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Consti Sept 19
Consti Sept 19
FACTS:
RA 9337, an act amending certain sections of the National Internal Revenue Code of 1997, is questioned by petitioners for
being unconstitutional. Procedural issues raised by petitioners are the legality of the bicameral proceedings, exclusive
origination of revenue measures and the power of the Senate concomitant thereto. Also, an issue was raised with regard to the
undue delegation of legislative power to the President to increase the rate of value-added tax to 12%.
Petitioners also argue that the increase to 12%, as well as the 70% limitation on the creditable input tax, the 60- month
amortization on the purchase or importation of capital goods exceeding P1,000,000.00, and the 5% final withholding tax by
government agencies, is arbitrary, oppressive, and confiscatory, and that it violates the constitutional principle on progressive
taxation, among others.
ISSUE:
Whether RA 9337 is constitutional
RULING:
Yes. Mounting budget deficit, revenue generation, inadequate fiscal allocation for education, increased emoluments for health
workers, and wider coverage for full value-added tax benefits ... these are the reasons why Republic Act No. 9337 (R.A. No.
9337) was enacted. Reasons, the wisdom of which, the Court even with its extensive constitutional power of review, cannot
probe.
It has been said that taxes are the lifeblood of the government. In this case, it is just an enema, a first-aid measure to
resuscitate an economy in distress. The Court is neither blind nor is it turning a deaf ear on the plight of the masses. But it does
not have the panacea for the malady that the law seeks to remedy. As in other cases, the Court cannot strike down a law as
unconstitutional simply because of its yokes.
Garcia vs Mata
Issues:
I. Whether or not the DAP violates the principle no money shall be paid out of the Treasury except in
pursuance of an appropriation made by law (Sec. 29(1), Art. VI, Constitution).
II. Whether or not the DAP realignments can be considered as impoundments by the executive.
III. Whether or not the DAP realignments/transfers are constitutional.
IV. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.
V. Whether or not the Doctrine of Operative Fact is applicable.
HELD:
I. No, the DAP did not violate Section 29(1), Art. VI of the Constitution. DAP was merely a program by the
Executive and is not a fund nor is it an appropriation. It is a program for prioritizing government spending. As
such, it did not violate the Constitutional provision cited in Section 29(1), Art. VI of the Constitution. In DAP no
additional funds were withdrawn from the Treasury otherwise, an appropriation made by law would have been
required. Funds, which were already appropriated for by the GAA, were merely being realigned via the DAP.
II. No, there is no executive impoundment in the DAP. Impoundment of funds refers to the Presidents power to
refuse to spend appropriations or to retain or deduct appropriations for whatever reason. Impoundment is
actually prohibited by the GAA unless there will be an unmanageable national government budget deficit
(which did not happen). Nevertheless, theres no impoundment in the case at bar because whats involved in
the DAP was the transfer of funds.
III. No, the transfers made through the DAP were unconstitutional. It is true that the President (and even the
heads of the other branches of the government) are allowed by the Constitution to make realignment of funds,
however, such transfer or realignment should only be made within their respective offices. Thus, no crossborder transfers/augmentations may be allowed. But under the DAP, this was violated because funds
appropriated by the GAA for the Executive were being transferred to the Legislative and other non-Executive
agencies.
Further, transfers within their respective offices also contemplate realignment of funds to an existing project
in the GAA. Under the DAP, even though some projects were within the Executive, these projects are nonexistent insofar as the GAA is concerned because no funds were appropriated to them in the GAA. Although
some of these projects may be legitimate, they are still non-existent under the GAA because they were not
provided for by the GAA. As such, transfer to such projects is unconstitutional and is without legal basis.
On the issue of what are savings
These DAP transfers are not savings contrary to what was being declared by the Executive. Under the
definition of savings in the GAA, savings only occur, among other instances, when there is an excess in the
funding of a certain project once it is completed, finally discontinued, or finally abandoned. The GAA does not
refer to savings as funds withdrawn from a slow moving project. Thus, since the statutory definition of
savings was not complied with under the DAP, there is no basis at all for the transfers. Further, savings should
only be declared at the end of the fiscal year. But under the DAP, funds are already being withdrawn from
certain projects in the middle of the year and then being declared as savings by the Executive particularly by
the DBM.
