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VIII. President’s Veto Power on Appropriation, Revenue, Tarif

G.R. No. L-4742 !a" 4, ##$

%&!!I''I&N(R &) INT(RNAL R(V(N*(, petitioner,vs.

+&N. %&*RT &) TA APP(AL' and !ANILA G&L) %&*NTR %L*/, IN%., respondents.

Bito, Misa & Lozada for private respondent.

!(0IAL0(A, J.:

In Commissioner of Internal Revenue v. Manila Hotel Corporation, et al., G.R. No. 83250, Septemer 2!,"#8#, $e overruled a de%ision of t&e Court of 'a( )ppeals *&i%& de%lared t&e %olle%tion of %aterer+s ta(under Se%tion "#") of Repuli% )%t No. !""0 ille-al e%ause Se%. 2 of House /ill No. "83#, *&i%&%arries t&at proviso, *as vetoed 1 t&en resident erdinand 4. Mar%os *&en t&e ill *as presented to&im and Con-ress &ad not taen an1 step to override t&e presidential veto. $e &eld t&us6

'&e po*er of t&e State to impose t&e 37 %aterer+s ta( is not deatale. '&e Court of 'a( )ppeals erred, &o*ever, in &oldin- t&at t&e ta( *as aolis&ed as a result of t&epresidential veto of )u-ust , "#!#. It failed to e(amine t&e la* t&en, and up to no*,e(istin- on t&e sue%t *&i%& &as al*a1s imposed a 37 %aterer+s ta( on operators ofrestaurants. Sin%e t&e Manila Hotel operates restaurants in its premises, it is liale topa1 t&e ta( provided in para-rap& 9":, Se%tion 20! of t&e 'a( Code. 9Commissioner ofInternal Revenue v. Manila Hotel Corporation and t&e Court of 'a( )ppeals, G.R. No.83250, Septemer 2!, "#8#:

'&e petition no* efore ;s presents an identi%al <uestion6 *&et&er t&e presidential veto referred to t&eentire se%tion or merel1 to t&e imposition of 207 ta( on -ross re%eipts of operators or proprietors ofrestaurants, refres&ment parlors, ars and ot&er eatin- pla%es *&i%& are maintained *it&in t&epremises or %ompound of a &otel, motel or rest&ouses. Referen%e to t&e Manila Hotel %ase, t&erefore,

mi-&t &ave een su=%ient to dispose of t&is petition *ere it not for t&e position of t&e C') t&at a %&iefe(e%utive &as no po*er to veto part of an item in a ill> eit&er &e vetoes an entire se%tion or approvesit ut not a fra%tion t&ereof.

Herein private respondent, Manila Golf ? Countr1 Clu, In%. is a nonsto% %orporation. 'rue, itmaintains a -olf %ourse and operates a %lu&ouse *it& a loun-e, ar and dinin- room, ut t&esefa%ilities are for t&e e(%lusive use of its memers and a%%ompanied -uests, and it %&ar-es on %ostpluse(pense asis. )s su%&, it %laims it s&ould &ave een e(empt from pa1ment of privile-e ta(es*ere it not for t&e last para-rap& of Se%tion "#") of R.). No. !""0, ot&er*ise no*n as t&e @Amnius 'a( Ba*.@ Se%tion "#") reads6

Se%. "#"). Caterer . ) %aterer+s ta( is &ere1 imposed as follo*s6

9": An proprietors or operators of restaurants, refres&ment parlors and ot&er eatin-

pla%es, in%ludin- %lus, and %aterers, t&ree per %ent of t&eir -ross re%eipts.

92: An proprietors or operators of restaurants, ars, %afes and ot&er eatin- pla%es,in%ludin- %lus, *&ere distilled spirits, fermented li<uors, or *ines are served, t&reeper %ent of t&eir -ross re%eipts from sale of food or refres&ments and seven per %ent of t&eir -ross re%eipts from sale of distilled spirits, fermented li<uors or *ines. '*o sets of %ommer%ial invoi%es or re%eipts seriall1 numered in dupli%ate s&all e separatel1prepared and issued, one for sale of refres&ments served, and anot&er for ea%& sale ofdistilled spirits, fermented li<uors or *ines served, t&e ori-inals of t&e invoi%es orre%eipts to e issued to t&e pur%&aser or %ustomer.



93: An proprietors or operators of restaurants, refres&ment parlors, ars, %afes andot&er eatin- pla%es *&i%& are maintained *it&in t&e preferen%es or %ompound ofa hotel, motel, resthouse, %o%pit, ra%e tra%, aialai, %aaret, ni-&t or da1 %lu 1means of a %onne%tin- door or passa-e t*ent1 per %ent of t&eir -ross re%eipts.

Where the establishments are operated or maintained by clubs of any kind or nature(irrespective of the disposition of their net income and hether or not they cater

e!clusively to members or their "uests# the keepers of the establishments shall paythe correspondin" ta! at the rate $!ed above. 94mp&asis supplied:

Repuli% )%t No. !""0 too eDe%t on Septemer ", "#!#. /1 t&is virtue, petitioners assessed t&e %luE(ed ta(es as operators of -olf lins and restaurants, and also per%enta-e ta( 9%aterer+s ta(: for itssale of foods and fermented li<uorsF*ines for t&e period %overin- Septemer "#!# to e%emer "#0in t&e amount of 32,50.#!. '&e %lu protested %laimin- t&e assessment to e *it&out asis e%auseSe%tion 2 *as vetoed 1 t&en resident Mar%os. '&e veto messa-e reads6

M)B)C))NGManila

)u-ust

Gentlemen of t&e House

of Representatives6

I &ave t&e &onor to inform 1ou t&at I &ave t&is da1 si-ned H./. No. "83#, entitled6

)N )C' )M4NING C4R')IN

RAISIANS A 'H4 N)'IAN)B IN'4RN)B

R44N;4 CA4, )S )M4N4

ursuant to t&e provisions of Se%tion 2093:, )rti%le I, of t&e Constitution, &o*ever, %have vetoed the folloin" items in this bill6

((( ((( (((

pp. , S4C. 2. Insertin- a ne* Se%tion "#") *&i%& imposes a %aterer+s ta( of t&reeper%ent of t&e -ross re%eipts of proprietors or operators of restaurants, refres&mentparlors and ot&er eatin- pla%es> t&ree per%ent of -ross re%eipts from sale of food orrefres&ment and seven per%ent on -ross re%eipts from t&e sale of distilled spirits,fermented li<uors or *ines, on proprietors or operators of restaurants, ars, %afes andot&er eatin- pla%es, in%ludin- %lus, *&ere distilled spirits, fermented li<uors, or *inesare served> and t*ent1 per%ent of -ross re%eipts on proprietor or operators ofrestaurants, refres&ment parlors, ars, %afes and ot&er eatin- pla%es maintained *it&int&e premises or %ompound of a &otel, motel, rest&ouse, %o%pit, ra%e tra%, aialai,%aaret, ni-&t or da1 %lu, or *&i%& are a%%essile to patrons of said estalis&ments 1means of a %onne%tin- door or passa-e.

'&e urden of petition *ill e s&ifted to t&e %onsumin- puli%.

'&e development of &otels, essential to our tourist industr1, ma1 erestrained %onsiderin- t&at a i- portion of &otel earnin-s %omes fromfood sale. . . .



'&is ill, H./. No. "83#, &as e%ome Repuli% )%t No. !""0.

Respe%tfull1,

9SG.:4RIN)N 4.M)RCAS

J4mp&asis oursK

'&e protestation of t&e %lu *as denied 1 t&e petitioner *&o maintains t&at Se%tion 2 *as notentirel1 vetoed ut merel1 t&e *ords @&otels, motels, rest&ouses@ on t&e -round t&at it mi-&t restraint&e development of &otels *&i%& is essential to t&e tourism industr1. '&is in fa%t *as t&e position of t&eHouse $a1s and Means Committee *&i%& reported, to *it6

$&en Con-ress de%ided to split Se%tion "#" into t*o parts, one dealin- *it&%ontra%tors, and t&e ot&er dealin- *it& t&ose *&o serve food and drins, t&e intention

*as to %lassif1 and to improve. $&ile t&e Con-ress e(panded t&e %overa-e of ot& "#"and "#"), it also provided for %ertain e(emptions. '&e veto messa-e seems to oe%tto %ertain additions to "#"). $&at additions are oe%tionales %an e -leaned fromt&e reasons -iven6 a -eneral reason t&at t&is sort of ta( is passed on to t&e %onsumin-puli%, and a parti%ular reason t&at &otel developments, so essential to t&e touristindustr1, ma1 e restrained. '&ese reasons &ave een taen to-et&er in t&einterpretations of t&e veto messa-e and t&e deletions of su%& enterprises as are%onne%ted *it& t&e tourist industr1 &as t&erefore een re%ommended.

'o interpret t&e veto. messa-e ot&er*ise *ould result in t&e e(emption of entitiesalread1 sue%t of ta(. '&is *ould e asurd. $&ere t&e Con-ress *anted to e(empt, it*as so provided in t&e ill. $&ile t&e resident ma1 veto an1 item or items in arevenue ill t&e %onstitution does not -ive &im t&e po*er to repeal an e(istin- ta(.92nd Indorsement dated e%emer #, "#!#, C&airman on $a1s and Means, Si(t&

Con-ress of t&e Repuli% of t&e &il.: 94(&s. ", p. 85, /.I.R. re%.:. 9pp. 202", ollo:

It *as 1 reason of t&is interpretation of t&e Committee t&at R.). No. !""0 *as pulis&ed in olume!!, No. "8, p. 53" of t&e A=%ial GaLette 9Ma1 , "#0: in su%& a *a1 t&at Se%tion "#") *as in%ludedin t&e te(t save for t&e *ords @&otels, motels, rest&ouses.@

)s alread1 mentioned, t&e Court of 'a( )ppeals, upon petition 1 t&e %lu, sustained t&e latter+sposition reasonin- t&at t&e veto messa-e *as %lear and un<ualiEed, as in fa%t it *as %onErmed t&ree1ears later, after mu%& %ontrovers1, 1 t&e A=%e of t&e resident, t&us6

Mr. )ntero M. Sison, r.

San Martin /uildin-, "5!,

). Maini, .A. /o( 2288

Manila, &ilippines

ear Sir6

$it& referen%e to 1our letter dated ul1 ", "#2, *e *is& to inform 1ou t&at Se%tion2 9*&i%& %ontains Se%. "#"): of House /ill No. "83#, no* R.). !""0 *as one of t&e



Se%tions vetoed 1 t&e resident in &is veto messa-e dated )u-ust , "#!#, vetoin-%ertain se%tions of t&e said revenue ill.

er1 'rul1 ours,

9SG.:IRIN4A '.)G;IRR4, R.

residentialStaD)ssistant

9p. #, ollo:

)s mentioned earlier, $e &ave alread1 ruled t&at t&e presidential veto referred merel1 to t&e in%lusionof &otels, motels and rest&ouses in t&e 207 %aterer+s ta( ra%et ut not to t&e *&ole se%tion. /ut, asmentioned earlier also, t&e C') opined t&at t&e resident %ould not veto *ords or p&rases in a ill utonl1 an entire item. Aviousl1, *&at t&e C') meant 1 @item@ *as an entire se%tion. $e do not a-ree./ut even assumin- it to e so, it *ould also e to petitioner+s favor. '&e ineDe%tual veto 1 t&eresident rendered t&e *&ole se%tion "#") as not &avin- een vetoed at all and it, t&erefore, e%amela* as an un%onstitutional veto &as no eDe%t, *&atsoever. 9See /olinao 4le%troni%s Corp. v. aleria No.B200, une 30, "#!, "" SCR) 8!:.

Ho*ever, $e a-ree *it& t&en Soli%itor General 4stelito MendoLa and &is asso%iates t&at in%lusion of&otels, motels and rest&ouses in t&e 207 %aterer+s ta( ra%et are @items@ in t&emselves *it&in t&emeanin- of Se%. 2093:, )rt. I of t&e "#35 Constitution *&i%&, t&erefore, t&e resident &as t&e po*er toveto. )n @item@ in a revenue ill does not refer to an entire se%tion imposin- a parti%ular ind of ta(,

ut rat&er to t&e sue%t of t&e ta( and t&e ta( rate. In t&e portion of a revenue ill *&i%& a%tuall1imposes a ta(, a se%tion identiEes t&e ta( and enumerates t&e persons liale t&erefor *it& t&e%orrespondin- ta( rate. 'o %onstrue t&e *ord @item@ as referrin- to t&e *&ole se%tion *ould tie t&eresident+s &and in %&oosin- eit&er to approve t&e *&ole se%tion at t&e e(pense of also approvin- aprovision t&erein *&i%& &e deems una%%eptale or veto t&e entire se%tion at t&e e(pense of fore-oin-t&e %olle%tion of t&e ind of ta( alto-et&er. '&e evil *&i%& *as sou-&t to e prevented in -ivin- t&eresident t&e po*er to disapprove items in a revenue ill *ould e perpetrated renderin- t&at po*erinutile 9See Common*ealt& e( rel. 4lin v. /arnett, "## a. "!", 55 BR) 882 J"#0"K:.

)CCARINGB, t&e petition is GR)N'4 and t&e de%ision of t&e Court of 'a( )ppeals in C') Case No.2!30 is set aside. Se%tion "#") of R) No. !""0 is valid and enfor%eale and, &en%e, t&e Manila Golf ?Countr1 Clu In%. is liale for t&e amount assessed a-ainst it.

SA AR4R4.

I. Ta1es Levied or 'pe3ia Purpose 5reer to t6e aove 3ase8

I. )e1ie Tarif %ause

G.R. No. 7$9: ;u" :, 2$$<

A=/AAN %ITI>(N' A%TI&N PART 5?A=/AAN?8, PA!/AN'ANG =ATIP*NAN NG !GA'A!A+AN 'A =ANA*NAN 5?P='=?8, ALLIAN%( &) PR&GR(''IV( LA/&R 5?APL?8, VI%(NT(



A. )A/(, ANG(LIT& R. !(N0&>A, !AN*(L P. @*IA!/A&, R&'( /(ATRI %R*>-ANG(L(',%&NG. L&R(N>& R. TANA0A III, %&NG. !ARI& ;&& AG*;A, %&NG. L&R(TA ANN P. R&'AL(',%&NG. ANA T+(R('IA +&NTIV(R&'-/ARA@*(L, AN0 %&NG. (!!AN*(L ;&(L ;.VILLAN*(VA, etitioners,vs.T+&!A' G. A@*IN&, in 6is 3apa3it" as *nderse3retar" o t6e 0epartent o Trade andIndustr" 50TI8 and %6airan and %6ie 0eeBate o t6e P6iippine %oordinatinB %oittee

5P%%8 or t6e ;apan-P6iippines (3onoi3 Partners6ip ABreeent, (0'(L T. %*'T&0I&, in6is 3apa3it" as *nderse3retar" o t6e 0epartent o )oreiBn Afairs 50)A8 and %o-%6air ot6e P%% or t6e ;P(PA, (0GAR0& A/&N, in 6is 3apa3it" as %6airan o t6e Tarif%oission and ead neBotiator or %opetition Poi3" and (erBen3" !easures o t6e ;P(PA, !ARGARITA '&NG%&, in 6er 3apa3it" as Assistant 0ire3tor-Genera o t6e Nationa(3onoi3 0eveopent Aut6orit" 5N(0A8 and ead neBotiator or Trade in 'ervi3es and%ooperation o t6e ;P(PA, !AL&* !&NT(R&, in 6er 3apa3it" as )oreiBn 'ervi3e &C3er I,&C3e o t6e *nderse3retar" or Internationa (3onoi3 Reations o t6e 0)A and eadneBotiator or t6e Genera and )ina Provisions o t6e ;P(PA, (RLIN0A AR%(LLANA, in 6er3apa3it" as 0ire3tor o t6e /oard o Investents and ead neBotiator or Trade in Goods5Genera Rues8 o t6e ;P(PA, RA@*(L (%+AG*(, in 6er 3apa3it" as ead neBotiator orRues o &riBin o t6e ;P(PA, GALLANT '&RIAN&, in 6is oC3ia 3apa3it" as 0eput"%oissioner o t6e /ureau o %ustos and ead neBotiator or %ustos Pro3edures andPaperess TradinB o t6e ;P(PA, !A. L*I'A GIG(TT( I!P(RIAL, in 6er 3apa3it" as 0ire3tor o t6e /ureau o Lo3a (po"ent o t6e 0epartent o Laor and (po"ent 50&L(8 and

ead neBotiator or !oveent o Natura Persons o t6e ;P(PA, PA'%*AL 0( G*>!AN, in 6is3apa3it" as 0ire3tor o t6e /oard o Investents and ead neBotiator or Investent o t6e ;P(PA, ;('*' !&T&&!*LL, in 6is 3apa3it" as 0ire3tor or t6e /ureau o Produ3t 'tandardso t6e 0TI and ead neBotiator or !utua Re3oBnition o t6e ;P(PA, L&*I( %ALVARI&, in 6is3apa3it" as ead neBotiator or Intee3tua Propert" o t6e ;P(PA, (L!(R +. 0&RA0&, in 6is3apa3it" as &C3er-in-%6arBe o t6e Governent Pro3ureent Poi3" /oard Te36ni3a'upport &C3e, t6e Bovernent aBen3" t6at is eadinB t6e neBotiations on GovernentPro3ureent o t6e ;P(PA, RI%AR0& V. PARA', in 6is 3apa3it" as %6ie 'tate %ounse o t6e0epartent o ;usti3e 50&;8 and ead neBotiator or 0ispute Avoidan3e and 'etteent ot6e ;P(PA, A0&NI' '*LIT, in 6is 3apa3it" as ead neBotiator or t6e Genera and )inaProvisions o t6e ;P(PA, (0*AR0& R. (R!ITA, in 6is 3apa3it" as (1e3utive 'e3retar", andAL/(RT& R&!*L&, in 6is 3apa3it" as 'e3retar" o t6e 0)A,D Respondents.

4 C I S I A N

%ARPI& !&RAL(', J.E

etitioners O non-overnment or-aniLations, Con-resspersons, %itiLens and ta(pa1ers O see via t&epresent petition for mandamus and pro&iition to otain from respondents t&e full te(t of t&e apan&ilippines 4%onomi% artners&ip )-reement 94): in%ludin- t&e &ilippine and apanese oDerssumitted durin- t&e ne-otiation pro%ess and all pertinent atta%&ments and anne(es t&ereto.

etitioners Con-ressmen BorenLo R. 'aPada III and Mario o1o )-ua Eled on anuar1 25, 2005 HouseResolution No. 55" %allin- for an in<uir1 into t&e ilateral trade a-reements t&en ein- ne-otiated 1t&e &ilippine -overnment, parti%ularl1 t&e 4). '&e Resolution e%ame t&e asis of an in<uir1suse<uentl1 %ondu%ted 1 t&e House Spe%ial Committee on GloaliLation 9t&e House Committee: intot&e ne-otiations of t&e 4).

In t&e %ourse of its in<uir1, t&e House Committee re<uested &erein respondent ;nderse%retar1 'omas)<uino 9;se%. )<uino:, C&airman of t&e &ilippine Coordinatin- Committee %reated under 4(e%utiveArder No. 2"3 9@Creation of ) &ilippine Coordinatin- Committee to Stud1 t&e easiilit1 of t&e apan&ilippines 4%onomi% artners&ip )-reement@:" to stud1 and ne-otiate t&e proposed 4), and tofurnis& t&e Committee *it& a %op1 of t&e latest draft of t&e 4). ;se%. )<uino did not &eed t&ere<uest, &o*ever.

http://www.lawphil.net/judjuris/juri2008/jul2008/gr_170516_2008.html#fnt1




Con-ressman )-ua later re<uested for t&e same do%ument, ut ;se%. )<uino, 1 letter of Novemer2, 2005, replied t&at t&e Con-ressman s&all e provided *it& a %op1 t&ereof @on%e t&e ne-otiations are%ompleted and as soon as a t&orou-& le-al revie* of t&e proposed a-reement &as een %ondu%ted.@

In a separate move, t&e House Committee, t&rou-& Con-ressman Herminio G. 'eves, re<uested4(e%utive Se%retar1 4duardo 4rmita to furnis& it *it& @all do%uments on t&e sue%t in%ludin- t&e latestdraft of t&e proposed a-reement, t&e re<uests and oDers et%.@2 )%tin- on t&e re<uest, Se%retar1

4rmita, 1 letter of une 23, 2005, *rote Con-ressman 'eves as follo*s6

In its letter dated "5 une 2005 9%op1 en%losed:, Jt&eK Jepartment ofK Jorei-nK )JDairsK e(plainst&at t6e %oittee’s reFuest to e urnis6ed a do3uents on t6e ;P(PA a" e diC3ut toa33opis6 at t6is tie, sin3e t6e proposed ABreeent 6as een a wor in proBress oraout t6ree "ears. ) %op1 of t&e draft 4) *ill &o*ever e for*arded to t&e Committee as soon ast&e te(t t&ereof is settled and %omplete. 94mp&asis supplied:

Con-ressman )-ua also re<uested N4) ire%torGeneral Romulo Neri and 'ariD CommissionC&airman 4d-ardo )on, 1 letter of ul1 ", 2005, for %opies of t&e latest te(t of t&e 4).C&airman )on replied, &o*ever, 1 letter of ul1 "2, 2005 t&at t&e 'ariD Commission does not &ave a%op1 of t&e do%uments ein- re<uested, aleit &e *as %ertain t&at ;se%. )<uino *ould provide t&eCon-ressman *it& a %op1 @on%e t&e ne-otiation is %ompleted.@ )nd 1 letter of ul1 "8, 2005, N4))ssistant ire%torGeneral Mar-arita R. Son-%o informed t&e Con-ressman t&at &is re<uest addressedto ire%torGeneral Neri &ad een for*arded to ;se%. )<uino *&o *ould e @in t&e est position torespond@ to t&e re<uest.

In its t&ird &earin- %ondu%ted on )u-ust 3", 2005, t&e House Committee resolved to issue a supoenafor t&e most re%ent draft of t&e 4), ut t&e same *as not pursued e%ause 1 Committee C&airmanCon-ressman 'evesQ information, t&en House Speaer ose de ene%ia &ad re<uested &im to &old inae1an%e t&e issuan%e of t&e supoena until t&e resident -ives &er %onsent to t&e dis%losure of t&edo%uments.3

)mid spe%ulations t&at t&e 4) mi-&t e si-ned 1 t&e &ilippine -overnment *it&in e%emer2005, t&e present petition *as Eled on e%emer #, 2005. '&e a-reement *as to e later si-ned onSeptemer #, 200! 1 resident Gloria Ma%apa-al)rro1o and apanese rime Minister uni%&irooiLumi in Helsini, inland, follo*in- *&i%& t&e resident endorsed it to t&e Senate for its %on%urren%epursuant to )rti%le II, Se%tion 2" of t&e Constitution. 'o date, t&e 4) is still ein- delierated upon1 t&e Senate.

'&e 4), *&i%& *ill e t&e Erst iatera free trade a-reement to e entered into 1 t&e &ilippines*it& anot&er %ountr1 in t&e event t&e Senate -rants its %onsent to it, %overs a road ran-e of topi%s*&i%& respondents enumerate as follo*s6 trade in -oods, rules of ori-in, %ustoms pro%edures,paperless tradin-, trade in servi%es, investment, intelle%tual propert1 ri-&ts, -overnment pro%urement,movement of natural persons, %ooperation, %ompetition poli%1, mutual re%o-nition, dispute avoidan%eand settlement, improvement of t&e usiness environment, and -eneral and Enal provisions.5

$&ile t&e Enal te(t of t&e 4) &as no* een made a%%essile to t&e puli% sin%e Septemer "",200!,!respondents do not dispute t&at, at t&e time t&e petition *as Eled up to t&e Elin- of petitionersQRepl1 O *&en t&e 4) *as still ein- ne-otiated O t&e initial drafts t&ereof *ere ept from puli% vie*.

/efore delvin- on t&e sustantive -rounds relied upon 1 petitioners in support of t&e petition, t&eCourt Ends it ne%essar1 to Erst resolve some material pro%edural issues.

'tandinB

or a petition for mandamus su%& as t&e one at ar to e -iven due %ourse, it must e instituted 1 apart1 a--rieved 1 t&e alle-ed ina%tion of an1 triunal, %orporation, oard or person *&i%& unla*full1e(%ludes said part1 from t&e eno1ment of a le-al ri-&t. Respondents den1 t&at petitioners &ave su%&standin- to sue. @JIKn t&e interest of a speed1 and deEnitive resolution of t&e sustantive issuesraised,@ &o*ever, respondents %onsider it su=%ient to %ite a portion of t&e rulin- in 'imentel v. )ce
















of *!ecutive +ecretary 8 *&i%& emp&asiLes t&e need for a @personal stae in t&e out%ome of t&e%ontrovers1@ on <uestions of standin-.

In a petition an%&ored upon t&e ri-&t of t&e people to information on matters of puli% %on%ern, *&i%&is a puli% ri-&t 1 its ver1 nature, petitioners need not s&o* t&at t&e1 &ave an1 le-al or spe%ialinterest in t&e result, it ein- su=%ient to s&o* t&at t&e1 are %itiLens and, t&erefore, part of t&e-eneral puli% *&i%& possesses t&e ri-&t.# )s t&e present petition is an%&ored on t&e ri-&t to

information and petitioners are all suin- in t&eir %apa%it1 as %itiLens and -roups of %itiLens in%ludin-petitionersmemers of t&e House of Representatives *&o additionall1 are suin- in t&eir %apa%it1 assu%&, t&e standin- of petitioners to Ele t&e present suit is -rounded in urispruden%e.

!ootness

Considerin-, &o*ever, t&at @JtK&e prin%ipal relief petitioners are pra1in- for is t&e dis%losure of t&e%ontents of t&e 4) prior to its EnaliLation et*een t&e t*o States parties,@"0 puli% dis%losure of t&ete(t of t&e 4) after its si-nin- 1 t&e resident, durin- t&e penden%1 of t&e present petition, &aseen lar-el1 rendered moot and a%ademi%.

$it& t&e Senate delierations on t&e 4) still pendin-, t&e a-reement as it no* stands %annot 1et e%onsidered as Enal and indin- et*een t&e t*o States. )rti%le "! of t&e 4) itself provides t&at t&e

a-reement does not tae eDe%t immediatel1 upon t&e si-nin- t&ereof. or it must still -o t&rou-& t&epro%edures re<uired 1 t&e la*s of ea%& %ountr1 for its entr1 into for%e, viL6

)rti%le "!4ntr1 into or%e

'&is )-reement s&all enter into for%e on t&e t&irtiet& da1 after t&e date on *&i%& t&e Governments oft&e arties e(%&an-e diplomati% notes informin- ea%& ot&er t6at t6eir respe3tive eBa pro3eduresne3essar" or entr" into or3e o t6is ABreeent 6ave een 3opeted. It s&all remain in for%eunless terminated as provided for in )rti%le "!5."" 94mp&asis supplied:

resident )rro1oQs endorsement of t&e 4) to t&e Senate for %on%urren%e is part of t&e le-alpro%edures *&i%& must e met prior to t&e a-reementQs entr1 into for%e.

'&e te(t of t&e 4) &avin- t&en een made a%%essile to t&e puli%, t&e petition &as e%ome mootand a%ademi% to t&e e(tent t&at it sees t&e dis%losure of t&e @full te(t@ t&ereof.

'&e petition is not entirel1 moot, &o*ever, e%ause petitioners see to otain, not merel1 t&e te(t oft&e 4), ut also t&e &ilippine and apanese oDers in t&e %ourse of t&e ne-otiations."2

) dis%ussion of t&e sustantive issues, insofar as t&e1 impin-e on petitionersQ demand for a%%ess tot&e &ilippine and apanese oDers, is t&us in order.

Grounds reied upon " petitioners

etitioners assert, Erst, t&at t&e refusal of t&e -overnment to dis%lose t&e do%uments earin- on t&e 4) ne-otiations violates t&eir ri-&t to information on matters of puli% %on%ern"3 and %ontravenes

ot&er %onstitutional provisions on transparen%1, su%& as t&at on t&e poli%1 of full puli% dis%losure of alltransa%tions involvin- puli% interest." Se%ond, t&e1 %ontend t&at nondis%losure of t&e samedo%uments undermines t&eir ri-&t to eDe%tive and reasonale parti%ipation in all levels of so%ial,politi%al, and e%onomi% de%isionmain-."5 Bastl1, t&e1 proDer t&at divul-in- t&e %ontents of t&e 4)onl1 after t&e a-reement &as een %on%luded *ill eDe%tivel1 mae t&e Senate into a mere ruerstamp of t&e 4(e%utive, in violation of t&e prin%iple of separation of po*ers.

Si-niE%antl1, t&e -rounds relied upon 1 petitioners for t&e dis%losure of t&e atest te1t of t&e 4)are, e(%ept for t&e last, t&e same as t&ose %ited for t&e dis%losure of t&e &ilippine and apanese ofers.






















'&e Erst t*o -rounds relied upon 1 petitioners *&i%& ear on t&e merits of respondentsQ %laim ofprivile-e s&all e dis%ussed. '&e last, ein- purel1 spe%ulator1 -iven t&at t&e Senate is stilldelieratin- on t&e 4), s&all not.

T6e ;P(PA is a atter o pui3 3on3ern

'o e %overed 1 t&e ri-&t to information, t&e information sou-&t must meet t&e t&res&old re<uirementt&at it e a matter of puli% %on%ern. )propos is t&e tea%&in- of Le"aspi v. Civil +ervice Commission6

In determinin- *&et&er or not a parti%ular information is of puli% %on%ern t&ere is no ri-id test *&i%&%an e applied. uli% %on%ernQ lie puli% interestQ is a term t&at eludes e(a%t deEnition. /ot& termsemra%e a road spe%trum of sue%ts *&i%& t&e puli% ma1 *ant to no*, eit&er e%ause t&esedire%tl1 aDe%t t&eir lives, or simpl1 e%ause su%& matters naturall1 arouse t&e interest of an ordinar1%itiLen. In t&e Enal anal1sis, it is for t&e %ourts to determine on a %ase 1 %ase asis *&et&er t&ematter at issue is of interest or importan%e, as it relates to or aDe%ts t&e puli%."!9;nders%orin-supplied:

rom t&e nature of t&e 4) as an international trade a-reement, it is evident t&at t&e &ilippine and apanese oDers sumitted durin- t&e ne-otiations to*ards its e(e%ution are matters of puli% %on%ern. '&is, respondents do not dispute. '&e1 onl1 %laim t&at diplomati% ne-otiations are %overed 1 t&e

do%trine of e1e3utive privieBe, t&us %onstitutin- an e(%eption to t&e ri-&t to information and t&epoli%1 of full puli% dis%losure.

Respondents’ 3ai o privieBe

It is *ellestalis&ed in urispruden%e t&at neit&er t&e ri-&t to information nor t&e poli%1 of full puli%dis%losure is asolute, t&ere ein- matters *&i%&, aleit of puli% %on%ern or puli% interest, arere%o-niLed as privile-ed in nature. '&e t1pes of information *&i%& ma1 e %onsidered privile-ed &aveeen elu%idated in lmonte v. -asuez," Chavez v. 'C//,"8 Chavez v. 'ublic *state0s uthority,"# andmost re%entl1 in +enate v. *rmita20*&ere t&e Court rea=rmed t&e validit1 of t&e do%trine of e(e%utiveprivile-e in t&is urisdi%tion and d*elt on its s%ope.

$&et&er a %laim of e(e%utive privile-e is valid depends on t&e -round invoed to ustif1 it andt&e %onte(t in *&i%& it is made.2" In t&e present %ase, t&e -round for respondentsQ %laim of privile-e is

set fort& in t&eir %oent, viL6

( ( ( '&e %ate-ories of information t&at ma1 e %onsidered privile-ed in%ludes matters of diplomati%%&ara%ter and under ne-otiation and revie*. In t&is %ase, t&e privile-ed %&ara%ter of t&e diplomati%ne-otiations &as een %ate-ori%all1 invoed and %learl1 e(plained 1 respondents parti%ularl1respondent 'I Senior ;nderse%retar1.

'&e do%uments on t&e proposed 4) as *ell as t&e te(t *&i%& is sue%t to ne-otiations and le-alrevie* 1 t&e parties fall under t&e e(%eptions to t&e ri-&t of a%%ess to information on matters ofpuli% %on%ern and poli%1 of puli% dis%losure. '&e1 %ome *it&in t&e %overa-e of e(e%utive privile-e. )tt&e time *&en t&e Committee *as re<uestin- for %opies of su%& do%uments, t&e ne-otiations *ereon-oin- as t&e1 are still no* and t&e te(t of t&e proposed 4) is still un%ertain and sue%t to%&an-e. Considerin- t&e status and nature of su%& do%uments t&en and no*, t&ese are evidentl1%overed 1 e(e%utive privile-e %onsistent *it& e(istin- le-al provisions and settled urispruden%e.

ra%ti%al and strate-i% %onsiderations lie*ise %ounsel a-ainst t&e dis%losure of t&e @rollin- te(ts@*&i%& ma1 under-o radi%al %&an-e or portions of *&i%& ma1 e totall1 aandoned. urt&ermore,t&e neBotiations o t6e representatives o t6e P6iippines as we as o ;apan ust eaowed to e1pore aternatives in t6e 3ourse o t6e neBotiations in t6e sae anner as Hudi3ia deierations and worinB drats o opinions are a33orded stri3t3ondentiait".22 94mp&asis and unders%orin- supplied:

'&e -round relied upon 1 respondents is t&us not simpl1 t&at t&e information sou-&t involves adiplomati% matter, ut t&at it pertains to diplomati% ne-otiations t&en in pro-ress.



















PrivieBed 36ara3ter o dipoati3 neBotiations

'&e privile-ed %&ara%ter of diplomati% ne-otiations &as een re%o-niLed in t&is urisdi%tion. Indis%ussin- valid limitations on t&e ri-&t to information, t&e Court in Chavez v. 'C// &eld t&at@information on inter-overnment e(%&an-es prior to t&e %on%lusion of treaties and e(e%utivea-reements ma1 e sue%t to reasonale safe-uards for t&e sae of national interest.@23 4ven earlier,t&e same privile-e *as up&eld in 'eople0s Movement for 'ress 1reedom ('M'1# v. Man"lapus2 *&erein

t&e Court dis%ussed t&e reasons for t&e privile-e in more pre%ise terms.

In 'M'1 v. Man"lapus, t&e t&erein petitioners *ere seein- information from t&e residentQsrepresentatives on t&e state of t&e t&en on-oin- ne-otiations of t&e R;S Militar1 /ases)-reement.25 '&e Court denied t&e petition, stressin- t&at @se3re3" o neBotiations wit6 oreiBn3ountries is not vioative of t&e %onstitutional provisions of freedom of spee%& or of t&e press nor o t6e reedo o a33ess to inoration.@ '&e Resolution *ent on to state, t&us6

T6e nature o dipoa3" reFuires 3entraiJation o aut6orit" and e1pedition o de3isionw6i36 are in6erent in e1e3utive a3tion. Anot6er essentia 36ara3teristi3 o dipoa3" is its3ondentia nature.)lt&ou-& mu%& &as een said aout @open@ and @se%ret@ diploma%1, *it&dispara-ement of t&e latter, Se%retaries of State Hu-&es and Stimson &ave %learl1 anal1Led and ustiEed t&e pra%ti%e. In t&e *ords of Mr. Stimson6

@A 3opi3ated neBotiation . . . 3annot e 3arried t6rouB6 wit6out an", an" private tasand dis3ussion, an to anK an" tentative suBBestions and proposas. 0eeBates root6er 3ountries 3oe and te "ou in 3onden3e o t6eir troues at 6oe and o t6eirdiferen3es wit6 ot6er 3ountries and wit6 ot6er deeBatesK t6e" te "ou o w6at t6e" wouddo under 3ertain 3ir3ustan3es and woud not do under ot6er 3ir3ustan3es. . . I t6esereports . . . s6oud e3oe pui3 . . . w6o woud ever trust Aeri3an 0eeBations inanot6er 3oneren3e 9;nited States epartment of State, ress Releases, une , "#30, pp. 28228.:.@

( ( ( (

T6ere is reFuent 3riti3is o t6e se3re3" in w6i36 neBotiation wit6 oreiBn powers onnear" a suHe3ts is 3on3erned. T6is, it is 3aied, is in3opatie wit6 t6e sustan3e o

deo3ra3". )s e(pressed 1 one *riter, @It %an e said t&at t&ere is no more ri-id s1stem of silen%ean1*&ere in t&e *orld.@ 94.. oun-, Booin- /e&ind t&e Censors&ip, . /. Bippin%ott Co., "#38:resident $ilson in startin- &is eDorts for t&e %on%lusion of t&e $orld $ar de%lared t&at *e must &ave@open %ovenants, openl1 arrived at.@ He <ui%l1 aandoned &is t&ou-&t.

No one *&o &as studied t&e <uestion elieves t&at su%& a met&od of puli%it1 is possile. In t6eoent t6at neBotiations are started, pressure Broups attept to ?us3e in.? An i-tiedspee36 " one o t6e parties or a ran de3aration o t6e 3on3ession w6i36 are e1a3ted orofered on ot6 sides woud Fui3" ead to widespread propaBanda to o3 t6eneBotiations. Ater a treat" 6as een drated and its ters are u" puis6ed, t6ere isape opportunit" or dis3ussion eore it is approved. 9'&e Ne* )meri%an Government and Its$ors, ames '. oun-, t& 4dition, p. "#: 94mp&asis and unders%orin- supplied:

Still in M v. Man-lapus, t&e Court adopted t&e do%trine in 2.+. v. Curtiss3Wri"ht *!port Corp.2! t&at

t&e resident is t&e sole or-an of t&e nation in its ne-otiations *it& forei-n %ountries, viL6

@( ( ( In t&is vast e(ternal realm, *it& its important, %ompli%ated, deli%ate and manifold prolems, t&eresident alone &as t&e po*er to spea or listen as a representative of t&e nation. He maes treaties*it& t&e advi%e and %onsent of t&e Senate> ut &e alone ne-otiates. Into t&e Eeld of ne-otiation t&eSenate %annot intrude> and Con-ress itself is po*erless to invade it. )s Mars&all said in &is -reatar-ument of Mar%& , "800, in t&e House of Representatives,?T6e President is t6e soe orBan ot6e nation in its e1terna reations, and its soe representative wit6 oreiBn nations.? )nnals,!t& Con-., %ol. !"3. . . 94mp&asis supplied> unders%orin- in t&e ori-inal:













)ppl1in- t&e prin%iples adopted in M v. Man-lapus, it is %lear t&at *&ile t&e Enal te(t of t&e 4)ma1 not e ept perpetuall1 %onEdential O sin%e t&ere s&ould e @ample opportunit1 for dis%ussionefore Ja treat1K is approved@ O t&e oDers e(%&an-ed 1 t&e parties durin- t&e ne-otiations %ontinue toe privile-ed even after t&e 4) is pulis&ed. It is reasonale to %on%lude t&at t&e apaneserepresentatives sumitted t&eir oDers *it& t&e understandin- t&at @6istori3 3ondentiait"@2 *ould-overn t&e same. is%losin- t&ese oDers %ould impair t&e ailit1 of t&e &ilippines to deal not onl1 *it& apan ut *it& ot&er forei-n -overnments in uture ne-otiations.

) rulin- t&at &ilippine oDers in treat1 ne-otiations s&ould no* e open to puli% s%rutin1 *oulddis%oura-e future &ilippine representatives from franl1 e(pressin- t&eir vie*s durin- ne-otiations.$&ile, on Erst impression, it appears *ise to deter &ilippine representatives from enterin- into%ompromises, it ears notin- t&at treat1 ne-otiations, or an1 ne-otiation for t&atmatter, normall1 involve a pro%ess of <uid pro <uo, and otenties neBotiators 6ave to e wiinBto Brant 3on3essions in an area o esser iportan3e in order to otain ore avoraeters in an area o Breater nationa interest. )propos are t&e follo*in- oservations of /enaminS. uval, r.6

( ( ( J'K&ose involved in t&e pra%ti%e of ne-otiations appear to e in a-reement t&at puli%it1 leads to@-randstandin-,@ tends to freeLe ne-otiatin- positions, and in&iits t&e -iveandtae essential tosu%%essful ne-otiation. )s Sissela /o points out, if @ne-otiators &ave more to -ain from ein-approved 1 t&eir o*n sides t&an 1 main- a reasoned a-reement *it& %ompetitors or adversaries,

t&en t&e1 are in%lined to +pla1 to t&e -aller1 . . .++ In fa%t, t6e pui3 rea3tion a" eave t6e itteoption. It *ould e a rave, or foolis&, )ra leader *&o e(pressed puli%l1 a *illin-ness for pea%e *it&Israel t&at did not involve t&e return of t&e entire $est /an, or Israeli leader *&o stated puli%l1 a*illin-ness to remove Israel+s e(istin- settlements from udea and Samaria in return forpea%e.28 94mp&asis supplied:

Indeed, 1 &amperin- t&e ailit1 of our representatives to %ompromise, *e ma1 e eopardiLin- &i-&ernational -oals for t&e sae of se%urin- less %riti%al ones.

iplomati% ne-otiations, t&erefore, are re%o-niLed as privile-ed in t&is urisdi%tion, t&e 4)ne-otiations %onstitutin- no e(%eption. It ears emp&asis, &o*ever, t&at su%& privile-e isonl1 presuptive. or as +enate v. *rmita &olds, re%o-niLin- a t1pe of information as privile-ed doesnot mean t&at it *ill e %onsidered privile-ed in all instan%es. Anl1 after a %onsideration of t&e %onte(tin *&i%& t&e %laim is made ma1 it e determined if t&ere is a puli% interest t&at %alls for t&e dis%losure

of t&e desired information, stron- enou-& to over%ome its traditionall1 privile-ed status.

$&et&er petitioners &ave estalis&ed t&e presen%e of su%& a puli% interest s&all e dis%ussed later.or no*, t&e Court s&all Erst pass upon t&e ar-uments raised 1 petitioners a-ainst t&e appli%ationof 'M'1 v. Man"lapus to t&e present %ase.

ArBuents profered " petitioners aBainst t6e appi3ation o PMPF v. Manglapus

etitioners ar-ue t&at 'M'1 v. Man"lapus %annot e applied in toto to t&e present %ase, t&ereein- sustantial fa%tual distin%tions et*een t&e t*o.

'o petitioners, t&e Erst and most fundamental distin%tion lies in t&e nature of t&e treat1 involved. '&e1stress t&at'M'1 v. Man"lapus involved t&e Militar1 /ases )-reement *&i%& ne%essaril1 pertained to

matters aDe%tin- national se%urit1> *&ereas t&e present %ase involves an e%onomi% treat1 t&at seesto re-ulate trade and %ommer%e et*een t&e &ilippines and apan, matters *&i%&, unlie t&ose%overed 1 t&e Militar1 /ases )-reement, are not so vital to national se%urit1 to disallo* t&eirdis%losure.

etitionersQ ar-ument etra1s a fault1 assumption t&at information, to e %onsidered privile-ed, mustinvolve national se%urit1. '&e re%o-nition in +enate v. *rmita2# t&at e(e%utive privile-e &asen%ompassed %laims of var1in- inds, su%& t&at it ma1 even e more a%%urate to spea of @e(e%utiveprivile-es,@ %autions a-ainst su%& -eneraliLation.










$&ile t&ere %ertainl1 are privile-es -rounded on t&e ne%essit1 of safe-uardin- national se%urit1 su%&as t&ose involvin- militar1 se%rets, not all are founded t&ereon. Ane e(ample is t&e @informerQsprivile-e,@ or t&e privile-e of t&e Government not to dis%lose t&e identit1 of a person or persons *&ofurnis& information of violations of la* to o=%ers %&ar-ed *it& t&e enfor%ement of t&at la*.30 '&esuspe%t involved need not e so notorious as to e a t&reat to national se%urit1 for t&is privile-e toappl1 in an1 -iven instan%e. At&er*ise, t&e privile-e *ould e inappli%ale in all ut t&e most &i-&proEle %ases, in *&i%& %ase not onl1 *ould t&is e %ontrar1 to lon-standin- pra%ti%e. It *ould also e

&i-&l1 preudi%ial to la* enfor%ement eDorts in -eneral.

)lso illustrative is t&e privile-e a%%orded to presidential %ommuni%ations, *&i%& are presumedprivile-ed *it&out distin-uis&in- et*een t&ose *&i%& involve matters of national se%urit1 and t&ose*&i%& do not, t&e rationale for t&e privile-e ein- t&at

( ( ( JaK ran e136anBe of e(plorator1 ideas and assessments, free from t&e -lare of puli%it1 andpressure 1 interested parties, is essential to prote%t t6e independen3e o de3ision-ainB oft&ose tased to e(er%ise residential, Be-islative and udi%ial po*er. ( ( (3" 94mp&asis supplied:

In t&e same *a1 t&at t&e privile-e for udi%ial delierations does not depend on t&e nature of t&e %asedelierated upon, so presidential %ommuni%ations are privile-ed *&et&er t&e1 involve matters ofnational se%urit1.

It ears emp&asis, &o*ever, t&at t&e privile-e a%%orded to presidential %ommuni%ations is notasolute, one si-niE%ant <ualiE%ation ein- t&at @t&e 4(e%utive %annot, an1 more t&an t&e ot&erran%&es of -overnment, invoe a -eneral %onEdentialit1 privile-e to s&ield its o=%ials and emplo1eesfrom investi-ations 1 t&e proper -overnmental institutions into possile %riminal *ron-doin-.@ 32 '&is<ualiE%ation applies *&et&er t&e privile-e is ein- invoed in t&e %onte(t of a udi%ial trial or a%on-ressional investi-ation %ondu%ted in aid of le-islation.33

Closel1 related to t&e @presidential %ommuni%ations@ privile-e is t&e delierative pro%ess privile-ere%o-niLed in t&e ;nited States. )s dis%ussed 1 t&e ;.S. Supreme Court in 4LB v. +ears, oebuck &Co,3 delierative pro%ess %overs do%uments reTe%tin- advisor1 opinions, re%ommendations anddelierations %omprisin- part of a pro%ess 1 *&i%& -overnmental de%isions and poli%ies areformulated. Notal1, t&e privile-ed status of su%& do%uments rests,not on t6e need to prote3tnationa se3urit" ut, on t&e @ovious realiLation t&at o=%ials *ill not %ommuni%ate %andidl1 amon-t&emselves if ea%& remar is a potential item of dis%over1 and front pa-e ne*s,@ t&e oe%tive of t&eprivile-e ein- to en&an%e t&e <ualit1 of a-en%1 de%isions&ttp6FF*e2.*estla*.%omFEndFdefault.*lUrsV$B$.0?serialnumV"#5"2#2?fnVWtop?svVSplit?t%V"?Endt1peV?tfV"?dV08?utidV7532)!/#/C)5)8"!C20#/))3!C7d?vrV2.0?rpV72=nd72fdefault.*l?mtV$BIGeneralSus%ription. 35

'&e diplomati% ne-otiations privile-e ears a %lose resemlan%e to t&e delierative pro%ess andpresidential %ommuni%ations privile-e. It ma1 e readil1 per%eived t&at t&e rationale for t&e%onEdential %&ara%ter of diplomati% ne-otiations, delierative pro%ess, and presidential%ommuni%ations is similar, if not identi%al.

'&e earlier dis%ussion on 'M'1 v. Man"lapus3! s&o*s t&at t&e privile-e for diplomati% ne-otiations ismeant to en%oura-e a fran e(%&an-e of e(plorator1 ideas et*een t&e ne-otiatin- parties 1s&ieldin- su%& ne-otiations from puli% vie*. Similar to t&e privile-e for presidential %ommuni%ations,t&e diplomati% ne-otiations privile-e sees, t&rou-& t&e same means, to prote%t t&e independen%e inde%isionmain- of t&e resident, parti%ularl1 in its %apa%it1 as @t&e sole or-an of t&e nation in itse(ternal relations, and its sole representative *it& forei-n nations.@ )nd, as *it& t&e delierativepro%ess privile-e, t&e privile-e a%%orded to diplomati% ne-otiations arises, not on a%%ount of t&e%ontent of t&e information per se, ut e%ause t&e information is part of a pro%ess of delieration*&i%&, in pursuit of t&e puli% interest, must e presumed %onEdential.

'&e de%ision of t&e ;.S. istri%t Court, istri%t of Columia in 1ulbri"ht & 5aorski v. 6epartment of the7reasury 3enli-&tens on t&e %lose relation et*een diplomati% ne-otiations and delierative pro%essprivile-es. '&e plaintiDs in t&at %ase sou-&t a%%ess to notes taen 1 a memer of t&e ;.S. ne-otiatin-team durin- t&e ;.S.ren%& ta1treat" ne-otiations. )mon- t&e points noted t&erein *ere t&e issues








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to e dis%ussed, positions *&i%& t&e ren%& and ;.S. teams too on some points, t&e draft lan-ua-ea-reed on, and arti%les *&i%& needed to e amended. ;p&oldin- t&e %onEdentialit1 of t&ose notes, ud-e Green ruled, t&us6

NeBotiations etween two 3ountries to drat a treat" represent a true e1ape o adeierative pro3ess. !u36 Bive-and-tae ust o33ur or t6e 3ountries to rea36 ana33ord. ) des%ription of t&e ne-otiations at an1 one point *ould not provide an onlooer a summar1

of t&e dis%ussions *&i%& %ould later e relied on as la*. It *ould not e @*orin- la*@ as t&e pointsdis%ussed and positions a-reed on *ould e sue%t to %&an-e at an1 date until t&e treat1 *as si-ned1 t&e resident and ratiEed 1 t&e Senate.

T6e poi3ies e6ind t6e deierative pro3ess privieBe support non-dis3osure. !u36 6ar3oud a33rue to t6e neBotiations pro3ess i t6ese notes were reveaed. (1posure o t6e pre-aBreeent positions o t6e )ren36 neBotiators iB6t we ofend oreiBn Bovernents andwoud ead to ess 3andor " t6e *. '. in re3ordinB t6e events o t6e neBotiationspro3ess. )s several mont&s pass in et*een ne-otiations, t&is la% of re%ord %ould &inder readil1 t&e;. S. ne-otiatin- team. urt&er dis%losure *ould reveal prematurel1 adopted poli%ies. If t&ese poli%iess&ould e %&an-ed, puli% %onfusion *ould result easil1.

)ina", reeasinB t6ese snaps6ot views o t6e neBotiations woud e 3oparae toreeasinB drats o t6e treat", parti3uar" w6en t6e notes state t6e tentative provisions

and anBuaBe aBreed on. As drats o reBuations t"pi3a" are prote3ted " t6edeierative pro3ess privieBe, )rt&ur )ndersen ? Co. v. Internal Revenue Servi%e, C.). No. 80059.C.Cir., Ma1 2", "#82:, drats o treaties s&ould e a33orded t6e sae prote3tion. 94mp&asisand unders%orin- supplied:

Clearl1, t&e privile-e a%%orded to diplomati% ne-otiations follo*s as a lo-i%al %onse<uen%e from t&eprivile-ed %&ara%ter of t&e delierative pro%ess.

'&e Court is not una*are t&at in Center for %nternational *nvironmental La (C%*L#, et al. v. )ce of2.+. 7rade epresentative38 O *&ere t&e plaintiDs sou-&t information relatin- to t&e ust%ompletedne-otiation of a ;nited StatesC&ile ree 'rade )-reement O t&e same distri%t %ourt, t&is time under ud-e riedman, %ons%iousl1 refrained from appl1in- t&e do%trine in 1ulbri"ht and ordered t&edis%losure of t&e information ein- sou-&t.

Sin%e t&e fa%tual milieu in C%*L seemed to %all for t&e strai-&t appli%ation of t&e do%trine in 1ulbri"ht , adis%ussion of *&1 t&e distri%t %ourt did not appl1 t&e same *ould &elp illumine t&is CourtQs o*nreasons for de%idin- t&e present %ase alon- t&e lines of 1ulbri"ht .

In ot& 1ulbri"ht and C%*L, t&e ;.S. -overnment %ited a statutor1 asis for *it&&oldin- information,namel1, 4(emption 5 of t&e reedom of Information )%t 9AI):.3# In order to <ualif1 for prote%tion under4(emption 5, a do%ument must satisf1 t*o %onditions6 9": it must e eit&er inter-aBen3" or intra-aBen3" in nature, and 92: it must e ot& pre-de3isiona and part o t6e aBen3"Ms deierativeor de3ision-ainB pro3ess.0

ud-e riedman, in CI4B, &imself %o-niLant of a @superE%ial similarit1 of %onte(t@ et*een t&e t*o%ases, ased &is de%ision on *&at &e per%eived to e a si-niE%ant distin%tion6 &e found t&ene-otiatorQs notes t&at *ere sou-&t in1ulbri"ht to e @%learl1 internal,@ *&ereas t&e do%uments ein-

sou-&t in C%*L *ere t&ose produ%ed 1 or e(%&an-ed *it& an outside part1, i.e. C&ile. '&e do%umentssue%t of ulri-&t ein- %learl1 internal in %&ara%ter, t&e <uestion of dis%losure t&erein turned not ont&e t&res&old re<uirement of 4(emption 5 t&at t&e do%ument e intera-en%1, ut on *&et&er t&edo%uments *ere part of t&e a-en%1+s prede%isional delierative pro%ess. An t&is asis, ud-e riedmanfound t&at @ud-e Green+s dis%ussion Jin ulri-&tK of t&e &arm t&at %ould result from dis%losuret&erefore is irrelevant, sin3e t6e do3uents at issue in CIELO are not inter-aBen3", and t6e%ourt does not rea36 t6e Fuestion o deierative pro3ess.@ 94mp&asis supplied:

In Ene, 1ulbri"ht *as not overturned. '&e %ourt in C%*L merel1 found t&e same to e irrelevant in li-&tof its distin%t fa%tual settin-. $&et&er t&is %on%lusion *as valid O a <uestion on *&i%& t&is Court *ould










not pass O t&e rulin- in1ulbri"ht t&at @JnKe-otiations et*een t*o %ountries to draft a treat1 representa true e(ample of a delierative pro%ess@ *as left standin-, sin%e t&e C%*L %ourt e(pli%itl1 stated t&at itdid not rea%& t&e <uestion of delierative pro%ess.

Goin- a% to t&e present %ase, t&e Court re%o-niLes t&at t&e information sou-&t 1 petitionersin%ludes do%uments produ%ed and %ommuni%ated 1 a part1 e(ternal to t&e &ilippine -overnment,namel1, t&e apanese representatives in t&e 4) ne-otiations, and to t&at e(tent t&is %ase is %loser to

t&e fa%tual %ir%umstan%es of C%*L t&an t&ose of 1ulbri"ht .

Nonet&eless, for reasons *&i%& s&all e dis%ussed s&ortl1, t&is Court e%&oes t&e prin%iple arti%ulatedin 1ulbri"ht t&at t&e puli% poli%1 underl1in- t&e delierative pro%ess privile-e re<uires t&at diplomati%ne-otiations s&ould also e a%%orded privile-ed status, even if t&e do%uments sue%t of t&e present%ase %annot e des%ried as purel1 internal in %&ara%ter.

It need not e stressed t&at in C%*L, t&e %ourt ordered t&e dis%losure of information ased on its Endin-t&at t&e Erst re<uirement of AI) 4(emption 5 O t&at t&e do%uments e intera-en%1 O *as not met. Indeterminin- *&et&er t&e -overnment ma1 validl1 refuse dis%losure of t&e e(%&an-es et*een t&e ;.S.and C&ile, it ne%essaril1 &ad to deal *it& t&is re<uirement, it ein- laid do*n 1 a statute indin- ont&em.

