-Chief of all military forces, shall be responsible that mobilization measures are prepared at alltimes.(Emphasis supplied)

Indeed, I find in that declaration of policy that the security of the Philippines and its freedomconstitutes the core of the preservation of our State which is the basic duty of every citizen and thatto secure which it is enjoined that the President employ all the resources at his command. But overand above all that power and duty, fundamental as they may seem, there is the injunction that thecivil authority shall always be supreme. This injunction can only mean that while all precautionsshould be taken to insure the security and preservation of the State and to this effect theemployment of all resources may be resorted to, the action must always be taken within the

framework of the civil authority. Military authority should be harmonized and coordinated with civilauthority, the only exception being when the law clearly ordains otherwise. Neither Republic Act2207, nor Republic Act 3452, contains any exception in favor of military action concerningimportation of rice and corn. An exception must be strictly construed.

A distinction is made between the government and government agency in an attempt to take theformer out of the operation of Republic Act 2207. I disagree. The Government of the Republic ofthe Philippines under the Revised Administrative Code refers to that entity through which thefunctions of government are exercised, including the various arms through which political

authority is made effective whether they be provincial, municipal or other form of localgovernment, whereas a government instrumentality refers to corporations owned or controlled bythe government to promote certain aspects of the economic life of our people. A governmentagency, therefore, must necessarily refer to the government itself of the Republic, as distinguishedfrom any government instrumentality which has a personality distinct and separate from it (Section2).

The important point to determine, however, is whether we should enjoin respondents fromcarrying out the importation of the rice which according to the record has been authorized to beimported on government to government level, it appearing that the arrangement to this effect hasalready been concluded, the only thing lacking being its implementation. This is evident from themanifestation submitted by the Solicitor General wherein it appears that the contract for thepurchase of 47,000 tons of rice from had been sign on October 5, 1963, and for the purchase of

20,000 tons from Burma on October 8, 1963, by the authorized representatives of both ourgovernment and the governments of Vietnam and Burma, respectively. If it is true that, ourgovernment has already made a formal commitment with the selling countries there arises thequestion as to whether the act can still be impeded at this stage of the negotiations. Though onthis score there is a divergence of opinion, it is gratifying to note that the majority has expresseditself against it. This is a plausible attitude for, had the writ been issued, our government wouldhave been placed in a predicament where, as a necessary consequence, it would have torepudiate a duly formalized agreement to its great embarrassment and loss of face. This wasavoided by the judicial statesmanship evinced by the Court.

BARRERA, J., concurring:

Because of possible complications that might be aggravated by misrepresentation of the truenature and scope of the case before this Court, it is well to restate as clearly as possible, the realand only issue presented by the respondents representing the government.

From the answer filed by the Solicitor General, in behalf of respondents, we quote:

The importation of the rice in question by the Armed Forces of the Philippines is for military

stockpiling authorized by the President pursuant to his inherent power as commander-in-chief andas a military precautionary measure in view the worsening situation in Laos and Vietnam and, it mayadded, the recent, tension created by the Malaysia problem (Answer, p. 2; emphasis supplied.)

During the oral argument, Senator Fernandez, appealing in behalf of the respondents, likewisereiterated the imported rice was for military stockpiling, and which he admitted that some of itwent to the Rice and Corn Administration, he emphasized again and again that rice was not




intended for the RCA for distribution to people, as there was no shortage of rice for that purposebut it was only exchanged for palay because this could better preserved.

From the memorandum filed thereafter by the Solicits General, again the claim was made:

We respectfully reiterate the arguments in our answer dated October 4, 1963 that the importationof rice sought be enjoined in this petition is in the exercise of the authority vested in the Presidentof the Philippines as Commander-in-Chief of the Armed Forces, as a measure of military

preparedness demanded by a real and actual threat of emergency in the South East Asian

countries. (p. 1, Emphasis supplied.)

xxx xxx xxx

It (the stressing of the unsettled conditions in Southeast Asia) is merely our intention to show thenecessity for the stockpiling of rice for army purposes, which is the very reason for the importation .

xxx xxx xxx

As it is, the importation in question is being made by the Republic of the Philippines for its own use,

and the rice is not supposed to be poured into the open market as to affect the price to be paid by

the public. (p. 4, Emphasis supplied.)

xxx

xxx

xxx

What we do contend is that the law, for want of express and clear provision to that effect, does not

include in its prohibition importation by the Government of rice for its own use and not for the

consuming public, regardless of whether there is or there is no emergency . (p. 5, Emphasissupplied.)

From the above, it not only appears but is evident that the respondents were not concerned withthe present rice situation confronting the consuming public, but were solely and exclusively afterthe stockpiling of rice for the future use of the army . The issue, therefore, in which the Governmentwas interested is not whether rice is imported to give the people a bigger or greater supply tomaintain the price at P.80 per ganta — for, to quote again their contention: "the rice is notsupposed to be poured into the open market to affect the price to be paid by the public, as it is

not for the consuming public, regardless of whether there is or there is no emergency", — butwhether rice can legally be imported by the Armed Forces of the Philippines avowedly for itsfuture use, notwithstanding the prohibitory provisions of Republic Acts Nos. 2207 and 3452. Themajority opinion ably sets forth the reasons why this Court can not accept the contention of therespondents that this importation is beyond and outside the operation of these statutes. I can onlyemphasize that I see in the theory advanced by the Solicitor General a dangerous trend — thatbecause the policies enunciated in the cited laws are for the protection of the producers and theconsumers, the army is removed from their application. To adopt this theory is to proclaim theexistence in the Philippines of three economic groups or classes: the producers, the consumers,and the Armed Forces of the Philippines. What is more portentous is the effect to equate the armywith the Government itself.

Then again, the importation of this rice for military stockpiling is sought to be justified by the

alleged threat of emergency in the Southeast Asian countries. But the existence of this supposedthreat was unilaterally determined by the Department of National Defense alone. We recall that

there exists a body called the National Security Council in which are represented the Executive aswell as the Legislative department. In it sit not only members of the party in power but of theopposition as well. To our knowledge, this is the highest consultative body which deliberatesprecisely in times of emergency threatening to affect the security of the state. The democraticcomposition of this council is to guarantee that its deliberations would be non-partisan and onlythe best interests of the nation will be considered. Being a deliberative body, it insures againstprecipitate action. This is as it should be. Otherwise, in these days of ever present cold war, anychange or development in the political climate in any region of the world is apt to be taken as anexcuse for the military to conjure up a crisis or emergency and thereupon attempt to override our

laws and legal processes, and imperceptibly institute some kind of martial law on the pretext ofprecautionary mobilization measure avowedly in the interest of the security of the state. One neednot, be too imaginative to perceive a hint of this in the present case.

The Supreme Court, in arriving at the conclusion unanimously reached, is fully aware of the difficultand delicate task it had to discharge. Its position is liable to be exploited by some for their ownpurposes by claiming and making it appear that the Court is unmindful of the plight of our peopleduring these days of hardship; that it preferred to give substance to the "niceties of the law thanheed the needs of the people. Our answer is that the Court was left no alternative. It had, incompliance with its duty, to decide the case upon the facts presented to it. The respondents,representing the administration, steadfastly maintained and insisted that there is no rice shortage;that the imported rice is not for the consuming public and is not supposed to be placed in theopen market to affect the price to be paid by the public; that it is solely for stockpiling of the army

for future use as a measure of mobilization in the face of what the Department of National Defenseunilaterally deemed a threatened armed conflict in Southeast Asia. Confronted with these factsupon, which the Government has built and rested its case, we have searched in vain for legalauthority or cogent reasons to justify this importation made admittedly contrary to the provisionsof Republic Acts Nos. 2207 and 3452. I say admittedly, because respondents never as much aspretended that the importation fulfills the conditions specified in these laws, but limitedthemselves to the contention, which is their sole defense that this importation does not fall withinthe scope of said laws. In our view, however, the laws are clear. The laws are comprehensive andtheir application does not admit of any exception. The laws are adequate. Compliance therewith isnot difficult, much less impossible. The avowed emergency, if at all, is not urgently immediate.

In this connection, it is pertinent to bear in mind that the Supreme Court has a duty to perform

under the Constitution. It has to decide, when called upon to do so in an appropriate proceeding,all cases in which the constitutionality or validity of any treaty, law, ordinance, executive order orregulation is in question. We can not elude this duty. To do so would be culpable dereliction onour part. While we sympathize with the public that might be adversely affected as a result of thisdecision yet our sympathy does not authorize us to sanction an act contrary to applicable laws. Thefault lies with those who stubbornly contended and represented before this Court that there is norice shortage, that the imported rice is not intended for the consuming public, but for stockpilingof the army. And, if as now claimed before the public, contrary to the Government's stand in thiscase, that there is need for imported rice to stave off hunger, our legislature has provided for sucha situation. As already stated, the laws are adequate. The importation of rice under the conditions

set forth in the laws may be authorized not only where there is an existing shortage, but also whenthe shortage is imminent . In other words, lawful remedy to solve the situation is available, if onlythose who have the duty to execute the laws perform their duty. If there is really need for the

importation of rice, who adopt some dubious means which necessitates resort to doubtful exerciseof the power of the President as Commander-in-Chief of the Army? Why not comply with the




mandate of the law? Ours is supposed to be a regime under the rule of law. Adoption as agovernment policy of the theory of the end justifies the means brushing aside constitutional andlegal restraints, must be rejected, lest we end up with the end of freedom.

For these reasons, I concur in the decision of the Court.

Separate Opinions

Footnotes 1 The Secretary of National Defense, the Auditor General, the Secretary of Commerce and Industry, and the

Secretary Justice.2 275 hectares.3 Tapales vs. The President and the Board of Regents of the U.P., L-17523, March 30, 1963.4 Mangubat vs. Osmeña, L-12837, April 30, 1959; Baguio vs. Hon. Jose Rodriguez, L-11078, May 27, 1959;

Pascual Provincial Board, L-11959, October 31, 1959.5 Marinduque Iron Mines Agents, Inc. vs. Secretary of Public Works, L-15982, May 31, 1963.6 In the present case, respondents allege in their answer that "the importation ... in question ... is authorized by

the President .7 Alzate vs. Aldaba, L-14407, February 29, 1960; Demaisip vs. Court of Appeals, L-13000, September 25, 1959.8 Which provides that the national defense policy of the Philippines shall be follows:

(a) The preservation of the state is the o bligation of every citizen. The security of the Ph ilippines and the freedom,

independence and perpetual neutrality of the Philippine Republic shall be guaranteed by the employment of allcitizens, without distinction of sex or age, and all resources.

(b) The employment of the nation's citizens and resources for national defense shall be effected by a national

mobilization.

(c) The national mobilization shall include the execution of all measures necessary to pass from a peace to a war

footing.

(d) The civil authority shall always be supreme. The President of the Philippines as the Commander-in-Chief of all

military forces, shall be responsible that mobilization measures are prepared at all times.

xxx xxx xxx9 In line with the provisions of paragraphs b), c), e), and f) of section 2 of said Act.10 The Constitution and What It Means Today, pp. 95-96.11 The Power of the President as Commander-in-Chief is primarily that of military command in wartime, and as

such includes, as against the persons and property of enemies of the United States encountered within the

theater of military operations, all the powers allowed a military commander in such cases by the Law of Nations.

President Lincoln's famous Proclamation of Emancipation rested upon this ground. It was effective within thetheater of military operations while the war lasted, but no longer. (p. 93, Emphasis supplied.)12 From an early date the Commander-in-Chief power came to be merged with the President's duty to take care

that the laws be faithfully executed. So, while in using military force against unlawful combinations too strong to

be dealt with through the ordinary processes of law the President acts by authorization of statute, his powers arestill those of Commander-in-Chief. ...

Under "preventive martial law", so-called because it authorizes "preventive" arrests and detentions, the military

acts as an adjunct of the civil authorities but not necessarily subject to their orders. It may be established

whenever the executive organ, State or national, deems it to be necessary for the restoration of good order. The

concept, being of judicial origin, is of course for judicial application, and ultimately for application by the

Supreme Court , in enforcement of the due process clauses. (See, also, Section III of this Article, and Article IV,

Section IV.) (Pp. 95-96, Emphasis supplied.)





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 ofFinance; 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 BUREAUOF INTERNAL REVENUE AND BUREAU OF CUSTOMS, respondents.

G.R. No. 115544 October 30, 1995

PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; KAMAHALAN PUBLISHINGCORPORATION; 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 capaci ty as Executive Secretary; and HON. ROBERTO B. DEOCAMPO, 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., andPHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO TAÑADA, petitioners,vs.

THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE COMMISSIONER OFINTERNAL 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 capac ity as Executive Secretary, and HON. ROBERTO B. DEOCAMPO, in his capacity as Secretary of Finance, respondents.

G.R. No. 115931 October 30, 1995

PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and ASSOCIATION OF PHILIPPINEBOOK SELLERS, petitioners,vs.

HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON. LIWAYWAY V. CHATO, as theCommissioner of Internal Revenue; and HON. GUILLERMO PARAYNO, JR., in his capacity as theCommissioner 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 thesecases for the declaration of unconstitutionality of R.A. No. 7716, otherwise known as the ExpandedValue-Added Tax Law. The motions, of which there are 10 in all, have been filed by the severalpetitioners 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 thePhilippine 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 BuildersAssociation (CREBA)) reiterate previous claims made by them that R.A. No. 7716 did not "originateexclusively" 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 passedthree readings and that afterward it was sent to the Senate where after first reading it was referredto the Senate Ways and Means Committee, they complain that the Senate did not pass it onsecond 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 itwith 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 anamendment to a House revenue bill by enacting its own version of a revenue bill. On at least twooccasions during the Eighth Congress, the Senate passed its own version of revenue bills, which, inconsolidation 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 EXTENDINGFROM 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. ThisAct 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 TOANY FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC GAMES) which was approved by thePresident on May 22, 1992. This Act is a consolidation of H. No. 22232, which was approved by theHouse of Representatives on August 2, 1989, and S. No. 807, which was approved by the Senateon October 21, 1991.

On the other hand, the Ninth Congress passed revenue laws which were also the result of theconsolidation of House and Senate bills. These are the following, with indications of the dates onwhich 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 THEPERTINENT 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 THEPAYMENT 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 THENATIONAL 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 PLACEFOR PAYMENT OF INTERNAL REVENUE TAXES BY LARGE TAXPAYERS, AMENDING FOR THISPURPOSE 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 THERATE OF THREE PERCENT (3%) ON GROSS PAYMENT FOR THE PURCHASE OF GOODS AND SIXPERCENT (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 DECLAREDIVIDENDS UNDER CERTAIN CONDITIONS TO THE NATIONAL GOVERNMENT, AND FOR OTHER

PURPOSES (November 9, 1993)

House Bill No. 11024, November 3, 1993


6. R.A. NO. 7660

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

House Bill No. 7789, May 31, 1993





7. R.A. NO. 7717

AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES OF STOCK LISTEDAND TRADED THROUGH THE LOCAL STOCK EXCHANGE OR THROUGH INITIAL PUBLICOFFERING, AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE, ASAMENDED, 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 ofits power to propose amendments to bills required to originate in the House, passed its ownversion 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 thirdreadings.

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 wouldmake if, as the Senate actually did in this case, a separate bill like S. No. 1630 is instead enacted asa substitute measure, "taking into Consideration . . . H.B. 11197."

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

RULE XXIX

AMENDMENTS

xxx xxx xxx

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

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

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

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

xxx xxx xxx

§70-A. A bill or resolution shall not be amended by substituting it with another which covers asubject 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 Senatepossesses less power than the U.S. Senate because of textual differences between constitutionalprovisions 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 maypropose 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 localapplication, and private bills shall originate exclusively in the House of Representatives, but theSenate may propose or concur with amendments.

The addition of the word "exclusively" in the Philippine Constitution and the decision to drop thephrase "as on other Bills" in the American version, according to petitioners, shows the intention ofthe framers of our Constitution to restrict the Senate's power to propose amendments to revenuebills. 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 tobe like other bills but must be treated as a special kind."

The history of this provision does not support this contention. The supposed indicia ofconstitutional intent are nothing but the relics of an unsuccessful attempt to limit the power of theSenate. It will be recalled that the 1935 Constitution originally provided for a unicameral NationalAssembly. When it was decided in 1939 to change to a bicameral legislature, it became necessaryto provide for the procedure for lawmaking by the Senate and the House of Representatives. Thework 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 lawmakingpowers, sought to curtail the powers of the proposed Senate. Accordingly they proposed thefollowing provision:

All bills appropriating public funds, revenue or tariff bills, bills of local application, and private billsshall originate exclusively in the Assembly, but the Senate may propose or concur withamendments. In case of disapproval by the Senate of any such bills, the Assembly may repass thesame by a two-thirds vote of all its members, and thereupon, the bill so repassed shall be deemedenacted and may be submitted to the President for corresponding action. In the event that theSenate should fail to finally act on any such bills, the Assembly may, after thirty days from theopening of the next regular session of the same legislative term, reapprove the same with a vote oftwo-thirds of all the members of the Assembly. And upon such reapproval, the bill shall bedeemed 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 theproposal. It deleted everything after the first sentence. As rewritten, the proposal was approved bythe 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 submittedto 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 presentConstitution was derived. It explains why the word "exclusively" was added to the American textfrom which the framers of the Philippine Constitution borrowed and why the phrase "as on otherBills" was not copied. Considering the defeat of the proposal, the power of the Senate to proposeamendments 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, theSenate 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 thesame 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 isclear 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 tocome 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 impositionof an inheritance tax . This was changed by the Senate into a corporation tax. The amendingauthority of the Senate was declared by the United States Supreme Court to be sufficiently broadto 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 becauseit 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 regardto 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 billintroduced in the U.S. House of Representatives was changed by the Senate to make a proposedinheritance tax a corporation tax. It is also accepted practice for the Senate to introduce what isknown as an amendment by substitution, which may entirely replace the bill initiated in the Houseof Representatives.

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

In sum, while Art. VI, §24 provides that all appropriation, revenue or tariff bills, bills authorizingincrease of the public debt, bills of local application, and private bills must "originate exclusively inthe 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 asubstitute 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 sectionsor altering its language; (3) to make and endorse an entirely new bill as a substitute, in which caseit 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 Houseby prescribing that the number of the House bill and its other parts up to the enacting clause mustbe preserved although the text of the Senate amendment may be incorporated in place of theoriginal body of the bill is to insist on a mere technicality. At any rate there is no rule prescribingthis 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 thatS. No. 1630 is an independent and distinct bill. Hence their repeated references to its certificationthat 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 thereference to S. No. 1129 and the reference to H. No. 11197. From this premise, they conclude thatR.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 ofCongress."

In point of fact, in several instances the provisions of S. No. 1630, clearly appear to be mereamendments of the corresponding provisions of H. No. 11197. The very tabular comparison of theprovisions of H. No. 11197 and S. No. 1630 attached as Supplement A to the basic petition ofpetitioner Tolentino, while showing differences between the two bills, at the same time indicatesthat 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 wasa mere amendment of the House bill, H. No. 11197 in its original form did not have to pass theSenate on second and three readings. It was enough that after it was passed on first reading it wasreferred to the Senate Committee on Ways and Means. Neither was it required that S. No. 1630 bepassed by the House of Representatives before the two bills could be referred to the ConferenceCommittee.

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 disclosureof bank deposits), were referred to a conference committee, the question was raised whether thetwo bills could be the subject of such conference, considering that the bill from one house had notbeen 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 notrefer to investments in government securities, whereas the bill in the House, which was introducedby the Speaker, covers two subject matters: not only investigation of deposits in banks but alsoinvestigation 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 thiswhere a conference should be had. If the House bill had been approved by the Senate, therewould 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 nowconsidering 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 thatbecause 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 versionof the same revenue bill which at the moment was being considered. Otherwise, to followpetitioners' theory, it would be necessary for the President to certify as many bills as are presentedin 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 underconsideration. Since on March 22, 1994 the Senate was considering S. No. 1630, it was that billwhich 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 bythe 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 maindecision that the phrase "except when the President certifies to the necessity of its immediateenactment, 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 therequirement that before a bill can become a law it must have passed "three readings on separatedays." 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 inits final form furnished its Members at least three calendar days prior to its passage, except whenthe 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 shallbe 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 printedcopies thereof in its final form have been distributed to the Members three days before itspassage, except when the Prime Minister certifies to the necessity of its immediate enactment tomeet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shallbe 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 onseparate days, and printed copies thereof in its final form have been distributed to its Membersthree days before its passage, except when the President certifies to the necessity of its immediateenactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendmentthereto 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 onseparate days are required and a bill has to be printed in final form before it can be passed, theneed for a law may be rendered academic by the occurrence of the very emergency or publiccalamity which it is meant to address.

Petitioners further contend that a "growing budget deficit" is not an emergency, especially in acountry 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 thesituation calling for its enactment any less an emergency.

Apparently, the members of the Senate (including some of the petitioners in these cases) believedthat there was an urgent need for consideration of S. No. 1630, because they responded to the callof 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 theConstitution 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 whereit was discussed for six days. Only its distribution in advance in its final printed form was actuallydispensed 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 onsecond reading and its approval on March 24, 1994 elapsed before it was finally voted on by theSenate on third reading.

The purpose for which three readings on separate days is required is said to be two-fold: (1) toinform 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 inthe measure to prepare their positions with reference to it. (1 J. G. SUTHERLAND, STATUTES ANDSTATUTORY CONSTRUCTION §10.04, p. 282 (1972)). These purposes were substantially achievedin the case of R.A. No. 7716.

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

As pointed out in our main decision, even in the United States it was customary to hold suchsessions 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 PhilippineCongress 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 leaststaff 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 casewho on the last two days of the conference were excluded. There is no showing that the confereesthemselves did not take notes of their proceedings so as to give petitioner Kilosbayan basis forclaiming that even in secret diplomatic negotiations involving state interests, conferees keep notesof their meetings. Above all, the public's right to know was fully served because the ConferenceCommittee in this case submitted a report showing the changes made on the differing versions ofthe House and the Senate.

Petitioners cite the rules of both houses which provide that conference committee reports mustcontain "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 ofboth houses could thus ascertain what changes had been made in the original bills without theneed of a statement detailing the changes.

The same question now presented was raised when the bill which became R.A. No. 1400 (LandReform Act of 1955) was reported by the Conference Committee. Congressman Bengzon raised apoint 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, ofthe Rules of this House which provides specifically that the conference report must beaccompanied 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 oforder raised by the gentleman from Pangasinan.

There is no question about the provision of the Rule cited by the gentleman from Pangasinan, butthis 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 billwhat 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 ofthe Rules, and the reason for the requirement in the provision cited by the gentleman fromPangasinan is when there are only certain words or phrases inserted in or deleted from theprovisions of the bill included in the conference report, and we cannot understand what thosewords 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 theRule 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 wasappealed, it was upheld by viva voce and when a division of the House was called, it was sustainedby 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 aslong 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 Senateand 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 notentertain 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, noamendment 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 enrolledbill and the legislative journals certify that the measure was duly enacted i.e., in accordance withArticle VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from acoordinate 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 a1979 study:

Conference committees may be of two types: free or instructed. These committees may be giveninstructions by their parent bodies or they may be left without instructions. Normally theconference committees are without instructions, and this is why they are often critically referred toas "the little legislatures." Once bills have been sent to them, the conferees have almost unlimitedauthority to change the clauses of the bills and in fact sometimes introduce new measures thatwere 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: "Ikilled a bill on export incentives for my interest group [copra] in the conference committee but Icould not have done so anywhere else." The conference committee submits a report to bothhouses, and usually it is accepted. If the report is not accepted, then the committee is dischargedand new members are appointed.

(R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND LEGISLATURES: ACOMPARATIVE 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 onlyto say that conference committees here are no different from their counterparts in the UnitedStates 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 ofCongress 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 onesubject which shall be expressed in the title thereof." PAL contends that the amendment of itsfranchise 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 allother taxes, duties, royalties, registration, license and other fees and charges of any kind, nature, ordescription, imposed, levied, established, assessed or collected by any municipal, city, provincialor 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 NationalInternal Revenue Code, which provides as follows:




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

xxx xxx xxx

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

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

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

xxx xxx xxx

(q) Transactions which are exempt under special laws, except those granted under PresidentialDecree 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 ANDENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALINGTHE 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 THESEPURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONALINTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES," Congress therebyclearly expresses its intention to amend any provision of the NIRC which stands in the way ofaccomplishing the purpose of the law.

