Abakada Guro vs Ermita

Abakada Guro v. Ermita G.R. No. 168056, July 5, 2005

J. Puno En Banc

Facts:

Motions for Reconsideration filed by petitioners, ABAKADA Guro party List Officer and et al., insist that the bicameral conference committee should not even have acted on the no pass-on provisions since there is no disagreement between House Bill Nos. 3705 and 3555 on the one hand, and Senate Bill No. 1950 on the other, with regard to the no pass-on provision for the sale of service for power generation because both the Senate and the House were in agreement that the VAT burden for the sale of such service shall not be passed on to the end-consumer. As to the no pass-on provision for sale of petroleum products, petitioners argue that the fact that the presence of such a no pass-on provision in the House version and the absence thereof in the Senate Bill means there is no conflict because “a House provision cannot be in conflict with something that does not exist.”

Escudero, et. al., also contend that Republic Act No. 9337 grossly violates the constitutional imperative on exclusive origination of revenue bills under Section 24 of Article VI of the Constitution when the Senate introduced amendments not connected with VAT.

Petitioners Escudero, et al., also reiterate that R.A. No. 9337’s stand- by authority to the Executive to increase the VAT rate, especially on account of the recommendatory power granted to the Secretary of Finance, constitutes undue delegation of legislative power. They submit that the recommendatory power given to the Secretary of Finance in regard to the occurrence of either of two events using the Gross Domestic Product (GDP) as a benchmark necessarily and inherently required extended analysis and evaluation, as well as policy making.

Petitioners also reiterate their argument that the input tax is a property or a property right. Petitioners also contend that even if the right to credit the input VAT is merely a statutory privilege, it has already evolved into a vested right that the State cannot remove.

Issue:

Whether or not the R.A. No. 9337 or the Vat Reform Act is constitutional?

Held:

The Court is not persuaded. Article VI, Section 24 of the Constitution provides that All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

The Court reiterates that in making his recommendation to the President on the existence of either of the two conditions, the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. He is acting as the agent of the legislative department, to determine and declare the event upon which its expressed will is to take effect. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented, considering that he possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate them. His function is to gather and collate statistical data and other pertinent information and verify if any of the two conditions laid out by Congress is present.

In the same breath, the Court reiterates its finding that it is not a property or a property right, and a VAT-registered person’s entitlement to the creditable input tax is a mere statutory privilege. As the Court stated in its Decision, the right to credit the input tax is a mere creation of law. More importantly, the assailed provisions of R.A. No. 9337 already involve legislative policy and wisdom. So long as there is a public end for which R.A. No. 9337 was passed, the means through which such end shall be accomplished is for the legislature to choose so long as it is within constitutional bounds.

The Motions for Reconsideration are hereby DENIED WITH FINALITY. The temporary restraining order issued by the Court is LIFTED.

G.R. No. 168056 ' ABAKADA GURO PARTY LIST, ET AL. VS. EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL.

 

G.R. No. 168207 ' AQUILINO PIMENTEL, JR., ET AL. VS. EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL.

 

G.R. No. 168461 ' ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., ET AL. VS. CESAR V. PURISIMA, ET AL.

 

G.R. No. 168463 ' FRANCIS JOSEPH G. ESCUDERO, ET AL. VS. CESAR V. PURISIMA, ET AL.

Promulgated:

 

 

September 1, 2005

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CONCURRING AND

DISSENTING OPINION

 

PUNO, J.:

The main opinion of Madam Justice Martinez exhaustively discusses the numerous constitutional and

legal issues raised by the petitioners. Be that as it may, I wish to raise the following points, viz:

First. Petitioners assail sections 4 to 6 of Republic Act No. 9337 as violative of the principle of non-

delegation of legislative power. These sections authorize the President, upon recommendation of the

Secretary of Finance, to raise the value-added tax (VAT) rate to 12% effective January 1, 2006, upon

satisfaction of the following conditions: viz:

(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%); or

(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1 '%).

 

The power of judicial review under Article VIII, section 5(2) of the 1987 Constitution is limited to the

review of 'actual cases and controversies.[1] As rightly stressed by retired Justice Vicente V. Mendoza,

this requirement gives the judiciary 'the opportunity, denied to the legislature, of seeing the actual

operation of the statute as it is applied to actual facts and thus enables it to reach sounder judgment and

'enhances public acceptance of its role in our system of government.[2] It also assures that the judiciary

does not intrude on areas committed to the other branches of government and is confined to its role as

defined by the Constitution.[3] Apposite thereto is the doctrine of ripeness whose basic rationale is to

prevent the courts, through premature adjudication, from entangling themselves in abstract

disagreements.[4] Central to the doctrine is the determination of 'whether the case involves uncertain or

contingent future events that may not occur as anticipated, or indeed may not occur at all.[5] The

ripeness requirement must be satisfied for each challenged legal provision and parts of a statute so that

those which are 'not immediately involved are not thereby thrown open for a judicial determination of

constitutionality.[6]

It is manifest that the constitutional challenge to sections 4 to 6 of R.A. No. 9337 cannot hurdle the

requirement of ripeness. These sections give the President the power to raise the VAT rate to 12% on

January 1, 2006 upon satisfaction of certain fact-based conditions. We are not endowed with the

infallible gift of prophesy to know whether these conditions are certain to happen. The power to adjust the

tax rate given to the President is futuristic and may or may not be exercised. The Court is therefore

beseeched to render a conjectural judgment based on hypothetical facts. Such a supplication has to be

rejected.

Second. With due respect, I submit that the most important constitutional issue posed by the petitions at

bar relates to the parameters of power of a Bicameral Conference Committee. Most of the issues in

the petitions at bar arose because the Bicameral Conference Committee concerned exercised powers that

went beyond reconciling the differences between Senate Bill No. 1950 and House Bill Nos. 3705 and

3555. In Tolentino v. Secretary of Finance,[7] I ventured the view that a Bicameral Conference

Committee has limited powers and cannot be allowed to act as if it were a 'third house of Congress. I

further warned that unless its roving powers are reigned in, a Bicameral Conference Committee can

wreck the lawmaking process which is a cornerstone of the democratic, republican regime established in

our Constitution. The passage of time fortifies my faith that there ought to be no legal u-turn on this

preeminent principle. I wish, therefore, to reiterate my reasons for this unbending view, viz:[8]

Section 209, Rule XII of the Rules of the Senate provides:

In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after their composition.

Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, and shall be signed by the conferees. (Emphasis supplied)

The counterpart rule of the House of Representatives is cast in near identical language. Section 85 of the Rules of the House of Representatives pertinently provides:

In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may be settled by a conference committee of both chambers.

x x x. Each report shall contain a detailed, sufficiently explicit statement of the changes in or amendments to the subject measure. (Emphasis supplied)

The Jefferson's Manual has been adopted as a supplement to our parliamentary rules and practice. Section 456 of Jefferson's Manual similarly confines the powers of a conference committee, viz:

The managers of a conference must confine themselves to the differences committed to them ' and may not include subjects not within the disagreements, even though germane to a question in issue.

This rule of antiquity has been honed and honored in practice by the Congress of the United States. Thus, it is chronicled by Floyd Biddick, Parliamentarian Emeritus of the United States Senate, viz:

Committees of conference are appointed for the sole purpose of compromising and adjusting the differing and conflicting opinions of the two Houses and the committees of conference alone can grant compromises and modify propositions of either Houses within the limits of the disagreement. Conferees are limited to the consideration of differences between the two Houses.

Congress shall not insert in their report matters not committed to them by either House, nor shall they strike from the bill matters agreed to by both Houses. No matter on which there is nothing in either the Senate or House passed versions of a bill may be included in the conference report and actions to the contrary would subject the report to a point of order. (Emphasis ours)

In fine, there is neither a sound nor a syllable in the Rules of the Senate and the House of Representatives to support the thesis of the respondents that a bicameral conference committee is clothed with an ex post veto power.

But the thesis that a Bicameral Conference Committee can wield ex post veto power does not only contravene the rules of both the Senate and the House. It wages war against our settled ideals of representative democracy. For the inevitable, catastrophic effect of the thesis is to install a Bicameral Conference Committee as the Third Chamber of our Congress, similarly vested with the power to make laws but with the dissimilarity that its laws are not the subject of a free and full discussion of both Houses of Congress. With such a vagrant power, a Bicameral Conference Committee acting as a Third Chamber will be a constitutional monstrosity.

It needs no omniscience to perceive that our Constitution did not provide for a Congress composed of three chambers. On the contrary, section 1, Article VI of the Constitution provides in clear and certain language: 'The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives Note that in vesting legislative power exclusively to the Senate and the House, the Constitution used the word 'shall. Its command for a Congress of two houses is mandatory. It is not mandatory sometimes.

In vesting legislative power to the Senate, the Constitution means the Senate composed of twenty-four Senators xxx elected at large by the qualified voters of the Philippines Similarly, when the Constitution vested the legislative power to the House, it means the House composed of not more than two hundred and fifty members xxx who shall be elected from legislative districts xxx and those who xxx shall be elected through a party-list system of registered national, regional, and sectoral parties or organizations. The Constitution thus, did not vest on a Bicameral Conference Committee with an ad hoc membership the power to legislate for it exclusively vested legislative power to the Senate and the House as co-equal bodies. To be sure, the Constitution does not mention the Bicameral Conference Committees of Congress. No constitutional status is accorded to them. They are not even statutory creations. They owe their existence from the internal rules of the two Houses of Congress. Yet, respondents peddle the disconcerting idea that they should be recognized as a Third Chamber of Congress and with ex post veto power at that.

The thesis that a Bicameral Conference Committee can exercise law making power with ex post veto power is freighted with mischief. Law making is a power that can be used for good or for ill, hence, our Constitution carefully laid out a plan and a procedure for its exercise. Firstly, it vouchsafed that the power to make laws should be exercised by no other body except the Senate and the House. It ought to be indubitable that what is contemplated is the Senate acting as a full Senate and the House acting as a full House. It is only when the Senate and the House act as whole bodies that they truly represent the people. And it is only when they represent the people that they can legitimately pass laws. Laws that are not enacted by the people's rightful representatives subvert the people's sovereignty. Bicameral Conference Committees, with their ad hoc character and limited membership, cannot pass laws for they do not represent the people. The Constitution does not allow the tyranny of the majority. Yet, the respondents will impose the worst kind of tyranny ' the tyranny of the minority over the majority. Secondly, the Constitution delineated in deft strokes the steps to be followed in making laws. The overriding purpose of these procedural rules is to assure that only bills that successfully survive the searching scrutiny of the proper committees of Congress and the full and unfettered deliberations of both Houses can become laws. For this reason, a bill has to undergo three (3) mandatory separate readings in each House. In the case at bench, the additions and deletions made by the Bicameral Conference

Committee did not enjoy the enlightened studies of appropriate committees. It is meet to note that the complexities of modern day legislations have made our committee system a significant part of the legislative process. Thomas Reed called the committee system as 'the eye, the ear, the hand, and very often the brain of the house. President Woodrow Wilson of the United States once referred to the government of the United States as 'a government by the Chairmen of the Standing Committees of Congress Neither did these additions and deletions of the Bicameral Conference Committee pass through the coils of collective deliberation of the members of the two Houses acting separately. Due to this shortcircuiting of the constitutional procedure of making laws, confusion shrouds the enactment of R.A. No. 7716. Who inserted the additions and deletions remains a mystery. Why they were inserted is a riddle. To use a Churchillian phrase, lawmaking should not be a riddle wrapped in an enigma. It cannot be, for Article II, section 28 of the Constitution mandates the State to adopt and implement a 'policy of full public disclosure of all its transactions involving public interest. The Constitution could not have contemplated a Congress of invisible and unaccountable John and Mary Does. A law whose rationale is a riddle and whose authorship is obscure cannot bind the people.

All these notwithstanding, respondents resort to the legal cosmetology that these additions and deletions should govern the people as laws because the Bicameral Conference Committee Report was anyway submitted to and approved by the Senate and the House of Representatives. The submission may have some merit with respect to provisions agreed upon by the Committee in the process of reconciling conflicts between S.B. No. 1630 and H.B. No. 11197. In these instances, the conflicting provisions had been previously screened by the proper committees, deliberated upon by both Houses and approved by them. It is, however, a different matter with respect to additions and deletions which were entirely new and which were made not to reconcile inconsistencies between S.B. No. 1630 and H.B. No. 11197. The members of the Bicameral Conference Committee did not have any authority to add new provisions or delete provisions already approved by both Houses as it was not necessary to discharge their limited task of reconciling differences in bills. At that late stage of law making, the Conference Committee cannot add/delete provisions which can become laws without undergoing the study and deliberation of both chambers given to bills on 1 st, 2nd, and 3rd

readings. Even the Senate and the House cannot enact a law which will not undergo these mandatory three (3) readings required by the Constitution. If the Senate and the House cannot enact such a law, neither can the lesser Bicameral Conference Committee.