In t&is urisdi%tion, &o*ever, t&ere is no %ounterpart of t&e AI), nor is t&ere an1 statutor1 re<uirementsimilar to AI) 4(emption 5 in parti%ular. Hen%e, &ilippine %ourts, *&en assessin- a %laim of privile-efor diplomati% ne-otiations, are more free to fo%us dire%tl1 on t&e issue of *&et&er t&e privile-e ein-%laimed is indeed supported 1 puli% poli%1, *it&out &avin- to %onsider O as t&e CI4B %ourt did O ift&ese ne-otiations fulEll a formal re<uirement of ein- @intera-en%1.@ Important t&ou-& t&atre<uirement ma1 e in t&e %onte(t of domesti% ne-otiations, it need not e a%%orded t&e samesi-niE%an%e *&en dealin- *it& international ne-otiations.

'&ere ein- a puli% poli%1 supportin- a privile-e for diplomati% ne-otiations for t&e reasons e(plainedaove, t&e Court sees no reason to modif1, mu%& less aandon, t&e do%trine in 'M'1 v. Man"lapus.

) se%ond point petitioners proDer in t&eir attempt to diDerentiate 'M'1 v. Man"lapus from t&e present%ase is t&e fa%t t&at t&e petitioners t&erein %onsisted entirel1 of memers of t&e mass media, *&ilepetitioners in t&e present %ase in%lude memers of t&e House of Representatives *&o invoe t&eir ri-&t

to information not ust as %itiLens ut as memers of Con-ress.

etitioners t&us %on%lude t&at t&e present %ase involves t&e ri-&t of memers of Con-ress to demandinformation on ne-otiations of international trade a-reements from t&e 4(e%utive ran%&, a matter*&i%& *as not raised in'M'1 v. Man"lapus.

$&ile indeed t&e petitioners in 'M'1 v. Man"lapus %onsisted onl1 of memers of t&e mass media, it*ould e in%orre%t to %laim t&at t&e do%trine laid do*n t&erein &as no earin- on a %ontrovers1 su%& ast&e present, *&ere t&e demand for information &as %ome from memers of Con-ress, not onl1 fromprivate %itiLens.

T6e privieBed 36ara3ter a33orded to dipoati3 neBotiations does not ipso a3to ose aor3e and efe3t sip" e3ause t6e sae privieBe is now einB 3aied under diferent3ir3ustan3es. '&eproailit1 of t&e %laim su%%eedin- in t&e ne* %onte(t mi-&t diDer, ut to sa1

t&at t&e privile-e, as su%&, &as no validit1 at all in t&at %onte(t is anot&er matter alto-et&er.

'&e CourtQs statement in +enate v. *rmita t&at @presidential refusals to furnis& information ma1 ea%tuated 1 an1 of at least t&ree distin%t inds of %onsiderations Jstate se%rets privile-e, informerQsprivile-e, and a -eneri% privile-e for internal delierationsK, and ma1 e asserted, wit6 diferinBdeBrees o su33ess, in t&e %onte(t of eit&er udi%ial or le-islative investi-ations,@ " implies t&at aprivile-e, on%e re%o-niLed, ma1 e invoed under diDerent pro%edural settin-s. '&at t&is prin%iple&olds true parti%ularl1 *it& respe%t to diplomati% ne-otiations ma1 e inferred from 'M'1 v.Man"lapus itself, *&ere t&e Court &eld t&at it is t&e resident alone *&o ne-otiates treaties, and noteven t&e Senate or t&e House of Representatives, unless ased, ma1 intrude upon t&at pro%ess.





Clearl1, t&e privile-e for diplomati% ne-otiations ma1 e invoed not onl1 a-ainst %itiLensQ demands forinformation, ut also in t&e %onte(t of le-islative investi-ations.

Hen%e, t&e re%o-nition -ranted in 'M'1 v. Man"lapus to t&e privile-ed %&ara%ter of diplomati%ne-otiations %annot e %onsidered irrelevant in resolvin- t&e present %ase, t&e %onte(tual diDeren%eset*een t&e t*o %ases not*it&standin-.

)s t&ird and last point raised a-ainst t&e appli%ation of 'M'1 v. Man"lapus in t&is %ase, petitionersproDer t&at @t&e so%iopoliti%al and &istori%al %onte(ts of t&e t*o %ases are *orlds apart.@ '&e1 %laimt&at t&e %onstitutional traditions and %on%epts prevailin- at t&e time 'M'1 v. Man"lapus %ame aout,parti%ularl1 t&e s%&ool of t&ou-&t t&at t&e re<uirements of forei-n poli%1 and t&e ideals oftransparen%1 *ere in%ompatile *it& ea%& ot&er or t&e @in%ompatiilit1 &1pot&esis,@ *&ile valid *&eninternational relations *ere still -overned 1 po*er, politi%s and *ars, are no lon-er so in t&is a-e ofinternational %ooperation.2

$it&out delvin- into petitionersQ assertions respe%tin- t&e @in%ompatiilit1 &1pot&esis,@ t&e Court notest&at t&e rulin- in 'M'1 v. Man"lapus is -rounded more on t&e nature of treat1 ne-otiations as su%&t&an on a parti%ular so%iopoliti%al s%&ool of t&ou-&t. If petitioners are su--estin- t&at t&e nature oftreat1 ne-otiations &ave so %&an-ed t&at @JaKn illtimed spee%& 1 one of t&e parties or a frande%laration of t&e %on%ession *&i%& are e(a%ted or oDered on ot& sides@ no lon-er @leadJsK to*idespread propa-anda to lo% t&e ne-otiations,@ or t&at parties in treat1 ne-otiations nolon-er e(pe%t t&eir %ommuni%ations to e -overned 1 &istori% %onEdentialit1, t&e urden is on t&emto sustantiate t&e same. '&is petitioners failed to dis%&ar-e.

6et6er t6e privieBe appies on" at 3ertain staBes o t6e neBotiation pro3ess

etitioners admit t&at @diplomati% ne-otiations on t&e 4) are entitled to a reasonale amount of%onEdentialit1 so as not to eopardiLe t&e diplomati% pro%ess.@ '&e1 ar-ue, &o*ever, t&at t&e same isprivile-ed @onl1 at %ertain sta-es of t&e ne-otiatin- pro%ess, after *&i%& su%& information mustne%essaril1 e revealed to t&e puli%.@3 '&e1 add t&at t&e dut1 to dis%lose t&is information *as vestedin t&e -overnment *&en t&e ne-otiations moved from t&e formulation and e(plorator1 sta-e to t&eErmin- up of deEnite propositions or o=%ial re%ommendations, %itin-Chavez v. 'C// and Chavez v.'*.5

'&e follo*in- statement in Chavez v. '*, &o*ever, su=%es to s&o* t&at t&e do%trine in ot& t&at %aseand Chavez v. 'C// *it& re-ard to t&e dut1 to dis%lose @deEnite propositions of t&e -overnment@ doesnot appl1 to diplomati% ne-otiations6

$e rule, t&erefore, t&at t&e %onstitutional ri-&t to information in%ludes o=%ial information on on-oin-ne-otiationsefore a Enal %ontra%t. T6e inoration, 6owever, ust 3onstitute denitepropositions " t6e Bovernent and s6oud not 3over re3oBniJed e13eptions ie privieBedinoration, iitar" and dipoati3 se3rets and siiar atters afe3tinB nationa se3urit"and pui3 order. ( ( (! 94mp&asis and unders%orin- supplied:

It follo*s from t&is rulin- t&at even deEnite propositions of t&e -overnment ma1 not e dis%losed ift&e1 fall under @re%o-niLed e(%eptions.@ '&e privile-e for diplomati% ne-otiations is %learl1 amon- t&ere%o-niLed e(%eptions, for t&e footnote to t&e immediatel1 <uoted rulin- %ites 'M'1 v. Man"lapus itself as an aut&orit1.

6et6er t6ere is suC3ient pui3 interest to over3oe t6e 3ai o privieBe

It ein- estalis&ed t&at diplomati% ne-otiations eno1 a presumptive privile-e a-ainst dis%losure, evena-ainst t&e demands of memers of Con-ress for information, t&e Court s&all no* determine *&et&erpetitioners &ave s&o*n t&e e(isten%e of a puli% interest su=%ient to over%ome t&e privile-e in t&isinstan%e.

'o %larif1, t&ere are at least t*o inds of puli% interest t&at must e taen into a%%ount. Ane is t&epresumed puli% interest in avor o eepinB t6e suHe3t inoration 3ondentia, *&i%& is t&e













reason for t&e privile-e in t&e Erst pla%e, and t&e ot&er is t&e puli% interest in avor o dis3osure,t&e e(isten%e of *&i%& must e s&o*n 1 t&e part1 asin- for information.

'&e %riteria to e emplo1ed in determinin- *&et&er t&ere is a su=%ient puli% interest in favor ofdis%losure ma1 e -at&ered from %ases su%& as 2.+. v. 4i!on,8 +enate +elect Committee on'residential Campai"n ctivities v. 4i!on,# and %n re +ealed Case.50

2.+. v. 4i!on, *&i%& involved a %laim of t&e presidential %ommuni%ations privile-e a-ainst t&esupoena duces tecum of a distri%t %ourt in a %riminal %ase, emp&asiLed t&e need to alan%e su%&%laim of privile-e a-ainst t&e %onstitutional dut1 of %ourts to ensure a fair administration of %riminal usti%e.

( ( ( t6e aowan3e o t6e privieBe to *it&&old eviden%e t&at is demonstral1 relevant in a %riminaltrial woud 3ut deep" into t6e Buarantee o due pro3ess o aw and Brave" ipair t6e asi3un3tion o t6e 3ourts. A President’s a3nowedBed need or 3ondentiait" in t6e3ouni3ations o 6is oC3e is Benera in nature, w6ereas t6e 3onstitutiona need orprodu3tion o reevant eviden3e in a 3riina pro3eedinB is spe3i3 and 3entra to t6e airadHudi3ation o a parti3uar 3riina 3ase in t6e adinistration o Husti3e.$it&out a%%ess tospe%iE% fa%ts a %riminal prose%ution ma1 e totall1 frustrated. '&e residentQs road interest in%onEdentialit1 of %ommuni%ations *ill not e vitiated 1 dis%losure of a limited numer of%onversations preliminaril1 s&o*n to &ave some earin- on t&e pendin- %riminal %ases. 94mp&asis,itali%s and unders%orin- supplied:

Similarl1, +enate +elect Committee v. 4i!on,5" *&i%& involved a %laim of t&e presidential%ommuni%ations privile-e a-ainst t&e supoena duces tecum of a Senate %ommittee, spoe of t&eneed to alan%e su%& %laim *it& t&e dut1 of Con-ress to perform its le-islative fun%tions.

'&e sta-ed de%isional stru%ture estalis&ed in 4i!on v. +irica *as desi-ned to ensure t&at t&e residentand t&ose upon *&om &e dire%tl1 relies in t&e performan%e of &is duties %ould %ontinue to *or undera -eneral assuran%e t&at t&eir delierations *ould remain %onEdential. So lon- as t6e presuptiont6at t6e pui3 interest avors 3ondentiait" 3an e deeated on" " a stronB s6owinB oneed " anot6er institution o Bovernent-a s6owinB t6at t6e responsiiities o t6atinstitution 3annot responsi" e ued wit6out a33ess to re3ords o t6e PresidentMsdeierations *e elieved in 4i!on v. +irica, and %ontinue to elieve, t&at t&e eDe%tive fun%tionin- of t&e presidential o=%e *ill not e impaired. ( ( (

( ( ( (

T6e suC3ien3" o t6e %oitteeMs s6owinB o need 6as 3oe to depend, t6ereore,entire" on w6et6er t6e supoenaed aterias are 3riti3a to t6e peroran3e o itseBisative un3tions. ( ( ( 94mp&asis and unders%orin- supplied:

%n re +ealed Case52 involved a %laim of t&e delierative pro%ess and presidential %ommuni%ationsprivile-es a-ainst a supoena duces tecum of a -rand ur1. An t&e %laim of delierative pro%essprivile-e, t&e %ourt stated6

'&e delierative pro%ess privile-e is a <ualiEed privile-e and 3an e over3oe " a suC3ients6owinB o need. T6is need deterination is to e ade Qe1i" on a 3ase-"-3ase, ad 6o3

asis. @J4Ka%& time Jt&e delierative pro%ess privile-eK is asserted t&e distri%t %ourt must undertae afres& alan%in- of t&e %ompetin- interests,@ tainB into a33ount a3tors su36 as ?t6e reevan3eo t6e eviden3e,? ?t6e avaiaiit" o ot6er eviden3e,? ?t6e seriousness o t6e itiBation,??t6e roe o t6e Bovernent,? and t6e ?possiiit" o uture tiidit" " Bovernentepo"ees. ( ( ( 94mp&asis, itali%s and unders%orin- supplied:

etitioners &ave failed to present t&e stron- and @su=%ient s&o*in- of need@ referred to in t&eimmediatel1 %ited %ases. '&e ar-uments t&e1 proDer to estalis& t&eir entitlement to t&e sue%tdo%uments fall s&ort of t&is standard.


















etitioners -o on to assert t&at t&e noninvolvement of t&e ilipino people in t&e 4) ne-otiationpro%ess eDe%tivel1 results in t&e ar-ainin- a*a1 of t&eir e%onomi% and propert1 ri-&ts *it&out t&eirno*led-e and parti%ipation, in violation of t&e due pro%ess %lause of t&e Constitution. '&e1 %laim,moreover, t&at it is essential for t&e people to &ave a%%ess to t&e initial oDers e(%&an-ed durin- t&ene-otiations sin%e onl1 t&rou-& su%& dis%losure %an t&eir %onstitutional ri-&t to eDe%tivel1 parti%ipatein de%isionmain- e rou-&t to life in t&e %onte(t of international trade a-reements.

$&et&er it %an a%%uratel1 e said t&at t&e ilipino people *ere not involved in t&e 4) ne-otiations isa <uestion of fa%t *&i%& t&is Court need not resolve. Su=%e it to state t&at respondents &ad presenteddo%uments purportin- to s&o* t&at puli% %onsultations *ere %ondu%ted on t&e 4). arent&eti%all1,petitioners %onsider t&ese @alle-ed %onsultations@ as @*oefull1 sele%tive and inade<uate.@53

)' )BB 44N'S, sin%e it is not disputed t&at t&e oDers e(%&an-ed 1 t&e &ilippine and apaneserepresentatives &ave not een dis%losed to t&e puli%, t&e Court s&all pass upon t&e issue of *&et&era%%ess to t&e do%uments earin- on t&em is, as petitioners %laim, essential to t&eir ri-&t to parti%ipatein de%isionmain-.

'&e %ase for petitioners &as, of %ourse, een immensel1 *eaened 1 t&e dis%losure of t&e full te(t oft&e 4) to t&e puli% sin%e Septemer "", 200!, even as it is still ein- delierated upon 1 t&eSenate and, t&erefore, not 1et indin- on t&e &ilippines. $ere t&e Senate to %on%ur *it& t&e validit1of t&e 4) at t&is moment, t&ere &as alread1 een, in t&e *ords of 'M'1 v. Man"lapus, @ampleopportunit1 for dis%ussion efore Jt&e treat1K is approved.@

'&e te(t of t&e 4) &avin- een pulis&ed, petitioners &ave failed to %onvin%e t&is Court t&at t&e1*ill not e ale to meanin-full1 e(er%ise t&eir ri-&t to parti%ipate in de%isionmain- unless t&e initialoDers are also pulis&ed.

It is of puli% no*led-e t&at various non-overnment se%tors and private %itiLens &ave alread1puli%l1 e(pressed t&eir vie*s on t&e 4), t&eir %omments not ein- limited to -eneral oservationst&ereon ut on its spe%iE% provisions. Numerous arti%les and statements %riti%al of t&e 4) &ave eenposted on t&e Internet.5 Given t&ese developments, t&ere is no asis for petitionersQ %laim t&at a%%essto t&e &ilippine and apanese oDers is essential to t&e e(er%ise of t&eir ri-&t to parti%ipate in de%isionmain-.

etitionermemers of t&e House of Representatives additionall1 an%&or t&eir %laim to &ave a ri-&t tot&e sue%t do%uments on t&e asis of Con-ressQ in&erent po*er to re-ulate %ommer%e, e it domesti%or international. '&e1 alle-e t&at Con-ress %annot meanin-full1 e(er%ise t&e po*er to re-ulateinternational trade a-reements su%& as t&e 4) *it&out ein- -iven %opies of t&e initial oDerse(%&an-ed durin- t&e ne-otiations t&ereof. In t&e same vein, t&e1 ar-ue t&at t&e resident %annote(%lude Con-ress from t&e 4) ne-otiations sin%e *&atever po*er and aut&orit1 t&e resident &as tone-otiate international trade a-reements is derived onl1 1 dele-ation of Con-ress, pursuant to )rti%leI, Se%tion 2892: of t&e Constitution and Se%tions 0" and 02 of residential e%ree No. "!.55

'&e sue%t of )rti%le I Se%tion 2892: of t&e Constitution is not t&e po*er to ne-otiate treaties andinternational a-reements, ut t&e po*er to E( tariD rates, import and e(port <uotas, and ot&er ta(es. '&us it provides6

92: '&e Con-ress ma1, 1 la*, aut&oriLe t&e resident to E( *it&in spe%iEed limits, and sue%t to su%&

limitations and restri%tions as it ma1 impose, tariD rates, import and e(port <uotas, tonna-e and*&arfa-e dues, and ot&er duties or imposts *it&in t&e frame*or of t&e national developmentpro-ram of t&e Government.

)s to t&e po*er to ne-otiate treaties, t&e %onstitutional asis t&ereof is Se%tion 2" of )rti%le II O t&earti%le on t&e 4(e%utive epartment O *&i%& states6

No treat1 or international a-reement s&all e valid and eDe%tive unless %on%urred in 1 at least t*ot&irds of all t&e Memers of t&e Senate.









'&e do%trine in M v. Man-lapus t&at t&e treat1main- po*er is e(%lusive to t&e resident, ein-t&e sole or-an of t&e nation in its e(ternal relations, *as e%&oed in B84 v. *!ecutive+ecretary 5! *&ere t&e Court &eld6

/" %onstitutional Eat and 1 t&e intrinsi% nature of &is o=%e, t&e resident, as &ead of State, ist&e sole or-an and aut&orit1 in t&e e(ternal aDairs of t&e %ountr1. In man1 *a1s, t&e resident is t&e%&ief ar%&ite%t of t&e nation+s forei-n poli%1> &is @dominan%e in t&e Eeld of forei-n relations is 9t&en:

%on%eded.@ $ieldin- vast po*ers and inTuen%e, &is %ondu%t in t&e e(ternal aDairs of t&e nation, as eDerson des%ries, is @e(e%utive alto-et&er.@

As reBards t6e power to enter into treaties or internationa aBreeents, t6e %onstitutionvests t6e sae in t6e President, suHe3t on" to t6e 3on3urren3e o at east two t6irds voteo a t6e eers o t6e 'enate. In t&is li-&t, t&e ne-otiation of t&e ) and t&e suse<uentratiE%ation of t&e a-reement are e(%lusive a%ts *&i%& pertain solel1 to t&e resident, in t&e la*fule(er%ise of 6is vast e1e3utive and dipoati3 powersBranted 6i no ess t6an " t6eundaenta aw itse. Into t6e ed o neBotiation t6e 'enate 3annot intrude, and%onBress itse is poweress to invade it. ( ( ( 9Itali%s in t&e ori-inal> emp&asis and unders%orin-supplied:

'&e same do%trine *as reiterated even more re%entl1 in 'imentel v. *!ecutive +ecretary 5 *&ere t&eCourt ruled6

In our s1stem of -overnment, t&e resident, ein- t&e &ead of state, is re-arded as t6e soeorBan and aut6orit" in e1terna reations and is t6e 3ountr"Ms soe representative wit6oreiBn nations. )s t&e %&ief ar%&ite%t of forei-n poli%1, t&e resident a%ts as t&e %ountr1+smout&pie%e *it& respe%t to international aDairs. Hen%e, t6e President is vested wit6 t6e aut6orit"to deal *it& forei-n states and -overnments, e(tend or *it&&old re%o-nition, maintain diplomati%relations, enter into treaties, and ot&er*ise transa%t t&e usiness of forei-n relations. In t6e reao treat"-ainB, t6e President 6as t6e soe aut6orit" to neBotiate wit6 ot6er states.

Nonet6eess, w6ie t6e President 6as t6e soe aut6orit" to neBotiate and enter intotreaties, t6e %onstitution provides a iitation to 6is power " reFuirinB t6e 3on3urren3e o 2S o a t6e eers o t6e 'enate or t6e vaidit" o t6e treat" entered into " 6i. ( ( (94mp&asis and unders%orin- supplied:

$&ile t&e po*er t&en to E( tariD rates and ot&er ta(es %learl1 elon-s to Con-ress, and is e(er%ised 1t&e resident onl1 1 dele-ation of t&at od1, it &as lon- een re%o-niLed t&at t&e po*er to enter intotreaties is vested dire%tl1 and e(%lusivel1 in t&e resident, sue%t onl1 to t&e %on%urren%e of at leastt*ot&irds of all t&e Memers of t&e Senate for t&e validit1 of t&e treat1. In t&is li-&t, t&e aut&orit1 oft&e resident to enter into trade a-reements *it& forei-n nations provided under .. "!58 ma1 einterpreted as an a%no*led-ment of a po*er alread1 in&erent in its o=%e. It ma1 not e used as asisto &old t&e resident or its representatives a%%ountale to Con-ress for t&e %ondu%t of treat1ne-otiations.

'&is is not to sa1, of %ourse, t&at t&e residentQs po*er to enter into treaties is unlimited ut for t&ere<uirement of Senate %on%urren%e, sin%e t&e resident must still ensure t&at all treaties *illsustantivel1 %onform to all t&e relevant provisions of t&e Constitution.

It follo*s from t&e aove dis%ussion t&at Con-ress, *&ile possessin- vast le-islative po*ers, ma1 notinterfere in t&e Eeld of treat1 ne-otiations. $&ile )rti%le II, Se%tion 2" provides for Senate%on%urren%e, su%& pertains onl1 to t&e validit1 of t&e treat1 under %onsideration, not to t&e %ondu%t ofne-otiations attendant to its %on%lusion. Moreover, it is not even Con-ress as a *&ole t&at &as een-iven t&e aut&orit1 to %on%ur as a means of %&e%in- t&e treat1main- po*er of t&e resident,ut onl1 t&e Senate.

'&us, as in t&e %ase of petitioners suin- in t&eir %apa%it1 as private %itiLens, petitionersmemers oft&e House of Representatives fail to present a @su=%ient s&o*in- of need@ t&at t&e information sou-&t











is %riti%al to t&e performan%e of t&e fun%tions of Con-ress, fun%tions t&at do not in%lude treat1ne-otiation.

Respondents’ aeBed aiure to tie" 3ai e1e3utive privieBe

An respondentsQ invo%ation of e(e%utive privile-e, petitioners End t&e same defe%tive, not &avin- eendone seasonal1 as it *as raised onl1 in t&eir Comment to t&e present petition and not durin- t&eHouse Committee &earin-s.

'&at respondents invoed t&e privile-e for t&e Erst time onl1 in t&eir Comment to t&e present petitiondoes not mean t&at t&e %laim of privile-e s&ould not e %redited. etitionersQ position presupposes t&atan assertion of t&e privile-e s&ould &ave een made durin- t&e House Committee investi-ations,failin- *&i%& respondents are deemed to &ave *aived it.

$&en t&e House Committee and petitionerCon-ressman )-ua re<uested respondents for %opies oft&e do%uments sue%t of t&is %ase, respondents replied t&at t&e ne-otiations *ere still on-oin- andt&at t&e draft of t&e 4) *ould e released on%e t&e te(t t&ereof is settled and %omplete. '&ere *asno intimation t&at t&e re<uested %opies are %onEdential in nature 1 reason of puli% poli%1. '&eresponse ma1 not t&us e deemed a %laim of privile-e 1 t&e standards of +enate v. *rmita, *&i%&re%o-niLes as %laims of privile-e onl1 t&ose *&i%& are a%%ompanied 1 pre3ise and 3ertain

reasons for preservin- t&e 3ondentiait" of t&e information ein- sou-&t.

RespondentsQ failure to %laim t&e privile-e durin- t&e House Committee &earin-s ma1 not, &o*ever, e%onstrued as a *aiver t&ereof 1 t&e 4(e%utive ran%&. )s t&e immediatel1 pre%edin- para-rap&indi%ates, *&at respondents re%eived from t&e House Committee and petitionerCon-ressman )-ua*ere mere re<uests for information. )nd as priorl1 stated, t&e House Committee itself refrained frompursuin- its earlier resolution to issue a supoena du%es te%um on a%%ount of t&en Speaer ose deene%iaQs alle-ed re<uest to Committee C&airperson Con-ressman 'eves to &old t&e same inae1an%e.

$&ile it is a salutar1 and nole pra%ti%e for Con-ress to refrain from issuin- supoenas to e(e%utiveo=%ials O out of respe%t for t&eir o=%e O until resort to it e%omes ne%essar1, t&e fa%t remains t&atsu%& re<uests are not a %ompulsor1 pro%ess. /ein- mere re<uests, t&e1 do not stri%tl1 %all for anassertion of e(e%utive privile-e.

'&e privile-e is an e(emption to Con-ressQ po*er of in<uir1.5# So lon- as Con-ress itself Ends no %auseto enfor%e su%& po*er, t&ere is no stri%t ne%essit1 to assert t&e privile-e. In t&is li-&t, respondentsQfailure to invoe t&e privile-e durin- t&e House Committee investi-ations did not amount to a *aivert&ereof.

'&e Court oserves, &o*ever, t&at t&e %laim of privile-e appearin- in respondentsQ Comment to t&ispetition fails to satisf1 in full t&e re<uirement laid do*n in Senate v. 4rmita t&at t&e %laim s&ould einvoed 1 t&e resident or t&rou-& t&e 4(e%utive Se%retar1 @1 order of t&eresident.@!0 RespondentsQ %laim of privile-e is ein- sustained, &o*ever, its Ta* not*it&standin-,e%ause of %ir%umstan%es pe%uliar to t&e %ase.

'&e assertion of e(e%utive privile-e 1 t&e 4(e%utive Se%retar1, *&o is one of t&e respondents &erein,*it&out &im addin- t&e p&rase @1 order of t&e resident,@ s&all e %onsidered as partiall1 %ompl1in-

*it& t&e re<uirement laid do*n in Senate v. 4rmita. '&e re<uirement t&at t&e p&rase @1 order of t&eresident@ s&ould a%%ompan1 t&e 4(e%utive Se%retar1Qs %laim of privile-e is a ne* rule laid do*n fort&e Erst time in +enate v. *rmita, *&i%& *as not 1et Enal and e(e%utor1 at t&e time respondents Eledt&eir Comment to t&e petition.!" ) stri%t appli%ation of t&is re<uirement *ould t&us e un*arranted int&is %ase.

Response to t6e 0issentinB &pinion o t6e %6ie ;usti3e

$e are a*are t&at e&ind t&e dissent of t&e C&ief usti%e lies a -enuine Leal to prote%t our peopleQsri-&t to information a-ainst an1 ause of e(e%utive privile-e. It is a Leal t&at $e full1 s&are.










'&e Court, &o*ever, in its endeavor to -uard a-ainst t&e ause of e(e%utive privile-e, s&ould e%areful not to veer to*ards t&e opposite e(treme, to t&e point t&at it *ould strie do*n as invalid evena le-itimate e(er%ise t&ereof.

$e respond onl1 to t&e salient ar-uments of t&e issentin- Apinion *&i%& &ave not 1et eensu=%ientl1 addressed aove.

". )fter its &istori%al dis%ussion on t&e allo%ation of po*er over international trade a-reements in t&e;nited States, t&e dissent %on%ludes t&at @it *ill e turnin- somersaults *it& &istor1 to %ontend t&att&e resident is t&e sole or-an for e(ternal relations@ in t&at urisdi%tion. $it& re-ard to t&is opinion,$e mae onl1 t&e follo*in- oservations6

'&ere is, at least, a %ore meanin- of t&e p&rase @sole or-an of t&e nation in its e(ternal relations@*&i%& is not ein- disputed, namel1, t&at t&e po*er to dire%tl1 ne-otiate treaties and internationala-reements is vested 1 our Constitution onl1 in t&e 4(e%utive. '&us, t&e dissent states t&at @Con-ress&as t&e po*er to re-ulate %ommer%e *it& forei-n nations ut does not 6ave t6e power toneBotiate internationa aBreeents dire3t".@!2

$&at is disputed is &o* t&is prin%iple applies to t&e %ase at ar.

'&e dissent opines t&at petitionermemers of t&e House of Representatives, 1 asin- for t&e sue%t 4) do%uments, are not seein- to dire%tl1 parti%ipate in t&e ne-otiations of t&e 4), &en%e, t&e1%annot e prevented from -ainin- a%%ess to t&ese do%uments.

An t&e ot&er &and, $e &old t&at t&is is one o%%asion *&ere t&e follo*in- rulin- in "an v. '%7C!3 Oand in ot&er %ases ot& efore and sin%e O s&ould e applied6

T6is %ourt 6as onB and 3onsistent" ad6ered to t6e eBa a1i t6at t6ose t6at 3annot edone dire3t" 3annot e done indire3t". 7o declare the '%7C contracts valid despite the clearstatutory prohibition a"ainst a direct "overnment "uarantee ould not only make a mockery of hatthe B7 La seeks to prevent 33 hich is to e!pose the "overnment to the risk of incurrin" a monetary obli"ation resultin" from a contract of loan beteen the pro9ect proponent and its lenders and to hichthe /overnment is not a party to 33 but ould also render the B7 La useless for hat it seeks toachieve :3 to make use of the resources of the private sector in the ;$nancin", operation and

maintenance of infrastructure and development pro9ects; hich are necessary for national "roth anddevelopment but hich the "overnment, unfortunately, could ill3a<ord to $nance at this point in time.!

Similarl1, *&ile &erein petitionersmemers of t&e House of Representatives ma1 not &ave eenaimin- to parti%ipate in t&e ne-otiations dire%tl1, openin- t&e 4) ne-otiations to t&eir s%rutin1 Oeven to t&e point of -ivin- t&em a%%ess to t&e oDers e(%&an-ed et*een t&e apanese and &ilippinedele-ations O *ould &ave made a mo%er1 of *&at t&e Constitution sou-&t to prevent and rendered ituseless for *&at it sou-&t to a%&ieve *&en it vested t&e po*er of dire%t ne-otiation solel1 *it& t&eresident.

$&at t&e ;.S. Constitution sou-&t to prevent and aimed to a%&ieve in deEnin- t&e treat1main-po*er of t&e resident, *&i%& our Constitution similarl1 deEnes, ma1 e -at&ered from HamiltonQse(planation of *&1 t&e ;.S. Constitution e(%ludes t&e House of Representatives from t&e treat1main-pro%ess6

( ( ( '&e Tu%tuatin-, and tain- its future in%rease into a%%ount, t&e multitudinous %omposition of t&atod1, forid us to e(pe%t in it t&ose <ualities *&i%& are essential to t&e proper e(e%ution of su%& atrust. )%%urate and %ompre&ensive no*led-e of forei-n politi%s> a stead1 and s1stemati% ad&eren%eto t&e same vie*s> a ni%e and uniform sensiilit1 to national %&ara%ter,de%ision, secrecy and dispat36> are in%ompatile *it& a od1 so variale and so numerous. '&e ver1%ompli%ation of t&e usiness 1 introdu%in- a ne%essit1 of t&e %on%urren%e of so man1 diDerent odies,*ould of itself aDord a solid oe%tion. '&e -reater fre<uen%1 of t&e %alls upon t&e &ouse ofrepresentatives, and t&e -reater len-t& of time *&i%& it *ould often e ne%essar1 to eep t&em










to-et&er *&en %onvened, to otain t&eir san%tion in t&e pro-ressive sta-es of a treat1, *ould esour%e of so -reat in%onvenien%e and e(pense, as alone ou-&t to %ondemn t&e proe%t.!5

'&ese %onsiderations a fortiori appl1 in t&is urisdi%tion, sin%e t&e &ilippine Constitution, unlie t&at oft&e ;.S., does not even -rant t6e 'enate t&e po*er to advise t&e 4(e%utive in t&e main- of treaties,ut onl1 vests in t&at od1 t&e po*er to %on%ur in t&e validit1 of t&e treat1 after ne-otiations &aveeen %on%luded.!! Mu%& less, t&erefore, s&ould it e inferred t&at t&e House of Representatives &as t&is

po*er.

Sin%e allo*in- petitionermemers of t&e House of Representatives a%%ess to t&e sue%t 4)do%uments *ould set a pre%edent for future ne-otiations, leadin- to t&e %ontravention of t&e puli%interests arti%ulated aove *&i%& t&e Constitution sou-&t to prote%t, t&e sue%t do%uments s&ould note dis%losed.

2. '&e dissent also asserts t&at respondents %an no lon-er %laim t&e diplomati% se%rets privile-e overt&e sue%t 4) do%uments no* t&at ne-otiations &ave een %on%luded, sin%e t&eir reasons fornondis%losure %ited in t&e une 23, 2005 letter of Se%. 4rmita, and later in t&eir Comment, ne%essaril1appl1 onl1 for as lon- as t&e ne-otiations *ere still pendin->

In t&eir Comment, respondents %ontend t&at @t&e ne-otiations of t&e representatives of t&e &ilippines

as *ell as of apan must e allo*ed to e(plore alternatives in t&e %ourse of t&e ne-otiations in t&esame manner as udi%ial delierations and *orin- drafts of opinions are a%%orded stri%t%onEdentialit1.@ T6at respondents ien t6e do3uents invoved in t6e ;P(PA neBotiations to Hudi3ia deierations and worinB drats o opinions evin3es, " itse, t6at t6e" were3aiinB 3ondentiait" not on" unti, ut even ater, t6e 3on3usion o t6e neBotiations.

udi%ial delierations do not lose t&eir %onEdential %&ara%ter on%e a de%ision &as een promul-ated 1t&e %ourts. '&e same &olds true *it& respe%t to *orin- drafts of opinions, *&i%& are %omparale tointraa-en%1re%ommendations. Su%& intraa-en%1 re%ommendations are privile-ed even after t&eposition under %onsideration 1 t&e a-en%1 &as developed into a deEnite proposition, &en%e, t&e rulein t&is urisdi%tion t&at a-en%ies &ave t&e dut1 to dis%lose onl1 deEnite propositions, and not t&e intera-en%1 and intraa-en%1 %ommuni%ations durin- t&e sta-e *&en %ommon assertions are still ein-formulated.!

3. '&e dissent %laims t&at petitionermemers of t&e House of Representatives &ave su=%ientl1 s&o*nt&eir need for t&e same do%uments to over%ome t&e privile-e. )-ain, $e disa-ree.

'&e House Committee t&at initiated t&e investi-ations on t&e 4) did not pursue its earlier intentionto supoena t&e do%uments. '&is stron-l1 undermines t&e assertion t&at a%%ess to t&e samedo%uments 1 t&e House Committee is %riti%al to t&e performan%e of its le-islative fun%tions. If t&edo%uments *ere indeed %riti%al, t&e House Committee s&ould &ave, at t&e ver1 least, issueda subpoena duces tecum or, lie *&at t&e Senate did in +enate v. *rmita, Eled t&e present petition as ale-islative od1, rat&er t&an leavin- it to t&e dis%retion of individual Con-ressmen *&et&er to pursuean a%tion or not. Su%& a%ts *ould &ave served as stron- indi%ia t&at Con-ress itself Ends t&e sue%tinformation to e %riti%al to its le-islative fun%tions.

urt&er, -iven t&at respondents &ave %laimed e(e%utive privile-e, petitionermemers of t&e House ofRepresentatives s&ould &ave, at least, s&o*n &o* its la% of a%%ess to t&e &ilippine and apanese

oDers *ould &inder t&e intelli-ent %raftin- of le-islation. Mere assertion t&at t&e 4) %overs a sue%tmatter over *&i%& Con-ress &as t&e po*er to le-islate *ould not su=%e. )s +enate +elect Committeev. 4i!on!8 &eld, t&e s&o*in- re<uired to over%ome t&e presumption favorin- %onEdentialit1 turns, notonl1 on t&e nature and appropriateness of t&e fun%tion in t&e performan%e of *&i%& t&e material *assou-&t, ut also t&e de-ree to *&i%& t&e material *as ne%essar1 to its fulEllment. '&is petitionersfailed to do.

urt&ermore, from t&e time t&e Enal te(t of t&e 4) in%ludin- its anne(es and atta%&ments *aspulis&ed, petitionermemers of t&e House of Representatives &ave een free to use it for an1le-islative purpose t&e1 ma1 see Et. Sin%e su%& puli%ation, petitionersQ need, if an1, spe%iE%all1 for












t&e &ilippine and apanese oDers leadin- to t&e Enal version of t&e 4), &as e%ome even lessapparent.

In assertin- t&at t&e alan%e in t&is instan%e tilts in favor of dis%losin- t&e 4) do%uments, t&edissent %ontends t&at t&e 4(e%utive &as failed to s&o* &o* dis%losin- t&em after t&e %on%lusion ofne-otiations *ould impair t&e performan%e of its fun%tions. '&e %ontention, *it& due respe%t,mispla%es t&e onus proandi. $&ile, in eepin- *it& t&e -eneral presumption of transparen%1, t&e

urden is initiall1 on t&e 4(e%utive to provide pre%ise and %ertain reasons for up&oldin- its %laim ofprivile-e, on%e t&e 4(e%utive is ale to s&o* t&at t&e do%uments ein- sou-&t are %overed 1 are%o-niLed privile-e, t&e urden s&ifts to t&e part1 seein- information to over%ome t&e privile-e 1 astron- s&o*in- of need.

$&en it *as t&us estalis&ed t&at t&e 4) do%uments are %overed 1 t&e privile-e for diplomati%ne-otiations pursuant to 'M'1 v. Man"lapus, t&e presumption arose t&at t&eir dis%losure *ould impairt&e performan%e of e(e%utive fun%tions. It *as t&en in%ument on petitioner re<uestin- parties tos&o* t&at t&e1 &ave a stron- need for t&e information su=%ient to over%ome t&e privile-e. '&e1 &avenot, &o*ever.

. Respe%tin- t&e failure of t&e 4(e%utive Se%retar1 to e(pli%itl1 state t&at &e is %laimin- t&e privile-e@1 order of t&e resident,@ t&e same ma1 not e stri%tl1 applied to t&e privile-e %laim sue%t of t&is%ase.

$&en t&e Court in +enate v. *rmita limited t&e po*er of invoin- t&e privile-e to t&e resident alone, it*as la1in- do*n a ne* rule for *&i%& t&ere is no %ounterpart even in t&e ;nited States from *&i%& t&e%on%ept of e(e%utive privile-e *as adopted. )s &eld in t&e 200 %ase of 5udicial Watch, %nc. v.6epartment of 5ustice,!# %itin- %n re +ealed Case,0 @t&e issue of *&et&er a resident must personall1invoe t&e Jpresidential %ommuni%ationsK privile-e remains an open <uestion.@ 2.+. v. eynolds," ont&e ot&er &and, &eld t&at @JtK&ere must e a formal %laim of privile-e, lod-ed 1 t&e &ead of t&edepartment *&i%& &as %ontrol over t&e matter, after a%tual personal %onsideration 1 t&at o=%er.@

'&e rule *as t&us laid do*n 1 t&is Court, not in ad&eren%e to an1 estalis&ed pre%edent, ut *it& t&eaim of preventin- t&e ause of t&e privile-e in li-&t of its &i-&l1 e(%eptional nature. '&e CourtQsre%o-nition t&at t&e 4(e%utive Se%retar1 also ears t&e po*er to invoe t&e privile-e, provided &e doesso @1 order of t&e resident,@ is meant to avoid la1in- do*n too ri-id a rule, t&e Court ein- a*aret&at it *as la1in- do*n a ne* restri%tion on e(e%utive privile-e. It is *it& t&e same spirit t&at t&e Courts&ould not e overl1 stri%t *it& appl1in- t&e same rule in t&is pe%uliar instan%e, *&ere t&e %laim ofe(e%utive privile-e o%%urred efore t&e ud-ment in +enate v. *rmitae%ame Enal.

5. 'o s&o* t&at 'M'1 v. Man"lapus ma1 not e applied in t&e present %ase, t&e dissent implies t&at t&eCourt t&erein erred in %itin- 2+ v. Curtiss Wri"ht 2 and t&e oo entitled 7he 4e merican/overnment and %ts Work 3sin%e t&ese aut&orities, so t&e dissent %laims, ma1 not e used to %aliratet&e importan%e of t&e ri-&t to information in t&e &ilippine settin-.

'&e dissent ar-ues t&at sin%e Curtiss3Wri"ht referred to a %onTi%t et*een t&e e(e%utive andle-islative ran%&es of -overnment, t&e fa%tual settin- t&ereof *as diDerent from t&at of 'M'1 v.Man"lapus *&i%& involved a %ollision et*een -overnmental po*er over t&e %ondu%t of forei-n aDairsand t&e %itiLenQs ri-&t to information.

'&at t&e Court %ould freel1 %ite Curtiss$ri-&t O a %ase t&at up&olds t&e se%re%1 of diplomati%ne-otiations a-ainst%on-ressional demands for information O in t&e %ourse of la1in- do*n a rulin- ont&e puli% ri-&t to information onl1 serves to unders%ore t&e prin%iple mentioned earlier t&at t&eprivile-ed %&ara%ter a%%orded to diplomati% ne-otiations does not ipso facto lose all for%e and eDe%tsimpl1 e%ause t&e same privile-e is no* ein- %laimedunder diDerent %ir%umstan%es.

'M'1 v. Man"lapus indeed involved a demand for information from private %itiLens and not ane(e%utivele-islative %onTi%t, ut so did Chavez v. '* *&i%& &eld t&at @t&e Jpuli%QsK ri-&t toinformation . . . does not e(tend to matters re%o-niLed as privile-ed information under t&e separation
















of po*ers.@ $&at %ounts as privile-ed information in an e(e%utivele-islative %onTi%t is t&us alsore%o-niLed as su%& in %ases involvin- t&e puli%Qs ri-&t to information.

Chavez v. 'C//5 also involved t&e puli%Qs ri-&t to information, 1et t&e Court re%o-niLed as a validlimitation to t&at ri-&t t&e same privile-ed information ased on separation of po*ers O %loseddoorCainet meetin-s, e(e%utive sessions of eit&er &ouse of Con-ress, and t&e internal delierations of t&eSupreme Court.

'&ese %ases s&o* t&at t&e Court &as al*a1s re-arded %laims of privile-e, *&et&er in t&e %onte(t of ane(e%utivele-islative %onTi%t or a %itiLenQs demand for information, as %losel1 intert*ined, su%& t&at t&eprin%iples appli%ale to one are also appli%ale to t&e ot&er.

'&e reason is ovious. If t&e validit1 of %laims of privile-e *ere to e assessed 1 entirel1 diDerent%riteria in ea%& %onte(t, t&is ma1 -ive rise to t&e asurd result *&ere %onBress *ould e denieda%%ess to a parti%ular information e%ause of a %laim of e(e%utive privile-e, ut t6e Benerapui3 *ould &ave a%%ess to t&e same information, t&e %laim of privile-e not*it&standin-.

)surdit1 *ould e t&e ultimate result if, for instan%e, t&e Court adopts t&e @%lear and present dan-er@test for t&e assessment of %laims of privile-e a-ainst %itiLensQ demands for information. If e(e%utiveinformation, *&en demanded 1 a %itiLen, is privile-ed onl1 *&en t&ere is a %lear and present dan-er

of a sustantive evil t&at t&e State &as a ri-&t to prevent, it *ould e ver1 di=%ult for t&e 4(e%utive toestalis& t&e validit1 of its %laim in ea%& instan%e. In %ontrast, if t&e demand %omes from Con-ress, t&e4(e%utive merel1 &as to s&o* t&at t&e information is %overed 1 a re%o-niLed privile-e in order to s&iftt&e urden on Con-ress to present a stron- s&o*in- of need. '&is *ould lead to a situation *&ere it*ould e more di=%ult for Con-ress to a%%ess e(e%utive information t&an it *ould e for private%itiLens.

$e maintain t&en t&at *&en t&e 4(e%utive &as alread1 s&o*n t&at an information is %overed 1e(e%utive privile-e, t&e part1 demandin- t&e information must present a @stron- s&o*in- ofneed,@ *&et&er t&at part1 is Con-ress or a private %itiLen.

'&e rule t&at t&e same @s&o*in- of need@ test applies in ot& t&ese %onte(ts, &o*ever, s&ould not e%onstrued as a denial of t&e importan%e of anal1Lin- t&e %onte(t in *&i%& an e(e%utive privile-e%ontrovers1 ma1 &appen to e pla%ed. Rat&er, it a=rms it, for it means t&at t&e spe%iE% need ein-

s&o*n 1 t&e part1 seein- information in ever1 parti%ular instan%e is &i-&l1 si-niE%ant in determinin-*&et&er to up&old a %laim of privile-e. T6is ?need? is, pre3ise", part o t6e 3onte1t in iB6t ow6i36 ever" 3ai o privieBe s6oud e assessed.

Sin%e, as demonstrated aove, t&ere are %ommon prin%iples t&at s&ould e applied to e(e%utiveprivile-e %ontroversies a%ross diDerent %onte(ts, t&e Court in 'M'1 v. Man"lapus did not err *&en it%ited t&e Curtiss3Wri"ht %ase.

'&e %laim t&at t&e oo %ited in 'M'1 v. Man"lapus entitled 7he 4e merican /overnment and %tsWork %ould not &ave taen into a%%ount t&e e(panded statutor1 ri-&t to information in t&e AI)assumes t&at t&e oservations in t&at oo in support of t&e %onEdentialit1 of treat1ne-otiations *ould e diDerent &ad it een *ritten after t&e AI). Su%& assumption is, *it& duerespe%t, at est, spe%ulative.

)s to t&e %laim in t&e dissent t&at @JiKt is more doutful if t&e same oo e used to %alirate t&eimportan%e of t&e ri-&t of a%%ess to information in t&e &ilippine settin- %onsiderin- its elevation as a%onstitutional ri-&t,@ *e sumit t&at t&e elevation of su%& ri-&t as a %onstitutional ri-&t did not set itfree from t&e le-itimate restri%tions of e(e%utive privile-e *&i%& is itself %onstitutionall1ased.! Hen%e, t&e %omments in t&at oo *&i%& *ere %ited in 'M'1 v. Man"lapus remain validdo%trine.

!. '&e dissent furt&er asserts t&at t&e Court &as never used @need@ as a test to up&old or allo* inroadsinto ri-&ts -uaranteed under t&e Constitution. $it& due respe%t, *e assert ot&er*ise. '&e Court &asdone so efore, aleit *it&out usin- t&e term @need.@







In e(e%utive privile-e %ontroversies, t&e re<uirement t&at parties present a @su=%ient s&o*in- ofneed@ onl1 means, in sustan%e, t&at t&e1 s&ould s&o* a puli% interest in favor of dis%losure su=%ientin de-ree to over%ome t&e %laim of privile-e. eril1, t&e Court in su%& %ases en-a-es in a aan3inBo interests. Su%& a alan%in- of interests is %ertainl1 not ne* in %onstitutional adudi%ation involvin-fundamental ri-&ts. +ecretary of 5ustice v. Lantion, 8 *&i%& *as %ited in t&e dissent, applied ust su%& atest.

Given t&at t&e dissent &as %lariEed t&at it does not see to appl1 t&e @%lear and present dan-er@ test tot&e present %ontrovers1, ut t&e alan%in- test, t&ere seems to e no sustantial dispute et*een t&eposition laid do*n in t&is ponencia and t&at reTe%ted in t&e dissent as to *&at test to appl1. It *ouldappear t&at t&e onl1 disa-reement is on t&e results of appl1in- t&at test in t&is instan%e.

'&e dissent, nonet&eless, maintains t&at @it su=%es t&at information is of puli% %on%ern for it to e%overed 1 t&e ri-&t, re-ardless of t&e puli%Qs need for t&e information,@ and t&at t&e same *ould&old true even @if t&e1 simpl1 *ant to no* it e%ause it interests t&em.@ )s &as een stated earlier,&o*ever, t&ere is no dispute t&at t&e information sue%t of t&is %ase is a matter of puli% %on%ern. '&eCourt &as earlier %on%luded t&at it is a matter of puli% %on%ern, not on t&e asis of an1 spe%iE% needs&o*n 1 petitioners, ut from t&e ver1 nature of t&e 4) as an international trade a-reement.

+owever, *&en t&e 4(e%utive &as O as in t&is %ase O invoed t&e privile-e, and it &as een estalis&edt&at t&e sue%t information is indeed %overed 1 t&e privile-e ein- %laimed, %an a part1 over%omet&e same 1 merel1 assertin- t&at t&e information ein- demanded is a matter of puli% %on%ern,*it&out an1 furt&er s&o*in- re<uiredU Certainl1 not, for t&at *ould render t&e do%trine of e(e%utiveprivile-e of no for%e and eDe%t *&atsoever as a limitation on t&e ri-&t to information, e%ause t&en t&esole test in su%& %ontroversies *ould e *&et&er an information is a matter of puli% %on%ern.

Moreover, in vie* of t&e earlier dis%ussions, *e must ear in mind t&at, 1 dis%losin- t&e do%uments of t&e 4) ne-otiations, t&e &ilippine -overnment runs t&e -rave ris of etra1in- t&e trust reposed init 1 t&e apanese representatives, indeed, 1 t&e apanese -overnment itself. Ho* *ould t&e&ilippine -overnment t&en e(plain itself *&en t&at &appensU Surel1, it %annot ear to sa1 t&at it ust 6ad to release t&e information e%ause %ertain persons simpl1 *anted to no* it @e%ause itinterests t&em.@

'&us, t&e Court &olds t&at, in determinin- *&et&er an information is %overed 1 t&e ri-&t toinformation, a spe%iE% @s&o*in- of need@ for su%& information is not a relevant %onsideration, ut onl1*&et&er t&e same is a matter ofpuli% %on%ern. $&en, &o*ever, t&e -overnment &as %laimede(e%utive privile-e, and it &as estalis&ed t&at t&e information is indeed %overed 1 t&e same, t&ent&e part1 demandin- it, if it is to over%ome t&e privile-e, must s&o* t&at t&at t&e information is vital,not simpl1 for t&e satisfa%tion of its %uriosit1, ut for its ailit1 to eDe%tivel1 and reasonal1 parti%ipatein so%ial, politi%al, and e%onomi% de%isionmain-.#

. '&e dissent maintains t&at @JtK&e treat1 &as t&us entered t&e ultimate sta-e *&ere t&e people %ane(er%ise t&eirriB6t to parti3ipate in t&e dis%ussion *&et&er t&e Senate s&ould %on%ur in itsratiE%ation or not.@ 94mp&asis supplied: It adds t&at t&is ri-&t @*ill e diluted unless t&e people %an&ave a%%ess to t&e sue%t 4) do%uments@. $&at, to t&e dissent, is a dilution of t&e ri-&t toparti%ipate in de%isionmain- is, to ;s, simpl1 a re%o-nition of t&e <ualiEed nature of t&e puli%Qs ri-&tto information. It is e1ond dispute t&at t&e ri-&t to information is not asolute and t&at t&e do%trine of e(e%utive privile-e is a re%o-niLed limitation on t&at ri-&t.

Moreover, %ontrar1 to t&e sumission t&at t&e ri-&t to parti%ipate in de%isionmain- *ould e diluted,$e reiterate t&at our people &ave een e(er%isin- t&eir ri-&t to parti%ipate in t&e dis%ussion on t&eissue of t&e 4), and t&e1 &ave een ale to arti%ulate t&eir diDerent opinions *it&out need ofa%%ess to t&e 4) ne-otiation do%uments.

'&us, *e &old t&at t&e alan%e in t&is %ase tilts in favor of e(e%utive privile-e.

8. )-ainst our rulin- t&at t&e prin%iples applied in 2.+. v. 4i!on, t&e +enate +elect Committee %ase,and %n re +ealed Case, are similarl1 appli%ale to t&e present %ontrovers1, t&e dissent %ites t&e %aveat










in t&e 4i!on %ase t&at t&e ;.S. Court *as t&ere addressin- onl1 t&e residentQs assertion of privile-e int&e %onte(t of a %riminal trial, not a %ivil liti-ation nor a %on-ressional demand for information. $&att&is %aveat means, &o*ever, is onl1 t&at %ourts must e %areful not to &astil1 appl1 t&e rulin- t&ereinto ot&er %onte(ts. It does not, &o*ever, asolutel1 mean t&at t&e prin%iples applied in t&at %ase ma1never e applied in su%& %onte(ts.

Hen%e, ;.S. %ourts &ave %ited 2.+. v. 4i!on in support of t&eir rulin-s on %laims of e(e%utive privile-e in

%onte(ts ot&er t&an a %riminal trial, as in t&e %ase of 4i!on v. dministrator of /eneral +ervices80 O*&i%& involved former resident Ni(onQs invo%ation of e(e%utive privile-e to %&allen-e t&e%onstitutionalit1 of t&e @residential Re%ordin-s and Materials reservation )%t@8" O and t&e aovementioned %n re +ealed Case *&i%& involved a %laim of privile-e a-ainst a subpoena ducestecum issued in a -rand ur1 investi-ation.

Indeed, in appl1in- to t&e present %ase t&e prin%iples found in 2.+. v. 4i!on and in t&e ot&er %asesalread1 mentioned, $e are merel1 a=rmin- *&at t&e C&ief usti%e stated in &is issentin- Apinionin 4eri v. +enate Committee on ccountability 82 O a %ase involvin- an e(e%utivele-islative %onTi%t overe(e%utive privile-e. '&at dissentin- opinion stated t&at, *&ile 4i!on *as not %on%erned *it& t&ealan%e et*een t&e residentQs -eneraliLed interest in %onEdentialit1 and %on-ressional demands forinformation, @nOonet6eess t6e *.'.O %ourt aid down prin3ipes and pro3edures t6at 3anserve as tor36 iB6ts to iuine us on t6e s3ope and use o Presidentia 3ouni3ationprivieBe in t6e 3ase at ar.@83 $&ile t&e Court *as divided in 4eri, t&is opinion of t&e C&ief usti%e

*as not amon- t&e points of disa-reement, and $e similarl1 &old no* t&at t&e 4i!on %ase is a useful-uide in t&e proper resolution of t&e present %ontrovers1, not*it&standin- t&e diDeren%e in %onte(t.

Veri", w6ie t6e %ourt s6oud Buard aBainst t6e ause o e1e3utive privieBe, it s6oud asoBive u re3oBnition to t6e vaidit" o t6e privieBe w6enever it is 3aied wit6in t6e properounds o e1e3utive power, as in t6is 3ase. At&er*ise, t&e Court *ould undermine its o*n%rediilit1, for it *ould e per%eived as no lon-er aimin- to strie a alan%e, ut seein- merel1 to*ater do*n e(e%utive privile-e to t&e point of irrelevan%e.