PAL asserts that the amendment of its franchise must be reflected in the title of the law by specificreference to P.D. No. 1590. It is unnecessary to do this in order to comply with the constitutionalrequirement, since it is already stated in the title that the law seeks to amend the pertinentprovisions 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. Thetitles of H. No. 11197 and S. No. 1630 in fact specifically referred to §103 of the NIRC as among theprovisions sought to be amended. We are satisfied that sufficient notice had been given of thependency 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 wasrejected. R.A. No. 7354 is entitled AN ACT CREATING THE PHILIPPINE POSTAL CORPORATION,DEFINING ITS POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR REGULATION OFTHE INDUSTRY AND FOR OTHER PURPOSES CONNECTED THEREWITH. It contained a provisionrepealing all franking privileges. It was contended that the withdrawal of franking privileges wasnot expressed in the title of the law. In holding that there was sufficient description of the subjectof 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 thestatute to be expressed in its title would not only be unreasonable but would actually renderlegislation impossible. [Cooley, Constitutional Limitations, 8th Ed., p. 297] As has been correctlyexplained:

The details of a legislative act need not be specifically stated in its title, but matter germane to thesubject as expressed in the title, and adopted to the accomplishment of the object in view, mayproperly be included in the act. Thus, it is proper to create in the same act the machinery by whichthe 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 inthe 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, thepress is not exempt from the taxing power of the State and that what the constitutional guaranteeof free press prohibits are laws which single out the press or target a group belonging to the pressfor special treatment or which in any way discriminate against the press on the basis of the contentof 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 isaverred, "even nondiscriminatory taxation of constitutionally guaranteed freedom isunconstitutional."

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

Indeed, in withdrawing the exemption, the law merely subjects the press to the same tax burden towhich other businesses have long ago been subject. It is thus different from the tax involved in thecases 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 appliedonly to 13 out of 124 publishers in Louisiana. These large papers were critical of Senator HueyLong who controlled the state legislature which enacted the license tax. The censorial motivationfor 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 couldhave 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 fromboth taxes. It was, however, later made to pay a special use tax on the cost of paper and ink whichmade these items "the only items subject to the use tax that were component of goods to be soldat retail." The U.S. Supreme Court held that the differential treatment of the press "suggests thatthe goal of regulation is not related to suppression of expression, and such goal is presumptivelyunconstitutional." It would therefore appear that even a law that favors the press is constitutionallysuspect. (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 thosepreviously granted to PAL, petroleum concessionaires, enterprises registered with the ExportProcessing Zone Authority, and many more are likewise totally withdrawn, in addition toexemptions 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 thattransactions, which are profit oriented, continue to enjoy exemption under R.A. No. 7716. Anenumeration 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 aregranted, in some cases, to encourage agricultural production and, in other cases, for the personalbenefit 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 forestproducts, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawnlivestock 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 manufactureof feeds).

(b) Goods used for personal consumption or use (household and personal effects of citizensreturning 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 ofpetroleum products subject to excise tax and services subject to percentage tax.

(d) Educational services, medical, dental, hospital and veterinary services, and services renderedunder 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 pressbecause "even nondiscriminatory taxation on constitutionally guaranteed freedom isunconstitutional." 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 theFirst Amendment is not so restricted. A license tax certainly does not acquire constitutional validitybecause it classifies the privileges protected by the First Amendment along with the wares andmerchandise 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 preferredposition.

The Court was speaking in that case of a license tax , which, unlike an ordinary tax, is mainly forregulation. Its imposition on the press is unconstitutional because it lays a prior restraint on theexercise of its right. Hence, although its application to others, such those selling goods, is valid, itsapplication to the press or to religious groups, such as the Jehovah's Witnesses, in connection withthe latter's sale of religious books and pamphlets, is unconstitutional. As the U.S. Supreme Courtput it, "it is one thing to impose a tax on income or property of a preacher. It is quite another thingto 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 thesale of general merchandise. It was held that the tax could not be imposed on the sale of bibles bythe 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 orproperties or the sale or exchange of services and the lease of properties purely for revenuepurposes. To subject the press to its payment is not to burden the exercise of its right any morethan to make the press pay income tax or subject it to general regulation is not to violate itsfreedom under the Constitution.

Additionally, the Philippine Bible Society, Inc. claims that although it sells bibles, the proceedsderived 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, whilereducing the volume of sale. Granting that to be the case, the resulting burden on the exercise ofreligious freedom is so incidental as to make it difficult to differentiate it from any other economicimposition that might make the right to disseminate religious doctrines costly. Otherwise, to followthe petitioner's argument, to increase the tax on the sale of vestments would be to lay animpermissible 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 registrationand enforcement of provisions such as those relating to accounting in §108 of the NIRC. That thePBS distributes free bibles and therefore is not liable to pay the VAT does not excuse it from thepayment of this fee because it also sells some copies. At any rate whether the PBS is liable for theVAT 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) classifiestransactions as covered or exempt without reasonable basis and (3) violates the rule that taxesshould be uniform and equitable and that Congress shall "evolve a progressive system oftaxation."

With respect to the first contention, it is claimed that the application of the tax to existing contractsof the sale of real property by installment or on deferred payment basis would result in substantialincreases 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 thecontract.




The short answer to this is the one given by this Court in an early case: "Authorities from numeroussources are cited by the plaintiffs, but none of them show that a lawful tax on a new subject, or anincreased tax on an old one, interferes with a contract or impairs its obligation, within the meaningof the Constitution. Even though such taxation may affect particular contracts, as it may increasethe debt of one person and lessen the security of another, or may impose additional burdens uponone class and release the burdens of another, still the tax must be paid unless prohibited by theConstitution, nor can it be said that it impairs the obligation of any existing contract in its true legalsense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)). Indeed notonly 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, 22SCRA 135, 147 (1968)) Contracts must be understood as having been made in reference to thepossible exercise of the rightful authority of the government and no obligation of contract canextend 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 ofagricultural products, food items, petroleum, and medical and veterinary services, it grants noexemption on the sale of real property which is equally essential. The sale of real property forsocialized and low-cost housing is exempted from the tax, but CREBA claims that real estatetransactions of "the less poor," i.e., the middle class, who are equally homeless, should likewise beexempted.

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 ofR.A. No. 7716. Petitioner is in error in claiming that R.A. No. 7716 granted exemption to thesetransactions, while subjecting those of petitioner to the payment of the VAT. Moreover, there is adifference between the "homeless poor" and the "homeless less poor" in the example given bypetitioner, because the second group or middle class can afford to rent houses in the meantimethat 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 hasbeen repeatedly held that 'inequalities which result from a singling out of one particular class fortaxation, or exemption infringe no constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153(1955). Accord, City of Baguio v. De Leon, 134 Phil. 912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654,663 (1984); Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 371(1988)).

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

Equality and uniformity of taxation means that all taxable articles or kinds of property of the sameclass be taxed at the same rate. The taxing power has the authority to make reasonable and naturalclassifications for purposes of taxation. To satisfy this requirement it is enough that the statute orordinance applies equally to all persons, forms and corporations placed in similar situation. (City ofBaguio 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 questionedin Kapatiran ng Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v . Tan, 163 SCRA 383 (1988) ongrounds 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 thechallenge 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 cornersari-sari stores are consequently exempt from its application. Likewise exempt from the tax aresales of farm and marine products, so that the costs of basic food and other necessities, spared asthey are from the incidence of the VAT, are expected to be relatively lower and within the reach ofthe general public.

(At 382-383)

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

The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, areregressive. 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 bepreferred [and] as much as possible, indirect taxes should be minimized." (E. FERNANDO, THECONSTITUTION OF THE PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to Congressis not to prescribe, but to evolve, a progressive tax system. Otherwise, sales taxes, which perhapsare 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 arealso regressive.

Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if notimpossible, 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 zerorating of certain transactions (R.A. No. 7716, §3, amending §102 (b) of the NIRC), while grantingexemptions 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 exemptedfrom the VAT:

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




(b) Goods used for personal consumption or use (household and personal effects of citizensreturning to the Philippines) and or professional use, like professional instruments andimplements, 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 ofpetroleum products subject to excise tax and services subject to percentage tax.

(d) Educational services, medical, dental, hospital and veterinary services, and services renderedunder 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 goodsand services which are used or availed of mainly by higher income groups. These include realproperties held primarily for sale to customers or for lease in the ordinary course of trade orbusiness, the right or privilege to use patent, copyright, and other similar property or right, theright or privilege to use industrial, commercial or scientific equipment, motion picture films, tapesand discs, radio, television, satellite transmission and cable television time, hotels, restaurants andsimilar places, securities, lending investments, taxicabs, utility cars for rent, tourist buses, and othercommon carriers, services of franchise grantees of telephone and telegraph.

The problem with CREBA's petition is that it presents broad claims of constitutional violations bytendering issues not at retail but at wholesale and in the abstract. There is no fully developedrecord which can impart to adjudication the impact of actuality. There is no factual foundation toshow in the concrete the application of the law to actual contracts and exemplify its effect onproperty 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, ashere, 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 notmade out a case. This is merely to adhere to the authoritative doctrine that where the due processand equal protection clauses are invoked, considering that they are not fixed rules but ratherbroad standards, there is a need for proof of such persuasive character as would lead to such aconclusion. 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 actualcase 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 notreally settle legal issues.

We are told that it is our duty under Art. VIII, §1, ¶2 to decide whenever a claim is made that "therehas 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 orcontroversy is before us. Under Art . VIII, §5 our jurisdiction is defined in terms of "cases" and allthat 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 thegovernment.

Put in another way, what is granted in Art. VIII, §1, ¶2 is "judicial power," which is "the power of acourt to hear and decide cases pending between parties who have the right to sue and be sued inthe courts of law and equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as distinguished fromlegislative and executive power. This power cannot be directly appropriated until it is apportionedamong several courts either by the Constitution, as in the case of Art. VIII, §5, or by statute, as in thecase 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, thisCourt cannot inquire into any allegation of grave abuse of discretion by the other departments ofthe government.

VIII. Alleged violation of policy to wards cooperatives. On the other hand, the Cooperative Union ofthe Philippines (CUP), after briefly surveying the course of legislation, argues that it was to adopt adefinite policy of granting tax exemption to cooperatives that the present Constitution embodiesprovisions on cooperatives. To subject cooperatives to the VAT would therefore be to infringe aconstitutional policy. Petitioner claims that in 1973, P.D. No. 175 was promulgated exemptingcooperatives from the payment of income taxes and sales taxes but in 1984, because of the crisiswhich menaced the national economy, this exemption was withdrawn by P.D. No. 1955; that in1986, 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 in1987 the framers of the Constitution "repudiated the previous actions of the government adverseto 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 forthe benefit of the people; and an expanding productivity as the key to raising the quality of life forall, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agriculturaldevelopment and agrarian reform, through industries that make full and efficient use of humanand 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 begiven 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 asinstruments 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 outcooperatives 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 besetthe nation. It is true that after P.D. No. 2008, §2 had restored the tax exemptions of cooperatives in1986, the exemption was again repealed by E.O. No. 93, §1, but then again cooperatives were notthe 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 reallyrequire 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 cooperativeshad been one of vacillation, as far as the grant of tax privileges was concerned, and that it was toput an end to this indecision that the constitutional provisions cited were adopted. Perhaps as amatter of policy cooperatives should be granted tax exemptions, but that is left to the discretion ofCongress. If Congress does not grant exemption and there is no discrimination to cooperatives, noviolation 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 areexempt 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 theequal protection of the law because electric cooperatives are exempted from the VAT. Theclassification between electric and other cooperatives (farmers cooperatives, producerscooperatives, marketing cooperatives, etc.) apparently rests on a congressional determination thatthere is greater need to provide cheaper electric power to as many people as possible, especiallythose living in the rural areas, than there is to provide them with other necessities in life. We cannotsay 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 resolutionof these cases. We have now come to the conclusion that the law suffers from none of theinfirmities attributed to it by petitioners and that its enactment by the other branches of thegovernment 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 electorallyresponsible, remembering that, as Justice Holmes has said, "legislators are the ultimate guardiansof 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, aspetitioner in G.R. No. 115543 does in arguing that we should enforce the public accountability oflegislators, that those who took part in passing the law in question by voting for it in Congressshould 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 overlegislation.

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

SO ORDERED.

Narvasa, C.J., Feliciano, Melo, Kapunan, Francisco and Hermosisima, Jr., JJ., concur.

Padilla and Vitug, JJ., maintained their separate opinion.

Regalado, Davide, Jr., Romero, Bellosillo and Puno, JJ, maintained their di ssenting opinion.

Panganiban, J., took no part.





Manila

EN BANC

G.R. No. 113105 August 19, 1994

PHILIPPINE CONSTITUTION ASSOCIATION, EXEQUIEL B. GARCIA and A. GONZALES,petitioners,vs.

HON. SALVADOR ENRIQUEZ, as Secretary of Budget and Management; HON. VICENTE T. TAN,as National Treasurer and COMMISSION ON AUDIT, respondents.

G.R. No. 113174 August 19, 1994

RAUL S. ROCO, as Member of the Philippine Senate, NEPTALI A. GONZALES, Chairman of theCommittee on Finance of the Philippine Senate, and EDGARDO J. ANGARA, as President andChief Executive of the Philippine Senate, all of whom also sue as taxpayers, in their own behalfand in representation of Senators HEHERSON ALVAREZ, AGAPITO A. AQUINO, RODOLFO G.

BIAZON, JOSE D. LINA, JR., ERNESTO F. HERRERA, BLAS F. OPLE, JOHN H. OSMENA, GLORIAMACAPAGAL- ARROYO, VICENTE C. SOTTO III, ARTURO M. TOLENTINO, FRANCISCO S. TATAD,WIGBERTO E. TAÑADA and FREDDIE N. WEBB, petitioners,vs.

THE EXECUTIVE SECRETARY, THE DEPARTMENT OF BUDGET AND MANAGEMENT, and THENATIONAL TREASURER, THE COMMISSION ON AUDIT, impleaded herein as an unwillingco-petitioner, respondents.

G.R. No. 113766 August 19, 1994

WIGBERTO E. TAÑADA and ALBERTO G. ROMULO, as Members of the Senate and as taxpayers,and FREEDOM FROM DEBT COALITION, petitioners,vs.

HON. TEOFISTO T. GUINGONA, JR. in his capacity as Exec utive Secretary, HON. SALVADORENRIQUEZ, JR., in his capacity as Secretary of the Department of Budget and Management,HON. CARIDAD VALDEHUESA, in her capacity as National Treasurer, and THE COMMISSION ON AUDIT, respondents.

G.R. No. 113888 August 19, 1994

WIGBERTO E. TAÑADA and ALBERTO G. ROMULO, as Members of the Senate and as taxpayers,petitioners,vs.

HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executi ve Secretary, HON. SALVADORENRIQUEZ, JR., in his capacity as Secretary of the Department of Budget and Management,HON. CARIDAD VALDEHUESA, in her capacity as National Treasurer, and THE COMMISSION ON

AUDIT, respondents.

Ramon R. Gonzales for petitioners in G.R. No. 113105.

Eddie Tamondong for petitioners in G.R. Nos. 113766 & 113888.

Roco, Buñag, Kapunan, Migallos & Jardeleza for petitioners Raul S. Roco, Neptali A. Gonzales and

Edgardo Angara.

Ceferino Padua Law Office fro intervenor Lawyers Against Monopoly and Poverty (Lamp).

QUIASON, J.:

Once again this Court is called upon to rule on the conflicting claims of authority between theLegislative and the Executive in the clash of the powers of the purse and the sword. Providing thefocus for the contest between the President and the Congress over control of the national budgetare the four cases at bench. Judicial intervention is being sought by a group of concernedtaxpayers on the claim that Congress and the President have impermissibly exceeded theirrespective authorities, and by several Senators on the claim that the President has committedgrave abuse of discretion or acted without jurisdiction in the exercise of his veto power.

I

House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of 1994), was passed andapproved by both houses of Congress on December 17, 1993. As passed, it imposed conditionsand limitations on certain items of appropriations in the proposed budget previously submitted bythe President. It also authorized members of Congress to propose and identify projects in the"pork barrels" allotted to them and to realign their respective operating budgets.

Pursuant to the procedure on the passage and enactment of bills as prescribed by theConstitution, Congress presented the said bill to the President for consideration and approval.

On December 30, 1993, the President signed the bill into law, and declared the same to havebecome Republic Act No. 7663, entitled "AN ACT APPROPRIATING FUNDS FOR THE OPERATIONOF THE GOVERNMENT OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY ONE,

NINETEEN HUNDRED AND NINETY-FOUR, AND FOR OTHER PURPOSES" (GAA of 1994). On thesame day, the President delivered his Presidential Veto Message, specifying the provisions of thebill he vetoed and on which he imposed certain conditions.

No step was taken in either House of Congress to override the vetoes.

In G.R. No. 113105, the Philippine Constitution Association, Exequiel B. Garcia and Ramon A.Gonzales as taxpayers, prayed for a writ of prohibition to declare as unconstitutional and void: (a)Article XLI on the Countrywide Development Fund, the special provision in Article I entitledRealignment of Allocation for Operational Expenses, and Article XLVIII on the Appropriation forDebt Service or the amount appropriated under said Article XLVIII in excess of the P37.9 Billionallocated for the Department of Education, Culture and Sports; and (b) the veto of the President ofthe Special Provision of

Article XLVIII of the GAA of 1994 (Rollo, pp. 88-90, 104-105)




In G.R. No. 113174, sixteen members of the Senate led by Senate President Edgardo J. Angara,Senator Neptali A. Gonzales, the Chairman of the Committee on Finance, and Senator Raul S.Roco, sought the issuance of the writs of certiorari, prohibition and mandamus against theExecutive Secretary, the Secretary of the Department of Budget and Management, and theNational Treasurer.

Suing as members of the Senate and taxpayers, petitioners question: (1) the constitutionality of theconditions imposed by the President in the items of the GAA of 1994: (a) for the Supreme Court,(b) Commission on Audit (COA), (c) Ombudsman, (d) Commission on Human Rights (CHR), (e)

Citizen Armed Forces Geographical Units (CAFGU'S) and (f) State Universities and Colleges(SUC's); and (2) the constitutionality of the veto of the special provision in the appropriation fordebt service.

In G.R. No. 113766, Senators Alberto G. Romulo and Wigberto Tañada (a co-petitioner in G.R. No.113174), together with the Freedom from Debt Coalition, a non-stock domestic corporation,sought the issuance of the writs of prohibition and mandamus against the Executive Secretary, theSecretary of the Department of Budget and Management, the National Treasurer, and the COA.

Petitioners Tañada and Romulo sued as members of the Philippine Senate and taxpayers, whilepetitioner Freedom from Debt Coalition sued as a taxpayer. They challenge the constitutionality ofthe Presidential veto of the special provision in the appropriations for debt service and theautomatic appropriation of funds therefor.

In G.R. No. 11388, Senators Tañada and Romulo sought the issuance of the writs of prohibition andmandamus against the same respondents in G.R. No. 113766. In this petition, petitioners contestthe constitutionality of: (1) the veto on four special provision added to items in the GAA of 1994 forthe Armed Forces of the Philippines (AFP) and the Department of Public Works and Highways(DPWH); and (2) the conditions imposed by the President in the implementation of certainappropriations for the CAFGU's, the DPWH, and the National Housing Authority (NHA).

Petitioners also sought the issuance of temporary restraining orders to enjoin respondentsSecretary of Budget and Management, National Treasurer and COA from enforcing the questionedprovisions of the GAA of 1994, but the Court declined to grant said provisional reliefs on the time-honored principle of according the presumption of validity to statutes and the presumption ofregularity to official acts.

In view of the importance and novelty of most of the issues raised in the four petitions, the Courtinvited former Chief Justice Enrique M. Fernando and former Associate Justice Irene Cortes tosubmit their respective memoranda as Amicus curiae, which they graciously did.

II

Locus Standi

When issues of constitutionality are raised, the Court can exercise its power of judicial review onlyif the following requisites are compresent: (1) the existence of an actual and appropriate case; (2) apersonal and substantial interest of the party raising the constitutional question; (3) the exercise of

judicial review is pleaded at the earliest opportunity; and (4) the constitutional question is the lis

mota of the case (Luz Farms v. Secretary of the Department of Agrarian Reform, 192 SCRA 51

[1990]; Dumlao v. Commission on Elections, 95 SCRA 392 [1980]; People v. Vera, 65 Phil. 56[1937]).

While the Solicitor General did not question the locus standi of petitioners in G.R. No. 113105, heclaimed that the remedy of the Senators in the other petitions is political (i.e., to override thevetoes) in effect saying that they do not have the requisite legal standing to bring the suits.

The legal standing of the Senate, as an institution, was recognized in Gonzales v . Macaraig, Jr . , 191SCRA 452 (1990). In said case, 23 Senators, comprising the entire membership of the Upper House

of Congress, filed a petition to nullify the presidential veto of Section 55 of the GAA of 1989. Thefiling of the suit was authorized by Senate Resolution No. 381, adopted on February 2, 1989, andwhich reads as follows:

Authorizing and Directing the Committee on Finance to Bring in the Name of the Senate of thePhilippines the Proper Suit with the Supreme Court of the Philippines contesting theConstitutionality of the Veto by the President of Special and General Provisions, particularly Section55, of the General Appropriation Bill of 1989 (H.B. No. 19186) and For Other Purposes.

In the United States, the legal standing of a House of Congress to sue has been recognized(United States v. American Tel. & Tel. Co., 551 F. 2d 384, 391 [1976]; Notes: Congressional Access

To The Federal Courts, 90 Harvard Law Review 1632 [1977]).

While the petition in G.R. No. 113174 was filed by 16 Senators, including the Senate President andthe Chairman of the Committee on Finance, the suit was not authorized by the Senate itself.Likewise, the petitions inG.R. Nos. 113766 and 113888 were filed without an enabling resolution for the purpose.

Therefore, the question of the legal standing of petitioners in the three cases becomes apreliminary issue before this Court can inquire into the validity of the presidential veto and theconditions for the implementation of some items in the GAA of 1994.

We rule that a member of the Senate, and of the House of Representatives for that matter, has thelegal standing to question the validity of a presidential veto or a condition imposed on an item inan appropriation bill.

Where the veto is claimed to have been made without or in excess of the authority vested on thePresident by the Constitution, the issue of an impermissible intrusion of the Executive into thedomain of the Legislature arises (Notes: Congressional Standing To Challenge Executive Action, 122 University of Pennsylvania Law Review 1366 [1974]).

To the extent the power of Congress are impaired, so is the power of each member thereof, sincehis office confers a right to participate in the exercise of the powers of that institution (Coleman v.Miller, 307 U.S. 433 [1939]; Holtzman v. Schlesinger, 484 F. 2d 1307 [1973]).

An act of the Executive which injures the institution of Congress causes a derivative butnonetheless substantial injury, which can be questioned by a member of Congress (Kennedy v.Jones, 412 F. Supp. 353 [1976]). In such a case, any member of Congress can have a resort to thecourts.

Former Chief Justice Enrique M. Fernando, as Amicus Curiae, noted:




This is, then, the clearest case of the Senate as a whole or individual Senators as such having asubstantial interest in the question at issue. It could likewise be said that there was the requisiteinjury to their rights as Senators. It would then be futile to raise any locus standi issue. Any intrusioninto the domain appertaining to the Senate is to be resisted. Similarly, if the situation werereversed, and it is the Executive Branch that could allege a transgression, its officials could likewisefile the corresponding action. What cannot be denied is that a Senator has standing to maintaininviolate the prerogatives, powers and privileges vested by the Constitution in his office(Memorandum, p. 14).

It is true that the Constitution provides a mechanism for overriding a veto (Art. VI, Sec. 27 [1]). Saidremedy, however, is available only when the presidential veto is based on policy or politicalconsiderations but not when the veto is claimed to be ultra vires. In the latter case, it becomes theduty of the Court to draw the dividing line where the exercise of executive power ends and thebounds of legislative jurisdiction begin.

III

G.R. No. 113105

1. Countrywide Development Fund

Article XLI of the GAA of 1994 sets up a Countrywide Development Fund of P2,977,000,000.00 to

"be used for infrastructure, purchase of ambulances and computers and other priority projects andactivities and credit facilities to qualified beneficiaries." Said Article provides:

COUNTRYWIDE DEVELOPMENT FUND

For Fund requirements of countrywidedevelopment projects P 2,977,000,000———————

New Appropriations, by Purpose

Current Operating Expenditures

A. PURPOSE

Personal Maintenance Capital Total

Services and Other OutlaysOperatingExpenses

1. For CountrywideDevelopments Projects P250,000,000 P2,727,000,000 P2,977,000,000

TOTAL NEWAPPROPRIATIONS P250,000,000 P2,727,000,000 P2,977,000,000

Special Provisions

1. Use and Release of Funds. The amount herein appropriated shall be used for infrastructure,purchase of ambulances and computers and other priority projects and activities, and creditfacilities to qualified beneficiaries as proposed and identified by officials concerned according tothe following allocations: Representatives, P12,500,000 each; Senators, P18,000,000 each; Vice-President, P20,000,000; PROVIDED, That, the said credit facilities shall be constituted as a revolvingfund to be administered by a government financial institution (GFI) as a trust fund for lendingoperations. Prior years releases to local government units and national government agencies forthis purpose shall be turned over to the government financial institution which shall be the soleadministrator of credit facilities released from this fund.

