Republic Act No. 7716, the Expanded Value-Added Tax Law, is constitutional, having been enacted in compliance with the procedural requirements of the Constitution, and its provisions do not, on their face, violate the Bill of Rights or other constitutional mandates concerning taxation, freedom of speech and religion, or impairment of contracts; claims regarding its regressive nature or oppressiveness are considered prematurely raised without a sufficient factual record.

The Philippine government sought to widen the tax base of the existing Value-Added Tax (VAT) system and enhance its administration to address a growing budget deficit and improve revenue collection. This led to the legislative effort to amend the National Internal Revenue Code (NIRC) through what would become Republic Act No. 7716. The law aimed to remove certain VAT exemptions, expand the coverage of VAT to previously exempt goods and services, and restructure its application, sparking widespread opposition from various sectors who feared its economic impact and questioned its legality.

• Several bills were introduced in the House of Representatives between July 1992 and August 1993 to amend the VAT provisions of the National Internal Revenue Code (NIRC). These were consolidated into House Bill No. 11197.
• H. No. 11197 was approved by the House on third reading on November 17, 1993, and transmitted to the Senate on November 23, 1993.
• The Senate Committee on Ways and Means, taking into consideration H. No. 11197 and other Senate resolutions/bills (S. No. 1129, P.S. Res. No. 734), submitted Senate Bill No. 1630 on February 7, 1994, "in substitution of Senate Bill No. 1129."
• The President certified S. No. 1630 as urgent. The Senate approved S. No. 1630 on second and third readings on the same day, March 24, 1994.
• H. No. 11197 and S. No. 1630 were referred to a Bicameral Conference Committee, which submitted a consolidated bill. The title of the conference committee bill was "AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES."
• The Conference Committee bill was approved by the House on April 27, 1994, and by the Senate on May 2, 1994.
• The President signed the bill into law on May 5, 1994, as Republic Act No. 7716. It was published on May 12, 1994, and took effect on May 28, 1994, but its implementation was suspended until June 30, 1994.
• R.A. No. 7716 amended Section 103 of the NIRC, removing VAT exemptions for certain transactions, including those of Philippine Airlines (PAL) under P.D. No. 1590, and print media under the previous NIRC §103(f).
• Respondent Secretary of Finance later issued Revenue Regulations No. 11-94, exempting the "circulation income of print media" from VAT.

• R.A. No. 7716 violated Article VI, § 24 of the Constitution because it did not originate exclusively in the House of Representatives, being a consolidation of a House bill and a Senate bill.
• R.A. No. 7716 violated Article VI, § 26(2) of the Constitution because the Senate version (S. No. 1630) was not passed on three readings on separate days, and the presidential certification of urgency was allegedly invalid.
• The Bicameral Conference Committee exceeded its powers by inserting provisions not found in either the House or Senate bills, effectively acting as a third legislative chamber.
• R.A. No. 7716 violated the Bill of Rights: §1 (due process and equal protection), §4 (freedom of speech and press), §5 (free exercise of religion), and §10 (non-impairment of contracts).
• R.A. No. 7716 violated other constitutional provisions: Article VI, § 28(1) (uniform and equitable taxation, progressive system of taxation) and § 28(3) (tax exemption of charitable institutions, churches, etc.).
• The withdrawal of VAT exemption for the press (PPI) and the imposition of VAT on religious articles (PBS) abridged fundamental freedoms. The registration fee was a prior restraint.
• The law is regressive, oppressive, and confiscatory.
• For PAL, R.A. No. 7716 violated Article VI, § 26(1) (one subject in title rule) as the removal of its VAT exemption was not reflected in the title, and its franchise could only be amended by a special law.

