a law, be presented to the President.
If he approves the same, he shall sign it; otherwise, he shall veto it and return the same with his objections to the House where it originated, which shall enter the objections at large in its Journal, and proceed to consider it. If, after such reconsideration, two-thirds of all the Members of such House shall agree to pass the bill, it shall be sent, together with the objections to the other House by which it shall likewise be reconsidered, and if approved by two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of each House shall be determined by yeas or nays, and the names of the Members voting for or against shall be entered in its Journal. The President shall communicate his veto of any bill to the House where it originated within thirty days after the date of receipt thereof; otherwise, it shall become a law as if he had signed it.
1. Three methods by which a bill may become a law: (1988 Bar Question)
1. When the President signs
it;
2. When the President vetoes it but the veto is overridden by two-thirds vote of all the members of each House;
3. When the President does
not act upon the measure within 30 days after it shall have been presented to him.
2. Presidential approval
(1) Passed bill is presented to the President (2) President signs the bill if he approves the same (3) The bill becomes a law.
3. Presidential veto
(1) Passed bill is presented to the President
(2) President vetoes the bill if he does not approve of it.
(3) He returns the passed bill with his objections to the House where it originated. (Veto Mesasge)
General rule: If the president disapproves the bill approved by Congress, he should veto the entire bill. He is not allowed to veto separate items of a bill.
Exceptions:
(1) President may veto an item in cases of appropriation, revenue and tariff bills.
(2) President may veto inappropriate provisions or riders.
4. Legislative reconsideration of the bill (1993 Bar Question)
(1) The House where the bill originated enters the objections of the President at large in its Journal.
(2) Said House reconsiders the bill.
(3) 2/3 of all the Members of such House agree to pass the bill.
(4) The bill together with the objections is sent to the other House by which it is also reconsidered.
(5) The other House approves the bill by 2/3 of all the members of that House.
(6) The bill becomes a law.
In all such cases, the votes of each House shall be determined by yeas or nays.
The names of the Members voting for or against shall be entered in its Journal.
Q: When does the Constitution require that the yeas and nays of the Members be taken every time a House has to vote?
A:
1. Upon the last and third readings of a bill (art. 6 sec26(2))
2. At the request of 1/5 of the members present (art 6 sec 16(4))
3. In repassing a bill over the veto of the President (art 6 sec 27(1))
5. Presidential Inaction
(1) Passed bill is presented to the President
(2) President does not approve nor communicate his veto to the House where the bill originated within 30 days.
(3) The bill becomes a law.
E. Item veto Section 27
(2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object.
Again, the General rule is: If the president disapproves the bill approved by Congress, he should veto the entire bill. He is not allowed to veto separate items of a bill.
Exceptions:
(1)
President may veto an item in cases of appropriation, revenue and tariff bills.(2)
President may veto inappropriate provisions or riders.Item. An item is an indivisible [sum] of money dedicated to a stated purpose.232 (Item = Purpose, Amount)
In a tax measure, an item refers to the subject of the tax and the tax rate. It does not refer to the entire section imposing a particular kind of tax.
(CIR v. CTA)
The president may not veto the method or manner of using an appropriated amount. (Bengzon v.
Drillon)
F. Doctrine of inappropriate provisions Doctrine
Reason for the Doctrine Inappropriate Provisions Appropriate Provisions
1. Doctrine
A provision that is constitutionally inappropriate for an appropriation bill may be singled out for veto even if it is not an appropriation or revenue “item”.
(Gonzales v. Macaraig) 2. Reason for the Doctrine
The intent behind the doctrine is to prevent the legislature from forcing the government to veto an entire appropriation law thereby paralyzing government.
3. Inappropriate Provisions
Repeal of laws. Repeal of laws should not be done in appropriation act but in a separate law (PHILCONSA v. Enriquez) (use this doctrine carefully)
The requirement of congressional approval for the release of funds for the modernization of the AFP
232 Bernas Primer, p. 276 (2006 ed.)
must be incorporated in a separate bill. Being an inappropriate provision, it was properly vetoed.
(PHILCONSA v. Enriquez)
The proviso on “power of augmentation from savings” can by no means be considered a specific appropriation of money. (Gonzales v. Macaraig) 4. Appropriate Provisions
The special provision providing that “the maximum amount of the appropriation for the DPWH to be contracted for the maintenance of national roads and bridges should not exceed 30%” is germane to the appropriation for road maintenance. It specifies how the item shall be spent. It cannot be vetoed separately from the item. (PHILCONSA v.
