first batch cases (nature of tax to constitutional limitations)

7/25/2019 First Batch Cases (Nature of Tax to Constitutional Limitations)

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G.R. No. L-31156 February 27, 1976

PEPSI-COLA BOLING CO!PAN" OF #E P#ILIPPINES, INC., plaintif-appellant,vs.!$NICIPALI" OF ANA$AN, LE"E, #E !$NICIPAL !A"OR, E AL., deendant appellees.

Sabido, Sabido & Associates for appellant.

Provincial Fiscal Zoila M. Redona & Assistant Provincial Fiscal Bonifacio R Matol and Assistant Solicitor General

Conrado T. Licaoco & Solicitor !nri"#e M. Re$es for appellees.

!ARIN,J.:

This is an appeal rom the decision o the Court o First Instance o Leyte in its Civil Case No. 32!, "hich "ascerti#ed to $s %y the Court o &ppeals on 'cto%er (, )(, as involvin* only pure +uestions o la", challen*in*the po"er o taation dele*ated to municipalities under the Local &utonomy &ct epu%lic &ct No. 22(!, asamended, /une ), )01.

'n Fe%ruary )!, )(3, the plaintif-appellant, epsi-Cola ottlin* Company o the hilippines, Inc., commenced a

complaint "ith preliminary in4unction %eore the Court o First Instance o Leyte or that court to declare 5ection 2o epu%lic &ct No. 22(!.1other"ise 6no"n as the Local &utonomy &ct, unconstitutional as an undue dele*ationo tain* authority as "ell as to declare 'rdinances Nos. 23 and 27, series o )(2, o the municipality o

Tanauan, Leyte, null and void.

'n /uly 23, )(3, the parties entered into a 5tipulation o Facts, the material portions o "hich state that, %rst,%oth 'rdinances Nos. 23 and 27 em%race or cover the same su%4ect matter and the production ta rates imposedtherein are practically the same, and second, that on /anuary )7, )(3, the actin* 8unicipal Treasurer o

Tanauan, Leyte, as per his letter addressed to the 8ana*er o the epsi-Cola ottlin* lant in said municipality,sou*ht to enorce compliance %y the latter o the provisions o said 'rdinance No. 27, series o )(2.

8unicipal 'rdinance No. 23, o Tanauan, Leyte, "hich "as approved on 5eptem%er 20, )(2, levies and collects9rom sot drin6s producers and manuacturers a tai o one-siteenth ):)(1 o a centavo or every %ottle o sotdrin6 cor6ed.9 2For the purpose o computin* the taes due, the person, #rm, company or corporation producin*sot drin6s shall su%mit to the 8unicipal Treasurer a monthly report, o the total num%er o %ottles produced andcor6ed durin* the month. 3

'n the other hand, 8unicipal 'rdinance No. 27, "hich "as approved on 'cto%er 2;, )(2, levies and collects 9onsot drin6s produced or manuactured "ithin the territorial 4urisdiction o this municipality a ta o 'N< C


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). E Is 5ection 2, epu%lic &ct No. 22(! an undue dele*ation o po"er, con#scatory andoppressive

2. E Go 'rdinances Nos. 23 and 27 constitute dou%le taation and impose percenta*e or speci#ctaes

3. E &re 'rdinances Nos. 23 and 27 un4ust and unair

). The po"er o taation is an essential and inherent attri%ute o soverei*nty, %elon*in* as a matter o ri*ht to

every independent *overnment, "ithout %ein* epressly conerred %y the people.6

It is a po"er that is purelyle*islative and "hich the central le*islative %ody cannot dele*ate either to the eecutive or 4udicial departmento the *overnment "ithout inrin*in* upon the theory o separation o po"ers. The eception, ho"ever, lies in thecase o municipal corporations, to "hich, said theory does not apply. Le*islative po"ers may %e dele*ated tolocal *overnments in respect o matters o local concern. 7This is sanctioned %y immemorial practice. &ynecessary implication, the le*islative po"er to create political corporations or purposes o local sel-*overnmentcarries "ith it the po"er to coner on such local *overnmental a*encies the po"er to ta. 9$nder the Ne"Constitution, local *overnments are *ranted the autonomous authority to create their o"n sources o revenueand to levy taes. 5ection 0, &rticle HI providesD 9


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contents o the %ottle and still pay the same ta rate, the 8unicipality o Tanauan enacted 'rdinance No. 27,approved on 'cto%er 2;, )(2, imposin* a ta o one centavo >.>)1 on each *allon )2; ?uid ounces, $.5.1 ovolume capacity. The diference %et"een the t"o ordinances clearly lies in the ta rate o the sot drin6sproducedD in 'rdinance No. 23, it "as ):)( o a centavo or every %ottle cor6ed in 'rdinance No. 27, it is onecentavo >.>)1 on each *allon )2; ?uid ounces, $.5.1 o volume capacity. The intention o the 8unicipal Councilo Tanauan in enactin* 'rdinance No. 27 is thus clearD it "as intended as a plain su%stitute or the prior'rdinance No. 23, and operates as a repeal o the latter, even "ithout "ords to that efect. 1&laintif-appellant inits %rie admitted that deendants-appellees are only see6in* to enorce 'rdinance No. 27, series o )(2. .>)1 on each *allon )2; ?uid ounces, $.5.1 o volume capacity9 on all sot drin6s produced or manuacturedunder 'rdinance No. 27 does not parta6e o the nature o a percenta*e ta on sales, or other taes in any orm%ased thereon. The ta is levied on the produce "hether sold or not1 and not on the sales. The volume capacityo the tapayer@s production o sot drin6s is considered solely or purposes o determinin* the ta rate on theproducts, %ut there is not set ratio %et"een the volume o sales and the amount o the ta.21

Nor can the ta levied %e treated as a speci#c ta. 5peci#c taes are those imposed on speci#ed articles, such as

distilled spirits, "ines, ermented li+uors, products o to%acco other than ci*ars and ci*arettes, matches#recrac6ers, manuactured oils and other uels, coal, %un6er uel oil, diesel uel oil, cinemato*raphic #lms, playin*cards, saccharine, opium and other ha%it-ormin* dru*s. 225ot drin6 is not one o those speci#ed.

3. The ta o one >.>)1 on each *allon )2; ?uid ounces, $.5.1 o volume capacity on all sotdrin6s, produced ormanuactured, or an e+uivalent o )-K centavos per case, 23cannot %e considered un4ust and unair. 2! anincrease in the ta alone "ould not support the claim that the ta is oppressive, un4ust and con#scatory.8unicipal corporations are allo"ed much discretion in determinin* the reates o imposa%le taes. 20 This is inline "ith the constutional policy o accordin* the "idest possi%le autonomy to local *overnments in matters olocal taation, an aspect that is *iven epression in the Local Ta Code G No. 23), /uly ), )731. 2( $nless theamount is so ecessive as to %e prohi%itive, courts "ill *o slo" in "ritin* of an ordinance as unreasona%le. 27eluctance should not deter compliance "ith an ordinance such as 'rdinance No. 27 i the purpose o the la" to

urther stren*then local autonomy "ere to %e realied. 2;

Finally, the municipal license ta o ),>>>.>> per cor6in* machine "ith #ve %ut not more than ten cro"ners or2,>>>.>> "ith ten %ut not more than t"enty cro"ners imposed on manuacturers, producers, importers anddealers o sot drin6s and:or mineral "aters under 'rdinance No. 0!, series o )(!, as amended %y 'rdinanceNo. !), series o )(;, o deendant 8unicipality, 29appears not to afect the resolution o the validity o'rdinance No. 27. 8unicipalities are empo"ered to impose, not only municipal license taes upon personsen*a*ed in any %usiness or occupation %ut also to levy or pu%lic purposes, 4ust and uniorm taes. The ordinancein +uestion 'rdinance No. 271 comes "ithin the second po"er o a municipality.

&CC'GINML, the constitutionality o 5ection 2 o epu%lic &ct No. 22(!, other"ise 6no"n as the Local&utonomy &ct, as amended, is here%y upheld and 8unicipal 'rdinance No. 27 o the 8unicipality o Tanauan,


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Leyte, series o )(2, re-pealin* 8unicipal 'rdinance No. 23, same series, is here%y declared o valid and le*alefect. Costs a*ainst petitioner-appellant.

5' 'G


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#ON. E(EC$I)E SECREAR", M.. No. )(!)72SECREAR" OF #E *EPAR!ENOF RANSPORAION AN*CO!!$NICAION +*OC,CO!!ISSIONER OF C$SO!S,ASSISAN SECREAR", LAN*RANSPORAION OFFICE +LO,COLLECOR OF C$SO!S, S$BIC

BA" FREE POR ONE AN* C#IEF OFLO, S$BIC BA" FREE POR ONE,

etitioners,

- versus -

S$BIC INEGRAE* !ACRO)EN$RES CORP., re/re0eeby 40 Pre04e "OLAN*A A!BAR,espondent.

--------------------------------------------------------

#ON. E(EC$I)E SECREAR", M.. No. )(;7!)#ON. SECREAR" OF FINANCE,#E C#IEF OF #E LAN*RANSPORAION OFFICE, #ECO!!ISSIONER OF C$SO!S,a #E COLLECOR OF C$SO!S,S$BIC SPECIAL ECONO!IC ONE,

etitioners,

- versus -

!OOR )E#ICLE I!PORERSASSOCIAION OF S$BIC BA"FREEPOR, INC., re/re0ee by romul*atedD40 Pre04e ALFRE*O S. GALANG,espondent. Fe%ruary 2>, 2>>(

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DECISION

"NARES-SANIAGO,J.:

The instant consolidated petitions see6 to annul and set aside the Gecisions o the e*ional Trial Courto 'lon*apo City, ranch 72, in Civil Case No. 2>->->! and Civil Case No. 22->->!, %oth dated 8ay 2!, 2>>! andthe Fe%ruary )!, 2>>0 Gecision o the Court o &ppeals in C&-M.. 5. No. ;32;!, "hich declared &rticle 2, 5ection3.) o . mo%ile drillin* derric6s)). transit:concrete miers)2. mo%ile radiolo*ical units)3. "rec6ers or to" truc6s)!. concrete pump truc6s)0. aerial:%uc6et ?at-orm truc6s

)(. street s"eepers)7. vacuum truc6s);. *ar%a*e compactors). sel loader truc6s2>. man lit truc6s2). li*htin* truc6s22. truc6s mounted "ith special purpose e+uipment23. all other types o vehicle desi*ned or a speci#c use.