%on3usion

'o re%apitulate, petitionersQ demand to e furnis&ed *it& a %op1 of t&e full te(t of t&e 4) &ase%ome moot and a%ademi%, it &avin- een made a%%essile to t&e puli% sin%e Septemer "", 200!.)s for t&eir demand for %opies of t&e &ilippine and apanese oDers sumitted durin- t&e 4)ne-otiations, t&e same must e denied, respondentsQ %laim of e(e%utive privile-e ein- valid.

iplomati% ne-otiations &ave, sin%e t&e Court promul-ated its Resolution in M v. Man-lapus onSeptemer "3, "#88, een re%o-niLed as privile-ed in t&is urisdi%tion and t&e reasons proDered 1petitioners a-ainst t&e appli%ation of t&e rulin- t&erein to t&e present %ase &ave not persuaded t&eCourt. Moreover, petitioners O ot& private %itiLens and memers of t&e House of Representatives O&ave failed to present a @su=%ient s&o*in- of need@ to over%ome t&e %laim of privile-e in t&is %ase.

'&at t&e privile-e *as asserted for t&e Erst time in respondentsQ Comment to t&e present petition, andnot durin- t&e &earin-s of t&e House Spe%ial Committee on GloaliLation, is of no moment, sin%e it%annot e interpreted as a *aiver of t&e privile-e on t&e part of t&e 4(e%utive ran%&.

or reasons alread1 e(plained, t&is e%ision s&all not e interpreted as departin- from t&e rulin-

in +enate v. *rmita t&at e(e%utive privile-e s&ould e invoed 1 t&e resident or t&rou-& t&e4(e%utive Se%retar1 @1 order of t&e resident.@

$H4R4AR4, t&e petition is ISMISS4.

'& &R0(R(0.

G.R. No. 9<94$ ;u" <, 2$$4











'&*T+(RN %R&'' %(!(NT %&RP&RATI&N, petitioner,vs.T+( P+ILIPPIN( %(!(NT !AN*)A%T*R(R' %&RP., T+( '(%R(TAR &) T+( 0(PART!(NT &)TRA0( IN0*'TR, T+( '(%R(TAR &) T+( 0(PART!(NT &) )INAN%(, and T+(%&!!I''I&N(R &) T+( /*R(A* &) %*'T&!', respondents.

4 C I S I A N

TINGA, J.E

@Good fen%es mae -ood nei-&ors,@ so oserved Roert rost, t&e ar%&et1pe of traditional Ne*4n-land deta%&ment. '&e 1rost et&os &as een &eeded 1 nations adustin- to t&e eDe%ts of t&elieraliLed -loal maret." '&e &ilippines, for one, ena%ted Repuli% )%t 9Rep. )%t: No. 85" 9on t&eimposition of %ountervailin- duties:, Rep. )%t No. 852 9on t&e imposition of antidumpin- duties: and,

Enall1, Rep. )%t No. 8800, also no*n as t&e Safe-uard Measures )%t 9@SM)@:2

soon after it oined t&eGeneral )-reement on 'ariD and 'rade 9G)'': and t&e $orld 'rade Ar-aniLation 9$'A: )-reement.3

'&e SM) provides t&e stru%ture and me%&ani%s for t&e imposition of emer-en%1 measures, in%ludin-tariDs, to prote%t domesti% industries and produ%ers from in%reased imports *&i%& inTi%t or %ould inTi%tserious inur1 on t&em. '&e *isdom of t&e poli%ies e&ind t&e SM), &o*ever, is not put into <uestion1 t&e petition at ar. '&e <uestions sumitted to t&e Court relate to t&e means and t&e pro%eduresordained in t&e la* to ensure t&at t&e determination of t&e imposition or nonimposition of a safe-uardmeasure is proper.

ntecedent 1acts

etitioner Sout&ern Cross Cement Corporation 9@Sout&ern Cross@: is a domesti% %orporation en-a-ed int&e usiness of %ement manufa%turin-, produ%tion, importation and e(portation. Its prin%ipalsto%&olders are 'ai&ei1o Cement Corporation and 'ou1ama Corporation, purportedl1 t&e lar-est%ement manufa%turers in apan.5

rivate respondent &ilippine Cement Manufa%turers Corporation! 9@&il%em%or@: is an asso%iation ofdomesti% %ement manufa%turers. It &as ei-&teen 9"8: memers, per ecord. $&ile &il%em%or &eraldsitself to e an asso%iation of domesti% %ement manufa%turers, it appears t&at %onsiderale e<uit1&oldin-s, if not %ontrollin- interests in at least t*elve 9"2: of its memer%orporations, *ere a%<uired1 t&e t&ree lar-est %ement manufa%turers in t&e *orld, namel1 inan%iere Bafar-e S.). of ran%e,Ceme( S.). de C.. of Me(i%o, and Hol%im Btd. of S*itLerland 9formerl1 Holderan inan%iere Glaris,Btd., t&en HolderEn /..:.8

An 22 Ma1 200", respondent epartment of 'rade and Industr1 9@'I@: a%%epted an appli%ation from&il%em%or, alle-in- t&at t&e importation of -ra1 ortland %ement# in in%reased <uantities &as %ausedde%lines in domesti% produ%tion, %apa%it1 utiliLation, maret s&are, sales and emplo1ment> as *ell as%aused depressed lo%al pri%es. )%%ordin-l1, &il%em%or sou-&t t&e imposition at Erst of provisional,t&en later, deEnitive safe-uard measures on t&e import of %ement pursuant to t&e SM). &il%em%orEled t&e appli%ation in e&alf of t*elve 9"2: of its memer%ompanies."0

)fter preliminar1 investi-ation, t&e /ureau of Import Servi%es of t&e 'I, determined t&at %riti%al%ir%umstan%es e(isted ustif1in- t&e imposition of provisional measures."" An Novemer 200", t&e'I issued an rder ,imposin- a provisional measure e<uivalent to '*ent1 esos and Si(t1 Centavos920.!0: per fort1 90: ilo-ram a- on all importations of -ra1 ortland %ement for a period note(%eedin- t*o &undred 9200: da1s from t&e date of issuan%e 1 t&e /ureau of Customs 9/AC: of t&eimplementin- Customs Memorandum rder ."2 '&e %orrespondin- Customs Memorandum rder *as






























issued on "0 e%emer 200", to tae eDe%t t&at same da1 and to remain in for%e for t*o &undred9200: da1s."3

In t&e meantime, t&e 'ariD Commission, on "# Novemer 200", re%eived a re<uest from t&e 'I for aformal investi-ation to determine *&et&er or not to impose a deEnitive safe-uard measure on importsof -ra1 ortland %ement, pursuant to Se%tion # of t&e SM) and its Implementin- Rules and Re-ulations.) noti%e of %ommen%ement of formal investi-ation *as pulis&ed in t&e ne*spapers on 2" Novemer

200". Individual noti%es *ere lie*ise sent to %on%erned parties, su%& as &il%em%or, various importersand e(porters, t&e 4massies of Indonesia, apan and 'ai*an, %ontra%torsFuilders asso%iations,industr1 asso%iations, %ement *orers+ -roups, %onsumer -roups, non-overnment or-aniLations and%on%erned -overnment a-en%ies." ) preliminar1 %onferen%e *as &eld on 2 Novemer 200", attended1 several %on%erned parties, in%ludin- Sout&ern Cross."5 Suse<uentl1, t&e 'ariD Commission re%eivedseveral position papers ot& in support and a-ainst &il%em%or+s appli%ation."! '&e 'ariD Commissionalso visited t&e %orporate o=%es and manufa%turin- fa%ilities of ea%& of t&e appli%ant %ompanies, as*ell as t&at of Sout&ern Cross and t*o ot&er %ement importers."

An "3 Mar%& 2002, t&e 'ariD Commission issued its ormal Investi-ation Report 9@Report@:. )mon- t&efa%tors studied 1 t&e 'ariD Commission in its Report *ere t&e maret s&are of t&e domesti%industr1,"8 produ%tion and sales,"# %apa%it1 utiliLation,20 Enan%ial performan%e and proEtailit1,2" andreturn on sales.22 '&e 'ariD Commission arrived at t&e follo*in- %on%lusions6

". '&e %ir%umstan%es provided in )rti%le XIX of G)'' "## need not e demonstrated sin%e t&eprodu%t under %onsideration 9-ra1 ortland %ement: is not t&e sue%t of an1 &ilippineoli-ation or tariD %on%ession under t&e $'A )-reement. Nonet&eless, su%& in<uir1 is-overned 1 t&e national le-islation 9R.). 8800: and t&e terms and %onditions of t&e)-reement on Safe-uards.

2. '&e %olle%tive output of t&e t*elve 9"2: appli%ant %ompanies %onstitutes a maor proportionof t&e total domesti% produ%tion of -ra1 ortland %ement and lended ortland %ement.

3. Bo%all1 produ%ed -ra1 ortland %ement and lended ortland %ement 9oLLolan: are @lie@ toimported -ra1 ortland %ement.

. Gra1 ortland %ement is ein- imported into t&e &ilippines in in%reased <uantities, ot& in

asolute terms and relative to domesti% produ%tion, startin- in 2000. '&e in%rease in volume of imports is re%ent, sudden, s&arp and si-niE%ant.

5. '&e industr1 &as not suDered and is not suDerin- si-niE%ant overall impairment in its%ondition, i.e., serious inur1.

!. '&ere is no t&reat of serious inur1 t&at is imminent from imports of -ra1 ortland %ement.

. Causation &as e%ome moot and a%ademi% in vie* of t&e ne-ative determination of t&eelements of serious inur1 and imminent t&reat of serious inur1.23

)%%ordin-l1, t&e 'ariD Commission made t&e follo*in- re%ommendation, to *it6

'&e elements of serious inur1 and imminent t&reat of serious inur1 not &avin- eenestalis&ed, it is &ere1 re%ommended t&at no deEnitive -eneral safe-uard measure eimposed on t&e importation of -ra1 ortland %ement.2

'&e 'I re%eived t&e Report on " Mar%& 2002. )fter revie*in- t&e report, t&en 'I Se%retar1 ManuelRo(as II 9@'I Se%retar1@: disa-reed *it& t&e %on%lusion of t&e 'ariD Commission t&at t&ere *as noserious inur1 to t&e lo%al %ement industr1 %aused 1 t&e sur-e of imports. 25 In vie* of t&isdisa-reement, t&e 'I re<uested an opinion from t&e epartment of usti%e 9@A@: on t&e 'ISe%retar1+s s%ope of options in a%tin- on t&e Commission+s re%ommendations. Suse<uentl1, t&en ASe%retar1 Hernando ereL rendered an opinion statin- t&at Se%tion "3 of t&e SM) pre%luded a revie*

































1 t&e 'I Se%retar1 of t&e 'ariD Commission+s ne-ative Endin-, or Endin- t&at a deEnitive safe-uardmeasure s&ould not e imposed.2!

An 5 )pril 2002, t&e 'I Se%retar1 promul-ated a 6ecision. )fter <uotin- t&e %on%lusions of t&e 'ariDCommission, t&e 'I Se%retar1 noted t&e 'I+s disa-reement *it& t&e %on%lusions. Ho*ever, &e also%ited t&e A Apinion advisin- t&e 'I t&at it *as ound 1 t&e ne-ative Endin- of t&e 'ariDCommission. '&us, &e ruled as follo*s6

'&e 'I &as no alternative ut to aide 1 t&e J'ariDK Commission+s re%ommendations.

IN VI( &) T+( )&R(G&ING, and in a%%ordan%e *it& Se%tion "3 of R) 8800 *&i%& states6

"In the event of a negative nal deterination! or if the cash ond is ine#cess of the denitive safeguard duty assessed$ the %ecretary shalliediately issue$ through the %ecretary of Finance$ a &ritten instruction tothe Coissioner of Custos$ authori'ing the return of the cash ond or thereainder thereof$ as the case ay e$ previously collected as provisionalgeneral safeguard easure &ithin ten ()*+ days fro the date a naldecision has een ade! Provided$ that the governent shall not e lialefor any interest on the aount to e returned. ,he %ecretary shall not

accept for consideration another petition fro the sae industry$ &ithrespect to the sae iports of the product under consideration &ithin one()+ year after the date of rendering such a decision."

'&e 'I &ere1 issues t&e follo*in-6

'&e appli%ation for safe-uard measures a-ainst t&e importation of -ra1 ortland %ement Eled1 HIBC4MCAR 9Case No. 02200": is &ere1 denied.2 94mp&asis in t&e ori-inal:

&il%em%or re%eived a %op1 of t&e 'I 6ecision on "2 )pril 2002. 'en da1s later, it Eled *it& t&e Courtof )ppeals a 'etition for Certiorari, 'rohibition and Mandamus28 seein- to set aside t&e'I 6ecision, as *ell as t&e 'ariD Commission+s Report. &il%em%or lie*ise applied for a 7emporaryestrainin" rder=%n9unction to enoin t&e 'I and t&e /AC from implementin- t&e<uestioned 6ecision and Report. It pra1ed t&at t&e Court of )ppeals dire%t t&e 'I Se%retar1 to

disre-ard t&e Report and to render ud-ment independentl1 of t&e Report. &il%em%or ar-ued t&at t&e'I Se%retar1, vested as &e is under t&e la* *it& t&e po*er of revie*, is not ound to adopt t&ere%ommendations of t&e 'ariD Commission> and, t&at t&e Report is void, as it is predi%ated on a Ta*edframe*or, in%onsistent inferen%es and erroneous met&odolo-1.2#

An "0 une 2002, Sout&ern Cross Eled its Comment .30 It ar-ued t&at t&e Court of )ppeals &ad no urisdi%tion over &il%em%or+s 'etition, for it is on t&e Court of 'a( )ppeals 9@C')@: t&at t&e SM)%onferred urisdi%tion to revie* rulin-s of t&e Se%retar1 in %onne%tion *it& t&e imposition of asafe-uard measure. It lie*ise ar-ued t&at &il%em%or+s resort to t&e spe%ial %ivil a%tion of %ertiorari isimproper, %onsiderin- t&at *&at &il%em%or sou-&t to re%tif1 is an error of ud-ment and not an errorof urisdi%tion or -rave ause of dis%retion, and t&at a petition for revie* *it& t&e C') *as availale asa plain, speed1 and ade<uate remed1. inall1, Sout&ern Cross e%&oed t&e A Apinion t&at Se%tion "3of t&e SM) pre%ludes a revie* 1 t&e 'I Se%retar1 of a ne-ative Endin- of t&e 'ariD Commission.

)fter %ondu%tin- a &earin- on "# une 2002 on &il%em%or+s appli%ation for preliminar1 inun%tion, t&eCourt of )ppeals+ '*elft& ivision3" -ranted t&e *rit sou-&t in its esolution dated 2" une2002.32 Seven da1s later, on 28 une 2002, t&e t*o&undred 9200:da1 period for t&e imposition of t&eprovisional measure e(pired. espite t&e lapse of t&e period, t&e /AC %ontinued to impose t&eprovisional measure on all importations of ortland %ement made 1 Sout&ern Cross. '&euninterrupted assessment of t&e tariD, a%%ordin- to Sout&ern Cross, *ored to its detriment to t&epoint t&at t&e %ontinued imposition *ould eventuall1 lead to its %losure. 33

Sout&ern Cross timel1 Eled a Motion for econsideration of t&e esolution on # Septemer 2002.)lle-in- t&at &il%em%or *as not entitled to provisional relief, Sout&ern Cross lie*ise sou-&t a




















%lariE%ator1 order as to *&et&er t&e -rant of t&e *rit of preliminar1 inun%tion %ould e(tend t&e earlierimposition of t&e provisional measure e1ond t&e t*o &undred 9200:da1 limit imposed 1 la*. '&eappeals+ %ourt failed to tae immediate a%tion on Sout&ern Cross+s motion despite t&e four 9: motionsfor earl1 resolution t&e latter Eled et*een Septemer of 2002 and eruar1 of 2003. )fter si( 9!:mont&s, on "# eruar1 2003, t&e Court of )ppeals dire%ted &il%em%or to %omment on Sout&ernCross+s Motion for econsideration.3 )fter &il%em%or Eled its pposition35 on "3 Mar%& 2003, Sout&ernCross Eled anot&er set of four 9: motions for earl1 resolution.

espite t&e eDorts of Sout&ern Cross, t&e Court of )ppeals failed to dire%tl1 resolve t&e Motion foreconsideration. Instead, on 5 une 2003, it rendered a 6ecision,3! -rantin- in part &il%em%or+spetition. '&e appellate %ourt ruled t&at it &ad urisdi%tion over t&e petition for %ertiorari sin%e it alle-ed-rave ause of dis%retion. It refused to annul t&e Endin-s of t&e 'ariD Commission, %itin- t&e rule t&atfa%tual Endin-s of administrative a-en%ies are indin- upon t&e %ourts and its %orollar1, t&at %ourtss&ould not interfere in matters addressed to t&e sound dis%retion and %omin- under t&e spe%ialte%&ni%al no*led-e and trainin- of su%& a-en%ies.3 Nevert&eless, it &eld t&at t&e 'I Se%retar1 is notound 1 t&e fa%tual Endin-s of t&e 'ariD Commission sin%e su%& Endin-s are merel1 re%ommendator1and t&e1 fall *it&in t&e amit of t&e Se%retar1+s dis%retionar1 revie*. It determined t&at t&e le-islativeintent is to -rant t&e 'I Se%retar1 t&e po*er to mae a Enal de%ision on t&e 'ariD Commission+sre%ommendation.38 '&e dispositive portion of t&e 6ecision reads6

+(R()&R(, ased on t&e fore-oin- premises, petitioner+s pra1er to set aside t&e Endin-s of

t&e 'ariD Commission in its assailed Report dated Mar%& "3, 2002 is 0(NI(0. An t&e ot&er&and, t&e assailed )pril 5, 2002 e%ision of t&e Se%retar1 of t&e epartment of 'rade andIndustr1 is &ere1 '(T A'I0(. Conse<uentl1, t&e %ase is R(!AN0(0 to t&e puli% respondentSe%retar1 of epartment of 'rade and Industr1 for a Enal de%ision in a%%ordan%e *it& R) 8800and its Implementin- Rules and Re-ulations.

'& &R0(R(0.3#

An 23 une 2003, Sout&ern Cross Eled t&e present petition, assailin- t&e appellate %ourt+s 6ecision fordepartin- from t&e a%%epted and usual %ourse of udi%ial pro%eedin-s, and not de%idin- t&e sustantial<uestions in a%%ordan%e *it& la* and urispruden%e. '&e petition ar-ues in t&e main t&at t&e Court of)ppeals &as no urisdi%tion over &il%em%or+s petition, t&e proper remed1 ein- a petition for revie**it& t&e C') %onformal1 *it& t&e SM), and> t&at t&e fa%tual Endin-s of t&e 'ariD Commission on t&ee(isten%e or none(isten%e %onditions *arrantin- t&e imposition of -eneral safe-uard measures are

indin- upon t&e 'I Se%retar1.

'&e timel1 Elin- of Sout&ern Cross+s petition efore t&is Court ne%essaril1 prevented t&e Court of)ppeals6ecision from e%omin- Enal.0 et on 25 une 2003, t&e 'I Se%retar1 issued a ne* 6ecision,rulin- t&is time t&at t&at in li-&t of t&e appellate %ourt+s 6ecision t&ere *as no lon-er an1 le-alimpediment to &is de%idin- &il%em%or+s appli%ation for deEnitive safe-uard measures." He made adetermination t&at, %ontrar1 to t&e Endin-s of t&e 'ariD Commission, t&e lo%al %ement industr1 &adsuDered serious inur1 as a result of t&e import sur-es.2 )%%ordin-l1, &e imposed a deEnitivesafe-uard measure on t&e importation of -ra1 ortland %ement, in t&e form of a deEnitive safe-uarddut1 in t&e amount of 20.!0F0 -. a- for t&ree 1ears on imported -ra1 ortland Cement.3

An ul1 2003, Sout&ern Cross Eled *it& t&e Court a @-ery 2r"ent pplication for a 7emporaryestrainin" rder and=or Writ of 'reliminary %n9unction@ 9@'RA pplication@:, seein- to enoin t&e 'ISe%retar1 from enfor%in- &is6ecision of 25 une 2003 in vie* of t&e pendin- petition efore t&is Court.

&il%em%or Eled an opposition, %laimin-, amon- ot&ers, t&at it is not t&is Court ut t&e C') t&at &as urisdi%tion over t&e appli%ation under t&e la*.

An " )u-ust 2003, Sout&ern Cross Eled *it& t&e C') a 'etition for evie, assailin- t&e 'I Se%retar1+s25 une 2003 6ecision *&i%& imposed t&e deEnite safe-uard measure. res%indin- from t&is a%tion,&il%em%or Eled *it& t&is Court a Manifestation and Motion to 6ismiss in re-ard to Sout&ern Cross+spetition, alle-in- t&at it delieratel1 and *illfull1 resorted to forums&oppin-. It points out t&atSout&ern Cross+s 'RA pplication sees to enoin t&e 'I Se%retar1+s se%ond de%ision, *&ileits 'etition efore t&e C') pra1s for t&e annulment of t&e same de%ision.





























Reiteratin- its Comment on Sout&ern Cross+s 'etition for evie, &il%em%or also ar-ues t&at t&e C'),ein- a spe%ial %ourt of limited urisdi%tion, %ould onl1 revie* t&e rulin- of t&e 'I Se%retar1 *&en asafe-uard measure is imposed, and t&at t&e fa%tual Endin-s of t&e 'ariD Commission are not indin-on t&e 'I Se%retar1.5

)fter -ivin- due %ourse to Sout&ern Cross+s 'etition, t&e Court %alled t&e %ase for oral ar-ument on "8eruar1 200.! )t t&e oral ar-ument, attended 1 t&e %ounsel for &il%em%or and Sout&ern Cross and

t&e A=%e of t&e Soli%itor General, t&e Court simpliEed t&e issues in t&is *ise6 9i: *&et&ert&e 6ecision of t&e 'I Se%retar1 is appealale to t&e C') or t&e Court of )ppeals> 9ii: assumin- t&att&e Court of )ppeals &as urisdi%tion, *&et&er its6ecision is in a%%ordan%e *it& la*> and, 9iii: *&et&era 7emporary estrainin" rder is *arranted.

urin- t&e oral ar-uments, %ounsel for Sout&ern Cross manifested t&at due to t&e imposition of t&e-eneral safe-uard measures, Sout&ern Cross *as for%ed to %ease operations in t&e &ilippines inNovemer of 2003.8

'ropriety of the 7emporary estrainin" rder

/efore t&e merits of t&e 'etition, a rief %omment on Sout&ern Cross+s appli%ation for provisional relief.It sou-&t to enoin t&e 'I Se%retar1 from enfor%in- t&e deEnitive safe-uard measure &e imposed in &is

25 une 20036ecision. '&e Court did not -rant t&e provisional relief for it *ould e tantamount toenoinin- t&e %olle%tion of ta(es, a peremptor1 udi%ial a%t *&i%& is traditionall1 fro*ned upon,# unlesst&ere is a %lear statutor1 asis for it.50 In t&at re-ard, Se%tion 2"8 of t&e 'a( Reform )%t of "##pro&iits an1 %ourt from -rantin- an inun%tion to restrain t&e %olle%tion of an1 national internalrevenue ta(, fee or %&ar-e imposed 1 t&e internal revenue %ode.5") similar p&ilosop&1 is e(pressed 1Se%tion 2# of t&e SM), *&i%& states t&at t&e Elin- of a petition for revie* efore t&e C') does not stop,suspend, or ot&er*ise toll t&e imposition or %olle%tion of t&e appropriate tariD duties or t&e adoption ofot&er appropriate safe-uard measures.52 '&is evin%es a %lear le-islative intent t&at t&e imposition ofsafe-uard measures, despite t&e availailit1 of udi%ial revie*, s&ould not e enoined not*it&standin-an1 timel1 appeal of t&e imposition.

7he 1orum3+hoppin" %ssue

In t&e same reat&, *e are not %onvin%ed t&at t&e alle-ation of forums&oppin- &as een dul1 proven,

or t&at san%tion s&ould efall upon Sout&ern Cross and its %ounsel. '&e standard 1 Se%tion 5, Rule of t&e "## Rules of Civil ro%edure in order t&at san%tion ma1 e &ad is t&at @t&e a%ts of t&e part1 or&is %ounsel %learl1 %onstitute *illful and delierate forum s&oppin-.@53 '&e standard implies a mali%iousintent to suvert pro%edural rules, and su%& state of mind is not evident in t&is %ase.

7he 5urisdictional %ssue

An to t&e merits of t&e present petition.

In its assailed 6ecision, t&e Court of )ppeals, after assertin- onl1 in rief t&at it &ad urisdi%tion over&il%em%or+s'etition, dis%ussed t&e issue of *&et&er or not t&e 'I Se%retar1 is ound to adopt t&ene-ative re%ommendation of t&e 'ariD Commission on t&e appli%ation for safe-uard measure. '&eCourt of )ppeals maintained t&at it &ad urisdi%tion over t&e petition, as it alle-ed -rave ause ofdis%retion on t&e part of t&e 'I Se%retar1, t&us6

) perusal of t&e instant petition reveals alle-ations of -rave ause of dis%retion on t&e part oft&e 'I Se%retar1 in renderin- t&e assailed )pril 5, 2002 e%ision *&erein it *as ruled t&at &e&ad no alternative ut to aide 1 t&e Endin-s of t&e Commission on t&e matter of safe-uardmeasures for t&e lo%al %ement industr1. )use of dis%retion is admittedl1 *it&in t&e amit of%ertiorari.

Grave ause of dis%retion implies su%& %apri%ious and *&imsi%al e(er%ise of ud-ment as ise<uivalent to la% of urisdi%tion. It is alle-ed t&at, in t&e assailed e%ision, t&e 'I Se%retar1























-ravel1 aused &is dis%retion in *antonl1 evadin- to dis%&ar-e &is dut1 to render anindependent determination or de%ision in imposin- a deEnitive safe-uard measure.5

$e do not dout t&at t&e Court of )ppeals+ %ertiorari po*ers e(tend to %orre%tin- -rave ause ofdis%retion on t&e part of an o=%er e(er%isin- udi%ial or <uasiudi%ial fun%tions.55 Ho*ever, t&e spe%ial%ivil a%tion of %ertiorari is availale onl1 *&en t&ere is no plain, speed1 and ade<uate remed1 in t&eordinar1 %ourse of la*.5! Sout&ern Cross relies on t&is limitation, stressin- t&at Se%tion 2# of t&e SM) is

a plain, speed1 and ade<uate remed1 in t&e ordinar1 %ourse of la* *&i%& &il%em%or did not avail of. '&e Se%tion reads6

Se%tion 2#. 5udicial evie. O )n1 interested part1 *&o is adversel1 aDe%ted 1 t&e ruinB ot6e 'e3retar" in 3onne3tion wit6 t6e iposition o a saeBuard easure ma1 Ele *it&t&e C'), a petition for revie* of su%& rulin- *it&in t&irt1 930: da1s from re%eipt t&ereof.rovided, hoever, t&at t&e Elin- of su%& petition for revie* s&all not in an1 *a1 stop, suspendor ot&er*ise toll t&e imposition or %olle%tion of t&e appropriate tariD duties or t&e adoption ofot&er appropriate safe-uard measures, as t&e %ase ma1 e.

'&e petition for revie* s&all %ompl1 *it& t&e same re<uirements and s&all follo* t&e samerules of pro%edure and s&all e sue%t to t&e same disposition as in appeals in %onne%tion *it&adverse rulin-s on ta( matters to t&e Court of )ppeals.5 94mp&asis supplied:

It is not di=%ult to divine *&1 t&e le-islature sin-led out t&e C') as t&e %ourt *it& urisdi%tion to revie*t&e rulin- of t&e 'I Se%retar1 in %onne%tion *it& t&e imposition of a safe-uard measure. '&e Court&as lon- re%o-niLed t&e le-islative determination to vest sole and e(%lusive urisdi%tion on mattersinvolvin- internal revenue and %ustoms duties to su%& a spe%ialiLed %ourt.58 /1 t&e ver1 nature of itsfun%tion, t&e C') is dedi%ated e(%lusivel1 to t&e stud1 and %onsideration of ta( prolems and &asne%essaril1 developed an e(pertise on t&e sue%t.5#

)t t&e same time, sin%e t&e C') is a %ourt of limited urisdi%tion, its urisdi%tion to tae %o-niLan%e of a%ase s&ould e %learl1 %onferred and s&ould not e deemed to e(ist on mere impli%ation.!0 Con%ededl1,Rep. )%t No. ""25, t&e statute %reatin- t&e C'), does not e(tend to it t&e po*er to revie* de%isions oft&e 'I Se%retar1 in %onne%tion *it& t&e imposition of safe-uard measures.!" Af %ourse, at t&at time*&i%& *as efore t&e advent of trade lieraliLation t&e notion of safe-uard measures or safet1 nets*as not 1et in vo-ue.

;ndenial1, &o*ever, t&e SM) e(panded t&e urisdi%tion of t&e C') 1 in%ludin- revie* of t&e rulin-sof t&e 'I Se%retar1 in %onne%tion *it& t&e imposition of safe-uard measures. Ho*ever, &il%em%orand t&e puli% respondents a-ree t&at t&e C') &as appellate urisdi%tion over a de%ision of t&e 'ISe%retar1 imposin- a safe-uard measure, ut not *&en &is rulin- is not to impose su%& measure.

In a related development, Rep. )%t No. #282, ena%ted on 30 Mar%& 200, e(pressl1 vests unto t&e C') urisdi%tion over @JdKe%isions of t&e Se%retar1 of 'rade and Industr1, in %ase of nona-ri%ultural produ%t,%ommodit1 or arti%le ((( involvin- ((( saeBuard easures under Repui3 A3t No. <<$$, w6ereeit6er part" a" appea t6e de3ision to ipose or not to ipose said duties.@!2 Had Rep. )%tNo. #282 alread1 een in for%e at t&e e-innin- of t&e in%idents sue%t of t&is %ase, t&ere *ould &aveeen no need to mae an1 deeper in<uir1 as to t&e e(tent of t&e C')+s urisdi%tion. /ut as Rep. )%t No.#282 %annot e applied retroa%tivel1 to t&e present %ase, t&e <uestion of *&et&er su%& urisdi%tione(tends to a de%ision not to impose a safe-uard measure *ill &ave to e settled prin%ipall1 on t&easis of t&e SM).

;nder Se%tion 2# of t&e SM), t&ere are t&ree re<uisites to enale t&e C') to a%<uire urisdi%tion overt&e petition for revie* %ontemplated t&erein6 9i: t&ere must e a rulin- 1 t&e 'I Se%retar1> 9ii: t&epetition must e Eled 1 an interested part1 adversel1 aDe%ted 1 t&e rulin-> and 9iii: su%& rulin- muste in %onne%tion *it& t&e imposition of a safe-uard measure. '&e Erst t*o re<uisites are %learl1present. '&e t&ird re<uisite deserves %loser s%rutin1.























Contrar1 to t&e stan%e of t&e puli% respondents and &il%em%or, in t&is %ase *&ere t&e 'I Se%retar1de%ides not to impose a safe-uard measure, it is t&e C') *&i%& &as urisdi%tion to revie* &is de%ision. '&e reasons are as follo*s6

1irst. Split urisdi%tion is a&orred.

4ssentiall1, respondents+ position is t&at udi%ial revie* of t&e 'I Se%retar1+s rulin- is e(er%ised 1 t*odiDerent %ourts, dependin- on *&et&er or not it imposes a safe-uard measure, and in eit&er %ase t&e%ourt e(er%isin- urisdi%tion does so to t&e e(%lusion of t&e ot&er. '&us, if t&e 'I de%ision involves t&eimposition of a safe-uard measure it is t&e C') *&i%& &as appellate urisdi%tion> ot&er*ise, it is t&eCourt of )ppeals. Su%& setup is as novel and unusual as it is %umersome and un*ise. 4ssentiall1,respondents advo%ate t&at Se%tion 2# of t&e SM) &as estalis&ed split appellate urisdi%tion overrulin-s of t&e 'I Se%retar1 on t&e imposition of safe-uard measure.

'&is interpretation %annot e favored, as t&e Court &as %onsistentl1 refused to san%tion split urisdi%tion.!3 '&e po*er of t&e 'I Se%retar1 to adopt or *it&&old a safe-uard measure emanates fromt&e same statutor1 sour%e, and it o--les t&e mind *&1 t&e appeal modalit1 *ould e su%& t&at oneappellate %ourt is <ualiEed if *&at is to e revie*ed is a positive determination, and it is not if *&at isappealed is a ne-ative determination. In de%idin- *&et&er or not to impose a safe-uard measure,provisional or -eneral, t&e 'I Se%retar1 *ould e evaluatin- onl1 one od1 of fa%ts and appl1in- t&emto one set of la*s. '&e revie*in- triunal *ill e %alled upon to e(amine t&e same fa%ts and t&e samela*s, *&et&er or not t&e determination is positive or ne-ative.

In s&ort, if *e *ere to rule for respondents *e *ould e %onErmin- t&e e(er%ise 1 t*o udi%ial odiesof urisdi%tion over asi%all1 t&e same sue%t matterYpre%isel1 t&e spliturisdi%tion situation *&i%& isanat&ema to t&e orderl1 administration of usti%e.! '&e Court %annot a%%ept t&at su%& *as t&ele-islative motive espe%iall1 %onsiderin- t&at t&e la* e(pressl1 %onfers on t&e C'), t&e triunal *it&t&e spe%ialiLed %ompeten%e over ta( and tariD matters, t&e role of udi%ial revie* *it&out mention ofan1 ot&er %ourt t&at ma1 e(er%ise %orollar1 or an%illar1 urisdi%tion in relation to t&e SM). '&e provisionrefers to t&e Court of )ppeals ut onl1 in re-ard to pro%edural rules and dispositions of appeals fromt&e C') to t&e Court of )ppeals.!5

'&e prin%iple enun%iated in 7e9ada v. >omestead 'roperty Corporation!! is appli%ale to t&e %ase atar6

'&e Court a-rees *it& t&e oservation of t&e Jt&atK *&en an administrative a-en%1 or od1 is%onferred <uasiudi%ial fun%tions, a 3ontroversies reatinB to t6e suHe3t atterpertaininB to its spe3iaiJation are deeed to e in3uded wit6in t6e Hurisdi3tion osaid adinistrative aBen3" or od". 'pit Hurisdi3tion is not avored.!

+econd. '&e interpretation of t&e provisions of t&e SM) favors vestin- untrammeled appellate urisdi%tion on t&e C').

) plain readin- of Se%tion 2# of t&e SM) reveals t&at Con-ress did not e(pressl1 ar t&e C') fromrevie*in- a ne-ative determination 1 t&e 'I Se%retar1 nor %onferred on t&e Court of )ppeals su%&revie* aut&orit1. Respondents note, on t&e ot&er &and, t&at neit&er did t&e la* e(pressl1 -rant to t&eC') t&e po*er to revie* a ne-ative determination. Ho*ever, under t&e %lear te(t of t&e la*, t&e C') isvested *it& urisdi%tion to revie* t&e rulin- of t&e 'I Se%retar1 @in 3onne3tion wit6 t&e imposition

of a safe-uard measure.@ Had t&e la* een %ou%&ed instead to in%orporate t&e p&rase @t&e rulin-imposin- a safe-uard measure,@ t&en respondent+s %laim *ould &ave indisputale merit. ;ndoutedl1,t&e p&rase @in %onne%tion *it&@ not onl1 <ualiEes ut %lariEes t&e su%%eedin- p&rase @imposition of asafe-uard measure.@ )s e(pounded later, t&e p&rase also en%ompasses t&e opposite or %onverse rulin-*&i%& is t&e nonimposition of a safe-uard measure.

In t&e )meri%an %ase of +ha v. 6elta ir Lines, %nc.,!8 t&e ;nited States Supreme Court, in interpretin-a e1 provision of t&e 4mplo1ee Retirement Se%urit1 )%t of "#, %onstrued t&e p&rase @relates to@ inits normal sense *&i%& is t&e same as @if it &as %onne%tion *it& or referen%e to.@!# '&ere is no seriousdispute t&at t&e p&rase @in %onne%tion *it&@ is s1non1mous to @relates to@ or @referen%e to,@ and t&at





















all t&ree p&rases are roadl1 e(pansive. '&is is a=rmed not ust 1 urisprudential Eat, ut also t&ea%<uired %onnotative meanin- of @in %onne%tion *it&@ in %ommon parlan%e. Conse<uentl1, *it& t&e useof t&e p&rase @in %onne%tion *it&,@ Se%tion 2# allo*s t&e C') to revie* not onl1 t&e rulin- imposin- asafe-uard measure, ut all ot&er ruinBs reated or 6ave reeren3e to t6e appi3ation or su36easure.

No*, let us determine t&e ma(imum s%ope and rea%& of t&e p&rase @in %onne%tion *it&@ as used in

Se%tion 2# of t&e SM). ) literalist readin- or lin-uisti% surve1 ma1 not satisf1. 4ven t&e ;S SupremeCourt in 4e 8ork +tate Blue Cross 'lans v. 7ravelers %ns.0 %on%eded t&at t&e p&rases @relate to@ or @in%onne%tion *it&@ ma1 e e(tended to t&e fart&est stret%& of indetermina%1 for, universall1, relations or%onne%tions are inEnite and stop no*&ere." '&us, in t&e %ase t&e ;S Hi-& Court, e(aminin- t&e samep&rase of t&e same provision of la* involved in +ha, resorted to looin- at t&e statute and itsoe%tives as t&e alternative to an @un%riti%al literalism.@2 ) similar in<uir1 into t&e ot&er provisions oft&e SM) is in order to determine t&e s%ope of revie* a%%orded t&erein to t&e C').3

'&e aut&orit1 to de%ide on t&e safe-uard measure is vested in t&e 'I Se%retar1 in t&e %ase of nona-ri%ultural produ%ts, and in t&e Se%retar1 of t&e epartment of )-ri%ulture in t&e %ase of a-ri%ulturalprodu%ts. Se%tion 2# is lie*ise e(pli%it t&at onl1 t&e rulin-s of t&e 'I Se%retar1 or t&e )-ri%ultureSe%retar1 ma1 e revie*ed 1 t&e C').5 '&us, t&e a%ts of ot&er odies t&at *ere -ranted somepo*ers 1 t&e SM), su%& as t&e 'ariD Commission, are not sue%t to dire%t revie* 1 t&e C').

;nder t&e SM), t&e epartment Se%retar1 %on%erned is aut&oriLed to de%ide on several matters.$it&in t&irt1 930: da1s from re%eipt of a petition seein- t&e imposition of a safe-uard measure, orfrom t&e date &e made motu proprio initiation, t&e Se%retar1 s&all mae a preliminar1 determinationon *&et&er t&e in%reased imports of t&e produ%t under %onsideration sustantiall1 %ause or t&reaten to%ause serious inur1 to t&e domesti% industr1.!Su%& rulin- is %ru%ial sin%e onl1 upon t&e Se%retar1+spositive preliminar1 determination t&at a t&reat to t&e domesti% industr1 e(ists s&all t&e matter ereferred to t&e 'ariD Commission for formal investi-ation, t&is time, to determine *&et&er t&e -eneralsafe-uard measure s&ould e imposed or not. ursuant to a positive preliminar1 determination, t&eSe%retar1 ma1 also de%ide t&at t&e imposition of a provisional safe-uard measure *ould e *arrantedunder Se%tion 8 of t&e SM).8 '&e Se%retar1 is also aut&oriLed to de%ide, after re%eipt of t&e report oft&e 'ariD Commission, *&et&er or not to impose t&e -eneral safe-uard measure, and if in t&ea=rmative, *&at -eneral safe-uard measures s&ould e applied.# 4ven after t&e -eneral safe-uardmeasure is imposed, t&e Se%retar1 is empo*ered to e(tend t&e safe-uard measure,80 or terminate,redu%e or modif1 &is previous rulin-s on t&e -eneral safe-uard measure.8"

$it& t&e e(pli%it -rant of %ertain po*ers involvin- safe-uard measures 1 t&e SM) on t&e 'ISe%retar1, it follo*s t&at &e is empo*ered to rule on several issues. '&ese are t&e issues *&i%& arise in%onne%tion *it&, or in relation to, t&e imposition of a safe-uard measure. '&e1 ma1 arise at diDerentsta-es O t&e preliminar1 investi-ation sta-e, t&e postformal investi-ation sta-e, or t&e postsafe-uardmeasure sta-e O 1et all t&ese issues do e%ome ripe for resolution e%ause an initiator1 a%tion &aseen taen seein- t&e imposition of a safe-uard measure. It is t&e initiator1 a%tion for t&e impositionof a safe-uard measure t&at sets t&e *&eels in motion, allo*in- t&e Se%retar1 to mae su%%essiverulin-s, e-innin- *it& t&e preliminar1 determination.

Clearl1, t&erefore, t&e s%ope and rea%& of t&e p&rase @in %onne%tion *it&,@ as intended 1 Con-ress,pertain to all rulin-s of t&e 'I Se%retar1 or )-ri%ulture Se%retar1 *&i%& arise from t&e time anappli%ation or motu proprioinitiation for t&e imposition of a safe-uard measure is taen. Indeed, t&ein%idents *&i%& re<uire resolution %ome to t&e fore onl1 e%ause t&ere is an initial appli%ation or a%tion

seein- t&e imposition of a safe-uard measure. rom t&e le-islative standpoint, it *as a matter ofsense and pra%ti%alit1 to lump up t&e <uestions related to t&e initiator1 appli%ation or a%tion forsafe-uard measure and to assi-n onl1 one %ourt and> t&at is t&e C') to initiall1 revie* all t&e rulin-srelated to su%& initiator1 appli%ation or a%tion. /ot& dire%tions Con-ress put in pla%e 1 emplo1in- t&ep&rase @in %onne%tion *it&@ in t&e la*.

Given t&e relative e(panse of de%isions sue%t to udi%ial revie* 1 t&e C') under Se%tion 2#, *e donot dout t&at a ne-ative rulin- refusin- to impose a safe-uard measure falls *it&in t&e s%ope of its urisdi%tion. An a literal level, su%& ne-ative rulin- is @a rulin- of t&e Se%retar1 in %onne%tion *it& t&eimposition of a safe-uard measure,@ as it is one of t&e possile out%omes t&at ma1 result from t&e






























initial appli%ation or a%tion for a safe-uard measure. An a more %riti%al level, t&e rulin-s of t&e 'ISe%retar1 in %onne%tion *it& a safe-uard measure, &o*ever diverse t&e out%ome ma1 e, arise fromt&e same -rant of urisdi%tion on t&e 'I Se%retar1 1 t&e SM).82 '&e refusal 1 t&e 'I Se%retar1 to-rant a safe-uard measure involves t&e same -rant of aut&orit1, t&e same statutor1 pres%riptions, andt&e same de-ree of dis%retion as t&e imposition 1 t&e 'I Se%retar1 of a safe-uard measure.

'&e position of t&e respondents is one of @un%riti%al literalism@83 in%on-ruent *it& t&e animus of t&e

la*. Moreover, a fundamentalist approa%& to Se%tion 2# is not *arranted, %onsiderin- t&e asurdit1 oft&e %onse<uen%es.

7hird. %nterpretatio 7alis %n mbi"uis +emper 1ienda *st, 2t *vitur %nconveniens *t bsurdum.8

4ven assumin- ar"uendo t&at Se%tion 2# &as not e(pressl1 -ranted t&e C') urisdi%tion to revie* ane-ative rulin- of t&e 'I Se%retar1, t&e Court is pre%luded from favorin- an interpretation t&at *ould%ause in%onvenien%e and asurdit1.85 )doptin- t&e respondents+ position favorin- t&e C')+s minimal urisdi%tion *ould unne%essaril1 lead to illo-i%al and onerous results.

Indeed, it is illieral to assume t&at Con-ress &ad intended to provide appellate relief to rulin-simposin- a safe-uard measure ut not to t&ose de%linin- to impose t&e measure. Respondents mi-&tar-ue t&at t&e ri-&t to relief from a ne-ative rulin- is not lost sin%e t&e appli%ant %ould, as &il%em%or

did, <uestion su%& rulin- t&rou-& a spe%ial %ivil a%tion for %ertiorari under Rule !5 of t&e "## Rules ofCivil ro%edure, in lieu of an appeal to t&e C'). et t&ese t*o reliefs are of diDerin- natures and-ravamen. $&ile an appeal ma1 e predi%ated on errors of fa%t or errors of la*, a spe%ial %ivil a%tionfor %ertiorari is -rounded on -rave ause of dis%retion or la% of or e(%ess of urisdi%tion on t&e part oft&e de%ider. or a spe%ial %ivil a%tion for %ertiorari to su%%eed, it is not enou-& t&at t&e <uestioned a%tof t&e respondent is *ron-. )s t&e Court %lariEed in +empio v. Court of ppeals6

) triunal, oard or o=%er a%ts *it&out urisdi%tion if itF&e does not &ave t&e le-al po*er todetermine t&e %ase. '&ere is e(%ess of urisdi%tion *&ere, ein- %lot&ed *it& t&e po*er todetermine t&e %ase, t&e triunal, oard or o=%er oversteps itsF&is aut&orit1 as determined 1la*. )nd t&ere is -rave ause of dis%retion *&ere t&e triunal, oard or o=%er a%ts in a%apri%ious, *&imsi%al, aritrar1 or despoti% manner in t&e e(er%ise of &is ud-ment as to esaid to e e<uivalent to la% of urisdi%tion. Certiorari is often resorted to in order to %orre%terrors of urisdi%tion. $&ere t&e error is one of la* or of fa%t, *&i%& is a mistae of ud-ment,appeal is t&e remed1.8!

It is ver1 %on%eivale t&at t&e 'I Se%retar1, after delierate t&ou-&t and %areful evaluation of t&eeviden%e, ma1 eit&er mae a ne-ative preliminar1 determination as &e is so empo*ered under Se%tion of t&e SM), or refuse to adopt t&e deEnitive safe-uard measure under Se%tion "3 of t&e same la*.)doptin- t&e respondents+ t&eor1, t&is ne-ative rulin- is sus%eptile to reversal onl1 t&rou-& a spe%ial%ivil a%tion for %ertiorari, t&us deprivin- t&e aDe%ted part1 t&e %&an%e to elevate t&e rulin- on appealon t&e rudimentar1 -rounds of errors in fa%t or in la*. Instead, and despite *&atever indi%ations t&att&e 'I Se%retar1 a%ted *it& measure and *it&in t&e ounds of &is urisdi%tion are, t&e a--rieved part1*ill e for%ed to resort to a -1mnasti% e(er%ise, %ontortin- t&e strai-&t and narro* in an eDort todis%omoulate t&e %ourts into elievin- t&at *&at *as *it&in *as a%tuall1 e1ond and *&at *asstudied and delierate a%tuall1 *&imsi%al and %apri%ious. $&at t&en *ould e t&e remed1 of t&e part1a--rieved 1 a ne-ative rulin- t&at simpl1 erred in interpretin- t&e fa%ts or t&e la*U It %ertainl1 %annote t&e spe%ial %ivil a%tion for %ertiorari, for as t&e Court &eld in +ilverio v. Court of ppeals? @Certiorariis a remed1 narro* in its s%ope and inTe(ile in its %&ara%ter. It is not a -eneral utilit1 tool in t&e le-al

*ors&op.@8

ortunatel1, t&is t&eoreti%al <uandar1 need not %ome to pass. Se%tion 2# of t&e SM) is *orded in su%&a *a1 t&at it pla%es under t&e C')+s udi%ial revie* all rulin-s of t&e 'I Se%retar1, *&i%& are%onne%ted *it& t&e imposition of a safe-uard measure. '&is is sound and proper in li-&t of t&espe%ialiLed urisdi%tion of t&e C') over ta( matters. In t&e same *a1 t&at a <uestion of *&et&er to ta(or not to ta( is properl1 a ta( matter, so is t&e <uestion of *&et&er to impose or not to impose adeEnitive safe-uard measure.

















An anot&er note, t&e se%ond para-rap& of Se%tion 2# similarl1 reveals t&e le-islative intent t&at rulin-sof t&e 'I Se%retar1 over safe-uard measures s&ould Erst e revie*ed 1 t&e C') and not t&e Court of)ppeals. It reads6

'&e petition for revie* s&all %ompl1 *it& t&e same re<uirements and s&all follo* t&e samerules of pro%edure and s&all e sue%t to t&e same disposition as in appeals in %onne%tion *it&adverse rulin-s on ta( matters to t&e Court of )ppeals.

'&is is t&e onl1 passa-e in t&e SM) in *&i%& t&e Court of )ppeals is mentioned. '&e e(press *is& ofCon-ress is t&at t&e petition %onform to t&e re<uirements and pro%edure under Rule 3 of t&e Rules ofCivil ro%edure. Sin%e Con-ress mandated t&at t&e form and pro%edure adopted e analo-ous to arevie* of a C') rulin- 1 t&e Court of )ppeals, t&e le-islative %ontemplation %ould not &ave een t&att&e appeal e dire%tl1 taen to t&e Court of )ppeals.

%ssue of Bindin" *<ect of 7ari< Commission@s 1actual 6eterminationon 67% +ecretary.

'&e ne(t issue for resolution is *&et&er t&e fa%tual determination made 1 t&e 'ariD Commission undert&e SM) is indin- on t&e 'I Se%retar1. At&er*ise stated, t&e <uestion is *&et&er t&e 'I Se%retar1

ma1 impose -eneral safe-uard measures in t&e asen%e of a positive Enal determination 1 t&e 'ariDCommission.

'&e Court of )ppeals relied upon Se%tion "3 of t&e SM) in rulin- t&at t&e Endin-s of t&e 'ariDCommission do not ne%essaril1 %onstitute a Enal de%ision. Se%tion "3 details t&e pro%edure for t&eadoption of a safe-uard measure, as *ell as t&e steps to e taen in %ase t&ere is a ne-ative Enaldetermination. '&e impli%ation of t&e Court of )ppeals+ &oldin- is t&at t&e 'I Se%retar1 ma1 adopt adeEnitive safe-uard measure, not*it&standin- a ne-ative determination made 1 t&e 'ariDCommission.

;ndoutedl1, Se%tion "3 pres%ries %ertain limitations and restri%tions efore -eneral safe-uardmeasures ma1 e imposed. Ho*ever, t6e ost undaenta restri3tion on t6e 0TI 'e3retar"Mspower in t6at respe3t is 3ontained in 'e3tion 9 o t6e '!At6at t6ere s6oud rst e apositive na deterination o t6e Tarif %oissionY*&i%& t&e Court of )ppeals %uriousl1 all

ut i-nored. Se%tion 5 reads6

Se%. 5. Conditions for the pplication of /eneral +afe"uard Measures. : '&e Se%retar1 s6aapp" a Benera saeBuard easure upon a positive na deterination o t6eTarifO %oission t&at a produ%t is ein- imported into t&e %ountr1 in in%reased <uantities,*&et&er asolute or relative to t&e domesti% produ%tion, as to e a sustantial %ause of seriousinur1 or t&reat t&ereof to t&e domesti% industr1> &o*ever, in t&e %ase of nona-ri%ulturalprodu%ts, t&e Se%retar1 s&all Erst estalis& t&at t&e appli%ation of su%& safe-uard measures*ill e in t&e puli% interest. 9emp&asis supplied:

'&e plain meanin- of Se%tion 5 s&o*s t&at it is t&e 'ariD Commission t&at &as t&e po*er to mae a@positive Enal determination.@ '&is po*er lod-ed in t&e 'ariD Commission, must e distin-uis&ed fromt&e po*er to impose t&e -eneral safe-uard measure *&i%& is properl1 vested on t&e 'I Se%retar1.88

)ll in all, t&ere are t*o %ondition pre%edents t&at must e satisEed efore t&e 'I Se%retar1 ma1impose a -eneral safe-uard measure on -re1 ortland %ement. irst, t&ere must e a positive Enaldetermination 1 t&e 'ariD Commission t&at a produ%t is ein- imported into t&e %ountr1 in in%reased<uantities 9*&et&er asolute or relative to domesti% produ%tion:, as to e a sustantial %ause ofserious inur1 or t&reat to t&e domesti% industr1. Se%ond, in t&e %ase of nona-ri%ultural produ%ts t&eSe%retar1 must estalis& t&at t&e appli%ation of su%& safe-uard measures is in t&e puli% interest.8# )sSout&ern Cross ar-ues, Se%tion 5 is <uite %lear%ut, and it is impossile to Ena-le a diDerent %on%lusioneven t&rou-& overar%&in- met&ods of statutor1 %onstru%tion. '&ere is no safer nor etter settled %anonof interpretation t&at *&en lan-ua-e is %lear and unami-uous it must e &eld to mean *&at it plainl1e(presses6#0 In t&e <uotale *ords of an illustrious memer of t&is Court, t&us6









JIKf a statute is %lear, plain and free from ami-uit1, it must e -iven its literal meanin- andapplied *it&out attempted interpretation. '&e verba le"is or plain meanin- rule rests on t&evalid presumption t&at t&e *ords emplo1ed 1 t&e le-islature in a statute %orre%tl1 e(press itsintent or *ill and pre%lude t&e %ourt from %onstruin- it diDerentl1. '&e le-islature is presumedto no* t&e meanin- of t&e *ords, to &ave used *ords advisedl1, and to &ave e(pressed itsintent 1 t&e use of su%& *ords as are found in t&e statute.#"

Moreover, Rule 5 of t&e Implementin- Rules and Re-ulations of t&e SM),#2 *&i%& interprets Se%tion 5 of t&e la*, lie*ise re<uires a positive Enal determination on t&e part of t&e 'ariD Commission efore t&eappli%ation of t&e -eneral safe-uard measure.

'&e SM) estalis&es a distin%t allo%ation of fun%tions et*een t&e 'ariD Commission and t&e 'ISe%retar1. '&e plain meanin- of Se%tion 5 s&o*s t&at it is t&e 'ariD Commission t&at &as t&e po*er tomae a @positive Enal determination.@ '&is po*er, *&i%& elon-s to t&e 'ariD Commission, must edistin-uis&ed from t&e po*er to impose -eneral safe-uard measure properl1 vested on t&e 'ISe%retar1. '&e distin%tion is vital, as a @positive Enal determination@ %learl1 ante%edes, as a %onditionpre%edent, t&e imposition of a -eneral safe-uard measure. )t t&e same time, a positive Enaldetermination does not ne%essaril1 result in t&e imposition of a -eneral safe-uard measure. ;nderSe%tion 5, not*it&standin- t&e positive Enal determination of t&e 'ariD Commission, t&e 'I Se%retar1is tased to de%ide *&et&er or not t&at t&e appli%ation of t&e safe-uard measures is in t&e puli%interest.

It is also %lear from Se%tion 5 of t&e SM) t&at t&e positive Enal determination to e undertaen 1 t&e 'ariD Commission does not entail a mere -at&erin- of statisti%al data. In order to arrive at su%&determination, it &as to estalis& %ausal lina-es from t&e statisti%s t&at it %ompiles and evaluates6after Endin- t&ere is an importation in in%reased <uantities of t&e produ%t in <uestion, t&at su%&importation is a sustantial %ause of serious t&reat or inur1 to t&e domesti% industr1.