Moreover, the so-called choice given to the members of both Houses to either approve or disapprove the said additions and deletions is more of an optical illusion. These additions and deletions are not submitted separately for approval. They are tucked to the entire bill. The vote is on the bill as a package, i.e., together with the insertions and deletions. And the vote is either 'aye or 'nay, without any further debate and deliberation. Quite often, legislators vote 'yes' because they approve of the bill as a whole although they may object to its amendments by the Conference Committee. This lack of real choice is well observed by Robert Luce:

Their power lies chiefly in the fact that reports of conference committees must be accepted without amendment or else rejected in toto. The impulse is to get done with the matter and so the motion to accept has undue advantage, for some members are sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is the more likely if the report comes in the rush of business toward the end of a

session, when to seek further conference might result in the loss of the measure altogether. At any time in the session there is some risk of such a result following the rejection of a conference report, for it may not be possible to secure a second conference, or delay may give opposition to the main proposal chance to develop more strength.

In a similar vein, Prof. Jack Davies commented that conference reports are returned to assembly and Senate on a take-it or leave-it-basis, and the bodies are generally placed in the position that to leave-it is a practical impossibility. Thus, he concludes that 'conference committee action is the most undemocratic procedure in the legislative process.

The respondents also contend that the additions and deletions made by the Bicameral Conference Committee were in accord with legislative customs and usages. The argument does not persuade for it misappreciates the value of customs and usages in the hierarchy of sources of legislative rules of procedure. To be sure, every legislative assembly has the inherent right to promulgate its own internal rules. In our jurisdiction, Article VI, section 16(3) of the Constitution provides that 'Each House may determine the rules of its proceedings x x x. But it is hornbook law that the sources of Rules of Procedure are many and hierarchical in character. Mason laid them down as follows:

x x x

1. Rules of Procedure are derived from several sources. The principal sources are as follows:

a. Constitutional rules.b. Statutory rules or charter provisions.c. Adopted rules.d. Judicial decisions.e. Adopted parliamentary authority.f. Parliamentary law.g. Customs and usages. 2. The rules from the different sources take precedence in the

order listed above except that judicial decisions, since they are interpretations of rules from one of the other sources, take the same precedence as the source interpreted. Thus, for example, an interpretation of a constitutional provision takes precedence over a statute.

 3. Whenever there is conflict between rules from these sources

the rule from the source listed earlier prevails over the rule from the source listed later. Thus, where the Constitution requires three readings of bills, this provision controls over any provision of statute, adopted rules, adopted manual, or of parliamentary law, and a rule of parliamentary law controls over a local usage but must give way to any rule from a higher source of authority. (Emphasis ours) 

As discussed above, the unauthorized additions and deletions made by the Bicameral Conference Committee violated the procedure fixed by the Constitution in the making of

laws. It is reasonless for respondents therefore to justify these insertions as sanctioned by customs and usages. Finally, respondents seek sanctuary in the conclusiveness of an enrolled bill to bar any judicial inquiry on whether Congress observed our constitutional procedure in the passage of R.A. No. 7716. The enrolled bill theory is a historical relic that should not continuously rule us from the fossilized past. It should be immediately emphasized that the enrolled bill theory originated in England where there is no written constitution and where Parliament is supreme. In this jurisdiction, we have a written constitution and the legislature is a body of limited powers. Likewise, it must be pointed out that starting from the decade of the 40s, even American courts have veered away from the rigidity and unrealism of the conclusiveness of an enrolled bill. Prof. Sutherland observed:

 x x x Where the failure of constitutional compliance in the enactment

of statutes is not discoverable from the face of the act itself but may be demonstrated by recourse to the legislative journals, debates, committee reports or papers of the governor, courts have used several conflicting theories with which to dispose of the issue. They have held: (1) that the enrolled bill is conclusive and like the sheriff's return cannot be attacked; (2) that the enrolled bill is prima facie correct and only in case the legislative journal shows affirmative contradiction of the constitutional requirement will the bill be held invalid; (3) that although the enrolled bill is prima facie correct, evidence from the journals, or other extrinsic sources is admissible to strike the bill down; (4) that the legislative journal is conclusive and the enrolled bills is valid only if it accords with the recital in the journal and the constitutional procedure.

 Various jurisdictions have adopted these alternative approaches in view of strong dissent and dissatisfaction against the philosophical underpinnings of the conclusiveness of an enrolled bill. Prof. Sutherland further observed: 

x x x. Numerous reasons have been given for this rule. Traditionally, an enrolled bill was 'a record and as such was not subject to attack at common law. Likewise, the rule of conclusiveness was similar to the common law rule of the inviolability of the sheriff's return. Indeed, they had the same origin, that is, the sheriff was an officer of the king and likewise the parliamentary act was a regal act and no official might dispute the king's word. Transposed to our democratic system of government, courts held that as the legislature was an official branch of government the court must indulge every presumption that the legislative act was valid. The doctrine of separation of powers was advanced as a strong reason why the court should treat the acts of a co-ordinate branch of government with the same respect as it treats the action of its own officers; indeed, it was thought that it was entitled to even greater respect, else the court might be in the position of reviewing the work of a supposedly equal branch of government. When these arguments failed, as they frequently did, the doctrine of convenience was advanced, that is, that it was not only an undue burden upon the legislature to preserve its records to meet the attack of persons not affected by the procedure of

enactment, but also that it unnecessarily complicated litigation and confused the trial of substantive issues.

 Although many of these arguments are persuasive and are indeed

the basis for the rule in many states today, they are not invulnerable to attack. The rule most relied on ' the sheriff's return or sworn official rule ' did not in civil litigation deprive the injured party of an action, for always he could sue the sheriff upon his official bond. Likewise, although collateral attack was not permitted, direct attack permitted raising the issue of fraud, and at a later date attack in equity was also available; and that the evidence of the sheriff was not of unusual weight was demonstrated by the fact that in an action against the sheriff no presumption of its authenticity prevailed.

 The argument that the enrolled bill is a record and therefore

unimpeachable is likewise misleading, for the correction of records is a matter of established judicial procedure. Apparently, the justification is either the historical one that the king's word could not be questioned or the separation of powers principle that one branch of the government must treat as valid the acts of another.