The issuance o


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classi#ed as 5u%ic ay Freeport ->!,A)Ba*ainst the >!, a summary 4ud*ment "as rendereddeclarin* that &rticle 2, 5ection 3.) o ->->!.

In this case, the trial court li6e"ise rendered a summary 4ud*ment on 8ay 2!, 2>>!, holdin* that &rticle2, 5ection 3.) o >3, respondent 8otor =ehicle Importers &ssociation o 5u%ic ay Freeport, Inc&55'CI&TI'N1, #led another action or declaratory relie "ith essentially the same prayer as those in Civil CaseNo. 22->->! and Civil Case No. 2>->->!, a*ainst the


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su%ordinates inside the 5u%ic 5pecial >3, #led a petition or certiorari A;B"ith the Court o

&ppeals C&-M.. 5. No. ;32;!1 "hich denied the petition on Fe%ruary )!, 2>>0 and sustained the #ndin* o thetrial court that &rticle 2, 5ection 3.) o >0,A)>Bsaid case "as consolidated "ith M.. No. )(!)7) and M.. No)(!)72.

etitioners are no" %eore this Court contendin* that &rticle 2, 5ection 3.) o ->-2>>3, numerous "arrants o seiure and detention "ere issued a*ainst imported used motor vehicles %elon*in*to respondent&55'CI&TI'Ns mem%ers.

etitioners ar*uments lac6 merit.

The esta%lished rule that the constitutionality o a la" or administrative issuance can %e challen*ed %yone "ho "ill sustain a direct in4ury as a result o its enorcement A))Bhas %een satis#ed in the instant case. The%road su%4ect o the prohi%ited importation is a;; y/e0 o< u0e :oor 8e4;e0. espondents "ould de#nitelysufer a direct in4ury rom the implementation o


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considerin* its importance to the pu%lic and in 6eepin* "ith the duty to determine "hether the other %ranches othe *overnment have 6ept themselves "ithin the limits o the Constitution.A)0B

e no" come to the 0ub0a48e 400ue0, "hich areD )1 "hether there is statutory %asis or the issuance

o a0 400ue /ur0uao EO 226, e O:4bu0 I8e0:e Coe o< e P4;4//4e0 a a 40 a//;4a4o 0ou; beeee o e Free/or beau0e e ?uaraee o< RA 7227 o e o< ?oo0 4o e 0a4oe 40 :ere;y a ee:/4o Bempo"ers the resident to approve or re4ect the prohi%ition on the importation o any e+uipmentor ra" materials or #nished products. ertinent provisions thereo, readD
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&T. !. Composition o the %oard. The oard o Investments shall %e composed o seven 71

*overnorsD The 5ecretary o Trade and Industry, three 31 $ndersecretaries o Trade and Industryto %e chosen %y the resident and three 31 representatives rom the *overnment a*encies andthe private sector .

&T. 7. o"ers and duties o the oard. )21 Formulate and implement rationaliation pro*rams or certain industries "hose

operation may result in dislocation, overcro"din* or ineJcient use o resources, thus impedin*economic *ro"th. For this purpose, the oard may ormulate *uidelines or pro*ressivemanuacturin* pro*rams, local content pro*rams, mandatory sourcin* re+uirements and dispersalo industries. I a//ro/r4ae a0e0 a u/o a//ro8a; o< e Pre04e, e Boar :ayre0r4, e4er oa;;y or /ar4a;;y, e 4:/ora4o o< ay eu4/:e or ra> :aer4a;0or 40e /rou0 48o;8e 4 e ra4oa;4a4o /ro?ra: >, other"ise 6no"n as the 5ae*uard 8easures &ct S!A1, and entitled &n &ct

rotectin* Local Industries y rovidin* 5ae*uard 8easures To e $nderta6en In esponse To Increased Imports&nd rovidin* enalties For =iolation Thereo,A2)Bdesi*nated the 5ecretariesA22Bo the Gepartment o Trade andIndustry GTI1 and the Gepartment o &*riculture, in their capacity as alter e(oso the resident, as theimplementin* authorities o the sae*uard measures, "hich include, inter alia, modi#cation or imposition o any+uantitative restriction on the importation o a product into the hilippines. The purpose o the 58& is stated inthe declaration o policy, thusD

5


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Considerin* the settled principle that in the a%sence o stron* evidence to the contrary, acts o the other%ranches o the *overnment are presumed to %e valid,A3)Band there %ein* no o%4ection rom the respondents as tothe procedure in the promul*ation o


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e >ou; ;4e o 0ee Sub4 area o8ere 4o a ;4;e #o? Jo?, !r. Pre04e,>ere ere 40 a ub o<


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import or eport into and out o the one. & contrary interpretation "ould deeat the very purpose othe Freeport and drive a"ay investors.

It does not mean, ho"ever, that the ri*ht o Freeport enterprises to import all types o *oods and article is

a%solute. 5uch ri*ht is o course su%4ect to the limitation that articles a%solutely prohi%ited %y la" cannot %eimported into the Freeport.A30BNevertheless, in determinin* "hether the prohi%ition "ould apply to the Freeportresort to the purpose o the prohi%ition is necessary.

In issuin*


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sou*ht to %e prevented or remedied "ill not arise. The application o the la" should %e consistent "ith thepurpose o and reason or the la". Ratione cessat le, et cessat le. hen the reason or the la" ceases, the la"ceases. It is not the letter alone %ut the spirit o the la" also that *ives it lie.A!2BTo apply the proscription tothe Freeport "ould not serve the purpose o the


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*oods, e+uipment, and consumer items ta and dutry-ree. Consumption items, ho"ever, must %econsumed "ithin the Sec#red Area. emoval o ra" materials, capital *oods, e+uipment andconsumer items out o the Sec#red Areaor sale to non-55arra e ?ra4? o< 0u a;;o>ae.

'n 8arch )(, )!, the petitioner as6ed the Control Committee to reconsider its action and approve his claim orallo"ance or /anuary to /une )0, )!, amountin* to ),(0>. The claim "as a*ain reerred %y the Control
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Committee to the auditor Meneral or comment. The latter, in turn reerred it to the N&FC' auditor, "horeaJrmed his previous recommendation and emphasied that the act that the corporation@s #nances had notimproved. In vie" o this, the auditor Meneral also reiterated his previous opinion a*ainst the *rantin* o thepetitioner@s claim and so inormed %oth the Control Committee and the petitioner. ut as the petitioner insistedon his claim the &uditor Meneral Inormed him on /une ), )0>, o his reusal to modiy his decision. Pence thispetition or revie".

e NAFCO >a0 reae by e Co::o>ea; A No. 332, a//ro8e o ue 1&, 1939, >4 aa/4a; 0o o< P2',''',''', 51 /er e o< >4 >a0 o be ab;e o be 0ub0r4be by e Na4oa;

Go8er:e a e re:a4er o be oHere o /ro844a;, :u44/a;, a e 4y ?o8er:e0 ao e ?eera; /ub;4.The mana*ement the corporation "as vested in a %oard o directors o not more than 0mem%ers appointed %y the president o the hilippines "ith the consent o the Commission on &ppointments. utthe corporation "as made su%4ect to the provisions o the corporation la" in so ar as they "ere compati%le "iththe provisions o its charter and the purposes o "hich it "as created and "as to en4oy the *eneral po"ersmentioned in the corporation la" in addition to those *ranted in its charter. The mem%ers o the %oard "ere toreceive each aper dieo not to eceed 3> or each day o meetin* actually attended, ecept the chairman othe %oard, "ho "as to %e at the same time the *eneral mana*er o the corporation and to receive a salary not toeceed )0,>>> per annum.

'n 'cto%er !, )!(, epu%lic &ct No. 0) "as approved authoriin* the resident o the hilippines, amon* otherthin*s, to efect such reorms and chan*es in *overnment o"ned and controlled corporations or the purpose o

promotin* simplicity, economy and eJciency in their operation ursuant to this authority, the resident on'cto%er !, )!7, promul*ated


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It is ar*ued, ho"ever, that


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/ust li6e li*htnin* "hich does stri6e the same place t"ice in some instances, this matter o indirect ta eemptiono the private respondent National o"er Corporation NC1 is %rou*ht to this Court a second time. $naed %ythe Gecision e promul*ated on 8ay 3), ))1petitioner ,>>>.>> the unds needed or the initial operationso the NC and reiteratin* the provision o the ?otation o %onds as soon as the #rst construction o any hydraulicpo"er pro4ect "as to %e decided %y the NC oard. 6The provision on ta eemption in relation to the issuance othe NC %onds "as neither amended nor deleted.

'n 5eptem%er 3>, )3, C.&. No. !0 "as enacted removin* the provision on the payment o the %ond@s principaland interest in 9*old coins9 %ut addin* that payment could %e made in $nited 5tates dollars. 7The provision onta eemption in relation to the issuance o the NC %onds "as neither amended nor deleted.

O ue %, 19%9, Re/ub;4 A No. 357 >a0 eae auor44? e Pre04e o< e P4;4//4e0 o?uaraee, ab0o;ue;y a uo44oa;;y, a0 /r4:ary ob;4?or, e /ay:e o< ay a a;; NPC;oa0.e >a0 a;0o auor4e o ora o bea;< o< e NPC >4 e Iera4oa; Ba


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E/or-I:/or Ba o< o< a04?o, *.C., $.S.A., or ay oer 4era4oa; a4a;404u4o.1%The ta provision or repayment o these loans, as stated in .&. No. 307, "as not amended.

O ue 2, 195%, R.A. No. 9&7 >a0 eae 0/e4a;;y o >4ra> NPCK0 a ee:/4o 0ae0 a0 0@

o er Cor/ora4o 0a;; beee:/ 00 "as enacted increasin* the total amount o orei*n loans NC "as authoried toincur to $5S)>>,>>>,>>>.>> rom the $5S0>,>>>,>>>.>> ceilin* in .&. No. 307. 17The ta provision related to therepayment o these loans "as not amended nor deleted.