'&e Court of )ppeals relies &eavil1 on t&e le-islative re%ord of a %on-ressional deate durin-delierations on t&e SM) to assert a purported le-islative intent t&at t&e Endin-s of t&e 'ariDCommission do not ind t&e 'I Se%retar1.#3 et as e(plained earlier, t&e plain meanin- of Se%tion 5emp&asiLes t&at onl1 if t&e 'ariD Commission renders a positive determination %ould t&e 'I Se%retar1impose a safe-uard measure. Resort to t&e %on-ressional re%ords to as%ertain le-islative intent is not*arranted if a statute is %lear, plain and free from ami-uit1. '&e le-islature is presumed to no* t&emeanin- of t&e *ords, to &ave used *ords advisedl1, and to &ave e(pressed its intent 1 t&e use of

su%& *ords as are found in t&e statute.#

Indeed, t&e le-islative re%ord, if at all to e availed of, s&ould e approa%&ed *it& e(treme %aution, asle-islative deates and pro%eedin-s are po*erless to var1 t&e terms of t&e statute *&en t&e meanin-is %lear.#5 Aur &oldin- in Civil Liberties 2nion v. *!ecutive +ecretary #! on t&e resort to delierations oft&e %onstitutional %onvention to interpret t&e Constitution is lie*ise appropriate in as%ertainin-statutor1 intent6

$&ile it is permissile in t&is urisdi%tion to %onsult t&e deates and pro%eedin-s of t&e%onstitutional %onvention in order to arrive at t&e reason and purpose of t&e resultin-Constitution, resort t&ereto ma1 e &ad onl1 *&en ot&er -uides fail as said pro%eedin-s arepo*erless to var1 t&e terms of t&e Constitution *&en t&e meanin- is %lear. eates in t&e%onstitutional %onvention @are of value as s&o*in- t&e vie*s of t&e individual memers, and asindi%atin- t&e reasons for t&eir votes, ut t&e1 -ive us no li-&t as to t&e vie*s of t&e lar-e

maorit1 *&o did not tal (((. $e t&in it safer to %onstrue t&e %onstitution from *&at appearsupon its fa%e.@#

Moreover, it is eas1 to sele%tivel1 %ite passa-es, sometimes out of t&eir proper %onte(t, in order toassert a misleadin- interpretation. '&e eDe%t %an e dan-erous. Minorit1 or solitar1 vie*s, ane%dotalruminations, or even t&e o%%asional %rude *itti%isms, ma1 improperl1 a%<uire t&e mantle of le-islativeintent 1 t&e sole virtue of t&eir puli%ation in t&e aut&oritative %on-ressional re%ord. Hen%e, resort tole-islative delierations is allo*ale *&en t&e statute is %rafted in su%& a manner as to leave room fordout on t&e real intent of t&e le-islature.


















Se%tion 5 plainl1 evin%es le-islative intent to restri%t t&e 'I Se%retar1+s po*er to impose a -eneralsafe-uard measure 1 pre%onditionin- su%& imposition on a positive determination 1 t&e 'ariDCommission. Su%& le-islative intent s&ould e -iven full for%e and eDe%t, as t&e e(e%utive po*er toimpose deEnitive safe-uard measures is ut a dele-ated po*erYt&e po*er of ta(ation, 1 nature and1 %ommand of t&e fundamental la*, ein- a preserve of t&e le-islature.#8 Se%tion 2892:, )rti%le I oft&e "#8 Constitution %onErms t&e dele-ation of le-islative po*er, 1et ensures t&at t&e prero-ative ofCon-ress to impose limitations and restri%tions on t&e e(e%utive e(er%ise of t&is po*er6

'&e Con-ress ma1, 1 la*, aut&oriLe t&e resident to E( *it&in spe%iEed limits, and sue%t tosu%& limitations and restri%tions as it ma1 impose, tariD rates, import and e(port <uotas,tonna-e and *&arfa-e dues, and ot&er duties or imposts *it&in t&e frame*or of t&e nationaldevelopment pro-ram of t&e Government.##

'&e safe-uard measures *&i%& t&e 'I Se%retar1 ma1 impose under t&e SM) ma1 tae t&e follo*in-variations, to *it6 9a: an in%rease in, or imposition of an1 dut1 on t&e imported produ%t> 9: a de%reasein or t&e imposition of a tariDrate <uota on t&e produ%t> 9%: a modiE%ation or imposition of an1<uantitative restri%tion on t&e importation of t&e produ%t into t&e &ilippines> 9d: one or moreappropriate adustment measures, in%ludin- t&e provision of trade adustment assistan%e> and 9e: an1%omination of t&e aovedes%ried a%tions. 4(%ept for t&e provision of trade adustment assistan%e,t&e measures enumerated 1 t&e SM) are essentiall1 imposts, *&i%& pre%isel1 are t&e sue%t ofdele-ation under Se%tion 2892:, )rti%le I of t&e "#8 Constitution."00

'&is dele-ation of t&e ta(ation po*er 1 t&e le-islative to t&e e(e%utive is aut&oriLed 1 t&eConstitution itself."0")t t&e same time, t&e Constitution also -rants t&e dele-atin- aut&orit1 9Con-ress:t&e ri-&t to impose restri%tions and limitations on t&e ta(ation po*er dele-ated to t&e resident."02 '&erestri%tions and limitations imposed 1 Con-ress tae on t&e mantle of a %onstitutional %ommand,*&i%& t&e e(e%utive ran%& is oli-ed to oserve.

'&e SM) empo*ered t&e 'I Se%retar1, as alter e"o of t&e resident,"03 to impose deEnitive -eneralsafe-uard measures, *&i%& asi%all1 are tariD imposts of t&e t1pe spoen of in t&e Constitution.Ho*ever, t&e la* did not -rant &im full, unin&iited dis%retion to impose su%& measures. '&e 'ISe%retar1 aut&orit1 is derived from t&e SM)> it does not To* from an1 in&erent e(e%utive po*er. '&us,t&e limitations imposed 1 Se%tion 5 are asolute, *arranted as t&e1 are 1 a %onstitutional Eat."0

&il%em%or %ites our "#"2 rulin- in Lamb v. 'hipps"05 to assert t&at t&e 'I Se%retar1, &avin- t&e Enalde%ision on t&e safe-uard measure, &as t&e po*er to evaluate t&e Endin-s of t&e 'ariD Commissionand mae an independent ud-ment t&ereon. Given t&e %onstitutional and statutor1 limitations-overnin- t&e present %ase, t&e %itation is mispla%ed. Lamb pertained to t&e dis%retion of t&e Insular)uditor of t&e &ilippine Islands, *&om, as t&e Court re%o-niLed, @JtK&e statutes of t&e ;nited Statesre<uireJdK ((( to e(er%ise &is ud-ment upon t&e le-alit1 ((( JofK provisions of la* and resolutions ofCon-ress providin- for t&e pa1ment of mone1, t&e means of pro%urin- testimon1 upon *&i%& &e ma1a%t.@"0!

'&us in Lamb, *&ile t&e Court re%o-niLed t&e *ide latitude of dis%retion t&at ma1 &ave een vested ont&e Insular )uditor, it also re%o-niLed t&at su%& latitude To*ed from, and is %onse<uentl1 limited 1,statutor1 -rant. Ho*ever, in t&is %ase, t&e provision of t&e Constitution in point e(pressl1 re%o-niLest&e aut&orit1 of Con-ress to pres%rie limitations in t&e %ase of tariDs, e(portFimport <uotas and ot&ersu%& safe-uard measures. '&us, t&e road dis%retion -ranted to t&e Insular )uditor of t&e &ilippineIslands %annot e analo-ous to t&e dis%retion of t&e 'I Se%retar1 *&i%& is %ir%ums%ried 1 Se%tion 5

of t&e SM).

or t&at matter, CariAo v. Commissioner on >uman i"hts,"0 lie*ise %ited 1 &il%em%or, is alsoinappli%ale o*in- to t&e diDerent statutor1 re-imes prevailin- over t&at %ase and t&e present petition.In CariAo, t&e Court ruled t&at t&e %onstitutional po*er of t&e Commission on Human Ri-&ts 9CHR: toinvesti-ate &uman ri-&ts+ violations did not e(tend to adudi%atin- %laims on t&e merits."08 &il%em%or%laims t&at t&e fun%tions of t&e 'ariD Commission ein- @onl1 investi-ator1,@ it %ould neit&er de%idenor adudi%ate."0#





























'&e appli%ale la* -overnin- t&e issue in CariAo is Se%tion "8, )rti%le XIII of t&e Constitution, *&i%&delineates t&e po*ers and fun%tions of t&e CHR. '&e provision does not vest on t&e CHR t&e po*er toadudi%ate %ases, ut onl1 to investi-ate all forms of &uman ri-&ts violations.""0 et, *it&out modif1in-t&e t&orou-& dis<uisition of t&e Court in CariAo on t&e -eneral limitations on t&e investi-ator1 po*er,t&e pre%edent is inappli%ale e%ause of t&e diDeren%e in t&e involved statutor1 frame*ors. '&eConstitution does not repose indin- eDe%t on t&e results of t&e CHR+s investi-ation.""" An t&e ot&er&and, t&rou-& Se%tion 5 of t&e SM) and under t&e aut&orit1 of Se%tion 2892:, )rti%le I of t&e

Constitution, Con-ress did intend to ind t&e 'I Se%retar1 to t&e determination made 1 t&e 'ariDCommission.""2 It is of no %onse<uen%e t&at su%& determination results from t&e e(er%ise ofinvesti-ator1 po*ers 1 t&e 'ariD Commission sin%e Con-ress is *ell *it&in its %onstitutional mandateto limit t&e aut&orit1 of t&e 'I Se%retar1 to impose safe-uard measures in t&e manner t&at it sees Et.

'&e Court of )ppeals and &il%em%or also rel1 on Se%tion "3 of t&e SM) and Rule "3 of t&e SM)+sImplementin- Rules in support of t&e vie* t&at t&e 'I Se%retar1 ma1 de%ide independentl1 of t&edetermination made 1 t&e 'ariD Commission. )dmittedl1, t&ere are %ertain infeli%ities in t&e lan-ua-eof Se%tion "3 and Rule "3. /ut relian%e s&ould not e pla%ed on t&e te(tual impre%isions. Rat&er,Se%tion "3 and Rule "3 must e vie*ed in li-&t of t&e fundamental pres%ription imposed 1 Se%tion5. ""3

Se%tion "3 of t&e SM) la1s do*n t&e pro%edure to e follo*ed after t&e 'ariD Commission renders itsreport. '&e provision reads in full6

S4C. "3. doption of 6e$nitive Measures. ;pon its positive determination, t&e Commissions&all re%ommend to t&e Se%retar1 an appropriate deEnitive measure, in t&e form of6

9a: )n in%rease in, or imposition of, an1 dut1 on t&e imported produ%t>

9: ) de%rease in or t&e imposition of a tariDrate <uota 9M): on t&e produ%t>

9%: ) modiE%ation or imposition of an1 <uantitative restri%tion on t&e importation of t&eprodu%t into t&e &ilippines>

9d: Ane or more appropriate adustment measures, in%ludin- t&e provision of trade adustmentassistan%e>

9e: )n1 %omination of a%tions des%ried in supara-rap&s 9a: to 9d:.

'&e Commission ma1 also re%ommend ot&er a%tions, in%ludin- t&e initiation of internationalne-otiations to address t&e underl1in- %ause of t&e in%rease of imports of t&e produ%t, toalleviate t&e inur1 or t&reat t&ereof to t&e domesti% industr1, and to fa%ilitate positiveadustment to import %ompetition.

'&e -eneral safe-uard measure s&all e limited to t&e e(tent of redressin- or preventin- t&einur1 and to fa%ilitate adustment 1 t&e domesti% industr1 from t&e adverse eDe%ts dire%tl1attriuted to t&e in%reased imports6 'rovided, hoever, '&at *&en <uantitative importrestri%tions are used, su%& measures s&all not redu%e t&e <uantit1 of imports elo* t&eavera-e imports for t&e t&ree 93: pre%edin- representative 1ears, unless %lear ustiE%ation is-iven t&at a diDerent level is ne%essar1 to prevent or remed1 a serious inur1.

) -eneral safe-uard measure s&all not e applied to a produ%t ori-inatin- from a developin-%ountr1 if its s&are of total imports of t&e produ%t is less t&an t&ree per%ent 937:6 'rovided,hoever , '&at developin- %ountries *it& less t&an t&ree per%ent 937: s&are %olle%tivel1a%%ount for not more t&an nine per%ent 9#7: of t&e total imports.

'&e de%ision imposin- a -eneral safe-uard measure, t&e duration of *&i%& is more t&an one9": 1ear, s&all e revie*ed at re-ular intervals for purposes of lieraliLin- or redu%in- itsintensit1. '&e industr1 eneEtin- from t&e appli%ation of a -eneral safe-uard measure s&all e













re<uired to s&o* positive adustment *it&in t&e allo*ale period. ) -eneral safe-uard measures&all e terminated *&ere t&e eneEtin- industr1 fails to s&o* an1 improvement, as ma1 edetermined 1 t&e Se%retar1.

'&e Se%retar1 s&all issue a *ritten instru%tion to t&e &eads of t&e %on%erned -overnmenta-en%ies to implement t&e appropriate -eneral safe-uard measure as determined 1 t&eSe%retar1 *it&in Efteen 9"5: da1s from re%eipt of t&e report.

In t&e event of a ne-ative Enal determination, or if t&e %as& ond is in e(%ess of t&e deEnitivesafe-uard dut1 assessed, t&e Se%retar1 s&all immediatel1 issue, t&rou-& t&e Se%retar1 ofinan%e, a *ritten instru%tion to t&e Commissioner of Customs, aut&oriLin- t&e return of t&e%as& ond or t&e remainder t&ereof, as t&e %ase ma1 e, previousl1 %olle%ted as provisional-eneral safe-uard measure *it&in ten 9"0: da1s from t&e date a Enal de%ision &as eenmade6 'rovided, '&at t&e -overnment s&all not e liale for an1 interest on t&e amount to ereturned. '&e Se%retar1 s&all not a%%ept for %onsideration anot&er petition from t&e sameindustr1, *it& respe%t to t&e same imports of t&e produ%t under %onsideration *it&in one 9":1ear after t&e date of renderin- su%& a de%ision.

$&en t&e deEnitive safe-uard measure is in t&e form of a tariD in%rease, su%& in%rease s&allnot e sue%t or limited to t&e ma(imum levels of tariD as set fort& in Se%tion 0"9a: of t&e 'ariD and Customs Code of t&e &ilippines.

'o etter %ompre&end Se%tion "3, note must e taen of t&e distin%tion et*een t&e investi-ator1 andre%ommendator1 fun%tions of t&e 'ariD Commission under t&e SM).

'&e *ord @determination,@ as used in t&e SM), pertains to t&e fa%tual Endin-s on *&et&er t&ere arein%reased imports into t&e %ountr1 of t&e produ%t under %onsideration, and on *&et&er su%& in%reasedimports are a sustantial %ause of serious inur1 or t&reaten to sustantiall1 %ause serious inur1 to t&edomesti% industr1."" '&e SM) e(pli%itl1 aut&oriLes t&e 'I Se%retar1 to mae a preliminar1determination,""5 and t&e 'ariD Commission to mae t&e Enal determination.""! '&e distin%tion isfundamental, as t&ese fun%tions are not inter%&an-eale. '&e 'ariD Commission maes itsdetermination onl1 after a formal investi-ation pro%ess, *it& su%& investi-ation initiated onl1 if t&ere isa positive preliminar1 determination 1 t&e 'I Se%retar1 under Se%tion of t&e SM)."" An t&e ot&er&and, t&e 'I Se%retar1 ma1 impose deEnitive safe-uard measure onl1 if t&ere is a positive Enaldetermination made 1 t&e 'ariD Commission.""8

In %ontrast, a @re%ommendation@ is a su--ested remedial measure sumitted 1 t&e 'ariD Commissionunder Se%tion "3 after main- a positive Enal determination in a%%ordan%e *it& Se%tion 5. '&e 'ariDCommission is not empo*ered to mae a re%ommendation asent a positive Enal determination on itspart.""# ;nder Se%tion "3, t&e 'ariD Commission is re<uired to re%ommend to t&e J'IK Se%retar1 an@appropriate deEnitive measure.@"20 '&e 'ariD Commission @ma1 also re%ommend ot&er a%tions,in%ludin- t&e initiation of international ne-otiations to address t&e underl1in- %ause of t&e in%rease ofimports of t&e produ%ts, to alleviate t&e inur1 or t&reat t&ereof to t&e domesti% industr1 and tofa%ilitate positive adustment to import %ompetition.@"2"

'&e re%ommendations of t&e 'ariD Commission, as rendered under Se%tion "3, are not oli-ator1 ont&e 'I Se%retar1. Not&inin t&e SM) mandates t&e 'I Se%retar1 to adopt t&e re%ommendationsmade 1 t&e 'ariD Commission. In fa%t, t&e SM) re<uires t&at t&e 'I Se%retar1 estalis& t&at t&eappli%ation of su%& safe-uard measures is in t&e puli% interest, not*it&standin- t&e 'ariDCommission+s re%ommendation on t&e appropriate safe-uard measure ased on its positive Enaldetermination."22 '&e nonindin- for%e of t&e 'ariD Commission+s re%ommendations is %on-ruent *it&t&e %ommand of Se%tion 2892:, )rti%le I of t&e "#8 Constitution t&at onl1 t&e resident ma1 eempo*ered 1 t&e Con-ress to impose appropriate tariD rates, importFe(port <uotas and ot&er similarmeasures."23 It is t&e 'I Se%retar1, as alter e"o of t&e resident, *&o under t&e SM) ma1 impose su%&safe-uard measures sue%t to t&e limitations imposed t&erein. ) %ontrar1 %on%lusion *ould in essen%eundul1 arro-ate to t&e 'ariD Commission t&e e(e%utive po*er to impose t&e appropriate tariDmeasures. '&at is *&1 t&e SM) empo*ers t&e 'I Se%retar1 to adopt safe-uard measures ot&er t&ant&ose re%ommended 1 t&e 'ariD Commission.




























;nlie t&e re%ommendations of t&e 'ariD Commission, its determination &as a diDerent eDe%t on t&e'I Se%retar1. Anl1 on t&e asis of a positive Enal determination made 1 t&e 'ariD Commission underSe%tion 5 %an t&e 'I Se%retar1 impose a -eneral safe-uard measure. Clearl1, t&en t&e 'I Se%retar1is ound " t6e deterinationmade 1 t&e 'ariD Commission.

Some %onfusion ma1 arise e%ause t&e si(t& para-rap& of Se%tion "3"2 uses t&e variant *ord@determined@ in a diDerent %onte(t, as it %ontemplates @t&e appropriate -eneral safe-uard measure as

determined 1 t&e Se%retar1 *it&in Efteen 9"5: da1s from re%eipt of t&e report.@ Zuite plainl1, t&e *ord@determined@ in t&is %onte(t pertains to t&e 'I Se%retar1+s po*er of %&oi%e of t&e appropriatesafe-uard measure, as opposed to t&e 'ariD Commission+s po*er to determine t&e e(isten%e of%onditions ne%essar1 for t&e imposition of an1 safe-uard measure. In relation to Se%tion 5, su%& %&oi%ealso relates to t&e mandate of t&e 'I Se%retar1 to estalis& t&at t&e appli%ation of safe-uardmeasures is in t&e puli% interest, also *it&in t&e Efteen 9"5: da1 period. Not&inin Se%tion "3%ontradi%ts t&e instru%tion in Se%tion 5 t&at t&e 'I Se%retar1 is allo*ed to impose t&e -eneralsafe-uard measures onl1 if t&ere is a positive determination made 1 t&e 'ariD Commission.

;nfortunatel1, Rule "3.2 of t&e Implementin- Rules of t&e SM) is %aptioned @inal etermination 1t&e Se%retar1.@ '&e assailed 6ecision and &il%em%or lat%& on t&is p&raseolo-1 to impl1 t&at t&e fa%tualdetermination rendered 1 t&e 'ariD Commission under Se%tion 5 ma1 e amended or reversed 1 t&e'I Se%retar1. Af %ourse, implementin- rules s&ould %onform, not %las&, *it& t&e la* t&at t&e1 see toimplement, for a re-ulation *&i%& operates to %reate a rule out of &armon1 *it& t&e statute is a

nullit1."25

et imperfe%t draftsmans&ip aside, not&inin Rule "3.2 implies t&at t&e 'I Se%retar1 %an setaside t&e determination made 1 t&e 'ariD Commission under t&e ae-is of Se%tion 5. '&is %an e seen1 e(aminin- t&e spe%iE% provisions of Rule "3.2, t&us6

R;B4 "3.2. inal etermination 1 t&e Se%retar1

R;B4 "3.2.a. $it&in Efteen 9"5: %alendar da1s from re%eipt of t&e Report of t&eCommission, t&e Se%retar1 s&all mae a de%ision, tain- into %onsideration t&emeasures re%ommended 1 t&e Commission.

R;B4 "3.2.. If t&e determination is a=rmative, t&e Se%retar1 s&all issue, *it&in t*o92: %alendar da1s after main- &is de%ision, a *ritten instru%tion to t&e &eads of t&e%on%erned -overnment a-en%ies to immediatel1 implement t&e appropriate -eneralsafe-uard measure as determined 1 &im. rovided, &o*ever, t&at in t&e %ase of nona-ri%ultural produ%ts, t&e Se%retar1 s&all Erst estalis& t&at t&e imposition of t&esafe-uard measure *ill e in t&e puli% interest.

R;B4 "3.2.%. $it&in t*o 92: %alendar da1s after main- &is de%ision, t&e Se%retar1s&all also order its puli%ation in t*o 92: ne*spapers of -eneral %ir%ulation. He s&allalso furnis& a %op1 of &is Arder to t&e petitioner and ot&er interested parties, *&et&era=rmative or ne-ative. 94mp&asis supplied.:

Moreover, t&e 'I Se%retar1 does not &ave t&e po*er to revie* t&e Endin-s of t&e 'ariD Commissionfor it is not suordinate to t&e epartment of 'rade and Industr1 9@'I@:. It falls under t&e supervision,not of t&e 'I nor of t&e epartment of inan%e 9as mistaenl1 asserted 1 Sout&ern Cross:,"2! ut oft&e Nationa (3onoi3 0eveopent Aut6orit", an independent panninB aBen3" o t6eBovernent o 3o-eFua ran as t6e 0TI."2 )s t&e supervision and %ontrol of a epartmentSe%retar1 is limited to t&e ureaus, o=%es, and a-en%ies under &im,"28 t&e 'I Se%retar1 -enerall1%annot e(er%ise revie* aut&orit1 over a%tions of t&e 'ariD Commission. Neit&er does t&e SM)spe%iE%all1 aut&oriLe t&e 'I Se%retar1 to alter, amend or modif1 in an1 *a1 t&e determination made1 t&e 'ariD Commission. '&e most t&at t&e 'I Se%retar1 %ould do to e(press displeasure over t&e 'ariD Commission+s a%tions is to i-nore its re%ommendation, ut not its determination.

'&e *ord @determination@ as used in Rule "3.2 of t&e Implementin- Rules is dissonant *it& t&e same*ord as emplo1ed in t&e SM), *&i%& in t&e latter %ase is undeviatin-l1 in referen%e to t&edetermination made 1 t&e 'ariD Commission. /e1ond t&e resultin- %onfusion, &o*ever, t&e diver-entuse in Rule "3.2 is e(pli%ale as t&e Rule te(tuall1 pertains to t&e po*er of t&e 'I Se%retar1 to revie*t&e re%ommendations of t&e 'ariD Commission, not t&e latter+s determination. Indeed, an e(amination















of t&e spe%iE% provisions s&o* t&at t&ere is no real %onTi%t to re%on%ile. Rule "3.2 respe%ts t&e lo-i%alorder imposed 1 t&e SM). '&e Rule does not remove t&e essential re<uirement under Se%tion 5 t&at apositive Enal determination e made 1 t&e 'ariD Commission efore a deEnitive safe-uard measurema1 e imposed 1 t&e 'I Se%retar1.

'&e assailed 6ecision %&ara%teriLes t&e Endin-s of t&e 'ariD Commission as merel1 re%ommendator1and points to t&e 'I Se%retar1 as t&e aut&orit1 *&o renders t&e Enal de%ision."2# )t t&e same time,

&il%em%or asserts t&at t&e 'ariD Commission+s fun%tions are merel1 investi-ator1, and as su%& do notin%lude t&e po*er to de%ide or adudi%ate. '&ese %ontentions, vie*ed in t&e %onte(t of t&efundamental re<uisite set fort& 1 Se%tion 5, are untenale. '&e1 run %ounter to t&e statutor1pres%ription t&at a positive Enal determination made 1 t&e 'ariD Commission s&ould Erst e otainedefore t&e deEnitive safe-uard measures ma1 e laid do*n.

$as it anomalous for Con-ress to &ave provided for a s1stem *&ere1 t&e 'ariD Commission ma1pre%lude t&e 'I, an o=%e of &i-&er ran, from imposin- a safe-uard measureU Af %ourse, t&is Courtdoes not in<uire into t&e *isdom of t&e le-islature ut onl1 %&arts t&e oundaries of po*ers andfun%tions set in its ena%tments. /ut t&en, it is not di=%ult to see t&e internal lo-i% of t&is statutor1frame*or.

or one, as earlier stated, t&e 'I %annot e(er%ise revie* po*ers over t&e 'ariD Commission *&i%& isnot its suordinate o=%e.

Moreover, t&e me%&anism estalis&ed 1 Con-ress estalis&es a measure of %&e% and alan%einvolvin- t*o diDerent -overnmental a-en%ies *it& disparate spe%ialiLations. '&e matter of safe-uardmeasures is of su%& national importan%e t&at a de%ision eit&er to impose or not to impose t&en %ould&ave ruinous eDe%ts on %ompanies doin- usiness in t&e &ilippines. '&us, it is ideal to put in pla%e as1stem *&i%& aDords all due delieration and %alls to fore various -overnmental a-en%ies e(er%isin-t&eir parti%ular spe%ialiLations.

inall1, if t&is arran-ement dra*n up 1 Con-ress maes it di=%ult to otain a -eneral safe-uardmeasure, it is e%ause su%& safe-uard measure is t&e e(%eption, rat&er t&an t&e rule. '&e &ilippinesis oli-ed to oserve its oli-ations under t&e G)'', under *&ose frame*or trade lieraliLation, notprote%tionism, is laid do*n. eril1, t&e G)'' a%tuall1 pres%ries %onditions efore a memer%ountr1ma1 impose a safe-uard measure. '&e pertinent portion of t&e G)'' )-reement on Safe-uards reads6

2. ) Memer ma1 onl1 appl1 a safe-uard measure to a produ%t onl1 if t&at memer &asdetermined, pursuant to t&e provisions set out elo*, t&at su%& produ%t is ein- imported intoits territor1 in su%& in%reased <uantities, asolute or relative to domesti% produ%tion, andunder su%& %onditions as to %ause or t&reaten to %ause serious inur1 to t&e domesti% industr1t&at produ%es lie or dire%tl1 %ompetitive produ%ts."30

3. 9a: ) Memer ma1 appl1 a safe-uard measure onl1 follo*inan investi-ation 1 t&e%ompetent aut&orities of t&at Memer pursuant to pro%edures previousl1 estalis&ed andmade puli% in %onsonan%e *it& )rti%le X of t&e G)'' "##. '&is investi-ation s&all in%ludereasonale puli% noti%e to all interested parties and puli% &earin-s or ot&er appropriatemeans in *&i%& importers, e(porters and ot&er interested parties %ould present eviden%e andt&eir vie*s, in%ludin- t&e opportunit1 to respond to t&e presentations of ot&er parties and tosumit t&eir vie*s, inter alia, as to *&et&er or not t&e appli%ation of a safe-uard measure*ould e in t&e puli% interest. '&e %ompetent aut&orities s&all pulis& a report settin- fort&t&eir Endin-s and reasoned %on%lusions rea%&ed on all pertinent issues of fa%t and la*."3"

'&e SM) *as desi-ned not to %ontradi%t t&e G)'', ut to %omplement it. '&e t*o re<uisites laid do*nin Se%tion 5 for a positive Enal determination are t&e same %onditions provided under t&e G)'')-reement on Safe-uards for t&e appli%ation of safe-uard measures 1 a memer %ountr1. Moreover,t&e investi-ator1 pro%edure laid do*n 1 t&e SM) %onforms to t&e pro%edure re<uired 1 t&e G)'')-reement on Safe-uards. Con-ress &as %&osen t&e 'ariD Commission as t&e %ompetent aut&orit1 to%ondu%t su%& investi-ation. Sout&ern Cross stresses t&at appl1in- t&e provision of t&e G)'' )-reementon Safe-uards, t&e 'ariD Commission is %learl1 empo*ered to arrive at indin- %on%lusions."32 $ea-ree6 indin- on t&e 'I Se%retar1 is t&e 'ariD Commission+s determinations on *&et&er a produ%t is












imported in in%reased <uantities, asolute or relative to domesti% produ%tion and *&et&er an1 su%&in%rease is a sustantial %ause of serious inur1 or t&reat t&ereof to t&e domesti% industr1."33

SatisEed as *e are *it& t&e proper statutor1 paradi-m *it&in *&i%& t&e SM) s&ould e anal1Led, t&eTa*s in t&e reasonin- of t&e Court of )ppeals and in t&e ar-uments of t&e respondents e%omeapparent. 'o etter understand t&e d1nami%s of t&e pro%edure set up 1 t&e la* leadin- to t&eimposition of deEnitive safe-uard measures, a rief step1step re%ount t&ereof is in order.

". )fter t&e initiation of an a%tion involvin- a -eneral safe-uard measure,"3 t&e 'I Se%retar1 maes apreliminar1 determination *&et&er t&e in%reased imports of t&e produ%t under %onsiderationsustantiall1 %ause or t&reaten to sustantiall1 %ause serious inur1 to t&e domesti% industr1, "35 and*&et&er t&e imposition of a provisional measure is *arranted under Se%tion 8 of t&e SM)."3! If t&epreliminar1 determination is ne-ative, it is implied t&at no furt&er a%tion *ill e taen on t&eappli%ation.

2. $&en &is preliminar1 determination is positive, t&e Se%retar1 immediatel1 transmits t&e re%ords%overin- t&e appli%ation to t&e 'ariD Commission for immediate formal investi-ation."3

3. '&e 'ariD Commission %ondu%ts its formal investi-ation, e1ed to*ards main- a Enaldetermination. In t&e pro%ess, it &olds puli% &earin-s, providin- interested parties t&e opportunit1 to

present eviden%e or ot&er*ise e &eard."38

'o repeat, Se%tion 5 enumerates *&at t&e 'ariD Commissionis tased to determine6 9a: *&et&er a produ%t is ein- imported into t&e %ountr1 in in%reased<uantities, irrespe%tive of *&et&er t&e produ%t is asolute or relative to t&e domesti% produ%tion> and9: *&et&er t&e importation in in%reased <uantities is su%& t&at it %auses serious inur1 or t&reat to t&edomesti% industr1."3# '&e Endin-s of t&e 'ariD Commission as to t&ese matters %onstitute t&e Enaldetermination, *&i%& ma1 e eit&er positive or ne-ative.

. ;nder Se%tion "3 of t&e SM), if t&e 'ariD Commission maes a positive determination, t&e 'ariDCommission @re%ommends to t&e J'IK Se%retar1 an appropriate deEnitive measure.@ '&e 'ariDCommission @ma1 also re%ommend ot&er a%tions, in%ludin- t&e initiation of international ne-otiationsto address t&e underl1in- %ause of t&e in%rease of imports of t&e produ%ts, to alleviate t&e inur1 ort&reat t&ereof to t&e domesti% industr1, and to fa%ilitate positive adustment to import %ompetition.@"0

5. If t&e 'ariD Commission maes a positive Enal determination, t&e 'I Se%retar1 is t&en to de%ide,

*it&in Efteen 9"5: da1s from re%eipt of t&e report, as to *&at appropriate safe-uard measures s&ould&e impose.

!. Ho*ever, if t&e 'ariD Commission maes a ne-ative Enal determination, t&e 'I Se%retar1 %annotimpose an1 deEnitive safe-uard measure. ;nder Se%tion "3, &e is instru%ted instead to return*&atever %as& ond *as paid 1 t&e appli%ant upon t&e initiation of t&e a%tion for safe-uard measure.

7he *<ect of the Court@s 6ecision

'&e Court of )ppeals erred in remandin- t&e %ase a% to t&e 'I Se%retar1, *it& t&e instru%tion t&att&e 'I Se%retar1 ma1 impose a -eneral safe-uard measure even if t&ere is no positive Enaldetermination from t&e 'ariD Commission. More %ru%iall1, t&e Court of )ppeals %ould not &ave a%<uired urisdi%tion over &il%em%or+s petition for %ertiorari in t&e Erst pla%e, as Se%tion 2# of t&e SM) properl1vests urisdi%tion on t&e C'). Conse<uentl1, t&e assailed 6ecision is an asolute nullit1, and *e de%lare

it as su%&.

$&at is t&e eDe%t of t&e nullit1 of t&e assailed 6ecision on t&e 5 une 2003 6ecision of t&e 'ISe%retar1 imposin- t&e -eneral safe-uard measureU $e &ave re%o-niLed t&at an1 initial udi%ial revie*of a 'I rulin- in %onne%tion *it& t&e imposition of a safe-uard measure elon-s to t&e C'). )t t&esame time, t&e Court also re%o-niLes t&e fundamental prin%iple t&at a null and void ud-ment %annotprodu%e an1 le-al eDe%t. '&ere is su=%ient %ause to estalis& t&at t&e 5 une 2003 6ecision of t&e 'ISe%retar1 resulted from t&e assailed Court of )ppeals 6ecision, even if t&e latter &ad not 1et e%omeEnal. Conversel1, it %an e %on%luded t&at it *as e%ause of t&e putative imprimatur of t&e Court of)ppeals+ 6ecision t&at t&e 'I Se%retar1 issued &is rulin- imposin- t&e safe-uard measure. Sin%e t&e 5






















une 2003 6ecision derives its le-al eDe%t from t&e void 6ecision of t&e Court of )ppeals, t&is rulin- oft&e 'I Se%retar1 is %onse<uentl1 void. 7he sprin" cannot rise hi"her than the source.

'&e 'I Se%retar1 &imself a%no*led-ed t&at &e dre* stimulatin- for%e from t&e appellate%ourt+s 6ecision for in &is o*n 5 une 2003 6ecision, &e de%lared6

rom t&e aforementioned rulin-, t&e C) &as remanded t&e %ase to t&e 'I Se%retar1 for a Enalde%ision. '&us, t&ere is no le-al impediment for t&e Se%retar1 to de%ide on t&e appli%ation.""

'&e ines%apale %on%lusion is t&at t&e 'I Se%retar1 needed t&e assailed 6ecision of t&e Court of)ppeals to ustif1 &is renderin- a se%ond 6ecision. He e(pli%itl1 invoed t&e Court of)ppeals+ 6ecision as asis for renderin- &is 5 une 2003 rulin-, and impli%itl1 re%o-niLed t&at *it&outsu%& 6ecision &e *ould not &ave t&e aut&orit1 to revoe &is previous rulin- and render a ne*, overserulin-.

It is %lear t&en t&at t&e 25 une 2003 6ecision of t&e 'I Se%retar1 is a produ%t of t&e void 6ecision, itein- an attempt to %arr1 out su%& null ud-ment. '&ere is t&erefore no %&oi%e ut to de%lare it void as*ell, lest *e san%tion t&e perverse e(isten%e of a fruit from a none(istent tree. It does not evenmatter *&at t&e disposition of t&e 25 une 2003 6ecision *as, its nullit1 *ould e *arranted even ift&e 'I Se%retar1 %&ose to up&old &is earlier rulin- den1in- t&e appli%ation for safe-uard measures.

It is also an unfortunate spe%ta%le to e&old t&e 'I Se%retar1, seein- to enfor%e a udi%ial de%ision*&i%& is not 1et Enal and a%tuall1 pendin- revie* on appeal. Had it een a ud-e *&o attempted toenfor%e a de%ision t&at is not 1et Enal and e(e%utor1, &e or s&e *ould &ave readil1 een sue%ted tosan%tion 1 t&is Court. '&e 'I Se%retar1 ma1 e e1ond t&e amit of administrative revie* 1 t&isCourt, ut *e are %apa%itated to allo%ate t&e oundaries set 1 t&e la* of t&e land and to e(a%t fealt1to t&e le-al order, espe%iall1 from t&e instrumentalities and o=%ials of -overnment.

+(R()&R(, t&e petition is GR)N'4. '&e assailed 6ecision of t&e Court of )ppeals is 4CB)R4N;BB )N AI and S4' )SI4. '&e 6ecision of t&e 'I Se%retar1 dated 25 une 2003 is also4CB)R4 N;BB )N AI and S4' )SI4. No Costs.

'& &R0(R(0.

II. (1eption ro Rea Propert" Ta1es

G.R. No. L-S#$<: ;une 9, #<<

A/RA VALL( %&LL(G(, IN%., represented " P(0R& V. /&RG&NIA, petitioner,vs.+&N. ;*AN P. A@*IN&, ;udBe, %ourt o )irst Instan3e, AraK AR!IN !. %ARIAGA, Provin3iaTreasurer, AraK GA'PAR V. /&'@*(, !uni3ipa Treasurer, /anBued, AraK +(IR' &)PAT(RN& !ILLAR(,respondents.

PARA', J.:

'&is is a petition for revie* on %ertiorari of t&e de%ision D of t&e defun%t Court of irst Instan%e of )ra,/ran%& I, dated une ", "#, rendered in Civil Case No. !5!, entitled @)ra alle1 unior Colle-e, In%.,represented 1 edro . /or-onia, plaintiD vs. )rmin M. Caria-a as rovin%ial 'reasurer of )ra, Gaspar. /os<ue as Muni%ipal 'reasurer of /an-ued, )ra and aterno Millare, defendants,@ t&e de%retalportion of *&i%& reads6

IN I4$ A )BB 'H4 AR4GAING, t&e Court &ere1 de%lares6





'&at t&e distraint seiLure and sale 1 t&e Muni%ipal 'reasurer of /an-ued, )ra, t&erovin%ial 'reasurer of said provin%e a-ainst t&e lot and uildin- of t&e )ra alle1 unior Colle-e, In%., represented 1 ire%tor edro /or-onia lo%ated at /an-ued, )ra,is valid>

'&at sin%e t&e s%&ool is not e(empt from pa1in- ta(es, it s&ould t&erefore pa1 all a%ta(es in t&e amount of 5,"0.3" and a% ta(es and penalties from t&e promul-ation

of t&is de%ision>

'&at t&e amount deposited 1 t&e plaintaD &im t&e sum of !0,000.00 efore t&e trial,e %onEs%ated to appl1 for t&e pa1ment of t&e a% ta(es and for t&e redemption oft&e propert1 in <uestion, if t&e amount is less t&an !,000.00, t&e remainder must ereturned to t&e ire%tor of edro /or-onia, *&o represents t&e plaintiD &erein>

'&at t&e deposit of t&e Muni%ipal 'reasurer in t&e amount of !,000.00 also efore t&etrial must e returned to said Muni%ipal 'reasurer of /an-ued, )ra>

)nd Enall1 t&e %ase is &ere1 ordered dismissed *it& %osts a-ainst t&e plaintiD.

SA AR4R4. 9Rollo, pp. 2223:

etitioner, an edu%ational %orporation and institution of &i-&er learnin- dul1 in%orporated *it& t&eSe%urities and 4(%&an-e Commission in "#8, Eled a %omplaint 9)nne( @"@ of )ns*er 1 t&erespondents Heirs of aterno Millare> Rollo, pp. #5#: on ul1 "0, "#2 in t&e %ourt a uo to annul andde%lare void t&e @Noti%e of SeiLure+ and t&e @Noti%e of Sale@ of its lot and uildin- lo%ated at /an-ued,)ra, for nonpa1ment of real estate ta(es and penalties amountin- to 5,"0.3". Said @Noti%e ofSeiLure@ of t&e %olle-e lot and uildin- %overed 1 Ari-inal CertiE%ate of 'itle No. Z83 dul1 re-isteredin t&e name of petitioner, plaintiD elo*, on ul1 !, "#2, 1 respondents Muni%ipal 'reasurer androvin%ial 'reasurer, defendants elo*, *as issued for t&e satisfa%tion of t&e said ta(es t&ereon. '&e@Noti%e of Sale@ *as %aused to e served upon t&e petitioner 1 t&e respondent treasurers on ul1 8,"#2 for t&e sale at puli% au%tion of said %olle-e lot and uildin-, *&i%& sale *as &eld on t&e samedate. r. aterno Millare, t&en Muni%ipal Ma1or of /an-ued, )ra, oDered t&e &i-&est id of !,000.00*&i%& *as dul1 a%%epted. '&e %ertiE%ate of sale *as %orrespondin-l1 issued to &im.

An )u-ust "0, "#2, t&e respondent aterno Millare 9no* de%eased: Eled t&rou-& %ounstel a motion todismiss t&e %omplaint.

An )u-ust 23, "#2, t&e respondent rovin%ial 'reasurer and Muni%ipal 'reasurer, t&rou-& t&enrovin%ial is%al Boreto C. Roldan, Eled t&eir ans*er 9)nne( @2@ of )ns*er 1 t&e respondents Heirs ofatemo Millare> Rollo, pp. #8"00: to t&e %omplaint. '&is *as follo*ed 1 an amended ans*er 9)nne(@3,@ ibid, Rollo, pp. "0""03: on )u-ust 3", "#2.

An Septemer ", "#2 t&e respondent aterno Millare Eled &is ans*er 9)nne( @5,@ ibid> Rollo, pp. "0!"08:.

An A%toer "2, "#2, *it& t&e aforesaid sale of t&e s%&ool premises at puli% au%tion, t&e respondent ud-e, Hon. uan . )<uino of t&e Court of irst Instan%e of )ra, /ran%& I, ordered 9)nne( @!,@ ibid>Rollo, pp. "0#""0: t&e respondents provin%ial and muni%ipal treasurers to deliver to t&e Cler of Courtt&e pro%eeds of t&e au%tion sale. Hen%e, on e%emer ", "#2, petitioner, t&rou-& ire%tor /or-onia,deposited *it& t&e trial %ourt t&e sum of !,000.00 eviden%ed 1 N/ C&e% No. #03!#.

An )pril "2, "#3, t&e parties entered into a stipulation of fa%ts adopted and emodied 1 t&e trial%ourt in its <uestioned de%ision. Said Stipulations reads6

S'I;B)'IAN A )C'S



CAM4 NA$ t&e parties, assisted 1 %ounsels, and to t&is Honorale Court respe%tfull1enter into t&e follo*in- a-reed stipulation of fa%ts6

". '&at t&e personal %ir%umstan%es of t&e parties as stated in para-rap& " of t&e%omplaint is admitted> ut t&e parti%ular person of Mr. )rmin M. Caria-a is to esustituted, &o*ever, 1 an1one *&o is a%tuall1 &oldin- t&e position of rovin%ial 'reasurer of t&e rovin%e of )ra>

2. '&at t&e plaintiD )ra alle1 unior Colle-e, In%. is t&e o*ner of t&e lot and uildin-st&ereon lo%ated in /an-ued, )ra under Ari-inal CertiE%ate of 'itle No. 083>

3. '&at t&e defendant Gaspar . /os<ue, as Muni%ipal treasurer of /an-ued, )ra%aused to e served upon t&e )ra alle1 unior Colle-e, In%. a Noti%e of SeiLure on t&epropert1 of said s%&ool under Ari-inal CertiE%ate of 'itle No. 083 for t&e satisfa%tion of real propert1 ta(es t&ereon, amountin- to 5,"0.3"> t&e Noti%e of SeiLure ein- t&eone atta%&ed to t&e %omplaint as 4(&iit )>

. '&at on une 8, "#2 t&e aove properties of t&e )ra alle1 unior Colle-e, In%. *assold at puli% au%tion for t&e satisfa%tion of t&e unpaid real propert1 ta(es t&ereon andt&e same *as sold to defendant aterno Millare *&o oDered t&e &i-&est id of

!,000.00 and a CertiE%ate of Sale in &is favor *as issued 1 t&e defendant Muni%ipal 'reasurer.

5. '&at all ot&er matters not parti%ularl1 and spe%iall1 %overed 1 t&is stipulation offa%ts *ill e t&e sue%t of eviden%e 1 t&e parties.

$H4R4AR4, it is respe%tfull1 pra1ed of t&e Honorale Court to %onsider and admitt&is stipulation of fa%ts on t&e point a-reed upon 1 t&e parties.

/an-ued, )ra, )pril "2, "#3.

S-d.)-ripino/rillantes '1p)GRIINA/RIBB)N'4S)ttorne1 forlaintiD

S-d.BoretoRoldan

'1pBAR4'ARAB)Nrovin%ialis%alCounselfor



efendantsrovin%ial 'reasurer of)ra

and t&eMuni%ipal 'reasurer of/an-ued, )ra

S-d.emetrio .re '1p.4M4'

RIA .R4)ttorne1 forefendantaternoMillare9Rollo,pp. ""8:

)side from t&e Stipulation of a%ts, t&e trial %ourt amon- ot&ers, found t&e follo*in-6 9a: t&at t&es%&ool is re%o-niLed 1 t&e -overnment and is oDerin- rimar1, Hi-& S%&ool and Colle-e Courses, and&as a s%&ool population of more t&an one t&ousand students all in all> 9: t&at it is lo%ated ri-&t in t&e&eart of t&e to*n of /an-ued, a fe* meters from t&e plaLa and aout "20 meters from t&e Court ofirst Instan%e uildin-> 9%: t&at t&e elementar1 pupils are &oused in a t*ostore1 uildin- a%ross t&estreet> 9d: t&at t&e &i-& s%&ool and %olle-e students are &oused in t&e main uildin-> 9e: t&at t&eire%tor *it& &is famil1 is in t&e se%ond Toor of t&e main uildin-> and 9f: t&at t&e annual -ross in%omeof t&e s%&ool rea%&es more t&an one &undred t&ousand pesos.

rom all t&e fore-oin-, t&e onl1 issue left for t&e Court to determine and as a-reed 1 t&e parties, is*&et&er or not t&e lot and uildin- in <uestion are used e!clusively for educational purposes. 9Rollo, p.20:

'&e su%%eedin- rovin%ial is%al, Hon. ose ). Solomon and &is )ssistant, Hon. 4usta<uio [. Montero,Eled a Memorandum for t&e Government on Mar%& 25, "#, and a Supplemental Memorandum onMa1 , "#, *&erein t&e1 opined @t&at ased on t&e eviden%e, t&e la*s appli%ale, %ourt de%isionsand urispruden%e, t&e s%&ool uildin- and s%&ool lot used for edu%ational purposes of t&e )ra alle1Colle-e, In%., are e(empted from t&e pa1ment of ta(es.@ 9)nne(es @/,@ @/"@ of etition> Rollo, pp. 2#> and #:.

Nonet&eless, t&e trial %ourt disa-reed e%ause of t&e use of t&e se%ond Toor 1 t&e ire%tor ofpetitioner s%&ool for residential purposes. He t&us ruled for t&e -overnment and rendered t&e assailedde%ision.

)fter &avin- een -ranted 1 t&e trial %ourt ten 9"0: da1s from )u-ust !, "# *it&in *&i%& to perfe%tits appeal 9er Arder dated )u-ust !, "#> )nne( @G@ of etition> Rollo, p. 5: petitioner instead



availed of t&e instant petition for revie* on certiorari *it& pra1er for preliminar1 inun%tion efore t&isCourt, *&i%& petition *as Eled on )u-ust ", "# 9Rollo, p.2:.

In t&e resolution dated )u-ust "!, "#, t&is Court resolved to -ive ;4 CA;RS4 to t&e petition 9Rollo,p. 58:. Respondents *ere re<uired to ans*er said petition 9Rollo, p. :.

etitioner raised t&e follo*in- assi-nments of error6

I

'H4 CA;R' 2 4RR4 IN S;S')INING )S )BI 'H4 S4I[;R4 )N S)B4 A 'H4 CABB4G4 BA' )N/;IBING ;S4 AR 4;C)'IAN)B ;RAS4S A 'H4 4'I'IAN4R.

II

'H4 CA;R' 2 4RR4 IN 4CB)RING 'H)' 'H4 CABB4G4 BA' )N /;IBING A 'H4 4'I'IAN4R)R4 NA' ;S4 4XCB;SI4B AR 4;C)'IAN)B ;RAS4S M4R4B /4C);S4 'H4 CABB4G4R4SI4N' R4SI4S IN AN4 RAAM A 'H4 CABB4G4 /;IBING.

III

'H4 CA;R' 2 4RR4 IN 4CB)RING 'H)' 'H4 CABB4G4 BA' )N /;IBING A 'H4 4'I'IAN4R)R4 NA' 4X4M' RAM RA4R' ')X4S )N IN AR4RING 4'I'IAN4R 'A ) 5,"0.3" )S R4)B' ')X4S.

I

'H4 CA;R' 2 4RR4 IN AR4RING 'H4 CANISC)'IAN A 'H4 !,000.00 4ASI' M)4 IN 'H4CA;R' / 4'I'IAN4R )S )M4N' A 'H4 5,"0.3" R4)B' ')X4S. 9See /rief for t&e etitioner, pp."2:

'&e main issue in t&is %ase is t&e proper interpretation of t&e p&rase @used e(%lusivel1 for edu%ationalpurposes.@

etitioner %ontends t&at t&e primar1 use of t&e lot and uildin- for edu%ational purposes, and not t&ein%idental use t&ereof, determines and e(emption from propert1 ta(es under Se%tion 22 93:, )rti%le Iof t&e "#35 Constitution. Hen%e, t&e seiLure and sale of sue%t %olle-e lot and uildin-, *&i%& are%ontrar1 t&ereto as *ell as to t&e provision of Common*ealt& )%t No. 0, ot&er*ise no*n as t&e)ssessment Ba*, are *it&out le-al asis and t&erefore void.

An t&e ot&er &and, private respondents maintain t&at t&e %olle-e lot and uildin- in <uestion *&i%&*ere sue%ted to seiLure and sale to ans*er for t&e unpaid ta( are used6 9": for t&e edu%ationalpurposes of t&e %olle-e> 92: as t&e permanent residen%e of t&e resident and ire%tor t&ereof, Mr.edro . /or-onia, and &is famil1 in%ludin- t&e inla*s and -rand%&ildren> and 93: for %ommer%ialpurposes e%ause t&e -round Toor of t&e %olle-e uildin- is ein- used and rented 1 a %ommer%ialestalis&ment, t&e Nort&ern Maretin- Corporation 9See p&oto-rap& atta%&ed as )nne( @8@ 9Comment>Rollo, p. #0K:.

ue to its time frame, t&e %onstitutional provision *&i%& Ends appli%ation in t&e %ase at ar is Se%tion22, para-rap& 3, )rti%le I, of t&e t&en "#35 &ilippine Constitution, *&i%& e(pressl1 -rants e(emptionfrom realt1 ta(es for @Cemeteries, %&ur%&es and parsona-es or %onvents appurtenant t&ereto, and alllands, uildin-s, and improvements used e!clusively for reli-ious, %&aritale or edu%ationalpurposes ...

Relative t&ereto, Se%tion 5, para-rap& %, Common*ealt& )%t No. 0 as amended 1 Repuli% )%t No.0#, ot&er*ise no*n as t&e )ssessment Ba*, provides6



'&e follo*in- are e(empted from real propert1 ta( under t&e )ssessment Ba*6

((( ((( (((

9%: %&ur%&es and parsona-es or %onvents appurtenant t&ereto, and all lands, uildin-s,and improvements used e!clusively for reli-ious, %&aritale, s%ientiE% or edu%ationalpurposes.

((( ((( (((

In t&is re-ard petitioner ar-ues t&at t&e primar1 use of t&e s%&ool lot and uildin- is t&e asi% and%ontrollin- -uide, norm and standard to determine ta( e(emption, and not t&e mere in%idental uset&ereof.

)s earl1 as "#"! in 8MC of Manila vs. Collector of lnternal evenue, 33 &il. 2" J"#"!K, t&is Courtruled t&at *&ile it ma1 e true t&at t&e MC) eeps a lod-in- and a oardin- &ouse and maintains arestaurant for its memers, still t&ese do not %onstitute usiness in t&e ordinar1 a%%eptan%e of t&e*ord, ut an institution used e(%lusivel1 for reli-ious, %&aritale and edu%ational purposes, and assu%&, it is entitled to e e(empted from ta(ation.

In t&e %ase of /is&op of 4ueva +e"ovia v. 'rovincial Board of %locos 4orte, 5" &il. 352 J"#2K, t&isCourt in%luded in t&e e(emption a ve-etale -arden in an ada%ent lot and anot&er lot formerl1 used asa %emeter1. It *as %lariEed t&at t&e term @used e(%lusivel1@ %onsiders in%idental use also. '&us, t&ee(emption from pa1ment of land ta( in favor of t&e %onvent in%ludes, not onl1 t&e land a%tuall1o%%upied 1 t&e uildin- ut also t&e ada%ent -arden devoted to t&e in%idental use of t&e paris&priest. '&e lot *&i%& is not used for %ommer%ial purposes ut serves solel1 as a sort of lod-in- pla%e,also <ualiEes for e(emption e%ause t&is %onstitutes in%idental use in reli-ious fun%tions.

'&e p&rase @e(%lusivel1 used for edu%ational purposes@ *as furt&er %lariEed 1 t&is Court in t&e %asesof >errera vs. uezon City Board of assessment ppeals, 3 SCR) "8! J"#!"K and Commissioner of%nternal evenue vs. Bishop of the Missionary 6istrict , " SCR) ##" J"#!5K, t&us

Moreover, t&e e(emption in favor of propert1 used e(%lusivel1 for %&aritale oredu%ational purposes is +not limited to propert1 a%tuall1 indispensale+ t&erefor 9Coole1on 'a(ation, ol. 2, p. "30:, ut e(tends to fa%ilities *&i%& are in%idental to andreasonal1 ne%essar1 for t&e a%%omplis&ment of said purposes, su%& as in t&e %ase of&ospitals, @a s%&ool for trainin- nurses, a nurses+ &ome, propert1 use to provide&ousin- fa%ilities for interns, resident do%tors, superintendents, and ot&er memers oft&e &ospital staD, and re%reational fa%ilities for student nurses, interns, and residents+98 CS !!2":, su%& as @)t&leti% Eelds@ in%ludin- @a Erm used for t&e inmates of t&einstitution. 9Coole1 on 'a(ation, ol. 2, p. "30:.

'&e test of e(emption from ta(ation is t&e use of t&e propert1 for purposes mentioned in t&eConstitution 9)postoli% refe%t v. Cit1 'reasurer of /a-uio, " &il, 5 J"#"K:.

It must e stressed &o*ever, t&at *&ile t&is Court allo*s a more lieral and nonrestri%tiveinterpretation of t&e p&rase @e(%lusivel1 used for edu%ational purposes@ as provided for in )rti%le I,Se%tion 22, para-rap& 3 of t&e "#35 &ilippine Constitution, reasonale emp&asis &as al*a1s eenmade t&at e(emption e(tends to fa%ilities *&i%& are in%idental to and reasonal1 ne%essar1 for t&ea%%omplis&ment of t&e main purposes. At&er*ise stated, t&e use of t&e s%&ool uildin- or lot for%ommer%ial purposes is neit&er %ontemplated 1 la*, nor 1 urispruden%e. '&us, *&ile t&e use of t&ese%ond Toor of t&e main uildin- in t&e %ase at ar for residential purposes of t&e ire%tor and &isfamil1, ma1 End ustiE%ation under t&e %on%ept of in%idental use, *&i%& is %omplimentar1 to t&e mainor primar1 purposeedu%ational, t&e lease of t&e Erst Toor t&ereof to t&e Nort&ern Maretin-Corporation %annot 1 an1 stret%& of t&e ima-ination e %onsidered in%idental to t&e purpose ofedu%ation.