• R.A. No. 7716 complied with Article VI, § 24, as the revenue bill (H. No. 11197) originated in the House, and the Senate has the power to propose or concur with amendments, even to the extent of substituting the entire bill.
• The presidential certification of S. No. 1630 as urgent dispensed with the requirement of three readings on separate days under Article VI, § 26(2).
• The Bicameral Conference Committee acted within its powers to reconcile differences, and its report, including new but germane provisions, was validly approved by both Houses. The enrolled bill doctrine precludes further inquiry into its enactment.
• R.A. No. 7716 does not violate freedom of speech, press, or religion, as these freedoms do not grant immunity from general, non-discriminatory taxation. The registration fee is administrative.
• The law is not regressive but aims for a broader and more equitable tax base. Claims of oppressiveness are speculative.
• The title of R.A. No. 7716 is sufficient to cover the removal of PAL's VAT exemption, and the law expressly amended PAL's franchise as permitted by the Constitution.
• The Secretary of Finance has the authority to issue regulations to implement the law, including clarifying exemptions.

• Whether R.A. No. 7716 violated Article VI, § 24 of the Constitution concerning the origination of revenue bills.
• Whether R.A. No. 7716 violated Article VI, § 26(2) of the Constitution concerning the three readings on separate days and distribution of printed copies.
• Whether the Bicameral Conference Committee exceeded its powers in formulating the final version of R.A. No. 7716.
• Whether R.A. No. 7716 violated provisions of the Bill of Rights, specifically §1 (due process and equal protection), §4 (freedom of speech and press), §5 (free exercise of religion), and §10 (non-impairment of contracts).
• Whether R.A. No. 7716 violated other constitutional provisions, specifically Article VI, § 28(1) (uniform and equitable taxation, progressive system) and § 28(3) (tax exemption of religious/charitable entities).
• Whether the title of R.A. No. 7716 complied with Article VI, § 26(1) of the Constitution (one subject expressed in the title).

• The petitions were dismissed. The Court upheld the constitutionality of R.A. No. 7716.
• On procedural issues:
  • R.A. No. 7716 complied with Art. VI, §24. The revenue bill (H. No. 11197) originated in the House. The Senate has the power to propose extensive amendments, including its own version, so long as the initiative comes from the House.
  • R.A. No. 7716 complied with Art. VI, §26(2). The President's certification of S. No. 1630 as urgent dispensed with the requirement of three readings on separate days for the Senate version. The factual basis of such certification is generally not subject to judicial review in this context.
  • The Bicameral Conference Committee acted within its power. It can reconcile differences and even introduce new provisions germane to the subject matter of the bills. Its report, approved by both Houses, is valid. The enrolled bill doctrine generally precludes judicial inquiry into the details of legislative procedure beyond what is constitutionally mandated to be recorded.
• On substantive issues:
  • R.A. No. 7716 does not violate freedom of speech, press (Art. III, §4) or religion (Art. III, §5). These freedoms do not confer immunity from general, non-discriminatory taxes. The VAT is a tax of general application. The registration fee is an administrative fee, not a prior restraint.
  • The title of R.A. No. 7716 is sufficiently comprehensive to include the amendments made, including the removal of PAL's VAT exemption (Art. VI, §26(1)).
  • Claims that the law is regressive, oppressive, confiscatory, or violates the non-impairment clause (Art. III, §10), due process, or equal protection (Art. III, §1) were deemed prematurely raised due to a lack of a concrete factual record and evidence of actual harm. The directive for a progressive system of taxation (Art. VI, §28(1)) is for Congress to implement and not a judicially enforceable negative standard against specific tax laws.
  • The amendment to PAL's franchise was an express amendment by a specific provision in R.A. 7716, which is within Congress's power.