The fund shall be automatically released quarterly by way of Advice of Allotments and Notice ofCash Allocation directly to the assigned implementing agency not later than five (5) days after thebeginning of each quarter upon submission of the list of projects and activities by the officialsconcerned.

2. Submission of Quarterly Reports. The Department of Budget and Management shall submitwithin thirty (30) days after the end of each quarter a report to the Senate Committee on Financeand the House Committee on Appropriations on the releases made from this Fund. The reportshall include the listing of the projects, locations, implementing agencies and the endorsingofficials (GAA of 1994, p. 1245).

Petitioners claim that the power given to the members of Congress to propose and identify the

projects and activities to be funded by the Countrywide Development Fund is an encroachment bythe legislature on executive power, since said power in an appropriation act in implementation of alaw. They argue that the proposal and identification of the projects do not involve the making oflaws or the repeal and amendment thereof, the only function given to the Congress by theConstitution (Rollo, pp. 78- 86).

Under the Constitution, the spending power called by James Madison as "the power of the purse,"belongs to Congress, subject only to the veto power of the President. The President may proposethe budget, but still the final say on the matter of appropriations is lodged in the Congress.

The power of appropriation carries with it the power to specify the project or activity to be fundedunder the appropriation law. It can be as detailed and as broad as Congress wants it to be.

The Countrywide Development Fund is explicit that it shall be used "for infrastructure, purchase ofambulances and computers and other priority projects and activities and credit facilities toqualified beneficiaries . . ." It was Congress itself that determined the purposes for theappropriation.

Executive function under the Countrywide Development Fund involves implementation of thepriority projects specified in the law.

The authority given to the members of Congress is only to propose and identify projects to beimplemented by the President. Under Article XLI of the GAA of 1994, the President must perforceexamine whether the proposals submitted by the members of Congress fall within the specificitems of expenditures for which the Fund was set up, and if qualified, he next determines whetherthey are in line with other projects planned for the locality. Thereafter, if the proposed projects

qualify for funding under the Funds, it is the President who shall implement them. In short, theproposals and identifications made by the members of Congress are merely recommendatory.




The procedure of proposing and identifying by members of Congress of particular projects oractivities under Article XLI of the GAA of 1994 is imaginative as it is innovative.

The Constitution is a framework of a workable government and its interpretation must take intoaccount the complexities, realities and politics attendant to the operation of the political branchesof government. Prior to the GAA of 1991, there was an uneven allocation of appropriations for theconstituents of the members of Congress, with the members close to the Congressionalleadership or who hold cards for "horse-trading," getting more than their less favored colleagues.The members of Congress also had to reckon with an unsympathetic President, who could exercise

his veto power to cancel from the appropriation bill a pet project of a Representative or Senator.

The Countrywide Development Fund attempts to make equal the unequal. It is also a recognitionthat individual members of Congress, far more than the President and their congressionalcolleagues are likely to be knowledgeable about the needs of their respective constituents and thepriority to be given each project.

2. Realignment of Operating Expenses

Under the GAA of 1994, the appropriation for the Senate is P472,000,000.00 of whichP464,447,000.00 is appropriated for current operating expenditures, while the appropriation forthe House of Representatives is P1,171,924,000.00 of which P1,165,297,000.00 is appropriated forcurrent operating expenditures (GAA of 1994, pp. 2, 4, 9, 12).

The 1994 operating expenditures for the Senate are as follows:

Personal Services

Salaries, Permanent 153,347Salaries/Wage, Contractual/Emergency 6,870————Total Salaries and Wages 160,217=======

Other Compensation

Step Increments 1,073Honoraria and Commutable Allowances 3,731Compensation Insurance Premiums 1,579Pag-I.B.I.G. Contributions 1,184Medicare Premiums 888Bonus and Cash Gift 14,791Terminal Leave Benefits 2,000Personnel Economic Relief Allowance 10,266Additional Compensation of P500 under A.O. 53 11,130Others 57,173————

Total Other Compensation 103,815————

01 Total Personal Services 264,032=======

Maintenance and Other Operating Expenses

02 Traveling Expenses 32,84103 Communication Services 7,66604 Repair and Maintenance of Government Facilities 1,22005 Repair and Maintenance of Government Vehicles 318

06 Transportation Services 12807 Supplies and Materials 20,18908 Rents 24,58414 Water/Illumination and Power 6,56115 Social Security Benefits and Other Claims 3,27017 Training and Seminars Expenses 2,22518 Extraordinary and Miscellaneous Expenses 9,36023 Advertising and Publication24 Fidelity Bonds and Insurance Premiums 1,32529 Other Services 89,778————Total Maintenance and Other Operating Expenditures 200,415————

Total Current Operating Expenditures 464,447=======

(GAA of 1994, pp. 3-4)

The 1994 operating expenditures for the House of Representatives are as follows:

Personal Services

Salaries, Permanent 261,557Salaries/Wages, Contractual/Emergency 143,643————Total Salaries and Wages 405,200

=======

Other Compensation

Step Increments 4,312Honoraria and CommutableAllowances 4,764Compensation InsurancePremiums 1,159Pag-I.B.I.G. Contributions 5,231Medicare Premiums 2,281

Bonus and Cash Gift 35,669

Terminal Leave Benefits 29Personnel Economic Relief




Allowance 21,150Additional Compensation of P500 under A.O. 53Others 106,140————Total Other Compensation 202,863————01 Total Personal Services 608,063=======

Maintenance and Other Operating Expenses

02 Traveling Expenses 139,61103 Communication Services 22,51404 Repair and Maintenance of Government Facilities 5,11605 Repair and Maintenance of Government Vehicles 1,86306 Transportation Services 17807 Supplies and Materials 55,24810 Grants/Subsidies/Contributions 94014 Water/Illumination and Power 14,45815 Social Security Benefits and Other Claims 32517 Training and Seminars Expenses 7,23618 Extraordinary and Miscellaneous Expenses 14,474

20 Anti-Insurgency/Contingency Emergency Expenses 9,40023 Advertising and Publication 24224 Fidelity Bonds and Insurance Premiums 1,42029 Other Services 284,209————Total Maintenance and Other Operating Expenditures 557,234————Total Current Operating Expenditures 1,165,297=======

(GAA of 1994, pp. 11-12)

The Special Provision Applicable to the Congress of the Philippines provides:

4. Realignment of Allocation for Operational Expenses. A member of Congress may realign hisallocation for operational expenses to any other expenses category provide the total of saidallocation is not exceeded. (GAA of 1994, p. 14).

The appropriation for operating expenditures for each House is further divided into expendituresfor salaries, personal services, other compensation benefits, maintenance expenses and otheroperating expenses. In turn, each member of Congress is allotted for his own operatingexpenditure a proportionate share of the appropriation for the House to which he belongs. If hedoes not spend for one items of expense, the provision in question allows him to transfer hisallocation in said item to another item of expense.

Petitioners assail the special provision allowing a member of Congress to realign his allocation for

operational expenses to any other expense category (Rollo, pp. 82-92), claiming that this practiceis prohibited by Section 25(5), Article VI of the Constitution. Said section provides:

No law shall be passed authorizing any transfer of appropriations: however, the President, thePresident of the Senate, the Speaker of the House of Representatives, the Chief Justice of theSupreme Court, and the heads of Constitutional Commissions may, by law, be authorized toaugment any item in the general appropriations law for their respective offices from savings inother items of their respective appropriations.

The proviso of said Article of the Constitution grants the President of the Senate and the Speakerof the House of Representatives the power to augment items in an appropriation act for theirrespective offices from savings in other items of their appropriations, whenever there is a law

authorizing such augmentation.

The special provision on realignment of the operating expenses of members of Congress isauthorized by Section 16 of the General Provisions of the GAA of 1994, which provides:

Expenditure Components. Except by act of the Congress of the Philippines, no change ormodification shall be made in the expenditure items authorized in this Act and other appropriationlaws unless in casesof augmentations from savings in appropriations as authorized under Section 25(5) of Article VI ofthe Constitution (GAA of 1994, p. 1273).

Petitioners argue that the Senate President and the Speaker of the House of Representatives, butnot the individual members of Congress are the ones authorized to realign the savings as

appropriated.

Under the Special Provisions applicable to the Congress of the Philippines, the members ofCongress only determine the necessity of the realignment of the savings in the allotments for theiroperating expenses. They are in the best position to do so because they are the ones who knowwhether there are savings available in some items and whether there are deficiencies in otheritems of their operating expenses that need augmentation. However, it is the Senate President andthe Speaker of the House of Representatives, as the case may be, who shall approve therealignment. Before giving their stamp of approval, these two officials will have to see to it that:

(1) The funds to be realigned or transferred are actually savings in the items of expenditures fromwhich the same are to be taken; and

(2) The transfer or realignment is for the purposes of augmenting the items of expenditure towhich said transfer or realignment is to be made.

3. Highest Priority for Debt Service

While Congress appropriated P86,323,438,000.00 for debt service (Article XLVII of the GAA of1994), it appropriated only P37,780,450,000.00 for the Department of Education Culture andSports. Petitioners urged that Congress cannot give debt service the highest priority in the GAA of1994 (Rollo, pp. 93-94) because under the Constitution it should be education that is entitled tothe highest funding. They invoke Section 5(5), Article XIV thereof, which provides:

(5) The State shall assign the highest budgetary priority to education and ensure that teaching willattract and retain its rightful share of the best available talents through adequate remuneration and

other means of job satisfaction and fulfillment.




This issue was raised in Guingona, Jr . v . Carague, 196 SCRA 221 (1991), where this Court held thatSection 5(5), Article XIV of the Constitution, is merely directory, thus:

While it is true that under Section 5(5), Article XIV of the Constitution, Congress is mandated to"assign the highest budgetary priority to education" in order to "insure that teaching will attractand retain its rightful share of the best available talents through adequate remuneration and othermeans of job satisfaction and fulfillment," it does not thereby follow that the hands of Congress areso hamstrung as to deprive it the power to respond to the imperatives of the national interest andfor the attainment of other state policies or objectives.

As aptly observed by respondents, since 1985, the budget for education has tripled to upgradeand improve the facility of the public school system. The compensation of teachers has beendoubled. The amount of P29,740,611,000.00 set aside for the Department of Education, Cultureand Sports under the General Appropriations Act (R.A. No. 6381), is the highest budgetaryallocation among all department budgets. This is a clear compliance with the aforesaidconstitutional mandate according highest priority to education.

Having faithfully complied therewith, Congress is certainly not without any power, guided only byits good judgment, to provide an appropriation, that can reasonably service our enormous debt,the greater portion of which was inherited from the previous administration. It is not only a matterof honor and to protect the credit standing of the country. More especially, the very survival of oureconomy is at stake. Thus, if in the process Congress appropriated an amount for debt service

bigger than the share allocated to education, the Court finds and so holds that said appropriationcannot be thereby assailed as unconstitutional.

G.R. No. 113105

G.R. No. 113174

Veto of Provision on Debt Ceiling

The Congress added a Special Provision to Article XLVIII (Appropriations for Debt Service) of theGAA of 1994 which provides:

Special Provisions

1. Use of the Fund. The appropriation authorized herein shall be used for payment of principal andinterest of foreign and domestic indebtedness; PROVIDED, That any payment in excess of theamount herein appropriated shall be subject to the approval of the President of the Philippineswith the concurrence of the Congress of the Philippines; PROVIDED, FURTHER, That in no caseshall this fund be used to pay for the liabilities of the Central Bank Board of Liquidators.

2. Reporting Requirement. The Bangko Sentral ng Pilipinas and the Department of Finance shallsubmit a quarterly report of actual foreign and domestic debt service payments to the HouseCommittee on Appropriations and Senate Finance Committee within one (1) month after eachquarter (GAA of 1944, pp. 1266).

The President vetoed the first Special Provision, without vetoing the P86,323,438,000.00appropriation for debt service in said Article. According to the President's Veto Message:

IV. APPROPRIATIONS FOR DEBT SERVICE

I would like to emphasize that I concur fully with the desire of Congress to reduce the debt burdenby decreasing the appropriation for debt service as well as the inclusion of the Special Provisionquoted below. Nevertheless, I believe that this debt reduction scheme cannot be validly donethrough the 1994 GAA. This must be addressed by revising our debt policy by way of innovativeand comprehensive debt reduction programs conceptualized within the ambit of the Medium-Term Philippine Development Plan.

Appropriations for payment of public debt, whether foreign or domestic, are automaticallyappropriated pursuant to the Foreign Borrowing Act and Section 31 of P.D. No. 1177 as reiterated

under Section 26, Chapter 4, Book VI of E.O. No. 292, the Administrative Code of 1987. I wish toemphasize that the constitutionality of such automatic provisions on debt servicing has beenupheld by the Supreme Court in the case of "Teofisto T. Guingona, Jr., and Aquilino Q. Pimentel, Jr.v. Hon. Guillermo N. Carague, in his capacity as Secretary of Budget and Management, et al.," G.R.No. 94571, dated April 22, 1991.

I am, therefore vetoing the following special provision for the reason that the GAA is not theappropriate legislative measure to amend the provisions of the Foreign Borrowing Act, P.D. No.1177 and E.O. No. 292:

Use of the Fund. The appropriation authorized herein shall be used for payment of principal andinterest of foreign and domestic indebtedness: PROVIDED, That any payment in excess of theamount herein appropriated shall be subject to the approval of the President of the Philippines

with the concurrence of the Congress of the Philippines: PROVIDED, FURTHER, That in no caseshall this fund be used to pay for the liabilities of the Central Bank Board of Liquidators (GAA of1994, p. 1290).

Petitioners claim that the President cannot veto the Special Provision on the appropriation for debtservice without vetoing the entire amount of P86,323,438.00 for said purpose (Rollo, G.R. No.113105, pp. 93-98; Rollo, G.R. No. 113174, pp. 16-18). The Solicitor General counterposed that theSpecial Provision did not relate to the item of appropriation for debt service and could thereforebe the subject of an item veto (Rollo, G.R. No. 113105, pp. 54-60; Rollo, G.R. No. 113174, pp.72-82).

This issue is a mere rehash of the one put to rest in Gonzales v . Macaraig, Jr . , 191 SCRA 452 (1990).In that case, the issue was stated by the Court, thus:

The fundamental issue raised is whether or not the veto by the President of Section 55 of the 1989Appropriations Bill (Section 55FY '89), and subsequently of its counterpart Section 16 of the 1990 Appropriations Bill (Section 16FY '90), is unconstitutional and without effect.

The Court re-stated the issue, just so there would not be any misunderstanding about it, thus:

The focal issue for resolution is whether or not the President exceeded the item-veto poweraccorded by the Constitution. Or differently put, has the President the power to veto "provisions"of an Appropriations Bill?

The bases of the petition in Gonzales, which are similar to those invoked in the present case, are

stated as follows:




In essence, petitioners' cause is anchored on the following grounds: (1) the President's line-vetopower as regards appropriation bills is limited to item/s and does not cover provision/s; therefore,she exceeded her authority when she vetoed Section 55 (FY '89) and Section 16 (FY '90) which areprovisions; (2) when the President objects to a provision of an appropriation bill, she cannotexercise the item-veto power but should veto the entire bill; (3) the item-veto power does not carrywith it the power to strike out conditions or restrictions for that would be legislation, in violation ofthe doctrine of separation of powers; and (4) the power of augmentation in Article VI, Section 25[5] of the 1987 Constitution, has to be provided for by law and, therefore, Congress is also vestedwith the prerogative to impose restrictions on the exercise of that power.

The restrictive interpretation urged by petitioners that the President may not veto a provisionwithout vetoing the entire bill not only disregards the basic principle that a distinct and severablepart of a bill may be the subject of a separate veto but also overlooks the Constitutional mandatethat any provision in the general appropriations bill shall relate specifically to some particularappropriation therein and that any such provision shall be limited in its operation to theappropriation to which it relates (1987 Constitution, Article VI, Section 25 [2]). In other words, in thetrue sense of the term, a provision in an Appropriations Bill is limited in its operation to someparticular appropriation to which it relates, and does not relate to the entire bill.

The Court went one step further and ruled that even assuming arguendo that "provisions" arebeyond the executive power to veto, and Section 55(FY '89) and Section 16 (FY '90) were not "provisions" in the budgetary sense of the term, they are

"inappropriate provisions" that should be treated as "items" for the purpose of the President's vetopower.

The Court, citing Henry v . Edwards, La., 346 So. 2d 153 (1977), said that Congress cannot include ina general appropriations bill matters that should be more properly enacted in separate legislation,and if it does that, the inappropriate provisions inserted by it must be treated as "item", which canbe vetoed by the President in the exercise of his item-veto power.

It is readily apparent that the Special Provision applicable to the appropriation for debt serviceinsofar as it refers to funds in excess of the amount appropriated in the bill, is an "inappropriate"provision referring to funds other than the P86,323,438,000.00 appropriated in the GeneralAppropriations Act of 1991.

Likewise the vetoed provision is clearly an attempt to repeal Section 31 of P.D. No. 1177 (ForeignBorrowing Act) and E.O. No. 292, and to reverse the debt payment policy. As held by the Court inGonzales, the repeal of these laws should be done in a separate law, not in the appropriations law.

The Court will indulge every intendment in favor of the constitutionality of a veto, the same as itwill presume the constitutionality of an act of Congress (Texas Co. v. State, 254 P. 1060; 31 Ariz,485, 53 A.L.R. 258 [1927]).

The veto power, while exercisable by the President, is actually a part of the legislative process(Memorandum of Justice Irene Cortes as Amicus Curiae, pp. 3-7). That is why it is found in Article VIon the Legislative Department rather than in Article VII on the Executive Department in theConstitution. There is, therefore, sound basis to indulge in the presumption of validity of a veto.The burden shifts on those questioning the validity thereof to show that its use is a violation of the

Constitution.

Under his general veto power, the President has to veto the entire bill, not merely parts thereof(1987 Constitution, Art. VI, Sec. 27[1]). The exception to the general veto power is the power givento the President to veto any particular item or items in a general appropriations bill (1987Constitution, Art. VI,Sec. 27[2]). In so doing, the President must veto the entire item.

A general appropriations bill is a special type of legislation, whose content is limited to specifiedsums of money dedicated to a specific purpose or a separate fiscal unit (Beckman, The Item VetoPower of the Executive,

31 Temple Law Quarterly 27 [1957]).

The item veto was first introduced by the Organic Act of the Philippines passed by the U.S.Congress on August 29, 1916. The concept was adopted from some State Constitutions.

Cognizant of the legislative practice of inserting provisions, including conditions, restrictions andlimitations, to items in appropriations bills, the Constitutional Convention added the followingsentence to Section 20(2), Article VI of the 1935 Constitution:

. . . When a provision of an appropriation bill affect one or more items of the same, the Presidentcannot veto the provision without at the same time vetoing the particular item or items to which itrelates . . . .

In short, under the 1935 Constitution, the President was empowered to veto separately not onlyitems in an appropriations bill but also "provisions".

While the 1987 Constitution did not retain the aforementioned sentence added to Section 11(2) ofArticle VI of the 1935 Constitution, it included the following provision:

No provision or enactment shall be embraced in the general appropriations bill unless it relatesspecifically to some particular appropriation therein. Any such provision or enactment shall belimited in its operation to the appropriation to which it relates (Art. VI, Sec. 25[2]).

In Gonzales, we made it clear that the omission of that sentence of Section 16(2) of the 1935Constitution in the 1987 Constitution should not be interpreted to mean the disallowance of thepower of the President to veto a "provision".

As the Constitution is explicit that the provision which Congress can include in an appropriationsbill must "relate specifically to some particular appropriation therein" and "be limited in itsoperation to the appropriation to which it relates," it follows that any provision which does notrelate to any particular item, or which extends in its operation beyond an item of appropriation, isconsidered "an inappropriate provision" which can be vetoed separately from an item. Also to beincluded in the category of "inappropriate provisions" are unconstitutional provisions andprovisions which are intended to amend other laws, because clearly these kind of laws have noplace in an appropriations bill. These are matters of general legislation more appropriately dealtwith in separate enactments. Former Justice Irene Cortes, as Amicus Curiae, commented thatCongress cannot by law establish conditions for and regulate the exercise of powers of thePresident given by the Constitution for that would be an unconstitutional intrusion into executiveprerogative.

The doctrine of "inappropriate provision" was well elucidated in Henry v . Edwards, supra. , thus:




Just as the President may not use his item-veto to usurp constitutional powers conferred on thelegislature, neither can the legislature deprive the Governor of the constitutional powers conferredon him as chief executive officer of the state by including in a general appropriation bill mattersmore properly enacted in separate legislation. The Governor's constitutional power to veto bills ofgeneral legislation . . . cannot be abridged by the careful placement of such measures in a generalappropriation bill, thereby forcing the Governor to choose between approving unacceptablesubstantive legislation or vetoing "items" of expenditures essential to the operation ofgovernment. The legislature cannot by location of a bill give it immunity from executive veto . Nor

can it circumvent the Governor's veto power over substantive legislation by artfully drafting general

law measures so that they appear to be true conditions or limitations on an item of appropriation .Otherwise, the legislature would be permitted to impair the constitutional responsibilities andfunctions of a co-equal branch of government in contravention of the separation of powersdoctrine . . . We are no more willing to allow the legislature to use its appropriation power toinfringe on the Governor's constitutional right to veto matters of substantive legislation than weare to allow the Governor to encroach on the Constitutional powers of the legislature. In order toavoid this result, we hold that, when the legislature inserts inappropriate provisions in a general

appropriation bill, such provisions must be treated as "items" for purposes of the Governor's item

veto power over general appropriation bills.

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. . . Legislative control cannot be exercised in such a manner as to encumber the general

appropriation bill with veto-proof "logrolling measures", special interest provisions which couldnot succeed if separately enacted, or "riders", substantive pieces of legislation incorporated in abill to insure passage without veto . . . (Emphasis supplied).

Petitioners contend that granting arguendo that the veto of the Special Provision on the ceiling fordebt payment is valid, the President cannot automatically appropriate funds for debt paymentwithout complying with the conditions for automatic appropriation under the provisions of R.A. No.4860 as amended by P.D. No. 81 and the provisions of P.D. No. 1177 as amended by theAdministrative Code of 1987 and P.D. No. 1967 (Rollo, G.R. No. 113766, pp. 9-15).

Petitioners cannot anticipate that the President will not faithfully execute the laws. The writ ofprohibition will not issue on the fear that official actions will be done in contravention of the laws.

The President vetoed the entire paragraph one of the Special Provision of the item on debt service,including the provisions that the appropriation authorized in said item "shall be used for paymentof the principal and interest of foreign and domestic indebtedness" and that "in no case shall thisfund be used to pay for the liabilities of the Central Bank Board of Liquidators." These provisionsare germane to and have a direct connection with the item on debt service. Inherent in the powerof appropriation is the power to specify how the money shall be spent (Henry v. Edwards, LA, 346So., 2d., 153). The said provisos, being appropriate provisions, cannot be vetoed separately. Hencethe item veto of said provisions is void.

We reiterate, in order to obviate any misunderstanding, that we are sustaining the veto of theSpecial Provision of the item on debt service only with respect to the proviso therein requiring that"any payment in excess of the amount herein, appropriated shall be subject to the approval of thePresident of the Philippines with the concurrence of the Congress of the Philippines . . ."

G.R. NO. 113174

G.R. NO. 113766

G.R. NO. 11388

1. Veto of provisions for revolving funds of SUC's.

In the appropriation for State Universities and Colleges (SUC's), the President vetoed specialprovisions which authorize the use of income and the creation, operation and maintenance ofrevolving funds. The Special Provisions vetoed are the following:

(H. 7) West Visayas State University

Equal Sharing of Income. Income earned by the University subject to Section 13 of the specialprovisions applicable to all State Universities and Colleges shall be equally shared by theUniversity and the University Hospital (GAA of 1994, p. 395).

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(J. 3) Leyte State College

Revolving Fund for the Operation of LSC House and Human Resources Development Center(HRDC). The income of Leyte State College derived from the operation of its LSC House and HRDCshall be constituted into a Revolving Fund to be deposited in an authorized governmentdepository bank for the operational expenses of these projects/services. The net income of theRevolving Fund at the end of the year shall be remitted to the National Treasury and shall accrue tothe General Fund. The implementing guidelines shall be issued by the Department of Budget andManagement (GAA of 1994, p. 415).