It *ill e noted &o*ever t&at t&e aforementioned lease appears to &ave een raised for t&e Erst time int&is Court. '&at t&e matter *as not taen up in t&e to %ourt is reall1 apparent in t&e de%ision ofrespondent ud-e. No mention t&ereof *as made in t&e stipulation of fa%ts, not even in t&e des%riptionof t&e s%&ool uildin- 1 t&e trial ud-e, ot& emodied in t&e de%ision nor as one of t&e issues toresolve in order to determine *&et&er or not said properl1 ma1 e e(empted from pa1ment of realestate ta(es 9Rollo, pp. "23:. An t&e ot&er &and, it is note*ort&1 t&at su%& fa%t *as not disputedeven after it *as raised in t&is Court.

Indeed, it is a(iomati% t&at fa%ts not raised in t&e lo*er %ourt %annot e taen up for t&e Erst time onappeal. Nonet&eless, as an e(%eption to t&e rule, t&is Court &as &eld t&at alt&ou-& a fa%tual issue isnot s<uarel1 raised elo*, still in t&e interest of sustantial usti%e, t&is Court is not prevented from%onsiderin- a pivotal fa%tual matter. @'&e Supreme Court is %lot&ed *it& ample aut&orit1 to revie*palpale errors not assi-ned as su%& if it Ends t&at t&eir %onsideration is ne%essar1 in arrivin- at a ustde%ision.@ 9ereL vs. Court of )ppeals, "2 SCR) !5 J"#8K:.

;nder t&e "#35 Constitution, t&e trial %ourt %orre%tl1 arrived at t&e %on%lusion t&at t&e s%&ool uildin-as *ell as t&e lot *&ere it is uilt, s&ould e ta(ed, not e%ause t&e se%ond Toor of t&e same is ein-used 1 t&e ire%tor and &is famil1 for residential purposes, ut e%ause t&e Erst Toor t&ereof is ein-used for %ommer%ial purposes. Ho*ever, sin%e onl1 a portion is used for purposes of %ommer%e, it isonl1 fair t&at &alf of t&e assessed ta( e returned to t&e s%&ool involved.

R4MIS4S CANSI4R4, t&e de%ision of t&e Court of irst Instan%e of )ra, /ran%& I, is &ere1)IRM4 sue%t to t&e modiE%ation t&at &alf of t&e assessed ta( e returned to t&e petitioner.

SA AR4R4.

G.R. No. L-279<< 0e3eer S, #27

T+( R&!AN %AT+&LI% /I'+&P &) N*(VA '(G&VIA, as representative o t6e Roan%at6oi3 Apostoi3 %6ur36, plaintiDappellant,vs.T+( PR&VIN%IAL /&AR0 &) IL&%&' N&RT(, (T AL., defendantsappellants.

-icente Llanes and 'roceso Coloma for plainti<3appellant.

'rovincial 1iscal +antos for defendant3appellants.

AVAN%(UA, J.:

'&e plaintiD, t&e Roman Cat&oli% )postoli% C&ur%&, represented 1 t&e /is&op of Nueva Se-ovia,possesses and is t&e o*ner of a par%el of land in t&e muni%ipalit1 of San Ni%olas, Ilo%os Norte, all foursides of *&i%& fa%e on puli% streets. An t&e sout& side is a part of t&e %&ur%&1ard, t&e %onvent and anada%ent lot used for a ve-etale -arden, %ontainin- an area oD ",!2 s<uare meters, in *&i%& t&ere isa stale and a *ell for t&e use of t&e %onvent. In t&e %enter is t&e remainder of t&e %&ur%&1ard and t&e%&ur%&. An t&e nort& is an old %emeter1 *it& t*o of its *alls still standin-, and a portion *&ereformerl1 stood a to*er, t&e ase of *&i%& still e seen, %ontainin- a total area of 8,#55 s<uare meters.

)s re<uired 1 t&e defendants, on ul1 3, "#25 t&e plaintiD paid, under protest, t&e land ta( on t&e lotadoinin- t&e %onvent and t&e lot *&i%& formerl1 *as t&e %emeter1 *it& t&e portion *&ere t&e to*erstood.

'&e plaintiD Eled t&is a%tion for t&e re%over1 of t&e sum paid 1 to t&e defendants 1 *a1 of land ta(,alle-in- t&at t&e %olle%tion of t&is ta( is ille-al. '&e lo*er %ourt asolved t&e defendants from t&e%omplaint in re-ard to t&e lot adoinin- %onvent and de%lared t&at t&e ta( %olle%ted on t&e lot, *&i%&formerl1 *as t&e %emeter1 and on t&e portion *&ere t&e lo*er stood, *as ille-al. /ot& partiesappealed from t&is ud-ment.



'&e e(emption in favor of t&e %onvent in t&e pa1ment of t&e land ta( 9se%. 3 J%K )dministrativeCode: refers to t&e &ome of t&e parties *&o presides over t&e %&ur%& and *&o &as to tae %are of&imself in order to dis%&ar-e &is duties. In t&erefore must, in t&e sense, in%lude not onl1 t&e landa%tuall1 o%%upied 1 t&e %&ur%&, ut also t&e ada%ent -round destined to t&e ordinar1 in%idental usesof man. 4(%ept in lar-e %ities *&ere t&e densit1 of t&e population and t&e development of %ommer%ere<uire t&e use of lar-er tra%ts of land for uildin-s, a ve-etale -arden elon-s to a &ouse and, in t&e%ase of a %onvent, it use is limited to t&e ne%essities of t&e priest, *&i%& %omes under t&e

e(emption. laphi.net

In re-ard to t&e lot *&i%& formerl1 *as t&e %emeter1, *&ile it is no lon-er used as su%&, neit&er is itused for %ommer%ial purposes and, a%%ordin- to t&e eviden%e, is no* ein- used as a lod-in- &ouse 1t&e people *&o parti%ipate in reli-ious festivities, *&i%& %onstitutes an in%idental use in reli-iousfun%tions, *&i%& also %omes *it&in t&e e(emption.

'&e ud-ment appealed from is reversed in all it parts and it is &eld t&at ot& lots are e(empt from landta( and t&e defendants are ordered to refund to plaintiD *&atever *as paid as su%& ta(, *it&out an1spe%ial pronoun%ement as to %osts. So ordered.

5ohnson, +treet, -illamor, strand, 5ohns and -illa3eal, 55., concur.

G.R. No. 44$4 ;une 2#, 2$$4

L*NG %(NT(R &) T+( P+ILIPPIN(', petitioner,vs.@*(>&N %IT and %&N'TANTIN& P. R&'A', in 6is 3apa3it" as %it" Assessor o @ueJon%it",respondents.

4 C I S I A N

%ALL(;&, 'R., J.:

'&is is a petition for revie* on %ertiorari under Rule 5 of t&e Rules of Court, as amended, of t&ee%ision" dated ul1 ", 2000 of t&e Court of )ppeals in C)G.R. S No. 50" *&i%& a=rmed t&ede%ision of t&e Central /oard of )ssessment )ppeals &oldin- t&at t&e lot o*ned 1 t&e petitioner andits &ospital uildin- %onstru%ted t&ereon are sue%t to assessment for purposes of real propert1 ta(.

T6e Ante3edents

'&e petitioner Bun- Center of t&e &ilippines is a nonsto% and nonproEt entit1 estalis&ed on anuar1 "!, "#8" 1 virtue of residential e%ree No. "823.2 It is t&e re-istered o*ner of a par%el ofland, parti%ularl1 des%ried as Bot No. R3/3)"/", S$A0000#5, lo%ated at ZueLon )venue%orner 4llipti%al Road, Central istri%t, ZueLon Cit1. '&e lot &as an area of "2",!3 s<uare meters andis %overed 1 'ransfer CertiE%ate of 'itle 9'C': No. 2!"320 of t&e Re-istr1 of eeds of ZueLon Cit1.4re%ted in t&e middle of t&e aforesaid lot is a &ospital no*n as t&e Bun- Center of t&e &ilippines. )i- spa%e at t&e -round Toor is ein- leased to private parties, for %anteen and small store spa%es,and to medi%al or professional pra%titioners *&o use t&e same as t&eir private %lini%s for t&eir patients*&om t&e1 %&ar-e for t&eir professional servi%es. )lmost one&alf of t&e entire area on t&e left side oft&e uildin- alon- ZueLon )venue is va%ant and idle, *&ile a i- portion on t&e ri-&t side, at t&e %ornerof ZueLon )venue and 4llipti%al Road, is ein- leased for %ommer%ial purposes to a private enterpriseno*n as t&e 4llipti%al Ar%&ids and Garden Center.

'&e petitioner a%%epts pa1in- and nonpa1in- patients. It also renders medi%al servi%es to outpatients,ot& pa1in- and nonpa1in-. )side from its in%ome from pa1in- patients, t&e petitioner re%eivesannual susidies from t&e -overnment.

An une , "##3, ot& t&e land and t&e &ospital uildin- of t&e petitioner *ere assessed for realpropert1 ta(es in t&e amount of ,55,8!0 1 t&e Cit1 )ssessor of ZueLon Cit1.3 )%%ordin-l1, 'a(



e%laration Nos. C02"0"22! 9"!25"8: and C02"0"23" 9"525"8): *ere issued for t&e land andt&e &ospital uildin-, respe%tivel1. An )u-ust 25, "##3, t&e petitioner Eled a Claim for4(emption5 from real propert1 ta(es *it& t&e Cit1 )ssessor, predi%ated on its %laim t&at it is a%&aritale institution. '&e petitionerQs re<uest *as denied, and a petition *as, t&ereafter, Eled eforet&e Bo%al /oard of )ssessment )ppeals of ZueLon Cit1 9ZCB/)), for revit1: for t&e reversal of t&eresolution of t&e Cit1 )ssessor. '&e petitioner alle-ed t&at under Se%tion 28, para-rap& 3 of t&e "#8Constitution, t&e propert1 is e(empt from real propert1 ta(es. It averred t&at a minimum of !07 of its

&ospital eds are e(%lusivel1 used for %&arit1 patients and t&at t&e maor t&rust of its &ospitaloperation is to serve %&arit1 patients. '&e petitioner %ontends t&at it is a %&aritale institution and, assu%&, is e(empt from real propert1 ta(es. '&e ZCB/)) rendered ud-ment dismissin- t&e petition and&oldin- t&e petitioner liale for real propert1 ta(es.!

'&e ZCB/))Qs de%ision *as, lie*ise, a=rmed on appeal 1 t&e Central /oard of )ssessment )ppealsof ZueLon Cit1 9C/)), for revit1: *&i%& ruled t&at t&e petitioner *as not a %&aritale institution andt&at its real properties *ere not a%tuall1, dire%tl1 and e(%lusivel1 used for %&aritale purposes> &en%e,it *as not entitled to real propert1 ta( e(emption under t&e %onstitution and t&e la*. '&e petitionersou-&t relief from t&e Court of )ppeals, *&i%& rendered ud-ment a=rmin- t&e de%ision of t&e C/)).8

;ndaunted, t&e petitioner Eled its petition in t&is Court %ontendin- t&at6

). 'H4 CA;R' 2 4RR4 IN 4CB)RING 4'I'IAN4R )S NA' 4N'I'B4 'A R4)B' ')X4X4M'IANS AN 'H4 GRA;N 'H)' I'S B)N, /;IBING )N IMRA4M4N'S, S;/4C' A)SS4SSM4N', )R4 NA' )C';)BB, IR4C'B )N 4XCB;SI4B 4A'4 AR CH)RI')/B4;RAS4S.

/. $HIB4 4'I'IAN4R IS NA' 4CB)R4 )S R4)B RA4R' ')X 4X4M' ;N4R I'S CH)R'4R, "823, S)I 4X4M'IAN M) N44R'H4B4SS /4 4X'4N4 ;AN RA4R )BIC)'IAN.

'&e petitioner avers t&at it is a %&aritale institution *it&in t&e %onte(t of Se%tion 2893:, )rti%le I oft&e "#8 Constitution. It asserts t&at its %&ara%ter as a %&aritale institution is not altered 1 t&e fa%tt&at it admits pa1in- patients and renders medi%al servi%es to t&em, leases portions of t&e land toprivate parties, and rents out portions of t&e &ospital to private medi%al pra%titioners from *&i%& itderives in%ome to e used for operational e(penses. '&e petitioner points out t&at for t&e 1ears "##5to "###, "007 of its outpatients *ere %&arit1 patients and of t&e &ospitalQs 282ed %apa%it1, !07t&ereof, or "0 eds, is allotted to %&arit1 patients. It asserts t&at t&e fa%t t&at it re%eives susidiesfrom t&e -overnment attests to its %&ara%ter as a %&aritale institution. It %ontends t&at t&e@e(%lusivit1@ re<uired in t&e Constitution does not ne%essaril1 mean @solel1.@ Hen%e, even if a portion of its real estate is leased out to private individuals from *&om it derives in%ome, it does not lose its%&ara%ter as a %&aritale institution, and its e(emption from t&e pa1ment of real estate ta(es on itsreal propert1. '&e petitioner %ited our rulin- in >errera v. C3B# to olster its pose. '&e petitionerfurt&er %ontends t&at even if .. No. "823 does not e(empt it from t&e pa1ment of real estate ta(es, itis not pre%luded from seein- ta( e(emption under t&e "#8 Constitution.

In t&eir %omment on t&e petition, t&e respondents aver t&at t&e petitioner is not a %&aritale entit1. '&e petitionerQs real propert1 is not e(empt from t&e pa1ment of real estate ta(es under .. No. "823and even under t&e "#8 Constitution e%ause it failed to prove t&at it is a %&aritale institution andt&at t&e said propert1 is a%tuall1, dire%tl1 and e(%lusivel1 used for %&aritale purposes. '&erespondents noted t&at in a ne*spaper report, it appears t&at -raft %&ar-es *ere Eled *it& t&eSandi-ana1an a-ainst t&e dire%tor of t&e petitioner, its administrative o=%er, and [enaida Rivera, t&e

proprietress of t&e 4llipti%al Ar%&ids and Garden Center, for enterin- into a lease %ontra%t over,!!3."3 s<uare meters of t&e propert1 in "##0 for onl1 20,000 a mont&, *&en t&e mont&l1 rentals&ould e35,000 a mont& as determined 1 t&e Commission on )udit> and t&at instead of %ompl1in-*it& t&e dire%tive of t&e CA) for t&e %an%ellation of t&e %ontra%t for ein- -rossl1 preudi%ial to t&e-overnment, t&e petitioner rene*ed t&e same on Mar%& "3, "##5 for a mont&l1 rental of onl1 2,000. '&e1 assert t&at t&e petitioner uses t&e susidies -ranted 1 t&e -overnment for %&arit1 patients anduses t&e rest of its in%ome from t&e propert1 for t&e eneEt of pa1in- patients, amon- ot&er purposes. '&e1 aver t&at t&e petitioner failed to addu%e sustantial eviden%e t&at "007 of its outpatients and"0 eds in t&e &ospital are reserved for indi-ent patients. '&e respondents furt&er assert, t&us6



"3. '&at t&e %laimsFalle-ations of t&e etitioner BC do not spea *ell of its re%ord of servi%e. '&at efore a patient is admitted for treatment in t&e Center, Erst impression is t&at it is pa1patient and re<uired to pa1 a %ertain amount as deposit. '&at even if a patient is livin- elo*t&e povert1 line, &e is %&ar-ed *it& &i-& &ospital ills. )nd, *it&out t&ese ills ein- Erstsettled, t&e poor patient %annot e allo*ed to leave t&e &ospital or e dis%&ar-ed *it&out Erstpa1in- t&e &ospital ills or issue a promissor1 note -uaranteed and indorsed 1 an inTuentiala-en%1 or person no*n onl1 to t&e Center> t&at even t&e remains of de%eased poor patients

suDered t&e same fate. Moreover, efore a patient is admitted for treatment as free or %&arit1patient, one must under-o a series of intervie*s and must sumit all t&e re<uirements needed1 t&e Center, usuall1 a%%ompanied 1 endorsement 1 an inTuential a-en%1 or person no*nonl1 to t&e Center. '&ese fa%ts *ere &eard and admitted 1 t&e etitioner BC durin- t&e&earin-s efore t&e Honorale ZC/)) and Honorale C/)). '&ese are t&e reasons of indi-entpatients, instead of seein- treatment *it& t&e Center, t&e1 prefer to e treated at t&e ZueLonInstitute. Can su%& pra%ti%e 1 t&e Center e %alled %&aritaleU"0

T6e Issues

'&e issues for resolution are t&e follo*in-6 9a: *&et&er t&e petitioner is a %&aritale institution *it&int&e %onte(t of residential e%ree No. "823 and t&e "#3 and "#8 Constitutions and Se%tion 239:of Repuli% )%t No. "!0> and 9: *&et&er t&e real properties of t&e petitioner are e(empt from realpropert1 ta(es.

T6e %ourt’s RuinB

'&e petition is partiall1 -ranted.

An t&e Erst issue, *e &old t&at t&e petitioner is a %&aritale institution *it&in t&e %onte(t of t&e "#3and "#8 Constitutions. 'o determine *&et&er an enterprise is a %&aritale institutionFentit1 or not, t&eelements *&i%& s&ould e %onsidered in%lude t&e statute %reatin- t&e enterprise, its %orporatepurposes, its %onstitution and 1la*s, t&e met&ods of administration, t&e nature of t&e a%tual *orperformed, t&e %&ara%ter of t&e servi%es rendered, t&e indeEniteness of t&e eneE%iaries, and t&e useand o%%upation of t&e properties.""

In t&e le-al sense, a %&arit1 ma1 e full1 deEned as a -ift, to e applied %onsistentl1 *it& e(istin- la*s,

for t&e eneEt of an indeEnite numer of persons, eit&er 1 rin-in- t&eir minds and &earts under t&einTuen%e of edu%ation or reli-ion, 1 assistin- t&em to estalis& t&emselves in life or ot&er*iselessenin- t&e urden of -overnment."2 It ma1 e applied to almost an1t&in- t&at tend to promote t&e*elldoin- and *ellein- of so%ial man. It emra%es t&e improvement and promotion of t&e &appinessof man."3 '&e *ord @%&aritale@ is not restri%ted to relief of t&e poor or si%." '&e test of a %&arit1 anda %&aritale or-aniLation are in la* t&e same. '&e test *&et&er an enterprise is %&aritale or not is*&et&er it e(ists to %arr1 out a purpose reor-aniLed in la* as %&aritale or *&et&er it is maintained for-ain, proEt, or private advanta-e.

;nder .. No. "823, t&e petitioner is a nonproEt and nonsto% %orporation *&i%&, sue%t to t&eprovisions of t&e de%ree, is to e administered 1 t&e A=%e of t&e resident of t&e &ilippines *it& t&eMinistr1 of Healt& and t&e Ministr1 of Human Settlements. It *as or-aniLed for t&e *elfare and eneEtof t&e ilipino people prin%ipall1 to &elp %omat t&e &i-& in%iden%e of lun- and pulmonar1 diseases int&e &ilippines. '&e raison d0etre for t&e %reation of t&e petitioner is stated in t&e de%ree, viz 6

$&ereas, for de%ades, respirator1 diseases &ave een a priorit1 %on%ern, &avin- een t&eleadin- %ause of illness and deat& in t&e &ilippines, %omprisin- more t&an 57 of t&e totalannual deat&s from all %auses, t&us, e(a%tin- a tremendous toll on &uman resour%es, *&i%&ailments are liel1 to in%rease and de-enerate into serious lun- diseases on a%%ount ofunaated pollution, industrialiLation and un%&e%ed %i-arette smoin- in t&e %ountr1>lavvphDl.net



$&ereas, t&e more %ommon lun- diseases are, to a -reat e(tent, preventale, and %urale*it& earl1 and ade<uate medi%al %are, immuniLation and t&rou-& prompt and intensiveprevention and &ealt& edu%ation pro-rams>

$&ereas, t&ere is an ur-ent need to %onsolidate and reinfor%e e(istin- pro-rams, strate-iesand eDorts at preventin-, treatin- and re&ailitatin- people aDe%ted 1 lun- diseases, and toundertae resear%& and trainin- on t&e %ure and prevention of lun- diseases, t&rou-& a Bun-

Center *&i%& *ill &ouse and nurture t&e aove and related a%tivities and provide tertiar1level%are for more di=%ult and prolemati%al %ases>

$&ereas, to a%&ieve t&is purpose, t&e Government intends to provide material and Enan%ialsupport to*ards t&e estalis&ment and maintenan%e of a Bun- Center for t&e *elfare andeneEt of t&e ilipino people."5

'&e purposes for *&i%& t&e petitioner *as %reated are spelled out in its )rti%les of In%orporation, t&us6

S4CAN6 '&at t&e purposes for *&i%& su%& %orporation is formed are as follo*s6

". 'o %onstru%t, estalis&, e<uip, maintain, administer and %ondu%t an inte-ratedmedi%al institution *&i%& s&all spe%ialiLe in t&e treatment, %are, re&ailitation andFor

relief of lun- and allied diseases in line *it& t&e %on%ern of t&e -overnment to assistand provide material and Enan%ial support in t&e estalis&ment and maintenan%e of alun- %enter primaril1 to eneEt t&e people of t&e &ilippines and in pursuan%e of t&epoli%1 of t&e State to se%ure t&e *ellein- of t&e people 1 providin- t&em spe%ialiLed&ealt& and medi%al servi%es and 1 minimiLin- t&e in%iden%e of lun- diseases in t&e%ountr1 and else*&ere.

2. 'o promote t&e nole undertain- of s%ientiE% resear%& related to t&e prevention oflun- or pulmonar1 ailments and t&e %are of lun- patients, in%ludin- t&e &oldin- of aseries of relevant %on-resses, %onventions, seminars and %onferen%es>

3. 'o stimulate and, *&enever possile, under*rite s%ientiE% resear%&es on t&eiolo-i%al, demo-rap&i%, so%ial, e%onomi%, eu-eni% and p&1siolo-i%al aspe%ts of lun- orpulmonar1 diseases and t&eir %ontrol> and to %olle%t and pulis& t&e Endin-s of su%&

resear%& for puli% %onsumption>

. 'o fa%ilitate t&e dissemination of ideas and puli% a%%eptan%e of information on lun-%ons%iousness or a*areness, and t&e development of fa%tEndin-, information andreportin- fa%ilities for and in aid of t&e -eneral purposes or oe%ts aforesaid,espe%iall1 in &uman lun- re<uirements, -eneral &ealt& and p&1si%al Etness, and ot&errelevant or related Eelds>

5. 'o en%oura-e t&e trainin- of p&1si%ians, nurses, &ealt& o=%ers, so%ial *orers andmedi%al and te%&ni%al personnel in t&e pra%ti%al and s%ientiE% implementation ofservi%es to lun- patients>

!. 'o assist universities and resear%& institutions in t&eir studies aout lun- diseases,to en%oura-e advan%ed trainin- in matters of t&e lun- and related Eelds and to supportedu%ational pro-rams of value to -eneral &ealt&>

. 'o en%oura-e t&e formation of ot&er or-aniLations on t&e national, provin%ial andFor%it1 and lo%al levels> and to %oordinate t&eir various eDorts and a%tivities for t&epurpose of a%&ievin- a more eDe%tive pro-rammati% approa%& on t&e %ommonprolems relative to t&e oe%tives enumerated &erein>



8. 'o see and otain assistan%e in an1 form from ot& international and lo%alfoundations and or-aniLations> and to administer -rants and funds t&at ma1 e -ivento t&e or-aniLation>

#. 'o e(tend, *&enever possile and e(pedient, medi%al servi%es to t&e puli% and, in-eneral, to promote and prote%t t&e &ealt& of t&e masses of our people, *&i%& &as lon-een re%o-niLed as an e%onomi% asset and a so%ial lessin->

"0. 'o &elp prevent, relieve and alleviate t&e lun- or pulmonar1 a\i%tions andmaladies of t&e people in an1 and all *als of life, in%ludin- t&ose *&o are poor andneed1, all *it&out re-ard to or dis%rimination, e%ause of ra%e, %reed, %olor or politi%alelief of t&e persons &elped> and to enale t&em to otain treatment *&en su%&disorders o%%ur>

"". 'o parti%ipate, as %ir%umstan%es ma1 *arrant, in an1 a%tivit1 desi-ned and %arriedon to promote t&e -eneral &ealt& of t&e %ommunit1>

"2. 'o a%<uire andFor orro* funds and to o*n all funds or e<uipment, edu%ationalmaterials and supplies 1 pur%&ase, donation, or ot&er*ise and to dispose of anddistriute t&e same in su%& manner, and, on su%& asis as t&e Center s&all, from time

to time, deem proper and est, under t&e parti%ular %ir%umstan%es, to serve its -eneraland nonproEt purposes and oe%tives>lavvphil.net

"3. 'o u1, pur%&ase, a%<uire, o*n, lease, &old, sell, e(%&an-e, transfer and dispose ofproperties, *&et&er real or personal, for purposes &erein mentioned> and

". 'o do ever1t&in- ne%essar1, proper, advisale or %onvenient for t&ea%%omplis&ment of an1 of t&e po*ers &erein set fort& and to do ever1 ot&er a%t andt&inin%idental t&ereto or %onne%ted t&ere*it&."!

Hen%e, t&e medi%al servi%es of t&e petitioner are to e rendered to t&e puli% in -eneral in an1 and all*als of life in%ludin- t&ose *&o are poor and t&e need1 *it&out dis%rimination. )fter all, an1 person,t&e ri%& as *ell as t&e poor, ma1 fall si% or e inured or *ounded and e%ome a sue%t of %&arit1."

)s a -eneral prin%iple, a %&aritale institution does not lose its %&ara%ter as su%& and its e(emptionfrom ta(es simpl1 e%ause it derives in%ome from pa1in- patients, *&et&er outpatient, or %onEned int&e &ospital, or re%eives susidies from t&e -overnment, so lon- as t&e mone1 re%eived is devoted orused alto-et&er to t&e %&aritale oe%t *&i%& it is intended to a%&ieve> and no mone1 inures to t&eprivate eneEt of t&e persons mana-in- or operatin- t&e institution."8 In Con"re"ational +unday+chool, etc. v. Board of evie,"# t&e State Supreme Court of Illinois &eld, t&us6

] J)Kn institution does not lose its %&aritale %&ara%ter, and %onse<uent e(emption fromta(ation, 1 reason of t&e fa%t t&at t&ose re%ipients of its eneEts *&o are ale to pa1 arere<uired to do so, *&ere no proEt is made 1 t&e institution and t&e amounts so re%eived areapplied in furt&erin- its %&aritale purposes, and t&ose eneEts are refused to none on a%%ountof inailit1 to pa1 t&erefor. '&e fundamental -round upon *&i%& all e(emptions in favor of%&aritale institutions are ased is t&e eneEt %onferred upon t&e puli% 1 t&em, and a%onse<uent relief, to some e(tent, of t&e urden upon t&e state to %are for and advan%e t&e

interests of its %itiLens.20

)s aptl1 stated 1 t&e State Supreme Court of Sout& aota in Lutheran >ospital ssociation of +outh6akota v. Baker 62"

] J'K&e fa%t t&at pa1in- patients are taen, t&e proEts derived from attendan%e upon t&esepatients ein- e(%lusivel1 devoted to t&e maintenan%e of t&e %&arit1, seems rat&er to en&an%et&e usefulness of t&e institution to t&e poor> for it is a matter of %ommon oservation amon-stt&ose *&o &ave -one aout at all amon-st t&e suDerin- %lasses, t&at t&e deservin- poor %an*it& di=%ult1 e persuaded to enter an as1lum of an1 ind %onEned to t&e re%eption of oe%ts



of %&arit1> and t&at t&eir &onest pride is mu%& less *ounded 1 ein- pla%ed in an institution in*&i%& pa1in- patients are also re%eived. '&e fa%t of re%eivin- mone1 from some of t&e patientsdoes not, *e t&in, at all impair t&e %&ara%ter of t&e %&arit1, so lon- as t&e mone1 t&usre%eived is devoted alto-et&er to t&e %&aritale oe%t *&i%& t&e institution is intended tofurt&er.22

'&e mone1 re%eived 1 t&e petitioner e%omes a part of t&e trust fund and must e devoted to puli%

trust purposes and %annot e diverted to private proEt or eneEt.23

;nder .. No. "823, t&e petitioner is entitled to re%eive donations. '&e petitioner does not lose its%&ara%ter as a %&aritale institution simpl1 e%ause t&e -ift or donation is in t&e form of susidies-ranted 1 t&e -overnment. )s &eld 1 t&e State Supreme Court of ;ta& in 8or"ason v. County Boardof *ualization of +alt Lake County 62

Se%ond, t&e ] -overnment susid1 pa1ments are provided to t&e proe%t. '&us, t&osepa1ments are lie a -ift or donation of an1 ot&er ind e(%ept t&e1 %ome from t&e -overnment.In ot& %ntermountain >ealth Careand t&e present %ase, t&e %ru( is t&e presen%e or asen%e ofmaterial re%ipro%it1. It is entirel1 irrelevant to t&is anal1sis t&at t&e -overnment, rat&er t&an aprivate enefa%tor, %&ose to mae up t&e deE%it resultin- from t&e e(%&an-e et*een St.MarQs 'o*er and t&e tenants 1 main- a %ontriution to t&e landlord, ust as it *ould &aveeen irrelevant in %ntermountain >ealth Care if t&e patientsQ in%ome supplements &ad %omefrom private individuals rat&er t&an t&e -overnment.

'&erefore, t&e fa%t t&at susidiLation of part of t&e %ost of furnis&in- su%& &ousin- is 1 t&e-overnment rat&er t&an private %&aritale %ontriutions does not di%tate t&e denial of a%&aritale e(emption if t&e fa%ts ot&er*ise support su%& an e(emption, as t&e1 do &ere.25

In t&is %ase, t&e petitioner addu%ed sustantial eviden%e t&at it spent its in%ome, in%ludin- t&esusidies from t&e -overnment for "##" and "##2 for its patients and for t&e operation of t&e &ospital.It even in%urred a net loss in "##" and "##2 from its operations.

4ven as *e End t&at t&e petitioner is a %&aritale institution, *e &old, anent t&e se%ond issue, t&att&ose portions of its real propert1 t&at are leased to private entities are not e(empt from real propert1ta(es as t&ese are not a%tuall1, dire%tl1 and e(%lusivel1 used for %&aritale purposes.

'&e settled rule in t&is urisdi%tion is t&at la*s -rantin- e(emption from ta( are %onstrued strictissimi 9uris a-ainst t&e ta(pa1er and lierall1 in favor of t&e ta(in- po*er. 'a(ation is t&e rule and e(emptionis t&e e(%eption. '&e eDe%t of an e(emption is e<uivalent to an appropriation. Hen%e, a %laim fore(emption from ta( pa1ments must e %learl1 s&o*n and ased on lan-ua-e in t&e la* too plain to emistaen.2! )s &eld in +alvation rmy v. >oehn62

)n intention on t&e part of t&e le-islature to -rant an e(emption from t&e ta(in- po*er of t&estate *ill never e implied from lan-ua-e *&i%& *ill admit of an1 ot&er reasonale%onstru%tion. Su%& an intention must e e(pressed in %lear and unmistaale terms, or mustappear 1 ne%essar1 impli%ation from t&e lan-ua-e used, for it is a *ell settled prin%iple t&at,*&en a spe%ial privile-e or e(emption is %laimed under a statute, %&arter or a%t ofin%orporation, it is to e %onstrued stri%tl1 a-ainst t&e propert1 o*ner and in favor of t&epuli%. '&is prin%iple applies *it& pe%uliar for%e to a %laim of e(emption from ta(ation . ]28

Se%tion 2 of residential e%ree No. "823, relied upon 1 t&e petitioner, spe%iE%all1 provides t&at t&epetitioner s&all eno1 t&e ta( e(emptions and privile-es6

S4C. 2. ')X 4X4M'IANS )N RIIB4G4S. /ein- a nonproEt, nonsto% %orporation or-aniLedprimaril1 to &elp %omat t&e &i-& in%iden%e of lun- and pulmonar1 diseases in t&e &ilippines,all donations, %ontriutions, endo*ments and e<uipment and supplies to e imported 1aut&oriLed entities or persons and 1 t&e /oard of 'rustees of t&e Bun- Center of t&e&ilippines, In%., for t&e a%tual use and eneEt of t&e Bun- Center, s&all e e(empt fromin%ome and -ift ta(es, t&e same furt&er dedu%tile in full for t&e purpose of determinin- t&e



ma(imum dedu%tile amount under Se%tion 30, para-rap& 9&:, of t&e National InternalRevenue Code, as amended.

'&e Bun- Center of t&e &ilippines s&all e e(empt from t&e pa1ment of ta(es, %&ar-es andfees imposed 1 t&e Government or an1 politi%al sudivision or instrumentalit1 t&ereof *it&respe%t to e<uipment pur%&ases made 1, or for t&e Bun- Center.2#

It is plain as da1 t&at under t&e de%ree, t&e petitioner does not eno1 an1 propert1 ta( e(emptionprivile-es for its real properties as *ell as t&e uildin- %onstru%ted t&ereon. If t&e intentions *ereot&er*ise, t&e same s&ould &ave een amon- t&e enumeration of ta( e(empt privile-es under Se%tion26

It is a settled rule of statutor1 %onstru%tion t&at t&e e(press mention of one person, t&in-, or%onse<uen%e implies t&e e(%lusion of all ot&ers. '&e rule is e(pressed in t&e familiarma(im, e!pressio unius est e!clusio alterius.

'&e rule of e!pressio unius est e!clusio alterius is formulated in a numer of *a1s. Anevariation of t&e rule is t&e prin%iple t&at *&at is e(pressed puts an end to t&at *&i%& isimplied. *!pressium facit cessare tacitum. '&us, *&ere a statute, 1 its terms, is e(pressl1limited to %ertain matters, it ma1 not, 1 interpretation or %onstru%tion, e e(tended to ot&er

matters.

...

'&e rule of e!pressio unius est e!clusio alterius and its variations are %anons of restri%tiveinterpretation. '&e1 are ased on t&e rules of lo-i% and t&e natural *orin-s of t&e &umanmind. '&e1 are predi%ated upon oneQs o*n voluntar1 a%t and not upon t&at of ot&ers. '&e1pro%eed from t&e premise t&at t&e le-islature *ould not &ave made spe%iEed enumeration in astatute &ad t&e intention een not to restri%t its meanin- and %onEne its terms to t&osee(pressl1 mentioned.30

'&e e(emption must not e so enlar-ed 1 %onstru%tion sin%e t&e reasonale presumption is t&at t&eState &as -ranted in e(press terms all it intended to -rant at all, and t&at unless t&e privile-e is limitedto t&e ver1 terms of t&e statute t&e favor *ould e intended e1ond *&at *as meant.3"

Se%tion 2893:, )rti%le I of t&e "#8 &ilippine Constitution provides, t&us6

93: C&aritale institutions, %&ur%&es and parsona-es or %onvents appurtenant t&ereto,mos<ues, nonproEt %emeteries, and all lands, uildin-s, andimprovements, a%tuall1, dire%tl1 and e(%lusivel1 used for reli-ious, %&aritale or edu%ationalpurposes s&all e e(empt from ta(ation.32

'&e ta( e(emption under t&is %onstitutional provision %overs property ta(es onl1.33 )s C&ief usti%eHilario G. avide, r., t&en a memer of t&e "#8! Constitutional Commission, e(plained6 @. . . *&at ise(empted is not t&e institution itself . . .> t&ose e(empted from real estate ta(es are lands, uildin-sand improvements a%tuall1, dire%tl1 and e(%lusivel1 used for reli-ious, %&aritale or edu%ationalpurposes.@3

Conse<uentl1, t&e %onstitutional provision is implemented 1 Se%tion 239: of Repuli% )%t No. "!09ot&er*ise no*n as t&e Bo%al Government Code of "##": as follo*s6

S4C'IAN 23. *!emptions from eal 'roperty 7a! . O '&e follo*in- are e(empted from pa1mentof t&e real propert1 ta(6

...



9: C&aritale institutions, %&ur%&es, parsona-es or %onvents appurtenant t&ereto,mos<ues, nonproEt or reli-ious %emeteries and all lands, uildin-s, andimprovements a%tuall1, dire%tl1, ande(%lusivel1 used for reli-ious, %&aritale oredu%ational purposes.35

$e note t&at under t&e "#35 Constitution, @... all lands, uildin-s, and improvements used e(%lusivel1Qfor ] %&aritale ] purposes s&all e e(empt from ta(ation.@3! Ho*ever, under t&e "#3 and t&e

present Constitutions, for @lands, uildin-s, and improvements@ of t&e %&aritale institution to e%onsidered e(empt, t&e same s&ould not onl1 e @e(%lusivel1@ used for %&aritale purposes> it isre<uired t&at su%& propert1 e used @a%tuall1@ and @dire%tl1@ for su%& purposes.3

In li-&t of t&e fore-oin- sustantial %&an-es in t&e Constitution, t&e petitioner %annot rel1 on our rulin-in >errera v. uezon City Board of ssessment ppeals *&i%& *as promul-ated on Septemer 30,"#!" efore t&e "#3 and "#8 Constitutions too eDe%t.38 )s t&is Court &eld in 'rovince of bra v.>ernando63#

] ;nder t&e "#35 Constitution6 @Cemeteries, %&ur%&es, and parsona-es or %onventsappurtenant t&ereto, and all lands, uildin-s, and improvements used e(%lusivel1 for reli-ious,%&aritale, or edu%ational purposes s&all e e(empt from ta(ation.@ '&e present Constitutionadded @%&aritale institutions, mos<ues, and nonproEt %emeteries@ and re<uired t&at for t&ee(emption of @lands, uildin-s, and improvements,@ t&e1 s&ould not onl1 e @e(%lusivel1@ utalso @a%tuall1@ and @dire%tl1@ used for reli-ious or %&aritale purposes. '&e Constitution is*orded diDerentl1. '&e %&an-e s&ould not e i-nored. It must e dul1 taen into %onsideration.Relian%e on past de%isions *ould &ave su=%ed *ere t&e *ords @a%tuall1@ as *ell as @dire%tl1@not added. '&ere must e proof t&erefore of t&e actual and direct use of t&e lands, uildin-s,and improvements for reli-ious or %&aritale purposes to e e(empt from ta(ation. ]

;nder t&e "#3 and "#8 Constitutions and Rep. )%t No. "!0 in order to e entitled to t&e e(emption,t&e petitioner is urdened to prove, 1 %lear and une<uivo%al proof, t&at 9a: it is a %&aritaleinstitution> and 9: its real properties are A%T*ALL, 0IR(%TL and (%L*'IV(L used for %&aritalepurposes. @4(%lusive@ is deEned as possessed and eno1ed to t&e e(%lusion of ot&ers> dearred fromparti%ipation or eno1ment> and @e(%lusivel1@ is deEned, @in a manner to e(%lude> as eno1in- aprivile-e e(%lusivel1.@0 If real propert1 is used for one or more %ommer%ial purposes, it is note(%lusivel1 used for t&e e(empted purposes ut is sue%t to ta(ation." '&e *ords @dominant use@ or@prin%ipal use@ %annot e sustituted for t&e *ords @used e(%lusivel1@ *it&out doin- violen%e to t&e

Constitutions and t&e la*.2 Solel1 is s1non1mous *it& e(%lusivel1.3

$&at is meant 1 a%tual, dire%t and e(%lusive use of t&e propert1 for %&aritale purposes is t&e dire%tand immediate and a%tual appli%ation of t&e propert1 itself to t&e purposes for *&i%& t&e %&aritaleinstitution is or-aniLed. It is not t&e use of t&e in%ome from t&e real propert1 t&at is determinative of*&et&er t&e propert1 is used for ta(e(empt purposes.

'&e petitioner failed to dis%&ar-e its urden to prove t&at t&e entiret1 of its real propert1 is a%tuall1,dire%tl1 and e(%lusivel1 used for %&aritale purposes. $&ile portions of t&e &ospital are used for t&etreatment of patients and t&e dispensation of medi%al servi%es to t&em, *&et&er pa1in- or nonpa1in-,ot&er portions t&ereof are ein- leased to private individuals for t&eir %lini%s and a %anteen. urt&er, aportion of t&e land is ein- leased to a private individual for &er usiness enterprise under t&eusiness name @4llipti%al Ar%&ids and Garden Center.@ Indeed, t&e petitionerQs eviden%e s&o*s t&at it%olle%ted ","3!,83.5 as rentals in "##" and ",!#,###.28 for "##2 from t&e said lessees.

)%%ordin-l1, *e &old t&at t&e portions of t&e land leased to private entities as *ell as t&ose parts oft&e &ospital leased to private individuals are not e(empt from su%& ta(es.5 An t&e ot&er &and, t&eportions of t&e land o%%upied 1 t&e &ospital and portions of t&e &ospital used for its patients, *&et&erpa1in- or nonpa1in-, are e(empt from real propert1 ta(es.

IN LIG+T &) ALL T+( )&R(G&ING, t&e petition is PARTIALL GRANT(0. '&e respondent ZueLonCit1 )ssessor is &ere1 0IR(%T(0 to determine, after due &earin-, t&e pre%ise portions of t&e landand t&e area t&ereof *&i%& are leased to private persons, and to %ompute t&e real propert1 ta(es duet&ereon as provided for 1 la*.



'& &R0(R(0.

G.R. No. #9#$# 'epteer 2:, 2$2

%&!!I''I&N(R &) INT(RNAL R(V(N*(, 4'I'IAN4R,vs.'T. L*=(M' !(0I%AL %(NT(R, IN%., R4SAN4N'.

( (

G.R. No. #9#:$

'T. L*=(M' !(0I%AL %(NT(R, IN%., 4'I'IAN4R,vs.%&!!I''I&N(R &) INT(RNAL R(V(N*(, R4SAN4N'.

4 C I S I A N

%ARPI&, J.:

'&e Case

'&ese are %onsolidated " petitions for revie* on %ertiorari under Rule 5 of t&e Rules of Court assailin-t&e e%ision of "# Novemer 20"0 of t&e Court of 'a( )ppeals 9C'): 4n /an% and its Resolution 2 of "Mar%& 20"" in C') Case No. !!. '&is Court resolves t&is %ase on a pure <uestion of la*, *&i%&involves t&e interpretation of Se%tion 29/: vis^vis Se%tion 3094: and 9G: of t&e National InternalRevenue Code of t&e &ilippines 9NIRC:, on t&e in%ome ta( treatment of proprietar1 nonproEt&ospitals.

'&e a%ts

St. Bue+s Medi%al Center, In%. 9St. Bue+s: is a &ospital or-aniLed as a nonsto% and nonproEt%orporation. ;nder its arti%les of in%orporation, amon- its %orporate purposes are6

9a: 'o estalis&, e<uip, operate and maintain a nonsto%, nonproEt C&ristian, enevolent,%&aritale and s%ientiE% &ospital *&i%& s&all -ive %urative, re&ailitative and spiritual %are tot&e si%, diseased and disaled persons> provided t&at purel1 medi%al and sur-i%al servi%ess&all e performed 1 dul1 li%ensed p&1si%ians and sur-eons *&o ma1 e freel1 andindividuall1 %ontra%ted 1 patients>

9: 'o provide a %areer of &ealt& s%ien%e edu%ation and provide medi%al servi%es to t&e%ommunit1 t&rou-& or-aniLed %lini%s in su%& spe%ialties as t&e fa%ilities and resour%es of t&e%orporation mae possile>

9%: 'o %arr1 on edu%ational a%tivities related to t&e maintenan%e and promotion of &ealt& as*ell as provide fa%ilities for s%ientiE% and medi%al resear%&es *&i%&, in t&e opinion of t&e /oard

of 'rustees, ma1 e ustiEed 1 t&e fa%ilities, personnel, funds, or ot&er re<uirements t&at areavailale>

9d: 'o %ooperate *it& or-aniLed medi%al so%ieties, a-en%ies of ot& -overnment and privatese%tor> estalis& rules and re-ulations %onsistent *it& t&e &i-&est professional et&i%s>

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An "! e%emer 2002, t&e /ureau of Internal Revenue 9/IR: assessed St. Bue+s deE%ien%1 ta(esamountin- to!,0!3,""!.0! for "##8, %omprised of deE%ien%1 in%ome ta(, valueadded ta(,

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*it&&oldin- ta( on %ompensation and e(panded *it&&oldin- ta(. '&e /IR redu%ed t&e amountto !3,#35,35".5 durin- trial in t&e irst ivision of t&e C').

An " anuar1 2003, St. Bue+s Eled an administrative protest *it& t&e /IR a-ainst t&e deE%ien%1 ta(assessments. '&e /IR did not a%t on t&e protest *it&in t&e "80da1 period under Se%tion 228 of t&eNIRC. '&us, St. Bue+s appealed to t&e C').

'&e /IR ar-ued efore t&e C') t&at Se%tion 29/: of t&e NIRC, *&i%& imposes a "07 preferential ta(rate on t&e in%ome of proprietar1 nonproEt &ospitals, s&ould e appli%ale to St. Bue+s. )%%ordin- tot&e /IR, Se%tion 29/:, introdu%ed in "##, @is a ne* provision intended to amend t&e e(emption onnonproEt &ospitals t&at *ere previousl1 %ate-oriLed as nonsto%, nonproEt %orporations underSe%tion 2! of t&e "## 'a( Code ( ( (.@ 5 It is a spe%iE% provision *&i%& prevails over t&e -enerale(emption on in%ome ta( -ranted under Se%tion 3094: and 9G: for nonsto%, nonproEt %&aritaleinstitutions and %ivi% or-aniLations promotin- so%ial *elfare. !

'&e /IR %laimed t&at St. Bue+s *as a%tuall1 operatin- for proEt in "##8 e%ause onl1 "37 of itsrevenues %ame from %&aritale purposes. Moreover, t&e &ospital+s oard of trustees, o=%ers andemplo1ees dire%tl1 eneEt from its proEts and assets. St. Bue+s &ad total revenues of ",30,3!,#!5or appro(imatel1 ".3 illion from patient servi%es in "##8.

St. Bue+s %ontended t&at t&e /IR s&ould not %onsider its total revenues, e%ause its free servi%es topatients *as2"8,"8,#8 or !5.207 of its "##8 operatin- in%ome 9i.e., total revenues less operatin-e(penses: of33,!2,!"5. 8 St. Bue+s also %laimed t&at its in%ome does not inure to t&e eneEt of an1individual.

St. Bue+s maintained t&at it is a nonsto% and nonproEt institution for %&aritale and so%ial *elfarepurposes under Se%tion 3094: and 9G: of t&e NIRC. It ar-ued t&at t&e main- of proEt per se does notdestro1 its in%ome ta( e(emption.

'&e petition of t&e /IR efore t&is Court in G.R. No. "#5#0# reiterates its ar-uments efore t&e C')t&at Se%tion 29/: applies to St. Bue+s. '&e petition raises t&e sole issue of *&et&er t&e ena%tment ofSe%tion 29/: taes proprietar1 nonproEt &ospitals out of t&e in%ome ta( e(emption under Se%tion 30of t&e NIRC and instead, imposes a preferential rate of "07 on t&eir ta(ale in%ome. '&e /IR pra1st&at St. Bue+s e ordered to pa15,!5#,#8"."# as deE%ien%1 in%ome and e(panded *it&&oldin- ta(

for "##8 *it& sur%&ar-es and interest for late pa1ment.

'&e petition of St. Bue+s in G.R. No. "#5#!0 raises fa%tual matters on t&e treatment and *it&&oldin- of a part of its in%ome, # as *ell as t&e pa1ment of sur%&ar-e and delin<uen%1 interest. '&ere is no-round for t&is Court to undertae su%& a fa%tual revie*. ;nder t&e Constitution "0 and t&e Rules ofCourt, "" t&is Court+s revie* po*er is -enerall1 limited to @%ases in *&i%& onl1 an error or <uestion ofla* is involved.@ "2 '&is Court %annot depart from t&is limitation if a part1 fails to invoe a re%o-niLede(%eption.

'&e Rulin- of t&e Court of 'a( )ppeals

'&e C') 4n /an% e%ision on "# Novemer 20"0 a=rmed in toto t&e C') irst ivision e%ision dated23 eruar1 200# *&i%& &eld6

$H4R4AR4, t&e )mended etition for Revie* J1 St. Bue+sK is &ere1 )R'I)BB GR)N'4.)%%ordin-l1, t&e "##8 deE%ien%1 )' assessment issued 1 respondent a-ainst petitioner in t&eamount of ""0,000.00 is &ere1 C)NC4BB4 and $I'HR)$N. Ho*ever, petitioner is &ere1AR4R4 to ) deE%ien%1 in%ome ta( and deE%ien%1 e(panded *it&&oldin- ta( for t&e ta(ale 1ear"##8 in t&e respe%tive amounts of 5,#!,#!3.5 and8,0!.8 or in t&e sum of !,25,30.38, ( ((.

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In addition, petitioner is &ere1 AR4R4 to ) t*ent1 per%ent 9207: delin<uen%1 interest on t&etotal amount of !,25,30.38 %ounted from A%toer "5, 2003 until full pa1ment t&ereof, pursuant toSe%tion 2#9C:93: of t&e NIRC of "##.

SA AR4R4. "3

'&e deE%ien%1 in%ome ta( of 5,#!,#!3.5, ordered 1 t&e C') 4n /an% to e paid, arose from t&efailure of St. Bue+s to prove t&at part of its in%ome in "##8 9de%lared as @At&er In%omeNet@: " %amefrom %&aritale a%tivities. '&e C') %an%elled t&e remainder of t&e !3,""3,#52.# deE%ien%1 assessed1 t&e /IR ased on t&e "07 ta( rate under Se%tion 29/: of t&e NIRC, *&i%& t&e C') 4n /an% &eld *asnot appli%ale to St. Bue+s. "5

'&e C') ruled t&at St. Bue+s is a nonsto% and nonproEt %&aritale institution %overed 1 Se%tion3094: and 9G: of t&e NIRC. '&is rulin- *ould e(empt all in%ome derived 1 St. Bue+s from servi%es toits patients, *&et&er pa1in- or nonpa1in-. '&e C') reiterated its earlier de%ision in St. Bue+s Medi%alCenter, In%. v. Commissioner of Internal Revenue, "! *&i%& e(amined t&e primar1 purposes of St. Bue+sunder its arti%les of in%orporation and various do%uments " identif1in- St. Bue+s as a %&aritaleinstitution.

'&e C') adopted t&e test in Hospital de San uan de ios, In%. v. asa1 Cit1, "8 *&i%& states t&at @a

%&aritale institution does not lose its %&aritale %&ara%ter and its %onse<uent e(emption from ta(ationmerel1 e%ause re%ipients of its eneEts *&o are ale to pa1 are re<uired to do so, *&ere fundsderived in t&is manner are devoted to t&e %&aritale purposes of t&e institution ( ( (.@ "# '&e-eneration of in%ome from pa1in- patients does not per se destro1 t&e %&aritale nature of St. Bue+s.

Hospital de San uan %ited esus Sa%red Heart Colle-e v. Colle%tor of Internal Revenue, 20 *&i%& ruledt&at t&e old NIRC 9Common*ealt& )%t No. !!, as amended: 2" @positivel1 e(empts from ta(ation t&ose%orporations or asso%iations *&i%&, ot&er*ise, *ould e sue%t t&ereto, e%ause of t&e e(isten%e of (( ( net in%ome.@ 22 '&e NIRC of "## sustantiall1 reprodu%es t&e provision on %&aritale institutions of t&e old NIRC. '&us, in ree%tin- t&e ar-ument t&at ta( e(emption is lost *&enever t&ere is net in%ome,t&e Court in esus Sa%red Heart Colle-e de%lared6 @J4Kver1 responsile or-aniLation must e run to atleast insure its e(isten%e, 1 operatin- *it&in t&e limits of its o*n resour%es, espe%iall1 its re-ularin%ome. In ot&er *ords, it s&ould al*a1s strive, *&enever possile, to &ave a surplus.@ 23

'&e C') &eld t&at Se%tion 29/: of t&e present NIRC does not appl1 to St. Bue+s.2

'&e C') e(plainedt&at to appl1 t&e "07 preferential rate, Se%tion 29/: re<uires a &ospital to e @nonproEt.@ An t&eot&er &and, Con-ress spe%iE%all1 used t&e *ord @nonsto%@ to <ualif1 a %&aritale @%orporation orasso%iation@ in Se%tion 3094: of t&e NIRC. )%%ordin- to t&e C'), t&is is uni<ue in t&e present ta( %ode,indi%atin- an intent to e(empt t&is t1pe of %&aritale or-aniLation from in%ome ta(. Se%tion 29/: doesnot re<uire t&at t&e &ospital e @nonsto%.@ '&e C') stated, @it is %lear t&at nonsto%, nonproEt&ospitals operated e(%lusivel1 for %&aritale purpose are e(empt from in%ome ta( on in%ome re%eived1 t&em as su%&, appl1in- t&e provision of Se%tion 3094: of t&e NIRC of "##, as amended.@ 25

'&e Issue

'&e sole issue is *&et&er St. Bue+s is liale for deE%ien%1 in%ome ta( in "##8 under Se%tion 29/: oft&e NIRC, *&i%& imposes a preferential ta( rate of "07 on t&e in%ome of proprietar1 nonproEt&ospitals.

'&e Rulin- of t&e Court

St. Bue+s etition in G.R. No. "#5#!0

)s a preliminar1 matter, t&is Court denies t&e petition of St. Bue+s in G.R. No. "#5#!0 e%ause t&epetition raises fa%tual issues. ;nder Se%tion ", Rule 5 of t&e Rules of Court, @JtK&e petition s&all raiseonl1 <uestions of la* *&i%& must e distin%tl1 set fort&.@ St. Bue+s %ites MartineL v. Court of)ppeals 2! *&i%& permits fa%tual revie* @*&en t&e Court of )ppeals Jin t&is %ase, t&e C')K manifestl1










































overlooed %ertain relevant fa%ts not disputed 1 t&e parties and *&i%&, if properl1 %onsidered, *ould ustif1 a diDerent %on%lusion.@ 2

'&is Court does not see &o* t&e C') overlooed relevant fa%ts. St. Bue+s itself stated t&at t&e C')@disre-arded t&e testimon1 of JitsK *itness, Romeo /. Mar1, ein- alle-edl1 selfservin-, to s&o* t&enature of t&e +At&er In%omeNet+ ( ( (.@ 28 '&is is not a %ase of overlooin- or failin- to %onsiderrelevant eviden%e. '&e C') oviousl1 %onsidered t&e eviden%e and %on%luded t&at it is selfservin-.

'&e C') de%lared t&at it &as @-one t&rou-& t&e re%ords of t&is %ase and found no ot&er eviden%e asidefrom t&e selfservin- a=davit e(e%uted 1 Jt&eK *itnesses Jof St. Bue+sK ( ( (.@ 2#

'&e deE%ien%1 ta( on @At&er In%omeNet@ stands. '&us, St. Bue+s is liale to pa1 t&e 257 sur%&ar-eunder Se%tion 289):93: of t&e NIRC. '&ere is @JfKailure to pa1 t&e deE%ien%1 ta( *it&in t&e timepres%ried for its pa1ment in t&e noti%e of assessmentJ.K@ 30 St. Bue+s is also liale to pa1 207delin<uen%1 interest under Se%tion 2#9C:93: of t&e NIRC. 3" )s e(plained 1 t&e C') 4n /an%, t&eamount of !,25,30.38 in t&e dispositive portion of t&e C') irst ivision e%ision in%ludes onl1deE%ien%1 interest under Se%tion 2#9): and 9/: of t&e NIRC and not delin<uen%1 interest. 32

'&e Main Issue

'&e issue raised 1 t&e /IR is a purel1 le-al one. It involves t&e eDe%t of t&e introdu%tion of Se%tion

29/: in t&e NIRC of "## vis^vis Se%tion 3094: and 9G: on t&e in%ome ta( e(emption of %&aritaleand so%ial *elfare institutions. '&e "07 in%ome ta( rate under Se%tion 29/: spe%iE%all1 pertains toproprietar1 edu%ational institutions and proprietar1 nonproEt &ospitals. '&e /IR ar-ues t&at Con-ressintended to remove t&e e(emption t&at nonproEt &ospitals previousl1 eno1ed under Se%tion 294: oft&e NIRC of "#, *&i%& is no* sustantiall1 reprodu%ed in Se%tion 3094: of t&e NIRC of"##. 33 Se%tion 29/: of t&e present NIRC provides6

S4C. 2. Rates of In%ome 'a( on omesti% Corporations.