'n /une )3, )0;, .&. No. 2>0; "as enactin* #in* the corporate lie o NC to Gecem%er 3), 2>>>. 1&&ll la"s orprovisions o la"s and eecutive orders contrary to said .&. No. 2>0; "ere epressly repealed. 19

'n /une );, )(>, .&. No 2(!) "as enacted convertin* the NC rom a pu%lic corporation into a stoc6corporation "ith an authoried capital stoc6 o )>>,>>>,>>>.>> divided into ),>>>.>>> shares havin* a par valueo )>>.>> each, "ith said capital stoc6 "holly su%scri%ed to %y the Movernment. 2'No ta eemption "asincorporated in said &ct.

'n /une )7, )(), .&. No. 3>!3 "as enacted increasin* the a%ove-mentioned authoried capital stoc6 to20>,>>>,>>>.>> "ith the increase to %e "holly su%scri%ed %y the Movernment. 21No ta provision "asincorporated in said &ct.

'n /une )7, )(7, .&. No !;7 "as enacted. NC@s capital stoc6 "as increased a*ain to 3>>,>>>,>>>.>>, theincrease to %e "holly su%scri%ed %y the Movernment. No ta provision "as incorporated in said &ct. 22

'n 5eptem%er )>, )7), .&. No. (30 "as enacted revisin* the charter o the NC, C.&. No. )2>, as amended.Geclared as primary o%4ectives o the nation "ereD

Geclaration o olicy. E Con*ress here%y declares that )1 the comprehensive development,utiliation and conservation o hilippine "ater resources or all %ene#cial uses, includin* po"er*eneration, and 21 the total electri#cation o the hilippines throu*h the development o po"errom all sources to meet the needs o industrial development and dispersal and the needs o ruralelectri#cation are primary o%4ectives o the nation "hich shall %e pursued coordinately andsupported %y all instrumentalities and a*encies o the *overnment, includin* the #nancialinstitutions. 23

5ection ! o C.&. No. )2>, "as renum%ered as 5ection ;, and divided into sections ; a1 &uthority to incurGomestic Inde%tedness1 and 5ection ; %1 &uthority to Incur Forei*n Loans1.

&s to the issuance o %onds %y the NC, ara*raph No. 3 o 5ection ;a1, states as ollo"sD

The %onds issued under the authority o this su%section shall %e eempt rom the payment o alltaes %y the epu%lic o the hilippines, or %y any authority, %ranch, division or politicalsu%division thereo "hich acts shall %e stated upon the ace o said %onds. . . . 2%

&s to the orei*n loans the NC "as authoried to contract, ara*raph No. 0, 5ection ;%1, states as ollo"sD


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The loans, credits and inde%tedness contracted under this su%section and the payment o theprincipal, interest and other char*es thereon, as "ell as the importation o machinery, e+uipment,materials and supplies %y the Corporation, paid rom the proceeds o any loan, credit orinde%tedeness incurred under this &ct, shall also %e eempt rom all taes, ees, imposts, otherchar*es and restrictions, includin* import restrictions, %y the epu%lic o the hilippines, or any oits a*encies and political su%divisions.25

& ne" section "as added to the charter, no" 6no"n as 5ection )3, .&. No. (30, "hich declares the non-pro#tcharacter and ta eemptions o NC as ollo"sD

The Corporation shall %e non-pro#t and shall devote all its returns rom its capital investment, as"ell as ecess revenues rom its operation, or epansion. To ena%le the Corporation to pay itsinde%tedness and o%li*ations and in urtherance and efective implementation o the policyenunciated in 5ection one o this &ct, the Corporation is here%y declared eemptD

a1 From the payment o all taes, duties, ees, imposts, char*es costs and service ees in anycourt or administrative proceedin*s in "hich it may %e a party, restrictions and duties to theepu%lic o the hilippines, its provinces, cities, and municipalities and other *overnment a*enciesand instrumentalities

%1 From all income taes, ranchise taes and realty taes to %e paid to the National Movernment,

its provinces, cities, municipalities and other *overnment a*encies and instrumentalities

c1 From all import duties, compensatin* taes and advanced sales ta, and "hara*e ees onimport o orei*n *oods re+uired or its operations and pro4ects and

d1 From all taes, duties, ees, imposts and all other char*es its provinces, cities, municipalitiesand other *overnment a*encies and instrumentalities, on all petroleum products used %y theCorporation in the *eneration, transmission, utiliation, and sale o electric po"er. 26

'n Novem%er 7, )72, residential Gecree No. !> "as issued declarin* that the electri#cation othe entire country "as one o the primary concerns o the country. &nd in connection "ith this, it"as speci#cally stated thatD

The settin* up o transmission line *rids and the construction o associated *eneration acilities inLuon, 8indanao and ma4or islands o the country, includin* the =isayas, shall %e theresponsi%ility o the National o"er Corporation NC1 as the authoried implementin* a*ency othe 5tate. 27

It is the ultimate o%4ective o the 5tate or the NC to o"n and operate as a sin*le inte*ratedsystem all *eneratin* acilities supplyin* electric po"er to the entire area em%raced %y any *ridset up %y the NC.2&

'n /anuary 22, )7!, .G. No. 3;> "as issued *ivin* etra po"ers to the NC to ena%le it to ul#ll its role underaoresaid .G. No. !>. Its authoried capital stoc6 "as raised to 2,>>>,>>>,>>>.>>, 29its total domesticinde%tedness "as pe**ed at a maimum o 3,>>>,>>>,>>>.>> at any one time, 3'and the NC "as authoried to%orro" a total o $5S),>>>,>>>,>>>.>> 31in orei*n loans.

The relevant ta eemption provision or these orei*n loans states as ollo"sD

The loans, credits and inde%tedness contracted under this su%section and the payment o theprincipal, interest and other char*es thereon, as "ell as the importation o machinery, e+uipment,materials, supplies and services, %y the Corporation, paid rom the proceeds o any loan, credit orinde%tedness incurred under this &ct, shall also %e eept fro all direct and indirect taes, ees,


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imposts, other char*es and restrictions, includin* import restrictions previously and presentlyimposed, and to %e imposed %y the epu%lic o the hilippines, or any o its a*encies and politicalsu%divisions. 32, .G. No. 30 "as issued removin* certain restrictions in the NC@s sale o electricity to itsdiferent customers. 3%No ta eemption provision "as amended, deleted or added.

'n /uly 3), )70, .G. No. 70; "as issued directin* that 2>>,>>>,>>>.>> "ould %e appropriated annually tocover the unpaid su%scription o the Movernment in the NC authoried capital stoc6, "hich amount "ould %eta6en rom taes accruin* to the Meneral Funds o the Movernment, proceeds rom loans, issuance o %onds,treasury %ills or notes to %e issued %y the 5ecretary o Finance or this particular purpose. 35

'n 8ay 27, )7( .G. No. 3; "as issued

I1n vie" o the accelerated epansion pro*rams or *eneration and transmission acilities "hichincludes nuclear po"er *eneration, the present capitaliation o National o"er Corporation NC1

and the ceilin*s or domestic and orei*n %orro"in*s are deemed insuJcient 36

I1n the application o the ta eemption provisions o the evised Charter, the non-pro#tcharacter o NC has not %een ully utilied %ecause o restrictive interpretation o the tain*a*encies o the *overnment on said provisions 37

I1n order to efect the accelerated epansion pro*ram and attain the declared o%4ective o total

electri#cation o the country, urther amendments o certain sections o epu%lic &ct No. (30, asamended %y residential Gecrees Nos. 3;>, 30 and 70;, have %ecome imperative 3&

Thus NC@s capital stoc6 "as raised to ;,>>>,>>>,>>>.>>, 39the total domestic inde%tedness ceilin* "asincreased to )2,>>>,>>>,>>>.>>, %'the total orei*n loan ceilin* "as raised to $5S!,>>>,>>>,>>>.>> %1and5ection )3 o .&. No. (30, "as amended to read as ollo"sD

The Corporation shall %e non-pro#t and shall devote all its returns rom its capital investment as"ell as ecess revenues rom its operation, or epansion. To ena%le the Corporation to pay to itsinde%tedness and o%li*ations and in urtherance and efective implementation o the policyenunciated in 5ection one o this &ct, the Corporation, includin* its su%sidiaries, is here%y declaredeempt rom the payment o all orms o taes, duties, ees, imposts as "ell as costs and service


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ees includin* #lin* ees, appeal %onds, supersedeas %onds, in any court or administrativeproceedin*s. %2

II

'n the other hand, the pertinent ta la"s involved in this controversy are .G. Nos. ;;2, ))77, )3) anda0 400ue >4ra>4? e a ee:/4o o< NPC >4 re?ar o

4:/or0as ollo"sD

P, )77, .G. ))77 "as issued as it "as


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. . . declared the policy o the 5tate to ormulate and implement a National ud*et that is aninstrument o national development, re?ective o national o%4ectives, strate*ies and plans. The%ud*et shall %e supportive o and consistent "ith the socio-economic development plan and shall%e oriented to"ards the achievement o eplicit o%4ectives and epected results, to ensure thatunds are utilied and operations are conducted efectively, economically and eJciently. Thenational %ud*et shall %e ormulated "ithin a contet o a re*ionalied *overnment structure and othe totality o revenues and other receipts, ependitures and %orro"in*s o all levels o*overnment-o"ned or controlled corporations. The %ud*et shall li6e"ise %e prepared "ithin thecontet o the national lon*-term plan and o a lon*-term %ud*et pro*ram. %3

I ;4e >4 0u /o;4y, e ;a> eree a

A;; u40 o< ?o8er:e, 4;u4? ?o8er:e-o>e or oro;;e or/ora4o0, 0a;; /ay 4o:eae0, u0o:0 u4e0 a oer ae0 a 0 D provided, thator*aniations other"ise eempted %y la" rom the payment o such taes:duties may as6 or a su%sidy rom theMeneral Fund in the eact amount o taes:duties dueD provided, urther, that a procedure shall %e esta%lished %ythe 5ecretary o Finance and the Commissioner o the ud*et, "here%y such su%sidies shall automatically %econsidered as %oth revenue and ependiture o the Meneral Fund. %%

The la" also declared that E

A&Bll la"s, decrees, eecutive orders, rules and re*ulations or parts thereo "hich are inconsistent"ith the provisions o the Gecree are here%y repealed and:or modi#ed accordin*ly. %5

'n /uly )), );!, most li6ely due to the economic morass the Movernment ound itsel in ater the &+uinoassassination, .G. No. )3) "as issued to reiterate thatD

P


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5ec. 0. The provisions o residential Gecree No. ))77 as "ell as all other la"s, decrees, eecutiveorders, administrative orders, rules, re*ulations or parts thereo "hich are inconsistent "ith thisGecree are here%y repealed, amended or modi#ed accordin*ly.