The vetoed Special Provisions applicable to all SUC's are the following:

12. Use of Income from Extension Services. State Universities and Colleges are authorized to usetheir income from their extension services. Subject to the approval of the Board of Regents and theapproval of a special budget pursuant to Sec. 35, Chapter 5, Book VI of E.O.No. 292, such income shall be utilized solely for faculty development, instructional materials andwork study program (GAA of 1994, p. 490).

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13. Income of State Universities and Colleges. The income of State Universities and Collegesderived from tuition fees and other sources as may be imposed by governing boards other thanthose accruing to revolving funds created under LOI Nos. 872 and 1026 and those authorized tobe recorded as trust receipts pursuant to Section 40, Chapter 5, Book VI of E.O. No. 292 shall bedeposited with the National Treasury and recorded as a Special Account in the General Fundpursuant to P.D. No. 1234 and P.D. No. 1437 for the use of the institution, subject to Section 35,Chapter 5, Book VI of E.O. No. 292L PROVIDED, That disbursements from the Special Account shallnot exceed the amount actually earned and deposited: PROVIDED, FURTHER, That a cash advanceon such income may be allowed State half of income actually realized during the preceding yearand this cash advance shall be charged against income actually earned during the budget year:

AND PROVIDED, FINALLY, That in no case shall such funds be used to create positions, nor forpayment of salaries, wages or allowances, except as may be specifically approved by the




Department of Budge and Management for income-producing activities, or to purchaseequipment or books, without the prior approval of the President of the Philippines pursuant toLetter of Implementation No. 29.

All collections of the State Universities and Colleges for fees, charges and receipts intended forprivate recipient units, including private foundations affiliated with these institutions shall be dulyacknowledged with official receipts and deposited as a trust receipt before said income shall besubject to Section 35, Chapter 5, Book VI of E.O. No. 292(GAA of 1994, p. 490).

The President gave his reason for the veto thus:

Pursuant to Section 65 of the Government Auditing Code of the Philippines, Section 44, Chapter 5,Book VI of E.O. No. 292, s. 1987 and Section 22, Article VII of the Constitution, all income earnedby all Government offices and agencies shall accrue to the General Fund of the Government in linewith the One Fund Policy enunciated by Section 29 (1), Article VI and Section 22, Article VII of theConstitution. Likewise, the creation and establishment of revolving funds shall be authorized bysubstantive law pursuant to Section 66 of the Government Auditing Code of the Philippines andSection 45, Chapter 5, Book VI of E.O. No. 292.

Notwithstanding the aforementioned provisions of the Constitution and existing law, I have notedthe proliferation of special provisions authorizing the use of agency income as well as the creation,

operation and maintenance of revolving funds.

I would like to underscore the facts that such income were already considered as integral part ofthe revenue and financing sources of the National Expenditure Program which I previouslysubmitted to Congress. Hence, the grant of new special provisions authorizing the use of agencyincome and the establishment of revolving funds over and above the agency appropriationsauthorized in this Act shall effectively reduce the financing sources of the 1994 GAA and, at thesame time, increase the level of expenditures of some agencies beyond the well-coordinated,rationalized levels for such agencies. This corresponding increases the overall deficit of theNational Government (Veto Message, p. 3).

Petitioners claim that the President acted with grave abuse of discretion when he disallowed by hisveto the "use of income" and the creation of "revolving fund" by the Western Visayas State

University and Leyte State Colleges when he allowed other government offices, like the NationalStud Farm, to use their income for their operating expenses (Rollo, G.R. No. 113174, pp. 15-16).

There was no undue discrimination when the President vetoed said special provisions whileallowing similar provisions in other government agencies. If some government agencies wereallowed to use their income and maintain a revolving fund for that purpose, it is because theseagencies have been enjoying such privilege before by virtue of the special laws authorizing suchpractices as exceptions to the "one-fund policy" (e. g., R.A. No. 4618 for the National Stud Farm,P.D. No. 902-A for the Securities and Exchange Commission; E.O. No. 359 for the Department ofBudget and Management's Procurement Service).

2. Veto of provision on 70% (administrative)/30% (contract) ratio for road maintenance .

In the appropriation for the Department of Public Works and Highways, the President vetoed thesecond paragraph of Special Provision No. 2, specifying the 30% maximum ration of works to be

contracted for the maintenance of national roads and bridges. The said paragraph reads asfollows:

2. Release and Use of Road Maintenance Funds. Funds allotted for the maintenance and repair ofroads which are provided in this Act for the Department of Public Works and Highways shall bereleased to the respective Engineering District, subject to such rules and regulations as may beprescribed by the Department of Budget and Management. Maintenance funds for roads andbridges shall be exempt from budgetary reserve.

Of the amount herein appropriated for the maintenance of national roads and bridges, a maximum

of thirty percent (30%) shall be contracted out in accordance with guidelines to be issued by the

Department of Public Works and Highways. The balance shall be used for maintenance by force

account .

Five percent (5%) of the total road maintenance fund appropriated herein to be applied across theboard to the allocation of each region shall be set aside for the maintenance of roads which maybe converted to or taken over as national roads during the current year and the same shall bereleased to the central office of the said department for eventualsub-allotment to the concerned region and district: PROVIDED, That any balance of the said fivepercent (5%) shall be restored to the regions on a pro-rata basis for the maintenance of existingnational roads.

No retention or deduction as reserves or overhead expenses shall be made, except as authorizedby law or upon direction of the President(GAA of 1994, pp. 785-786; Emphasis supplied).

The President gave the following reason for the veto:

While I am cognizant of the well-intended desire of Congress to impose certain restrictionscontained in some special provisions, I am equally aware that many programs, projects andactivities of agencies would require some degree of flexibility to ensure their successfulimplementation and therefore risk their completion. Furthermore, not only could these restrictionsand limitations derail and impede program implementation but they may also result in a breach ofcontractual obligations.

D.1.a. A study conducted by the Infrastructure Agencies show that for practical intent andpurposes, maintenance by contract could be undertaken to an optimum of seventy percent (70%)and the remaining thirty percent (30%) by force account. Moreover, the policy of maximizingimplementation through contract maintenance is a covenant of the Road and Road TransportProgram Loan from the Asian Development Bank (ADB Loan No. 1047-PHI-1990) and OverseasEconomic Cooperation Fund (OECF Loan No. PH-C17-199). The same is a covenant under theWorld Bank (IBRD) Loan for the Highway Management Project (IBRD LoanNo. PH-3430) obtained in 1992.

In the light of the foregoing and considering the policy of the government to encourage andmaximize private sector participation in the regular repair and maintenance of infrastructurefacilities, I am directly vetoing the underlined second paragraph of Special Provision No. 2 of theDepartment of Public Works and Highways (Veto Message, p. 11).




The second paragraph of Special Provision No. 2 brings to fore the divergence in policy ofCongress and the President. While Congress expressly laid down the condition that only 30% ofthe total appropriation for road maintenance should be contracted out, the President, on the basisof a comprehensive study, believed that contracting out road maintenance projects at an option of70% would be more efficient, economical and practical.

The Special Provision in question is not an inappropriate provision which can be the subject of aveto. It is not alien to the appropriation for road maintenance, and on the other hand, it specifiedhow the said item shall be expended — 70% by administrative and 30% by contract.

The 1987 Constitution allows the addition by Congress of special provisions, conditions to items inan expenditure bill, which cannot be vetoed separately from the items to which they relate so longas they are "appropriate" in the budgetary sense (Art. VII, Sec. 25[2]).

The Solicitor General was hard put in justifying the veto of this special provision. He merely arguedthat the provision is a complete turnabout from an entrenched practice of the government tomaximize contract maintenance (Rollo, G.R. No. 113888, pp. 85-86). That is not a ground to veto aprovision separate from the item to which it refers.

The veto of the second paragraph of Special Provision No. 2 of the item for the DPWH is thereforeunconstitutional.

3. Veto of provision on purchase of medicines by AFP .

In the appropriation for the Armed Forces of the Philippines (AFP), the President vetoed the specialprovision on the purchase by the AFP of medicines in compliance with the Generics Drugs Law(R.A. No. 6675). The vetoed provision reads:

12. Purchase of Medicines. The purchase of medicines by all Armed Forces of the Philippines units,hospitals and clinics shall strictly comply with the formulary embodied in the National Drug Policyof the Department of Health (GAA of 1994, p. 748).

According to the President, while it is desirable to subject the purchase of medicines to a standardformulary, "it is believed more prudent to provide for a transition period for its adoption andsmooth implementation in the Armed Forces of the Philippines" (Veto Message, p. 12).

The Special Provision which requires that all purchases of medicines by the AFP should strictlycomply with the formulary embodied in the National Drug Policy of the Department of Health is an"appropriate" provision. it is a mere advertence by Congress to the fact that there is an existinglaw, the Generics Act of 1988, that requires "the extensive use of drugs with generic namesthrough a rational system of procurement and distribution." The President believes that it is moreprudent to provide for a transition period for the smooth implementation of the law in the case ofpurchases by the Armed Forces of the Philippines, as implied by Section 11 (Education Drive) ofthe law itself. This belief, however, cannot justify his veto of the provision on the purchase ofmedicines by the AFP.

Being directly related to and inseparable from the appropriation item on purchases of medicinesby the AFP, the special provision cannot be vetoed by the President without also vetoing the said

item (Bolinao Electronics Corporation v. Valencia, 11 SCRA 486 [1964]).

4. Veto of provision on prior approval of Congress for purchase of military equipment .

In the appropriation for the modernization of the AFP, the President vetoed the underlined provisoof Special Provision No. 2 on the "Use of Fund," which requires the prior approval of Congress forthe release of the corresponding modernization funds, as well as the entire Special ProvisionsNo. 3 on the "Specific Prohibition":

2. Use of the Fund. Of the amount herein appropriated, priority shall be given for the acquisition ofAFP assets necessary for protecting marine, mineral, forest and other resources within Philippineterritorial borders and its economic zone, detection, prevention or deterrence of air or surfaceintrusions and to support diplomatic moves aimed at preserving national dignity, sovereignty andpatrimony: PROVIDED, That the said modernization fund shall not be released until a Table of

Organization and Equipment for FY 1994-2000 is submitted to and approved by Congress .

3. Specific Prohibition. The said Modernization Fund shall not be used for payment of six (6)additional S-211 Trainer planes, 18 SF-260 Trainer planes and 150 armored personnel carriers(GAA of 1994, p. 747).

As reason for the veto, the President stated that the said condition and prohibition violate theConstitutional mandate of non-impairment of contractual obligations, and if allowed, "shalleffectively alter the original intent of the AFP Modernization Fund to cover all military equipmentdeemed necessary to modernize the Armed Forces of the Philippines" (Veto Message, p. 12).

Petitioners claim that Special Provision No. 2 on the "Use of Fund" and Special Provision No. 3 areconditions or limitations related to the item on the AFP modernization plan.

The requirement in Special Provision No. 2 on the "Use of Fund" for the AFP modernizationprogram that the President must submit all purchases of military equipment to Congress for itsapproval, is an exercise of the "congressional or legislative veto." By way of definition, acongressional veto is a means whereby the legislature can block or modify administrative actiontaken under a statute. It is a form of legislative control in the implementation of particular executiveactions. The form may be either negative, that is requiring disapproval of the executive action, oraffirmative, requiring approval of the executive action. This device represents a significant attemptby Congress to move from oversight of the executive to shared administration ( Dixon, The

Congressional Veto and Separation of Powers: The Executive on a Leash,

56 North Carolina Law Review, 423 [1978]).

A congressional veto is subject to serious questions involving the principle of separation ofpowers.

However the case at bench is not the proper occasion to resolve the issues of the validity of thelegislative veto as provided in Special Provisions Nos. 2 and 3 because the issues at hand can bedisposed of on other grounds. Any provision blocking an administrative action in implementing alaw or requiring legislative approval of executive acts must be incorporated in a separate andsubstantive bill. Therefore, being "inappropriate" provisions, Special Provisions Nos. 2 and 3 wereproperly vetoed.

As commented by Justice Irene Cortes in her memorandum as Amicus Curiae: "What Congress

cannot do directly by law it cannot do indirectly by attaching conditions to the exercise of thatpower (of the President as Commander-in-Chief) through provisions in the appropriation law."

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Furthermore, Special Provision No. 3, prohibiting the use of the Modernization Funds for paymentof the trainer planes and armored personnel carriers, which have been contracted for by the AFP, isviolative of the Constitutional prohibition on the passage of laws that impair the obligation ofcontracts (Art. III, Sec. 10), more so, contracts entered into by the Government itself.

The veto of said special provision is therefore valid.

5. Veto of provision on use of savings to augment AFP pension funds .

In the appropriation for the AFP Pension and Gratuity Fund, the President vetoed the new provisionauthorizing the Chief of Staff to use savings in the AFP to augment pension and gratuity funds. Thevetoed provision reads:

2. Use of Savings. The Chief of Staff, AFP, is authorized, subject to the approval of the Secretary ofNational Defense, to use savings in the appropriations provided herein to augment the pensionfund being managed by the AFP Retirement and Separation Benefits System as provided underSections 2(a) and 3 of P.D. No. 361 (GAA of 1994,p. 746).

According to the President, the grant of retirement and separation benefits should be covered bydirect appropriations specifically approved for the purpose pursuant to Section 29(1) of Article VIof the Constitution. Moreover, he stated that the authority to use savings is lodged in the officials

enumerated in Section 25(5) of Article VI of the Constitution (Veto Message, pp. 7-8).

Petitioners claim that the Special Provision on AFP Pension and Gratuity Fund is a condition orlimitation which is so intertwined with the item of appropriation that it could not be separatedtherefrom.

The Special Provision, which allows the Chief of Staff to use savings to augment the pension fundfor the AFP being managed by the AFP Retirement and Separation Benefits System is violative ofSections 25(5) and 29(1) of the Article VI of the Constitution.

Under Section 25(5), no law shall be passed authorizing any transfer of appropriations, and underSection 29(1), no money shall be paid out ofthe Treasury except in pursuance of an appropriation made by law. While Section 25(5) allows as

an exception the realignment of savings to augment items in the general appropriations law forthe executive branch, such right must and can be exercised only by the President pursuant to aspecific law.

6. Condition on the deactivation of the CAFGU's.

Congress appropriated compensation for the CAFGU's, including the payment of separationbenefits but it added the following Special Provision:

1. CAFGU Compensation and Separation Benefit. The appropriation authorized herein shall beused for the compensation of CAFGU's including the payment of their separation benefit notexceeding one (1) year subsistence allowance for the 11,000 members who will be deactivated in1994. The Chief of Staff, AFP, shall, subject to the approval of the Secretary of National Defense,

promulgate policies and procedures for the payment of separation benefit (GAA of 1994, p. 740).

The President declared in his Veto Message that the implementation of this Special Provision to theitem on the CAFGU's shall be subject to prior Presidential approval pursuant to P.D. No. 1597 andR.A.. No. 6758. He gave the following reasons for imposing the condition:

I am well cognizant of the laudable intention of Congress in proposing the amendment of SpecialProvision No. 1 of the CAFGU. However, it is premature at this point in time of our peace process toearmark and declare through special provision the actual number of CAFGU members to bedeactivated in CY 1994. I understand that the number to be deactivated would largely depend onthe result or degree of success of the on-going peace initiatives which are not yet precisely

determinable today. I have desisted, therefore, to directly veto said provisions because this wouldmean the loss of the entire special provision to the prejudice of its beneficient provisions. Itherefore declare that the actual implementation of this special provision shall be subject to priorPresidential approval pursuant to the provisions of P.D. No. 1597 andR.A. No. 6758 (Veto Message, p. 13).

Petitioners claim that the Congress has required the deactivation of the CAFGU's when itappropriated the money for payment of the separation pay of the members of thereof. ThePresident, however, directed that the deactivation should be done in accordance to his timetable,taking into consideration the peace and order situation in the affected localities.

Petitioners complain that the directive of the President was tantamount to an administrativeembargo of the congressional will to implement the Constitution's command to dissolve the

CAFGU's (Rollo, G.R. No. 113174,p. 14; G.R. No. 113888, pp. 9, 14-16). They argue that the President cannot impair or withholdexpenditures authorized and appropriated by Congress when neither the Appropriations Act norother legislation authorize such impounding (Rollo, G.R. No. 113888, pp. 15-16).

The Solicitor General contends that it is the President, as Commander-in-Chief of the ArmedForces of the Philippines, who should determine when the services of the CAFGU's are no longerneeded (Rollo, G.R. No. 113888,pp. 92-95.).

This is the first case before this Court where the power of the President to impound is put in issue.Impoundment refers to a refusal by the President, for whatever reason, to spend funds madeavailable by Congress. It is the failure to spend or obligate budget authority of any type (Notes:

Impoundment of Funds, 86 Harvard Law Review 1505 [1973]).

Those who deny to the President the power to impound argue that once Congress has set asidethe fund for a specific purpose in an appropriations act, it becomes mandatory on the part of thePresident to implement the project and to spend the money appropriated therefor. The Presidenthas no discretion on the matter, for the Constitution imposes on him the duty to faithfully executethe laws.

In refusing or deferring the implementation of an appropriation item, the President in effectexercises a veto power that is not expressly granted by the Constitution. As a matter of fact, theConstitution does not say anything about impounding. The source of the Executive authority mustbe found elsewhere.

Proponents of impoundment have invoked at least three principal sources of the authority of thePresident. Foremost is the authority to impound given to him either expressly or impliedly by

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Congress. Second is the executive power drawn from the President's role as Commander-in-Chief.Third is the Faithful Execution Clause which ironically is the same provision invoked by petitionersherein.

The proponents insist that a faithful execution of the laws requires that the President desist fromimplementing the law if doing so would prejudice public interest. An example given is whenthrough efficient and prudent management of a project, substantial savings are made. In such acase, it is sheer folly to expect the President to spend the entire amount budgeted in the law(Notes: Presidential Impoundment : Constitutional Theories and Political Realities, 61 Georgetown

Law Journal 1295 [1973]; Notes; Protecting the Fisc: Executive Impoundment and CongressionalPower , 82 Yale Law Journal 1686 [1973).

We do not find anything in the language used in the challenged Special Provision that would implythat Congress intended to deny to the President the right to defer or reduce the spending, muchless to deactivate 11,000 CAFGU members all at once in 1994. But even if such is the intention, theappropriation law is not the proper vehicle for such purpose. Such intention must be embodiedand manifested in another law considering that it abrades the powers of the Commander-in-Chiefand there are existing laws on the creation of the CAFGU's to be amended. Again we state: aprovision in an appropriations act cannotbe used to repeal or amend other laws, in this case, P.D. No. 1597 and R.A. No. 6758.

7. Condition on the appropriation for the Supreme Court, etc.

(a) In the appropriations for the Supreme Court, Ombudsman, COA, and CHR, the Congressadded the following provisions:

The Judiciary

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Special Provisions

1. Augmentation of any Item in the Court's Appropriations. Any savings in the appropriations forthe Supreme Court and the Lower Courts may be utilized by the Chief Justice of the SupremeCourt to augment any item of the Court's appropriations for (a) printing of decisions and

publication of "Philippine Reports"; (b) Commutable terminal leaves of Justices and otherpersonnel of the Supreme Court and payment of adjusted pension rates to retired Justices entitledthereto pursuant to Administrative Matter No. 91-8-225-C.A.; (c) repair, maintenance, improvementand other operating expenses of the courts' libraries, including purchase of books and periodicals;(d) purchase, maintenance and improvement of printing equipment; (e) necessary expenses forthe employment of temporary employees, contractual and casual employees, for judicialadministration; (f) maintenance and improvement of the Court's Electronic DataProcessing System; (g) extraordinary expenses of the Chief Justice, attendance in internationalconferences and conduct of training programs; (h) commutable transportation and representationallowances and fringe benefits for Justices, Clerks of Court, Court Administrator, Chiefs of Officesand other Court personnel in accordance with the rates prescribed by law; and (i) compensation ofattorney-de-officio: PROVIDED, That as mandated by LOI No. 489 any increase in salary andallowances shall be subject to the usual procedures and policies as provided for under

P.D. No. 985 and other pertinent laws (GAA of 1994, p. 1128; Emphasis supplied).

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Commission on Audit

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5. Use of Savings. The Chairman of the Commission on Audit is hereby authorized, subject toappropriate accounting and auditing rules and regulations, to use savings for the payment offringe benefits as may be authorized by law for officials and personnel of the Commission (GAA of1994, p. 1161; Emphasis supplied).

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Office of the Ombudsman

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6. Augmentation of Items in the appropriation of the Office of the Ombudsman. The Ombudsmanis hereby authorized, subject to appropriate accounting and auditing rules and regulations toaugment items of appropriation in the Office of the Ombudsman from savings in other items ofappropriation actually released, for: (a) printing and/or publication of decisions, resolutions,training and information materials; (b) repair, maintenance and improvement of OMB Central andArea/Sectoral facilities; (c) purchase of books, journals, periodicals and equipment;(d) payment of commutable representation and transportation allowances of officials andemployees who by reason of their positions are entitled thereto and fringe benefits as may be

authorized specifically by law for officials and personnel of OMB pursuant to Section 8 of Article IX-B of the Constitution; and (e) for other official purposes subject to accounting and auditing rulesand regulations (GAA of 1994, p. 1174; Emphasis supplied).

xxx xxx xxx

Commission on Human Rights

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1. Use of Savings. The Chairman of the Commission on Human Rights (CHR) is hereby authorized,subject to appropriate accounting and auditing rules and regulations, to augment any item ofappropriation in the office of the CHR from savings in other items of appropriations actuallyreleased, for: (a) printing and/or publication of decisions, resolutions, training materials andeducational publications; (b) repair, maintenance and improvement of Commission's central andregional facilities; (c) purchase of books, journals, periodicals and equipment, (d) payment ofcommutable representation and transportation allowances of officials and employees who byreason of their positions are entitled thereto and fringe benefits, as may be authorized by law forofficials and personnel of CHR, subject to accounting and auditing rules and regulations (GAA of1994, p. 1178; Emphasis supplied).

In his Veto Message, the President expressed his approval of the conditions included in the GAA of1994. He noted that:

P f th C




The said condition is consistent with the Constitutional injunction prescribed under Section 8,Article IX-B of the Constitution which states that "no elective or appointive public officer oremployee shall receive additional, double, or indirect compensation unless specifically authorizedby law." I am, therefore, confident that the heads of the said offices shall maintain fidelity to the lawand faithfully adhere to the well-established principle on compensation standardization (VetoMessage, p. 10).

Petitioners claim that the conditions imposed by the President violated the independence andfiscal autonomy of the Supreme Court, the Ombudsman, the COA and the CHR.

In the first place, the conditions questioned by petitioners were placed in the GAB by Congressitself, not by the President. The Veto Message merely highlighted the Constitutional mandate thatadditional or indirect compensation can only be given pursuant to law.

In the second place, such statements are mere reminders that the disbursements of appropriationsmust be made in accordance with law. Such statements may, at worse, be treated as superfluities.

(b) In the appropriation for the COA, the President imposed the condition that the implementationof the budget of the COA be subject to "the guidelines to be issued by the President."

The provisions subject to said condition reads:

xxx xxx xxx

3. Revolving Fund. The income of the Commission on Audit derived from sources authorized bythe Government Auditing Code of the Philippines (P.D. No. 1445) not exceeding Ten Million Pesos(P10,000,000) shall be constituted into a revolving fund which shall be used for maintenance,operating and other incidental expenses to enhance audit services and audit-related activities. Thefund shall be deposited in an authorized government depository ban, and withdrawals therefromshall be made in accordance with the procedure prescribed by law and implementing rules andregulations: PROVIDED, That any interests earned on such deposit shall be remitted at the end ofeach quarter to the national Treasury and shall accrue to the General Fund: PROVIDED FURTHER,

That the Commission on Audit shall submit to the Department of Budget and Management aquarterly report of income and expenditures of said revolving fund (GAA of 1994, pp. 1160-1161).

The President cited the "imperative need to rationalize" the implementation, applicability andoperation of use of income and revolving funds. The Veto Message stated:

. . . I have observed that there are old and long existing special provisions authorizing the use ofincome and the creation of revolving funds. As a rule, such authorizations should be discouraged.However, I take it that these authorizations have legal/statutory basis aside from being already avested right to the agencies concerned which should not be jeopardized through the VetoMessage. There is, however, imperative need to rationalize their implementation, applicability andoperation. Thus, in order to substantiate the purpose and intention of said provisions, I herebydeclare that the operationalization of the following provisions during budget implementation shallbe subject to the guidelines to be issued by the President pursuant to Section 35, Chapter 5, BookVI of E.O. No. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of theGeneral Provisions of this Act (Veto Message, p. 6; Emphasis Supplied.)

(c) In the appropriation for the DPWH, the President imposed the condition that in theimplementation of DPWH projects, the administrative and engineering overhead of 5% and 3%"shall be subject to the necessary administrative guidelines to be formulated by the Executivepursuant to existing laws." The condition was imposed because the provision "needs further study"according to the President.