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9/: roprietar1 4du%ational Institutions and Hospitals. roprietar1 edu%ational institutions and&ospitals *&i%& are nonproEt s&all pa1 a ta( of ten per%ent 9"07: on t&eir ta(ale in%ome e(%eptt&ose %overed 1 Suse%tion 9: &ereof6 rovided, '&at if t&e -ross in%ome from unrelated trade,

usiness or ot&er a%tivit1 e(%eeds Eft1 per%ent 9507: of t&e total -ross in%ome derived 1 su%&edu%ational institutions or &ospitals from all sour%es, t&e ta( pres%ried in Suse%tion 9): &ereof s&alle imposed on t&e entire ta(ale in%ome. or purposes of t&is Suse%tion, t&e term +unrelated trade,usiness or ot&er a%tivit1+ means an1 trade, usiness or ot&er a%tivit1, t&e %ondu%t of *&i%& is notsustantiall1 related to t&e e(er%ise or performan%e 1 su%& edu%ational institution or &ospital of itsprimar1 purpose or fun%tion. ) +proprietar1 edu%ational institution+ is an1 private s%&ool maintainedand administered 1 private individuals or -roups *it& an issued permit to operate from t&eepartment of 4du%ation, Culture and Sports 94CS:, or t&e Commission on Hi-&er 4du%ation 9CH4:,or t&e 'e%&ni%al 4du%ation and Sills evelopment )ut&orit1 9'4S):, as t&e %ase ma1 e, ina%%ordan%e *it& e(istin- la*s and re-ulations. 94mp&asis supplied:

St. Bue+s %laims ta( e(emption under Se%tion 3094: and 9G: of t&e NIRC. It %ontends t&at it is a%&aritale institution and an or-aniLation promotin- so%ial *elfare. '&e ar-uments of St. Bue+s fo%uson t&e *ordin- of Se%tion 3094: e(emptin- from in%ome ta( nonsto%, nonproEt %&aritale

institutions.3

St. Bue+s asserts t&at t&e le-islative intent of introdu%in- Se%tion 29/: *as onl1 toremove t&e e(emption for @proprietar1 nonproEt@ &ospitals. 35 '&e relevant provisions of Se%tion 30state6

S4C. 30. 4(emptions from 'a( on Corporations. '&e follo*in- or-aniLations s&all not e ta(ed undert&is 'itle in respe%t to in%ome re%eived 1 t&em as su%&6

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94: Nonsto% %orporation or asso%iation or-aniLed and operated e(%lusivel1 for reli-ious, %&aritale,s%ientiE%, at&leti%, or %ultural purposes, or for t&e re&ailitation of veterans, no part of its net in%omeor asset s&all elon- to or inure to t&e eneEt of an1 memer, or-aniLer, o=%er or an1 spe%iE% person>

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9G: Civi% lea-ue or or-aniLation not or-aniLed for proEt ut operated e(%lusivel1 for t&e promotion ofso%ial *elfare>

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Not*it&standin- t&e provisions in t&e pre%edin- para-rap&s, t&e in%ome of *&atever ind and%&ara%ter of t&e fore-oin- or-aniLations from an1 of t&eir properties, real or personal, or from an1 oft&eir a%tivities %ondu%ted for proEt re-ardless of t&e disposition made of su%& in%ome, s&all e sue%tto ta( imposed under t&is Code. 94mp&asis supplied:

'&e Court partl1 -rants t&e petition of t&e /IR ut on a diDerent -round. $e &old t&at Se%tion 29/: oft&e NIRC does not remove t&e in%ome ta( e(emption of proprietar1 nonproEt &ospitals under Se%tion3094: and 9G:. Se%tion 29/: on one &and, and Se%tion 3094: and 9G: on t&e ot&er &and, %an e%onstrued to-et&er *it&out t&e removal of su%& ta( e(emption. '&e eDe%t of t&e introdu%tion of

Se%tion 29/: is to sue%t t&e ta(ale in%ome of t*o spe%iE% institutions, namel1, proprietar1 nonproEt edu%ational institutions 3! and proprietar1 nonproEt &ospitals, amon- t&e institutions %overed 1Se%tion 30, to t&e "07 preferential rate under Se%tion 29/: instead of t&e ordinar1 307 %orporaterate under t&e last para-rap& of Se%tion 30 in relation to Se%tion 29):9":.

Se%tion 29/: of t&e NIRC imposes a "07 preferential ta( rate on t&e in%ome of 9": proprietar1 nonproEt edu%ational institutions and 92: proprietar1 nonproEt &ospitals. '&e onl1 <ualiE%ations for&ospitals are t&at t&e1 must e proprietar1 and nonproEt. @roprietar1@ means private, follo*in- t&edeEnition of a @proprietar1 edu%ational institution@ as @an1 private s%&ool maintained and administered1 private individuals or -roups@ *it& a -overnment permit. @NonproEt@ means no net in%ome or asseta%%rues to or eneEts an1 memer or spe%iE% person, *it& all t&e net in%ome or asset devoted to t&einstitution+s purposes and all its a%tivities %ondu%ted not for proEt.

@NonproEt@ does not ne%essaril1 mean @%&aritale.@ In Colle%tor of Internal Revenue v. Clu ilipino

In%. de Ceu,3 t&is Court %onsidered as nonproEt a sports %lu or-aniLed for re%reation andentertainment of its sto%&olders and memers. '&e %lu *as primaril1 funded 1 memers&ip feesand dues. If it &ad proEts, t&e1 *ere used for over&ead e(penses and improvin- its -olf %ourse. 38 '&e%lu *as nonproEt e%ause of its purpose and t&ere *as no eviden%e t&at it *as en-a-ed in a proEtmain- enterprise. 3#

'&e sports %lu in Clu ilipino In%. de Ceu ma1 e nonproEt, ut it *as not %&aritale. '&e CourtdeEned @%&arit1@ in Bun- Center of t&e &ilippines v. ZueLon Cit1 0 as @a -ift, to e applied%onsistentl1 *it& e(istin- la*s, for t&e eneEt of an indeEnite numer of persons, eit&er 1 rin-in-t&eir minds and &earts under t&e inTuen%e of edu%ation or reli-ion, 1 assistin- t&em to estalis&t&emselves in life or J1K ot&er*ise lessenin- t&e urden of -overnment.@ " ) nonproEt %lu for t&eeneEt of its memers fails t&is test. )n or-aniLation ma1 e %onsidered as nonproEt if it does notdistriute an1 part of its in%ome to sto%&olders or memers. Ho*ever, despite its ein- a ta( e(emptinstitution, an1 in%ome su%& institution earns from a%tivities %ondu%ted for proEt is ta(ale, as

e(pressl1 provided in t&e last para-rap& of Se%tion 30.

'o e a %&aritale institution, &o*ever, an or-aniLation must meet t&e sustantive test of %&arit1 inBun- Center. '&e issue in Bun- Center %on%erns e(emption from real propert1 ta( and not in%ome ta(.Ho*ever, it provides for t&e test of %&arit1 in our urisdi%tion. C&arit1 is essentiall1 a -ift to anindeEnite numer of persons *&i%& lessens t&e urden of -overnment. In ot&er *ords, %&aritaleinstitutions provide for free -oods and servi%es to t&e puli% *&i%& *ould ot&er*ise fall on t&es&oulders of -overnment. '&us, as a matter of e=%ien%1, t&e -overnment for-oes ta(es *&i%& s&ould&ave een spent to address puli% needs, e%ause %ertain private entities alread1 assume a part of t&eurden. '&is is t&e rationale for t&e ta( e(emption of %&aritale institutions. '&e loss of ta(es 1 t&e

















-overnment is %ompensated 1 its relief from doin- puli% *ors *&i%& *ould &ave een funded 1appropriations from t&e 'reasur1. 2

C&aritale institutions, &o*ever, are not ipso fa%to entitled to a ta( e(emption. '&e re<uirements for ata( e(emption are spe%iEed 1 t&e la* -rantin- it. '&e po*er of Con-ress to ta( implies t&e po*er toe(empt from ta(. Con-ress %an %reate ta( e(emptions, sue%t to t&e %onstitutional provision t&at @JnKola* -rantin- an1 ta( e(emption s&all e passed *it&out t&e %on%urren%e of a maorit1 of all t&e

Memers of Con-ress.@ 3 '&e re<uirements for a ta( e(emption are stri%tl1 %onstrued a-ainst t&eta(pa1er e%ause an e(emption restri%ts t&e %olle%tion of ta(es ne%essar1 for t&e e(isten%e of t&e-overnment.

'&e Court in Bun- Center de%lared t&at t&e Bun- Center of t&e &ilippines is a %&aritale institution fort&e purpose of e(emption from real propert1 ta(es. '&is rulin- uses t&e same premise as Hospital deSan uan 5 and esus Sa%red Heart Colle-e ! *&i%& sa1s t&at re%eivin- in%ome from pa1in- patientsdoes not destro1 t&e %&aritale nature of a &ospital.

)s a -eneral prin%iple, a %&aritale institution does not lose its %&ara%ter as su%& and its e(emptionfrom ta(es simpl1 e%ause it derives in%ome from pa1in- patients, *&et&er outpatient, or %onEned int&e &ospital, or re%eives susidies from t&e -overnment, so lon- as t&e mone1 re%eived is devoted orused alto-et&er to t&e %&aritale oe%t *&i%& it is intended to a%&ieve> and no mone1 inures to t&eprivate eneEt of t&e persons mana-in- or operatin- t&e institution.

or real propert1 ta(es, t&e in%idental -eneration of in%ome is permissile e%ause t&e test ofe(emption is t&e use of t&e propert1. '&e Constitution provides t&at @J%K&aritale institutions, %&ur%&esand persona-es or %onvents appurtenant t&ereto, mos<ues, nonproEt %emeteries, and all lands,uildin-s, and improvements, a%tuall1, dire%tl1, and e(%lusivel1 used for reli-ious, %&aritale, oredu%ational purposes s&all e e(empt from ta(ation.@ 8 '&e test of e(emption is not stri%tl1 are<uirement on t&e intrinsi% nature or %&ara%ter of t&e institution. '&e test re<uires t&at t&e institutionuse t&e propert1 in a %ertain *a1, i.e. for a %&aritale purpose. '&us, t&e Court &eld t&at t&e Bun-Center of t&e &ilippines did not lose its %&aritale %&ara%ter *&en it used a portion of its lot for%ommer%ial purposes. '&e eDe%t of failin- to meet t&e use re<uirement is simpl1 to remove from t&eta( e(emption t&at portion of t&e propert1 not devoted to %&arit1.

'&e Constitution e(empts %&aritale institutions onl1 from real propert1 ta(es. In t&e NIRC, Con-ressde%ided to e(tend t&e e(emption to in%ome ta(es. Ho*ever, t&e *a1 Con-ress %rafted Se%tion 3094: of t&e NIRC is materiall1 diDerent from Se%tion 2893:, )rti%le I of t&e Constitution. Se%tion 3094: of t&eNIRC deEnes t&e %orporation or asso%iation t&at is e(empt from in%ome ta(. An t&e ot&er &and, Se%tion2893:, )rti%le I of t&e Constitution does not deEne a %&aritale institution, ut re<uires t&at t&einstitution @a%tuall1, dire%tl1 and e(%lusivel1@ use t&e propert1 for a %&aritale purpose.

Se%tion 3094: of t&e NIRC provides t&at a %&aritale institution must e6

9": ) nonsto% %orporation or asso%iation>

92: Ar-aniLed e(%lusivel1 for %&aritale purposes>

93: Aperated e(%lusivel1 for %&aritale purposes> and

9: No part of its net in%ome or asset s&all elon- to or inure to t&e eneEt of an1 memer,or-aniLer, o=%er or an1 spe%iE% person.

'&us, ot& t&e or-aniLation and operations of t&e %&aritale institution must e devoted @e(%lusivel1@for %&aritale purposes. '&e or-aniLation of t&e institution refers to its %orporate form, as s&o*n 1 itsarti%les of in%orporation, 1la*s and ot&er %onstitutive do%uments. Se%tion 3094: of t&e NIRCspe%iE%all1 re<uires t&at t&e %orporation or asso%iation e nonsto%, *&i%& is deEned 1 t&eCorporation Code as @one *&ere no part of its in%ome is distriutale as dividends to its memers,trustees, or o=%ers@ # and t&at an1 proEt @otainJedK as an in%ident to its operations s&all, *&eneverne%essar1 or proper, e used for t&e furt&eran%e of t&e purpose or purposes for *&i%& t&e %orporation























*as or-aniLed.@ 50 Ho*ever, under Bun- Center, an1 proEt 1 a %&aritale institution must not onl1 eplo*ed a% @*&enever ne%essar1 or proper,@ ut must e @devoted or used alto-et&er to t&e%&aritale oe%t *&i%& it is intended to a%&ieve.@ 5"

'&e operations of t&e %&aritale institution -enerall1 refer to its re-ular a%tivities. Se%tion 3094: of t&eNIRC re<uires t&at t&ese operations e e(%lusive to %&arit1. '&ere is also a spe%iE% re<uirement t&at@no part of Jt&eK net in%ome or asset s&all elon- to or inure to t&e eneEt of an1 memer, or-aniLer,

o=%er or an1 spe%iE% person.@ '&e use of lands, uildin-s and improvements of t&e institution is ut apart of its operations.

'&ere is no dispute t&at St. Bue+s is or-aniLed as a nonsto% and nonproEt %&aritale institution.Ho*ever, t&is does not automati%all1 e(empt St. Bue+s from pa1in- ta(es. '&is onl1 refers to t&eor-aniLation of St. Bue+s. 4ven if St. Bue+s meets t&e test of %&arit1, a %&aritale institution is not ipsofa%to ta( e(empt. 'o e e(empt from real propert1 ta(es, Se%tion 2893:, )rti%le I of t&e Constitutionre<uires t&at a %&aritale institution use t&e propert1 @a%tuall1, dire%tl1 and e(%lusivel1@ for %&aritalepurposes. 'o e e(empt from in%ome ta(es, Se%tion 3094: of t&e NIRC re<uires t&at a %&aritaleinstitution must e @or-aniLed and operated e(%lusivel1@ for %&aritale purposes. Bie*ise, to ee(empt from in%ome ta(es, Se%tion 309G: of t&e NIRC re<uires t&at t&e institution e @operatede(%lusivel1@ for so%ial *elfare.

Ho*ever, t&e last para-rap& of Se%tion 30 of t&e NIRC <ualiEes t&e *ords @or-aniLed and operatede(%lusivel1@ 1 providin- t&at6

Not*it&standin- t&e provisions in t&e pre%edin- para-rap&s, t&e in%ome of *&atever ind and%&ara%ter of t&e fore-oin- or-aniLations from an1 of t&eir properties, real or personal, or from an1 oft&eir a%tivities %ondu%ted for proEt re-ardless of t&e disposition made of su%& in%ome, s&all e sue%tto ta( imposed under t&is Code. 94mp&asis supplied:

In s&ort, t&e last para-rap& of Se%tion 30 provides t&at if a ta( e(empt %&aritale institution %ondu%ts@an1@ a%tivit1 for proEt, su%& a%tivit1 is not ta( e(empt even as its notforproEt a%tivities remain ta(e(empt. '&is para-rap& <ualiEes t&e re<uirements in Se%tion 3094: t&at t&e @JnKonsto% %orporation orasso%iation Jmust eK or-aniLed and operated e(%lusivel1 for ( ( ( %&aritale ( ( ( purposes ( ( (.@ Itlie*ise <ualiEes t&e re<uirement in Se%tion 309G: t&at t&e %ivi% or-aniLation must e @operatede(%lusivel1@ for t&e promotion of so%ial *elfare.

'&us, even if t&e %&aritale institution must e @or-aniLed and operated e(%lusivel1@ for %&aritalepurposes, it is nevert&eless allo*ed to en-a-e in @a%tivities %ondu%ted for proEt@ *it&out losin- its ta(e(empt status for its notforproEt a%tivities. '&e onl1 %onse<uen%e is t&at t&e @in%ome of *&ateverind and %&ara%ter@ of a %&aritale institution @from an1 of its a%tivities %ondu%ted for proEt, re-ardlessof t&e disposition made of su%& in%ome, s&all e sue%t to ta(.@ rior to t&e introdu%tion of Se%tion29/:, t&e ta( rate on su%& in%ome from forproEt a%tivities *as t&e ordinar1 %orporate rate underSe%tion 29):. $it& t&e introdu%tion of Se%tion 29/:, t&e ta( rate is no* "07.

In "##8, St. Bue+s &ad total revenues of ",30,3!,#!5 from servi%es to pa1in- patients. It %annot edisputed t&at a &ospital *&i%& re%eives appro(imatel1 ".3 illion from pa1in- patients is not aninstitution @operated e(%lusivel1@ for %&aritale purposes. Clearl1, revenues from pa1in- patients arein%ome re%eived from @a%tivities %ondu%ted for proEt.@ 52 Indeed, St. Bue+s admits t&at it derivedproEts from its pa1in- patients. St. Bue+s de%lared ",30,3!,#!5 as @Revenues from Servi%es toatients@ in %ontrast to its @ree Servi%es@ e(penditure of2"8,"8,#8. In its Comment in G.R. No."#5#0#, St. Bue+s s&o*ed t&e follo*in- @%al%ulation@ to support its %laim t&at !5.207 of its @in%omeafter e(penses *as allo%ated to free or %&aritale servi%es@ in "##8. 53

R(V(N*(' )R&! '(RVI%(' T&PATI(NT'

",30,3!,#!5.00













&P(RATING (P(N'('

rofessional %are of patients ",0"!,!08,3#.00

)dministrative 28,3"#,33.00

House&old and ropert1 #",#,!22.00

",3#5,25,350.00

INCAM4 RAM A4R)'IANS 33,!2,!"5.00

"007

)ree 'ervi3es -2<,<7,4#<.$$

-:9.2$

INCAM4 RAM A4R)'IANS, Net of R44S4RIC4S

""!,55,"".00

3.807

A'H4R INCAM4 ",82,30.00

(%('' &) R(V(N*(' &V(R(P(N'('

PSS,#S7,42.$$

In Bun- Center, t&is Court de%lared6

@JeK(%lusive@ is deEned as possessed and eno1ed to t&e e(%lusion of ot&ers> dearred fromparti%ipation or eno1ment> and @e(%lusivel1@ is deEned, @in a manner to e(%lude> as eno1in- aprivile-e e(%lusivel1.@ ( ( ( '&e *ords @dominant use@ or @prin%ipal use@ %annot e sustituted for t&e*ords @used e(%lusivel1@ *it&out doin- violen%e to t&e Constitution and t&e la*. Solel1 is s1non1mous*it& e(%lusivel1. 5

'&e Court %annot e(pand t&e meanin- of t&e *ords @operated e(%lusivel1@ *it&out violatin- t&e NIRC.Servi%es to pa1in- patients are a%tivities %ondu%ted for proEt. '&e1 %annot e %onsidered an1 ot&er*a1. '&ere is a @purpose to mae proEt over and aove t&e %ost@ of servi%es. 55 '&e ".3 illion totalrevenues from pa1in- patients is not even in%idental to St. Bue+s %&arit1 e(penditure of 2"8,"8,#8

for nonpa1in- patients.

St. Bue+s %laims t&at its %&arit1 e(penditure of 2"8,"8,#8 is !5.207 of its operatin- in%ome in"##8. Ho*ever, if a part of t&e remainin- 3.807 of t&e operatin- in%ome is reinvested in propert1,e<uipment or fa%ilities used for servi%es to pa1in- and nonpa1in- patients, t&en it %annot e said t&att&e in%ome is @devoted or used alto-et&er to t&e %&aritale oe%t *&i%& it is intended toa%&ieve.@ 5! '&e in%ome is plo*ed a% to t&e %orporation not entirel1 for %&aritale purposes, ut forproEt as *ell. In an1 %ase, t&e last para-rap& of Se%tion 30 of t&e NIRC e(pressl1 <ualiEes t&at in%omefrom a%tivities for proEt is ta(ale @re-ardless of t&e disposition made of su%& in%ome.@









esus Sa%red Heart Colle-e de%lared t&at t&ere is no o=%ial le-islative re%ord e(plainin- t&e p&rase@an1 a%tivit1 %ondu%ted for proEt.@ Ho*ever, it <uoted a deposition of Senator Mariano esus Cuen%o,*&o *as a memer of t&e Committee of Conferen%e for t&e Senate, *&i%& introdu%ed t&e p&rase @orfrom an1 a%tivit1 %ondu%ted for proEt.@

. Cuando &a &alado de la ;niversidad de Santo 'om_s <ue tiene un &ospital, no %ree d. <ue es unaa%tividad esen%ial di%&o &ospital para el fun%ionamiento del %ole-io de medi%ina de di%&a universidadU

( ( ( (

R. Si el &ospital se limita a re%iir enformos pores, mi %ontesta%i`n seria aErmativa> pero%onsiderando <ue el &ospital tiene %uartos de pa-o, 1 a los mismos -eneralmente van enfermos deuena posi%i`n so%ial e%on`mi%a, lo <ue se pa-a por estos enfermos dee estar sueto a +in%ome ta(+,1 es una de las raLones <ue &emos tenido para insertar las palaras o frase +or from an1 a%tivit1%ondu%ted for proEt.+ 5

'&e <uestion *as *&et&er &avin- a &ospital is essential to an edu%ational institution lie t&e Colle-e of Medi%ine of t&e ;niversit1 of Santo 'omas. Senator Cuen%o ans*ered t&at if t&e &ospital &as paidrooms -enerall1 o%%upied 1 people of -ood e%onomi% standin-, t&en it s&ould e sue%t to in%ometa(. He said t&at t&is *as one of t&e reasons Con-ress inserted t&e p&rase @or an1 a%tivit1 %ondu%ted

for proEt.@

'&e <uestion in esus Sa%red Heart Colle-e involves an edu%ational institution. 58 Ho*ever, it isappli%ale to %&aritale institutions e%ause Senator Cuen%o+s response s&o*s an intent to fo%us ont&e a%tivities of %&aritale institutions. )%tivities for proEt s&ould not es%ape t&e rea%& of ta(ation./ein- a nonsto% and nonproEt %orporation does not, 1 t&is reason alone, %ompletel1 e(empt aninstitution from ta(. )n institution %annot use its %orporate form to prevent its proEtale a%tivities fromein- ta(ed.

'&e Court Ends t&at St. Bue+s is a %orporation t&at is not @operated e(%lusivel1@ for %&aritale or so%ial*elfare purposes insofar as its revenues from pa1in- patients are %on%erned. '&is rulin- is ased notonl1 on a stri%t interpretation of a provision -rantin- ta( e(emption, ut also on t&e %lear and plainte(t of Se%tion 3094: and 9G:. Se%tion 3094: and 9G: of t&e NIRC re<uires t&at an institution e@operated e(%lusivel1@ for %&aritale or so%ial *elfare purposes to e %ompletel1 e(empt from in%ome

ta(. )n institution under Se%tion 3094: or 9G: does not lose its ta( e(emption if it earns in%ome from itsforproEt a%tivities. Su%& in%ome from forproEt a%tivities, under t&e last para-rap& of Se%tion 30, ismerel1 sue%t to in%ome ta(, previousl1 at t&e ordinar1 %orporate rate ut no* at t&e preferential "07rate pursuant to Se%tion 29/:.

) ta( e(emption is eDe%tivel1 a so%ial susid1 -ranted 1 t&e State e%ause an e(empt institution isspared from s&arin- in t&e e(penses of -overnment and 1et eneEts from t&em. 'a( e(emptions for%&aritale institutions s&ould t&erefore e limited to institutions eneE%ial to t&e puli% and t&ose*&i%& improve so%ial *elfare. ) proEtmain- entit1 s&ould not e allo*ed to e(ploit t&is susid1 to t&edetriment of t&e -overnment and ot&er ta(pa1ers.Ephi

St. Bue+s fails to meet t&e re<uirements under Se%tion 3094: and 9G: of t&e NIRC to e %ompletel1 ta(e(empt from all its in%ome. Ho*ever, it remains a proprietar1 nonproEt &ospital under Se%tion 29/:of t&e NIRC as lon- as it does not distriute an1 of its proEts to its memers and su%& proEts are

reinvested pursuant to its %orporate purposes. St. Bue+s, as a proprietar1 nonproEt &ospital, isentitled to t&e preferential ta( rate of "07 on its net in%ome from its forproEt a%tivities.

St. Bue+s is t&erefore liale for deE%ien%1 in%ome ta( in "##8 under Se%tion 29/: of t&e NIRC.Ho*ever, St. Bue+s &as -ood reasons to rel1 on t&e letter dated ! une "##0 1 t&e /IR, *&i%& opinedt&at St. Bue+s is @a %orporation for purel1 %&aritale and so%ial *elfare purposes@5# and t&us e(emptfrom in%ome ta(. !0 In Mi%&ael . B&uillier, In%. v. Commissioner of Internal Revenue, !" t&e Court saidt&at @-ood fait& and &onest elief t&at one is not sue%t to ta( on t&e asis of previous interpretationof -overnment a-en%ies tased to implement t&e ta( la*, are su=%ient ustiE%ation to delete t&eimposition of sur%&ar-es and interest.@ !2
















$H4R4AR4, t&e petition of t&e Commissioner of Internal Revenue in G.R. No. "#5#0# is )R'BGR)N'4. '&e e%ision of t&e Court of 'a( )ppeals 4n /an% dated "# Novemer 20"0 and itsResolution dated " Mar%& 20"" in C') Case No. !! are MAII4. St. Bue+s Medi%al Center, In%. isAR4R4 'A ) t&e deE%ien%1 in%ome ta( in "##8 ased on t&e "07 preferential in%ome ta( rateunder Se%tion 29/: of t&e National Internal Revenue Code. Ho*ever, it is not liale for sur%&ar-es andinterest on su%& deE%ien%1 in%ome ta( under Se%tions 28 and 2# of t&e National Internal RevenueCode. )ll ot&er parts of t&e e%ision and Resolution of t&e Court of 'a( )ppeals are )IRM4.

'&e petition of St. Bue+s Medi%al Center, In%. in G.R. No. "#5#!0 is 4NI4 for violatin- Se%tion ", Rule5 of t&e Rules of Court.

SA AR4R4.

VII. ReiBious )reedo

G.R. No. 9499 &3toer S$, ##9

ART*R& !. T&L(NTIN&, petitioner,vs.T+( '(%R(TAR &) )INAN%( and T+( %&!!I''I&N(R &) INT(RNAL R(V(N*(, respondents.

G.R. No. 9929 &3toer S$, ##9

;*AN T. 0AVI0, petitioner,vs.T(&)I'T& T. G*ING&NA, ;R., as (1e3utive 'e3retar"K R&/(RT& 0( &%A!P&, as 'e3retar" o)inan3eK LIAA VIN>&N'-%+AT&, as %oissioner o Interna RevenueK and t6eirA*T+&RI>(0 AG(NT' &R R(PR('(NTATIV(', respondents.

G.R. No. 994S &3toer S$, ##9

RA*L '. R&%& and t6e INT(GRAT(0 /AR &) T+( P+ILIPPIN(', petitioners,vs.

T+( '(%R(TAR &) T+( 0(PART!(NT &) )INAN%(K T+( %&!!I''I&N(R' &) T+( /*R(A*&) INT(RNAL R(V(N*( AN0 /*R(A* &) %*'T&!', respondents.

G.R. No. 9944 &3toer S$, ##9

P+ILIPPIN( PR('' IN'TIT*T(, IN%.K (GP P*/LI'+ING %&., IN%.K =A!A+ALAN P*/LI'+ING%&RP&RATI&NK P+ILIPPIN( ;&*RNALI'T', IN%.K ;&'( L. PAVIAK and &)(LIA L.0I!ALANTA, petitioners,vs.+&N. LIAA V. %+AT&, in 6er 3apa3it" as %oissioner o Interna RevenueK +&N.T(&)I'T& T. G*ING&NA, ;R., in 6is 3apa3it" as (1e3utive 'e3retar"K and +&N. R&/(RT& /.0( &%A!P&, in 6is 3apa3it" as 'e3retar" o )inan3e, respondents.

G.R. No. 9794 &3toer S$, ##9

%+A!/(R &) R(AL ('TAT( AN0 /*IL0(R' A''&%IATI&N', IN%., 5%R(/A8, petitioner,vs.T+( %&!!I''I&N(R &) INT(RNAL R(V(N*(, respondent.

G.R. No. 97< &3toer S$, ##9

=IL&'/AAN, IN%., ;&VIT& R. 'AL&NGA, %IRIL& A. RIG&', (R!( %A!/A, (!ILI& %.%AP*L&NG, ;R., ;&'( T. AP&L&, (P+RAI! T(N0(R&, )(RNAN0& 'ANTIAG&, ;&'( A/%(0(,



%+RI'TIN( TAN, )(LIP( L. G&>&N, RA)A(L G. )(RNAN0&, RA&*L V. VI%T&RIN&, ;&'(%*NANAN, @*INTIN '. 0&R&!AL, !&V(!(NT &) ATT&RN(' )&R /R&T+(R+&&0,INT(GRIT AN0 NATI&NALI'!, IN%. 5?!A/INI?8, )R((0&! )R&! 0(/T %&ALITI&N, IN%., andP+ILIPPIN( /I/L( '&%I(T, IN%. and IG/(RT& TAUA0A,petitioners,vs.T+( ((%*TIV( '(%R(TAR, T+( '(%R(TAR &) )INAN%(, T+( %&!!I''I&N(R &)INT(RNAL R(V(N*( and T+( %&!!I''I&N(R &) %*'T&!', respondents.

G.R. No. 9<92 &3toer S$, ##9

P+ILIPPIN( AIRLIN(', IN%., petitioner,vs.T+( '(%R(TAR &) )INAN%( and %&!!I''I&N(R &) INT(RNAL R(V(N*(, respondents.

G.R. No. 9<7S &3toer S$, ##9

%&&P(RATIV( *NI&N &) T+( P+ILIPPIN(', petitioner,vs.+&N. LIAA V. %+AT&, in 6er 3apa3it" as t6e %oissioner o Interna Revenue, +&N.T(&)I'T& T. G*ING&NA, ;R., in 6is 3apa3it" as (1e3utive 'e3retar", and +&N. R&/(RT& /.

0( &%A!P&, in 6is 3apa3it" as 'e3retar" o )inan3e, respondents.

G.R. No. 9#S &3toer S$, ##9

P+ILIPPIN( (0*%ATI&NAL P*/LI'+(R' A''&%IATI&N, IN%. and A''&%IATI&N &) P+ILIPPIN(/&&= '(LL(R', petitioners,vs.+&N. R&/(RT& /. 0( &%A!P&, as t6e 'e3retar" o )inan3eK +&N. LIAA V. %+AT&, ast6e %oissioner o Interna RevenueK and +&N. G*ILL(R!& PARAN&, ;R., in 6is 3apa3it"as t6e %oissioner o %ustos, respondents.

R 4 S A B ; ' I A N

!(N0&>A, J.:

'&ese are motions seein- re%onsideration of our de%ision dismissin- t&e petitions Eled in t&ese %asesfor t&e de%laration of un%onstitutionalit1 of R.). No. "!, ot&er*ise no*n as t&e 4(panded alue)dded 'a( Ba*. '&e motions, of *&i%& t&ere are "0 in all, &ave een Eled 1 t&e several petitioners int&ese %ases, *it& t&e e(%eption of t&e &ilippine 4du%ational ulis&ers )sso%iation, In%. and t&e)sso%iation of &ilippine /oosellers, petitioners in G.R. No. ""5#3".

'&e Soli%itor General, representin- t&e respondents, Eled a %onsolidated %omment, to *&i%& t&e&ilippine )irlines, In%., petitioner in G.R. No. ""5852, and t&e &ilippine ress Institute, In%., petitionerin G.R. No. ""55, and uan '. avid, petitioner in G.R. No. ""5525, ea%& Eled a repl1. In turn t&eSoli%itor General Eled on une ", "##5 a reoinder to t&e I+s repl1.

An une 2, "##5 t&e matter *as sumitted for resolution.

I. 'oer of the +enate to propose amendments to revenue bills . Some of t&e petitioners 9'olentino,ilosa1an, In%., &ilippine )irlines 9)B:, Ro%o, and C&amer of Real 4state and /uilders )sso%iation9CR4/):: reiterate previous %laims made 1 t&em t&at R.). No. "! did not @ori-inate e(%lusivel1@ int&e House of Representatives as re<uired 1 )rt. I, 2 of t&e Constitution. )lt&ou-& t&e1 admit t&atH. No. """# *as Eled in t&e House of Representatives *&ere it passed t&ree readin-s and t&atafter*ard it *as sent to t&e Senate *&ere after Erst readin- it *as referred to t&e Senate $a1s andMeans Committee, t&e1 %omplain t&at t&e Senate did not pass it on se%ond and t&ird readin-s. Instead



*&at t&e Senate did *as to pass its o*n version 9S. No. "!30: *&i%& it approved on Ma1 2, "##.etitioner 'olentino adds t&at *&at t&e Senate %ommittee s&ould &ave done *as to amend H. No."""# 1 striin- out t&e te(t of t&e ill and sustitutin- it *it& t&e te(t of S. No. "!30. '&at *a1, it issaid, @t&e ill remains a House ill and t&e Senate version ust e%omes t&e te(t 9only the te!t : of t&eHouse ill.@

'&e %ontention &as no merit.

'&e ena%tment of S. No. "!30 is not t&e onl1 instan%e in *&i%& t&e Senate proposed an amendment toa House revenue ill 1 ena%tin- its o*n version of a revenue ill. An at least t*o o%%asions durin-t&e *i"hth Con"ress, t&e Senate passed its o*n version of revenue ills, *&i%&, in %onsolidation *it&House ills earlier passed, e%ame t&e enrolled ills. '&ese *ere6

R.). No. 3!# 9)N )C' 'A )M4N 'H4 AMNI/;S IN4S'M4N'S CA4 A "#8 / 4X'4NING RAMI4 95: 4)RS 'A '4N 4)RS 'H4 4RIA AR ')X )N ;' 4X4M'IAN )N ')X CR4I' ANC)I')B 4Z;IM4N': *&i%& *as approved 1 t&e resident on )pril "0, "##2. '&is )%t is a%tuall1 a%onsolidation of H. No. 325, *&i%& *as approved 1 t&e House on anuar1 2#, "##2, and S. No. "#20,*&i%& *as approved 1 t&e Senate on eruar1 3, "##2.

R.). No. 5# 9)N )C' GR)N'ING ')X 4X4M'IANS 'A $HA44R SH)BB GI4 R4$)R 'A )N

IBIINA )'HB4'4 $INNING ) M4)B IN ABMIC G)M4S: *&i%& *as approved 1 t&e resident on Ma122, "##2. '&is )%t is a %onsolidation of H. No. 22232, *&i%& *as approved 1 t&e House ofRepresentatives on )u-ust 2, "#8#, and S. No. 80, *&i%& *as approved 1 t&e Senate on A%toer 2","##".

An t&e ot&er &and, t&e 4inth Con"ress passed revenue la*s *&i%& *ere also t&e result of t&e%onsolidation of House and Senate ills. '&ese are t&e follo*in-, *it& indi%ations of t&e dates on *&i%&t&e la*s *ere approved 1 t&e resident and dates t&e separate ills of t&e t*o %&amers of Con-ress*ere respe%tivel1 passed6

". R.). NA. !2

)N )C' INCR4)SING 'H4 4N)B'I4S AR ')X 4)SIAN, )M4NING AR 'HIS ;RAS4 'H4 4R'IN4N' S4C'IANS A 'H4 N)'IAN)B IN'4RN)B R44N;4 CA4 9e%emer 28,

"##2:.

House /ill No. 2"!5, A%toer 5, "##2

Senate /ill No. 32, e%emer , "##2

2. R.). NA. !3

)N )C' 'A 4MA$4R 'H4 CAMMISSIAN4R A IN'4RN)B R44N;4 'A R4Z;IR4 'H4)M4N' A 'H4 )B;4)4 ')X 44R MAN'H )N 'A )BBA$ BAC)BGA4RNM4N' ;NI'S 'A SH)R4 IN )' R44N;4, )M4NING AR 'HIS ;RAS4C4R')IN S4C'IANS A 'H4 N)'IAN)B IN'4RN)B R44N;4 CA4 9e%emer 28, "##2:

House /ill No. "503, Septemer 3, "##2

Senate /ill No. #!8, e%emer , "##2

3. R.). NA. !!

)N )C' );'HARI[ING 'H4 CAMMISSIAN4R A IN'4RN)B R44N;4 'A R4SCRI/4 'H4B)C4 AR )M4N' A IN'4RN)B R44N;4 ')X4S / B)RG4 ')X)4RS, )M4NING



AR 'HIS ;RAS4 C4R')IN RAISIANS A 'H4 N)'IAN)B IN'4RN)B R44N;4 CA4,)S )M4N4 9eruar1 2, "##3:

House /ill No. "0, A%toer 20, "##2

Senate /ill No. 35, Novemer "#, "##2

. R.). NA. !#

)N )C' R4Z;IRING 'H4 GA4RNM4N' AR )N A I'S ABI'IC)B S;/IISIANS,INS'R;M4N')BI'I4S AR )G4NCI4S INCB;ING GA4RNM4N'A$N4 AR CAN'RABB4CARAR)'IANS 9GACCS: 'A 4;C' )N $I'HHAB 'H4 )B;4)4 ')X ;4 )' 'H4 R)'4 A 'HR44 4RC4N' 937: AN GRASS )M4N' AR 'H4 ;RCH)S4 AGAAS )N SIX 4RC4N' 9!7: AN GRASS R4C4I'S AR S4RIC4S R4N4R4 /CAN'R)C'ARS 9)pril !, "##3:

House /ill No. 52!0, anuar1 2!, "##3

Senate /ill No. """, Mar%& 30, "##3

5. R.). NA. !5!

)N )C' R4Z;IRING GA4RNM4N'A$N4 AR CAN'RABB4 CARAR)'IANS 'A4CB)R4 II4NS ;N4R C4R')IN CANI'IANS 'A 'H4 N)'IAN)B GA4RNM4N',)N AR A'H4R ;RAS4S 9Novemer #, "##3:

House /ill No. ""02, Novemer 3, "##3

Senate /ill No. ""!8, Novemer 3, "##3

!. R.). NA. !!0

)N )C' R)'IAN)BI[ING ;R'H4R 'H4 S'R;C';R4 )N )MINIS'R)'IAN A 'H4AC;M4N')R S')M ')X, )M4NING AR 'H4 ;RAS4 C4R')IN RAISIANS A 'H4 N)'IAN)B IN'4RN)B R44N;4 CA4, )S )M4N4, )BBAC)'ING ;NS ARS4CIIC RAGR)MS, )N AR A'H4R ;RAS4S 9e%emer 23, "##3:

House /ill No. 8#, Ma1 3", "##3

Senate /ill No. "330, Novemer "8, "##3

. R.). NA. "

)N )C' IMASING ) ')X AN 'H4 S)B4, /)R'4R AR 4XCH)NG4 A SH)R4S A S'ACBIS'4 )N 'R)4 'HRA;GH 'H4 BAC)B S'AC 4XCH)NG4 AR 'HRA;GH INI'I)B;/BIC A4RING, )M4NING AR 'H4 ;RAS4 'H4 N)'IAN)B IN'4RN)B R44N;4CA4, )S )M4N4, / INS4R'ING ) N4$ S4C'IAN )N R44)BING C4R')INS;/S4C'IANS 'H4R4A 9Ma1 5, "##:

House /ill No. #"8, Novemer 3, "##3

Senate /ill No. ""2, Mar%& 23, "##

'&us, t&e ena%tment of S. No. "!30 is not t&e onl1 instan%e in *&i%& t&e Senate, in t&e e(er%ise of itspo*er to propose amendments to ills re<uired to ori-inate in t&e House, passed its o*n version of a



House revenue measure. It is note*ort&1 t&at, in t&e parti%ular %ase of S. No. "!30, petitioners 'olentino and Ro%o, as memers of t&e Senate, voted to approve it on se%ond and t&ird readin-s.

An t&e ot&er &and, amendment 1 sustitution, in t&e manner ur-ed 1 petitioner 'olentino, %on%ernsa mere matter of form. etitioner &as not s&o*n *&at sustantial diDeren%e it *ould mae if, as t&eSenate a%tuall1 did in t&is %ase, a separate ill lie S. No. "!30 is instead ena%ted as a sustitutemeasure, @takin" into Consideration . . . >.B. FG.@

Indeed, so far as pertinent, t&e Rules of t&e Senate only provide6

R;B4 XXIX

)M4NM4N'S

((( ((( (((

!8. Not more t&an one amendment to t&e ori-inal amendment s&all e %onsidered.

4o amendment by substitution shall be entertained unless the te!t thereof is

submitted in ritin".

)n1 of said amendments ma1 e *it&dra*n efore a vote is taen t&ereon.

!#. No amendment *&i%& sees t&e in%lusion of a le-islative provision forei-n to t&esue%t matter of a ill 9rider: s&all e entertained.

((( ((( (((

0). ) ill or resolution s&all not e amended 1 sustitutin- it *it& anot&er *&i%&%overs a sue%t distin%t from t&at proposed in t&e ori-inal ill or resolution. 9emp&asisadded:.

Nor is t&ere merit in petitioners+ %ontention t&at, *it& re-ard to revenue ills, t&e &ilippine Senatepossesses less po*er t&an t&e ;.S. Senate e%ause of te(tual diDeren%es et*een %onstitutionalprovisions -ivin- t&em t&e po*er to propose or %on%ur *it& amendments.

)rt. I, , %l. " of t&e ;.S. Constitution reads6

)ll /ills for raisin- Revenue s&all ori-inate in t&e House of Representatives> ut t&eSenate ma1 propose or %on%ur *it& amendments as on ot&er /ills.

)rt. I, 2 of our Constitution reads6

)ll appropriation, revenue or tariD ills, ills aut&oriLin- in%rease of t&e puli% det,ills of lo%al appli%ation, and private ills s&all ori-inate e(%lusivel1 in t&e House ofRepresentatives, ut t&e Senate ma1 propose or %on%ur *it& amendments.

'&e addition of t&e *ord @e(%lusivel1@ in t&e &ilippine Constitution and t&e de%ision to drop t&e p&rase@as on ot&er /ills@ in t&e )meri%an version, a%%ordin- to petitioners, s&o*s t&e intention of t&e framersof our Constitution to restri%t t&e Senate+s po*er to propose amendments to revenue ills. etitioner 'olentino %ontends t&at t&e *ord @e(%lusivel1@ *as inserted to modif1 @ori-inate@ and @t&e *ords +as inany ot&er ills+ 9sic: *ere eliminated so as to s&o* t&at t&ese ills *ere not to e lie ot&er ills utmust e treated as a spe%ial ind.@



'&e &istor1 of t&is provision does not support t&is %ontention. '&e supposed indicia of %onstitutionalintent are not&in- ut t&e reli%s of an unsu%%essful attempt to limit t&e po*er of t&e Senate. It *ill ere%alled t&at t&e "#35 Constitution ori-inall1 provided for a uni%ameral National )sseml1. $&en it *asde%ided in "#3# to %&an-e to a i%ameral le-islature, it e%ame ne%essar1 to provide for t&e pro%edurefor la*main- 1 t&e Senate and t&e House of Representatives. '&e *or of proposin- amendments tot&e Constitution *as done 1 t&e National )sseml1, a%tin- as a %onstituent asseml1, some of *&osememers, ealous of preservin- t&e )sseml1+s la*main- po*ers, sou-&t to %urtail t&e po*ers of t&e

proposed Senate. )%%ordin-l1 t&e1 proposed t&e follo*in- provision6

)ll ills appropriatin- puli% funds, revenue or tariD ills, ills of lo%al appli%ation, andprivate ills s&all ori-inate e(%lusivel1 in t&e )sseml1, ut t&e Senate ma1 propose or%on%ur *it& amendments. In %ase of disapproval 1 t&e Senate of an1 su%& ills, t&e)sseml1 ma1 repass t&e same 1 a t*ot&irds vote of all its memers, and t&ereupon,t&e ill so repassed s&all e deemed ena%ted and ma1 e sumitted to t&e residentfor %orrespondin- a%tion. In t&e event t&at t&e Senate s&ould fail to Enall1 a%t on an1su%& ills, t&e )sseml1 ma1, after t&irt1 da1s from t&e openin- of t&e ne(t re-ularsession of t&e same le-islative term, reapprove t&e same *it& a vote of t*ot&irds ofall t&e memers of t&e )sseml1. )nd upon su%& reapproval, t&e ill s&all e deemedena%ted and ma1 e sumitted to t&e resident for %orrespondin- a%tion.

'&e spe%ial %ommittee on t&e revision of la*s of t&e Se%ond National )sseml1 vetoed t&e proposal. It

deleted ever1t&in- after t&e Erst senten%e. )s re*ritten, t&e proposal *as approved 1 t&e National)sseml1 and emodied in Resolution No. 38, as amended 1 Resolution No. 3. 9. )R;4GA, NA$ A;R CANS'I';'IAN !5!! 9"#50::. '&e proposed amendment *as sumitted to t&e people andratiEed 1 t&em in t&e ele%tions &eld on une "8, "#0.

'&is is t&e &istor1 of )rt. I, "8 92: of t&e "#35 Constitution, from *&i%& )rt. I, 2 of t&e presentConstitution *as derived. It e(plains *&1 t&e *ord @e(%lusivel1@ *as added to t&e )meri%an te(t from*&i%& t&e framers of t&e &ilippine Constitution orro*ed and *&1 t&e p&rase @as on ot&er /ills@ *asnot %opied. Considerin- t&e defeat of t&e proposal, t&e po*er of t&e Senate to propose amendmentsmust e understood to e full, plenar1 and %omplete @as on ot&er /ills.@ '&us, e%ause revenue illsare re<uired to ori-inate e(%lusivel1 in t&e House of Representatives, t&e Senate %annot ena%t revenuemeasures of its o*n *it&out su%& ills. )fter a revenue ill is passed and sent over to it 1 t&e House,&o*ever, t&e Senate %ertainl1 %an pass its o*n version on t&e same sue%t matter. '&is follo*s fromt&e %oe<ualit1 of t&e t*o %&amers of Con-ress.

'&at t&is is also t&e understandin- of oo aut&ors of t&e s%ope of t&e Senate+s po*er to %on%ur is%lear from t&e follo*in- %ommentaries6

'&e po*er of t&e Senate to propose or %on%ur *it& amendments is apparentl1 *it&outrestri%tion. It *ould seem t&at 1 virtue of t&is po*er, t&e Senate %an pra%ti%all1 re*rite a ill re<uired to %ome from t&e House and leave onl1 a tra%e of t&e ori-inal ill.or e(ample, a -eneral revenue ill passed 1 t&e lo*er &ouse of t&e ;nited StatesCon-ress %ontained provisions for t&e imposition of an in&eritan%e ta( . '&is *as%&an-ed 1 t&e Senate into a %orporation ta(. '&e amendin- aut&orit1 of t&e Senate*as de%lared 1 t&e ;nited States Supreme Court to e su=%ientl1 road to enale itto mae t&e alteration. Jlint v. Stone 'ra%1 Compan1, 220 ;.S. "0, 55 B. ed. 38#K.

9B. '))) )N . C)RR4AN, ABI'IC)B B)$ A 'H4 HIBIIN4S 2 9"#!"::

'&e aovementioned ills are supposed to e initiated 1 t&e House ofRepresentatives e%ause it is more numerous in memers&ip and t&erefore also morerepresentative of t&e people. Moreover, its memers are presumed to e more familiar*it& t&e needs of t&e %ountr1 in re-ard to t&e ena%tment of t&e le-islation involved.

'&e Senate is, &o*ever, allo*ed mu%& lee*a1 in t&e e(er%ise of its po*er to propose or%on%ur *it& amendments to t&e ills initiated 1 t&e House of Representatives. '&us, inone %ase, a ill introdu%ed in t&e ;.S. House of Representatives *as %&an-ed 1 t&eSenate to mae a proposed in&eritan%e ta( a %orporation ta(. It is also a%%epted



pra%ti%e for t&e Senate to introdu%e *&at is no*n as an amendment 1 sustitution,*&i%& ma1 entirel1 repla%e t&e ill initiated in t&e House of Representatives.

9I. CR;[, HIBIIN4 ABI'IC)B B)$ ""5 9"##3::.

In sum, *&ile )rt. I, 2 provides t&at all appropriation, revenue or tariD ills, ills aut&oriLin-in%rease of t&e puli% det, ills of lo%al appli%ation, and private ills must @ori-inate e(%lusivel1 in t&eHouse of Representatives,@ it also adds, @but the +enate may propose or concur ith amendments.@ Int&e e(er%ise of t&is po*er, t&e Senate ma1 propose an entirel1 ne* ill as a sustitute measure. )spetitioner 'olentino states in a &i-& s%&ool te(t, a %ommittee to *&i%& a ill is referred ma1 do an1 oft&e follo*in-6

9": to endorse t&e ill *it&out %&an-es> 92: to mae %&an-es in t&e ill omittin- oraddin- se%tions or alterin- its lan-ua-e> 93: to mae and endorse an entirel1 ne* illas a sustitute, in *&i%& %ase it *ill e no*n as a committee bill> or 9: to mae noreport at all.

9). 'AB4N'INA, 'H4 GA4RNM4N' A 'H4 HIBIIN4S 258 9"#50::

'o e(%ept from t&is pro%edure t&e amendment of ills *&i%& are re<uired to ori-inate in t&e House 1

pres%riin- t&at t&e numer of t&e House ill and its ot&er parts up to t&e ena%tin- %lause must epreserved alt&ou-& t&e te(t of t&e Senate amendment ma1 e in%orporated in pla%e of t&e ori-inalod1 of t&e ill is to insist on a mere te%&ni%alit1. )t an1 rate t&ere is no rule pres%riin- t&is form. S.No. "!30, as a sustitute measure, is t&erefore as mu%& an amendment of H. No. """# as an1 *&i%&t&e Senate %ould &ave made.

II. +. 4o. HIJ a mere amendment of >. 4o. FG. etitioners+ asi% error is t&at t&e1 assume t&at S.No. "!30 is an independent and distinct bill. Hen%e t&eir repeated referen%es to its %ertiE%ation t&at it*as passed 1 t&e Senate @in substitution of +.B. 4o. KF, takin" into consideration .S. Res. No. 3and >.B. 4o. FG,@ impl1in- t&at t&ere is somet&in- sustantiall1 diDerent et*een t&e referen%e toS. No. ""2# and t&e referen%e to H. No. """#. rom t&is premise, t&e1 %on%lude t&at R.). No. "!ori-inated ot& in t&e House and in t&e Senate and t&at it is t&e produ%t of t*o @&alfaed illse%ause neit&er H. No. """# nor S. No. "!30 *as passed 1 ot& &ouses of Con-ress.@

In point of fa%t, in several instan%es t&e provisions of S. No. "!30, %learl1 appear to e mereamendments of t&e %orrespondin- provisions of H. No. """#. '&e ver1 taular %omparison of t&eprovisions of H. No. """# and S. No. "!30 atta%&ed as Supplement ) to t&e asi% petition of petitioner 'olentino, *&ile s&o*in- diDeren%es et*een t&e t*o ills, at t&e same time indi%ates t&at t&eprovisions of t&e Senate ill *ere pre%isel1 intended to e amendments to t&e House ill.

$it&out H. No. """#, t&e Senate %ould not &ave ena%ted S. No. "!30. /e%ause t&e Senate ill *as amere amendment of t&e House ill, H. No. """# in its ori-inal form did not &ave to pass t&e Senate onse%ond and t&ree readin-s. It *as enou-& t&at after it *as passed on Erst readin- it *as referred to t&eSenate Committee on $a1s and Means. Neit&er *as it re<uired t&at S. No. "!30 e passed 1 t&eHouse of Representatives efore t&e t*o ills %ould e referred to t&e Conferen%e Committee.

'&ere is le-islative pre%edent for *&at *as done in t&e %ase of H. No. """# and S. No. "!30. $&ent&e House ill and Senate ill, *&i%& e%ame R.). No. "05 9)%t pro&iitin- t&e dis%losure of an

deposits:, *ere referred to a %onferen%e %ommittee, t&e <uestion *as raised *&et&er t&e t*o ills%ould e t&e sue%t of su%& %onferen%e, %onsiderin- t&at t&e ill from one &ouse &ad not een passed1 t&e ot&er and vi%e versa. )s Con-ressman uran put t&e <uestion6

MR. ;R)N. '&erefore, I raise t&is <uestion of order as to pro%edure6 %f a >ouse bill is passed by the >ouse but not passed by the +enate, and a +enate bill of a similarnature is passed in the +enate but never passed in the >ouse, can the to bills be thesub9ect of a conference, and can a la be enacted from these to billsU I understandt&at t&e Senate ill in t&is parti%ular instan%e does not refer to investments in-overnment se%urities, *&ereas t&e ill in t&e House, *&i%& *as introdu%ed 1 t&e



Speaer, %overs t*o sue%t matters6 not onl1 investi-ation of deposits in ans utalso investi-ation of investments in -overnment se%urities. No*, sin%e t&e t*o illsdiDer in t&eir sue%t matter, I elieve t&at no la* %an e ena%ted.

Rulin- on t&e point of order raised, t&e %&air 9Speaer ose /. Baurel, r.: said6

'H4 S4)4R. '&e report of t&e %onferen%e %ommittee is in order. It is pre%isel1 in%ases lie t&is *&ere a %onferen%e s&ould e &ad. If t&e House ill &ad een approved1 t&e Senate, t&ere *ould &ave een no need of a %onferen%e> ut pre%isel1 e%auset&e Senate passed another bill on the same sub9ect matter , t&e %onferen%e %ommittee&ad to e %reated, and *e are no* %onsiderin- t&e report of t&at %ommittee.

92 CANG. R4C. NA. "3, ul1 2, "#55, pp. 38"2 9emp&asis added::

III. 7he 'resident@s certi$cation. '&e falla%1 in t&inin- t&at H. No. """# and S. No. "!30 are distin%tand unrelated measures also a%%ounts for t&e petitioners+ 9ilosa1an+s and )B+s: %ontention t&ate%ause t&e resident separatel1 %ertiEed to t&e need for t&e immediate ena%tment of t&esemeasures, &is %ertiE%ation *as ineDe%tual and void. '&e %ertiE%ation &ad to e made of t&e version oft&e same revenue ill *&i%& at the moment *as ein- %onsidered. At&er*ise, to follo* petitioners+t&eor1, it *ould e ne%essar1 for t&e resident to %ertif1 as man1 ills as are presented in a &ouse of

Con-ress even t&ou-& t&e ills are merel1 versions of t&e ill &e &as alread1 %ertiEed. It is enou-& t&at&e %ertiEes t&e ill *&i%&, at t&e time &e maes t&e %ertiE%ation, is under %onsideration. Sin%e onMar%& 22, "## t&e Senate *as %onsiderin- S. No. "!30, it *as t&at ill *&i%& &ad to e %ertiEed. ort&at matter on une ", "##3 t&e resident &ad earlier %ertiEed H. No. #2"0 for immediate ena%tmente%ause it *as t&e one *&i%& at t&at time *as ein- %onsidered 1 t&e House. '&is ill *as latersustituted, to-et&er *it& ot&er ills, 1 H. No. """#.