• Origination Clause (Art. VI, § 24, Constitution) — 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. Applied: The Court held that the "bill" (H. No. 11197) originated in the House. The Senate's power to propose amendments is extensive and can include substituting its own version, provided the initial bill came from the House.
• Three Readings Rule and Presidential Certification of Urgency (Art. VI, § 26(2), Constitution) — No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed, except when the President certifies to the necessity of its immediate enactment. Applied: The President's certification of S. No. 1630 as urgent allowed the Senate to pass it on second and third readings on the same day, dispensing with the separate day requirement and prior printing/distribution.
• Power of Bicameral Conference Committee — A committee formed by both Houses of Congress to reconcile differing provisions of a bill. Applied: The Court affirmed that such committees can introduce new provisions or even propose an entirely new bill ("amendment in the nature of a substitute") as long as these are germane to the subject matter of the differing House and Senate bills. Its report requires the approval of both Houses.
• Enrolled Bill Doctrine — An enrolled act, authenticated by the signatures of the presiding officers of both Houses and the President, is conclusive proof of its due enactment and its contents, precluding judicial inquiry into alleged procedural irregularities not apparent on its face or not required by the Constitution to be entered in the journals. Applied: The Court invoked this doctrine to limit inquiry into the legislative process, stating that doubts as to formal validity should be resolved in favor of the enrolled act, R.A. No. 7716.
• Separation of Powers — The principle dividing governmental powers among the legislative, executive, and judicial branches, with each branch having distinct functions and limitations to prevent encroachment by others. Applied: The Court emphasized respect for the internal procedures of Congress and limited its inquiry into legislative actions, particularly concerning compliance with internal rules versus constitutional mandates.
• Non-Delegation of Legislative Power — The principle that powers vested in the legislature cannot be delegated to other bodies, though rulemaking authority for implementation can be delegated. (Implicitly relevant to the Secretary of Finance's power to issue regulations). Applied: The Court found it unnecessary to rule on the Secretary of Finance's authority to grant exemptions via regulation given its main finding on press freedom.
• Freedom of Speech, Press, and Expression (Art. III, § 4, Constitution) — No law shall be passed abridging these freedoms. Applied: The Court held that these freedoms do not grant immunity from general, non-discriminatory taxation. The VAT, as applied to print media's advertising income, was not found to be an abridgment of these freedoms.
• Freedom of Religion (Art. III, § 5, Constitution) — No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof. Applied: The Court, citing Jimmy Swaggart Ministries, held that the imposition of a generally applicable sales tax (like VAT) on the sale of religious materials does not violate the Free Exercise Clause.
• Prior Restraint — Governmental restriction on expression before it can take place. Applied: The Court found that the P1,000 VAT registration fee was an administrative fee to defray registration costs, not a prior restraint on the exercise of press or religious freedom.
• Uniformity and Equity in Taxation (Art. VI, § 28(1), Constitution) — The rule of taxation shall be uniform and equitable. Congress shall evolve a progressive system of taxation. Applied: The Court deemed claims of regressivity as academic without empirical data and stated that "progressive system" is a directive to Congress, not a judicially enforceable negative standard for specific tax laws.
• Non-Impairment Clause (Art. III, § 10, Constitution) — No law impairing the obligation of contracts shall be passed. Applied: The Court held that the State's taxing power is superior to contractual stipulations and is read into contracts, except where a tax exemption has been granted for valid consideration.
• One Subject-One Title Rule (Art. VI, § 26(1), Constitution) — Every bill passed by Congress shall embrace only one subject which shall be expressed in the title thereof. Applied: The Court found the title of R.A. No. 7716 sufficiently comprehensive to include the removal of PAL's VAT exemption, as widening the tax base is germane to the stated purpose.

• "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."
• "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."
• "Our cases manifest firm adherence to the rule that an enrolled copy of a bill is conclusive not only of its provisions but also of its due enactment."
• "Even with due recognition of its high estate and its importance in a democratic society, however, the press is not immune from general regulation by the State. It has been held: The publisher of a newspaper has no immunity from the application of general laws... Like others, he must pay equitable and nondiscriminatory taxes on his business."
• "[W]hen freedom of the mind is imperiled by law, it is freedom that commands a momentum of respect; when property is imperiled it is the lawmakers' judgment that commands respect. This dual standard may not precisely reverse the presumption of constitutionality in civil liberties cases, but obviously it does set up a hierarchy of values within the due process clause." (Quoting P.A. Freund)
• "Indeed, regressivity is not a negative standard for courts to enforce. What Congress is required by the Constitution to do is to 'evolve a progressive system of taxation.' This is a directive to Congress, just like the directive to it to give priority to the enactment of laws for the enhancement of human dignity and the reduction of social, economic and political inequalities (Art. XIII, § 1), or for the promotion of the right to 'quality education' (Art. XIV, § 1). These provisions are put in the Constitution as moral incentives to legislation, not as judicially enforceable rights."