The following provision was made subject to said condition:

9. Engineering and Administrative Overhead. Not more than five percent (5%) of the amount forinfrastructure project released by the Department of Budget and Management shall be deductedby DPWH for administrative overhead, detailed engineering and construction supervision, testingand quality control, and the like, thus insuring that at least ninety-five percent (95%) of the releasedfund is available for direct implementation of the project. PROVIDED, HOWEVER, That for schoolbuildings, health centers, day-care centers and barangay halls, the deductible amount shall notexceed three percent (3%).

Violation of, or non-compliance with, this provision shall subject the government official oremployee concerned to administrative, civil and/or criminal sanction under Sections 43 and 80,Book VI of E.O.No. 292 (GAA of 1994, p. 786).

(d) In the appropriation for the National Housing Authority (NHA), the President imposed the

condition that allocations for specific projects shall be released and disbursed "in accordance withthe housing program of the government, subject to prior Executive approval."

The provision subject to the said condition reads:

3. Allocations for Specified Projects. The following allocations for the specified projects shall be setaside for corollary works and used exclusively for the repair, rehabilitation and construction ofbuildings, roads, pathwalks, drainage, waterworks systems, facilities and amenities in the area:PROVIDED, That any road to be constructed or rehabilitated shall conform with the specificationsand standards set by the Department of Public Works and Highways for such kind of road:PROVIDED, FURTHER, That savings that may be available in the future shall be used for road repair,rehabilitation and construction:

(1) Maharlika Village Road — Not less than P5,000,000

(2) Tenement Housing Project (Taguig) — Not less than P3,000,000

(3) Bagong Lipunan Condominium Project (Taguig) — Not less than P2,000,000

4. Allocation of Funds. Out of the amount appropriated for the implementation of various projectsin resettlement areas, Seven Million Five Hundred Thousand Pesos (P7,500,000) shall be allocatedto the Dasmariñas Bagong Bayan resettlement area, Eighteen Million Pesos (P18,000,000) to theCarmona Relocation Center Area (Gen. Mariano Alvarez) and Three Million Pesos (P3,000,000) tothe Bulihan Sites and Services, all of which will be for the cementing of roads in accordance withDPWH standards.





5. Allocation for Sapang Palay. An allocation of Eight Million Pesos (P8,000,000) shall be set asidefor the asphalting of seven (7) kilometer main road of Sapang Palay, San Jose Del Monte, Bulacan(GAA of 1994, p. 1216).

The President imposed the conditions: (a) that the "operationalization" of the special provision onrevolving funds of the COA "shall be subject to guidelines to be issued by the President pursuantto Section 35, Chapter 5,Book VI of E.O. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of theGeneral Provisions of this Act" (Rollo, G.R.No. 113174, pp. 5,7-8); (b) that the implementation of Special Provision No. 9 of the DPWH on themandatory retention of 5% and 3% of the amounts released by said Department "be subject to thenecessary administrative guidelines to be formulated by the Executive pursuant to existinglaw" (Rollo, G.R. No. 113888; pp. 10, 14-16); and (c) that the appropriations authorized for the NHAcan be released only "in accordance with the housing program of the government subject to priorExecutive approval" (Rollo, G.R. No. 113888, pp. 10-11;14-16).

The conditions objected to by petitioners are mere reminders that the implementation of the itemson which the said conditions were imposed, should be done in accordance with existing laws,regulations or policies. They did not add anything to what was already in place at the time of theapproval of the GAA of 1994.

There is less basis to complain when the President said that the expenditures shall be subject toguidelines he will issue. Until the guidelines are issued, it cannot be determined whether they areproper or inappropriate. The issuance of administrative guidelines on the use of public fundsauthorized by Congress is simply an exercise by the President of his constitutional duty to see thatthe laws are faithfully executed (1987 Constitution, Art. VII, Sec. 17; Planas v. Gil 67 Phil. 62 [1939]).Under the Faithful Execution Clause, the President has the power to take "necessary and propersteps" to carry into execution the law (Schwartz, On Constitutional Law, p. 147 [1977]). These stepsare the ones to be embodied in the guidelines.

IV

Petitioners chose to avail of the special civil actions but those remedies can be used only whenrespondents have acted "without or in excess" of jurisdiction, or "with grave abuse of

discretion," (Revised Rules of Court,Rule 65, Section 2). How can we begrudge the President for vetoing the Special Provision on theappropriation for debt payment when he merely followed our decision in Gonzales? How can wesay that Congress has abused its discretion when it appropriated a bigger sum for debt paymentthan the amount appropriated for education, when it merely followed our dictum in Guingona?

Article 8 of the Civil Code of Philippines, provides:

Judicial decisions applying or interpreting the laws or the constitution shall from a part of the legalsystem of the Philippines.

The Court's interpretation of the law is part of that law as of the date of its enactment since thecourt's interpretation merely establishes the contemporary legislative intent that the construed law

purports to carry into effect (People v. Licera, 65 SCRA 270 [1975]). Decisions of the Supreme

Court assume the same authority as statutes (Floresca v. Philex Mining Corporation, 136 SCRA 141[1985]).

Even if Guingona and Gonzales are considered hard cases that make bad laws and should bereversed, such reversal cannot nullify prior acts done in reliance thereof.

WHEREFORE, the petitions are DISMISSED, except with respect to(1) G.R. Nos. 113105 and 113766 only insofar as they pray for the annulment of the veto of thespecial provision on debt service specifying that the fund therein appropriated "shall be used forpayment of the principal and interest of foreign and domestic indebtedness" prohibiting the useof the said funds "to pay for the liabilities of the Central Bank Board of Liquidators", and (2) G.R.No. 113888 only insofar as it prays for the annulment of the veto of: (a) the second paragraph ofSpecial Provision No. 2 of the item of appropriation for the Department of Public Works andHighways (GAA of 1994, pp. 785-786); and (b) Special Provision No. 12 on the purchase ofmedicines by the Armed Forces of the Philippines (GAA of 1994, p. 748), which is GRANTED.

SO ORDERED.

Narvasa, C.J., Feliciano, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan and

Mendoza, JJ., concur.

Separate Opinions

PADILLA, J., concurring and dissenting:

I concur with the ponencia of Mr. Justice Camilo D. Quiason except in so far as it re-affirms theCourt's decision in Gonzalez v . Macaraig (191 SCRA 452).

Sec. 27(2), Art. VI of the Constitution states:

The President shall have the power to veto any particular item or items in an appropriation,revenue, or tariff bill, but the veto shall not effect the item or items to which he does not object.

In my dissenting opinion in Gonzalez, I stated that:

The majority opinion positions the veto questioned in this case within the scope of Section 27(2)[Article VI of the Constitution]. I do not see how this can be done without doing violence to theconstitutional design. The distinction between an item-veto and a provision veto has beentraditionally recognized in constitutional litigation and budgetary practice. As stated by Mr. JusticeSutherland, speaking for the U.S. Supreme Court in Bengzon v . Secretary of Justice, 299 U.S.410-416:

. . . An item of an appropriation bill obviously means an item which in itself is a specificappropriation of money, not some general provisions of law which happens to be put into anappropriation bill . . .





When the Constitution in Section 27(2) empowers the President to veto any particular item oritems in the appropriation act, it does notconfer — in fact, it excludes — the power to veto any particular provision or provisions in said act.

In an earlier case, Sarmiento v . Mison, et al. , 156 SCRA 549, this court referred to its duty toconstrue the Constitution, not in accordance with how the executive or the legislative would want itconstrued, but in accordance with what it says and provides. When the Constitution states that thePresident has the power to veto any particular item or items in the appropriation act, this must betaken as a component of that delicate balance of power between the executive and legislative, sothat, for this Court to construe Sec. 27(2) of the Constitution as also empowering the President toveto any particular provision or provisions in the appropriations act, is to load the scale in favor ofthe executive, at the expense of that delicate balance of power.

I therefore disagree with the majority's pronouncements which would validate the veto by thePresident of specific provisions in the appropriations act based on the contention that such are"inappropriate provisions." Even assuming, for the sake of argument, that a provision in theappropriations act is "inappropriate" from the Presidential standpoint, it is still a provision, not anitem, in an appropriations act and, therefore, outside the veto power of the Executive.

VITUG, J., concurring:

I concur on the points so well expounded by a most respected colleague, Mr. Justice Camilo D.

Quiason. I should like to highlight a bit, however, that part of the ponencia dealing on theCountrywide Development Fund or, so commonly referred to as, the infamous "pork barrel".

I agree that it lies with Congress to determine in an appropriation act the activities and the projectsthat are desirable and may thus be funded. Once, however, such identification and thecorresponding appropriation therefore is done, the legislative act is completed and it ends there.Thereafter, the Executive is behooved, with exclusive responsibility and authority, to see to it thatthe legislative will is properly carried out. I cannot subscribe to another theory invoked by somequarters that, in so implementing the law, the Executive does so only by way of delegation.Congress neither may delegate what it does not have nor may encroach on the powers of a co-equal, independent and coordinate branch.

Within its own sphere, Congress acts as a body, not as the individuals that comprise it, in any action

or decision that can bind it, or be said to have been done by it, under its constitutional authority.Even assuming that overseeing the laws it enacts continues to be a legislative process, one that Ifind difficult to accept, it is Congress itself, not any of its members, that must exercise that function.

I cannot debate the fact that the members of Congress, more than the President and hiscolleagues, would have the best feel on the needs of their own respective cosntituents. I see nolegal obstacle, however, in their making, just like anyone else, the proper recommendations toalbeit not necessarily conclusive on, the President for the purpose. Neother would it beobjectionable for Congrss, by law, to appropriate funds for specific projects as it may be minded;to give that authoriy, however, to the individual members of Congress in whatever guise, I amafraid, would be constitutionality impermissible.

# Separate Opinions

PADILLA, J., concurring and dissenting:

I concur with the ponencia of Mr. Justice Camilo D. Quiason except in so far as it re-affirms theCourt's decision in Gonzalez v . Macaraig (191 SCRA 452).

Sec. 27(2), Art. VI of the Constitution states:

The President shall have the power to veto any particular item or items in an appropriation,revenue, or tariff bill, but the veto shall not effect the item or items to which he does not object.

In my dissenting opinion in Gonzalez, I stated that:

The majority opinion positions the veto questioned in this case within the scope of Section 27(2)[Article VI of the Constitution]. I do not see how this can be done without doing violence to theconstitutional design. The distinction between an item-veto and a provision veto has beentraditionally recognized in constitutional litigation and budgetary practice. As stated by Mr. JusticeSutherland, speaking for the U.S. Supreme Court in Bengzon v . Secretary of Justice, 299 U.S.410-416:

. . . An item of an appropriation bill obviously means an item which in itself is a specificappropriation of money, not some general provisions of law which happens to be put into anappropriation bill . . .

When the Constitution in Section 27(2) empowers the President to veto any particular item oritems in the appropriation act, it does notconfer — in fact, it excludes — the power to veto any particular provision or provisions in said act.

In an earlier case, Sarmiento v . Mison, et al. , 156 SCRA 549, this court referred to its duty toconstrue the Constitution, not in accordance with how the executive or the legislative would want itconstrued, but in accordance with what it says and provides. When the Constitution states that thePresident has the power to veto any particular item or items in the appropriation act, this must betaken as a component of that delicate balance of power between the executive and legislative, sothat, for this Court to construe Sec. 27(2) of the Constitution as also empowering the President toveto any particular provision or provisions in the appropriations act, is to load the scale in favor ofthe executive, at the expense of that delicate balance of power.

I therefore disagree with the majority's pronouncements which would validate the veto by thePresident of specific provisions in the appropriations act based on the contention that such are"inappropriate provisions." Even assuming, for the sake of argument, that a provision in theappropriations act is "inappropriate" from the Presidential standpoint, it is still a provision, not anitem, in an appropriations act and, therefore, outside the veto power of the Executive.

VITUG, J., concurring:

I concur on the points so well expounded by a most respected colleague, Mr. Justice Camilo D.Quiason. I should like to highlight a bit, however, that part of the ponencia dealing on theCountrywide Development Fund or, so commonly referred to as, the infamous "pork barrel".

I agree that it lies with Congress to determine in an appropriation act the activities and the projectsthat are desirable and may thus be funded. Once, however, such identification and the





corresponding appropriation therefore is done, the legislative act is completed and it ends there.Thereafter, the Executive is behooved, with exclusive responsibility and authority, to see to it thatthe legislative will is properly carried out. I cannot subscribe to another theory invoked by somequarters that, in so implementing the law, the Executive does so only by way of delegation.Congress neither may delegate what it does not have nor may encroach on the powers of a co-equal, independent and coordinate branch.

Within its own sphere, Congress acts as a body, not as the individuals that comprise it, in any actionor decision that can bind it, or be said to have been done by it, under its constitutional authority.Even assuming that overseeing the laws it enacts continues to be a legislative process, one that Ifind difficult to accept, it is Congress itself, not any of its members, that must exercise that function.

I cannot debate the fact that the members of Congress, more than the President and hiscolleagues, would have the best feel on the needs of their own respective constituents. I see nolegal obstacle, however, in their making, just like anyone else, the proper recommendations to,albeit not necessarily conclusive on, the President for the purpose. Neither would it beobjectionable for Congress, by law, to appropriate funds for such specific projects as it may beminded; to give that authority, however, to the individual members of Congress in whatever guise,I am afraid, would be constitutionally impermissible.




g


Manila

EN BANC

G.R. No. 89914 November 20, 1991

JOSE F.S. BENGZON JR., ABELARDO TERMULO, JOSE MANTECON, VICENTE MILLS JR.,LEONARDO GAMBOA, KURT BACHMANN JR., JOSE V.E. JIMENEZ, ERNESTO CALUYA, AGERICO UNGSON, SUSAN ROXAS, ELVIE CASTILLO, and CYNTHIA SABIDO LIMJAP, petitioners,vs.

THE SENATE BLUE RIBBON COMMITTEE AND ITS MEMBERS, represented by and through theCHAIRMAN, HON. WIGBERTO TAÑADA, respondents, JOSE S. SANDEJAS, intervenor.

Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioners.

Balgos & Perez for intervening petitioner.

Eddie Tamondong and Antonio T. Tagaro for respondents.

PADILLA, J.:p

This is a petition for prohibition with prayer for the issuance of a temporary restraining order and/or injuective relief, to enjoin the respondent Senate Blue Ribbon committee from requiring thepetitioners to testify and produce evidence at its inquiry into the alleged sale of the equity ofBenjamin "Kokoy" Romualdez to the Lopa Group in thirty-six (36) or thirty-nine (39) corporations.

On 30 July 1987, the Republic of the Philippines, represented by the Presidential Commission onGood Government (PCGG), assisted by the Solicitor General, filed with the Sandiganbayan CivilCase No. 0035 (PCGG Case No. 35) entitled "Republic of the Philippines vs. Benjamin "Kokoy"Romualdez, et al.", for reconveyance, reversion, accounting, restitution and damages.

The complaint was amended several times by impleading new defendants and/or amplifying theallegations therein. Under the Second Amended Complaint, 1 the herein petitioners wereimpleaded as party defendants.

The complaint insofar as pertinent to herein petitioners, as defendants, alleges among others that:

14. Defendants Benjamin (Kokoy) Romualdez and Juliette Gomez Romualdez, acting bythemselves and/or in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos,and taking undue advantage of their relationship, influence and connection with the latterDefendant spouses, engaged in devices, schemes and strategems to unjuestly enrigh themselvesat the expense of Plaintiff and the Filipino people, among others:

(a) Obatained, with the active collaboration of Defendants Sene J. Gabaldon, Mario D. Camacho,Mamerto Nepomuceno, Carlos J. Valdez, Cesar C. Zalamea and Francisco Tantuico, Atty. JoseBengzon, Jr. and his law partners, namely: Edilberto S. Narciso, Jr., Jose Vicente E. Jimenez,Amando V. Faustino, Jr., and Leonardo C. Cruz; Jose S. Sandejas and his fellow senior managers ofFMMC/PNI Holdings groups of companies such as Leonardo Gamboa, Vicente T. Mills, Jr., Jose M.Mantecon, Abelardo S. Termulo, Rex C. Drilon II and Kurt Bachmann, Jr., control of some of thebiggest business enterprises in the Philippines, such as the Manila Corporation (MERALCO),Benguet Consolidated and the Philippine Commercial International Bank (PCI Bank) by employingdevious financial schemes and techniques calculated to require the massive infusion and

hemorrhage of government funds with minimum or negligible "cashout" from DefendantBenjamin Romualdez...

xxx xxx xxx

(m) manipulated, with the support, assistance and collaboration of Philgurantee officials led bychairman Cesar E.A. Virata and the Senior managers of FMMC/PNI Holdings, Inc. led by Jose S.Sandejas, Jr., Jose M. Mantecom and Kurt S. Bachmann, Jr., among others, the formation ofErectors Holdings, Inc. without infusing additional capital solely for the purpose of ErectorsIncorporated with Philguarantee in the amount of P527,387,440.71 with insufficient securities/collaterals just to enable Erectors Inc, to appear viable and to borrow more capitals, so much sothat its obligation with Philgurantee has reached a total of more than P2 Billion as of June 30, 1987.

(n) at the onset of the present Administration and/or within the week following the February 1986People's Revolution, in conspiracy with, supoort, assistance and collaboration of the abovenamedlawyers of the Bengzon Law Offices, or specifically Defendants Jose F.S. Bengzon, Jr., V.E. Jimenez,Amando V. Faustino, Jr., and Edilberto S. Narciso, Jr., manipulated, shcemed, and/or executed aseries of devices intended to conceal and place, and/or for the purpose of concealing and placing,beyond the inquiry and jurisdiction of the Presidential Commission on Good Government (PCGG)herein Defendant's individual and collective funds, properties, and assets subject of and/or suitedint he instant Complaint.

(o) manuevered, with the technical know-how and legalitic talents of the FMMC senior managerand some of the Bengzon law partners, such as Attys. Jose F.S. Bengzon, Jr., Edilberto S. Narciso,Jr., Amando V. Faustino, Jose Vicente E. Jimenez and Leonardo C. Cruz, the purported sale ofdefendant Benjamin Romualdez's interests in the (i) Professional Managers, (ii) A & E International

Corporation (A & E), (iii) First Manila Managerment Corporation (FMMC), (iv) Philippine WorldTravel Inc. (PWTI) and its subsidiaries consisting of 36 corporations in all, to PNI Holdings, Inc.(wjose purported incorporations are all members of Atty. Jose F.S. Bengzon's law firm) for only P5million on March 3, 1986 or three days after the creation of the Presidential Commission on GoodGovernment on February 28, 1986, for the sole purpose of deceiving and preempting theGovernment, particularly the PCGG, and making it appear that defendant Benjamin Romualdezhad already divested himself of his ownership of the same when in truth and in fact, his interestsare well intact and being protected by Atty. Jose F.S. Bengzon, Jr. and some of his law partners,together with the FMMC senior managers who still control and run the affiars of said corporations,and in order to entice the PCGG to approve the said fictitious sale, the above-named defendantsoffered P20 million as "donation" to the Government;

(p) misused, with the connivance, support and technical assitance of the Bengzon law firm

represented by Atty. Jose F.S. Bengzon, Jr. as legal counsel, together with defendants Cesar




g

Zalamea, Antonio Ozaeta, Mario D. Camacho amd Senen J. Gabaldon as members of the Board ofDirectors of the Philippine Commercial International bank (PCIB), the Meralco Pension Fund (Fund,for short) in the amount of P25 million by cuasing it to be invested in the PCIB and through theBank's TSG, assigned to PCI Development and PCI Equity at 50% each, the Fund's (a) 8,028.011common shares in the Bank and (b) "Deposit in Subscription" in the amount of P4,929.972.50 butof the agreed consideration of P28 million for the said assignment, PCI Development and PCIEquity were able to pay only P5,500.00 downpayment and the first amortization of P3,937,500.00thus prompting the Fund to rescind its assignment, and the consequent reversion of the assignedbrought the total shareholding of the Fund to 11,470,555 voting shares or 36.8% of the voting

stock of the PCIB, and this development (which the defendants themselves orchestrated orallowed to happen) was used by them as an excuse for the unlawful dismantling or cancellation ofthe Fund's 10 million shares for allegedly exceeding the 30-percent ceiling prescribed by Section12-B of the General Banking Act, although they know for a fact that what the law declares asunlawful and void ab initio are the subscriptions in excess of the 30% ceiling "to the extent of theexcess over any of the ceilings prescribed ..." and not the whole or entire stockholding which theyallowed to stay for six years (from June 30, 1980 to March 24, 1986);

(q) cleverly hid behind the veil of corporate entity, through the use of the names and managerialexpertise of the FMMC senior manager and lawyers identified as Jose B. Sandejas, LeonardoGamboa, Vicente T. Mills, Abelardo S, Termulo, Edilberto S. Narciso, Jr., Jose M. Mantecon, Rex C.Drilon II, Kurt Bachmann, Jr. together with the legal talents of corporate lawyers, such as Attys. JoseF.S. Bengzon, Jr., Jose V.E. Jimenez, Amando V. Faustino, Jr., and Leonardo C. Cruz, the ill-gotten

wealth of Benjamin T. Romualdez including, among others, the 6,229,177 shares in PCIB registeredin the names of Trans Middle East Phils. Equities, Inc. and Edilberto S. Narciso, Jr. which theyrefused to surrender to PCGG despite their disclosure as they tried and continue to exert efforts ingetting hold of the same as well as the shares in Benguet registered in the names of Palm AvenueHoldings and Palm Avenue Realty Development Corp. purportedly to be applied as payment forthe claim of P70 million of a "merger company of the First Manila Managerment Corp. group"supposedly owned by them although the truth is that all the said firms are still beneficially ownedby defendants Benjamin Romualdez.

xxx xxx xxx

On 28 September 1988, petitioner (as defendants) filed their respective answers. 2 Meanwhile,from 2 to 6 August 1988, conflicting reports on the disposition by the PCGG of the "Romualdez

corporations" were carried in various metropolitan newspapers. Thus, one newspaper reportedthat the Romuladez firms had not been sequestered because of the opposition of certain PCGGofficials who "had worked prviously as lawyers of the Marcos crony firms." Another daily reportedotherwise, while others declared that on 3 March 1986, or shortly after the EDSA February 1986revolution, the Romualdez companies" were sold for P5 million, without PCGG approval, to aholding company controlled by Romualdez, and that Ricardo Lopa, the President's brother-in-law,had effectively taken over the firms, even pending negotiations for the purchase of thecorporations, for the same price of P5 million which was reportedly way below the fair value oftheir assets. 3

On 13 September 1988, the Senate Minority Floor Leader, Hon. Juan Ponce Enrile delivered aspeech "on a matter of personal privilege" before the Senate on the alleged "take-over personalprivilege" before the Senate on the alleged "take-over of SOLOIL Incorporated, the flaship of the

First Manila Management of Companies (FMMC) by Ricardo Lopa" and called upon "the Senate to

look into the possible violation of the law in the case, particularly with regard to Republic Act No.3019, the Anti-Graft and Corrupt Practices Act." 4

On motion of Senator Orlando Mercado, the matter was referred by the Senate to the Committeeon Accountability of Public Officers (Blue Ribbon Committee).5 Thereafter, the Senate Blue RibbonCommittee started its investigation on the matter. Petitioners and Ricardo Lopa were subpoenaedby the Committee to appear before it and testify on "what they know" regarding the "sale of thirty-six (36) corporations belonging to Benjamin "Kokoy" Romualdez."

At the hearing held on 23 May 1989, Ricardo Lopa declined to testify on the ground that histestimony may "unduly prejudice" the defendants in Civil Case No. 0035 before theSandiganbayan. Petitioner Jose F.S. Bengzon, Jr. likewise refused to testify involing hisconstitutional right to due process, and averring that the publicity generated by respondentsCommittee's inquiry could adversely affect his rights as well as those of the other petitioners whoare his co-defendants in Civil Case No. 0035 before the Sandiganbayan.

The Senate Blue Ribbon Committee, thereupon, suspended its inquiry and directed the petitionersto file their memorandum on the constitutional issues raised, after which, it issued a resolution 6 dated 5 June 1989 rejecting the petitioner's plea to be excused from testifying, and theCommittee voted to pursue and continue its investigation of the matter. Senator Neptali Gonzalesdissented. 7

Claiming that the Senate Blue Ribbon Committee is poised to subpoena them and required theirattendance and testimony in proceedings before the Committee, in excess of its jurisdiction andlegislative purpose, in clear and blatant disregard of their constitutional rights, and to their graveand irreparable damager, prejudice and injury, and that there is no appeal nor any other plain,speedy and adequate remedy in the ordinary course of law, the petitioners filed the presentpetition for prohibition with a prayer for temporary restraning order and/or injunctive relief.