'n Gecem%er )7, );(,


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i1 the Tarif and Customs Code, as amended

ii1 the National Internal evenue Code, as amended

iii1 the Local Ta Code, as amended

iv1 the eal roperty Ta Code, as amended

1 those approved %y the resident upon the recommendation o the Fiscal

Incentives evie" oard.

5ec. 2. The Fiscal Incentives evie" oard created under residential Gecree No. 77(, asamended, is here%y authoried toD

a1 restore ta and:or duty eemptions "ithdra"n hereunder in "hole or in part

%1 revise the scope and covera*e o ta and:or duty eemption that may %e restored

c1 impose conditions or the restoration o ta and:or duty eemption

d1 prescri%e the date o period o efectivity o the restoration o ta and:or duty eemption

e1 ormulate and su%mit to the resident or approval, a complete system or the *rant osu%sidies to deservin* %ene#ciaries, in lieu o or in com%ination "ith the restoration o ta andduty eemptions or preerential treatment in taation, indicatin* the source o undin* thereor,eli*i%le %ene#ciaries and the terms and conditions or the *rant thereo ta6in* into considerationthe international commitment o the hilippines and the necessary precautions such that the *ranto su%sidies does not %ecome the %asis or countervailin* action.

5ec. 3. In the dischar*e o its authority hereunder, the Fiscal Incentives evie" oard shall ta6einto account any or all o the ollo"in* considerationsD

a1 the efect on relative price levels

%1 relative contri%ution o the %ene#ciary to the revenue *eneration efort

c1 nature o the activity the %ene#ciary is en*a*ed and

d1 in *eneral, the *reater national interest to %e served.

5ec. 0. &ll la"s, orders, issuances, rules and re*ulations or parts thereo inconsistent "ith this


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C;a004a4o0 or 40 o< ae0@

Aor4? o Per0o0 >o /ay or >o bear e bure@

a. *4re a e >ere e /er0o 0u//o0e o /ay e a rea;;y /ay04. WITHOUT ra0o u;4:ae;y /ay0 o< e NPC ;a>0 >4;; 0o> a 4 a0 bee e ;a>:aerK0 4e4o a eNPC >a0 o be o:/;ee;y a ee:/


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ATBhe Corporation is here%y declared eemptD

d1 From all taes, duties, ees, imposts and all other char*es imposed %y the epu%lic o thehilippines, its provinces, cities, municipalities and other *overnment a*encies andinstrumentalities, on all petroleum products used %y the Corporation in the *eneration,transmission, utiliation, and sale o electric po"er.

.G. No. 3;> added phrase 9directly or indirectly9 to said 5ection )3d1, "hich no" reads as ollo"sD

d1 From all taes, duties, ees, imposts, and all other char*es imposed directl$ or indirectl$ %y theepu%lic o the hilippines, its provinces, cities, municipalities and other *overnment a*encies andinstrumentalities, on all petroleum products used %y the Corporation in the *eneration,transmission, utiliation and sale o electric po"er.


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up to its latest amendments, .G. No. 3;>, .G. No. 30 and .G. No. 70, &NG came up 55"ith a very simple5ection )3, .&. No. (30, as amended %y .G. No. 3;.

'ne common theme in all these la"s is that the NC must %e ena%le to pay its inde%tedness 56"hich, as o .G.No. 3;, "as )2 illion in total domestic inde%tedness, at any one time, and $S! illion in total orei*n loans atany one time. The NC must %e and has to %e eempt rom all orms o taes i this *oal is to %e achieved.

y virtue o .G. No. 3; NC@s capital stoc6 "as raised to ; illion. It must %e remem%ered that to pay the*overnment share in its capital stoc6 .G. No. 70; "as issued mandatin* that 2>> 8illion "ould %e appropriated

annually to cover the said unpaid su%scription o the Movernment in NC@s authoried capital stoc6. &ndsi*ni#cantly one o the sources o this annual appropriation o 2>> million is T&H 8'N as ollo"sD

The loans, credits and inde%tedness contracted this su%section and the payment o the principal,interest and other char*es thereon, as "ell as the importation o machinery, e+uipment,materials, supplies and services, %y the Corporation, paid rom the proceeds o any loan, credit or

inde%tedness incurred under this &ct, shall also %e eempt rom all direct and indirect taes, ees,imposts, other char*es and restrictions, includin* import restrictions previo#sl$ and presentl$iposed,and to be iposed %y the epu%lic o the hilippines, or any o its a*encies and politicalsu%divisions. 5&, still stands. 5ince the su%4ect matter o this particular 5ection ; %1 had to do only "ithloans and machinery imported, paid or rom the proceeds o these orei*n loans, T-!R! 5AS 6 T-!RSB)!CT MATT!R T LMP *T P 5*T-, and so, the ta eemption stood as is E "ith the epress mention o9directand indirect9 ta eemptions. &nd this 9direct and indirect9 ta eemption privile*e etended to 9taes, ees,imposts, other char*es . . . to %e imposed9 in t'e f#t#re E surely, an indication that the la"ma6ers "anted the

NC to %e eempt rom &LL F'85 o taes E direct and indirect.

It is crystal clear, thereore, that NC had %een *ranted ta eemption privile*es or %oth direct and indirect taesunder .G. No. 3;.

=I

Five 01 years on into the no" discredited Ne" 5ociety, the Movernment decided to rationalie *overnmentreceipts and ependitures %y ormulatin* and implementin* a National ud*et. 6'The NC, %ein* a *overnmento"ned and controlled corporation had to %e shed of its ta eemption status privile*es under .G. No. ))77. It"as, ho"ever, allo"ed to as6 or a su%sidy rom the Meneral Fund in the eact amount o taes:duties due.


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&ctually, much earlier, .G. No. ;;2 had already repealed NC@s ta-ree importation privile*es. It allo"ed,ho"ever, NC to appeal said repeal "ith the 'Jce o the resident and to avail o ta-ree importation privile*esunder its 5ection ), su%4ect to the prior approval o an Inter-&*ency Committed created %y virtue o said .G. No.;;2. It is presumed that the NC, %ein* the special creation o the 5tate, "as allo"ed to continue its ta-reeimportations.

This Court notes that petitioner %rou*ht to the attention o this Court, the matter o the a%olition o NC@s taeemption privile*es %y .G. No. ))77 61only in his Common eply:Comment to private espondents@9'pposition9 and 9Comment9 to 8otion or econsideration, our !1 months &FT, )77, the NC lost all its duty and taeemptions, "hether direct or indirect. &nd so there "as nothin* to %e "ithdra"n or to %erestored under .G. No. )3), issued on /une )), );!. This is evident rom sections ) and 2 osaid .G. No. )3), "hich readsD

95ection ). The provisions o special or *eneral la" to the contrary not"ithstandin*

all eemptions rom the payment o duties, taes, ees, imports and other char*esheretoore *ranted in avor o *overnment-o"ned or controlled corporationsincludin* their su%sidiaries are here%y "ithdra"n.9

5ec. 2. The resident o the hilippines and:or the 8inister o Finance, upon therecommendation o the Fiscal Incentives evie" oard created under .G. No. 77(,is here%y empo"ered to restore partially or totally, the eemptions "ithdra"n %ysection ) a%ove. . . .

Pence, .G. No. )3) did not have any efect or did it chan*e NC@s status. 5ince it had alreadylost all its ta eemptions privile*e "ith the issuance o .G. No. ))77 seven 71 years earlier or on


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/uly 3>, )77, there "ere no ta eemptions to %e "ithdra"n %y section ) "hich could later %erestored %y the 8inister o Finance upon the recommendation o the FI under 5ection 2 o .G.No. )3). Conse+uently, FI resolutions No. )>-;0, and )-;(, "ere all ille*ally and validly issuedsince FI acted %eyond their statutory authority %y creatin* and not merely restorin* the taeempt status o NC. The same is true or FI es. No. )7-;7 "hich restored NC@s taeemption under -;0 67and )-;( 6&as approved %y the 8inister oFinance.

Conse+uently, contrary to petitioner@s su%mission, FI esolutions Nos. )>-;0 and )-;( "ere %oth le*ally andvalidly issued %y the FI pursuant to .G. No. )3). FI did not created NC@s ta eemption status %ut merelyrestored it. 69

5ome +uarters have epressed the vie" that .G. No. )3) "as ille*ally issued under the no" rather inamous&mendment No. ( 7'as there "as no sho"in* that resident 8arcos@ encroachment on le*islative prero*atives"as 4usti#ed under the then prevailin* condition that he could le*islate 9only i the atasan* am%ansa @ailed or"as una%le to act inade+uately on any matter that in his 4ud*ment re+uired immediate action@ to meet the@ei*ency@. 71

&ctually under said &mendment No. (, then resident 8arcos could issue decrees not only "hen the Interimatasan* am%ansa ailed or "as una%le to act ade+uately on any matter or any reason that in his 8arcos@1

4ud*ment re+uired immediate action, %ut also "hen there eisted a *rave emer*ency or a threat or thereo. Itmust %e remem%ered that said residential Gecree "as issued only around nine 1 months ater the hilippinesunilaterally declared a moratorium on its orei*n de%t payments 72as a result o the economic crisis tri**ered %y

loss o con#dence in the *overnment %rou*ht a%out %y the &+uino assassination. The hilippines "as then tryin*to reschedule its de%t payments. 73'ne o the %i* %orro"ers "as the NC 7%"hich had a $5S 2.) %illion "hiteelephant o a ataan Nuclear o"er lant on its %ac6. 75From all indications, it must have %een this *raveemer*ency o a de%t reschedulin* "hich compelled 8arcos to issue .G. No. )3), under his &mendment (po"er. 76

The rule, thereore, that under the )73 Constitution 9no la" *rantin* a ta eemption shall %e passed "ithoutthe concurrence o a ma4ority o all the mem%ers o the atasan* am%ansa9 77does not apply as said .G. No.)3) "as not passed %y the Interim atasan* am%ansa %ut %y then resident 8arcos under Pis &mendment No.( po"er.


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.G. No. )3) "as, thereore, validly issued %y then resident 8arcos under his &mendment No. ( authority.

