Title
Tolentino vs. Secretary of Fice
Case
G.R. No. 115455
Decision Date
Aug 25, 1994
Republic Act No. 7716, the Expanded VAT Law, upheld as constitutional; procedural and substantive challenges dismissed, affirming legislative process and tax uniformity.

Case Summary (G.R. No. 115455)

Petitioner Groups and Their Claims

• Tolentino, David and Roco challengers: procedural defects under Art. VI, Secs. 24 & 26; improper role of Bicameral Conference Committee (BICAM).
• Press and religious groups: violations of free speech, press and free exercise clauses (Art. III, Secs. 4 & 5).
• CREBA and PAL: equal protection, due process, impairment of contracts; improper amendment of tax-exempt franchise.
• Educational publishers and cooperatives: alleged regressive taxation, priority of education, discrimination against cooperatives.

Key Dates

• July 25, 1987 – EO No. 273 (original VAT law) signed by President Aquino.
• November 17, 1993 – House passes H.B. 11197 (Expanded VAT proposal).
• February 7, 1994 – Senate Committee submits S.B. 1630 in substitution of S.B. 1129, “taking into consideration” H.B. 11197.
• March 22, 1994 – President Ramos certifies S.B. 1630 as urgent.
• March 24, 1994 – Senate approves S.B. 1630 on second and third readings and requests conference with the House.
• April 13, 19, 20, 21 & 25, 1994 – BICAM meets in executive session.
• April 27, 1994 – House approves BICAM report.
• May 2, 1994 – Senate approves BICAM report.
• May 5, 1994 – President Ramos signs Republic Act No. 7716 (Expanded VAT Law).
• May 28, 1994 – RA 7716 takes effect (implementation suspended until June 30).

Applicable Law and Constitutional Basis

• 1987 Constitution, Art. VI, Sec. 1–28 (legislative power, origination of revenue bills, readings, fiscal provisions).
• Art. III, Secs. 1, 4, 5, 10 (due process, equal protection, free speech, religion, impairment of contracts).
• National Internal Revenue Code (Title IV & V VAT provisions amended).
• Bicameral Conference Committee rules: Rule XII, Sec. 26 of Senate Rules; Rule XIV, Sec. 85 of House Rules; Jefferson’s Manual as supplement.

Procedural Issues

  1. Origination of revenue bill (Art. VI, Sec. 24):
    – Petitioners argued RA 7716 improperly originated in part from S.B. 1630 in the Senate.
    – Majority held H.B. 11197 originated in House and Senate’s action was a valid “amendment by substitution” within its power to propose amendments.
  2. Three readings and presidential certification (Art. VI, Sec. 26[2]):
    – Petitioners contended S.B. 1630 was passed on the same day (second & third readings) in violation of the separate-days rule.
    – Majority sustained that presidential certification dispensed with separate-day readings and printing distribution requirements.
  3. Bicameral Conference Committee authority:
    – Petitioners claimed BICAM exceeded its mandate by inserting new provisions and deleting others not in disagreement.
    – Majority found no violation of either Chamber’s rules, noting recognized legislative practice permitting germane insertions by BICAM.

Substantive Issues

• Freedom of speech/press (Art. III, Sec. 4): Challenge to deletion of VAT exemption on press circulation and advertising income.
– Majority: VAT as general taxation not a censorship measure; no evidence of discriminatory or suppressive intent.
• Free exercise of religion (Art. III, Sec. 5): VAT on sale/distribution of religious materials.
– Majority: VAT is a generally applicable tax; no unconstitutional burden on religious exercise.
• Impairment of contracts (Art. III, Sec. 10): Removal of PAL’s tax exemption granted by special franchise law.
– Majority: RA 7716 expressly amended PAL franchise under proper legislative power (Art. XII, Sec 11).
• Equal protection and regressivity (Art. VI, Sec. 28; Art. III, Sec. 1): VAT’s uniform rate and classification of taxpayers.
– Majority: Congress has broad discretion in tax policy; no judicial standard for progressivity; no show of arbitrary discrimination.
• Priority to education (Art. II, Sec. 17): Challenge by educational publishers re VAT increasing book prices.
– Majority: abstract, hypothetical; no judicially enforceable obligation on courts to assess tax impact on policy directives.

Majority Holding

The Court, by vote of 11 – 4, DISMISSED all petitions for lack of merit, holding:

  1. Procedural requirements for legislative enactment were observed.
  2. No judicial inquiry into non-constitutional rules of Congress; BICAM practice was reasonable.
  3. EVAT law does not violate freedom of speech, freedom of religion, impairment of contracts, or policy directives.
  4. Claims of regressivity, undue burden, and violation of policy directives were premature, hypothetical; no basis for r








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