IV. No. Unprogrammed funds from the GAA cannot be used as money source for the DAP because under the
law, such funds may only be used if there is a certification from the National Treasurer to the effect that the
revenue collections have exceeded the revenue targets. In this case, no such certification was secured before
unprogrammed funds were used.
V. Yes. The Doctrine of Operative Fact, which recognizes the legal effects of an act prior to it being declared as
unconstitutional by the Supreme Court, is applicable. The DAP has definitely helped stimulate the economy. It
has funded numerous projects. If the Executive is ordered to reverse all actions under the DAP, then it may
cause more harm than good. The DAP effects can no longer be undone. The beneficiaries of the DAP cannot
be asked to return what they received especially so that they relied on the validity of the DAP. However, the
Doctrine of Operative Fact may not be applicable to the authors, implementers, and proponents of the DAP if it
is so found in the appropriate tribunals (civil, criminal, or administrative) that they have not acted in good faith.
(1) We are convinced that the withdrawal of the franking privilege from some agencies is germane to the accomplishment of
the principal objective of R.A. No. 7354, which is the creation of a more efficient and effective postal service system. Our ruling
is that, by virtue of its nature as a repealing clause, Section 35 did not have to be expressly included in the title of the said law.
(2) Applying these principles, we shall decline to look into the petitioners' charges that an amendment was made upon the last
reading of the bill that eventually became R.A. No. 7354 and that copies thereof in its final form were not distributed among the
members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in
accordance with Article VI, Sec. 26(2) of the Constitution. We are bound by such official assurances from a coordinate
department of the government, to which we owe, at the very least, a becoming courtesy.
(3) The respondents counter that there is no discrimination because the law is based on a valid classification in accordance
with the equal protection clause. In fact, the franking privilege has been withdrawn not only from the Judiciary but also the
Office of Adult Education, the Institute of National Language; the Telecommunications Office; etc.
(4) We are unable to agree with the respondents that Section 35 of R.A. No. 7354 represents a valid exercise of discretion by
the Legislature under the police power. On the contrary, we find its repealing clause to be a discriminatory provision that denies
the Judiciary the equal protection of the laws guaranteed for all persons or things similarly situated. The distinction made by the
law is superficial. It is not based on substantial distinctions that make real differences between the Judiciary and the grantees
of the franking privilege.
It is unconstitutional.
Philippine Constitution Association, Inc (PHILCONSA) assails the validity of Republic Act No. 3836 insofar as the same allows
retirement gratuity and commutation of vacation and sick leave to Senators and Representatives. PHILCONSA now seeks to
enjoin Pedor Gimenez, the Auditor General, from disbursing funds therefor.
According to PHILCONSA, the provision on retirement gratuity is an attempt to circumvent the Constitutional ban on increase
of salaries of the members of Congress during their term of office, contrary to the provisions of Article VI, Section 14 of the
Constitution. The same provision constitutes selfish class legislation because it allows members and officers of Congress to
retire after twelve (12) years of service and gives them a gratuity equivalent to one year salary for every four years of service,
which is not refundable in case of reinstatement or re-election of the retiree, while all other officers and employees of the
government can retire only after at least twenty (20) years of service and are given a gratuity which is only equivalent to one
month salary for every year of service, which, in any case, cannot exceed 24 months. The provision on vacation and sick leave,
commutable at the highest rate received, insofar as members of Congress are concerned, is another attempt of the legislator to
further increase their compensation in violation of the Constitution.
The Solicitor General, arguing for Congress, averred that the grant of retirement or pension benefits under Republic Act No.
3836 to the officers does not constitute forbidden compensation within the meaning of Section 14 of Article VI of the Philippine
Constitution. The law in question does not constitute class legislation. The payment of commutable vacation and sick leave
benefits under the said Act is merely in the nature of a basis for computing the gratuity due each retiring member and,
therefore, is not an indirect scheme to increase their salary.
ISSUE: Whether or not RA 3836 is constitutional.
HELD: No, the said law is unconstitutional. Section 14, Article VI, of the Constitution, provides:
The senators and the Members of the House of Representatives shall, unless otherwise provided by law, receive an annual
compensation of seven thousand two hundred pesos each, including per diems and other emoluments or allowances, and
exclusive only of travelling expenses to and from their respective district in the case of Members of the House of
Representatives and to and from their places of residence in the case of Senators, when attending sessions of the Congress.