$nder -;0 and )- ;(. This has led some +uarters to %elieve that a 9travesty o 4ustice9 mi*ht haveoccurred "hen the 8inister o Finance approved his o"n recommendation as Chairman o the Fiscal Incentivesevie" oard as "hat happened inZabales C'roate vs. Co#rt of Appeals &'"hen the 5ecretary o &*ricultureand Natural esources approved a decision earlier rendered %y him "hen he "as the Girector o 8ines, &1andinAn0aldo vs. Clave &2"here residential


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=II

The net +uestion that pro4ects itsel is E "ho pays the ta

The ans"er to the +uestion could %e *leamed rom the manner %y "hich the Commissaries o the &rmed Forceso the hilippines sell their *oods.

y virtue o .G. No. ;3, &&veterans, mem%ers o the &rmed o the hilippines, and their deendants %ut *roceriesand other *oods ree o all taes and duties i %ou*ht rom any &F Commissaries.

In practice, the &F Commissary suppliers pro%a%ly treat the unchar*ea%le speci#c, ad valoreand other taeson the *oods earmar6ed or &F Commissaries as an added cost o operation and distri%ute it over the total unitso *oods sold as it "ould any other cost. Thus, even the ordinary supermar6et %uyer pro%a%ly pays or thespeci#c, ad valore and other taes "hich theses suppliers do not char*e the &F Commissaries. &9

IN 8$CP TP< 5&8< 8&NN


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It should %e noted at this point in time that the "hole issue o "ho ILL pay these indirect taes P&5 -;0. 925ince the ta eemption restoration "as retroactive to /une )), );! there "as a need. thereore, torecover said amount as Calte hiIs.1 Inc. had already paid the I the speci#c and ad valoretaes on the%un6er oil it sold NC durin* the period a%ove indicated and had %illed NC correspondin*ly. 93It should %e notedthat the NC, in its letter-claim dated 5eptem%er )), );0 to the Commissioner o the ureau o Internal evenue


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GIG N'T C&T2>,))>.7 as part o the %un6eruel oil price it purchased rom Calte hils1 Inc. 9%

The la" *overnin* recovery o erroneously or ille*ally, collected taes is section 23> o the National Internalevenue Code o )77, as amended "hich reads as ollo"sD

5ec. 23>. Recover of ta erroneo#sl$ or ille(all$ collected. E No suit or proceedin* shall %emaintained in any court or the recovery o any national internal revenue ta hereater alle*ed tohave %een erroneously or ille*ally assessed or collected, or o any penalty claimed to have %een

collected "ithout authority, or o any sum alle*ed to have %een ecessive or in any 8anner"ron*ully collected. until a claim or reund or credit has %een duly #led "ith the Commissioner%ut such suit or proceedin* may %e maintained, "hether or not such ta, penalty, or sum has%een paid under protest or duress.

In any case, no such suit or proceedin* shall %e %e*un ater the epiration o t"o years rom thedate o payment o the ta or penalty re*ardless o any supervenin* cause that may arise aterpayment rovided, ho"ever, That the Commissioner may, even "ithout a "ritten claim thereor,reund or credit any ta, "here on the ace o the return upon "hich payment "as made, suchpayment appears clearly, to have %een erroneously paid.

Inasmuch as NC #lled its claim or 0;.>2>,))>.7 on 5eptem%er )), );0, 95the Commissioner correctly issuedthe Ta Credit 8emo in vie" o NC@s indirect ta eemption.

etitioner, ho"ever, as6s $s to restrain the Commissioner rom actin* avora%ly on NC@s claim or!)>.0;>,>>>.>> "hich represents speci#c and ad valore taes paid %y the oil companies to the I rom /une)), );! to the early part o );(. 96

& careul eamination o petitioner@s pleadin*s and annees attached thereto does not reveal "hen the alle*edclaim or a !)>,0;>,>>>.>> ta reund "as #led. It is only stated In para*raph No. 2 o the Geed o&ssi*nment 97eecuted %y and %et"een NC and Calte hils.1 Inc., as ollo"sD

That the &55IMN'NC1 has a pendin* ta credit claim "ith the ureau o Internal evenueamountin* to !!2,;;7,7)(.)(. 0;.>2>,))>.7 o "hich is due to &ssi*nor@s oil purchases romthe &ssi*nee Calte Ahils.B Inc.1

&ctually, as the Court sees it, this is a clear case o a 98eican standof.9 e cannot restrain the I romreundin* said amount %ecause o 'ur rulin* that NC has %oth direct and indirect ta eemption privile*es.Neither can e order the I to reund said amount to NC as there is no pendin* petition or revie"on certiorari o a suit or its collection %eore $s. &t any rate, at this point in time, NC can no lon*er #le any suitto collect said amount ,0;>,>>>.>> had %een made on said date. it is clear that more than t"o 21 years had alreadyelapsed rom said date. &t the same time, e should note that there is no le*al o%stacle to the I *rantin*,even "ithout a suit %y NC, the ta credit or reund claimed %y NC, assumin* that NC@s claim had %een madeseasona%ly, and assumin* the amounts covered had actually %een paid previously %y the oil companies to theI.


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P4 reu4re0 /ub;4a4o o< e or4ae be


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re+uirement o pu%lication %eore and ater approval, the ordinance in +uestion is invalid and,thereore, null and void.

etitioners moved or reconsideration o the adverse decision, stressin* that a1 only a post-pu%lication isre+uired %y the Local Ta Code and %1 private respondent ailed to ehaust all administrative remedies %eoreinstitutin* an action in court.

'n 5eptem%er 2(, )70, respondent /ud*e denied the motion.

Forth"ith, petitioners %rou*ht the matter to $s throu*h the present petition or revie" on certiorari.

e e /e44o 4:/re00e >4 :er40.

). The ne#so the present controversy is the apparent con?ict %et"een the evised Charter o the City o 8anilaand the Local Ta Code on the manner o pu%lishin* a ta ordinance enacted %y the 8unicipal oard o 8anila.For, "hile 5ection )7 o the evised Charter providesD

!ac' proposed ordinanceshall %e pu%lished in t"o daily ne"spapers o *eneral circulation in thecity, and shall not %e discussed or enacted %y the oard until ater the third day ollo"in* suchpu%lication. V V V !ac' approved ordinanceV V V shall %e pu%lished in t"o daily ne"spapers o*eneral circulation in the city, "ithin ten days ater its approval and shall ta6e efect and %e in

orce on and ater the t"entieth day ollo"in* its pu%lication, i no date is #ed in the ordinance.

5ection !3 o the Local Ta Code directsD

ithin ten days ater t'eir approval, certi#ed true copies o all provincial, city, municipal and%arrioordinances lev$in( or iposin( taes, fees or ot'er c'ar(esshall %e pu%lished or threeconsecutive days in a ne"spaper or pu%lication "idely circulated "ithin the 4urisdiction o the loca*overnment, or posted in the local le*islative hall or premises and in t"o other conspicuous places"ithin the territorial 4urisdiction o the local *overnment. In either case, copies o all provincial,city, municipal and %arrio ordinances shall %e urnished the treasurers o the respectivecomponent and mother units o a local *overnment or dissemination.

I oer >or0, >4;e e Re840e Carer o< e C4y o< !a4;a reu4re0 /ub;4a4o beforeeea:e o< e or4ae and aftere a//ro8a; ereo< 4 >o a4;y e>0/a/er0 o< ?eera;4ru;a4o 4 e 4y, e Loa; a Coe o;y /re0r4be0 erea0 e Loa; a Coe 40 a ?eera; ;a> beau0e 4 a//;4e0 u48er0a;;yo a;; ;oa; ?o8er:e0. lac6stone de#nes *eneral la" as a universal rule afectin* the entire communityand special la" as one relatin* to particular persons or thin*s o a class. 1&nd the rule commonly said is that aprior special la" is not ordinarily repealed %y a su%se+uent *eneral la". The act that one is special and the other*eneral creates a presumption that the special is to %e considered as remainin* an eception o the *eneral, oneas a *eneral la" o the land, the other as the la" o a particular case. 2#o>e8er, e ru;e rea4;y y4e;0 o a04ua4o >ere e 0/e4a; 0aue re4 e ?eera; 0aue rea04$artic(lar.The eactly is the circumstance o%tainin* in the case at %ar. 5ection )7 o the evised Charter othe City o 8anila spea6s o 9ordinance9 in *eneral, i.e., irrespective o the nature and scope thereo,+'ereas,5ection !3 o the Local Ta Code relates to 9ordinances levyin* or imposin* taes, ees or other char*es9 inparticular. In re*ard, thereore, to ordinances in *eneral, the evised Charter o the City o 8anila is dou%tlessdominant, %ut, that dominant orce loses its continuity "hen it approaches the realm o 9ordinances levyin* orimposin* taes, ees or other char*es9 in particular. There, the Local Ta Code controls. Pere, as al"ays, a


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*eneral provision must *ive "ay to a particular provision. 35pecial provision *overns. %This is especially true"here the la" containin* the particular provision "as enacted later than the one containin* the *eneralprovision. The City Charter o 8anila "as promul*ated on /une );, )! as a*ainst the Local Ta Code "hich "asdecreed on /une ), )73. The la"-ma6in* po"er cannot %e said to have intended the esta%lishment o con?ictin*and hostile systems upon the same su%4ect, or to leave in orce provisions o a prior la" %y "hich the ne" "ill othe le*islatin* po"er may %e th"arted and overthro"n. 5uch a result "ould render le*islation a useless and Idleceremony, and su%4ect the la" to the reproach o uncertainty and unintelli*i%ility. 5

The case o Cit$ of Manila v. Teotico 6is opposite. In that case, Teotico sued the City o 8anila or dama*es arisin*

rom the in4uries he sufered "hen he ell inside an uncovered and unli*hted catch%asin or manhole on . ur*os&venue. The City o 8anila denied lia%ility on the %asis o the City Charter .&. !>1 eemptin* the City o 8anilarom any lia%ility or dama*es or in4ury to persons or property arisin* rom the ailure o the city oJcers toenorce the provisions o the charter or any other la" or ordinance, or rom ne*li*ence o the City 8ayor,8unicipal oard, or other oJcers "hile enorcin* or attemptin* to enorce the provisions o the charter or o anyother la" or ordinance. $pon the other hand, &rticle 2); o the Civil Code ma6es cities lia%le or dama*es orthe death o, or in4ury sufered %y any persons %y reason o the deective condition o roads, streets, %rid*es,pu%lic %uildin*s, and other pu%lic "or6s under their control or supervision. 'n revie", the Court held the CivilCode controllin*. It is true that, insoar as its territorial application is concerned, the evised City Charter is aspecial la" and the su%4ect matter o the t"o la"s, the evised City Charter esta%lishes a (eneral r#leo lia%ilityarisin* rom ne*li*ence in *eneral, re*ardless o the o%4ect thereo, "hereas the Civil Code constitutes aparticularprescriptionor lia%ility due to deective streets in particular. In the same manner, the evised Charter

o the City prescri%es a rule or the pu%lication o 9ordinance9 in (eneral, "hile the Local Ta Code esta%lishes arule or the pu%lication o 9ordinance levyin* or imposin* taes ees or other char*es in partic#lar.