• Flint v. Stone Tracy Co. (220 U.S. 107) — Cited to illustrate the U.S. Senate's broad power to amend revenue bills originating from the House, including substituting an entirely new measure, supporting the Court's interpretation of the Philippine Senate's similar power.
• Rainey v. United States (232 U.S. 309) — Referenced to show that the U.S. Senate can insert provisions in a tariff act, and such amendments are valid if the bill originated in the House.
• Philippine Judges Association v. Prado (G.R. No. 105371) — Cited to support the power of a conference committee to include in its report an entirely new provision not found in either the House or Senate bill, as long as it is germane.
• Osmeña v. Pendatun (109 Phil. 863) — Referenced for the principle that "parliamentary rules are merely procedural and with their observance the courts have no concern," limiting judicial review of legislative internal rules.
• Mabanag v. Lopez Vito (78 Phil. 1) — Cited as a key case establishing the enrolled bill doctrine in the Philippines, holding that an enrolled act is conclusive as to its due enactment.
• Casco (Phil.) Inc. v. Gimenez (7 SCRA 347) — Cited in support of the enrolled bill doctrine.
• Morales v. Subido (27 SCRA 131) — Cited in support of the enrolled bill doctrine.
• Astorga v. Villegas (56 SCRA 714) — Distinguished, as in that case the Senate President withdrew his signature from the enrolled bill, admitting a mistake, thus effectively there was no enrolled bill to consider, unlike the present case.
• Manila Railroad Co. v. Rafferty (40 Phil. 224) — Distinguished; held that a special law cannot be amended by a general law by implication. Here, R.A. 7716 expressly amended PAL's franchise.
• Grosjean v. American Press Co. (297 U.S. 233) — Distinguished; involved a tax specifically targeting newspapers critical of a politician, deemed discriminatory and a "tax on lying," unlike the general application of VAT.
• Minneapolis Star v. Minnesota Commissioner of Revenue (460 U.S. 575) — Distinguished; involved a use tax on ink and paper that singled out the press, found discriminatory, unlike the general VAT.
• Arkansas Writers' Project, Inc. v. Ragland (481 U.S. 221) — Distinguished; involved a tax differentiating magazines based on content, found discriminatory, unlike the VAT's application.
• Jimmy Swaggart Ministries v. Board of Equalization (493 U.S. 378) — Cited to support the holding that the Free Exercise Clause does not prohibit imposing a generally applicable sales and use tax on the sale of religious materials.
• American Bible Society v. City of Manila (101 Phil. 386) — Distinguished; involved a fixed license fee imposed as a condition for selling religious materials, deemed a prior restraint, unlike the VAT registration fee which is administrative.
• Murdock v. Pennsylvania (319 U.S. 105) — Relied upon by American Bible Society, concerned a flat license tax as a precondition to religious colportage, found unconstitutional.
• Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan (163 SCRA 371) — Cited as precedent where similar arguments against the original VAT law (E.O. No. 273) regarding regressivity and oppressiveness were found to be hypothetical and insufficient to invalidate the law.
• Marbury v. Madison (1 Cranch 137) — Cited for the fundamental principle that it is the duty of the judicial department to say what the law is.
• Angara v. Electoral Commission (63 Phil. 139) — Cited for the judiciary's role in mediating to allocate constitutional boundaries and determine conflicting claims of authority.