Enriquez)
The special provision that all purchases of medicines by the AFP should comply with Generics Act is a mere advertence to an existing law. It is directly related to the appropriation and cannot be vetoed separately from the item. (PHILCONSA v.
Enriquez)
G. Executive Impoundment:
Refusal of the President to spend funds already allocated by Congress for a specific purpose. (See PHILCONSA v. Enriquez)
H. Legislative veto
A Congressional veto is a means whereby the legislature can block or modify administrative action taken under a statute. It is a form of legislative control in the implementation of particular executive actions.
XII. FISCAL POWERS/ POWER OF THE PURSE
Taxation
A. Nature
B. Limitations
C. Delegation of power to tax D. Exempted from taxation Spending Power
A. Spending Power
B. Appropriation
C. Non-establishment provision
D. Special Fund
E. Appropriation
Power of the Purse. Congress is the guardian of the public treasury. It wields the tremendous power of the purse. The power of the purse comprehends both the power to generate money for the
government by taxation and the power to spend it.233
TAXATION
Section 28. (1) The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation.
A. Nature Definition Scope Purposes Tax
Public Purpose 1. Definition
Taxation refers to the inherent power of the state to demand enforced contributions for public purposes.
2. Scope
Taxation is so pervasive that it reaches even the citizen abroad and his income earned from source outside the State.
General Limit: For a public purpose; Due process and equal protection clauses (Sison v. Ancheta) Specific Limit: Uniform and equitable (Section 28) (See 29(2))
Exercise of the power: Primarily vested in the national legislature.
3. Purposes:
(1) To raise revenue
(2) Instrument of national economic and social policy
(3) Tool for regulation
(4)
The power to keep alive234 4. TaxTaxes are enforced proportional contributions from persons and property levied by the law making body of the state by virtue of its sovereignty for the support of the government and all public needs.
Justice Holmes said: “Taxes are what we pay for civilized society.”
5. Public Purpose
It is fundamental in democratic governments that taxes may be levied for public purpose only.
Without this element, a tax violates the due process clause and is invalid.235 In Planters Products, Inc. (PPI) v. Fertiphil Corp.236 the Court had occasion to review the validity of LOI 1465, a
233 Bernas Commentary, p 785 (2003 ed).
234 Bernas Primer at 278 (2006 ed.)
235 Sinco, Philippine Political Law, p 579 (1954ed).
236 G.R. No. 166006, March 14, 2008.
martial rule product, which imposed a ten peso capital contribution for the sale of each bag of fertilizer “until adequate capital is raised to make PPI viable.” PPI was private corporation. Clearly, therefore, the imposition was for private benefit and not for a public purpose.
B. Limitations on Power of Taxation
1. Rule of taxation shall be uniform and equitable.
Congress shall evolve a progressive system of taxation.
2. Charitable institutions, etc. and all lands, building and improvements actually, directly and exclusively used for religious, charitable or educational purposes shall be exempt from taxation. (art. 6 §28(3))
3. All revenues and assets of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties. (art. 14
§4(3))
4. Law granting tax exemption shall be passed only with the concurrence of the majority of all the members of Congress. (art. 6 §29(4)
UNIFORM
Uniformity. Uniformity signifies geographical uniformity. A tax is uniform when it operates with the same force and effect in every place where the subject is found.
Uniformity in taxation v. Equality in taxation.
Uniformity in taxation means that persons or things belonging to the same class shall be taxed at the same rate. It is distinguished from equality in taxation in that the latter requires the tax imposed to be determined on the basis of the value of the property.237
Tan v. del Rosario:
Uniformity means:
(1) the standards that are used therefor are substantial and not arbitrary;
(2) the categorization is germane to achieve the legislative purpose;
(3) the law applies, all things being equal, to both present and future conditions;
and
(4) the classification applies equally well to all those belonging to the same class.
There is a difference between the homeless people and the middle class. The two social classes are differently situated in life. (Tolentino v. Sec. of Finance)
EQUITABLE
237 Cruz, Philippine Political Law, p. 168 (1995 ed).
The present constitution adds that the rule of taxation shall also be equitable, which means that the tax burden must be imposed according to the taxpayer’s capacity to pay.238
Progressive system of taxation. The Congress shall evolve a progressive system of taxation. Tax system is progressive when the rate increases as the tax base increases.239
Reason for progressive system. The explicit mention of progressive taxation in the Constitution reflects the wish of the Commission that the legislature should use the power of taxation as an instrument for a more equitable distribution of wealth.