)s to *&at residential %ertiE%ation %an a%%omplis&, *e &ave alread1 e(plained in t&e main de%isiont&at t&e p&rase @e(%ept *&en t&e resident %ertiEes to t&e ne%essit1 of its immediate ena%tment, et%.@in )rt. I, 2! 92: <ualiEes not onl1 t&e re<uirement t&at @printed %opies Jof a illK in its Enal form JmusteK distriuted to t&e memers t&ree da1s efore its passa-e@ ut also t&e re<uirement t&at efore aill %an e%ome a la* it must &ave passed @t&ree readin-s on separate da1s.@ '&ere is not onl1 te(tualsupport for su%& %onstru%tion ut &istori%al asis as *ell.

)rt. I, 2" 92: of t&e "#35 Constitution ori-inall1 provided6

92: No ill s&all e passed 1 eit&er House unless it s&all &ave een printed and %opiest&ereof in its Enal form furnis&ed its Memers at least t&ree %alendar da1s prior to itspassa-e, e(%ept *&en t&e resident s&all &ave %ertiEed to t&e ne%essit1 of itsimmediate ena%tment. ;pon t&e last readin- of a ill, no amendment t&ereof s&all eallo*ed and t&e <uestion upon its passa-e s&all e taen immediatel1 t&ereafter, andt&e yeas and nays entered on t&e ournal.

$&en t&e "#3 Constitution *as adopted, it *as provided in )rt. III, "# 92:6

92: No ill s&all e%ome a la* unless it &as passed t&ree readin-s on separate da1s,and printed %opies t&ereof in its Enal form &ave een distriuted to t&e Memers t&reeda1s efore its passa-e, e(%ept *&en t&e rime Minister %ertiEes to t&e ne%essit1 of its

immediate ena%tment to meet a puli% %alamit1 or emer-en%1. ;pon t&e last readin-of a ill, no amendment t&ereto s&all e allo*ed, and t&e vote t&ereon s&all e taenimmediatel1 t&ereafter, and t&e yeas and nays entered in t&e ournal.

'&is provision of t&e "#3 do%ument, *it& sli-&t modiE%ation, *as adopted in )rt. I, 2! 92: of t&epresent Constitution, t&us6

92: No ill passed 1 eit&er House s&all e%ome a la* unless it &as passed t&reereadin-s on separate da1s, and printed %opies t&ereof in its Enal form &ave eendistriuted to its Memers t&ree da1s efore its passa-e, e(%ept *&en t&e resident



%ertiEes to t&e ne%essit1 of its immediate ena%tment to meet a puli% %alamit1 oremer-en%1. ;pon t&e last readin- of a ill, no amendment t&ereto s&all e allo*ed,and t&e vote t&ereon s&all e taen immediatel1 t&ereafter, andt&e yeasand nays entered in t&e ournal.

'&e e(%eption is ased on t&e prudential %onsideration t&at if in all %ases t&ree readin-s on separateda1s are re<uired and a ill &as to e printed in Enal form efore it %an e passed, t&e need for a la*

ma1 e rendered a%ademi% 1 t&e o%%urren%e of t&e ver1 emer-en%1 or puli% %alamit1 *&i%& it ismeant to address.

etitioners furt&er %ontend t&at a @-ro*in- ud-et deE%it@ is not an emer-en%1, espe%iall1 in a %ountr1lie t&e &ilippines *&ere ud-et deE%it is a %&roni% %ondition. 4ven if t&is *ere t&e %ase, an enormousud-et deE%it does not mae t&e need for R.). No. "! an1 less ur-ent or t&e situation %allin- for itsena%tment an1 less an emer-en%1.

)pparentl1, t&e memers of t&e Senate 9in%ludin- some of t&e petitioners in t&ese %ases: elieved t&att&ere *as an ur-ent need for %onsideration of S. No. "!30, e%ause t&e1 responded to t&e %all of t&eresident 1 votin- on t&e ill on se%ond and t&ird readin-s on t&e same da1. $&ile t&e udi%ialdepartment is not ound 1 t&e Senate+s a%%eptan%e of t&e resident+s %ertiE%ation, t&e respe%t due%oe<ual departments of t&e -overnment in matters %ommitted to t&em 1 t&e Constitution and t&easen%e of a %lear s&o*in- of -rave ause of dis%retion %aution a sta1 of t&e udi%ial &and.

)t an1 rate, *e are satisEed t&at S. No. "!30 re%eived t&orou-& %onsideration in t&e Senate *&ere it*as dis%ussed for si( da1s. Anl1 its distriution in advan%e in its Enal printed form *as a%tuall1dispensed *it& 1 &oldin- t&e votin- on se%ond and t&ird readin-s on t&e same da1 9Mar%& 2, "##:.At&er*ise, su=%ient time et*een t&e sumission of t&e ill on eruar1 8, "## on se%ond readin-and its approval on Mar%& 2, "## elapsed efore it *as Enall1 voted on 1 t&e Senate on t&irdreadin-.

'&e purpose for *&i%& t&ree readin-s on separate da1s is re<uired is said to e t*ofold6 9": to informt&e memers of Con-ress of *&at t&e1 must vote on and 92: to -ive t&em noti%e t&at a measure ispro-ressin- t&rou-& t&e ena%tin- pro%ess, t&us enalin- t&em and ot&ers interested in t&e measure toprepare t&eir positions *it& referen%e to it. 9" . G. S;'H4RB)N, S')';'4S )N S')';'ARCANS'R;C'IAN "0.0, p. 282 9"#2::. '&ese purposes *ere sustantiall1 a%&ieved in t&e %ase of R.).No. "!.

I. 'oer of Conference Committee. It is %ontended 9prin%ipall1 1 ilosa1an, In%. and t&e Movementof )ttorne1s for /rot&er&ood, Inte-rit1 and Nationalism, In%. 9M)/INI:: t&at in violation of t&e%onstitutional poli%1 of full puli% dis%losure and t&e people+s ri-&t to no* 9)rt. II, 28 and )rt. III, :t&e Conferen%e Committee met for t*o da1s in e(e%utive session *it& onl1 t&e %onferees present.

)s pointed out in our main de%ision, even in t&e ;nited States it *as %ustomar1 to &old su%& sessions*it& onl1 t&e %onferees and t&eir staDs in attendan%e and it *as onl1 in "#5 *&en a ne* rule *asadopted re<uirin- open sessions. ;nlie its )meri%an %ounterpart, t&e &ilippine Con-ress &as notadopted a rule pres%riin- open &earin-s for %onferen%e %ommittees.

It is nevert&eless %laimed t&at in t&e ;nited States, efore t&e adoption of t&e rule in "#5, at leaststaD memers *ere present. '&ese *ere staD memers of t&e Senators and Con-ressmen, &o*ever,

*&o ma1 e presumed to e t&eir %onEdential men, not steno-rap&ers as in t&is %ase *&o on t&e lastt*o da1s of t&e %onferen%e *ere e(%luded. '&ere is no s&o*in- t&at t&e %onferees t&emselves did nottae notes of t&eir pro%eedin-s so as to -ive petitioner ilosa1an asis for %laimin- t&at even inse%ret diplomati% ne-otiations involvin- state interests, %onferees eep notes of t&eir meetin-s. )oveall, t&e puli%+s ri-&t to no* *as full1 served e%ause t&e Conferen%e Committee in t&is %asesumitted a report s&o*in- t&e %&an-es made on t&e diDerin- versions of t&e House and t&e Senate.

etitioners %ite t&e rules of ot& &ouses *&i%& provide t&at %onferen%e %ommittee reports must %ontain@a detailed, su=%ientl1 e(pli%it statement of t&e %&an-es in or ot&er amendments.@ '&ese %&an-es ares&o*n in t&e ill atta%&ed to t&e Conferen%e Committee Report. '&e memers of ot& &ouses %ould



t&us as%ertain *&at %&an-es &ad een made in t&e ori-inal ills *it&out t&e need of a statementdetailin- t&e %&an-es.

'&e same <uestion no* presented *as raised *&en t&e ill *&i%& e%ame R.). No. "00 9Band Reform)%t of "#55: *as reported 1 t&e Conferen%e Committee. Con-ressman /en-Lon raised a point oforder. He said6

MR. /4NG[AN. M1 point of order is t&at it is out of order to %onsider t&e report of t&e%onferen%e %ommittee re-ardin- >ouse Bill 4o. KG 1 reason of t&e provision ofSe%tion "", )rti%le XII, of t&e Rules of t&is House *&i%& provides spe%iE%all1 t&at t&e%onferen%e report must e a%%ompanied 1 a detailed statement of t&e eDe%ts of t&eamendment on t&e ill of t&e House. '&is %onferen%e %ommittee report is nota%%ompanied 1 t&at detailed statement, Mr. Speaer. '&erefore it is out of order to%onsider it.

etitioner 'olentino, t&en t&e Maorit1 loor Beader, ans*ered6

MR. 'AB4N'INA. Mr. Speaer, I s&ould ust lie to sa1 a fe* *ords in %onne%tion *it&t&e point of order raised 1 t&e -entleman from an-asinan.

'&ere is no <uestion aout t&e provision of t&e Rule %ited 1 t&e -entleman froman-asinan, ut this provision applies to those cases here only portions of the billhave been amended. %n this case before us an entire bill is presented> therefore, it canbe easily seen from the readin" of the bill hat the provisions are . /esides, this procedure has been an established practice.

)fter some interruption, &e %ontinued6

MR. 'AB4N'INA. )s I *as sa1in-, Mr. Speaer, *e &ave to loo into t&e reason for t&eprovisions of t&e Rules, and t&e reason for t&e re<uirement in t&e provision %ited 1 t&e-entleman from an-asinan is *&en t&ere are onl1 %ertain *ords or p&rases inserted inor deleted from t&e provisions of t&e ill in%luded in t&e %onferen%e report, and *e%annot understand *&at t&ose *ords and p&rases mean and t&eir relation to t&e ill. %nthat case, it is necessary to make a detailed statement on ho those ords and

phrases ill a<ect the bill as a hole> but hen the entire bill itself is copied verbatimin the conference report, that is not necessary . So *&en t&e reason for t&e Rule doesnot e(ist, t&e Rule does not e(ist.

92 CANG. R4C. NA. 2, p. 05!. 9emp&asis added::

Con-ressman 'olentino *as sustained 1 t&e %&air. '&e re%ord s&o*s t&at *&en t&e rulin- *asappealed, it *as up&eld 1 viva voce and *&en a division of t&e House *as %alled, it *as sustained 1a vote of 8 to 5. 9%d.,p. 058:

Nor is t&ere an1 dout aout t&e po*er of a %onferen%e %ommittee to insert ne* provisions as lon- ast&ese are -ermane to t&e sue%t of t&e %onferen%e. )s t&is Court &eld in 'hilippine 5ud"es ssociationv . 'rado, 22 SCR) 03 9"##3:, in an opinion *ritten 1 t&en usti%e CruL, t&e urisdi%tion of t&e%onferen%e %ommittee is not limited to resolvin- diDeren%es et*een t&e Senate and t&e House. Itma1 propose an entirel1 ne* provision. $&at is important is t&at its report is suse<uentl1 approved1 t&e respe%tive &ouses of Con-ress. '&is Court ruled t&at it *ould not entertain alle-ations t&at,e%ause ne* provisions &ad een added 1 t&e %onferen%e %ommittee, t&ere *as t&ere1 a violationof t&e %onstitutional inun%tion t&at @upon t&e last readin- of a ill, no amendment t&ereto s&all eallo*ed.@

)ppl1in- t&ese prin%iples, *e s&all decline to loo into t&e petitioners+ %&ar-es that anamendment as made upon the last readin" of the bill t&at eventuall1 e%ame R.).No. 35 and t&at copiest&ereof in its Enal form ere not distributed amon- t&e



memers of ea%& House. /ot& t&e enrolled ill and t&e le-islative ournals %ertif1 t&att&e measure *as dul1 ena%ted i.e., in a%%ordan%e *it& )rti%le I, Se%. 2! 92: of t&eConstitution. $e are ound 1 su%& o=%ial assuran%es from a %oordinate departmentof t&e -overnment, to *&i%& *e o*e, at t&e ver1 least, a e%omin- %ourtes1.

9%d. at "0. 9emp&asis added::

It is interestin- to note t&e follo*in- des%ription of %onferen%e %ommittees in t&e &ilippines in a "##stud16

Conferen%e %ommittees ma1 e of t*o t1pes6 free or instru%ted. '&ese %ommitteesma1 e -iven instru%tions 1 t&eir parent odies or t&e1 ma1 e left *it&outinstru%tions. Normall1 t&e %onferen%e %ommittees are *it&out instru%tions, and t&is is*&1 t&e1 are often %riti%all1 referred to as @t&e little le-islatures.@ An%e ills &ave eensent to t&em, t&e %onferees &ave almost unlimited aut&orit1 to %&an-e t&e %lauses oft&e ills and in fa%t sometimes introdu%e ne* measures t&at *ere not in t&e ori-inalle-islation. No minutes are ept, and memers+ a%tivities on %onferen%e %ommitteesare di=%ult to determine. Ane %on-ressman no*n for &is idealism put it t&is *a16 @Iilled a ill on e(port in%entives for m1 interest -roup J%opraK in t&e %onferen%e%ommittee ut I %ould not &ave done so an1*&ere else.@ '&e %onferen%e %ommitteesumits a report to ot& &ouses, and usuall1 it is a%%epted. If t&e report is nota%%epted, t&en t&e %ommittee is dis%&ar-ed and ne* memers are appointed.

9R. a%son, Committees in t&e &ilippine Con-ress, in CAMMI''44S )NB4GISB)';R4S6 ) CAM)R)'I4 )N)BSIS "!3 9. . B44S )N M. SH)$, eds.::.

In %itin- t&is stud1, *e pass no ud-ment on t&e met&ods of %onferen%e %ommittees. $e %ite it onl1 tosa1 t&at %onferen%e %ommittees &ere are no diDerent from t&eir %ounterparts in t&e ;nited States*&ose vast po*ers *e noted in 'hilippine 5ud"es ssociation v . 'rado, supra. )t all events, under )rt.I, "!93: ea%& &ouse &as t&e po*er @to determine t&e rules of its pro%eedin-s,@ in%ludin- t&ose of its%ommittees. )n1 meanin-ful %&an-e in t&e met&od and pro%edures of Con-ress or its %ommitteesmust t&erefore e sou-&t in t&at od1 itself.

. 7he titles of +. 4o. HIJ and >. 4o. FG. )B maintains t&at R.). No. "! violates )rt. I, 2! 9":

of t&e Constitution *&i%& provides t&at @4ver1 ill passed 1 Con-ress s&all emra%e onl1 one sue%t*&i%& s&all e e(pressed in t&e title t&ereof.@ )B %ontends t&at t&e amendment of its fran%&ise 1 t&e*it&dra*al of its e(emption from t&e )' is not e(pressed in t&e title of t&e la*.

ursuant to "3 of .. No. "5#0, )B pa1s a fran%&ise ta( of 27 on its -ross revenue @in lieu of allot&er ta(es, duties, ro1alties, re-istration, li%ense and ot&er fees and %&ar-es of an1 ind, nature, ordes%ription, imposed, levied, estalis&ed, assessed or %olle%ted 1 an1 muni%ipal, %it1, provin%ial ornational aut&orit1 or -overnment a-en%1, no* or in t&e future.@

)B *as e(empted from t&e pa1ment of t&e )' alon- *it& ot&er entities 1 "03 of t&e NationalInternal Revenue Code, *&i%& provides as follo*s6

"03. *!empt transactions. '&e follo*in- s&all e e(empt from t&e valueadded ta(6

((( ((( (((

9<: 'ransa%tions *&i%& are e(empt under spe%ial la*s or international a-reements to*&i%& t&e &ilippines is a si-nator1.

R.). No. "! sees to *it&dra* %ertain e(emptions, in%ludin- t&at -ranted to )B, 1 amendin- "03,as follo*s6

"03. *!empt transactions. '&e follo*in- s&all e e(empt from t&e valueadded ta(6



((( ((( (((

9<: 'ransa%tions *&i%& are e(empt under spe%ial la*s, e(%ept t&ose -ranted underresidential e%ree Nos. !!, 52#, #2, "#", "5#0. . . .

'&e amendment of "03 is e(pressed in t&e title of R.). No. "! *&i%& reads6

)N )C' R4S'R;C';RING 'H4 )B;4)4 ')X 9)': SS'4M, $I4NING I'S ')X/)S4 )N 4NH)NCING I'S )MINIS'R)'IAN, )N AR 'H4S4 ;RAS4S )M4NING)N R44)BING 'H4 R4B4)N' RAISIANS A 'H4 N)'IAN)B IN'4RN)B R44N;4CA4, )S )M4N4, )N AR A'H4R ;RAS4S.

/1 statin- t&at R.). No. "! sees to @JR4S'R;C';R4K 'H4 )B;4)4 ')X 9)': SS'4M J/K$I4NING I'S ')X /)S4 )N 4NH)NCING I'S )MINIS'R)'IAN, )N AR 'H4S4 ;RAS4S)M4NING )N R44)BING 'H4 R4B4)N' RAISIANS A 'H4 N)'IAN)B IN'4RN)B R44N;4 CA4,)S )M4N4 )N AR A'H4R ;RAS4S,@ Con-ress t&ere1 %learl1 e(presses its intention to amendan1 provision of t&e NIRC *&i%& stands in t&e *a1 of a%%omplis&in- t&e purpose of t&e la*.

)B asserts t&at t&e amendment of its fran%&ise must e reTe%ted in t&e title of t&e la* 1 spe%iE%referen%e to .. No. "5#0. It is unne%essar1 to do t&is in order to %ompl1 *it& t&e %onstitutional

re<uirement, sin%e it is alread1 stated in t&e title t&at t&e la* sees to amend t&e pertinent provisionsof t&e NIRC, amon- *&i%& is "039<:, in order to *iden t&e ase of t&e )'. )%tuall1, it is t&e ill *&i%&e%omes a la* t&at is re<uired to e(press in its title t&e sue%t of le-islation. '&e titles of H. No."""# and S. No. "!30 in fa%t spe%iE%all1 referred to "03 of t&e NIRC as amon- t&e provisions sou-&tto e amended. $e are satisEed t&at su=%ient noti%e &ad een -iven of t&e penden%1 of t&ese ills inCon-ress efore t&e1 *ere ena%ted into *&at is no* R.).No. "!.

In 'hilippine 5ud"es ssociation v . 'rado, supra, a similar ar-ument as t&at no* made 1 )B *asree%ted. R.). No. 35 is entitled )N )C' CR4)'ING 'H4 HIBIIN4 AS')B CARAR)'IAN, 4ININGI'S A$4RS, ;NC'IANS )N R4SANSI/IBI'I4S, RAIING AR R4G;B)'IAN A 'H4 IN;S'R )NAR A'H4R ;RAS4S CANN4C'4 'H4R4$I'H. It %ontained a provision repealin- all franin-privile-es. It *as %ontended t&at t&e *it&dra*al of franin- privile-es *as not e(pressed in t&e title oft&e la*. In &oldin- t&at t&ere *as su=%ient des%ription of t&e sue%t of t&e la* in its title, in%ludin-

t&e repeal of franin- privile-es, t&is Court &eld6

'o re<uire ever1 end and means ne%essar1 for t&e a%%omplis&ment of t&e -eneraloe%tives of t&e statute to e e(pressed in its title *ould not onl1 e unreasonale ut*ould a%tuall1 render le-islation impossile. JCoole1, Constitutional Bimitations, 8t&4d., p. 2#K )s &as een %orre%tl1 e(plained6

'&e details of a le-islative a%t need not e spe%iE%all1 stated in itstitle, ut matter -ermane to t&e sue%t as e(pressed in t&e title, andadopted to t&e a%%omplis&ment of t&e oe%t in vie*, ma1 properl1 ein%luded in t&e a%t. '&us, it is proper to %reate in t&e same a%t t&ema%&iner1 1 *&i%& t&e a%t is to e enfor%ed, to pres%rie t&epenalties for its infra%tion, and to remove osta%les in t&e *a1 of itse(e%ution. If su%& matters are properl1 %onne%ted *it& t&e sue%t as

e(pressed in t&e title, it is unne%essar1 t&at t&e1 s&ould also &avespe%ial mention in t&e title. 9Sout&ern a%. Co. v. /artine, "0 ed. 25:

922 SCR) at 008:

I. Claims of press freedom and reli"ious liberty . $e &ave &eld t&at, as a -eneral proposition, t&e pressis not e(empt from t&e ta(in- po*er of t&e State and t&at *&at t&e %onstitutional -uarantee of freepress pro&iits are la*s *&i%& sin-le out t&e press or tar-et a -roup elon-in- to t&e press for spe%ialtreatment or *&i%& in an1 *a1 dis%riminate a-ainst t&e press on t&e asis of t&e %ontent of t&epuli%ation, and R.). No. "! is none of t&ese.



No* it is %ontended 1 t&e I t&at 1 removin- t&e e(emption of t&e press from t&e )' *&ilemaintainin- t&ose -ranted to ot&ers, t&e la* dis%riminates a-ainst t&e press. )t an1 rate, it is averred,@even nondis%riminator1 ta(ation of %onstitutionall1 -uaranteed freedom is un%onstitutional.@

$it& respe%t to t&e Erst %ontention, it *ould su=%e to sa1 t&at sin%e t&e la* -ranted t&e press aprivile-e, t&e la* %ould tae a% t&e privile-e an1time *it&out oDense to t&e Constitution. '&e reasonis simple6 1 -rantin- e(emptions, t&e State does not forever *aive t&e e(er%ise of its soverei-n

prero-ative.

Indeed, in *it&dra*in- t&e e(emption, t&e la* merel1 sue%ts t&e press to t&e same ta( urden to*&i%& ot&er usinesses &ave lon- a-o een sue%t. It is t&us diDerent from t&e ta( involved in t&e%ases invoed 1 t&e I. '&e li%ense ta( in /ros9ean v . merican 'ress Co., 2# ;.S. 233, 80 B. 4d.!!0 9"#3!: *as found to e dis%riminator1 e%ause it *as laid on t&e -ross advertisin- re%eipts onl1 of ne*spapers *&ose *eel1 %ir%ulation *as over 20,000, *it& t&e result t&at t&e ta( applied onl1 to "3out of "2 pulis&ers in Bouisiana. '&ese lar-e papers *ere %riti%al of Senator Hue1 Bon- *&o%ontrolled t&e state le-islature *&i%& ena%ted t&e li%ense ta(. '&e %ensorial motivation for t&e la* *ast&us evident.

An t&e ot&er &and, in Minneapolis +tar & 7ribune Co. v . Minnesota Comm@r of evenue, !0 ;.S. 55,5 B. 4d. 2d 2#5 9"#83:, t&e ta( *as found to e dis%riminator1 e%ause alt&ou-& it %ould &ave eenmade liale for t&e sales ta( or, in lieu t&ereof, for t&e use ta( on t&e privile-e of usin-, storin- or%onsumin- tan-ile -oods, t&e press *as not. Instead, t&e press *as e(empted from ot& ta(es. It*as, &o*ever, later made to pa1 a special use ta( on t&e %ost of paper and in *&i%& made t&eseitems @t&e onl1 items sue%t to t&e use ta( t&at *ere %omponent of -oods to e sold at retail.@ '&e;.S. Supreme Court &eld t&at t&e diDerential treatment of t&e press @su--ests t&at t&e -oal ofre-ulation is not related to suppression of e(pression, and su%& -oal is presumptivel1un%onstitutional.@ It *ould t&erefore appear t&at even a la* t&at favors t&e press is %onstitutionall1suspe%t. 9See t&e dissent of Re&n<uist, . in t&at %ase:

Nor is it true t&at onl1 t*o e(emptions previousl1 -ranted 1 4.A. No. 23 are *it&dra*n @asolutel1and un<ualiEedl1@ 1 R.). No. "!. At&er e(emptions from t&e )', su%& as t&ose previousl1 -rantedto )B, petroleum %on%essionaires, enterprises re-istered *it& t&e 4(port ro%essin- [one )ut&orit1,and man1 more are lie*ise totall1 *it&dra*n, in addition to e(emptions *&i%& are partiall1 *it&dra*n,in an eDort to roaden t&e ase of t&e ta(.

'&e I sa1s t&at t&e dis%riminator1 treatment of t&e press is &i-&li-&ted 1 t&e fa%t t&at transa%tions,*&i%& are proEt oriented, %ontinue to eno1 e(emption under R.). No. "!. )n enumeration of some of t&ese transa%tions *ill su=%e to s&o* t&at 1 and lar-e t&is is not so and t&at t&e e(emptions are-ranted for a purpose. )s t&e Soli%itor General sa1s, su%& e(emptions are -ranted, in some %ases, toen%oura-e a-ri%ultural produ%tion and, in ot&er %ases, for t&e personal eneEt of t&e enduser rat&ert&an for proEt. '&e e(empt transa%tions are6

9a: Goods for %onsumption or use *&i%& are in t&eir ori-inal state 9a-ri%ultural, marineand forest produ%ts, %otton seeds in t&eir ori-inal state, fertiliLers, seeds, seedlin-s,En-erlin-s, Es&, pra*n livesto% and poultr1 feeds: and -oods or servi%es to en&an%ea-ri%ulture 9millin- of pala1, %orn, su-ar %ane and ra* su-ar, livesto%, poultr1 feeds,fertiliLer, in-redients used for t&e manufa%ture of feeds:.

9: Goods used for personal %onsumption or use 9&ouse&old and personal eDe%ts of%itiLens returnin- to t&e &ilippines: or for professional use, lie professionalinstruments and implements, 1 persons %omin- to t&e &ilippines to settle &ere.

9%: Goods sue%t to e(%ise ta( su%& as petroleum produ%ts or to e used formanufa%ture of petroleum produ%ts sue%t to e(%ise ta( and servi%es sue%t toper%enta-e ta(.

9d: 4du%ational servi%es, medi%al, dental, &ospital and veterinar1 servi%es, andservi%es rendered under emplo1eremplo1ee relations&ip.



9e: $ors of art and similar %reations sold 1 t&e artist &imself.

9f: 'ransa%tions e(empted under spe%ial la*s, or international a-reements.

9-: 4(portsales 1 persons not )'re-istered.

9&: Goods or servi%es *it& -ross annual sale or re%eipt not e(%eedin- 'JJ,JJJ.JJ.

9Respondents+ Consolidated Comment on t&e Motions for Re%onsideration, pp. 58!0:

'&e I asserts t&at it does not reall1 matter t&at t&e la* does not dis%riminate a-ainst t&e presse%ause @even nondis%riminator1 ta(ation on %onstitutionall1 -uaranteed freedom is un%onstitutional.@I %ites in support of t&is assertion t&e follo*in- statement in Murdock v . 'ennsylvania, 3"# ;.S. "05,8 B. 4d. "2#2 9"#3:6

'&e fa%t t&at t&e ordinan%e is @nondis%riminator1@ is immaterial. '&e prote%tionaDorded 1 t&e irst )mendment is not so restri%ted. ) li%ense ta( %ertainl1 does nota%<uire %onstitutional validit1 e%ause it %lassiEes t&e privile-es prote%ted 1 t&e irst)mendment alon- *it& t&e *ares and mer%&andise of &u%sters and peddlers andtreats t&em all alie. Su%& e<ualit1 in treatment does not save t&e ordinan%e. reedomof press, freedom of spee%&, freedom of reli-ion are in preferred position.

'&e Court *as speain- in t&at %ase of a license ta! , *&i%&, unlie an ordinar1 ta(, is mainl1 forre-ulation. Its imposition on t&e press is un%onstitutional e%ause it la1s a prior restraint on t&ee(er%ise of its ri-&t. Hen%e, alt&ou-& its appli%ation to ot&ers, su%& t&ose sellin- -oods, is valid, itsappli%ation to t&e press or to reli-ious -roups, su%& as t&e e&ova&+s $itnesses, in %onne%tion *it& t&elatter+s sale of reli-ious oos and pamp&lets, is un%onstitutional. )s t&e ;.S. Supreme Court put it, @itis one t&in- to impose a ta( on in%ome or propert1 of a prea%&er. It is <uite anot&er t&in- to e(a%t ata( on &im for deliverin- a sermon.@

) similar rulin- *as made 1 t&is Court in merican Bible +ociety v . City of Manila, "0" &il. 38!9"#5: *&i%& invalidated a %it1 ordinan%e re<uirin- a usiness li%ense fee on t&ose en-a-ed in t&e saleof -eneral mer%&andise. It *as &eld t&at t&e ta( %ould not e imposed on t&e sale of iles 1 t&e)meri%an /ile So%iet1 *it&out restrainin- t&e free e(er%ise of its ri-&t to propa-ate.

'&e )' is, &o*ever, diDerent. It is not a li%ense ta(. It is not a ta( on t&e e(er%ise of a privile-e, mu%&less a %onstitutional ri-&t. It is imposed on t&e sale, arter, lease or e(%&an-e of -oods or properties ort&e sale or e(%&an-e of servi%es and t&e lease of properties purel1 for revenue purposes. 'o sue%tt&e press to its pa1ment is not to urden t&e e(er%ise of its ri-&t an1 more t&an to mae t&e press pa1in%ome ta( or sue%t it to -eneral re-ulation is not to violate its freedom under t&e Constitution.

)dditionall1, t&e &ilippine /ile So%iet1, In%. %laims t&at alt&ou-& it sells iles, t&e pro%eeds derivedfrom t&e sales are used to susidiLe t&e %ost of printin- %opies *&i%& are -iven free to t&ose *&o%annot aDord to pa1 so t&at to ta( t&e sales *ould e to in%rease t&e pri%e, *&ile redu%in- t&e volumeof sale. Grantin- t&at to e t&e %ase, t&e resultin- urden on t&e e(er%ise of reli-ious freedom is soin%idental as to mae it di=%ult to diDerentiate it from an1 ot&er e%onomi% imposition t&at mi-&t maet&e ri-&t to disseminate reli-ious do%trines %ostl1. At&er*ise, to follo* t&e petitioner+s ar-ument, toin%rease t&e ta( on t&e sale of vestments *ould e to la1 an impermissile urden on t&e ri-&t of t&eprea%&er to mae a sermon.

An t&e ot&er &and t&e re-istration fee of ",000.00 imposed 1 "0 of t&e NIRC, as amended 1 of R.). No. "!, alt&ou-& E(ed in amount, is reall1 ust to pa1 for t&e e(penses of re-istration andenfor%ement of provisions su%& as t&ose relatin- to a%%ountin- in "08 of t&e NIRC. '&at t&e /Sdistriutes free iles and t&erefore is not liale to pa1 t&e )' does not e(%use it from t&e pa1ment of t&is fee e%ause it also sells some %opies. )t an1 rate *&et&er t&e /S is liale for t&e )' must ede%ided in %on%rete %ases, in t&e event it is assessed t&is ta( 1 t&e Commissioner of InternalRevenue.



II. lle"ed violations of the due process, eual protection and contract clauses and the rule onta!ation. CR4/) asserts t&at R.). No. "! 9": impairs t&e oli-ations of %ontra%ts, 92: %lassiEestransa%tions as %overed or e(empt *it&out reasonale asis and 93: violates t&e rule t&at ta(es s&oulde uniform and e<uitale and t&at Con-ress s&all @evolve a pro-ressive s1stem of ta(ation.@

$it& respe%t to t&e Erst %ontention, it is %laimed t&at t&e appli%ation of t&e ta( to e(istin- %ontra%ts oft&e sale of real propert1 1 installment or on deferred pa1ment asis *ould result in sustantial

in%reases in t&e mont&l1 amortiLations to e paid e%ause of t&e "07 )'. '&e additional amount, it ispointed out, is somet&in- t&at t&e u1er did not anti%ipate at t&e time &e entered into t&e %ontra%t.

'&e s&ort ans*er to t&is is t&e one -iven 1 t&is Court in an earl1 %ase6 @)ut&orities from numeroussour%es are %ited 1 t&e plaintiDs, ut none of t&em s&o* t&at a la*ful ta( on a ne* sue%t, or anin%reased ta( on an old one, interferes *it& a %ontra%t or impairs its oli-ation, *it&in t&e meanin- oft&e Constitution. 4ven t&ou-& su%& ta(ation ma1 aDe%t parti%ular %ontra%ts, as it ma1 in%rease t&edet of one person and lessen t&e se%urit1 of anot&er, or ma1 impose additional urdens upon one%lass and release t&e urdens of anot&er, still t&e ta( must e paid unless pro&iited 1 t&eConstitution, nor %an it e said t&at it impairs t&e oli-ation of an1 e(istin- %ontra%t in its true le-alsense.@ 9Ba Insular v. Ma%&u%a Go'au%o and Nula CoSion-, 3# &il. 5!, 5 9"#"#::. Indeed not onl1e(istin- la*s ut also @the reservation of the essential attributes of soverei"nty , is . . . read into%ontra%ts as a postulate of t&e le-al order.@ 9&ilippine)meri%an Bife Ins. Co. v. )uditor General, 22SCR) "35, " 9"#!8:: Contra%ts must e understood as &avin- een made in referen%e to t&e

possile e(er%ise of t&e ri-&tful aut&orit1 of t&e -overnment and no oli-ation of %ontra%t %an e(tendto t&e defeat of t&at aut&orit1. 9Norman v. /altimore and A&io R.R., # B. 4d. 885 9"#35::.

It is ne(t pointed out t&at *&ile of R.). No. "! e(empts su%& transa%tions as t&e sale ofa-ri%ultural produ%ts, food items, petroleum, and medi%al and veterinar1 servi%es, it -rants noe(emption on t&e sale of real propert1 *&i%& is e<uall1 essential. '&e sale of real propert1 forso%ialiLed and lo*%ost &ousin- is e(empted from t&e ta(, ut CR4/) %laims t&at real estatetransa%tions of @t&e less poor,@ i.e., t&e middle %lass, *&o are e<uall1 &omeless, s&ould lie*ise ee(empted.

'&e sale of food items, petroleum, medi%al and veterinar1 servi%es, et%., *&i%& are essential -oods andservi%es *as alread1 e(empt under "03, pars. 9: 9d: 9": of t&e NIRC efore t&e ena%tment of R.). No."!. etitioner is in error in %laimin- t&at R.). No. "! -ranted e(emption to t&ese transa%tions,*&ile sue%tin- t&ose of petitioner to t&e pa1ment of t&e )'. Moreover, t&ere is a diDeren%e et*een

t&e @&omeless poor@ and t&e @&omeless less poor@ in t&e e(ample -iven 1 petitioner, e%ause t&ese%ond -roup or middle %lass %an aDord to rent &ouses in t&e meantime t&at t&e1 %annot 1et u1 t&eiro*n &omes. '&e t*o so%ial %lasses are t&us diDerentl1 situated in life. @It is in&erent in t&e po*er tota( t&at t&e State e free to sele%t t&e sue%ts of ta(ation, and it &as een repeatedl1 &eld t&at+ine<ualities *&i%& result from a sin-lin- out of one parti%ular %lass for ta(ation, or e(emption infrin-eno %onstitutional limitation.+@ 9ButL v. )raneta, #8 &il. "8, "53 9"#55:. ccord, Cit1 of /a-uio v. eBeon, "3 &il. #"2 9"#!8:> Sison, r. v. )n%&eta, "30 SCR) !5, !!3 9"#8:> apatiran n- m-aNa-lilin-od sa ama&alaan n- ilipinas, In%. v. 'an, "!3 SCR) 3" 9"#88::.

inall1, it is %ontended, for t&e reasons alread1 noted, t&at R.). No. "! also violates )rt. I, 289":*&i%& provides t&at @'&e rule of ta(ation s&all e uniform and e<uitale. '&e Con-ress s&all evolve apro-ressive s1stem of ta(ation.@

4<ualit1 and uniformit1 of ta(ation means t&at all ta(ale arti%les or inds of propert1 of t&e same

%lass e ta(ed at t&e same rate. '&e ta(in- po*er &as t&e aut&orit1 to mae reasonale and natural%lassiE%ations for purposes of ta(ation. 'o satisf1 t&is re<uirement it is enou-& t&at t&e statute orordinan%e applies e<uall1 to all persons, forms and %orporations pla%ed in similar situation. 9Cit1 of/a-uio v. e Beon, supra> Sison, r. v. )n%&eta, supra:

Indeed, t&e )' *as alread1 provided in 4.A. No. 23 lon- efore R.). No. "! *as ena%ted. R.). No."! merel1 e(pands t&e ase of t&e ta(. '&e validit1 of t&e ori-inal )' Ba* *as <uestionedin apatiran n" 4a"lilin"kod sa 'amahalaan n" 'ilipinas, %nc. v . 7an, "!3 SCR) 383 9"#88: on -roundssimilar to t&ose made in t&ese %ases, namel1, t&at t&e la* *as @oppressive, dis%riminator1, unust and



re-ressive in violation of )rt. I, 289": of t&e Constitution.@ 9)t 382: Ree%tin- t&e %&allen-e to t&ela*, t&is Court &eld6

)s t&e Court sees it, 4A 23 satisEes all t&e re<uirements of a valid ta(. It isuniform. . . .

'&e sales ta( adopted in 4A 23 is applied similarl1 on all -oods and servi%es sold tot&e puli%, *&i%& are not e(empt, at t&e %onstant rate of 07 or "07.

'&e disputed sales ta( is also e<uitale. It is imposed onl1 on sales of -oods orservi%es 1 persons en-a-ed in usiness *it& an a--re-ate -ross annual salese(%eedin- 200,000.00. Small %orner sarisari stores are %onse<uentl1 e(empt from itsappli%ation. Bie*ise e(empt from t&e ta( are sales of farm and marine produ%ts, sot&at t&e %osts of asi% food and ot&er ne%essities, spared as t&e1 are from t&ein%iden%e of t&e )', are e(pe%ted to e relativel1 lo*er and *it&in t&e rea%& of t&e-eneral puli%.

9)t 382383:

'&e CR4/) %laims t&at t&e )' is re-ressive. ) similar %laim is made 1 t&e Cooperative ;nion of t&e

&ilippines, In%. 9C;:, *&ile petitioner uan '. avid ar-ues t&at t&e la* %ontravenes t&e mandate ofCon-ress to provide for a pro-ressive s1stem of ta(ation e%ause t&e la* imposes a Tat rate of "07and t&us pla%es t&e ta( urden on all ta(pa1ers *it&out re-ard to t&eir ailit1 to pa1.

'&e Constitution does not reall1 pro&iit t&e imposition of indire%t ta(es *&i%&, lie t&e )', arere-ressive. $&at it simpl1 provides is t&at Con-ress s&all @evolve a pro-ressive s1stem of ta(ation.@ '&e %onstitutional provision &as een interpreted to mean simpl1 t&at @dire%t ta(es are . . . to epreferred JandK as mu%& as possile, indire%t ta(es s&ould e minimiLed.@ 94. 4RN)NA, 'H4CANS'I';'IAN A 'H4 HIBIIN4S 22" 9Se%ond ed. 9"#::. Indeed, t&e mandate to Con-ress is notto prescribe, ut to evolve, a pro-ressive ta( s1stem. At&er*ise, sales ta(es, *&i%& per&aps are t&eoldest form of indire%t ta(es, *ould &ave een pro&iited *it& t&e pro%lamation of )rt. III, "9": oft&e "#3 Constitution from *&i%& t&e present )rt. I, 289": *as taen. Sales ta(es are also re-ressive.

Resort to indire%t ta(es s&ould e minimized ut not avoided entirel1 e%ause it is di=%ult, if not

impossile, to avoid t&em 1 imposin- su%& ta(es a%%ordin- to t&e ta(pa1ers+ ailit1 to pa1. In t&e%ase of t&e )', t&e la* minimiLes t&e re-ressive eDe%ts of t&is imposition 1 providin- for zeroratin" of %ertain transa%tions 9R.). No. "!, 3, amendin- "02 9: of t&e NIRC:, *&ile-rantin- e!emptions to ot&er transa%tions. 9R.). No. "!, , amendin- "03 of t&e NIRC:.

'&us, t&e follo*in- transa%tions involvin- asi% and essential -oods and servi%es are e(empted fromt&e )'6

9a: Goods for %onsumption or use *&i%& are in t&eir ori-inal state 9a-ri%ultural, marineand forest produ%ts, %otton seeds in t&eir ori-inal state, fertiliLers, seeds, seedlin-s,En-erlin-s, Es&, pra*n livesto% and poultr1 feeds: and -oods or servi%es to en&an%ea-ri%ulture 9millin- of pala1, %orn su-ar %ane and ra* su-ar, livesto%, poultr1 feeds,fertiliLer, in-redients used for t&e manufa%ture of feeds:.

9: Goods used for personal %onsumption or use 9&ouse&old and personal eDe%ts of%itiLens returnin- to t&e &ilippines: and or professional use, lie professionalinstruments and implements, 1 persons %omin- to t&e &ilippines to settle &ere.

9%: Goods sue%t to e(%ise ta( su%& as petroleum produ%ts or to e used formanufa%ture of petroleum produ%ts sue%t to e(%ise ta( and servi%es sue%t toper%enta-e ta(.



9d: 4du%ational servi%es, medi%al, dental, &ospital and veterinar1 servi%es, andservi%es rendered under emplo1eremplo1ee relations&ip.

9e: $ors of art and similar %reations sold 1 t&e artist &imself.

9f: 'ransa%tions e(empted under spe%ial la*s, or international a-reements.

9-: 4(portsales 1 persons not )'re-istered.

9&: Goods or servi%es *it& -ross annual sale or re%eipt not e(%eedin- 'JJ,JJJ.JJ.

9Respondents+ Consolidated Comment on t&e Motions for Re%onsideration, pp. 58!0:

An t&e ot&er &and, t&e transa%tions *&i%& are sue%t to t&e )' are t&ose *&i%& involve -oods andservi%es *&i%& are used or availed of mainl1 1 &i-&er in%ome -roups. '&ese in%lude real properties&eld primaril1 for sale to %ustomers or for lease in t&e ordinar1 %ourse of trade or usiness, t&e ri-&t orprivile-e to use patent, %op1ri-&t, and ot&er similar propert1 or ri-&t, t&e ri-&t or privile-e to useindustrial, %ommer%ial or s%ientiE% e<uipment, motion pi%ture Elms, tapes and dis%s, radio, television,satellite transmission and %ale television time, &otels, restaurants and similar pla%es, se%urities,lendin- investments, ta(i%as, utilit1 %ars for rent, tourist uses, and ot&er %ommon %arriers, servi%esof fran%&ise -rantees of telep&one and tele-rap&.

'&e prolem *it& CR4/)+s petition is t&at it presents road %laims of %onstitutional violations 1tenderin- issues not at retail ut at *&olesale and in t&e astra%t. '&ere is no full1 developed re%ord*&i%& %an impart to adudi%ation t&e impa%t of a%tualit1. '&ere is no fa%tual foundation to s&o* int&e concrete t&e appli%ation of t&e la* to actual contracts and e(emplif1 its eDe%t on propert1 ri-&ts.or t&e fa%t is t&at petitioner+s memers &ave not even een assessed t&e )'. etitioner+s %ase is notmade %on%rete 1 a series of &1pot&eti%al <uestions ased *&i%& are no diDerent from t&ose dealt *it&in advisor1 opinions.

'&e di=%ult1 %onfrontin- petitioner is t&us apparent. He alle-es aritrariness. ) merealle-ation, as &ere, does not su=%e. '&ere must e a fa%tual foundation of su%&un%onstitutional taint. Considerin- t&at petitioner &ere *ould %ondemn su%& aprovision as void on its fa%e, &e &as not made out a %ase. '&is is merel1 to ad&ere tot&e aut&oritative do%trine t&at *&ere t&e due pro%ess and e<ual prote%tion %lauses areinvoed, %onsiderin- t&at t&e1 are not E(ed rules ut rat&er road standards, t&ere is aneed for proof of su%& persuasive %&ara%ter as *ould lead to su%& a %on%lusion. )sentsu%& a s&o*in-, t&e presumption of validit1 must prevail.

9Sison, r. v. )n%&eta, "30 SCR) at !!":

)dudi%ation of t&ese road %laims must a*ait t&e development of a %on%rete %ase. It ma1 e t&atpostponement of adudi%ation *ould result in a multipli%it1 of suits. '&is need not e t&e %ase,&o*ever. 4nfor%ement of t&e la* ma1 -ive rise to su%& a %ase. ) test %ase, provided it is an a%tual %aseand not an astra%t or &1pot&eti%al one, ma1 t&us e presented.

Nor is &ards&ip to ta(pa1ers alone an ade<uate ustiE%ation for adudi%atin- astra%t issues.

At&er*ise, adudi%ation *ould e no diDerent from t&e -ivin- of advisor1 opinion t&at does not reall1settle le-al issues.

$e are told t&at it is our dut1 under )rt. III, ", b2 to de%ide *&enever a %laim is made t&at @t&ere &aseen a -rave ause of dis%retion amountin- to la% or e(%ess of urisdi%tion on t&e part of an1 ran%&or instrumentalit1 of t&e -overnment.@ '&is dut1 %an onl1 arise if an a%tual %ase or %ontrovers1 isefore us. ;nder )rt . III, 5 our urisdi%tion is deEned in terms of @%ases@ and all t&at )rt. III, ", b2%an plausil1 mean is t&at in t&e e(er%ise of t&at 9urisdiction *e &ave t&e 9udicial poer to determine<uestions of -rave ause of dis%retion 1 an1 ran%& or instrumentalit1 of t&e -overnment.



ut in anot&er *a1, *&at is -ranted in )rt. III, ", b2 is @udi%ial po*er,@ *&i%& is @t&e po*er of a %ourtto &ear and de%ide %ases pendin- et*een parties *&o &ave t&e ri-&t to sue and e sued in t&e %ourtsof la* and e<uit1@ 9Bam v. &ipps, 22 &il. 5!, 55# 9"#"2::, as distin-uis&ed from le-islative ande(e%utive po*er. '&is po*er %annot e dire%tl1 appropriated until it is apportioned amon- several%ourts eit&er 1 t&e Constitution, as in t&e %ase of )rt. III, 5, or 1 statute, as in t&e %ase of t&e udi%iar1 )%t of "#8 9R.). No. 2#!: and t&e udi%iar1 Reor-aniLation )%t of "#80 9/.. /l-. "2#:. '&epo*er t&us apportioned %onstitutes t&e %ourt+s @urisdi%tion,@ deEned as @t&e po*er %onferred 1 la*

upon a %ourt or ud-e to tae %o-niLan%e of a %ase, to t&e e(%lusion of all ot&ers.@ 9;nited States v.)r%eo, ! &il. 2# 9"#0!:: $it&out an a%tual %ase %omin- *it&in its urisdi%tion, t&is Court %annot in<uireinto an1 alle-ation of -rave ause of dis%retion 1 t&e ot&er departments of t&e -overnment.

III. lle"ed violation of policy toards cooperatives. An t&e ot&er &and, t&e Cooperative ;nion of t&e&ilippines 9C;:, after rieT1 surve1in- t&e %ourse of le-islation, ar-ues t&at it *as to adopt a deEnitepoli%1 of -rantin- ta( e(emption to %ooperatives t&at t&e present Constitution emodies provisions on%ooperatives. 'o sue%t %ooperatives to t&e )' *ould t&erefore e to infrin-e a %onstitutional poli%1.etitioner %laims t&at in "#3, .. No. "5 *as promul-ated e(emptin- %ooperatives from t&epa1ment of in%ome ta(es and sales ta(es ut in "#8, e%ause of t&e %risis *&i%& mena%ed t&enational e%onom1, t&is e(emption *as *it&dra*n 1 .. No. "#55> t&at in "#8!, .. No. 2008 a-ain-ranted %ooperatives e(emption from in%ome and sales ta(es until e%emer 3", "##", ut, in t&esame 1ear, 4.A. No. #3 revoed t&e e(emption> and t&at Enall1 in "#8 t&e framers of t&e Constitution@repudiated t&e previous a%tions of t&e -overnment adverse to t&e interests of t&e %ooperatives, that

is, the repeated revocation of the ta! e!emption to cooperatives and instead up&eld t&e poli%1 ofstren-t&enin- t&e %ooperatives by ay of the "rant of ta! e!emptions,@ 1 providin- t&e follo*inin)rt. XII6

". '&e -oals of t&e national e%onom1 are a more e<uitale distriution ofopportunities, in%ome, and *ealt&> a sustained in%rease in t&e amount of -oods andservi%es produ%ed 1 t&e nation for t&e eneEt of t&e people> and an e(pandin-produ%tivit1 as t&e e1 to raisin- t&e <ualit1 of life for all, espe%iall1 t&eunderprivile-ed.

'&e State s&all promote industrialiLation and full emplo1ment ased on sounda-ri%ultural development and a-rarian reform, t&rou-& industries t&at mae full ande=%ient use of &uman and natural resour%es, and *&i%& are %ompetitive in ot&domesti% and forei-n marets. Ho*ever, t&e State s&all prote%t ilipino enterprises

a-ainst unfair forei-n %ompetition and trade pra%ti%es.

In t&e pursuit of t&ese -oals, all se%tors of t&e e%onom1 and all re-ions of t&e %ountr1s&all e -iven optimum opportunit1 to develop. rivate enterprises, in%ludin-%orporations, %ooperatives, and similar %olle%tive or-aniLations, s&all e en%oura-ed toroaden t&e ase of t&eir o*ners&ip.

"5. '&e Con-ress s&all %reate an a-en%1 to promote t&e viailit1 and -ro*t& of%ooperatives as instruments for so%ial usti%e and e%onomi% development.

etitioner+s %ontention &as no merit. In t&e Erst pla%e, it is not true t&at .. No. "#55 sin-led out%ooperatives 1 *it&dra*in- t&eir e(emption from in%ome and sales ta(es under .. No. "5, 5.$&at .. No. "#55, " did *as to *it&dra* the e!emptions and preferential treatments theretofore"ranted to private business enterprises in "eneral, in vie* of t&e e%onomi% %risis *&i%& t&en eset t&e

nation. It is true t&at after .. No. 2008, 2 &ad restored t&e ta( e(emptions of %ooperatives in "#8!,t&e e(emption *as a-ain repealed 1 4.A. No. #3, ", ut t&en a-ain %ooperatives *ere not t&e onl1ones *&ose e(emptions *ere *it&dra*n. 7he ithdraal of ta! incentives applied to all, includin""overnment and private entities. In t&e se%ond pla%e, t&e Constitution does not reall1 re<uire t&at%ooperatives e -ranted ta( e(emptions in order to promote t&eir -ro*t& and viailit1. Hen%e, t&ere isno asis for petitioner+s assertion t&at t&e -overnment+s poli%1 to*ard %ooperatives &ad een one ofva%illation, as far as t&e -rant of ta( privile-es *as %on%erned, and t&at it *as to put an end to t&isinde%ision t&at t&e %onstitutional provisions %ited *ere adopted. er&aps as a matter of poli%1%ooperatives s&ould e -ranted ta( e(emptions, ut t&at is left to t&e dis%retion of Con-ress. If



Con-ress does not -rant e(emption and t&ere is no dis%rimination to %ooperatives, no violation of an1%onstitutional poli%1 %an e %&ar-ed.

Indeed, petitioner+s theory amounts to sayin" that under the Constitution cooperatives are e!emptfrom ta!ation. Su%& t&eor1 is %ontrar1 to t&e Constitution under *&i%& onl1 t&e follo*in- are e(emptfrom ta(ation6 %&aritale institutions, %&ur%&es and parsona-es, 1 reason of )rt. I, 28 93:, and nonsto%, nonproEt edu%ational institutions 1 reason of )rt. XI, 93:.

C;+s furt&er -round for seein- t&e invalidation of R.). No. "! is t&at it denies %ooperatives t&ee<ual prote%tion of t&e la* e%ause ele%tri% %ooperatives are e(empted from t&e )'. '&e %lassiE%ationet*een ele%tri% and ot&er %ooperatives 9farmers %ooperatives, produ%ers %ooperatives, maretin-%ooperatives, et%.: apparentl1 rests on a %on-ressional determination t&at t&ere is -reater need toprovide %&eaper ele%tri% po*er to as man1 people as possile, espe%iall1 t&ose livin- in t&e rural areas,t&an t&ere is to provide t&em *it& ot&er ne%essities in life. $e %annot sa1 t&at su%& %lassiE%ation isunreasonale.

$e &ave %arefull1 read t&e various ar-uments raised a-ainst t&e %onstitutional validit1 of R.). No."!. $e &ave in fa%t taen t&e e(traordinar1 step of enoinin- its enfor%ement pendin- resolution oft&ese %ases. $e &ave no* %ome to t&e %on%lusion t&at t&e la* suDers from none of t&e inErmitiesattriuted to it 1 petitioners and t&at its ena%tment 1 t&e ot&er ran%&es of t&e -overnment doesnot %onstitute a -rave ause of dis%retion. )n1 <uestion as to its ne%essit1, desirailit1 or e(pedien%1must e addressed to Con-ress as t&e od1 *&i%& is ele%torall1 responsile, rememerin- t&at, as usti%e Holmes &as said, @le-islators are t&e ultimate -uardians of t&e lierties and *elfare of t&epeople in <uite as -reat a de-ree as are t&e %ourts.@ 9Missouri, ansas ? 'e(as R1. Co. v. Ma1, "# ;.S.2!, 20, 8 B. 4d. #", #3 9"#0::. It is not ri-&t, as petitioner in G.R. No. ""553 does in ar-uin-t&at *e s&ould enfor%e t&e puli% a%%ountailit1 of le-islators, t&at t&ose *&o too part in passin- t&ela* in <uestion 1 votin- for it in Con-ress s&ould later t&rust to t&e %ourts t&e urden of revie*in-measures in t&e Tus& of ena%tment. '&is Court does not sit as a t&ird ran%& of t&e le-islature, mu%&less e(er%ise a veto po*er over le-islation.

$H4R4AR4, t&e motions for re%onsideration are denied *it& Enalit1 and t&e temporar1 restrainin-order previousl1 issued is &ere1 lifted.

SA AR4R4.

G.R. No. L-#:S7 Apri S$, #97

A!(RI%AN /I/L( '&%I(T, plaintiDappellant,vs.%IT &) !ANILA, defendantappellee.

City 1iscal *u"enio n"eles and 5uan 4abon" for appellant. ssistant City 1iscal rsenio 4aAaa for appellee.

)(LI, J.E

laintiDappellant is a forei-n, nonsto%, nonproEt, reli-ious, missionar1 %orporation dul1 re-isteredand doin- usiness in t&e &ilippines t&rou-& its &ilippine a-en%1 estalis&ed in Manila in Novemer,"8#8, *it& its prin%ipal o=%e at !3! Isaa% eral in said Cit1. '&e defendant appellee is a muni%ipal%orporation *it& po*ers t&at are to e e(er%ised in %onformit1 *it& t&e provisions of Repuli% )%t No.0#, no*n as t&e Revised C&arter of t&e Cit1 of Manila.