• Constitution, Article VI, § 24 — Requires all appropriation, revenue, or tariff bills to originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Central to the procedural challenge regarding the law's enactment.
• Constitution, Article VI, § 26(2) — Mandates that no bill shall become a law unless it passes three readings on separate days in each House, and printed copies in its final form are distributed, except when certified as urgent by the President. Key to challenges on the Senate's passage of S. No. 1630.
• Constitution, Article VI, § 26(1) — Requires every bill to embrace only one subject which shall be expressed in its title. Basis for PAL's challenge.
• Constitution, Article III, § 1 — Due process and equal protection clause. Invoked by petitioners claiming the VAT law is oppressive and discriminatory.
• Constitution, Article III, § 4 — Freedom of speech, expression, and the press. Invoked by PPI and others arguing the VAT on media is an abridgment.
• Constitution, Article III, § 5 — Freedom of religion (non-establishment and free exercise). Invoked by PBS arguing VAT on religious articles is unconstitutional.
• Constitution, Article III, § 10 — Non-impairment of contracts. Invoked by CREBA concerning pre-existing contracts.
• Constitution, Article VI, § 28(1) — Mandates that the rule of taxation shall be uniform and equitable, and Congress shall evolve a progressive system of taxation. Basis for arguments that VAT is regressive.
• Constitution, Article II, § 17 — Mandates the State to give priority to education, science and technology. Invoked by PEPA.
• Constitution, Article XII, § 11 — Provides that no franchise for a public utility shall be exclusive or for a longer period than fifty years, and shall be subject to amendment, alteration, or repeal by Congress when the common good so requires. Cited to justify Congress's power to amend PAL's franchise.
• National Internal Revenue Code, § 103 (original and as amended by R.A. 7716) — Lists VAT-exempt transactions. The amendment by R.A. 7716 removed certain exemptions, which was a core issue.
• National Internal Revenue Code, § 107 — Requires VAT-registered persons to pay an annual registration fee. Challenged as a prior restraint.
• P.D. No. 1590 (PAL's franchise) — Specifically §24, which provided that the franchise could only be amended by a special law. R.A. 7716's amendment of §103 NIRC effectively removed PAL's VAT exemption under this decree.

• Chief Justice Andres R. Narvasa — Emphasized that "exclusive origination" refers to the formal transmission of a bill, not its initial conception, and that the Senate can prepare its own version in anticipation. He found the bicameral conference committee's actions consistent with established legislative practice and upheld the enrolled bill doctrine, seeing no fatal procedural defects.
• Justice Jose C. Vitug — Advocated for judicial restraint regarding the internal procedures of Congress, stating that the final approval by both Houses should be respected. He suggested that specific taxpayer grievances could be addressed through other legal remedies.
• Justice Isagani A. Cruz (Separate Opinion) — While concurring with the dismissal, he expressed strong reservations about the "enrolled bill" doctrine's application when constitutional procedures are questioned, suggesting a need for the Court to verify compliance if challenged. However, on the specific issue of origination, he found the certification in the enrolled bill itself problematic as it stated R.A. 7716 was a "consolidation" of House and Senate bills, implying non-exclusive origination by the House. (This opinion, though listed as separate, contains strong dissenting points on the origination issue based on the enrolled bill's text).
• Justice Sabino B. Padilla (Separate Opinion) — Concurred with the dismissal but found the imposition of VAT on the circulation income of newspapers and on the sale of religious articles unconstitutional for violating freedom of the press and religion, respectively. He otherwise found substantial compliance with procedural requirements.

• Justice Josue N. Bellosillo — Argued that "exclusively" in Art. VI, §24 is mandatory and that S.No. 1630, being a Senate-initiated bill substituting another Senate bill (S.No. 1129) and not H.No. 11197, violated this provision, rendering R.A. 7716 unconstitutional.
• Justice Hilario G. Davide, Jr. — Contended that R.A. 7716 was unconstitutional due to multiple procedural violations, including non-exclusive origination (being a consolidation), invalid presidential certification for S.No. 1630 (as a tax bill cannot originate in the Senate), and the Bicameral Conference Committee exceeding its authority by adding new matters and its referral being premature.
• Justice Reynato S. Puno — Asserted that the Bicameral Conference Committee acted as an unconstitutional "third chamber" by making substantive changes beyond its mandate, violating procedural due process. He called for a re-evaluation of the enrolled bill doctrine given the 1987 Constitution's expanded judicial power.
• Justice Florenz D. Regalado — Argued that the presidential certification for S.B. No. 1630 was invalid as a tax bill cannot originate in the Senate. He viewed the enrolled bill's certification of "consolidation" as an admission of dual origination, violating the "exclusively" requirement of Art. VI, §24.
• Justice Flerida Ruth P. Romero — Found R.A. 7716 unconstitutional due to the Bicameral Conference Committee exceeding its authority by making substantive changes and insertions beyond reconciling differences, and some of its sessions being held non-transparently. She also found the VAT on press's income and on religious articles violative of fundamental freedoms.