No increase in said compensation shall take effect until after the expiration of the full term of all the Members of the Senate and
of the House of Representatives approving such increase. Until otherwise provided by law, the President of the Senate and the
Speaker of the House of Representatives shall each receive an annual compensation of sixteen thousand pesos.
When the Constitutional Convention first determined the compensation for the Members of Congress, the amount fixed by it
was only P5,000.00 per annum but it embodies a special proviso which reads as follows:
No increase in said compensation shall take effect until after the expiration of the full term of all the members of the National
Assembly elected subsequent to approval of such increase.
In other words, under the original constitutional provision regarding the power of the National Assembly to increase the salaries
of its members, no increase would take effect until after the expiration of the full term of the members of the Assembly elected
subsequent to the approval of such increase.
The Constitutional provision in the aforementioned Section 14, Article VI, includes in the term compensation other
emoluments.
Emolument is the profit arising from office or employment; that which is received as compensation for services or which is
annexed to the possession of an office, as salary, fees and perquisites.
It is evident that retirement benefit is a form or another species of emolument, because it is a part of compensation for services
of one possessing any office.
RA 3836 provides for an increase in the emoluments of Senators and Members of the House of Representatives, to take effect
upon the approval of said Act, which was on June 22, 1963. Retirement benefits were immediately available thereunder,
without awaiting the expiration of the full term of all the Members of the Senate and the House of Representatives approving
such increase. Such provision clearly runs counter to the prohibition in Article VI, Section 14 of the Constitution. RA 3836 is
hereby declared unconstitutional by the SC.
Insular Lumber Company (ILC) is an American company engaged as a licensed forest concessionaire. The ILC purchased
manufactured oil and motor fuel which it used in the operation of its forest concession. In 1956, Republic Act No. 1435 was
passed. Section 5 thereof provides that there should be a partial tax refund to those using oil in the operation of forest and
mining concessions.
In 1964, ILC filed with the Commissioner of Internal Revenue (CIR) to have a tax refund of P19,921.37 pursuant to the said RA.
The Court of Industrial Relations (CIR) ruled that ILC is not covered by such provision because Sec. 5, RA 1435 is only
effective 5 years from its enactment. Hence, in 1961 the provision ceased to be effective. ILC appealed the issue to the CTA
and the CTA ruled the operation of a sawmill is distinct from the operation of a forest concession, hence, the refund provision of
Sec 5, RA 1435 allowing partial refund to forest and mining concessionaires cannot be extended to the operators of a sawmill.
And out of the P19,921.37 claimed, only the amount of P14,598.08 was paid on oil utilized in logging operations. The CTA did
not allow the refund of the full amount of P14,598.08 because the ILCs right to claim the refund of a portion thereof, particularly
those paid during the period from January 1, 1963 to April 29, 1963 had already prescribed. Hence, ICL was credited the refund
of P10,560.20 only. Both parties appealed from the decision of the CTA.
The CIR averred that CTA should not have ruled this way: The title of RA 1435 is An Act to Provide Means for Increasing The
Highway Special Fund. The CIR contends that the subject of RA 1435 was to increase Highway Special Fund. However,
Section 5 of the Act deals with another subject which is the partial exemption of miners and loggers. And this partial exemption
on which the Company based its claim for refund is clearly not expressed in the title of the aforesaid Act. More importantly,
Section 5 provides for a decrease rather than an increase of the Highway Special Fund.
ISSUE: Whether or not to grant the partial tax refund to ILC.
HELD: Yes, but only in the amount as found by the CTA. The Supreme Court ruled that there is no merit in the contention of
the CIR. RA 1435 deals with only one subject and proclaims just one policy, namely, the necessity for increasing the Highway
Special Fund through the imposition of an increased specific tax on manufactured oils. The proviso in Sec 5 of the law is in
effect a partial exemption from the imposed increased tax. Said proviso, which has reference to specific tax on oil and fuel, is
not a deviation from the general subject of the law. The primary purpose of the aforequoted constitutional provision is to prohibit
duplicity in legislation the title of which might completely fail to apprise the legislators or the public of the nature, scope and
consequences of the law or its operation. But that is not so for in the passage of RA 1435 since, as the records of its
proceedings bear out, a full debate on precisely the issue of whether its title reflects its complete subject was held by Congress
which passed it.