 Persuasive as these arguments are, the tendency today is to

avoid reaching results by artificial presumptions and thus it would seem desirable to insist that the enrolled bill stand or fall on the basis of the relevant evidence which may be submitted for or against it. (Emphasis ours)

 Thus, as far back as the 1940s, Prof. Sutherland confirmed that 'x x x the tendency seems to be toward the abandonment of the conclusive presumption rule and the adoption of the third rule leaving only a prima facie presumption of validity which may be attacked by any authoritative source of information.

 

Third. I respectfully submit that it is only by strictly following the contours of powers of a Bicameral

Conference Committee, as delineated by the rules of the House and the Senate, that we can prevent

said Committee from acting as a 'third chamber of Congress. Under the clear rules of both the Senate

and House, its power can go no further than settling differences in their bills or joint resolutions.

Sections 88 and 89, Rule XIV of the Rules of the House of Representatives provide as follows:

Sec. 88. Conference Committee. ' In the event that the House does not agree with the Senate on the amendment to any bill or joint resolution, the differences may be settled by the conference committees of both chambers.

In resolving the differences with the Senate, the House panel shall, as much as possible, adhere to and support the House Bill. If the differences with the Senate are so substantial that they materially impair the House Bill, the panel shall report such fact to the House for the latter's appropriate action.

Sec. 89. Conference Committee Reports. - . . . Each report shall contain a detailed, sufficiently explicit statement of the changes in or amendments to the subject measure.

. . .

The Chairman of the House panel may be interpellated on the Conference Committee Report prior to the voting thereon. The House shall vote on the Conference Committee Report in the same manner and procedure as it votes a bill on third and final reading.

 

Section 35, Rule XII of the Rules of the Senate states:

Sec. 35. In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten (10) days after their composition. The President shall designate the members of the Senate Panel in the conference committee with the approval of the Senate.

Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in, or amendments to the subject measure, and shall be signed by a majority of the members of each House panel, voting separately.

 

The House rule brightlines the following: (1) the power of the Conference Committee is limited . . . it is

only to settle differences with the Senate; (2) if the differences are substantial, the Committee must

report to the House for the latter's appropriate action; and (3) the Committee report has to be voted upon

in the same manner and procedure as a bill on third and final reading. Similarly, the Senate rule

underscores in crimson that (1) the power of the Committee is limited - - - to settle differences with the

House; (2) it can make changes or amendments only in the discharge of this limited power to settle

differences with the House; and (3) the changes or amendments are merely recommendatory for they

still have to be approved by the Senate.

Under both rules, it is obvious that a Bicameral Conference Committee is a mere agent of the House or

the Senate with limited powers. The House contingent in the Committee cannot, on its own, settle

differences which are substantial in character. If it is confronted with substantial differences, it has to

go back to the chamber that created it 'for the latter's appropriate action. In other words, it must take

the proper instructions from the chambers that created it. It cannot exercise its unbridled discretion.

Where there is no difference between the bills, it cannot make any change. Where the difference is

substantial, it has to return to the chamber of its origin and ask for appropriate instructions. It ought to be

indubitable that it cannot create a new law, i.e., that which has never been discussed in either chamber

of Congress. Its parameters of power are not porous, for they are hedged by the clear limitation that its

only power is to settle differences in bills and joint resolutions of the two chambers of Congress. '

Fourth. Prescinding from these premises, I respectfully submit that the following acts of the Bicameral

Conference Committee constitute grave abuse of discretion amounting to lack or excess of jurisdiction

and should be struck down as unconstitutional nullities, viz:

a.                                                                 Its deletion of the pro poor 'no pass on provision which is

common in both Senate Bill No. 1950 and House Bill No. 3705.

Sec. 1 of House Bill No. 3705[9] provides:

Section 106 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

SEC. 106. Value-added Tax on Sale of Goods or Properties. '

x x x

Provided, further, that notwithstanding the provision of the second paragraph of Section 105 of this Code, the Value-added Tax herein levied on the sale of petroleum products under Subparagraph (1) hereof shall be paid and absorbed by the sellers of petroleum products who shall be prohibited from passing on the cost of such tax payments, either directly or indirectly[,] to any consumer in whatever form or manner, it being the express intent of this act that the Value-added Tax shall be borne and absorbed exclusively by the sellers of petroleum products x x x. 

Sec. 3 of the same House bill provides:

Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Sec. 108. Value-added Tax on Sale of Goods or Properties. '

Provided, further, that notwithstanding the provision of the second paragraph of Section 105 of this Code, the Value-added Tax imposed under this paragraph shall be paid and absorbed by the subject generation companies who shall be prohibited from passing on the cost of such tax payments, either directly or indirectly[,] to any consumer in whatever form or manner, it being the express intent of this act that the Value-added Tax shall be borne and absorbed exclusively [by] the power-generating companies.

 

In contrast and comparison, Sec. 5 of Senate Bill No. 1950 provides:

Value-added Tax on sale of Services and Use or Lease of Properties. '

x x x Provided, that the VAT on sales of electricity by generation companies, and services of transmission companies and distribution companies, as well as those of franchise grantees of electrical utilities shall not apply to residential end-users: Provided, that the Value-added Tax herein levied shall be absorbed and paid by the generation, transmission and distribution companies concerned. The said companies shall not pass on such tax payments to NAPOCOR or ultimately to the consumers, including but not limited to residential end users, either as costs or in any other form whatsoever, directly or indirectly. x x x.

 

Even the faintest eye contact with the above provisions will reveal that: (a) both the House bill and the

Senate bill prohibited the passing on to consumers of the VAT on sales of electricity and (b) the House

bill prohibited the passing on to consumers of the VAT on sales of petroleum products while the Senate

bill is silent on the prohibition.