In act, there is no rule "hich prohi%its the repeal even %y implication o a special or speci#c act %y a *eneral or%road one. 7& charter provision may %e impliedly modi#ed or superseded %y a later statute, and "here a statuteis controllin*, it must %e read into the charter not"ithstandin* any particular charter provision. &A 0ub0eue?eera; ;a> 04:4;ar;y a//;4ab;e o a;; 44e0 /re8a4;0 o8er ay oD44? arer /ro8404o, 4 e ?eera; ;a>0 a /ub;4 /o;4y o< e0ae. 9& chartered city is not an independent soverei*nty. The state remains supreme in all matters not purelylocal. 'ther"ise stated, a charter must yield to the constitution and *eneral la"s o the state, it is to have readinto it that *eneral la" "hich *overns the municipal corporation and "hich the corporation cannot set aside %utto "hich it must yield. hen a city adopts a charter, it in efect adopts as part o its charter *eneral la" o such

character.1'

2. The principle o ehaustion o administrative remedies is stron*ly asserted %y petitioners as havin* %eenviolated %y private respondent in %rin*in* a direct suit in court. 40 40 beau0e Se4o %7 o< e Loa; aCoe /ro84e0 a ay ue04o or 400ue ra40e a?a40 e ;e?a;4y o< ay a or4ae, or /or4oereo


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or use o pu%lic mar6ets and premises V V V.9 1%They can provide or and re*ulate mar6et stands, stalls andprivile*es, and, also, the sale, lease or occupancy thereo. They can license, or permit the use o, lease, sell orother"ise dispose o stands, stalls or mar6etin* privile*es. 15

It is a ee%le attempt to ar*ue that the ordinance violates residential Gecree No. 7, dated 5eptem%er 3>, )72,insoar as it afects livestoc6 and animal products, %ecause the said decree prescri%es the collection o other eesand char*es thereon 9"ith the eception o ante-mortem and post-mortem inspection ees, as "ell as thedelivery, stoc6yard and slau*hter ees as may %e authoried %y the 5ecretary o &*riculture and Naturalesources.9 16Clearly, even the eception clause o the decree itsel permits the collection o the proper ees or

livestoc6. &nd the Local Ta Code .G. 23), /uly ), )731 authories in its 5ection 3)D 9Local *overnments maycollect ees or the slau*hter o animals and the use o corrals V V V 9

!. The non-participation o the 8ar6et Committee in the enactment o 'rdinance No. 7022 supposedly inaccordance "ith epu%lic &ct No. (>3, an amendment to the City Charter o 8anila, providin* that 9the mar6etcommittee shall ormulate, recommend and adopt, s#b7ect to t'e rati%cation of t'e #nicipal board, andapproval of t'e a$or, policies and rules or re*ulation repealin* or manedin* eistin* provisions o the mar6etcode9 does not inect the ordinance "ith any *erm o invalidity. 17The unction o the committee is purelyrecommendatory as the underscored phrase su**ests, its recommendation is "ithout %indin* efect on the8unicipal oard and the City 8ayor. Its prior ac+uiescence o an intended or proposed city ordinance is not acondition sine +ua non %eore the 8unicipal oard could enact such ordinance. The native po"er o the 8unicipaloard to le*islate remains undistur%ed even in the sli*htest de*ree. It can move in its o"n initiative and the

8ar6et Committee cannot demur. &t most, the 8ar6et Committee may serve as a le*islative aide o the 8unicipaloard in the enactment o city ordinances afectin* the city mar6ets or, in plain "ords, in the *atherin* o thenecessary data, studies and the collection o consensus or the proposal o ordinances re*ardin* city mar6ets.8uch less could it %e said that epu%lic &ct (>3 intended to dele*ate to the 8ar6et Committee the adoption ore*ulatory measures or the operation and administration o the city mar6ets. Potestas dele(ata non dele(arepotest.

0. Pr48ae re0/oe be>a4;0 a e :are 0a;;


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etitioner,

resentD

N&


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etitioner I and private respondent Fertiphil are private corporations incorporated under hilippine la"s.A3BThey are %oth en*a*ed in the importation and distri%ution o ertiliers, pesticides and a*ricultural chemicals.

'n /une 3, );0, then resident Ferdinand 8arcos, eercisin* his le*islative po"ers, issued L'I No. )!(0"hich provided, amon* others, or the imposition o a capital recovery component CC1 on the domestic sale oall *rades o ertiliers in the hilippines.A!BThe L'I providesD

3. The &dministrator o the Fertilier esticide &uthority to include in its ertilier pricin* ormula

a capital contri%ution component o not less than )> per %a*. This capital contri%ution shall%e collected until ade+uate capital is raised to ma6e I via%le. 5uch capital contri%ution shall%e applied %y F& to all domestic sales o ertiliers in the hilippines.A0B$nderscorin*supplied1

Pur0ua o e LOI, Fer4/4; /a4 P1' 4 u0e e /roee0 o :a4a4 40 :oo/o;y o< e


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5' 'Ger o< aa4o by e 0ae 40 /;eary. Co:/ree048e a 0u/re:e, e/r44/a; e u/o 40 abu0e re04? 4 e re0/o04b4;4y o< e :e:ber0 o< e;e?40;aure o e4r o04ue0. #o>e8er, ere are >o 40 o< ;4:4a4o0 o e/o>er o< aa4o@ e 4ere ;4:4a4o0 a e o04u4oa; ;4:4a4o0.

'ne o the inherent limitations is that a ta may %e levied only or pu%lic purposesD

e /o>er o a a be re0ore o o;y > to the Fertilier and esticide&uthority pursuant to the )> per %a* o ertilier sold imposition under L'I )!(0 "hich, in turn,remitted the amount to the deendant lanters roducts, Inc. thru the latters depository %an6, Far per ertilier %a* sold in thecountry and orders that the said amount should *o to the deendant lanters roduct, Inc. isunla"ul %ecause it violates the mandate that a ta can %e levied only or a pu%lic purpose andnot to %ene#t, aid and promote a private enterprise such as lanters roduct, Inc. A)2B

I moved or reconsideration %ut its motion "as denied. A)3BI then #led a notice o appeal "ith the TC %ut itailed to pay the re+uisite appeal doc6et ee.In a separate %ut related proceedin*, this Court A)!Ballo"ed theappeal o I and remanded the case to the C& or proper disposition.

CA *e404o
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'n Novem%er 2;, 2>>3, the C& handed do"n its decision aJrmin* "ith modi#cation that o the TC, "ith theollo"in* falloD

IN =I


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' the three undamental po"ers o the 5tate, the eercise o police po"er has %een characteriedas the most essential, insistent and the least limita%le o po"ers, etendin* as it does to all the*reat pu%lic needs. It may %e eercised as lon* as the activity or the property sou*ht to %ere*ulated has some relevance to pu%lic "elare Constitutional La", %y Isa*ani &. Cru, p. 3;,)0


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in the notice dated &pril 2, );0, addressed %y counsel or the Creditors to lantersFoundation. 5uch proceeds shall %e deposited %y F& on or %eore the )0 thday oeach month.

The capital recovery component shall continue to %e char*ed and collected until

payment in ull o a1 the $npaid Capital and:or %1 any shortall in the payment othe 5u%sidy eceiva%les, c1 any carryin* cost accruin* rom the date hereo on theamounts "hich may %e outstandin* rom time to time o the $npaid Capital and:orthe 5u%sidy eceiva%les and d1 the capital increases contemplated in para*raph 2hereo. For the purpose o the ore*oin* clause c1, the carryin* cost shall %e atsuch rate as "ill represent the ull and reasona%le cost to lanters o servicin* itsde%ts, ta6in* into account %oth its peso and orei*n currency-denominatedo%li*ations. ecords, pp. !2-!31

&ppellants proposition is open to +uestion, to say the least. The L'$ issued %y then rime 8inister=irata ta6en to*ether "ith the /ustice 5ecretarys 'pinion does not preponderantly demonstratethat the collections made "ere held in trust in avor o millions o armers. $nortunately or

appellant, in the a%sence o suJcient evidence to esta%lish its claims, this Court is constrained torely on "hat is eplicitly provided in L'I )!(0 that one o the primary aims in imposin* the levy isto support the successul reha%ilitation and continued via%ility o I.A);B

I moved or reconsideration %ut its motion "as denied. A)BIt then #led the present petition "ith thisCourt.

I00ue0

etitioner I raises our issues or 'ur consideration, vi0.D

I

TP< C'N5TIT$TI'N&LIT 'F L'I )!(0 C&NN'T < C'LL&T


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aced the possi%ility o severe sanctions or ailure to pay the levy. The act o payment is suJcient in4ury toFertiphil.

8oreover, Fertiphil sufered harm rom the enorcement o the L'I %ecause it "as compelled to actor inits product the levy. The levy certainly rendered the ertilier products o Fertiphil and other domestic sellersmuch more epensive. The harm to their %usiness consists not only in e"er clients %ecause o the increasedprice, %ut also in adoptin* alternative corporate strate*ies to meet the demands o L'I No. )!(0. Fertiphil andother ertilier sellers may have shouldered all or part o the levy 4ust to %e competitive in the mar6et. The harmoccasioned on the %usiness o Fertiphil is suJcient in4ury or purposes o loc#s standi.

