G.R. No. 115455 , 115525, 115543, 115544, 115754, 115781, 115852, 115873, 115931. August 25, 1994.
ARTURO M. TOLENTINO, ET AL., petitioners, vs. THE SECRETARY OF FINANCE, ET AL., respondents.

FACTS

Various petitioners, including legislators, industry associations, and civic groups, filed suits challenging the constitutionality of Republic Act No. 7716 , the Expanded Value-Added Tax (VAT) Law. They raised both procedural and substantive constitutional issues. Procedurally, they contended the law violated Article VI, Sections 24 and 26(2) of the Constitution. They argued that although the revenue bill originated in the House of Representatives as H. No. 11197, the Senate did not pass it but instead passed its own different version (S. No. 1630). The final law was a product of a Bicameral Conference Committee consolidation, which the petitioners claimed meant the law did not properly “originate” from the House.
Substantively, petitioners alleged the law violated the Bill of Rights, including provisions on due process, free speech, religious freedom, and non-impairment of contracts. They also claimed it contravened constitutional mandates on uniformity and equity in taxation and the exemption of certain entities from taxes.

ISSUE

The primary procedural issue was whether R.A. No. 7716 was enacted in violation of the constitutional requirements for revenue bills under Article VI, Sections 24 (origination clause) and 26(2) (three readings rule).

RULING

The Supreme Court dismissed the petitions and upheld the constitutionality of R.A. No. 7716 . On the procedural issue, the Court ruled that the law did not violate the origination clause. The constitutional requirement is satisfied as long as a revenue bill originates in the House, where it receives its crucial formulation. The Senate is not barred from proposing its own complete version or extensive amendments. The power of the Senate to “concur with amendments” includes the power to propose a substitute bill, which may entirely replace the House version, provided the amendment is germane to the subject matter. The consolidation of H. No. 11197 and S. No. 1630 in the Conference Committee was a legitimate legislative process to reconcile differences. The final enrolled bill, attested by the legislative officers and signed by the President, enjoys a conclusive presumption of regularity regarding its passage.
On the three readings rule, the Court found no violation. The Journal of the Senate showed that S. No. 1630 underwent the required three readings on separate days. The fact that the final version emerged from the Conference Committee does not negate compliance, as the conference report itself was subject to approval by both Houses. The substantive challenges were also rejected. The VAT is a uniform, indirect tax that does not violate due process, free press, or religious freedom. The law’s purpose to raise revenue and reform the tax system is a legitimate exercise of the State’s taxing power.