In the guise of reconciling disagreeing provisions of the House and the Senate bills on the matter, the

Bicameral Conference Committee deleted the 'no pass on provision on both the sales of electricity

and petroleum products. This action by the Committee is not warranted by the rules of either the Senate

or the House. As aforediscussed, the only power of a Bicameral Conference Committee is to reconcile

disagreeing provisions in the bills or joint resolutions of the two houses of Congress. The House and the

Senate bills both prohibited the passing on to consumers of the VAT on sales of electricity. 'The

Bicameral Conference Committee cannot override this unequivocal decision of the Senate and the

House. Nor is it clear that there is a conflict between the House and Senate versions on the 'no pass on

provisions' of the VAT on sales of petroleum products. The House version contained a 'no pass on

provision but the Senate had none. Elementary logic will tell us that while there may be a difference

in the two versions, it does not necessarily mean that there is a disagreement or conflict between the

Senate and the House. The silence of the Senate on the issue cannot be interpreted as an outright

opposition to the House decision prohibiting the passing on of the VAT to the consumers on sales of

petroleum products. Silence can even be conformity, albeit implicit in nature. But granting for the nonce

that there is conflict between the two versions, the conflict cannot escape the characterization as a

substantial difference. The seismic consequence of the deletion of the 'no pass on provision of the VAT

on sales of petroleum products on the ability of our consumers, especially on the roofless and the

shirtless of our society, to survive the onslaught of spiraling prices ought to be beyond quibble. The rules

require that the Bicameral Conference Committee should not, on its own, act on this substantial conflict.

It has to seek guidance from the chamber that created it. It must receive proper instructions from its

principal, for it is the law of nature that no spring can rise higher than its source. The records of both the

Senate and the House do not reveal that this step was taken by the members of the Bicameral Conference

Committee. They bypassed their principal and ran riot with the exercise of powers that the rules never

bestowed on them.

b. Even more constitutionally obnoxious are the added restrictions on local government's use of

incremental revenue from the VAT in Section 21 of R.A. No. 9337 which were not present in the

Senate or House Bills. Section 21 of R.A. No. 9337 provides:

Fifty percent of the local government unit's share from VAT shall be allocated and used exclusively for the following purposes:

1.                 Fifteen percent (15%) for public elementary and secondary education to finance the construction of buildings, purchases of school furniture and in-service teacher trainings;

2.                 Ten percent (10%) for health insurance premiums of enrolled indigents as a counterpart contribution of the local government

to sustain the universal coverage of the national health insurance program;

3.                 Fifteen percent (15%) for environmental conservation to fully implement a comprehensive national reforestation program; and

4.                 Ten percent (10%) for agricultural modernization to finance the construction of farm-to-market roads and irrigation facilities.

Such allocations shall be segregated as separate trust funds by the national treasury and shall be over and above the annual appropriation for similar purposes.

 

These amendments did not harmonize conflicting provisions between the constituent bills of R.A. No.

9337 but are entirely new and extraneous concepts which fall beyond the median thereof. They

transgress the limits of the Bicameral Conference Committee's authority and must be struck down.

I cannot therefore subscribe to the thesis of the majority that 'the changes introduced by the Bicameral

Conference Committee on disagreeing provisions were meant only to reconcile and harmonize the

disagreeing provisions for it did not inject any idea or intent that is wholly foreign to the subject

embraced by the original provisions.

Fifth. The majority further defends the constitutionality of the above provisions by holding that 'all the

changes or modifications were germane to subjects of the provisions referred to it for reconciliation.

With due respect, it is high time to re-examine the test of germaneness proffered in Tolentino.

The test of germaneness is overly broad and is the fountainhead of mischief for it allows the Bicameral

Conference Committee to change provisions in the bills of the House and the Senate when they are not

even in disagreement. Worse still, it enables the Committee to introduce amendments which are entirely

new and have not previously passed through the coils of scrutiny of the members of both houses. The

Constitution did not establish a Bicameral Conference Committee that can act as a 'third house of

Congress with super veto power over bills passed by the Senate and the House. We cannot concede that

super veto power without wrecking the delicate architecture of legislative power so carefully laid down

in our Constitution. The clear intent of our fundamental law is to install a lawmaking structure composed

only of two houses whose members would thoroughly debate proposed legislations in representation of

the will of their respective constituents. The institution of this lawmaking structure is unmistakable from

the following provisions: (1) requiring that legislative power shall be vested in a bicameral legislature;

[10] (2) providing for quorum requirements;[11] (3) requiring that appropriation, revenue or tariff

bills, bills authorizing increase of public debt, bills of local application, and private bills originate

exclusively in the House of Representatives;[12] (4) requiring

that bills embrace one subject expressed in the title thereof;[13] and (5) mandating that bills undergo

three readings on separate days in each House prior to passage into law and prohibiting amendments on

the last reading thereof.[14] A Bicameral Conference Committee with untrammeled powers will destroy

this lawmaking structure. At the very least, it will diminish the free and open debate of proposed

legislations and facilitate the smuggling of what purports to be laws.

On this point, Mr. Robert Luce's disconcerting observations are apropos:

Their power lies chiefly in the fact that reports of conference committees must be accepted without amendment or else rejected in toto. The impulse is to get done with the matters and so the motion to accept has undue advantage, for some members are sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is more likely if the report comes in the rush of business toward the end of the session, when to seek further conference might result in the loss of the measure altogether. At any time in the session there is some risk of such a result following the rejection of a conference report, for it may not be possible to secure a second conference, or delay may give opposition to the main proposal chance to develop more strength.

xxx xxx xxx

Entangled in a network of rule and custom, the Representative who resents and would resist this theft of his rights, finds himself helpless. Rarely can be vote, rarely can he voice his mind, in the matter of any fraction of the bill. Usually he cannot even record himself as protesting against some one feature while accepting the measure as whole. Worst of all, he cannot by argument or suggested change, try to improve what the other branch has done.

This means more than the subversion of individual rights. It means to a degree the abandonment of whatever advantage the bicameral system may have. By so much it in effect transfers the lawmaking power to small group of members who work out in private a decision that almost always prevails. What is worse, these men are not chosen in a way to ensure the wisest choice. It has become the practice to name as conferees the ranking members of the committee, so that the accident of seniority determines. Exceptions are made, but in general it is not a question of who are most competent to serve. Chance governs, sometimes giving way to favor, rarely to merit.

xxx xxx xxx

Speaking broadly, the system of legislating by conference committee is unscientific and therefore defective. Usually it forfeits the benefit of scrutiny and judgment by all the wisdom available. Uncontrolled, it is inferior to that process by which every amendment is secured independent discussion and vote. . . .[15]

 

It cannot be overemphasized that in a republican form of government, laws can only be enacted by all the

duly elected representatives of the people. It cuts against conventional wisdom in democracy to lodge

this power in the hands of a few or in the claws of a committee. It is for these reasons that the

argument that we should overlook the excesses of the Bicameral Conference Committee because its

report is anyway approved by both houses' is a futile attempt to square the circle for an unconstitutional

act is void and cannot be redeemed by any subsequent ratification.