B

It is settled that the TC has 4urisdiction to resolve the constitutionality o a statute, presidential decree oran eecutive order. This is clear rom 5ection 0, &rticle =III o the );7 Constitution, "hich providesD

5


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In Mirasol v. Co#rt of Appeals,A3)Bthis Court reco*nied the po"er o the TC to resolve constitutionaissues, thusD

'n the %rst iss#e. It is settled that e*ional Trial Courts have the authority and 4urisdictionto consider the constitutionality o a statute, presidential decree, or eecutive order. TheConstitution vests the po"er o 4udicial revie" or the po"er to declare a la", treaty, internationalor eecutive a*reement, presidential decree, order, instruction, ordinance, or re*ulation not only

in this Court, %ut in all e*ional Trial Courts.A32B

In the recent case o !"#i4Asia Placeent, *nc. v. /epartent of Forei(n A8airs,A33Bthis Court reiteratedD

There is no denyin* that re*ular courts have 4urisdiction over cases involvin* the validityor constitutionality o a rule or re*ulation issued %y administrative a*encies. 5uch 4urisdiction,ho"ever, is not limited to the Court o &ppeals or to this Court alone or even the re*ional trialcourts can ta6e co*niance o actions assailin* a speci#c rule or set o rules promul*ated %yadministrative %odies. Indeed, the Constitution vests the po"er o 4udicial revie" or the po"er todeclare a la", treaty, international or eecutive a*reement, presidential decree, order, instruction,

ordinance, or re*ulation in the courts, includin* the re*ional trial courts .A3!B

/udicial revie" o oJcial acts on the *round o unconstitutionality may %e sou*ht or availed o throu*hany o the actions co*nia%le %y courts o 4ustice, not necessarily in a suit or declaratory relie. 5uch revie" may%e had in criminal actions, as in People v. FerrerA30B involvin* the constitutionality o the no" deunct &nti-5u%version la", or in ordinary actions, as in 9riven3o v. Re(ister of /eedsA3(Binvolvin* the constitutionality o la"sprohi%itin* aliens rom ac+uirin* pu%lic lands. The constitutional issue, ho"ever, a1 must %e properly raisedand presented in the case, and %1 its resolution is necessary to a determination o the case, i.e., the issue oconstitutionality must %e the very lis otapresented.A37B

Contrary to Is claim, the constitutionality o L'I No. )!(0 "as properly and ade+uately raised in thecomplaint or collection #led "ith the TC. The pertinent portions o the complaint alle*eD

(. The CC o )> per %a* levied under L'I )!(0 on domestic sales o all *rades oertilier in the hilippines, is unla"ul, un4ust, uncalled or, unreasona%le, ine+uita%le andoppressive %ecauseD

c1 It avors only one private domestic corporation, i.e., deendant I, andimposed at the epense and disadvanta*e o the other ertilier

importers:distri%utors "ho "ere themselves in ti*ht %usiness situation and "erethen eertin* all eforts and maimiin* mana*ement and mar6etin* s6ills toremain via%le

e1 It "as a *larin* eample o crony capitalism, a orced pro*ram throu*h"hich the I, havin* %een presumptuously mas+ueraded as the ertilier industryitsel, "as the sole and anointed %ene#ciary
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7. The CC "as an unla"ul and unconstitutional special assessment and its imposition istantamount to ille*al eaction amountin* to a denial o due process since the persons o entities"hich had to %ear the %urden o payin* the CC derived no %ene#t thererom that on the contraryit "as used %y I in tryin* to re*ain its ormer despica%le monopoly o the ertilier industry tothe detriment o other distri%utors and importers.A3;B$nderscorin* supplied1

The constitutionality o L'I No. )!(0 is also the very lis otao the complaint or collection. Fertiphil #ledthe complaint to compel I to reund the levies paid under the statute on the *round that the la" imposin* the

levy is unconstitutional. The thesis is that an unconstitutional la" is void. It has no le*al efect. ein* voidFertiphil had no le*al o%li*ation to pay the levy. Necessarily, all levies duly paid pursuant to an unconstitutionala" should %e reunded under the civil code principle a*ainst un4ust enrichment. The reund is a mereconse+uence o the la" %ein* declared unconstitutional. The TC surely cannot order I to reund Fertiphil i itdoes not declare the L'I unconstitutional. It is the unconstitutionality o the L'I "hich tri**ers the reund. Theissue o constitutionality is the very lis otao the complaint "ith the TC.

T'e /01 le! (nder 2OI No. 0345 is an e%ercise of t'e$o-er of ta%ation.

&t any rate, the Court holds that the TC and the C& did not err in rulin* a*ainst the constitutionality o the L'I.

PPI 40400 a LOI No. 1%65 40 a 8a;4 eer40e e4er o< e /o;4e /o>er or e /o>er oa0 4:/;e:ee e;


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o0ru4o a :a4eae o< 4?>ay0 a o a :u ;e00er e?ree, /ay 1 and additional ees or chan*e o re*istration 5ec.))1. These are not to %e understood as taes %ecause such ees are very minimal to %e revenue-raisin*. Thus, they are not mentioned %y 5ec. 0%1 o the Code as taes li6e the motor vehiclere*istration ee and chaufeurs license ee. 5uch ees are to *o into the ependitures o the Land

Transportation Commission as provided or in the last proviso o 5ec. ().A!!B$nderscorin*supplied1

e P1' ;e8y uer LOI No. 1%65 40 oo ee0048e o 0er8e a :ere re?u;aory /ur/o0e. e;e8y, o oub, >a0 a b4? bure o e 0e;;er or e u;4:ae o0u:er. I 4rea0e e /r4e o< aba? o< a0 a0

4:/o0e (ntil ade(ate ca$ital is raised to #a6e //I iable.

Ta%es are e%acted onl! for a $(blic $(r$ose. T'e /01 le! is(nconstit(tional beca(se it -as not for a $(blic $(r$ose.T'e le! -as i#$osed to "ie (nd(e bene7t to //I.

&n inherent limitation on the po"er o taation is pu%lic purpose. Taes are eacted only or a pu%licpurpose. They cannot %e used or purely private purposes or or the eclusive %ene#t o private persons. A!(BThereason or this is simple. e /o>er o a e400 e;er 40e ;4:4a4o a 4 0ou; be u0e o;y ou; be a robbery 4 e oer o be0o> 4 u/o e a0e00e4a;;y ?o8er:e be u0e-o0 ou04? a urba or a?rar4a re


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3. The &dministrator o the Fertilier esticide &uthority to include in its ertilier pricin* ormulaa capital contri%ution component o not less than )> per %a*. This capital contri%ution shall%e collected until ade+uate capital is raised to ma6e I via%le. 5uch capital contri%ution shall%e applied %y F& to all domestic sales o ertiliers in the hilippines.A!;B$nderscorin*supplied1

It is a %asic rule o statutory construction that the tet o a statute should %e *iven a literal meanin*. Inthis case, the tet o the L'I is plain that the levy "as imposed in order to raise capital or I. The ramers o theL'I did not even hide the insidious purpose o the la". They "ere cavalier enou*h to name I as the ultimate

%ene#ciary o the taes levied under the L'I. e #nd it utterly repulsive that a ta la" "ould epressly name aprivate company as the ultimate %ene#ciary o the taes to %e levied rom the pu%lic. This is a clear case o cronycapitalism.

Second, e LOI /ro84e0 a e 4:/o044o o< e P1' ;e8y >a0 o44oa; a e/eeu/o PPI beo:4? a4a;;y 84ab;e. 40 0u??e00 a e ;e8y >a0 aua;;y 4:/o0e o beePPI. e LOI oab;y oe0 o a :a4:u: a:ou >e PPI 40 ee:e a4a;;y 84ab;e. or0e,e ;4ab4;4y o< Fer4/4; a oer o:e04 0e;;er0 o< a0 u0e o /ay e or/orae eb0 o< PPI. A rea4? o< e Leer o>3 is AFFIR!E*.

SO OR*ERE*.

G.R. No. L-3%15' Oober 16, 1971

AR$RO !. OLENINO, petitioner,vs.

CO!!ISSION ON ELECIONS, a #E C#IEF ACCO$NAN, #E A$*IOR, a #E *ISB$RSINGOFFICER OF #E 1971 CONSI$IONAL CON)ENION, respondents,RA$L S. !ANGLAP$S, ES$S G.BARRERA, PABLO S. RILLANA III, )ICOR *E LA SERNA, !ARCELO B. FERNAN, OSE ". FERIA,LEONAR*O SIG$ION RE"NA, )ICOR F. OREGA, a $AN ). BORRA, Intervenors.

Art#ro M. Tolentino in 'is o+n be'alf.

Raon A. Gon0ales for respondents C'ief Acco#ntant and A#ditor of t'e :;


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e;ar4? 0a4 re0o;u4o0 o be >4ou e 4 0o 4 e reor0 a e Cour ao>;e?e0 aey a8e o bee >4ou 8a;ue a0 :aer4a;0 4 e ee048e 0uy a a0 bee uerae 440 a0e.

e ba?rou o re0o;u4o0 o< e Co?re00 o< e P4;4//4e0 a//ro8e 4 40 a/a4y a0 a o04uea00e:b;y o8ee ere a;; e;ee uer a by84rue o< 0a4 re0o;u4o0 a e 4:/;e:e4?le*islation thereo, epu%lic &ct ()32. The pertinentportions o esolution No 2 read as ollo"sD

5, )7>, the Convention held its inau*ural session on /une), )7). Its preliminary la%ors o election o oJcers, or*aniation o committees and other preparatory "or6sover, as its #rst ormal proposal to amend the Constitution, its session "hich %e*an on 5eptem%er 27, )7), ormore accurately, at a%out 3D3> in the mornin* o 5eptem%er 2;, )7), the Convention approved 'r*anicesolution No. ) readin* thusD .


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CC 'M&NIC


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'n 5eptem%er 3>, )7), C'8


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0ub:44? 0u a:e:e0 e4er 4484ua;;y or =o4;y a 0u 4:e a :aer a0 eCo8e4o :ay 4re 4 40re4o. e CourK0 e;4ae a0 o> 40 o e4e >4 o< e0e >o/o0e0 40 rea;;y 4 aor >4 e ;eer a 0/4r4 o< e Co04u4o.

&s a preliminary and pre4udicial matter, the intervenors raise the +uestion o 4urisdiction. They contend that theissue %eore $s is a political +uestion and that the Convention %ein* le*islative %ody o the hi*hest order issoverei*n, and as such, its acts impu*ned %y petitioner are %eyond the control o the Con*ress and the courts. Inthis connection, it is to %e noted that none o the respondent has 4oined intervenors in this posture. In act,respondents Chie &ccountant and &uditor o the convention epressly concede the 4urisdiction o this Court in

their ans"er ac6no"led*in* that the issue herein is a 4usti#a%le one.