Meanwhile, one of the defendants in Civil Case No. 0035 before the Sandiganbayan, Jose S.Sandejas, filed with the Court of motion for intervention, 8 which the Court granted in theresolution 9 of 21 December 1989, and required the respondent Senate Blue Ribbon Committeeto comment on the petition in intervention. In compliance, therewith, respondent Senate BlueRibbon Committee filed its comment 10 thereon.

Before discussing the issues raised by petitioner and intervenor, we will first tackle the jurisdictional question raised by the respondent Committee.

In its comment, respondent Committee claims that this court cannot properly inquire into themotives of the lawmakers in conducting legislative investigations, much less cna it enjoin theCongress or any its regular and special commitees — like what petitioners seek — from makinginquiries in aid of legislation, under the doctrine of separation of powers, which obtaines in ourpresent system of government.

The contention is untenable. In Angara vs. Electoral Commission, 11 the Court held:

The separation of powers is a fundamental principle in our system of government. It obtains nothrough express provision but by actual division in our Constitution. Each department of the

government has exclusive cognizance of matters wihtin its jurisdiction, and is supreme within itsown sphere. But it does not follow from the fact that the three powers are to be kept separate and




distinct that the Constitution intended them to be absolutely unrestrained and independent ofeach other. The Constitution has provided for an elaborate system of checks and balances tosecure coordination in the workings of the various departments of the government...

xxx xxx xxx

But in the main, the Constitution has blocked out with deft strokes and in bold lines, allotment ofpower to the executive, the legislative and the judicial departments of the government. Theovelapping and interlacing of funcstions and duties between the several deaprtments, however,sometimes makes it hard to say just where the political excitement, the great landmarks of theConstitution are apt to be forgotten or marred, if not entirely obliterated, in cases of conflict, the

judicial departments is the only constitutional organ which can be called upon to determine theproper allocation of powers between the several departments and among the integral orconstituent units thereof.

xxx xxx xxx

The Constitution is a definition of the powers of government. Who is to determine the nature,scope and extent of such powers? The Constitution itself has provided for the instrumentality ofthe judiciary as the rational way. And when the judiciary mediates to allocate constitutionalboundaries; it does not assert any superiority over the other departments; it does not inr ealitynullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligationassigned to it by tyhe Constitution to determine conflicting claims of authority under theConstitution and to established for the parties in an actual controversy the rights which thatinstrument secures and guarantess to them. This is in thruth all that is involved in what is termed"judicial supremacy" which properly is the power of judicial review under the Constitution. Eventhe, this power of judicial review is limited to actual cases and controversies to be exercised afterfull opportunity of argument by the parties, and limited further to the constitutional question raisedor the very lis mota presented. Any attempt at abstraction could only lead to dialectics and barrenlegal questions and to sterile conclusions unrelated to actualities. Narrowed as its function is in thismanner, the judiciary does not pass upon questions of wisdom, justice or expediency oflegislation. More thatn that, courts accord the presumption of constitutionality to legislativeenactments, not only because the legislature is presumed to abide by the Constitution but alsobecuase the judiciary in the determination of actual cases and controversies must reflect thewisdom and justice of the people as expressed through their representatives in the executive and

legislative departments of the government.

The "allocation of constituional boundaries" is a task that this Court must perfomr under theConstitution. Moreowever, as held in a recent case, 12 "(t)he political question doctrine neitherinterposes an obstacle to judicial determination of the rival claims. The jurisdiction to delimitconstitutional boundaries has been given to this Court. It cannot abdicate that obligationmandated by the 1987 Constitution, although said provision by no means does away with ktheapplicability of the principle in appropriate cases." 13

The Court is thus of the considered view that it has jurisdiction over the present controversy for thepurpose of determining the scope and extent of the power of the Senate Blue Ribbon Committeeto conduct inquiries into private affirs in purported aid of legislation.

Coming to the specific issues raised in this case, petitioners contend that (1) the Senate BlueRibbon Committee's inquiry has no valid legislative purpose, i.e., it is not done in aid of legislation;

(2) the sale or disposition of hte Romualdez corporations is a "purely private transaction" which isbeyond the power of the Senate Blue Ribbon Committee to inquire into; and (3) the inquiryviolates their right to due process.

The 1987 Constition expressly recognizes the power of both houses of Congress to conductinquiries in aid of legislation.14 Thus, Section 21, Article VI thereof provides:

The Senate or the House of Representatives or any of its respective committee may conductinquiries in aid of legislation in accordance with its duly published rules of procedure. The rights ofpersons appearing in or affected by such inquiries shall be respected. 15

The power of both houses of Congress to conduct inquiries in aid of legislation is not, therefore,absolute or unlimited. Its exercise is circumscribed by the afore-quoted provision of theConstitution. Thus, as provided therein, the investigation must be "in aid of legislation inaccordance with its duly published rules of procedure" and that "the rights of persons appearingin or affected by such inquiries shall be respected." It follows then that the rights of persons underthe Bill of Rights must be respected, including the right to due process and the right not to becompelled to testify against one's self.

The power to conduct formal inquiries or investigations in specifically provided for in Sec. 1 of theSenate Rules of Procedure Governing Inquiries in Aid of Legislation. Such inquiries may refer to theimplementation or re-examination of any law or in connection with any proposed legislation or theformulation of future legislation. They may also extend to any and all matters vested by theConstitution in Congress and/or in the Seante alone.

As held in Jean L. Arnault vs. Leon Nazareno, et al., 16 the inquiry, to be within the jurisdiction ofthe legislative body making it, must be material or necessary to the exervise of a power in it vestedby the Constitution, such as to legislate or to expel a member.

Under Sec. 4 of the aforementioned Rules, the Senate may refer to any committee or committeesany speech or resolution filed by any Senator which in tis judgment requires an appropriate inquiryin aid of legislation. In order therefore to ascertain the character or nature of an inquiry, resort mustbe had to the speech or resolution under which such an inquiry is proposed to be made.

A perusal of the speech of Senator Enrile reveals that he (Senator Enrile) made a statement which

was published in various newspapers on 2 September 1988 accusing Mr. Ricardo "Baby" Lopa of"having taken over the FMMC Group of Companies." As a consequence thereof, Mr. Lopa wrote aletter to Senator Enrile on 4 September 1988 categorically denying that he had "taken over " theFMMC Group of Companies; that former PCGG Chairman Ramon Diaz himself categorically statedin a telecast interview by Mr. Luis Beltran on Channel 7 on 31 August 1988 that there has been notakeover by him (Lopa); and that theses repeated allegations of a "takeover" on his (Lopa's) part ofFMMC are baseless as they are malicious.

The Lopa reply prompted Senator Enrile, during the session of the Senate on 13 September 1988,to avail of the privilege hour, 17 so that he could repond to the said Lopa letter, and also tovindicate his reputation as a Member of the Senate of the Philippines, considering the claim of Mr.Lopa that his (Enrile's) charges that he (Lopa) had taken over the FMMC Group of Companies are"baseless" and "malicious." Thus, in his speech, 18 Senator Enrile said, among others, as follows:




Mr. President, I rise this afternnon on a matter of personal privilege; the privilege being that Ireceived, Mr. President, a letter dated September 4, 1988, signed by Mr. ricardo A. Lopa, a.k.a. orBaby Lopa, wherein he denied categorically that he has taken over the First Manila ManagementGroup of Companies which includes SOLOIL Incorporated.

xxx xxxx xxx

In answer to Mr. Lopa, I will quote pertinent portions from an Official Memorandum to thePresidential Commission of Good Government written and signed by former Governor, nowCongressman Jose Ramirez, in his capacity as head of the PCGG Task Force for Region VIII. In hismemorandum dated July 3, 1986, then Governor Ramirez stated that when he and the members ofhis task force sought to serve a sequestration order on the management of SOLOIL in Tanauan,Leyte, management officials assured him that relatives of the President of the Philippines werepersonally discussing and representing SOLOIL so that the order of sequestration would be liftedand that the new owner was Mr. Ricardo A. Lopa.

I will quote the pertinent portions in the Ramire's memorandum.

The first paragraph of the memorandum reads as follows and I quote, Mr. President:

"Our sequestration work of SOLOIL in Tanauan, Leyte was not heeded by management becausethey said another representation was being made to this Commission for the ventual lifting of oursequestrationorder. They even assured us that Mr. Ricardo Lopa and Peping Cojunangco werepersonally discussing and representing SOLOIL, so the order of sequestration will finally be lifted.While we attempted to carry on our order, management refused to cooperate and vehementlyturned down our request to make available to us the records of the company. In fact it wasobviously clear that they will meet us with forcethe moment we insist on doing normally ourassigned task. In view of the impending threat, and to avoid any untoward incident we decided totemporarily suspend our work until there is a more categorical stand of this Commission in view ofthe seemingly influential represetation being made by SOLOIL for us not to continue our work."

Another pertinent portion of the same memorandum is paragraph five, which reads as follows, andI quote Mr. President:

"The President, Mr. Gamboa, this is, I understand, the President of SOLOIL, and the Plant

Superintendent, Mr. Jimenez including their chief counsel, Atty. Mandong Mendiola are nowsaying that there have been divestment, and that the new owner is now Mr. Ricardo Lopa whoaccording to them, is the brother-in-law of the President. They even went further by telling us thateven Peping Cojuangco who we know is the brother of her excellency is also interested in theownership and management of SOLOIL. When he demanded for supporting papers which willindicate aforesaid divestment, Messrs. Gamboa, Jimenez and Mendiola refused vehemently tosubmit these papers to us, instead they said it will be submitted directly to this Commission. To ourmind their continuous dropping of names is not good for this Commission and even to thePresident if our dersire is to achieve respectability and stability of the government."

The contents of the memorandum of then Governor and now Congressman Jose Ramirez werepersonally confirmed by him in a news interview last September 7, 1988.

xxx xxxx xxx

Also relevant to this case, Mr. President, is a letter of Mr. Ricardo Lopa himself in August 11, 1988issue of the newspaper Malaya headlined "On Alleged Takeover of Romualdez Firms."

Mr. Lopa states in the last paragraph of the published letter and I quote him:

12. As of this writing, the sales agreement is under review by the PCGG solely to determine theappropriate price. The sale of these companies and our prior rigtht to requires them have neverbeen at issue.

Perhaps I could not make it any clearer to Mr. Lopa that I was not really making baseless and

malicious statements.

Senator Enrile concluded his privilege speech in the following tenor:

Mr. President, it may be worthwhile for the Senate to look into the possible violation of the law inthe case particularly with regard to Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act,Section 5 of which reads as follows and I quote:

Sec. 5. Prohibition on certain relatives. — It shall be unlawful for the spouse or for nay relative, byconsanguinity or affinity, within the third civil degree, of the President of the Philippines, the Vice-President of the Philippines, the President of the Senate, or the Speaker of the House ofRepresentatives, to intervene directly or indirectly, in any business, transaction, contract orapplication with the Government: Provided, that this section shall not apply to any person whoprior to the assumption of office of any of the above officials to whom he is related, has beenalready dealing with the Government along the same line of business, nor to any transaction,contract or application filed by him for approval of which is not discretionary on the part of theofficials concerned but depends upon compliance with requisites provided by law, nor to any actlawfully performed in an official capacity or in the exercise of a profession.

Mr. President, I have done duty to this Senate and to myself. I leave it to this august Body to makeits own conclusion.

Verily, the speech of Senator Enrile contained no suggestion of contemplated legislation; hemerely called upon the Senate to look into a possible violation of Sec. 5 of RA No. 3019, otherwiseknown as "The Anti-Graft and Corrupt Practices Act." I other words, the purpose of the inquiry tobe conducted by respondent Blue Ribbon commitee was to find out whether or not the relatives ofPresident Aquino, particularly Mr. ricardo Lopa, had violated the law in connection with the allegedsale of the 36 or 39 corporations belonging to Benjamin "Kokoy" Romualdez to the Lopaa Group.There appears to be, therefore, no intended legislation involved.

The Court is also not impressed with the respondent Committee's argument that the questionedinquiry is to be conducted pursuant to Senate Resolution No. 212. The said resolution wasintroduced by Senator Jose D. Lina in view of the representaions made by leaders of school youth,community groups and youth of non-governmental organizations to the Senate Committee onYouth and Sports Development, to look into the charges against the PCGG filed by three (3)stockholders of Oriental petroleum, i.e., that it has adopted a "get-rich-quick scheme" for itsnominee-directors in a sequestered oil exploration firm.The pertinent portion of Senate ResolutionNo. 212 reads as follows:

xxx xxx xxx




WHEREAS, recent developments have shown that no less than the Solicitor-General has stated thatthe PCGG Chairman and at least three Commissioners should resign and that the agency shouldrid itself of "ineptness, incompetence and corruption" and that the Sandiganbayan has reportedlyordered the PCGG to answer charges filed by three stockholders of Oriental Petroleum that it hasadopted a "get-rich-quick scheme" for its nominee-directors in a sequestered oil exploration firm;

WHEREAS, leaders of school youth, community groups and youth of non-governmentalorganization had made representations to the Senate Committee on Youth and SportsDevelopment to look into the charges against the PCGG since said agency is a symbol of thechanges expected by the people when the EDSA revolution took place and that the ill-gottenwealth to be recovered will fund priority projects which will benefit our people such as CARP, freeeducation in the elementary and secondary levels reforestration, and employment generation forrural and urban workers;

WHEREAS, the government and the present leadeship must demonstrate in their public andprivate lives integrity, honor and efficient management of government services lest our youthbecome disillusioned and lose hope and return to an Idelogy and form of government which isrepugnant to true freedom, democratic participation and human rights: Now, therefore, be it.

Resolved by the Senate, That the activities of the Presidential Commission on Good Governmentbe investigated by the appropriate Committee in connection with the implementation of Section26, Article XVIII of the Constitution. 19

Thus, the inquiry under Senate Resolution No. 212 is to look into the charges against the PCGGfiled by the three (3) stockholders of Oriental Petroleum in connection with the implementation ofSection 26, Article XVIII of the Constitution.

It cannot, therefore, be said that the contemplated inquiry on the subject of the privilege speech ofSenator Juan Ponce Enrile, i.e., the alleged sale of the 36 (or 39) corporations belonging toBenjamin "Kokoy" Romualdez to the Lopa Group is to be conducted pursuant to Senate ResolutionNo. 212 because, firstly, Senator Enrile did not indict the PCGG, and, secondly, neither Mr. RicardoLopa nor the herein petitioners are connected with the government but are private citizens.

It appeals, therefore, that the contemplated inquiry by respondent Committee is not really "in aidof legislation" becuase it is not related to a purpose within the jurisdiction of Congress, since the

aim of the investigation is to find out whether or not the ralatives of the President or Mr. RicardoLopa had violated Section 5 RA No. 3019, the "Anti-Graft and Corrupt Practices Act", a matter thatappears more within the province of the courts rather than of the legislature. Besides, the Courtmay take judicial notice that Mr. Ricardo Lopa died during the pendency of this case. In John T.

Watkins vs. United States, 20 it was held held:

... The power of congress to conduct investigations in inherent in the legislative process. Thatpower is broad. it encompasses inquiries concerning the administration of existing laws as well asproposed, or possibly needed statutes. It includes surveys of defects in our social,economic, orpolitical system for the purpose of enabling Congress to remedy them. It comprehends probesinto departments of the Federal Government to expose corruption, inefficiency or waste. But broad

asis this power of inquiry, it is not unlimited. There is no general authority to expose the private

affairs ofindividuals without justification in terms of the functions of congress. This was freely

conceded by Solicitor General in his argument in this case. Nor is the Congress a law enforcementor trial agency. These are functions of the executive and judicial departments of government. No

inquiry is an end in itself; it must be related to and in furtherance of a legitimate task of Congress.

Investigations conducted soly for the personal aggrandizement of the investigators or to "punish"

those investigated are indefensible. (emphasis supplied)

It can not be overlooked that when respondent Committee decide to conduct its investigation ofthe petitioners, the complaint in Civil No. 0035 had already been filed with the Sandiganbayan. Aperusal of that complaint shows that one of its principal causes of action against herein petitioners,as defendants therein, is the alleged sale of the 36 (or 39) corporations belonging to Benjamin"Kokoy" Romualdez. Since the issues in said complaint had long been joined by the filing ofpetitioner's respective answers thereto, the issue sought to be investigated by the respondentCommitee is one over which jurisdiction had been acquired by the Sandiganbayan. In short, theissue had been pre-empted by that court. To allow the respondent Committee to conduct its owninvestigation of an issue already before the Sandiganbayan would not only pose the possibility ofconflicting judgments betweena legislative commitee and a judicial tribunal, but if theCommittee's judgment were to be reached before that of the Sandiganbayan, the possibility of itsinfluence being made to bear on the ultimate judgment of the Sandiganbayan can not bediscounted.

In fine, for the rspondent Committee to probe and inquire into the same justiciable controversyalready before the Sandiganbayan, would be an encroachment into the exclusive domain of

judicial jurisdiction that had much earlier set in. In Baremblatt vs. United States, 21 it was held that:

Broad as it is, the power is not, howevern, without limitations. Since congress may only investigateinto those areas in which it may potentially legislate or appropriate, it cannot inquire into matterswhich are within the exclusive province of one of the other branches of the government. Lackingthe judicial power given to the Judiciary, it cannot inquire into mattes that are exclusively theconcern of the Judiciary. Neither can it suplant the Executive in what exclusively belongs to theExecutive. ...

Now to another matter. It has been held that "a congressional committee's right to inquire is'subject to all relevant limitations placed by the Constitution on governmental action,' including"'the relevant limitations of the Bill of Rights'." 22

In another case —

... the mere semblance of legislative purpose would not justify an inquiry in the face of the Bill ofRights. The critical element is the exeistence of, and the weight to be ascribed to, the interest ofthe Congress in demanding disclosures from an unwilling witness. We cannot simply assume,however, that every congressional investigation is justified by a public need that over-balances anyprivate rights affected. To do so would be to abdicate the responsibility placed by the Constitutionupon the judiciary to insure that the Congress does not unjustifiably encroah upon an individual'sright to privacy nor abridge his liberty of speech, press, religion or assembly.23

One of the basic rights guaranteed by the Constitution to an individual is the right against self-incrimination. 24 Thir right constured as the right to remain completely silent may be availed of bythe accused in a criminal case; but kit may be invoked by other witnesses only as questions areasked of them.

This distinction was enunciated by the Court in Romeo Chavez vs. The Honorable Court of Appeals,et al. 25 thus —




Petitioner, as accused, occupies a different tier of protection from an ordinary witness. Whereas anordinary witness may be compelled to take the witness stand and claim the privilege as eachquestion requiring an incriminating answer is hot at him, an accused may altother refuse to takethe witness stand and refuse to answer any all questions.

Moreover, this right of the accused is extended to respondents in administrative investigations butonly if they partake of the nature of a criminal proceeding or analogous to a criminal proceeding.In Galman vs. Pamaran, 26 the Court reiterated the doctrine in Cabal vs. Kapuanan (6 SCRA 1059)to illustrate the right of witnesses to invoke the right against self-incrimination not only in criminalproceedings but also in all other types of suit

It was held that:

We did not therein state that since he is not an accused and the case is not a criminal case, Cabalcannot refuse to take the witness stand and testify, and that he can invoke his right against self-incrimination only when a question which tends to elicit an answer that will incriminate him ispropounded to him. Clearly then, it is not the characeter of the suit involved but the nature of theproceedings that controls. The privilege has consistenly been held to extend to all proceedingssanctioned by law and to all cases in which punishment is sought to be visited upon a witness,whether a party or not.

We do not here modify these doctrines. If we presently rule that petitioners may not be compelledby the respondent Committee to appear, testify and produce evidenc before it, it is only becuasewe hold that the questioned inquiry is not in aid of legislation and, if pursued, would be violative ofthe principle of separation of powers between the legislative and the judicial departments ofgovernment, ordained by the Constitution.

WHEREFORE, the petition is GRANTED. The Court holds that, under the facts, including thecircumtance that petitioners are presently impleaded as defendants in a case before theSandiganbayan, which involves issues intimately related to the subject of contemplated inquirybefore the respondet Committee, the respondent Senate Blue Ribbon Committee is herebyenjoined from compelling the petitioners and intervenor to testify before it and produce evidenceat the said inquiry.

SO ORDERED.

Fernan, C.J., Melencio-Herrera, Feliciano, Bidin, Griño-Aquino, Medialdea, Regalado, Davide, Jr. and

Romero, JJ., concur.

Separate Opinions

PARAS, J., concurring:

I concur principally because any decision of the respondent committee may unduly influence theSandiganbayan

GUTIERREZ, JR., J., dissenting:

I regret that I must express a strong dissent the Court's opinion in this case.

The Court is asserting a power which I believe we do not possess. We are encroaching on the turfof Congress. We are prohibiting the Senate from proceeding with a consitutionally vested function.We are stopping the Senate Blue Ribbon Committee from exercising a legislative prerogative —investigations in aid of legislation. We do so becuase we somehow feel that the purported aim isnot the real purpose.

The Court has no power to second guess the motives behind an act of a House of Congress.Neither can we substitute our judgment for its judgment on a matter specifically given to it by theConstitution. The scope of the legislative power is broad. it emcompasses practically every aspectof human or corporate behavior capable of regulation. How can this Court say that unraveling thetangled and secret skeins behind the acquisition by Benjamin "Kokoy" Romualdez of 39corporations under the past regime and their sudden sale to the Lopa Group at the outset of thenew dispensation will not result in useful legislation?

The power of either House of Congress to conduct investigations is inherent. It needs no textualgrant. As stated in Arnault v. Nazareno, 87 Phil. 29 (1950)

Our form of government being patterned after the American system — the framers of ourConstitution having drawn largely from American institutions and practices — we can, in this case,properly draw also from American precedents in interpreting analogous provisions of ourConstitution, as we have done in other cases in the past.

Although there is no provision in the Constitution expressly investing either House of Congresswith power to make investigations and exact testimony to the end that it may exercise its legislativefunctions advisely and effectively, such power is so far incidental to the legislative function as to beimplied. In other words, the power of inquiry — with process to enforce it — is an essential andappropriate auxiliary to the legislative function. A legislative body cannot legislate wisely oreffectively in the absence of information respecting the conditions which the legislation isintended to affect or change: and where the legislative body does not itself possess the requisiteinformation — which is not infrequently true — recourse must be had to others who do possess it. ...(At p. 45)

The framers of the present Constitution were not content to leave the power inherent, incidental orimplied. The power is now expressed as follows:

Sec. 21 — The Senate or the House of Representatives or may of its respective committees mayconduct inquiries in aid of legialtion in accordance with its duly published rules of precedure. Therights of persons appearing in or affected by such inquiries shall be respected.

Apart from the formal requirement of publishing the rules of procedure, I agree that there arethree queries which, if answered in the affirmative, may give us cause to intervene.

First, is the matter being investigated one on which no valid legislation could possibly be enacted?

Second, is Congress encroaching on terrain which the Constitution has reserved as the exclusivedomain of another branch of government?

And third, is Congress violating the basic liberties of an individual?




The classic formulation of the power of the Court to interpret the meaning of "in aid of legislation"is expressed in Kilbourn v. Thompson, 103 U.S. 168 (1880).

The House of Representatives passed a resolution creating a committee to investigate the financialrelations between Jay Cooke and Co., a depositary of federal funds and a real estate pool. Adebtor of Jay Cooke and Co, Kilbourn, general manager of the pool refused to answer questionsput to him by the Committee and to produce certain book sna papers. Consequently, he wasordered jailed for forty-five days. He brought an action for false imprisonment and the SupremeCourt decided in his favor.

Speaking through Justice Miller, the Court ruled:

The resolution adopted as a sequence of this preamble contains no hint of any intention of finalaction by Congress on the subject, In all the argument of the case no suggestion has been madeof what the House of Respresentatives or the Congress could have done in the way of remedyingthe wrong or securing the creditors of Jay Cooke and Co., or even the United States. Was it to besimply a fruitless investigation into the personal affiars of individuals? If so the House ofRepresentatives had no power or authority in the matter more than any other equal number ofgentlemen interested for the government of their country. By fruitless we mean that it could resultin no valid legislation on the subject to which the inquiry referrred. (Kilbourn v. Thompson, Id. atpage 388)

The Kilbourn decision is, however, crica 1880. The world has turned over many times since that era.The same court which validated separate but equal facilities against of racial discrimination andruled that a private contract may bar improved labor standards and social justice legislation hasreversed itslef on these and many other questions.

In McGrain v. Daugherty , 273 U.S. 135; 71 L. Ed. 580 [1927], the court went beyond the expressterms of the Senate resolution directing the investigation of a former Attorney General for non-feasance, misfeasance, and malfeasance in office. It presumed that the action of the Senate waswith a legitimate object.