In t&e %ourse of its ministr1, plaintiD+s &ilippine a-en%1 &as een distriutin- and sellin- iles andFor-ospel portions t&ereof 9e(%ept durin- t&e apanese o%%upation: t&rou-&out t&e &ilippines andtranslatin- t&e same into several &ilippine diale%ts. An Ma1 2# "#53, t&e a%tin- Cit1 'reasurer of t&eCit1 of Manila informed plaintiD t&at it *as %ondu%tin- t&e usiness of -eneral mer%&andise sin%eNovemer, "#5, *it&out providin- itself *it& t&e ne%essar1 Ma1or+s permit and muni%ipal li%ense, inviolation of Ardinan%e No. 3000, as amended, and Ardinan%es Nos. 252#, 3028 and 33!, and re<uired



plaintiD to se%ure, *it&in t&ree da1s, t&e %orrespondin- permit and li%ense fees, to-et&er *it&%ompromise %overin- t&e period from t&e t& <uarter of "#5 to t&e 2nd <uarter of "#53, in t&e totalsum of 5,82".5 9)nne( ):.

laintiD protested a-ainst t&is re<uirement, ut t&e Cit1 'reasurer demanded t&at plaintiD deposit andpa1 under protest t&e sum of 5,8#".5, if suit *as to e taen in %ourt re-ardin- t&e same 9)nne( /:. 'o avoid t&e %losin- of its usiness as *ell as furt&er Enes and penalties in t&e premises on A%toer 2,

"#53, plaintiD paid to t&e defendant under protest t&e said permit and li%ense fees in t&eaforementioned amount, -ivin- at t&e same time noti%e to t&e Cit1 'reasurer t&at suit *ould e taenin %ourt to <uestion t&e le-alit1 of t&e ordinan%es under *&i%&, t&e said fees *ere ein- %olle%ted9)nne( C:, *&i%& *as done on t&e same date 1 Elin- t&e %omplaint t&at -ave rise to t&is a%tion. In its%omplaint plaintiD pra1s t&at ud-ment e rendered de%larin- t&e said Muni%ipal Ardinan%e No. 3000,as amended, and Ardinan%es Nos. 252#, 3028 and 33! ille-al and un%onstitutional, and t&at t&edefendant e ordered to refund to t&e plaintiD t&e sum of 5,8#".5 paid under protest, to-et&er *it&le-al interest t&ereon, and t&e %osts, plaintiD furt&er pra1in- for su%& ot&er relief and remed1 as t&e%ourt ma1 deem ust e<uitale.

efendant ans*ered t&e %omplaint, maintainin- in turn t&at said ordinan%es *ere ena%ted 1 t&eMuni%ipal /oard of t&e Cit1 of Manila 1 virtue of t&e po*er -ranted to it 1 se%tion 2, suse%tion9m2: of t&e Revised )dministrative Code, superseded on une "8, "##, 1 se%tion "8, suse%tion 9":of Repuli% )%t No. 0#, no*n as t&e Revised C&arter of t&e Cit1 of Manila, and pra1in- t&at t&e

%omplaint e dismissed, *it& %osts a-ainst plaintiD. '&is ans*er *as replied 1 t&e plaintiD reiteratin-t&e un%onstitutionalit1 of t&e oftenrepeated ordinan%es.

/efore trial t&e parties sumitted t&e follo*in- stipulation of fa%ts6

CAM4 NA$ t&e parties in t&e aoveentitled %ase, t&ru t&eir undersi-ned attorne1s andrespe%tfull1 sumit t&e follo*in- stipulation of fa%ts6

". '&at t&e plaintiD sold for t&e use of t&e pur%&asers at its prin%ipal o=%e at !3! Isaa% eral,Manila, /iles, Ne* 'estaments, ile portions and ile %on%ordan%e in 4n-lis& and ot&erforei-n lan-ua-es imported 1 it from t&e ;nited States as *ell as /iles, Ne* 'estaments andile portions in t&e lo%al diale%ts imported andFor pur%&ased lo%all1> t&at from t&e fourt&<uarter of "#5 to t&e Erst <uarter of "#53 in%lusive t&e sales made 1 t&e plaintiD *ere asfollo*s6

uarter mount of +ales

t& <uarter "#5 ",2.2"

"st <uarter "#! 2,20!.85

2nd <uarter "#! ",#50.38

3rd <uarter "#! 2,235.##

t& <uarter "#! 3,25!.0

"st <uarter "# "3,2".02nd <uarter "# "5,.55

3rd <uarter "# ",!5."3

t& <uarter "# "2,5#0.#

"st <uarter "#8 "","3.#0



2nd <uarter "#8 ","5.2!

3rd <uarter "#8 38,333.83

t& <uarter "#8 "!,"#.#0

"st <uarter "## 23,#5."0

2nd <uarter "## ",802.08

3rd <uarter "## "!,!0.#

t& <uarter "## "5,#!".38

"st <uarter "#50 "8,5!2.!

2nd <uarter "#50 2",8"!.32

3rd <uarter "#50 25,00.55

t& <uarter "#50 5,28.#2

"st <uarter "#5" 3,8".2"

2nd <uarter "#5" 2#,"03.#8

3rd <uarter "#5" 20,"8"."0

t& <uarter "#5" 22,#!8.#"

"st <uarter "#52 23,002.!5

2nd <uarter "#52 ",!2!.#!

3rd <uarter "#52 ",#2".0"

t& <uarter "#52 2,"80.2

"st <uarter "#53 2#,5"!.2"

2. '&at t&e parties &ere1 reserve t&e ri-&t to present eviden%e of ot&er fa%ts not &ereinstipulated.

$H4R4AR4, it is respe%tfull1 pra1ed t&at t&is %ase e set for &earin- so t&at t&e parties ma1present furt&er eviden%e on t&eir e&alf. 9Re%ord on )ppeal, pp. "5"!:.

$&en t&e %ase *as set for &earin-, plaintiD proved, amon- ot&er t&in-s, t&at it &as een in e(isten%ein t&e &ilippines sin%e "8##, and t&at its parent so%iet1 is in Ne* or, ;nited States of )meri%a> t&atits, %onti-uous real properties lo%ated at Isaa% eral are e(empt from real estate ta(es> and t&at it *as

never re<uired to pa1 an1 muni%ipal li%ense fee or ta( efore t&e *ar, nor does t&e )meri%an /ileSo%iet1 in t&e ;nited States pa1 an1 li%ense fee or sales ta( for t&e sale of ile t&erein. laintiDfurt&er tried to estalis& t&at it never made an1 proEt from t&e sale of its iles, *&i%& are disposed offor as lo* as one t&ird of t&e %ost, and t&at in order to maintain its operatin- %ost it otains sustantialremittan%es from its Ne* or o=%e and voluntar1 %ontriutions and -ifts from %ertain %&ur%&es, ot&in t&e ;nited States and in t&e &ilippines, *&i%& are interested in its missionar1 *or. Re-ardin-plaintiD+s %ontention of la% of proEt in t&e sale of iles, defendant retorts t&at t&e admissions ofplaintiDappellant+s lone *itness *&o testiEed on %rosse(amination t&at iles earin- t&e pri%e of 0%ents ea%& from plaintiDappellant+s Ne* or o=%e are sold &ere 1 plaintiDappellant at ".30 ea%&>t&ose earin- t&e pri%e of c.50 ea%& are sold &ere at "0 ea%&> t&ose earin- t&e pri%e of c ea%& are



sold &ere at "5 ea%&> and t&ose earin- t&e pri%e of c"" ea%& are sold &ere at 22 ea%&, %learl1 s&o*t&at plaintiD+s %ontention t&at it never maes an1 proEt from t&e sale of its ile, is evidentl1untenale.

)fter &earin- t&e Court rendered ud-ment, t&e last part of *&i%& is as follo*s6

)s ma1 e seen from t&e repealed se%tion 9m2: of t&e Revised )dministrative Code and t&erepealin- portions 9o: of se%tion "8 of Repuli% )%t No. 0#, alt&ou-& t&e1 seemin-l1 diDer int&e *a1 t&e le-islative intent is e(pressed, 1et t&eir meanin- is pra%ti%all1 t&e same for t&epurpose of ta(in- t&e mer%&andise mentioned in said le-al provisions, and t&at t&e ta(es to elevied 1 said ordinan%es is in t&e nature of per%enta-e -raduated ta(es 9Se%. 3 of Ardinan%eNo. 3000, as amended, and Se%. ", Group 2, of Ardinan%e No. 252#, as amended 1 Ardinan%eNo. 33!:.

IN I4$ A 'H4 AR4GAING CANSI4R)'IANS, t&is Court is of t&e opinion and so &olds t&att&is %ase s&ould e dismissed, as it is &ere1 dismissed, for la% of merits, *it& %osts a-ainstt&e plaintiD.

Not satisEed *it& t&is verdi%t plaintiD too up t&e matter to t&e Court of )ppeals *&i%& %ertiEed t&e%ase to ;s for t&e reason t&at t&e errors assi-ned to t&e lo*er Court involved onl1 <uestions of la*.

)ppellant %ontends t&at t&e lo*er Court erred6

". In &oldin- t&at Ardinan%es Nos. 252# and 3000, as respe%tivel1 amended, are notun%onstitutional>

2. In &oldin- t&at suse%tion m2 of Se%tion 2 of t&e Revised )dministrative Code under*&i%& Ardinan%es Nos. 25#2 and 3000 *ere promul-ated, *as not repealed 1 Se%tion "8 ofRepuli% )%t No. 0#>

3. In not &oldin- t&at an ordinan%e providin- for ta(es ased on -ross sales or re%eipts, inorder to e valid under t&e ne* C&arter of t&e Cit1 of Manila, must Erst e approved 1 t&eresident of t&e &ilippines> and

. In &oldin- t&at, as t&e sales made 1 t&e plaintiDappellant &ave assumed %ommer%ialproportions, it %annot es%ape from t&e operation of said muni%ipal ordinan%es under t&e %loaof reli-ious privile-e.

7he issues. )s ma1 e seen from t&e pro%eedin- statement of t&e %ase, t&e issues involved in t&epresent %ontrovers1 ma1 e redu%ed to t&e follo*in-6 9": *&et&er or not t&e ordinan%es of t&e Cit1 ofManila, Nos. 3000, as amended, and 252#, 3028 and 33!, are %onstitutional and valid> and 92:*&et&er t&e provisions of said ordinan%es are appli%ale or not to t&e %ase at ar.

Se%tion ", suse%tion 9: of )rti%le III of t&e Constitution of t&e Repuli% of t&e &ilippines, providest&at6

9: No la* s&all e made respe%tin- an estalis&ment of reli-ion, or pro&iitin- t&e free

e(er%ise t&ereof, and t&e free e(er%ise and eno1ment of reli-ious profession and *ors&ip,*it&out dis%rimination or preferen%e, s&all forever e allo*ed. No reli-ion test s&all e re<uiredfor t&e e(er%ise of %ivil or politi%al ri-&ts.

redi%ated on t&is %onstitutional mandate, plaintiDappellant %ontends t&at Ardinan%es Nos. 252# and3000, as respe%tivel1 amended, are un%onstitutional and ille-al in so far as its so%iet1 is %on%erned,e%ause t&e1 provide for reli-ious %ensors&ip and restrain t&e free e(er%ise and eno1ment of itsreli-ious profession, to *it6 t&e distriution and sale of iles and ot&er reli-ious literature to t&epeople of t&e &ilippines.



/efore enterin- into a dis%ussion of t&e %onstitutional aspe%t of t&e %ase, $e s&all Erst %onsider t&eprovisions of t&e <uestioned ordinan%es in relation to t&eir appli%ation to t&e sale of iles, et%. 1appellant. '&e re%ords, s&o* t&at 1 letter of Ma1 2#, "#53 9)nne( ):, t&e Cit1 'reasurer re<uiredplaintiD to se%ure a Ma1or+s permit in %onne%tion *it& t&e so%iet1+s alle-ed usiness of distriutin- andsellin- iles, et%. and to pa1 permit dues in t&e sum of 35 for t&e period %overed in t&is liti-ation,plus t&e sum of 35 for %ompromise on a%%ount of plaintiD+s failure to se%ure t&e permit re<uired 1Ardinan%e No. 3000 of t&e Cit1 of Manila, as amended. '&is Ardinan%e is of -eneral appli%ation and not

parti%ularl1 dire%ted a-ainst institutions lie t&e plaintiD, and it does not %ontain an1 provisions*&atever pres%riin- reli-ious %ensors&ip nor restrainin- t&e free e(er%ise and eno1ment of an1reli-ious profession. Se%tion " of Ardinan%e No. 3000 reads as follo*s6

S4C. ". 4RMI'S N4C4SS)R. It s&all e unla*ful for an1 person or entit1 to %ondu%t oren-a-e in an1 of t&e usinesses, trades, or o%%upations enumerated in +ection I of thisrdinance or other businesses, trades, or occupations for hich a permit is reuired for the proper supervision and enforcement of e!istin" las and ordinances "overnin" the sanitation,security, and elfare of the public and the health of the employees en"a"ed in the businessspeci$ed in said section I hereof, $I'HA;' IRS' H)ING A/')IN4 ) 4RMI' 'H4R4ARRAM 'H4 M)AR )N 'H4 N4C4SS)R BIC4NS4 RAM 'H4 CI' 'R4)S;R4R.

'&e usiness, trade or o%%upation of t&e plaintiD involved in t&is %ase is not parti%ularl1 mentioned inSe%tion 3 of t&e Ardinan%e, and t&e re%ord does not s&o* t&at a permit is re<uired t&erefor under

e(istin- la*s and ordinan%es for t&e proper supervision and enfor%ement of t&eir provisions -overnin-t&e sanitation, se%urit1 and *elfare of t&e puli% and t&e &ealt& of t&e emplo1ees en-a-ed in t&eusiness of t&e plaintiD. Ho*ever, se%tions 3 of Ardinan%e 3000 %ontains item No. #, *&i%& reads asfollo*s6

#. )ll ot&er usinesses, trades or o%%upations notmentioned in t&is Ardinan%e, e(%ept t&ose upon *&i%& t&eCit1 is not empo*ered to li%ense or to ta( 5.00

'&erefore, t&e ne%essit1 of t&e permit is made to depend upon t&e po*er of t&e Cit1 to li%ense or ta(said usiness, trade or o%%upation.

)s to t&e li%ense fees t&at t&e 'reasurer of t&e Cit1 of Manila re<uired t&e so%iet1 to pa1 from t&e t&<uarter of "#5 to t&e "st <uarter of "#53 in t&e sum of 5,82".5, in%ludin- t&e sum of 50 as%ompromise, Ardinan%e No. 252#, as amended 1 Ardinan%es Nos. 2#, 282" and 3028 pres%riest&e follo*in-6

S4C. ". 44S. Sue%t to t&e provisions of se%tion 58 of t&e Revised Ardinan%es of t&e Cit1of Manila, as amended, t&ere s&all e paid to t&e Cit1 'reasurer for en-a-inin an1 of t&eusinesses or o%%upations elo* enumerated, <uarterl1, li%ense fees ased on -ross sales orre%eipts realiLed durin- t&e pre%edin- <uarter in a%%ordan%e *it& t&e rates &erein pres%ried6RAI4, HA$44R, '&at a person en-a-ed in an1 usinesses or o%%upation for t&e Ersttime s&all pa1 t&e initial li%ense fee ased on t&e proale -ross sales or re%eipts for t&e Erst<uarter e-innin- from t&e date of t&e openin- of t&e usiness as indi%ated &erein for t&e%orrespondin- usiness or o%%upation.

( ( ( ( ( ( ( ( (

GRA; 2. Retail dealers in ne* 9not 1et used: mer%&andise, *&i%& dealers are not 1etsue%t to t&e pa1ment of an1 muni%ipal ta(, su%& as 9": retail dealers in "eneral merchandise>92: retail dealers e(%lusivel1 en-a-ed in t&e sale of . . . oos, in%ludin- stationer1.

( ( ( ( ( ( ( ( (

)s ma1 e seen, t&e li%ense fees re<uired to e paid <uarterl1 in Se%tion " of said Ardinan%e No. 252#,as amended, are not imposed dire%tl1 upon an1 reli-ious institution ut upon t&ose en-a-ed in an1 of



t&e usiness or o%%upations t&erein enumerated, su%& as retail @dealers in -eneral mer%&andise@*&i%&, it is alle-ed, %over t&e usiness or o%%upation of sellin- iles, oos, et%.

C&apter !0 of t&e Revised )dministrative Code *&i%& in%ludes se%tion 2, suse%tion 9m2: of saidle-al od1, as amended 1 )%t No. 3!5#, approved on 6ecember N, FKF, empo*ers t&e Muni%ipal/oard of t&e Cit1 of Manila6

9M2: 'o ta( and E( t&e li%ense fee on 9a: dealers in ne* automoiles or a%%essories or ot&,and 9: retail dealers in ne* 9not 1et used: mer%&andise, *&i%& dealers are not 1et sue%t tot&e pa1ment of an1 muni%ipal ta(.

or t&e purpose of ta(ation, t&ese retail dealers s&all e %lassiEed as 9": retail dealers in-eneral mer%&andise, and 92: retail dealers e(%lusivel1 en-a-ed in t&e sale of 9a: te(tiles . . .9e: oos, in%ludin- stationer1, paper and o=%e supplies, . . .6 RAI4, HA$44R, 7hat thecombined total ta! of any debtor or manufacturer, or both, enumerated under thesesubsections (m3# and (m3K#, hether dealin" in one or all of the articles mentioned herein,+>LL 47 B* %4 *OC*++ 1 1%-* >246*6 '*++ '* 442M.

and appellee+s %ounsel maintains t&at Cit1 Ardinan%es Nos. 252# and 3000, as amended, *ere ena%tedin virtue of t&e po*er t&at said )%t No. 3!!# %onferred upon t&e Cit1 of Manila. )ppellant, &o*ever,

%ontends t&at said ordinan%es are lon-er in for%e and eDe%t as t&e la* under *&i%& t&e1 *erepromul-ated &as een e(pressl1 repealed 1 Se%tion "02 of Repuli% )%t No. 0# passed on 5une N,FPF, no*n as t&e Revised Manila C&arter.

assin- upon t&is point t&e lo*er Court %ate-ori%all1 stated t&at Repuli% )%t No. 0# e(pressl1repealed t&e provisions of C&apter !0 of t&e Revised )dministrative Code ut in t&e opinion of t&e trial ud-e, alt&ou-& Se%tion 2 9m2: of t&e former Manila C&arter and se%tion "8 9o: of t&e ne*seemin-l1 diDer in t&e *a1 t&e le-islative intent *as e(pressed, 1et t&eir meanin- is pra%ti%all1 t&esame for t&e purpose of ta(in- t&e mer%&andise mentioned in ot& le-al provisions and, %onse<uentl1,Ardinan%es Nos. 252# and 3000, as amended, are to e %onsidered as still in full for%e and eDe%tuninterruptedl1 up to t&e present.

Aften t&e le-islature, instead of simpl1 amendin- t&e pree(istin- statute, *ill repeal t&e oldstatute in its entiret1 and 1 t&e same ena%tment reena%t all or %ertain portions of t&e

pree(istin- la*. Af %ourse, t&e prolem %reated 1 t&is sort of le-islative a%tion involves mainl1t&e eDe%t of t&e repeal upon ri-&ts and liailities *&i%& a%%rued under t&e ori-inal statute. )ret&ose ri-&ts and liailities destro1ed or preservedU '&e aut&orities are divided as to t&e eDe%tof simultaneous repeals and reena%tments. Some ad&ere to t&e vie* t&at t&e ri-&ts andliailities a%%rued under t&e repealed a%t are destro1ed, sin%e t&e statutes from *&i%& t&e1spran- are a%tuall1 terminated, even t&ou-& for onl1 a ver1 s&ort period of time. thers, andthey seem to be in the ma9ority, refuse to accept this vie of the situation, and conseuentlymaintain that all ri"hts an liabilities hich have accrued under the ori"inal statute are preserved and may be enforced, since the re3enactment neutralizes the repeal, therefore,continuin" the la in force ithout interruption. 9Cra*fordStatutor1 Constru%tion, Se%. 322:.

)ppellant+s %ounsel states t&at se%tion "8 9o: of Repuli% )%t No, 0# introdu%es a ne* and *ider%on%ept of ta(ation and is diDerent from t&e provisions of Se%tion 29m2: t&at t&e former %annot e%onsidered as a sustantial reena%tment of t&e provisions of t&e latter. $e &ave <uoted aove t&eprovisions of se%tion 29m2: of t&e Revised )dministrative Code and $e s&all no* %op1 &ereundert&e provisions of Se%tion "8, sudivision 9o: of Repuli% )%t No. 0#, *&i%& reads as follo*s6

9o: 'o ta( and E( t&e li%ense fee on dealers in -eneral mer%&andise, in%ludin- importers andindentors, e(%ept t&ose dealers *&o ma1 e e(pressl1 sue%t to t&e pa1ment of some ot&ermuni%ipal ta( under t&e provisions of t&is se%tion.

ealers in -eneral mer%&andise s&all e %lassiEed as 9a: *&olesale dealers and 9b: retaildealers. or purposes of t&e ta( on retail dealers, -eneral mer%&andise s&all e %lassiEed intofour main %lasses6 namel1 9": lu(ur1 arti%les, 92: semilu(ur1 arti%les, 93: essential



%ommodities, and 9: mis%ellaneous arti%les. ) separate li%ense s&all e pres%ried for ea%&%lass ut *&ere %ommodities of diDerent %lasses are sold in t&e same estalis&ment, it s&allnot e %ompulsor1 for t&e o*ner to se%ure more t&an one li%ense if &e pa1s t&e &i-&er or&i-&est rate of ta( pres%ried 1 ordinan%e. $&olesale dealers s&all pa1 t&e li%ense ta( assu%&, as ma1 e provided 1 ordinan%e.

or purposes of t&is se%tion, t&e term @General mer%&andise@ s&all in%lude poultr1 and

livesto%, a-ri%ultural produ%ts, Es& and ot&er allied produ%ts.

'&e onl1 essential diDeren%e t&at $e End et*een t&ese t*o provisions t&at ma1 &ave an1 earin- ont&e %ase at ar, is t&at, *&ile suse%tion 9m2: pres%ries t&at t&e %omined total ta( of an1 dealer ormanufa%turer, or ot&, enumerated under suse%tions 9m": and 9m2:, *&et&er dealin- in one or all of t&e arti%les mentioned t&erein,shall not be in e!cess of 'JJ per annum, t&e %orrespondin- se%tion "8,suse%tion 9o: of Repuli% )%t No. 0#, does not %ontain an1 limitation as to t&e amount of ta( orli%ense fee t&at t&e retail dealer &as to pa1 per annum. Hen%e, and in a%%ordan%e *it& t&e *ei-&t oft&e aut&orities aove referred to t&at maintain t&at @all ri-&ts and liailities *&i%& &ave a%%rued undert&e ori-inal statute are preserved and ma1 e enfor%ed, sin%e t&e reena%tment neutraliLes t&e repeal,t&erefore %ontinuin- t&e la* in for%e *it&out interruption@, $e &old t&at t&e <uestioned ordinan%es oft&e Cit1 of Manila are still in for%e and eDe%t.

laintiD, &o*ever, ar-ues t&at t&e <uestioned ordinan%es, to e valid, must Erst e approved 1 t&eresident of t&e &ilippines as per se%tion "8, suse%tion 9ii: of Repuli% )%t No. 0#, *&i%& reads asfollo*s6

9ii: 'o ta(, li%ense and re-ulate an1 usiness, trade or o%%upation ein- %ondu%ted *it&in t&eCit1 of Manila,not otherise enumerated in the precedin" subsections, includin" percenta"eta!es based on "ross sales or receipts, sub9ect to the approval of the '*+%6*47, e!ceptamusement ta!es.

ut t&is re<uirement of t&e resident+s approval *as not %ontained in se%tion 2 of t&e formerC&arter of t&e Cit1 of Manila under *&i%& Ardinan%e No. 252# *as promul-ated. )n1*a1, as stated 1appellee+s %ounsel, t&e usiness of @retail dealers in -eneral mer%&andise@ is e(pressl1 enumerated insuse%tion 9o:, se%tion "8 of Repuli% )%t No. 0#> &en%e, an ordinan%e pres%riin- a muni%ipal ta( onsaid usiness does not &ave to e approved 1 t&e resident to e eDe%tive, as it is not amon- t&osereferred to in said suse%tion 9 ii:. Moreover, t&e <uestioned ordinan%es are still in for%e, &avin- eenpromul-ated 1 t&e Muni%ipal /oard of t&e Cit1 of Manila under t&e aut&orit1 -ranted to it 1 la*.

'&e <uestion t&at no* remains to e determined is *&et&er said ordinan%es are inappli%ale, invalid orun%onstitutional if applied to t&e alle-ed usiness of distriution and sale of iles to t&e people of t&e&ilippines 1 a reli-ious %orporation lie t&e )meri%an /ile So%iet1, plaintiD &erein.

$it& re-ard to Ardinan%e No. 252#, as amended 1 Ardinan%es Nos. 2#, 282" and 3028, appellant%ontends t&at it is un%onstitutional and ille-al e%ause it restrains t&e free e(er%ise and eno1ment oft&e reli-ious profession and *ors&ip of appellant.

)rti%le III, se%tion ", %lause 9: of t&e Constitution of t&e &ilippines afore<uoted, -uarantees t&efreedom of reli-ious profession and *ors&ip. @Reli-ion &as een spoen of as a profession of fait& to ana%tive po*er t&at inds and elevates man to its Creator@ 9)-lipa1 vs. RuiL, ! &il., 20":.It &as

referen%e to one+s vie*s of &is relations to His Creator and to t&e oli-ations t&e1 impose of reveren%eto His ein- and %&ara%ter, and oedien%e to His $ill 9avis vs. /eason, "33 ;.S., 32:. '&e%onstitutional -uarant1 of t&e free e(er%ise and eno1ment of reli-ious profession and *ors&ip %arries*it& it t&e ri-&t to disseminate reli-ious information. )n1 restraints of su%& ri-&t %an onl1 e ustiEedlie ot&er restraints of freedom of e(pression on t&e -rounds t&at t&ere is a %lear and present dan-erof an1 sustantive evil *&i%& t&e State &as t&e ri-&t to prevent@. 9'aPada and ernando on t&eConstitution of t&e &ilippines, ol. ", t& ed., p. 2#:. In t&e %ase at ar t&e li%ense fee &erein involvedis imposed upon appellant for its distriution and sale of iles and ot&er reli-ious literature6



In t&e %ase of Murdock vs. 'ennsylvania, it *as &eld t&at an ordinan%e re<uirin- t&at a li%ensee otained efore a person %ould %anvass or soli%it orders for -oods, paintin-s, pi%tures,*ares or mer%&andise %annot e made to appl1 to memers of e&ova&+s $itnesses *&o *entaout from door to door distriutin- literature and soli%itin- people to @pur%&ase@ %ertainreli-ious oos and pamp&lets, all pulis&ed 1 t&e $at%& 'o*er /ile ? 'ra%t So%iet1. '&e@pri%e@ of t&e oos *as t*ent1Eve %ents ea%&, t&e @pri%e@ of t&e pamp&lets Eve %ents ea%&. It*as s&o*n t&at in main- t&e soli%itations t&ere *as a re<uest for additional @%ontriution@ of

t*ent1Eve %ents ea%& for t&e oos and Eve %ents ea%& for t&e pamp&lets. Besser sum *erea%%epted, &o*ever, and oos *ere even donated in %ase interested persons *ere *it&outfunds.

An t&e aove fa%ts t&e Supreme Court &eld t&at it %ould not e said t&at petitioners *ereen-a-ed in %ommer%ial rat&er t&an a reli-ious venture. '&eir a%tivities %ould not e des%riedas emra%ed in t&e o%%upation of sellin- oos and pamp&lets. '&en t&e Court %ontinued6

@$e do not mean to sa1 t&at reli-ious -roups and t&e press are free from all Enan%ial urdensof -overnment. See /ros9ean vs. merican 'ress Co., 2# ;.S., 233, 250, 80 B. ed. !!0, !!8,5! S. Ct. . $e &ave &ere somet&in- <uite diDerent, for e(ample, from a ta( on t&e in%omeof one *&o en-a-es in reli-ious a%tivities or a ta( on propert1 used or emplo1ed in %onne%tion*it& a%tivities. It is one t&in- to impose a ta( on t&e in%ome or propert1 of a prea%&er. It is<uite anot&er to e(a%t a ta( from &im for t&e privile-e of deliverin- a sermon. '&e ta( imposed

1 t&e Cit1 of eannette is a Tat li%ense ta(, pa1ment of *&i%& is a %ondition of t&e e(er%ise oft&ese %onstitutional privile-es. '&e po*er to ta( t&e e(er%ise of a privile-e is t&e po*er to%ontrol or suppress its eno1ment. . . . '&ose *&o %an ta( t&e e(er%ise of t&is reli-ious pra%ti%e%an mae its e(er%ise so %ostl1 as to deprive it of t&e resour%es ne%essar1 for its maintenan%e. '&ose *&o %an ta( t&e privile-e of en-a-inin t&is form of missionar1 evan-elism %an %lose allits doors to all t&ose *&o do not &ave a full purse. Spreadin- reli-ious eliefs in t&is an%ientand &onorale manner *ould t&us e denied t&e need1. . . .

It is %ontended &o*ever t&at t&e fa%t t&at t&e li%ense ta( %an suppress or %ontrol t&is a%tivit1 isunimportant if it does not do so. /ut t&at is to disre-ard t&e nature of t&is ta(. It is a li%ense ta( a Tat ta( imposed on t&e e(er%ise of a privile-e -ranted 1 t&e /ill of Ri-&ts . . . '&e po*erto impose a li%ense ta( on t&e e(er%ise of t&ese freedom is indeed as potent as t&e po*er of%ensors&ip *&i%& t&is Court &as repeatedl1 stru% do*n. . . . It is not a nominal fee imposed asa re-ulator1 measure to defra1 t&e e(penses of poli%in- t&e a%tivities in <uestion. It is in no

*a1 apportioned. It is Tat li%ense ta( levied and %olle%ted as a %ondition to t&e pursuit ofa%tivities *&ose eno1ment is -uaranteed 1 t&e %onstitutional lierties of press and reli-ionand inevital1 tends to suppress t&eir e(er%ise. '&at is almost uniforml1 re%o-niLed as t&ein&erent vi%e and evil of t&is Tat li%ense ta(.@

Nor %ould dissemination of reli-ious information e %onditioned upon t&e approval of an o=%ialor mana-er even if t&e to*n *ere o*ned 1 a %orporation as &eld in t&e %ase of Marsh vs.+tate of labama 932! ;.S. 50":, or 1 t&e ;nited States itself as &eld in t&e %ase of 'u%er vs. 'e(as 932! ;.S. 5":. In t&e former %ase t&e Supreme Court e(pressed t&e opinion t&at t&eri-&t to eno1 freedom of t&e press and reli-ion o%%upies a preferred position as a-ainst t&e%onstitutional ri-&t of propert1 o*ners.

@$&en *e alan%e t&e %onstitutional ri-&ts of o*ners of propert1 a-ainst t&ose of t&e peopleto eno1 freedom of press and reli-ion, as *e must &ere, *e remain mindful of t&e fa%t t&at t&e

latter o%%up1 a preferred position. . . . In our vie* t&e %ir%umstan%e t&at t&e propert1 ri-&ts tot&e premises *&ere t&e deprivation of propert1 &ere involved, too pla%e, *ere &eld 1 ot&erst&an t&e puli%, is not su=%ient to ustif1 t&e State+s permittin- a %orporation to -overn a%ommunit1 of %itiLens so as to restri%t t&eir fundamental lierties and t&e enfor%ement of su%&restraint 1 t&e appli%ation of a State statute.@ 9'aPada and ernando on t&e Constitution oft&e &ilippines, ol. ", t& ed., p. 3030!:.

Se%tion 2 of Common*ealt& )%t No. !!, ot&er*ise no*n as t&e National Internal Revenue Code,provides6



S4C. 2. 4X4M'IANS RAM ')X AN CARAR)'IANS. '&e follo*in- or-aniLations s&all note ta(ed under t&is 'itle in respe%t to in%ome re%eived 1 t&em as su%&

9e: Corporations or asso%iations or-aniLed and operated e(%lusivel1 for reli"ious,%&aritale, . . . or edu%ational purposes, . . .6 rovided, &o*ever, '&at t&e in%ome of *&ateverind and %&ara%ter from an1 of its properties, real or personal, or from an1 a%tivit1 %ondu%tedfor proEt, re-ardless of t&e disposition made of su%& in%ome, s&all e liale to t&e ta( imposed

under t&is Code>

)ppellant+s %ounsel %laims t&at t&e Colle%tor of Internal Revenue &as e(empted t&e plaintiD from t&ista( and sa1s t&at su%& e(emption %learl1 indi%ates t&at t&e a%t of distriutin- and sellin- iles, et%. ispurel1 reli-ious and does not fall under t&e aove le-al provisions.

It ma1 e true t&at in t&e %ase at ar t&e pri%e ased for t&e iles and ot&er reli-ious pamp&lets *asin some instan%es a little it &i-&er t&an t&e a%tual %ost of t&e same ut t&is %annot mean t&atappellant *as en-a-ed in t&e usiness or o%%upation of sellin- said @mer%&andise@ for proEt. or t&isreason $e elieve t&at t&e provisions of Cit1 of Manila Ardinan%e No. 252#, as amended, %annot eapplied to appellant, for in doin- so it *ould impair its free e(er%ise and eno1ment of its reli-iousprofession and *ors&ip as *ell as its ri-&ts of dissemination of reli-ious eliefs.

$it& respe%t to Ardinan%e No. 3000, as amended, *&i%& re<uires t&e otention t&e Ma1or+s permitefore an1 person %an en-a-e in an1 of t&e usinesses, trades or o%%upations enumerated t&erein, $edo not End t&at it imposes an1 %&ar-e upon t&e eno1ment of a ri-&t -ranted 1 t&e Constitution, norta( t&e e(er%ise of reli-ious pra%ti%es. In t&e %ase of Coleman vs. City of /ri)n, "8# S.4. 2, t&is point*as elu%idated as follo*s6

)n ordinan%e 1 t&e Cit1 of Gri=n, de%larin- t&at t&e pra%ti%e of distriutin- eit&er 1 &and orot&er*ise, %ir%ulars, &andoos, advertisin-, or literature of an1 ind, *&et&er said arti%les areein- delivered free, or *&et&er same are ein- sold *it&in t&e %it1 limits of t&e Cit1 of Gri=n,*it&out Erst otainin- *ritten permission from t&e %it1 mana-er of t&e Cit1 of Gri=n, s&all edeemed a nuisan%e and punis&ale as an oDense a-ainst t&e Cit1 of Gri=n, does not deprivedefendant of his constitutional ri"ht of the free e!ercise and en9oyment of reli"ious professionand orship, even thou"h it prohibits him from introducin" and carryin" out a scheme or purpose hich he sees $t to claim as a part of his reli"ious system.

It seems %lear, t&erefore, t&at Ardinan%e No. 3000 %annot e %onsidered un%onstitutional, even ifapplied to plaintiD So%iet1. /ut as Ardinan%e No. 252# of t&e Cit1 of Manila, as amended, is notappli%ale to plaintiDappellant and defendantappellee is po*erless to li%ense or ta( t&e usiness ofplaintiD So%iet1 involved &erein for, as stated efore, it *ould impair plaintiD+s ri-&t to t&e free e(er%iseand eno1ment of its reli-ious profession and *ors&ip, as *ell as its ri-&ts of dissemination of reli-iouseliefs, $e End t&at Ardinan%e No. 3000, as amended is also inappli%ale to said usiness, trade oro%%upation of t&e plaintiD.

$&erefore, and on t&e stren-t& of t&e fore-oin- %onsiderations, $e &ere1 reverse t&e de%isionappealed from, senten%in- defendant return to plaintiD t&e sum of 5,8#".5 undul1 %olle%ted from it.$it&out pronoun%ement as to %osts. It is so ordered.

VIII. Non-ipairent o %ontra3ts

G.R. No. SS9# !a" 9, ###

!ANILA (L(%TRI% %&!PAN, petitioner,vs.PR&VIN%( &) LAG*NA and /(NIT& R. /ALA>&, in 6is 3apa3it" as Provin3ia Treasurer oLaBuna,respondents.



VIT*G, J.:

An various dates, %ertain muni%ipalities of t&e rovin%e of Ba-una, in%ludin-, /iPan, Sta. Rosa, Sanedro, Buisiana, Calauan and Cau1ao, 1 virtue of e(istin- la*s t&en in eDe%t, issued resolutionst&rou-& t&eir respe%tive muni%ipal %oun%ils -rantin- fran%&ise in favor of petitioner Manila 4le%tri%Compan1 9@M4R)BCA@: for t&e suppl1 of ele%tri% li-&t, &eat and po*er *it&in t&eir %on%erned areas. An"# anuar1 "#83, M4R)BCA *as lie*ise -ranted a fran%&ise 1 t&e National 4le%triE%ation

)dministration to operate an ele%tri% li-&t and po*er servi%e in t&e Muni%ipalit1 of Calama, Ba-una.

An "2 Septemer "##", Repuli% )%t No. "!0, ot&er*ise no*n as t&e @Bo%al Government Code of"##",@ *as ena%ted to tae eDe%t on 0" anuar1 "##2 enoinin- lo%al -overnment units to %reate t&eiro*n sour%es of revenue and to lev1 ta(es, fees and %&ar-es, sue%t to t&e limitations e(pressedt&erein, %onsistent *it& t&e asi% poli%1 of lo%al autonom1. ursuant to t&e provisions of t&e Code,respondent provin%e ena%ted Ba-una rovin%ial Ardinan%e No. 0"#2, eDe%tive 0" anuar1 "##3,providin-, in part, as follo*s6

Se%. 2.0#. ran%&ise 'a(. '&ere is &ere1 imposed a ta( on usinesses eno1in- afran%&ise, at a rate of Eft1 per%ent 9507: of one per%ent 9"7: of t&e -ross annualre%eipts, *&i%& s&all in%lude ot& %as& sales and sales on a%%ount realiLed durin- t&epre%edin- %alendar 1ear *it&in t&is provin%e, in%ludin- t&e territorial limits on an1 %it1lo%ated in t&e provin%e.

An t&e asis of t&e aove ordinan%e, respondent rovin%ial 'reasurer sent a demand letter to M4R)BCAfor t&e %orrespondin- ta( pa1ment. etitioner M4R)BCA paid t&e ta(, *&i%& t&en amounted to"#,520.!28.2, under protest. ) formal %laim for refund *as t&ereafter sent 1 M4R)BCA to t&erovin%ial 'reasurer of Ba-una %laimin- t&at t&e fran%&ise ta( it &ad paid and %ontinued to pa1 to t&eNational Government pursuant to .. 55" alread1 in%luded t&e fran%&ise ta( imposed 1 t&e rovin%ial 'a( Ardinan%e. M4R)BCA, %ontended t&at t&e imposition of a fran%&ise ta( under Se%tion 2.0# ofBa-una rovin%ial Ardinan%e No. 0"#2, insofar as it %on%erned M4R)BCA, %ontravened t&e provisionsof Se%tion " of .. 55" *&i%& read6

)n1 provision of la* or lo%al ordinan%e to t&e %ontrar1 not*it&standin-, t&e fran%&iseta( pa1ale 1 all -rantees of fran%&ises to -enerate, distriute and sell ele%tri%%urrent for li-&t, &eat and po*er s&all e t*o per %ent 927: of t&eir -ross re%eiptsre%eived from t&e sale of ele%tri% %urrent and from transa%tions in%ident to t&e-eneration, distriution and sale of ele%tri% %urrent.

Su%& fran%&ise ta( s&all e pa1ale to t&e Commissioner of Internal Revenue or &isdul1 aut&oriLed representative on or efore t&e t*entiet& da1 of t&e mont& follo*in-t&e end of ea%& %alendar <uarter or mont&, as ma1 e provided in t&e respe%tivefran%&ise or pertinent muni%ipal re-ulation and s&all, an1 provision of t&e Bo%al 'a(Code or an1 ot&er la* to t&e %ontrar1 not*it&standin-, e in lieu of all ta(es andassessments of *&atever nature imposed 1 an1 national or lo%al aut&orit1 onearnin-s, re%eipts, in%ome and privile-e of -eneration, distriution and sale of ele%tri%%urrent.

An 28 )u-ust "##5, t&e %laim for refund of petitioner *as denied in a letter si-ned 1 Governor ose .Bina relied on a more re%ent la*, i.e. Repuli% )%t No. "!0 or t&e Bo%al Government Code of "##",t&an t&e old de%ree invoed 1 petitioner.

An " eruar1 "##!, petitioner M4R)BCA Eled *it& t&e Re-ional 'rial Court of Sta. CruL, Ba-una, a%omplaint for refund, *it& a pra1er for t&e issuan%e of a *rit of preliminar1 inun%tion andFor temporar1restrainin- order, a-ainst t&e rovin%e of Ba-una and also /enito R. /alaLo in &is %apa%it1 as t&erovin%ial 'reasurer of Ba-una. )side from t&e amount of "#,520,!28.2 for *&i%& petitionerM4R)BCA &ad priorl1 made a formal re<uest for refund, petitioner t&ereafter lie*ise made additionalpa1ments under protest on various dates totalin- 2,!!#,5!!.#".

'&e trial %ourt, in its assailed de%ision of 30 Septemer "##, dismissed t&e %omplaint and %on%luded6



$H4R4AR4, IN 'H4 BIGH' A )BB 'H4 AR4GAING CANSI4R)'IANS, ;GM4N' is&ere1 rendered in favor of t&e defendants and a-ainst t&e plaintiD, 16

". Arderin- t&e dismissal of t&e Complaint> and

2. e%larin- Ba-una rovin%ial 'a( Ardinan%e No. 0"#2 as valid, indin-, reasonaleand enfor%eale. 2

In t&e instant petition, M4R)BCA assails t&e aove rulin- and rin-s up t&e follo*in- issues> viz 6

". $&et&er t&e imposition of a fran%&ise ta( under Se%tion 2.0# of Ba-una rovin%ialArdinan%e No. 0"#2, insofar as petitioner is %on%erned, is violative of t&e nonimpairment %lause of t&e Constitution and Se%tion " of residential e%ree No. 55".

2. $&et&er Repuli% )%t No. "!0, ot&er*ise no*n Bo%al Government Code of "##",&as repealed, amended or modiEed residential e%ree No. 55".

3. $&et&er t&e do%trine of administrative remedies is appli%ale in t&is %ase. S

'&e petition la%s merit.

refatoril1, it mi-&t e *ell to re%all t&at lo%al -overnments do not &ave t&e in&erent po*er tota( 4 e(%ept to t&e e(tent t&at su%& po*er mi-&t e dele-ated to t&em eit&er 1 t&e asi% la* or 1statute. resentl1, under )rti%le X of t&e "#8 Constitution, a -eneral dele-ation of t&at po*er &aseen -iven in favor of lo%al -overnment units. '&us6

Se%. 3. '&e Con-ress s&all ena%t a lo%al -overnment %ode *&i%& s&all provide for amore responsive and a%%ountale lo%al -overnment stru%ture instituted t&rou-& as1stem of de%entraliLation *it& eDe%tive me%&anisms of re%all, initiative, andreferendum, allo%ate amon- t&e diDerent lo%al -overnment units t&eir po*ers,responsiilities, and resour%es, and provide for t&e <ualiE%ations, ele%tion,appointment and removal, term, salaries, po*ers and fun%tions, and duties of lo%alo=%ials, and all ot&er matters relatin- to t&e or-aniLation and operation of t&e lo%al

units.

((( ((( (((

Se%. 5. 4a%& lo%al -overnment unit s&all &ave t&e po*er to %reate its o*n sour%es ofrevenues and to lev1 ta(es, fees, and %&ar-es sue%t to su%& -uidelines andlimitations as t&e Con-ress ma1 provide, %onsistent *it& t&e asi% poli%1 of lo%alautonom1. Su%& ta(es, fees, and %&ar-es s&all a%%rue e(%lusivel1 to t&e lo%al-overnments.

'&e "#8 Constitution &as a %ounterpart provision in t&e "#3 Constitution *&i%& did %ome out*it& a similar dele-ation of revenue main- po*ers to lo%al -overnments. 9

;nder re-ime of t&e "#35 Constitution no similar dele-ation of ta( po*ers *as provided, and lo%al-overnment units instead derived t&eir ta( po*ers under a limited statutor1 aut&orit1. $&ereas, t&en,t&e dele-ation of ta( po*ers -ranted at t&at time 1 statute to lo%al -overnments *as %onEned anddeEned 9outside of *&i%& t&e po*er *as deemed *it&&eld:, t&e present %onstitutional rule 9startin-*it& t&e "#3 Constitution:, &o*ever, *ould roadl1 %onfer su%& ta( po*ers sue%t onl1 to spe%iE%e(%eptions t&at t&e la* mi-&t pres%rie.

;nder t&e no* prevailin- Constitution, *&ere t&ere is neit&er a -rant nor a pro&iition 1 statute, t&eta( po*er must e deemed to e(ist alt&ou-& Con-ress ma1 provide statutor1 limitations and-uidelines. '&e asi% rationale for t&e %urrent rule is to safe-uard t&e viailit1 and selfsu=%ien%1 oflo%al -overnment units 1 dire%tl1 -rantin- t&em -eneral and road ta( po*ers. Nevert&eless, t&e



fundamental la* did not intend t&e dele-ation to e asolute and un%onditional> t&e %onstitutionaloe%tive oviousl1 is to ensure t&at, *&ile t&e lo%al -overnment units are ein- stren-t&ened andmade more autonomous, : t&e le-islature must still see to it t&at 9a: t&e ta(pa1er *ill not e overurdened or saddled *it& multiple and unreasonale impositions> 9: ea%& lo%al -overnment unit *ill&ave its fair s&are of availale resour%es> 9%: t&e resour%es of t&e national -overnment *ill not eundul1 distured> and 9d: lo%al ta(ation *ill e fair, uniform, and ust.

'&e Bo%al Government Code of "##" &as in%orporated and adopted, 1 and lar-e, t&e provisions of t&eno* repealed Bo%al 'a( Code, *&i%& &ad een in eDe%t sin%e 0" ul1 "#3, promul-ated into la* 1residential e%reeNo. 23" 7 pursuant to t&e t&en provisions of Se%tion 2, )rti%le XI, of t&e "#3 Constitution. '&e "##"Code e(pli%itl1 aut&oriLes provin%ial -overnments, not*it&standin- @any e!emption "ranted by anyla or other special la, . . . (to# impose a ta! on businesses en9oyin" a franchise.@ Se%tion "3 t&ereof provides6

Se%. "3. 1ranchise 7a! 4otithstandin" any e!emption "ranted by any la or other special la, the province may impose a ta! on businesses en9oyin" a franchise, at arate not e(%eedin- Eft1 per%ent 9507: of one per%ent 9"7: of t&e -ross annual re%eiptsfor t&e pre%edin- %alendar 1ear ased on t&e in%omin- re%eipt, or realiLed, *it&in itsterritorial urisdi%tion. In t&e %ase of a ne*l1 started usiness, t&e ta( s&all not e(%eedonet*entiet& 9"F20: of one per%ent 9"7: of t&e %apital investment. In t&e su%%eedin-

%alendar 1ear, re-ardless of *&en t&e usiness started to operate, t&e ta( s&all eased on t&e -ross re%eipts for t&e pre%edin- %alendar 1ear, or an1 fra%tion t&ereof, asprovided &erein. 9;nders%orin- supplied for emp&asis:

Indi%ative of t&e le-islative intent to %arr1 out t&e Constitutional mandate of vestin- road ta( po*ersto lo%al -overnment units, t&e Bo%al Government Code &as eDe%tivel1 *it&dra*n under Se%tion "#3t&ereof, ta( e(emptions or in%entives t&eretofore eno1ed 1 %ertain entities. '&is la* states6

Se%. "#3. Withdraal of 7a! *!emption 'rivile"es 2nless otherise provided in thisCode, ta! e!emptions or incentives "ranted to, or presently en9oyed by all persons,hether natural or 9uridical, in%ludin- -overnmento*ned or %ontrolled %orporations,e(%ept lo%al *ater distri%ts, %ooperatives dul1 re-istered under R.). No. !#38, nonsto% and nonproEt &ospitals and edu%ational institutions, are hereby ithdran uponthe e<ectivity of this Code. 9;nders%orin- supplied for emp&asis:

'&e Code, in addition, %ontains a -eneral repealin- %lause in its Se%tion 53> t&us6

Se%. 53. Repealin- Clause. . . .

9f: ll "eneral and special las, a%ts, %it1 %&arters, de%rees, e(e%utive orders,pro%lamations and administrative re-ulations, or part or parts t&ereof *&i%& arein%onsistent *it& an1 of t&e provisions of t&is Code are &ere1 repealed or modiEeda%%ordin-l1. 9;nders%orin- supplied for emp&asis: <

'o e(emplif1, in Mactan Cebu %nternational irport uthority vs. Marcos, # t&e Court up&eld t&e*it&dra*al of t&e real estate ta( e(emption previousl1 eno1ed 1 Ma%tan Ceu International )irport)ut&orit1. '&e Court ratio%inated6

. . . '&ese poli%1 %onsiderations are %onsistent *it& t&e State poli%1 to ensureautonom1 to lo%al -overnments and t&e oe%tive of t&e BGC t&at t&e1 eno1 -enuineand meanin-ful lo%al autonom1 to enale t&em to attain t&eir fullest development asselfreliant %ommunities and mae t&em eDe%tive partners in t&e attainment ofnational -oals. '&e po*er to ta( is t&e most eDe%tive instrument to raise neededrevenues to Enan%e and support m1riad a%tivities if lo%al -overnment units for t&edeliver1 of asi% servi%es essential to t&e promotion of t&e -eneral *elfare and t&een&an%ement of pea%e, pro-ress, and prosperit1 of t&e people. It ma1 also e relevantto re%all t&at t&e ori-inal reasons for t&e *it&dra*al of ta( e(emption privile-es



-ranted to -overnmento*ned and %ontrolled %orporations and all ot&er units of-overnment *ere t&at su%& privile-e resulted in serious ta( ase erosion anddistortions in t&e ta( treatment of similarit1 situated enterprises, and t&ere *as a needfor t&ese entities to s&are in t&e re<uirements of development, Es%al or ot&er*ise, 1pa1in- t&e ta(es and ot&er %&ar-es due from t&em. $

etitioner in its %omplaint efore t&e Re-ional 'rial Court %ited t&e rulin- of t&is Court in 'rovince of

Misamis riental vs. Ca"ayan *lectric 'oer and Li"ht Company , %nc.> t&us6

In an earlier %ase, t&e p&rase @s&all e in lieu of all ta(es and at an1 time levied,estalis&ed 1, or %olle%ted 1 an1 aut&orit1@ found in t&e fran%&ise of t&e isa1an4le%tri% Compan1 *as &eld to e(empt t&e %ompan1 from pa1ment of t&e 57 ta( on%orporate fran%&ise provided in Se%tion 25# of t&e Internal Revenue Code 9isa1an4le%tri% Co. vs. avid, # A.G. JNo. K "385:

Similarl1, *e ruled t&at t&e provision6 @s&all e in lieu of all ta(es of ever1 name andnature@ in t&e fran%&ise of t&e Manila Railroad 9Suse%tion "2, Se%tion ", )%t No. "5"0:e(empts t&e Manila Railroad from pa1ment of internal revenue ta( for its importationsof %oal and oil under )%t No. 232 and t&e )mendator1 )%ts of t&e &ilippineBe-islature 9Manila Railroad vs. RaDert1, 0 &il. 22:.

'&e same p&rase found in t&e fran%&ise of t&e &ilippine Rail*a1 Co. 9Se%. "3, )%t No."#: ustiEed t&e e(emption of t&e &ilippine Rail*a1 Compan1 from pa1ment of t&eta( on its %orporate fran%&ise under Se%tion 25# of t&e Internal Revenue Code, asamended 1 R.). No. 3# 9&ilippine Rail*a1 Co vs. Colle%tor of Internal Revenue, #"&il. 35:.

'&ose ma-i% *ords, @s&all e in lieu of all ta(es@ also e(%used t&e Cotaato Bi-&t andI%e lant Compan1 from t&e pa1ment of t&e ta( imposed 1 Ardinan%e No. of t&e Cit1of Cotaato 9Cotaato Bi-&t and o*er Co. vs. Cit1 of Cotaato, 32 SCR) 23":.

So *as t&e e(emption up&eld in favor of t&e Car%ar 4le%tri% and I%e lant Compan1*&en it *as re<uired to pa1 t&e %orporate fran%&ise ta( under Se%tion 25# of t&eInternal Revenue Code, as amended 1 R.). No. 3# 9Car%ar 4le%tri% ? I%e lant vs.

Colle%tor of Internal Revenue, 53 A.G. JNo. K. "0!8:. '&is Court pointed out t&at su%&e(emption is part of t&e indu%ement for t&e a%%eptan%e of t&e fran%&ise and t&erendition of puli% servi%e 1 t&e -rantee. 2

In t&e re%ent %ase of t&e City /overnment of +an 'ablo, etc., et al. vs. >on. Bienvenido -.eyes, et al., S t&e Court &as &eld t&at t&e p&rase in lieu of all ta(es @&ave to -ive *a1 to t&eperemptor1 lan-ua-e of t&e Bo%al Government Code spe%iE%all1 providin- for t&e *it&dra*al of su%&e(emptions, privile-es,@ and t&at @upon t&e eDe%tivit1 of t&e Bo%al Government Code all e(emptionse(%ept onl1 as provided t&erein %an no lon-er e invoed 1 M4R)BCA to dis%laim liailit1 for t&e lo%alta(.@ In Ene, t&e Court &as vie*ed its previous rulin-s as la1in- stress more on t&e le-islative intent oft&e amendator1 la* *&et&er t&e ta( e(emption privile-e is to e *it&dra*n or not rat&er t&an on*&et&er t&e la* %an *it&dra*, *it&out violatin- t&e Constitution, t&e ta( e(emption or not.

$&ile t&e Court &as, not too infre<uentl1, referred to ta( e(emptions %ontained in spe%ial fran%&ises as

ein- in t&e nature of %ontra%ts and a part of t&e indu%ement for %arr1in- on t&e fran%&ise, t&esee(emptions, nevert&eless, are far from ein- stri%tl1 %ontra%tual in nature. Contra%tual ta( e(emptions,in t&e real sense of t&e term and *&ere t&e nonimpairment %lause of t&e Constitution %an ri-&tl1 einvoed, are t&ose a-reed to 1 t&e ta(in- aut&orit1 in %ontra%ts, su%& as t&ose %ontained in-overnment onds or deentures, la*full1 entered into 1 t&em under enalin- la*s in *&i%& t&e-overnment, a%tin- in its private %apa%it1, s&eds its %loa of aut&orit1 and *aives its -overnmentalimmunit1. 'rul1, ta( e(emptions of t&is ind ma1 not e revoed *it&out impairin- t&e oli-ations of%ontra%ts. 4 '&ese %ontra%tual ta( e(emptions, &o*ever, are not to e %onfused *it& ta( e(emptions-ranted under fran%&ises. ) fran%&ise partaes t&e nature of a -rant *&i%& is e1ond t&e purvie* oft&e nonimpairment %lause of t&e Constitution. 9 Indeed, )rti%le XII, Se%tion "", of t&e "#8Constitution, lie its pre%ursor provisions in t&e "#35 and t&e "#3 Constitutions, is e(pli%it t&at no



fran%&ise for t&e operation of a puli% utilit1 s&all e -ranted e(%ept under t&e %ondition t&at su%&privile-e s&all e sue%t to amendment, alteration or repeal 1 Con-ress as and *&en t&e %ommon-ood so re<uires.

$H4R4AR4, t&e instant petition is &ere1 ISMISS4. No %osts.Ephi.nQt

SA AR4R4.

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