John Ludwig B.

Pormento
Legislative Cases Nos. 24-31
24. G.R. Nos. 209287,209135 etc. 3 February 2015
Araullo vs. Aquino III
Facts:
When President Benigno Aquino III took office, his administration noticed the sluggish
growth of the economy. The World Bank advised that the economy needed a stimulus plan.
Budget Secretary Florencio “Butch” Abad then came up with a program called the
Disbursement Acceleration Program (DAP).
So what happens under the DAP was that if a certain government project is being
undertaken slowly by a certain executive agency, the funds allotted therefor will be
withdrawn by the Executive. Once withdrawn, these funds are declared as “savings” by the
Executive and said funds will then be reallotted to other priority projects.
It turns out that some non-Executive projects were also funded; to name a few: Php1.5B for
the CPLA (Cordillera People’s Liberation Army), Php1.8B for the MNLF (Moro National
Liberation Front), P700M for the Quezon Province, P50-P100M for certain Senators each,
P10B for Relocation Projects, etc.
This prompted Maria Carolina Araullo, Chairperson of the Bagong Alyansang Makabayan,
and several other concerned citizens to file various petitions with the Supreme Court
questioning the validity of the DAP. Among their contentions was:
DAP is unconstitutional because it violates the constitutional rule which provides that “no
money shall be paid out of the Treasury except in pursuance of an appropriation made by
law.”
Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings
and augmentation provisions thereof), Sec. 25(5), Art. VI of the Constitution (power of the
President to augment), Secs. 38 and 49 of Executive Order 292 (power of the President to
suspend expenditures and authority to use savings, respectively).

Issue: 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).

Ruling:
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 In DAP no additional funds were withdrawn from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.
25. 235 SCRA 506 (1994)
Philippine Constitution Association vs. Enriquez

This is a consolidation of cases which sought to question the veto authority of the president
involving the General Appropriations Bill of 1994 as well as the constitutionality of the pork
barrel. The Philippine Constitution Association (PHILCONSA) questions the countrywide
development fund. PHILCONSA said that Congress can only allocate funds but they cannot
specify the items as to which those funds would be applied for since that is already the
function of the executive.
In G.R. No. 113766, after the vetoing by the president of some provisions of the GAB of 1994,
neither house of congress took steps to override the veto. Instead, Senators Wigberto Tañada
and Alberto Romulo sought the issuance of the writs of prohibition and mandamus against
Executive Secretary Teofisto Guingona et al. Tañada et al contest the constitutionality of: (1)
the veto on four special provisions added to items in the GAB of 1994 for the Armed Forces
of the Philippines (AFP) and the Department of Public Works and Highways (DPWH); and (2)
the conditions imposed by the President in the implementation of certain appropriations for
the CAFGU’s, the DPWH, and the National Housing Authority (NHA).
ISSUE: Whether or not the President’s veto is valid.
HELD: In the PHILCONSA petition, the SC ruled that Congress acted within its power and
that the CDF is constitutional. In the Tañada petitions the SC dismissed the other petitions
and granted the others.
Veto on special provisions
The president did his veto with certain conditions and compliant to the ruling in Gonzales vs
Macaraig. The president particularly vetoed the debt reduction scheme in the GAA of 1994
commenting that the scheme is already taken cared of by other legislation and may be more
properly addressed by revising the debt policy. He, however did not delete the
P86,323,438,000.00 appropriation therefor. Tañada et al averred that the president cannot
validly veto that provision w/o vetoing the amount allotted therefor. The veto of the president
herein is sustained for the vetoed provision is considered “inappropriate”; in fact the Sc found
that such provision if not vetoed would in effect repeal the Foreign Borrowing Act making the
legislation as a log-rolling legislation.

26. 21 SCRA 496 (1967)

Lidasan vs. Commission on Elections

Bara Lidasan was a resident of Parang, Cotabato. Later, Republic Act No. 4790, entitled “An
Act Creating the Municipality of Dianaton in the Province of Lanao del Sur,” was passed.
Lidasan however discovered that certain barrios located in Cotabato were included in
Dianaton, Lanao Del Sur pursuant to RA 4790. [Remarkably, even the Congressman of
Cotabato voted in favor of RA 4790.] Pursuant to this law, COMELEC proceeded to establish
precincts for voter registration in the said territories of Dianaton. Lidasan then filed a case to
have RA 4790 be nullified for being unconstitutional. He averred that the law did not clearly
indicate in its title that in creating Dianaton, it would be including in its territory several barrios
from Cotabato.
ISSUE: Is RA 4790, which created Dianaton but which includes barrios located in another
province – Cotabato – to be spared from attack planted upon the constitutional mandate that
“No bill which may be enacted into law shall embrace more than one subject which shall be
expressed in the title of the bill”?
HELD: No. The said law is void. The baneful effect of the defective title here presented is not
so difficult to perceive. Such title did not inform the members of Congress as to the full impact
of the law; it did not apprise the people in the towns of Buldon and Parang in Cotabato and
in the province of Cotabato itself that part of their territory is being taken away from their towns
and province and added to the adjacent Province of Lanao del Sur; it kept the public in the
dark as to what towns and provinces were actually affected by the bill that even a
Congressman from Cotabato voted for it only to find out later on that it is to the prejudice of
his own province. These are the pressures which heavily weigh against the constitutionality
of RA 4790.