5tran*ely, intervenors cite in support o this contention portions o the decision o this Court in the case oMonales v. Comelec, 2) 5C& 77!, "herein the mem%ers o the Court, despite their %ein* divided in theiropinions as to the other matters therein involved, "ere precisely unanimous in upholdin* its 4urisdiction.'%viously, distin*uished counsel have either ailed to *rasp the ull impact o the portions o 'ur decision theyhave +uoted or "ould misapply them %y ta6in* them out o contet.

There should %e no more dou%t as to the position o this Court re*ardin* its 4urisdiction vis-a-vis theconstitutionality o the acts o the Con*ress, actin* as a constituent assem%ly, and, or that matter, those o aconstitutional convention called or the purpose o proposin* amendments to the Constitution, "hich concededlyis at par "ith the ormer. & simple readin* o 'ur rulin* in that very case o Gon0alesrelied upon %y intervenors

should dispel any lin*erin* mis*ivin*s as re*ards that point. 5uccinctly %ut comprehensively, Chie /usticeConcepcion held or the Court thusD .

&s early asAn(ara vs. !lectoral Coission(3 hil. )3, )071, this Court E spea6in* throu*hone o the leadin* mem%ers o the Constitutional Convention and a respected proessor oConstitutional La", Gr. /ose . Laurel E declared that 9the 4udicial department is the onlyconstitutional or*an "hich can %e called upon to determine the proper allocation o po"ers%et"een the several departments and amon* the inte*ral or constituent units thereo.9

It is true that in Mabana( v. Lope0 2itos#pra1, this Court characteriin* the issue su%mittedthereto as a political one declined to pass upon the +uestion "hether or not a *iven num%er ovotes cast in Con*ress in avor o a proposed amendment to the Constitution E "hich "as %ein*

su%mitted to the people or rati#cation E satis#ed the three-ourths vote re+uirement o theundamental la". The orce o this precedent has %een "ea6ened, ho"ever, %y S#anes v. C'iefAcco#ntanto the 5enate ;) hil. ;);1,Avelino v. C#enco, L-2;0), 8arch ! W )!, )!1, Ta=adav. C#enco, L-)>02>, Fe%. 2;, )071 and Macias v. Coission on !lections, L-);(;!, 5ept. )!,)()1. In the #rst "e held that the oJcers and employees o the 5enate


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Constitution o the hilippines1 Pence, "hen eercisin* the same, it is said that 5enators andmem%ers o the Pouse o epresentatives act, notas mem%ers o Con*ress, %ut as componentelements o a constit#ent assebl$. hen actin* as such, the mem%ers o Con*ress derive theirauthority rom the Constitution, unli6e the people, "hen perormin* the same unction, 'amendin* the Constitution1 or their authority does notemanate rom the Constitution E theyare t'e ver$ so#rceo all po"ers o *overnmentincl#din( t'e Constit#tion itself.

5ince, "hen proposin*, as a constituent assem%ly, amendments to the Constitution, the mem%erso Con*ress derive their authority rom the Fundamental La", it ollo"s, necessarily, that they do

not have the #nal say on "hether or not their acts are "ithin or %eyond constitutional limits.'ther"ise, they could %rush aside and set the same at nau*ht, contrary to the %asic tenet thatours is a *overnment o la"s, not o men, and to the ri*id nature o our Constitution. 5uch ri*idityis stressed %y the act that the Constitution epressly coners upon the 5upreme Court, &nd,inerentially, to lo"er courts.1 the po"er to declare a treaty unconstitutional. 5ec. 2)1, &rt. =III othe Constitution1, despite the eminently political character o treaty-ma6in* po"er.

In short, the issue "hether or not a esolution o Con*ress E actin* as a constituent assem%ly Eviolates the Constitution is essentially 4usticia%le not political, and, hence, su%4ect to 4udicialrevie", and, to the etent that this vie" may %e inconsistent "ith the stand ta6en in Mabana( v.Lope0 2ito, s#pra1 the latter should %e deemed modi#ed accordin*ly. The 8em%ers o the Courtare unanimous on this point.

No one can ri*htly claim that "ithin the domain o its le*itimate authority, the Convention is not supreme.No"here in his petition and in his oral ar*ument and memoranda does petitioner point other"ise. &ctually, "hatrespondents and intervenors are seemin*ly reluctant to admit is that the Constitutional Convention o )7), asany other convention o the same nature, o"es its eistence and derives all its authority and po"er rom theeistin* Constitution o the hilippines. This Convention has not %een called %y the people directly as in the caseo a revolutionary convention "hich drats the #rst Constitution o an entirely ne" *overnment %orn o either a"ar o li%eration rom a mother country or o a revolution a*ainst an eistin* *overnment or o a %loodlessseiure o po"er a la co#p d>etat. &s to such 6ind o conventions, it is a%solutely true that the convention iscompletely "ithout restrain and omnipotent all "ise, and it is as to such conventions that the remar6s oGele*ate 8anuel oas o the Constitutional Convention o )3! +uoted %y 5enator elae reer. No amount orationaliation can %elie the act that the current convention came into %ein* only %ecause it "as called %y a

resolution o a 4oint session o Con*ress actin* as a constituent assem%ly %y authority o 5ection ), &rticle H= othe present Constitution "hich providesD

&TICL< H= E &8


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resolution providin* or the ta6in* o private property "ithout 4ust compensation or or the imposition or eactin*o any ta, impost or assessment, or declare "ar or call the Con*ress to a special session, suspend the privile*eo the "rit o ha%eas corpus, pardon a convict or render 4ud*ment in a controversy %et"een private individuals or%et"een such individuals and the state, in violation o the distri%ution o po"ers in the Constitution.

It %ein* maniest that there are po"ers "hich the Convention may not and cannot validly assert, much lesseercise, in the li*ht o the eistin* Constitution, the simple +uestion arises, should an act o the Convention %eassailed %y a citien as %ein* amon* those not *ranted to or inherent in it, accordin* to the eistin* Constitution,"ho can decide "hether such a contention is correct or not It is o the very essence o the rule o la" that

someho" some"here the o"er and duty to resolve such a *rave constitutional +uestion must %e lod*ed onsome authority, or "e "ould have to coness that the inte*rated system o *overnment esta%lished %y ouroundin* athers contains a "ide vacuum no intelli*ent man could i*nore, "hich is naturally un"orthy o theirlearnin*, eperience and cratsmanship in constitution-ma6in*.

e need not *o ar in search or the ans"er to the +uery e have posed. The very decision o Chie /usticeConcepcion in Monales, so much invo6ed %y intervenors, reiterates and reinorces the irreuta%le lo*ic and"ealth o principle in the opinion "ritten or a unanimous Court %y /ustice Laurel in &n*ara vs.


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raised or the very lis otapresented. &ny attempt at a%straction could only lead to dialectics and%arren le*al +uestions and to stri6e conclusions unrelated to actualities. Narro"ed as its unctionsis in this manner the 4udiciary does not pass upon +uestions o "isdom, 4ustice or epediency ole*islation. 8ore than that, courts accord the presumption o constitutionality to le*islativeenactments, not only %ecause the le*islature is presumed to a%ide %y the Constitution %ut also%ecause the 4udiciary in the determination o actual cases and controversies must re?ect the"isdom and 4ustice o the people as epressed throu*h their representatives in the eecutive andle*islative departments o the *overnment.

ut much as "e mi*ht postulate on the internal chec6s o po"er provided in our Constitution, itou*ht not the less to %e remem%ered that, in the lan*ua*e o /ames 8adison, the system itsel isnot 9the chie palladium o constitutional li%erty ... the people "ho are authors o this %lessin*must also %e its *uardians ... their eyes must %e ever ready to mar6, their voices to pronounce ...a**ression on the authority o their Constitution.9 In the last and ultimate analysis then, must thesuccess o our *overnment in the unoldin* years to come %e tested in the cruci%le o Filipinominds and hearts than in consultation rooms and court cham%ers.

In the case at %ar, the National &ssem%ly has %y resolution No. ;1 o Gecem%er 3, )30,con#rmed the election o the herein petitioner to the said %ody. 'n the other hand, the


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Cechoslava6, epu%lic, Fe%ruary 2, )2>1 and 5pain arts. )2)-)23, Title IH, Constitution o theepu%lic o )3)1 especial constitutional courts are esta%lished to pass upon the validity oordinary la"s. In our case, the nature o the present controversy sho"s the necessity o a #nalconstitutional ar%iter to determine the con?ict o authority %et"een t"o a*encies created %y theConstitution. ere "e to decline to ta6e co*niance o the controversy, "ho "ill determine thecon?ict &nd i the con?ict "ere let undecided and undetermined, "ould not a void %e thuscreated in our constitutional system "hich may in the lon* run prove destructive o the entirerame"or6 To as6 these +uestions is to ans"er them. 6at#ra vac## ab'orret, so must "e avoidehaustion in our constitutional system. $pon principle, reason, and authority, "e are clearly othe opinion that upon the admitted acts o the present case, this court has 4urisdiction over the


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this case should %e understood as re?ectin*, in any de*ree or means the individual or collective stand o themem%ers o the Court on the undamental issue o "hether or not the ei*hteen-year-olds should %e allo"ed tovote, simply %ecause that issue is not %eore $s no". There should %e no dou%t in the mind o anyone that, oncethe Court #nds it constitutionally permissi%le, it "ill not hesitate to do its part so that the said proposedamendment may %e presented to the people or their approval or re4ection.

ithal, the Court rests securely in the conviction that the #re and enthusiasm o the youth have not %linded themto the a%solute necessity, under the undamental principles o democracy to "hich the Filipino people iscommitted, o adherin* al"ays to the rule o la". 5urely, their idealism, sincerity and purity o purpose cannot

permit any other line o conduct or approach in respect o the pro%lem %eore $s. The Constitutional Conventiono )7) itsel "as %orn, in a *reat measure, %ecause o the pressure %rou*ht to %ear upon the Con*ress o thehilippines %y various elements o the people, the youth in particular, in their incessant search or a peaceul andorderly means o %rin*in* a%out meanin*ul chan*es in the structure and %ases o the eistin* social and*overnmental inst

first batch cases (nature of tax to constitutional limitations)

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