Directive not a judicially enforceable right. The directive to evolve a progressive system of taxation is addressed to Congress and not a judicially enforceable right. (Tolentino v. Sec. of Finance) Indirect taxes. The Constitution does not prohibit the imposition of indirect taxes, which are regressive. The provision simply means that direct taxes are to be preferred and indirect taxes should be minimized as much as possible. It does not require Congress to avoid entirely indirect taxes.
Otherwise, sales taxes, which are the oldest form of indirect taxes, will be prohibited. The mandate to Congress is not to prescribe but to evolve a progressive system of taxation. (Tolentino v. Sec.
of Finance)
C. Delegation of power to tax Conditions
Tariffs and Customs Code
Limitation imposed regarding the Flexible Tariff Clause Section 28
(2) The Congress may by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government.
1. Conditions in the delegation of the power to tax:
(1) Delegation must be made by law
(2) The power granted is to fix tariff rates, import and export quotas, tonnage and wharfage dues, and other duties and impost.
238 Cruz, Philippine Political Law, p. 168 (1995 ed).
239 Bernas Commentary, p 779 (2003 ed).
(3) The said power is to be exercised within specified limits and subject to such limitations and restrictions as the Congress may impose.
(4) The authorization of such power must be within the framework of the national development program of the Government.
2. Tariff and Customs Code, Flexible Tariff Clause
The President is given by the Tariff and Customs Code ample powers to adjust tariff rates.
Flexible Tariff Clause
The President may fix tariff rates, import and export quotas, etc. under TCC:
1)
To increase, reduce or remove existing protective rates of import duty (including any necessary change in classification)
the existing rates may be increased or decreased to any level on one or several stages but in no case shall be higher than a maximum of 100% ad valorem2)To establish import quota or to ban imports of any commodity, as may be necessary
3)To impose an additional duty on all imports not exceeding 10% ad valorem whenever necessary 3. Limitation Imposed Regarding the Flexible Tariff Clause
1) Conduct by the Tariff
Commission of an investigation in a public hearing
The Commissioner shall also hear the views and recommendations of any government office, agency or instrumentality concerned
The NEDA thereafter shall submits its recommendation to the President
2) The power of the President
to increase or decrease the rates of import duty within the abovementioned limits fixed in the Code shall include the modification in the form of duty.
In such a case the corresponding ad valorem or specific equivalents of the duty with respect to the imports from the principal competing country for the most recent representative period shall be used as bases. (Sec 401 TCC)
D. Exempted from taxation Exempted from taxation Kind of tax exemption
“Exclusively”, Meaning
Elements in determining a charitable institution Reason for Requirement of Absolute Majority
Section 28
(3) Charitable institutions, churches and parsonages or convents
appurtenant thereto, mosques, non-profit cemeteries and all lands, buildings, and improvement actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.
1. Exempted:
(1) Charitable institutions (2) Churches
(3) Parsonages or convents appurtenant to churches
(4) Mosques
(5) Non-profit cemeteries
(6) All lands, buildings, and improvement actually, directly and exclusively used for religious, charitable, or educational purpose shall be exempt from taxation.
2. Kind of tax exemption under 28(3)
The exemption created by Section 28 is only for taxes assessed as property taxes and not excise tax. (CIR v. CA)
3. “Exclusively”
The phrase “exclusively used for educational purposes” extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purpose. (Abra Valley College v. Aquino)
PCGG has no power to grant tax exemptions (Chavez v. PCGG)
4. Elements to be considered in determining whether an enterprise is a charitable institution/entity:
(1) Statute creating the enterprise (2) Its corporate purposes (3) Its constitution and by-laws (4) Method of administration (5) Nature of actual work performed (6) Character of services rendered (7) Indefiniteness of the beneficiaries
(8) Use and occupation of the properties (Lung Center v. QC)
Section 28
(4) No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress.
5. Reason for absolute majority
Bills ordinarily passed with support of only a simple majority, or a majority of those present and voting.
The above provision requires an absolute majority of the entire membership of the Congress because a tax exemption represents a withholding of the
power to tax and consequent loss of revenue to the government.
POWER OF APPROPRIATION/ SPENDING POWER