... Plainly the subject was one on which legislation could be had and would be materially aided bythe information which the investigation was calculated to elicit. This becomes manifest when it isreflected that the functions of the Department of Justice, the powers and duties of the Attorney-

General and the duties of his assitants, are all subject to regulation by congressional legislation,and that the department is maintained and its activitites are carried on under such appropriationsas in the judgment of Congress are needed from year to year.

The only legitimate object the Senate could have in ordering the investigation was to aid it inlegislating, and we think the subject was the real object. An express avowal of the object wouldhave been better; but in view of the particular subject matter was not indispenable. In People exrel. Mc Donald v. Keeler, 99, N.Y. 463, 52 Am. Rep. 49, 2 N.E. 615, where the Court of Appeals ofNew york sustained an investigation order by the House of Representatives of that state where theresolution contained no avowal, but disclosed that it definitely related to the administrative ofpublic office the duties of which were subject to legislative regulation, the court said (pp. 485,487): Where public institutions under the control of the State are ordered to be investigated, it isgenerally with the view of some legislative action respecting them, and the same may be said in

respect of public officers,' And again "We are bound to presume that the action of the legislativebody was with a legitimate object if it is capable of being so construed, and we have no right to

assume that the contrary was intended." (McGrain v. Daugherty Id., at page 594-595, Emphasissupplied)

The American Court was more categorical in United States v. Josephson, 333 U.S. 858 (1938). Itdeclared that declaration of legislative purpose was conclusive on the Courts:

Whatever may be said of the Committee on the un-American activities, its authorizing resolutionrecites it is in aid of legislation and that fact is establshed for courts.

And since the matter before us in somethingwe inherited from the American constitutional system,

rulings from the decision of federal courts may be apropos. (Stamler v. Willis, 287 F. Supp. 734[1968]

The Court cannot probe into the motives of the members of the Congress.

Barsky v. United States, 167 F. 2d 241 [1948]

The measure of the power of inquiry is the potentiality that constitutional legislation might ensuefrom information derived from such inquiry.

The possibility that invalid as well as valid legislation might ensue from an inquiry does not limitthe power of inquiry, since invalid legislation might ensue from any inquiry.

United States v. Shelton, 148 F. Supp. 926 [1957]

The contention of the defendant that the hearing at which he testified and from which theindictment arose was not in furtherance og a legislative purpose proceeds on the assumption thata failure to have specific legislation in contemplation, or a failure to show that legislation was in factenacted, estabished an absence of legislative purpose. This argument is patently unsound. The

investigative power of Congress is not subject to the limitation that hearings must result in

legislation or recommendations for legislation.

United States v. Deutch (147 F. Supp. 89 (1956)

Under the Constitution of the U.S., the Federal Government is a government of limited powers.The Congress, being the legislative branch of the Federal Government, is also clothed with limited

legislative powers. In orders, however, to carry its legislative powers into effect successfully, it hasalways been held that Congress has the power to secure information concerning matters inrespect to which it has the authority to legislate. In fact, it would seem that Congress must secureinformation in order to legislate intelligently. Beyond that, the Congress has the right secure

information in order to determine whether or not to legislate on a particular subject matter on which

it is within its constitutional powers to act. — (Emphasis Supplied)

The even broader scope of legislative investigation in the Philippine context is explained by amember of the Constitutional Commission.

The requirement that the investigation be "in aid of legislation" is an essential element forestablishing the jurisdiction of the legislative body. It is, however, a requirement which is notdifficult to satisfy becuase, unlike in the United States, where legislative power is shared by theUnited State Congress and the states legislatures, the totality of legislative power is possessed by




the Congress nad its legislative field is well-nigh unlimited. "It would be difficult to define any limitsby which the subject matter of its inquiry can be bounded." (Supra, at p. 46) Moreover, it is notnecessary that every question propounded to a witness must be material to a proposed legislation."In other words, the materiality of the question must be determined by its direct relation to thesubject of the inquiry and not by its indirect relation to any proposed or possible legislation. Thereason is that the necessity or lack of necessity for legislative action and form and character of theaction itself are determined by the sum total of the information to be gathered as a result of theinvestigation, and not by a fraction to be gathered as a result of the investigation, and not by afraction of such information elicited from a single question. (Id., at 48)

On the basis of this interpretation of what "in aid of legislation" means, it can readily be seen thatthe phrase contributes practically nothing towards protecting witnesses. Practically anyinvestigation can be in aid of the broad legislative power of Congress. The limitation, thereforecannot effectively prevent what Kilbourn v. Thompson (103 U.S. 168 [1880]) characterized as"roving commissions" or what Watkins v. United States (354 U.S. 178, 200 [1957] labeled asexposure for the sake of exposure. (Bernas, Constitution of the Republic of the Philippines, Vol. II,1st Ed., page 132).

Applying the above principles to the present casem, it can readily be seen that the Senate isinvestigating an area where it may potentially legislate. The ease with which relatives of thePresident were allegedly able to amass great wealth under the past regime is a legitimate area ofinquiry. And if we tack on the alleged attempts o f relatives of a succeeding adminsitration to

duplicate the feat, the need for remedial legislation becomes more imperative.

Our second area of concern is congressional encroachment on matters reserved by theConstitution for the Executive or the Judiciary.

The majority opinion cites the decision in Angara v. E lectoral Commission, 63 Phil. 139 (1936)explaining our power to determined conflicting claims of authority. It is indeed the function on thisCourt to allocate constitutional boundaries but in the exercise of this "umpire" function we have totake care that we do not keep any of the three great departments of government from performingfunctions peculiar to each department or specifically vested to it sby the Constitution. When apower is vested, ti carries with is everything legitimately neede to exercise it.

It may be argued that the investigation into the Romualdez — Lopa transactions is more

appropriate for the Department of Justice and the judiciary. This argument misses the point oflegislative inquiry.

The prosecution of offenders by the Department of Justice or the Ombudsman and their trialbefore courts of justice is intended to punish persons who violate the law. Legislative investigationsgo further. The aim is to arrive at policy determinations which may or may not be enacted intolegislation. Referral to prosecutors or courts of justice is an added bonus. For sure, the Senate BlueRibbon Committee knows it cannot sentence any offender, no matter how overwhelming the proofthat it may gatherm to a jail term. But certainly, the Committee can recommend to Congress howthe situation which enabled get-rich-quick schemes to flourish may be remedied. The fact that thesubject of the investigation may currently be undergoing trial does not restrict the power ofCongress to investigate for its own purposes. The legislative purpose is distinctly different from the

judicial purpose.

In Sinclair v. United States, 279 U.S. 263, 73 L ed. 692 (1928), leases of naval reservations to oilcompanies were investigated by the United States Senate. On a finding that certain leases werefraudulent, court action was recommended. In other words, court action on one hand andlegislation on the other, are not mutually exclusive. They may complement each other.

... It may be conceded that Congress is without authority to compel disclosyres for the purpose ofaiding the prosecution of pending suits; but the authority of that body, directly or through itCommittees, to require pertinent disclosures in aid of its own consitutional power is not abridgedbecause the information sought to be elicited may also be of use in such suits... It is plain thatinvestigation of the matters involved in suits brought or to be commenced under the Senateresolution directing the institution of suits for the cancellation of the leases might directly aid inrespect of legislative action... (Sinclair v. United States, Id.at page 698).

In United States v. Orman, 207 F. 2d Ed. 148 (1953), the court declared that it was pertinent for alegislative committee to seek facts indicating that a witness was linked to unlawful intestategambling.

The power of a congressional committee to investigate matters cannot be challenged on theground that the Committee went beyond the scope of any contemplated legislative and assumedthe functions of a grand jury. Whre the genral subject of investigation is one concerning whichCongress can legislate, and the information sought might aid the congressional consideration, insuch a situation a legitimate legislative purpose must be presumed...

I submit that the filing of indictments or informations or the trial of certain persons cannot, bythemselves, half the intitiation or stop the progress of legislative investigations.

The other ground which I consider the more important one is where the legislative investigationviolates the liberties of the witnesses.

The Constitution expressly provides that "the rights of persons appearing in or affected by suchinquiries shall be respected.

It should be emphasized that the constitutional restriction does not call for the banning orprohibition of investigations where a violation of a basis rights is claimed. It only requires that inthe course of the proceedings, the right of persons should be respected.

What the majority opinion mandates is a blanket prohibition against a witness testifying at all,simply because he is already facing charges before the Sandiganbayan. To my mind, theConsitution allows him to interpose objections whenever an incriminating question is posed orwhen he is compelled to reveal his ocurt defenses, but not ot refuse to take the witness standcompletely.

Arnault v. Nazareno, supra , illustrates the reticence, with which the court views petitions to curtaillegislative investigations even where an invocation of individual liberties is made.

In Arnault, the entire country already knew the name of the presidential realtive whom the Sentatewas trying to link to the Tambobong-Buenavista estate anomalies. Still, the Court did not interferewhen Arnault refused to answer specific questions directed at him and he was punished for hir

refusal. The Court did not restrain the Senate when Arnault was sent o the national penitentiary foran indefinite visit until the name which the Senate wanted him to utter was extracted. Only when




the imprisonment became ureasonably prolonged and the situation in Congress had changed washe released.

As pointed out by the respondents, not one question has been asked requiring an answer thatwould incriminate the petitioners. The allegation that their basic rights are vilolated is not onlywithout basis but is also premature.

I agree with the respondents that the slae of 39 Romualdez corporations to Mr. Lopa is not a purelyprivate transaction into which the Senate may not inquire. if this were so, much of the work of thePresidential Commission on Good Government (PCGG) as it seeks to recover illegally acquired

wealth would be negated. Much of what PCGG is trying to recover is the product of arrangementswhich are not only private but also secret and hidden.

I therefore, vote to DISMISS the petition.

Narvasa, J., dissents.

CRUZ, J., dissenting:

I regret I am unable to give my concurrence, I do not agree that the investigation being conductedby the Blue Ribbon Committee is not in aid of legislation.

In Arnault v. Nazareno, 87 Phil. 29, this Court observed that "we are bound to presume that the

action of the legislative body was with a legitimate object if it is capable of being so construed,and we have no right ot assume that the contrary was intended." (People ex rel. Mc Donald vs.Keeler, 99 N.Y. 463; 52 Am. Rep., 49; 2 N.E., 615, quoted with approval by the U.S. Supreme Courtin McGrain vs. Daugherty, 273 U.S. 135). As far as I know, that is still the rule today.

More importantly, the presumption is supported by the established facts. The inquiry is sustainableas an implied of power the legislature and even as expressly limited by the Constitution.

The inquiry deals with alleged manipulations of public funds and illicit acquisitions of propertiesnow being claimed by the PCGG for the Republic of the Philippines. The purpose of theCommittee is to ascertain if and how such anomalies have been committed. It is settled that thelegislature has a right to investigate the disposition of the public funds it has appropriated; indeed,"an inquiry into the expenditure of all public money is na indispensable duty of the legislature."Moreover, an investigation of a possible violation of a law may be useful in the drafting ofamendatory legislation to correct or strengthen that law.

The ponencia quotes lengthily from Senator Enrile's speech and concludes that it "contained nosuggestions of contemplated legislation; he merely called upon the Senate to look into a possibleviolation of section 5 of R.A. No. 3019." However, according to McGrain v. Daugherty , supra:

Primarily, the purpose for which legislative inquiry and investigation is pursued is to serve as an aidin legislation. Through it, the legislature is able to obtain facts or data in aid fo proposedlegislation. However, it is not necessary that the resolution ordering an investigation should in terms

expressly state that the object of the inquiry is to obtain data in aid of proposed legislation. It isenough that such purpose appears from a consideration of the entire proceedings or one in whichlegislation could be had and would be materially aided by the information which the investigation

was calculated to elicit. An express avowal of the object would be better, but such is not

indispensable. (Emphasis supplied).

The petitioner's contention that the questioned investigation would compel them to reveal theirdefense in the cases now pending against them in the Sandigangbayan is untenable. They know orshould know that they cannot be compelled to answer incriminating questions. The case of Chavez

v. Court of Appeals, 24 SCRA 663, where we held that an accused may refuse at the outset to takethe stand on the ground that the questions to be put by the prosecutor will tend to incriminate himis, of course, not applicable to them. They are not facing criminal charges before the Blue RibbonCommittee. Like any ordinary witness, they can invoke the right against self-incrimination onlywhen and as the incriminating question is propounded.

While it is true that the Court is now allowed more leeway in reviewing the traditionally politicalacts of the legislative and executive departments, the power must be exercised with the utmostcircumspection lest we unduly trench on their prerogatives and disarrange the constitutionalseparation of powers. That power is available to us only if there is a clear showing of a grave abuseof discretion, which I do not see in the case at bar.

Guided by the presumption and the facts, I vote to DISMISS the petition.


# Separate Opinions

PARAS, J., concurring:

I concur principally because any decision of the respondent committee may unduly influence theSandiganbayan

GUTIERREZ, JR., J., dissenting:

I regret that I must express a strong dissent the Court's opinion in this case.

The Court is asserting a power which I believe we do not possess. We are encroaching on the turfof Congress. We are prohibiting the Senate from proceeding with a consitutionally vested function.We are stopping the Senate Blue Ribbon Committee from exercising a legislative prerogative —

investigations in aid of legislation. We do so becuase we somehow feel that the purported aim isnot the real purpose.

The Court has no power to second guess the motives behind an act of a House of Congress.Neither can we substitute our judgment for its judgment on a matter specifically given to it by theConstitution. The scope of the legislative power is broad. it emcompasses practically every aspectof human or corporate behavior capable of regulation. How can this Court say that unraveling thetangled and secret skeins behind the acquisition by Benjamin "Kokoy" Romualdez of 39corporations under the past regime and their sudden sale to the Lopa Group at the outset of thenew dispensation will not result in useful legislation?

The power of either House of Congress to conduct investigations is inherent. It needs no textualgrant. As stated in Arnault v. Nazareno, 87 Phil. 29 (1950)




Our form of government being patterned after the American system — the framers of ourConstitution having drawn largely from American institutions and practices — we can, in this case,properly draw also from American precedents in interpreting analogous provisions of ourConstitution, as we have done in other cases in the past.

Although there is no provision in the Constitution expressly investing either House of Congresswith power to make investigations and exact testimony to the end that it may exercise its legislativefunctions advisely and effectively, such power is so far incidental to the legislative function as to beimplied. In other words, the power of inquiry — with process to enforce it — is an essential andappropriate auxiliary to the legislative function. A legislative body cannot legislate wisely oreffectively in the absence of information respecting the conditions which the legislation isintended to affect or change: and where the legislative body does not itself possess the requisiteinformation — which is not infrequently true — recourse must be had to others who do possess it. ...(At p. 45)

The framers of the present Constitution were not content to leave the power inherent, incidental orimplied. The power is now expressed as follows:

Sec. 21 — The Senate or the House of Representatives or may of its respective committees mayconduct inquiries in aid of legialtion in accordance with its duly published rules of precedure. Therights of persons appearing in or affected by such inquiries shall be respected.

Apart from the formal requirement of publishing the rules of procedure, I agree that there arethree queries which, if answered in the affirmative, may give us cause to intervene.

First, is the matter being investigated one on which no valid legislation could possibly be enacted?

Second, is Congress encroaching on terrain which the Constitution has reserved as the exclusivedomain of another branch of government?

And third, is Congress violating the basic liberties of an individual?

The classic formulation of the power of the Court to interpret the meaning of "in aid of legislation"is expressed in Kilbourn v. Thompson, 103 U.S. 168 (1880).

The House of Representatives passed a resolution creating a committee to investigate the financial

relations between Jay Cooke and Co., a depositary of federal funds and a real estate pool. Adebtor of Jay Cooke and Co, Kilbourn, general manager of the pool refused to answer questionsput to him by the Committee and to produce certain book sna papers. Consequently, he wasordered jailed for forty-five days. He brought an action for false imprisonment and the SupremeCourt decided in his favor.

Speaking through Justice Miller, the Court ruled:

The resolution adopted as a sequence of this preamble contains no hint of any intention of finalaction by Congress on the subject, In all the argument of the case no suggestion has been madeof what the House of Respresentatives or the Congress could have done in the way of remedyingthe wrong or securing the creditors of Jay Cooke and Co., or even the United States. Was it to besimply a fruitless investigation into the personal affiars of individuals? If so the House ofRepresentatives had no power or authority in the matter more than any other equal number of

gentlemen interested for the government of their country. By fruitless we mean that it could resultin no valid legislation on the subject to which the inquiry referrred. (Kilbourn v. Thompson, Id. atpage 388)

The Kilbourn decision is, however, crica 1880. The world has turned over many times since that era.The same court which validated separate but equal facilities against of racial discrimination andruled that a private contract may bar improved labor standards and social justice legislation hasreversed itslef on these and many other questions.

In McGrain v. Daugherty , 273 U.S. 135; 71 L. Ed. 580 [1927], the court went beyond the express

terms of the Senate resolution directing the investigation of a former Attorney General for non-feasance, misfeasance, and malfeasance in office. It presumed that the action of the Senate waswith a legitimate object.

... Plainly the subject was one on which legislation could be had and would be materially aided bythe information which the investigation was calculated to elicit. This becomes manifest when it isreflected that the functions of the Department of Justice, the powers and duties of the Attorney-General and the duties of his assitants, are all subject to regulation by congressional legislation,and that the department is maintained and its activitites are carried on under such appropriationsas in the judgment of Congress are needed from year to year.

The only legitimate object the Senate could have in ordering the investigation was to aid it inlegislating, and we think the subject was the real object. An express avowal of the object wouldhave been better; but in view of the particular subject matter was not indispenable. In People exrel. Mc Donald v. Keeler, 99, N.Y. 463, 52 Am. Rep. 49, 2 N.E. 615, where the Court of Appeals ofNew york sustained an investigation order by the House of Representatives of that state where theresolution contained no avowal, but disclosed that it definitely related to the administrative ofpublic office the duties of which were subject to legislative regulation, the court said (pp. 485,487): Where public institutions under the control of the State are ordered to be investigated, it isgenerally with the view of some legislative action respecting them, and the same may be said inrespect of public officers,' And again "We are bound to presume that the action of the legislative

body was with a legitimate object if it is capable of being so construed, and we have no right toassume that the contrary was intended." (McGrain v. Daugherty Id., at page 594-595, Emphasissupplied)

The American Court was more categorical in United States v. Josephson, 333 U.S. 858 (1938). Itdeclared that declaration of legislative purpose was conclusive on the Courts:

Whatever may be said of the Committee on the un-American activities, its authorizing resolutionrecites it is in aid of legislation and that fact is establshed for courts.

And since the matter before us in somethingwe inherited from the American constitutional system,rulings from the decision of federal courts may be apropos. (Stamler v. Willis, 287 F. Supp. 734[1968]

The Court cannot probe into the motives of the members of the Congress.

Barsky v. United States, 167 F. 2d 241 [1948]




The measure of the power of inquiry is the potentiality that constitutional legislation might ensuefrom information derived from such inquiry.

The possibility that invalid as well as valid legislation might ensue from an inquiry does not limitthe power of inquiry, since invalid legislation might ensue from any inquiry.

United States v. Shelton, 148 F. Supp. 926 [1957]

The contention of the defendant that the hearing at which he testified and from which theindictment arose was not in furtherance og a legislative purpose proceeds on the assumption that

a failure to have specific legislation in contemplation, or a failure to show that legislation was in factenacted, estabished an absence of legislative purpose. This argument is patently unsound. The

investigative power of Congress is not subject to the limitation that hearings must result in

legislation or recommendations for legislation.

United States v. Deutch (147 F. Supp. 89 (1956)

Under the Constitution of the U.S., the Federal Government is a government of limited powers.The Congress, being the legislative branch of the Federal Government, is also clothed with limitedlegislative powers. In orders, however, to carry its legislative powers into effect successfully, it hasalways been held that Congress has the power to secure information concerning matters inrespect to which it has the authority to legislate. In fact, it would seem that Congress must secureinformation in order to legislate intelligently. Beyond that, the Congress has the right secure

information in order to determine whether or not to legislate on a particular subject matter on which

it is within its constitutional powers to act. — (Emphasis Supplied)

The even broader scope of legislative investigation in the Philippine context is explained by amember of the Constitutional Commission.

The requirement that the investigation be "in aid of legislation" is an essential element forestablishing the jurisdiction of the legislative body. It is, however, a requirement which is notdifficult to satisfy becuase, unlike in the United States, where legislative power is shared by theUnited State Congress and the states legislatures, the totality of legislative power is possessed bythe Congress nad its legislative field is well-nigh unlimited. "It would be difficult to define any limitsby which the subject matter of its inquiry can be bounded." (Supra, at p. 46) Moreover, it is notnecessary that every question propounded to a witness must be material to a proposed legislation."In other words, the materiality of the question must be determined by its direct relation to thesubject of the inquiry and not by its indirect relation to any proposed or possible legislation. Thereason is that the necessity or lack of necessity for legislative action and form and character of theaction itself are determined by the sum total of the information to be gathered as a result of theinvestigation, and not by a fraction to be gathered as a result of the investigation, and not by afraction of such information elicited from a single question. (Id., at 48)

On the basis of this interpretation of what "in aid of legislation" means, it can readily be seen thatthe phrase contributes practically nothing towards protecting witnesses. Practically anyinvestigation can be in aid of the broad legislative power of Congress. The limitation, thereforecannot effectively prevent what Kilbourn v. Thompson (103 U.S. 168 [1880]) characterized as"roving commissions" or what Watkins v. United States (354 U.S. 178, 200 [1957] labeled as

exposure for the sake of exposure. (Bernas, Constitution of the Republic of the Philippines, Vol. II,1st Ed., page 132).

Applying the above principles to the present casem, it can readily be seen that the Senate isinvestigating an area where it may potentially legislate. The ease with which relatives of thePresident were allegedly able to amass great wealth under the past regime is a legitimate area ofinquiry. And if we tack on the alleged attempts o f relatives of a succeeding adminsitration toduplicate the feat, the need for remedial legislation becomes more imperative.

Our second area of concern is congressional encroachment on matters reserved by theConstitution for the Executive or the Judiciary.

The majority opinion cites the decision in Angara v. Electoral Commission, 63 Phil. 139 (1936)

explaining our power to determined conflicting claims of authority. It is indeed the function on thisCourt to allocate constitutional boundaries but in the exercise of this "umpire" function we have totake care that we do not keep any of the three great departments of government from performingfunctions peculiar to each department or specifically vested to it sby the Constitution. When apower is vested, ti carries with is everything legitimately neede to exercise it.

It may be argued that the investigation into the Romualdez — Lopa transactions is moreappropriate for the Department of Justice and the judiciary. This argument misses the point oflegislative inquiry.

The prosecution of offenders by the Department of Justice or the Ombudsman and their trialbefore courts of justice is intended to punish persons who violate the law. Legislative investigationsgo further. The aim is to arrive at policy determinations which may or may not be enacted intolegislation. Referral to prosecutors or courts of justice is an added bonus. For sure, the Senate BlueRibbon Committee knows it cannot sentence any offender, no matter how overwhelming the proofthat it may gatherm to a jail term. But certainly, the Committee can recommend to Congress howthe situation which enabled get-rich-quick schemes to flourish may be remedied. The fact that thesubject of the investigation may currently be undergoing trial does not restrict the power ofCongress to investigate for its own purposes. The legislative purpose is distinctly different from the

judicial purpose.

In Sinclair v. United States, 279 U.S. 263, 73 L ed. 692 (1928), leases of naval reservations to oilcompanies were investigated by the United States Senate. On a finding that certain leases werefraudulent, court action was recommended. In other words, court action on one hand andlegislation on the other, are not mutually exclusive. They may complement each other.

... It may be conceded that Congress is without authority to compel disclosyres for the purpose ofaiding the prosecution of pending suits; but the authority of that body, directly or through itCommittees, to require pertinent disclosures in aid of its own consitutional power is not abridgedbecause the information sought to be elicited may also be of use in such suits... It is plain thatinvestigation of the matters involved in suits brought or to be commenced under the Senateresolution directing the institution of suits for the cancellation of the leases might directly aid inrespect of legislative action... (Sinclair v. United States, Id.at page 698).

In United States v. Orman, 207 F. 2d Ed. 148 (1953), the court declared that it was pertinent for alegislative committee to seek facts indicating that a witness was linked to unlawful intestategambling.

The power of a congressional committee to investigate matters cannot be challenged on theground that the Committee went beyond the scope of any contemplated legislative and assumed




the functions of a grand jury. Whre the genral subject of investigation is one concerning whichCongress can legislate, and the information sought might aid the congressional consideration, insuch a situation a legitimate legislative purpose must be presumed...

I submit that the filing of indictments or informations or the trial of certain persons cannot, bythemselves, half the intitiation or stop the progress of legislative investigations.