Neither can we shut our eyes to the unconstitutional acts of the Bicameral Conference Committee by

holding that the Court cannot interpose its checking powers over mere violations of the internal rules of

Congress. In Arroyo, et al. v. de Venecia, et al.,[16] we ruled that when the violations affect private

rights or impair the Constitution, the Court has all the power, nay, the duty to strike them down.

In conclusion, I wish to stress that this is not the first time nor will it be last that arguments will be

foisted for the Court to merely wink at assaults

on the Constitution on the ground of some national interest, sometimes clear and at other times inchoate.

To be sure, it cannot be gainsaid that the country is in the vortex of a financial crisis. The broadsheets

scream the disconcerting news that our debt payments for the year 2006 will exceed Pph1 billion daily for

interest alone. Experts underscore some factors that will further drive up the debt service expenses such as

the devaluation of the peso, credit downgrades and a spike in interest rates.[17] But no doomsday

scenario will ever justify the thrashing of the Constitution. The Constitution is meant to be our rule both

in good times as in bad times. 'It is the Court's uncompromising obligation to defend the Constitution at

all times lest it be condemned as an irrelevant relic.

WHEREFORE, I concur with the majority but dissent on the following points:

a) I vote to withhold judgment on the constitutionality of the 'standby authority in Sections 4 to 6 of

Republic Act No. 9337 as this issue is not ripe for adjudication.;

b) I vote to declare unconstitutional the deletion by the Bicameral Conference Committee of the pro poor

'no pass on provision on electricity to residential consumers as it contravened the unequivocal intent of

both Houses of Congress; and

c) I vote to declare Section 21 of Republic Act No. 9337 as unconstitutional as it contains extraneous

provisions not found in its constituent bills.

 

 

REYNATO S. PUNO

Associate Justice

EN BANC

Agenda for October 18, 2005

Item No. 45

 

          G.R. No. 168056 (ABAKADA Guro Party List Officer Samson S. Alcantara, et al. vs. The Hon. Executive Secretary Eduardo R. Ermita);  G.R. No. 168207 (Aquilino Q. Pimentel, Jr., et al. vs. Executive Secretary Eduardo R. Ermita, et al.);  G.R. No. 168461 (Association of Pilipinas Shell Dealers, Inc., et al. vs. Cesar V. Purisima, et al.);  G.R. No. 168463 (Francis Joseph G. Escudero vs. Cesar V. Purisima, et al);  and G.R. No. 168730 (Bataan Governor Enrique T. Garcia, Jr. vs. Hon. Eduardo R. Ermita, et al.)

 

RESOLUTION 

          For resolution are the following motions for reconsideration of the Court’s Decision dated September 1, 2005 upholding the constitutionality of Republic Act No. 9337 or the VAT Reform Act[1]:

 

1)  Motion for Reconsideration filed by petitioners in G.R. No. 168463, Escudero, et al., on the following grounds:

 A.  THE DELETION OF THE “NO PASS ON PROVISIONS” FOR THE SALE OF PETROLEUM PRODUCTS AND POWER GENERATION SERVICES CONSTITUTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION ON THE PART OF THE BICAMERAL CONFERENCE COMMITTEE. B.  REPUBLIC ACT NO. 9337 GROSSLY VIOLATES THE CONSTITUTIONAL IMPERATIVE ON EXCLUSIVE ORIGINATION OF REVENUE BILLS UNDER §24, ARTICLE VI, 1987 PHILIPPINE CONSTITUTION. 

C.  REPUBLIC ACT NO. 9337’S STAND-BY AUTHORITY TO THE EXECUTIVE TO INCREASE THE VAT RATE, ESPECIALLY ON ACCOUNT OF THE EFFECTIVE RECOMMENDATORY POWER GRANTED TO THE SECRETARY OF FINANCE, CONSTITUTES UNDUE DELEGATION OF LEGISLATIVE AUTHORITY.

 

2)  Motion for Reconsideration of petitioner in G.R. No. 168730, Bataan Governor Enrique T. Garcia, Jr., with the argument that burdening the consumers with significantly higher prices under a VAT regime vis-à-vis a 3% gross tax renders the law unconstitutional for being arbitrary, oppressive and inequitable.

 

and

 

3)  Motion  for Reconsideration  by petitioners Association of  Pilipinas Shell Dealers, Inc. in G.R. No. 168461, on the grounds that:

 

I.  This Honorable Court erred in upholding the constitutionality of Section 110(A)(2) and Section 110(B) of the NIRC, as amended by the EVAT Law, imposing limitations on the amount of input VAT that may be claimed as a credit against output VAT, as well as Section 114(C) of the NIRC, as amended by the EVAT Law, requiring the government or any of its instrumentalities to withhold a 5% final withholding VAT on their gross payments on purchases of goods and services, and finding that the questioned provisions:

 

A.        are not arbitrary, oppressive and consfiscatory as to amount to a deprivation of property without due process of law in violation of Article III, Section 1 of the 1987 Philippine Constitution;

B.         do not violate the equal protection clause prescribed under Article III, Section 1 of the 1987 Philippine Constitution; and

C.        apply uniformly to all those belonging to the same class and do not violate Article VI, Section 28(1) of the 1987 Philippine Constitution.

 

II.  This Honorable Court erred in upholding the constitutionality of Section 110(B) of the NIRC, as amended by the EVAT Law, imposing a limitation on the amount of input VAT that may be claimed as a credit against output VAT notwithstanding the finding that the tax is not progressive as exhorted by Article VI, Section 28(1) of the 1987 Philippine Constitution.

 

          Respondents filed their Consolidated Comment.  Petitioner Garcia filed his Reply.

 

          Petitioners Escudero, et al., insist that the bicameral conference committee should not even have acted on the no pass-on provisions since there is no disagreement between House Bill Nos. 3705 and 3555 on the one hand, and Senate Bill No. 1950 on the other, with regard to the no pass-on provision for the sale of service for power generation because both the Senate and the House were in agreement that the VAT burden for the sale of such service shall not be passed on to the end-consumer.   As to the no pass-on provision for sale of petroleum products, petitioners argue that the fact that the presence of such a no pass-on provision in the House version and the absence thereof in the Senate Bill means there is no conflict because “a House provision cannot be in conflict with something that does not exist.”

