POLITICAL LAW AND PUBLIC INTERNATIONAL LAW

IX. LEGISLATIVE DEPARTMENT

I. Powers of Congress

4. Limitations on Revenue, Appropriations, and Tariff Powers

Congress of the Philippines, as the primary legislative body, is vested with broad powers in matters of revenue, appropriations, and tariffs. However, these powers are subject to constitutional limitations and statutory constraints. Below is a detailed discussion of these limitations:

A. Limitations on Revenue Powers

The power of Congress to impose taxes, duties, imposts, and excises is an inherent aspect of its legislative authority. This power is subject to the following constitutional and statutory limitations:

1. Uniformity and Equity in Taxation (Art. VI, Sec. 28 (1))

Uniformity means that persons or things belonging to the same class shall be taxed at the same rate. The tax must operate in the same manner upon all individuals or corporations of the same class.
Equity in taxation implies that the burden must be proportionate to the taxpayer's ability to pay. Taxes should not be arbitrary or confiscatory.

2. Progressive System of Taxation (Art. VI, Sec. 28 (1))

The Constitution mandates that the taxation system in the Philippines should be progressive. This means that the rate of tax increases as the ability of the taxpayer to pay increases. The legislative intent is to place heavier tax burdens on those who have more and to relieve those with lesser financial capability.

3. Non-Delegation of Taxing Power (Art. VI, Sec. 24)

The power to impose taxes is inherently legislative and cannot be delegated to any other body except through constitutional exceptions, such as the delegation of limited powers to local government units (LGUs) under the Local Government Code (R.A. No. 7160).
Revenue Bills must originate exclusively from the House of Representatives, but the Senate may propose or concur with amendments. Revenue bills pertain to taxes, customs duties, and tariffs, as well as measures affecting fiscal policy.

4. Presidential Veto Power on Tax Measures (Art. VI, Sec. 27 (2))

The President has the power to veto bills, including tax measures, passed by Congress. A presidential veto may extend to a specific provision of an appropriation, revenue, or tariff bill. However, Congress can override the veto by a two-thirds vote of all members of both Houses.

B. Limitations on Appropriations Power

Appropriations refer to the allocation of public funds by Congress for specific government expenditures. The Constitution imposes stringent rules on how Congress may exercise its appropriation power:

1. Requirement for an Appropriation Law (Art. VI, Sec. 29 (1))

No money shall be paid out of the Treasury except in pursuance of an appropriation made by law. This requires the passing of a specific appropriation law to authorize the disbursement of public funds.

2. Appropriations for Public Purpose (Art. VI, Sec. 29 (1))

Public funds may only be appropriated for public purposes. An appropriation that serves private interest or is otherwise not for public benefit is unconstitutional.

3. Presidential Submission of the Budget (Art. VI, Sec. 22)

The President is required to submit to Congress a proposed national budget or General Appropriations Bill (GAB) within 30 days from the opening of each regular session. The proposed budget includes details of projected income and proposed expenditures.
The role of Congress is to deliberate and approve, modify, or reject the budget submitted by the President. The GAB must originate from the House of Representatives, but the Senate may propose amendments.

4. Prohibition on Reenactment of the Budget (Art. VI, Sec. 25 (7))

In the absence of a new General Appropriations Act, Congress may not reenact a previous budget indefinitely. However, the reenacted budget may be applied temporarily until a new budget is passed.

5. Prohibition Against Impairment of Judiciary and Constitutional Bodies (Art. VIII, Sec. 3; Art. IX-A, Sec. 5)

Congress is prohibited from reducing the appropriations of the Judiciary below the amount appropriated in the previous year. A similar restriction applies to constitutional commissions (e.g., Commission on Audit, Civil Service Commission, and Commission on Elections).

6. Presidential Power to Veto Appropriation Items (Art. VI, Sec. 27 (2))

The President has the power to veto individual appropriation items within a General Appropriations Bill, a practice known as the line-item veto. The veto can apply to specific appropriations while allowing the rest of the budget to be enacted.

7. Prohibition of “Pork Barrel” and Lump-Sum Appropriations

The Supreme Court declared the Priority Development Assistance Fund (PDAF) or pork barrel system unconstitutional in Belgica v. Ochoa (2013). Congress is prohibited from appropriating lump-sum funds to be later distributed at the discretion of legislators. All appropriations must be specific and itemized in the GAB.

8. Automatic Appropriations for Certain Expenditures

Certain expenditures are automatically appropriated by law. These include:
- Debt Service Payments (Art. VI, Sec. 26 (3)): Payments for principal and interest on government borrowings are automatically appropriated.
- Salaries of Constitutional Officers: Salaries and pensions of constitutional officers such as the Judiciary and constitutional commissions are automatically appropriated.

C. Limitations on Tariff Powers

The power to impose duties and tariffs is part of Congress's broader fiscal power. However, specific constitutional and statutory limitations apply:

1. Delegation of Tariff Powers (Art. VI, Sec. 28 (2))

While Congress possesses the exclusive power to impose tariffs, it may delegate to the President limited authority to adjust tariff rates, import and export quotas, and other trade restrictions. Such delegation is permissible for flexibility in economic policy but must be within the bounds of law.

2. Executive Modification of Tariff Rates (Customs Modernization and Tariff Act)

Pursuant to laws like the Customs Modernization and Tariff Act (R.A. No. 10863), the President, upon recommendation of the National Economic and Development Authority (NEDA), can modify tariff rates to address changes in domestic and international markets. However, these modifications must still conform to the objectives and limitations prescribed by Congress.

3. Free Trade Agreements (FTAs) and International Trade Commitments

Congress must respect the commitments of the Philippines under international agreements such as World Trade Organization (WTO) obligations and Free Trade Agreements. Tariffs and trade policies must conform to these international standards, and any changes require legislative action or treaty modification.

Conclusion

The powers of Congress to legislate on matters of revenue, appropriations, and tariffs are broad but subject to significant constitutional constraints. These limitations are designed to ensure accountability, prevent abuse, promote fairness, and protect public funds for legitimate public purposes. The overarching principle governing these limitations is that taxation and appropriations must serve the collective good and adhere to constitutional mandates of uniformity, equity, and fiscal responsibility.