Nos. 27-29 (Exact Same Cases) – 235 SCRA 630 – 249 SCRA 628
Tolentino vs. Secretary of Finance

Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the
Expanded Value Added Tax (EVAT) Law. Tolentino averred that this revenue bill did not
exclusively originate from the House of Representatives as required by Section 24, Article 6
of the Constitution. Even though RA 7716 originated as HB 11197 and that it passed the 3
readings in the HoR, the same did not complete the 3 readings in Senate for after the
1st reading it was referred to the Senate Ways & Means Committee thereafter Senate passed
its own version known as Senate Bill 1630. Tolentino averred that what Senate could have
done is amend HB 11197 by striking out its text and substituting it with the text of SB 1630 in
that way “the bill remains a House Bill and the Senate version just becomes the text (only the
text) of the HB”. (It’s ironic however to note that Tolentino and co-petitioner Raul Roco even
signed the said Senate Bill.)
ISSUE: Whether or not the EVAT law is procedurally infirm.
HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such
consolidation was consistent with the power of the Senate to propose or concur with
amendments to the version originated in the HoR. What the Constitution simply means,
according to the 9 justices, is that the initiative must come from the HoR. Note also that there
were several instances before where Senate passed its own version rather than having the
HoR version as far as revenue and other such bills are concerned. This practice of
amendment by substitution has always been accepted. The proposition of Tolentino concerns
a mere matter of form. There is no showing that it would make a significant difference if
Senate were to adopt his over what has been done.
30. 196 SCRA 322 (1991)
Reyes vs. Almanzor
FACTS: Petitioners JBL Reyes et al. owned a parcel of land in Tondo which are leased and occupied as dwelling
units by tenants who were paying monthly rentals of not exceeding P300. Sometimes in 1971 the Rental
Freezing Law was passed prohibiting for one year from its effectivity, an increase in monthly rentals of dwelling
units where rentals do not exceed three hundred pesos (P300.00), so that the Reyeses were precluded from
raising the rents and from ejecting the tenants. In 1973, respondent City Assessor of Manila re-classified and
reassessed the value of the subject properties based on the schedule of market values, which entailed an
increase in the corresponding tax rates prompting petitioners to file a Memorandum of Disagreement averring
that the reassessments made were "excessive, unwarranted, inequitable, confiscatory and unconstitutional"
considering that the taxes imposed upon them greatly exceeded the annual income derived from their
properties. They argued that the income approach should have been used in determining the land values instead
of the comparable sales approach which the City Assessor adopted.

ISSUE: Is the approach on tax assessment used by the City Assessor reasonable?

HELD: No. The taxing power has the authority to make a reasonable and natural classification for purposes of
taxation but the government's act must not be prompted by a spirit of hostility, or at the very least discrimination
that finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the same manner, the conditions not being different
both in the privileges conferred and the liabilities imposed.
Consequently, it stands to reason that petitioners who are burdened by the government by its Rental Freezing
Laws (then R.A. No. 6359 and P.D. 20) under the principle of social justice should not now be penalized by the
same government by the imposition of excessive taxes petitioners can ill afford and eventually result in the
forfeiture of their properties.

31. 298 SCRA 83 (1998)

Commissioner of Internal Revenue vs. Court of Appeals

Don Andres Soriano (American), founder of A. Soriano Corp. (ASC) had a total shareholdings
of 185,154 shares. Broken down, the shares comprise of 50,495 shares which were of original
issue when the corporation was founded and 134,659 shares as stock dividend declarations.
So in 1964 when Soriano died, half of the shares he held went to his wife as her conjugal
share (wife’s “legitime”) and the other half (92,577 shares, which is further broken down to
25,247.5 original issue shares and 82,752.5 stock dividend shares) went to the estate. For
sometime after his death, his estate still continued to receive stock dividends from ASC until
it grew to at least 108,000 shares.
In 1968, ASC through its Board issued a resolution for the redemption of shares from
Soriano’s estate purportedly for the planned “Filipinization” of ASC. Eventually, 108,000
shares were redeemed from the Soriano Estate. In 1973, a tax audit was conducted.
Eventually, the Commissioner of Internal Revenue (CIR) issued an assessment against ASC
for deficiency withholding tax-at-source. The CIR explained that when the redemption was
made, the estate profited (because ASC would have to pay the estate to redeem), and so
ASC would have withheld tax payments from the Soriano Estate yet it remitted no such
withheld tax to the government.
ASC averred that it is not duty bound to withhold tax from the estate because it redeemed the
said shares for purposes of “Filipinization” of ASC and also to reduce its remittance abroad.
ISSUE: Whether or not ASC’s arguments are tenable.
HELD: No. The reason behind the redemption is not material. The proceeds from a
redemption is taxable and ASC is duty bound to withhold the tax at source. The Soriano
Estate definitely profited from the redemption and such profit is taxable, and again, ASC had
the duty to withhold the tax. There was a total of 108,000 shares redeemed from the estate.
25,247.5 of that was original issue from the capital of ASC. The rest (82,752.5) of the shares
are deemed to have been from stock dividend shares. Sale of stock dividends is taxable. It is
also to be noted that in the absence of evidence to the contrary, the Tax Code presumes that
every distribution of corporate property, in whole or in part, is made out of corporate
profits such as stock dividends.
It cannot be argued that all the 108,000 shares were distributed from the capital of ASC and
that the latter is merely redeeming them as such. The capital cannot be distributed in the form
of redemption of stock dividends without violating the trust fund doctrine — wherein the capital
stock, property and other assets of the corporation are regarded as equity in trust for the
payment of the corporate creditors. Once capital, it is always capital. That doctrine was
intended for the protection of corporate creditors.