 

          Such argument is flawed.  Note that the rules of both houses of Congress provide that a conference committee shall settle the “differences” in the respective bills of each house.  Verily, the fact that a no pass-on provision is present in one version but absent in the other, and one version intends two industries, i.e., power generation companies and petroleum sellers, to bear the burden of the tax, while the other version intended only the industry of power generation, transmission and distribution to be saddled with such burden, clearly shows that there are indeed differences between the bills coming from each house, which differences should be acted upon by the bicameral conference committee.  It is incorrect to conclude that there is no clash between two opposing forces with regard to the no pass-on provision for VAT on the sale of petroleum products merely because such provision exists in the House version while it is absent in the Senate version.  It is precisely the absence of such provision in the Senate bill and the presence thereof in the House bills that causes the conflict.  The absence of the provision in the Senate bill shows the Senate’s disagreement to the intention of the House of Representatives make the sellers of petroleum bear the burden of the VAT.  Thus, there are indeed two opposing forces:  on one side, the House of Representatives which wants petroleum dealers to be saddled with the burden of paying VAT and on the other, the Senate which does not see it proper to make that particular industry bear said burden.  Clearly, such conflicts and differences between the no pass-on provisions in the Senate and House bills had to be acted upon by the bicameral conference committee as mandated by the rules of both houses of Congress.

 

          Moreover, the deletion of the no pass-on provision made the present VAT law more in consonance with the very nature of VAT which, as stated in the Decision promulgated on September 1, 2005, is a tax on spending or consumption, thus, the burden thereof is ultimately borne by the end-consumer.

 

Escudero, et al., then claim that there had been changes introduced in the Rules of the House of Representatives regarding the conduct of the House panel in a bicameral conference committee, since the time of Tolentino vs. Secretary of Finance[2] to act as safeguards against possible abuse of authority by the House members of the bicameral conference committee.   Even assuming that the rule requiring the House panel to report back to the House if there are substantial differences in the House and Senate bills had indeed been introduced after Tolentino, the Court stands by its ruling that the issue of whether or not the House panel in the bicameral conference committee complied with said internal rule cannot be inquired into by the Court.   To reiterate, “mere failure to conform to parliamentary usage will not invalidate the action (taken by a deliberative body) when the requisite number of members have agreed to a particular measure.”[3] 

 

Escudero, et. al.,  also contend that Republic Act No. 9337 grossly violates the constitutional imperative on exclusive origination of revenue bills under Section 24 of Article VI of the Constitution when the Senate introduced amendments not connected with VAT.    

 

The Court is not persuaded.

 

Article VI, Section 24 of the Constitution provides:

 

Sec. 24  All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

 

Section 24 speaks of origination of certain bills from the House of Representatives which has been interpreted in the Tolentino case as follows:

 

… To begin with, it is not the law — but the revenue bill — which is required by the Constitution to "originate exclusively" in the House of Representatives. It is important to emphasize this, because a bill originating in the

House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole …  At this point, what is important to note is that, as a result of the Senate action, a distinct bill may be produced. To insist that a revenue statute — and not only the bill which initiated the legislative process culminating in the enactment of the law — must substantially be the same as the House bill would be to deny the Senate's power not only to "concur with amendments" but also to " propose amendments." It would be to violate the coequality of legislative power of the two houses of Congress and in fact make the House superior to the Senate. 

… Given, then, the power of the Senate to propose amendments, the Senate can propose its own version even with respect to bills which are required by the Constitution to originate in the House.           . . .

Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff, or tax bills, bills authorizing an increase of the public debt, private bills and bills of local application must come from the House of Representatives on the theory that, elected as they are from the districts, the members of the House can be expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are elected at large, are expected to approach the same problems from the national perspective. Both views are thereby made to bear on the enactment of such laws.[4]

 

Clearly, after the House bills as approved on third reading are duly transmitted to the Senate, the Constitution states that the latter can propose or concur with amendments. The Court finds that the subject provisions found in the Senate bill are within the purview of such constitutional provision as declared in the Tolentino case. 

 

The intent of the House of Representatives in initiating House Bill Nos. 3555 and 3705 was to solve the country’s serious financial problems. It was stated in the respective explanatory notes that there is a need for the government to make significant expenditure savings and a credible package of revenue measures. These measures include improvement of tax administration and control and leakages in revenues from income taxes and value added tax.  It is also stated that one opportunity that could be beneficial to the overall status of our economy is to review existing tax rates, evaluating the relevance given our present conditions. Thus, with these purposes in mind and to accomplish these purposes for which the house bills were filed, i.e., to raise revenues for the government, the Senate introduced amendments on income taxes, which as admitted by Senator Ralph Recto, would yield about P10.5 billion a year.

 

Moreover, since the objective of these house bills is to raise revenues, the increase in corporate income taxes would be a great help and would also soften the impact of VAT measure on the consumers by distributing the burden across all sectors instead of putting it entirely on the shoulders of the consumers.

 

As to the other National Internal Revenue Code (NIRC) provisions found in Senate Bill No. 1950, i.e., percentage taxes, franchise taxes, amusement and excise taxes, these provisions are needed so as to cushion the effects of VAT on consumers. As we said in our decision, certain goods and services which were subject to percentage tax and excise tax would no longer be VAT exempt, thus, the consumer would be burdened more as they would be paying the VAT in addition to these taxes. Thus, there is a need to amend these sections to soften the impact of VAT.  The Court finds no reason to reverse the earlier ruling that the Senate introduced amendments that are germane to the subject matter and purposes of the house bills.

 

Petitioners Escudero, et al., also reiterate that R.A. No. 9337’s stand- by authority to the Executive to increase the VAT rate, especially on account of the recommendatory power granted to the Secretary of Finance, constitutes undue delegation of legislative power. They submit that the recommendatory power given to the Secretary of Finance in regard to the occurrence of either of two events using the Gross Domestic Product (GDP) as a benchmark necessarily and inherently required extended analysis and evaluation, as well as policy making. 