The other ground which I consider the more important one is where the legislative investigationviolates the liberties of the witnesses.

The Constitution expressly provides that "the rights of persons appearing in or affected by suchinquiries shall be respected.

It should be emphasized that the constitutional restriction does not call for the banning orprohibition of investigations where a violation of a basis rights is claimed. It only requires that inthe course of the proceedings, the right of persons should be respected.

What the majority opinion mandates is a blanket prohibition against a witness testifying at all,simply because he is already facing charges before the Sandiganbayan. To my mind, theConsitution allows him to interpose objections whenever an incriminating question is posed orwhen he is compelled to reveal his ocurt defenses, but not ot refuse to take the witness standcompletely.

Arnault v. Nazareno, supra, illustrates the reticence, with which the court views petitions to curtaillegislative investigations even where an invocation of individual liberties is made.

In Arnault, the entire country already knew the name of the presidential realtive whom the Sentatewas trying to link to the Tambobong-Buenavista estate anomalies. Still, the Court did not interferewhen Arnault refused to answer specific questions directed at him and he was punished for hirrefusal. The Court did not restrain the Senate when Arnault was sent o the national penitentiary foran indefinite visit until the name which the Senate wanted him to utter was extracted. Only whenthe imprisonment became ureasonably prolonged and the situation in Congress had changed washe released.

As pointed out by the respondents, not one question has been asked requiring an answer thatwould incriminate the petitioners. The allegation that their basic rights are vilolated is not onlywithout basis but is also premature.

I agree with the respondents that the slae of 39 Romualdez corporations to Mr. Lopa is not a purelyprivate transaction into which the Senate may not inquire. if this were so, much of the work of thePresidential Commission on Good Government (PCGG) as it seeks to recover illegally acquiredwealth would be negated. Much of what PCGG is trying to recover is the product of arrangementswhich are not only private but also secret and hidden.

I therefore, vote to DISMISS the petition.


CRUZ, J., dissenting:

I regret I am unable to give my concurrence, I do not agree that the investigation being conductedby the Blue Ribbon Committee is not in aid of legislation.

In Arnault v. Nazareno, 87 Phil. 29, this Court observed that "we are bound to presume that theaction of the legislative body was with a legitimate object if it is capable of being so construed,and we have no right ot assume that the contrary was intended." (People ex rel. Mc Donald vs.Keeler, 99 N.Y. 463; 52 Am. Rep., 49; 2 N.E., 615, quoted with approval by the U.S. Supreme Courtin McGrain vs. Daugherty, 273 U.S. 135). As far as I know, that is still the rule today.

More importantly, the presumption is supported by the established facts. The inquiry is sustainable

as an implied of power the legislature and even as expressly limited by the Constitution.

The inquiry deals with alleged manipulations of public funds and illicit acquisitions of propertiesnow being claimed by the PCGG for the Republic of the Philippines. The purpose of theCommittee is to ascertain if and how such anomalies have been committed. It is settled that thelegislature has a right to investigate the disposition of the public funds it has appropriated; indeed,"an inquiry into the expenditure of all public money is na indispensable duty of the legislature."Moreover, an investigation of a possible violation of a law may be useful in the drafting ofamendatory legislation to correct or strengthen that law.

The ponencia quotes lengthily from Senator Enrile's speech and concludes that it "contained nosuggestions of contemplated legislation; he merely called upon the Senate to look into a possibleviolation of section 5 of R.A. No. 3019." However, according to McGrain v. Daugherty , supra:

Primarily, the purpose for which legislative inquiry and investigation is pursued is to serve as an aidin legislation. Through it, the legislature is able to obtain facts or data in aid fo proposedlegislation. However, it is not necessary that the resolution ordering an investigation should in terms

expressly state that the object of the inquiry is to obtain data in aid of proposed legislation. It isenough that such purpose appears from a consideration of the entire proceedings or one in whichlegislation could be had and would be materially aided by the information which the investigationwas calculated to elicit. An express avowal of the object would be better, but such is not

indispensable. (Emphasis supplied).

The petitioner's contention that the questioned investigation would compel them to reveal theirdefense in the cases now pending against them in the Sandigangbayan is untenable. They know or

should know that they cannot be compelled to answer incriminating questions. The case of Chavezv. Court of Appeals, 24 SCRA 663, where we held that an accused may refuse at the outset to takethe stand on the ground that the questions to be put by the prosecutor will tend to incriminate himis, of course, not applicable to them. They are not facing criminal charges before the Blue RibbonCommittee. Like any ordinary witness, they can invoke the right against self-incrimination onlywhen and as the incriminating question is propounded.

While it is true that the Court is now allowed more leeway in reviewing the traditionally politicalacts of the legislative and executive departments, the power must be exercised with the utmostcircumspection lest we unduly trench on their prerogatives and disarrange the constitutionalseparation of powers. That power is available to us only if there is a clear showing of a grave abuseof discretion, which I do not see in the case at bar.

Guided by the presumption and the facts, I vote to DISMISS the petition.





# Footnotes1 Annex "A", Rollo, p. 38.

2 Annexes "B", "C" and "D", Rollo, pp. 98, 114 and 128.

3 Rollo, pp. 219-220.

4 Annex "E-1", Rollo, p. 143.

5 Annex "E", Rollo, p. 142.

6 Annex "H-1", Rollo, p. 162.

7 Annex "H-2", Rollo, p. 189.

8 Rollo, p. 264.

9 Ibid., p. 263.

10 Ibid., p. 284.

11 63 Phil. 139, 156, 157, 158-159.

12 Neptali A. Gonzales, et al. vs. Hon. Catalino Macaraig, Jr., et al., G.R. No. 87636, 19 November 1990, 191 SCRA452, 463.

13 Section 1, Article VII of the 1987 Constitution provides:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be

established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are

legally demandable and enforceable, and to determine whether or not there has been grave abuse of discretion

amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

14 In Arnault vs. Nazareno, 87 Phil. 29, this Court held that although there was no express provision in the 1935

Constitution giving such power to both houses of Congress, it was so incidental to the legislative function as to

be implied.15 This was taken from Section 12(2), Article VII of the 1973 Constitution.

16 No. L-3820, July 18, 1950, 87 Phil. 29.

17 Questions of privilege are those affecting the rights, privileges, reputation, conduct, decorum and dignity of

the Senate or its Members as well as the integrity of its proceedings." (Sec. 8, Rule XXXIX, Rules of hte Senate.)

18 Annex — 2, Rollo, p. 242.

19 Sec. 26, Article XVIII of the Constitution provides: The authority to issue sequestration or freeze orders under

Proclamation No. 3, dated March 24, 1986 in relation to the recovery of ill-gotten wealth shall remain operative

for not more than eighteen months after the retification of this Constitution. However, in the national interest, ascertified by the President, the Congress may extend said period.

20 354 U.S. 178, 1 L. ed. 1273 (1957).

21 360 U.S. 109, 3 L ed. 2d 1115, S CT 1081 (1959).

22 Maurice A. Hutcheson vs. U.S., 369 US 599.

23 Watkins vs. US, 354 USS 178 citing US vs. Rumely, 345 US 41.

24 Sec. 17, Article III of the Constitution provides:No person shall be compelled to be a witness against himself.

25 G.R. No. L-29169, August 19, 1968, 24 SCRA 663.

26 G.R. Nos. 71208-09, August 30, 1985, 138 SCRA 294.





Manila

EN BANC

G.R. No. 71977 February 27, 1987

DEMETRIO G. DEMETRIA, M.P., AUGUSTO S. SANCHEZ, M.P., ORLANDO S. MERCADO, M.P.,HONORATO Y. AQUINO, M.P., ZAFIRO L. RESPICIO, M.P., DOUGLAS R. CAGAS, M.P., OSCAR F.

SANTOS, M.P., ALBERTO G. ROMULO, M.P., CIRIACO R. ALFELOR, M.P., ISIDORO E. REAL, M.P.,EMIGDIO L. LINGAD, M.P., ROLANDO C. MARCIAL, M.P., PEDRO M. MARCELLANA, M.P., VICTORS. ZIGA, M.P., and ROGELIO V. GARCIA. M.P., petitioners,vs.

HON. MANUEL ALBA in his capacity as the MINISTER OF THE BUDGET and VICTORMACALINGCAG in his capacity as the TREASURER OF THE PHILIPPINES, respondents.

FERNAN, J.:

Assailed in this petition for prohibition with prayer for a writ of preliminary injunction is theconstitutionality of the first paragraph of Section 44 of Presidential Decree No. 1177, otherwise

known as the "Budget Reform Decree of 1977."

Petitioners, who filed the instant petition as concerned citizens of this country, as members of theNational Assembly/Batasan Pambansa representing their millions of constituents, as parties withgeneral interest common to all the people of the Philippines, and as taxpayers whose vital interestsmay be affected by the outcome of the reliefs prayed for" 1 listed the grounds relied upon in thispetition as follows:

A. SECTION 44 OF THE 'BUDGET REFORM DECREE OF 1977' INFRINGES UPON THEFUNDAMENTAL LAW BY AUTHORIZING THE ILLEGAL TRANSFER OF PUBLIC MONEYS.

B. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 IS REPUGNANT TO THE CONSTITUTION ASIT FAILS TO SPECIFY THE OBJECTIVES AND PURPOSES FOR WHICH THE PROPOSED TRANSFER

OF FUNDS ARE TO BE MADE.

C. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 ALLOWS THE PRESIDENT TO OVERRIDETHE SAFEGUARDS, FORM AND PROCEDURE PRESCRIBED BY THE CONSTITUTION INAPPROVING APPROPRIATIONS.

D. SECTION 44 OF THE SAME DECREE AMOUNTS TO AN UNDUE DELEGATION OF LEGISLATIVEPOWERS TO THE EXECUTIVE.

E. THE THREATENED AND CONTINUING TRANSFER OF FUNDS BY THE PRESIDENT AND THEIMPLEMENTATION THEREOF BY THE BUDGET MINISTER AND THE TREASURER OF THEPHILIPPINES ARE WITHOUT OR IN EXCESS OF THEIR AUTHORITY AND JURISDICTION. 2

Commenting on the petition in compliance with the Court resolution dated September 19, 1985,the Solicitor General, for the public respondents, questioned the legal standing of petitioners, whowere allegedly merely begging an advisory opinion from the Court, there being no justiciablecontroversy fit for resolution or determination. He further contended that the provision underconsideration was enacted pursuant to Section 16[5], Article VIII of the 1973 Constitution; and thatat any rate, prohibition will not lie from one branch of the government to a coordinate branch toenjoin the performance of duties within the latter's sphere of responsibility.

On February 27, 1986, the Court required the petitioners to file a Reply to the Comment. This, theydid, stating, among others, that as a result of the change in the administration, there is a need to

hold the resolution of the present case in abeyance "until developments arise to enable the partiesto concretize their respective stands." 3

Thereafter, We required public respondents to file a rejoinder. The Solicitor General filed arejoinder with a motion to dismiss, setting forth as grounds therefor the abrogation of Section16[5], Article VIII of the 1973 Constitution by the Freedom Constitution of March 25, 1986, whichhas allegedly rendered the instant petition moot and academic. He likewise cited the "sevenpillars" enunciated by Justice Brandeis in Ashwander v. TVA, 297 U.S. 288 (1936) 4 as basis for thepetition's dismissal.

In the case of Evelio B. Javier v. The Commission on Elections and Arturo F. Pacificador , G.R. Nos.68379-81, September 22, 1986, We stated that:

The abolition of the Batasang Pambansa and the disappearance of the office in dispute betweenthe petitioner and the private respondents — both of whom have gone their separate ways — couldbe a convenient justification for dismissing the case. But there are larger issues involved that mustbe resolved now, once and for all, not only to dispel the legal ambiguities here raised. The moreimportant purpose is to manifest in the clearest possible terms that this Court will not disregardand in effect condone wrong on the simplistic and tolerant pretext that the case has become mootand academic.

The Supreme Court is not only the highest arbiter of legal questions but also the conscience of thegovernment. The citizen comes to us in quest of law but we must also give him justice. The two arenot always the same. There are times when we cannot grant the latter because the issue has beensettled and decision is no longer possible according to the law. But there are also times when

although the dispute has disappeared, as in this case, it nevertheless cries out to be resolved.Justice demands that we act then, not only for the vindication of the outraged right, though gone,but also for the guidance of and as a restraint upon the future.

It is in the discharge of our role in society, as above-quoted, as well as to avoid great disservice tonational interest that We take cognizance of this petition and thus deny public respondents'motion to dismiss. Likewise noteworthy is the fact that the new Constitution, ratified by the Filipinopeople in the plebiscite held on February 2, 1987, carries verbatim section 16[5], Article VIII of the1973 Constitution under Section 24[5], Article VI. And while Congress has not officiallyreconvened, We see no cogent reason for further delaying the resolution of the case at bar.

The exception taken to petitioners' legal standing deserves scant consideration. The case ofPascual v. Secretary of Public Works, et al., 110 Phil. 331, is authority in support of petitioners' locus

standi. Thus:




Again, it is well-settled that the validity of a statute may be contested only by one who will sustain adirect injury in consequence of its enforcement. Yet, there are many decisions nullifying at theinstance of taxpayers, laws providing for the disbursement of public funds, upon the theory thatthe expenditure of public funds by an officer of the state for the purpose of administering anunconstitutional act constitutes a misapplication of such funds which may be enjoined at therequest of a taxpayer. Although there are some decisions to the contrary, the prevailing view in theUnited States is stated in the American Jurisprudence as follows:

In the determination of the degree of interest essential to give the requisite standing to attack theconstitutionality of a statute, the general rule is that not only persons individually affected, but alsotaxpayers have sufficient interest in preventing the illegal expenditures of moneys raised by taxation

and may therefore question the constitutionality of statutes requiring expenditure of publicmoneys. [ 11 Am. Jur. 761, Emphasis supplied. ]

Moreover, in Tan v. Macapagal, 43 SCRA 677 and Sanidad v. Comelec, 73 SCRA 333, We said thatas regards taxpayers' suits, this Court enjoys that open discretion to entertain the same or not.

The conflict between paragraph 1 of Section 44 of Presidential Decree No. 1177 and Section 16[5],Article VIII of the 1973 Constitution is readily perceivable from a mere cursory reading thereof.Said paragraph 1 of Section 44 provides:

The President shall have the authority to transfer any fund, appropriated for the differentdepartments, bureaus, offices and agencies of the Executive Department, which are included inthe General Appropriations Act, to any program, project or activity of any department, bureau, oroffice included in the General Appropriations Act or approved after its enactment.

On the other hand, the constitutional provision under consideration reads as follows:

Sec. 16[5]. No law shall be passed authorizing any transfer of appropriations, however, thePresident, the Prime Minister, the Speaker, the Chief Justice of the Supreme Court, and the headsof constitutional commis ions may by law be authorized to augment any item in the generalappropriations law for their respective offices from savings in other items of their respectiveappropriations.

The prohibition to transfer an appropriation for one item to another was explicit and categoricalunder the 1973 Constitution. However, to afford the heads of the different branches of thegovernment and those of the constitutional commissions considerable flexibility in the use ofpublic funds and resources, the constitution allowed the enactment of a law authorizing thetransfer of funds for the purpose of augmenting an item from savings in another item in theappropriation of the government branch or constitutional body concerned. The leeway grantedwas thus limited. The purpose and conditions for which funds may be transferred were specified,i.e. transfer may be allowed for the purpose of augmenting an item and such transfer may bemade only if there are savings from another item in the appropriation of the government branch orconstitutional body.

Paragraph 1 of Section 44 of P.D. No. 1177 unduly over extends the privilege granted under saidSection 16[5]. It empowers the President to indiscriminately transfer funds from one department,bureau, office or agency of the Executive Department to any program, project or activity of any

department, bureau or office included in the General Appropriations Act or approved after itsenactment, without regard as to whether or not the funds to be transferred are actually savings in

the item from which the same are to be taken, or whether or not the transfer is for the purpose ofaugmenting the item to which said transfer is to be made. It does not only completely disregardthe standards set in the fundamental law, thereby amounting to an undue delegation of legislativepowers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities renderthe provision in question null and void.

"For the love of money is the root of all evil: ..." and money belonging to no one in particular, i.e.public funds, provide an even greater temptation for misappropriation and embezzlement. This,evidently, was foremost in the minds of the framers of the constitution in meticulously prescribingthe rules regarding the appropriation and disposition of public funds as embodied in Sections 16

and 18 of Article VIII of the 1973 Constitution. Hence, the conditions on the release of money fromthe treasury [Sec. 18(1)]; the restrictions on the use of public funds for public purpose [Sec. 18(2)];the prohibition to transfer an appropriation for an item to another [See. 16(5) and the requirementof specifications [Sec. 16(2)], among others, were all safeguards designed to forestall abuses in theexpenditure of public funds. Paragraph 1 of Section 44 puts all these safeguards to naught. For, ascorrectly observed by petitioners, in view of the unlimited authority bestowed upon the President,"... Pres. Decree No. 1177 opens the floodgates for the enactment of unfunded appropriations,results in uncontrolled executive expenditures, diffuses accountability for budgetary performanceand entrenches the pork barrel system as the ruling party may well expand [sic] public money noton the basis of development priorities but on political and personal expediency." 5 The contentionof public respondents that paragraph 1 of Section 44 of P.D. 1177 was enacted pursuant to Section16(5) of Article VIII of the 1973 Constitution must perforce fall flat on its face.

Another theory advanced by public respondents is that prohibition will not lie from one branch ofthe government against a coordinate branch to enjoin the performance of duties within the latter'ssphere of responsibility.

Thomas M. Cooley in his " A Treatise on the Constitutional Limitations," Vol. 1, Eight Edition, Little,Brown and Company, Boston, explained:

... The legislative and judicial are coordinate departments of the government, of equal dignity;each is alike supreme in the exercise of its proper functions, and cannot directly or indirectly, whileacting within the limits of its authority, be subjected to the control or supervision of the other,without an unwarrantable assumption by that other of power which, by the Constitution, is notconferred upon it. The Constitution apportions the powers of government, but it does not make

any one of the three departments subordinate to another, when exercising the trust committed toit. The courts may declare legislative enactments unconstitutional and void in some cases, but notbecause the judicial power is superior in degree or dignity to the legislative. Being required todeclare what the law is in the cases which come before them, they must enforce the Constitution,as the paramount law, whenever a legislative enactment comes in conflict with it. But the courts sit,not to review or revise the legislative action, but to enforce the legislative will, and it is only wherethey find that the legislature has failed to keep within its constitutional limits, that they are at libertyto disregard its action; and in doing so, they only do what every private citizen may do in respect tothe mandates of the courts when the judges assumed to act and to render judgments or decreeswithout jurisdiction. "In exercising this high authority, the judges claim no judicial supremacy; theyare only the administrators of the public will. If an act of the legislature is held void, it is notbecause the judges have any control over the legislative power, but because the act is forbiddenby the Constitution, and because the will of the people, which is therein declared, is paramount to

that of their representatives expressed in any law." [Lindsay v. Commissioners, & c., 2 Bay, 38, 61;




People v. Rucker, 5 Col. 5; Russ v. Com., 210 Pa. St. 544; 60 Atl. 169, 1 L.R.A. [N.S.] 409, 105 Am. St.Rep. 825] (pp. 332-334).

Indeed, where the legislature or the executive branch is acting within the limits of its authority, the judiciary cannot and ought not to interfere with the former. But where the legislature or theexecutive acts beyond the scope of its constitutional powers, it becomes the duty of the judiciaryto declare what the other branches of the government had assumed to do as void. This is theessence of judicial power conferred by the Constitution "in one Supreme Court and in such lowercourts as may be established by law" [Art. VIII, Section 1 of the 1935 Constitution; Art. X, Section 1of the 1973 Constitution and which was adopted as part of the Freedom Constitution, and Art. VIII,

Section 1 of the 1987 Constitution] and which power this Court has exercised in many instances.*

Public respondents are being enjoined from acting under a provision of law which We have earliermentioned to be constitutionally infirm. The general principle relied upon cannot therefore accordthem the protection sought as they are not acting within their "sphere of responsibility" butwithout it.

The nation has not recovered from the shock, and worst, the economic destitution brought aboutby the plundering of the Treasury by the deposed dictator and his cohorts. A provision whichallows even the slightest possibility of a repetition of this sad experience cannot remain written inour statute books.

WHEREFORE, the instant petition is granted. Paragraph 1 of Section 44 of Presidential Decree No.

1177 is hereby declared null and void for being unconstitutional.

SO ORDER RED.

Teehankee, C.J., Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., Cruz, Paras, Feliciano,

Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Footnotes

1 Petition, p. 3, Rollo.

2 pp. 6-7, Rollo

3 p. 169, Rollo.4 The relevant portions read as follows:

The Court developed, for its own governance in the case confessedly within its jurisdiction, a series of rules

under which it has avoided passing upon a large part of all the constitutional questions pressed upon it for

decision. They are:

1. The Court will not pass upon the constitutionality of legislation in a friendly, non-adversary proceeding,

declining because to decide such questions "is legitimate only in the last resort, and as a necessity in the

determination of real, earnest and vital controversy between individuals. It never was the thought tht, by means

of a friendly suit, a party beaten in the legislature could transfer to the courts an inquiry as to the constitutionalityof the legislative act." Chicago & Grand Trunk Ry. v. Wellman, 143 U.S. 339, 345.

2. The Court will not "anticipate question of constitutional law in advance of the necessity of deciding it."

Liverpool. N.Y. & P.S.S. Co. v. Emigration Commissioners, 113 U.S. 3 3, 39 ... "It is not the h abit of the Court to

decide questions of a constitutional nature unless absolutely necessary to a decision of the case. 'Burton v.

United States. 196 U.S. 283, 295.

3. The Court will not formulate a rule of constitutional law broader than is required by the precise facts to which it

is to be applied." Liverpool, N.Y. & P.S.S. Co. v. Emigration Commissioners, supra.

4. The Court will not pass upon a constitutional question although properly presented by the record, if there isalso present some other ground upon which the case may be disposed of. This rule has found most varied

application. Thus, if a case can be decided on either of two grounds, one involving a constitutional question, the

other a question of statutory construction or general law, the Court will decide only the latter. Siler v. Louisville &

Nashville R. Co., 213 U.S. 175, 191; Light v. United States, 220 U.S. 523, 538. Appeals from the highest court of a

state challenging its decision of a question under the Federal Constitution are frequently dismissed because the

judgment can be sustained on an independent state ground. Berea College v. Kentucky, 211 U.S. 45, 53.

5. The Court will not pass upon the validity of a statute upon complaint of one who fails to show that he is injured

by its operation. Tyler v. The Judges, 179 U.S. 405; Hendr ick v. Maryland, 235 U.S. 610, 621. Among the many

applications of this rule, none is more striking than the denial of the right of challenge to one who lacks a

personal or property right. Thus, the challenge by a public official interested only in the performance of his

official duty will not be entertained..... In Fairchild v. Hughes, 258 U.S. 126, the Court affirmed the dismissal of a

suit brought by a citizenwho sought to have the Nineteenth Amendment declared unconstitutional. In

Massachusetts v. Mellon, 262 U.S. 447, the challenge of the federal Maternity Act was not entertained although

made by the Commonwealth on behalf of all its citizens.

6. The Court will not pass upon the constitutionality of a statute at the instance of one who has availed himself of

its benefits. Great Falls Mfg. Co. v. Attorney General, 124, U.S. 581 . . .

7. "When the validity of an act of the Congress is drawn in question, and even if a serious doubt of

constitutionality is raised, it is a cardinal principle that this Court will first ascertain whether a construction of thestatute is fairly possible by which the question may be avoided.' Cromwell v. Benson, 285 U.S. 22, 62." [pp.

176-177, Rollo].

5 p. 14, Rollo.

* Casanovas vs. Hord 8 Phil. 125; McGirr vs. Hamilton, 30 Phil. 563; Compania General de Tabacos vs. Board of

Public Utility, 34 Phil. 136; Central Capiz vs. Ramirez, 40 Phil. 883; Concepcion vs. Paredes, 42 Phil. 599; US vs.

Ang Tang Ho 43 Phil. 6; McDaniel vs. Apacible, 44 Phil. 248; People vs. Pomar, 46 Phil. 440; Agcaoili vs. Suguitan,

48 Phil. 676; Government of P.I. vs. Springer, 50 Phil. 259; Manila Electric Co. vs. Pasay Transp. Co., 57 Phil. 600:

People vs. Linsangan; 62 Phil. 464; People and Hongkong & Shanghai Banking Corp. vs. Jose O. Vera, 65 Phil. 56;

People vs. Carlos, 78 Phil. 535; City of Baguio vs. Nawasa, 106 Phil. 144; City of Cebu vs. Nawasa, 107 Phil, 1112;

Rutter vs. Esteban 93 Phil. 68.

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