 

There is no merit in this contention.  The Court reiterates that in making his recommendation to the President on the existence of either of the two conditions, the Secretary of Finance is not acting as the alter ego of the President or even her subordinate.  He is acting as the agent of the legislative department, to determine and declare the event upon which its expressed will is to take effect. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented, considering that he possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate them.  His function is to gather and collate statistical data and other pertinent information and verify if any of the two conditions laid out by Congress is present.  Congress granted the Secretary of Finance the authority to ascertain the existence of a fact, namely, whether by December 31, 2005, the value-added tax collection as a percentage of GDP of the previous year exceeds two and four-fifth percent (24/5%) or the national government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1½%).  If either of these two instances has occurred, the Secretary of Finance, by legislative mandate, must submit such information to the President. Then the 12% VAT rate must be imposed by the President effective January 1, 2006. Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it, and what is the scope of his authority; in our complex economy that is frequently the only way in which the legislative process can go forward. There is

no undue delegation of legislative power but only of the discretion as to the execution of a law.  This is constitutionally permissible. Congress did not delegate the power to tax but the mere implementation of the law.  The intent and will to increase the VAT rate to 12% came from Congress and the task of the President is to simply execute the legislative policy.  That Congress chose to use the GDP as a benchmark to determine economic growth is not within the province of the Court to inquire into, its task being to interpret the law.

 

With regard to petitioner Garcia’s arguments, the Court also finds the same to be without merit.  As stated in the assailed Decision, the Court recognizes the burden that the consumers will be bearing with the passage of R.A. No. 9337.  But as was also stated by the Court, it cannot strike down the law as unconstitutional simply because of its yokes.  The legislature has spoken and the only role that the Court plays in the picture is to determine whether the law was passed with due regard to the mandates of the Constitution.  Inasmuch as the Court finds that there are no constitutional infirmities with its passage, the validity of the law must therefore be upheld.

 

Finally, petitioners Association of Pilipinas Shell Dealers, Inc. reiterated their arguments in the petition, citing this time, the dissertation of Associate Justice Dante O. Tinga in his Dissenting Opinion. 

 

The glitch in petitioners’ arguments is that it presents figures based on an event that is yet to happen.  Their illustration of the possible effects of the 70% limitation, while seemingly concrete, still remains theoretical. Theories have no place in this case as the Court must only deal with an existing case or controversy that is appropriate or ripe for judicial determination, not one that is conjectural or merely anticipatory.[5]   The Court will not intervene absent an actual and substantial controversy admitting of specific relief through a decree conclusive in nature, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.[6]

 

The impact of the 70% limitation on the creditable input tax will ultimately depend on how one manages and operates its business.  Market forces, strategy and acumen will dictate their moves.  With or without these VAT provisions, an entrepreneur who does not have the ken to adapt to economic variables will surely perish in the competition.  The arguments posed are within the realm of business, and the solution lies also in business. 

 

Petitioners also reiterate their argument that the input tax is a property or a property right.  In the same breath, the Court reiterates its finding that it is not a property or a property

right, and a VAT-registered person’s entitlement to the creditable input tax is a mere statutory privilege.

 

Petitioners also contend that even if the right to credit the input VAT is merely a statutory privilege, it has already evolved into a vested right that the State cannot remove.

 

As the Court stated in its Decision, the right to credit the input tax is a mere creation of law.  Prior to the enactment of multi-stage sales taxation, the sales taxes paid at every level of distribution are not recoverable from the taxes payable.  With the advent of Executive Order No. 273 imposing a 10% multi-stage tax on all sales, it was only then that the crediting of the input tax paid on purchase or importation of goods and services by VAT-registered persons against the output tax was established.  This continued with the Expanded VAT Law (R.A. No. 7716), and The Tax Reform Act of 1997 (R.A. No. 8424).  The right to credit input tax as against the output tax is clearly a privilege created by law, a privilege that also the law can limit.   It should be stressed that a person has no vested right in statutory privileges.[7]

 

The concept of “vested right” is a consequence of the constitutional guaranty of due process that expresses a present fixed interest which in right reason and natural justice is protected against arbitrary state action; it includes not only legal or equitable title to the enforcement of a demand but also exemptions from new obligations created after the right has become vested.  Rights are considered vested when the right to enjoyment is a present interest, absolute, unconditional, and perfect or fixed and irrefutable.[8]   As adeptly stated by Associate Justice Minita V. Chico-Nazario in her Concurring Opinion, which the Court adopts, petitioners’ right to the input VAT credits has not yet vested, thus –

 

It should be remembered that prior to Rep. Act No. 9337, the petroleum dealers’ input VAT credits were inexistent – they were unrecognized and disallowed by law.  The petroleum dealers had no such property called input VAT credits.  It is only rational, therefore, that they cannot acquire vested rights to the use of such input VAT credits when they were never entitled to such credits in the first place, at least, not until Rep. Act No. 9337. 

 My view, at this point, when Rep. Act No. 9337 has not yet even been

implemented, is that petroleum dealers’ right to use their input VAT as credit against their output VAT unlimitedly has not vested, being a mere expectancy of a future benefit and being contingent on the continuance of Section 110 of the

National Internal Revenue Code of 1997, prior to its amendment by Rep. Act No. 9337.

 

The elucidation of Associate Justice Artemio V. Panganiban is likewise worthy of note, to wit:

 

Moreover, there is no vested right in generally accepted accounting principles.  These refer to accounting concepts, measurement techniques, and standards of presentation in a company’s financial statements, and are not rooted in laws of nature, as are the laws of physical science, for these are merely developed and continually modified by local and international regulatory accounting bodies.  To state otherwise and recognize such asset account as a vested right is to limit the taxing power of the State.  Unlimited, plenary, comprehensive and supreme, this power cannot be unduly restricted by mere creations of the State.

 

More importantly, the assailed provisions of R.A. No. 9337 already involve legislative policy and wisdom.  So long as there is a public end for which R.A. No. 9337 was passed, the means through which such end shall be accomplished is for the legislature to choose so long as it is within constitutional bounds.  As stated in Carmichael vs. Southern Coal & Coke Co.:

 

If the question were ours to decide, we could not say that the legislature, in adopting the present scheme rather than another, had no basis for its choice, or was arbitrary or unreasonable in its action.  But, as the state is free to distribute the burden of a tax without regard to the particular purpose for which it is to be used, there is no warrant in the Constitution for setting the tax aside because a court thinks that it could have distributed the burden more wisely.  Those are functions reserved for the legislature.[9]

 

WHEREFORE, the Motions for Reconsideration are hereby DENIED WITH FINALITY.  The temporary restraining order issued by the Court is LIFTED.

 

 

SO ORDERED.

 

(The Justices who filed their respective concurring and dissenting opinions maintain their respective positions.  Justice Dante O. Tinga filed a dissenting opinion to the present Resolution; while Justice Consuelo Ynares- Santiago joins him in his dissenting opinion.)