TITLE OF THE CASE: ABAKADA GURO PARTY LIST v. ERMITA CITATION: G.R. No. 168056, September 1, 2005 Petitioners: ABAK ABAKAD ADA A ALCAN LCANTA TARA RA
GURO GURO PART PARTY Y
and ED VINC VINCEN ENT T
LIST LIST (For (Forme merl rly y
AASJ AASJAS AS))
S. ALBA ALBANO NORespondent: Respondent: THE THE
SECR SECRETA ETARY RY EDUAR EDUARDO DO ER ERMIT MITA; A; HONO HONORA RABL BLE E
OFFI OF FICE CERS RS SAMS SAMSON ON S. HONO HONORA RABL BLE E
EXEC EX ECUTI UTIVE VE
SECR SECRETA ETARY RY OF THE THE DEPAR DEPARTME TMENT NT OF
FINANC FINANCE E CESAR CESAR PURISIM PURISIMA; A; and HONORA HONORABLE BLE COMMISS COMMISSION IONER ER OF INTERN INTERNAL AL REVENU REVENUE E GUILLERMO PARAYNO, JR Ponente: AUSTRIA-MARTINEZ, J. FACTS: On May 24, 2005, the President signed into law Republic Act 9337 or the VAT Reform Act. Before the law took effect on July 1, 2005, the Court issued a TRO enjoining government from implementing the law in response to a slew of petitions for certiorari and prohibition questioning the constitutionality constitutionality of the new law. The challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and 6: “That the President, upon the recommendation of the Secretary of Finance, shall, shall, effective January 1, 2006, raise the rate of value-added tax to 12%, after any of the following conditions has been satisfied:
(i) Value Value-ad -added ded tax collec collectio tion n as a percen percenta tage ge of Gross Gross Domest Domestic ic Produ Product ct (GDP) (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%);
(ii) National government government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1½%)”
Petitioners allege that the grant of stand-by authority to the President to increase the VAT rate is an abdication by Congress of its exclusive power to tax because such delegation is not covered by Section 28 (2), Article VI Constitution. They argue that VAT is a tax levied on the sale or exchang exchange e of goods and services services which which can’t can’t be included included within the purview purview of tariffs tariffs under under the exemption delegation since this refers to customs duties, tolls or tribute payable upon merchandise to the govern governmen mentt and and usual usually ly impose imposed d on import imported/ ed/exp export orted ed goods. goods. They They also also said said that that the President has powers to cause, influence or create the conditions provided by law to bring about the conditions precedent. Moreover, they allege that no guiding standards are made by law as to how the Secretary of Finance will make the recommendation.
Aside from questioning the so-called stand-by authority of authority of the President to increase the VAT rate to 12%, on the ground that it amounts to an undue delegation of legislative power, petitioners also contend that the increase in the VAT rate to 12% contingent on any of the two conditions being satisfied violates the due process clause embodied in Article III, Section 1 of the Constitution, as it impose imposes s an unfai unfairr and and addit addition ional al tax burden burden on the people, people, in that: that: (1) the 12% increas increase e is ambig ambiguou uous s becau because se it does does not state if the rate would be retur returned ned to the origina originall 10% if the conditions are no longer satisfied; (2) the rate is unfair and unreasonable, as the people are unsure of the applicable VAT rate from year to year; and (3) the increase in the VAT rate, which is supposed to be an incentive to the President to raise the VAT collection to at least 2
4
/5 of the GDP of the
previous year, should only be based on fiscal adequacy.
Petitioners’ further claim that the inclusion of a stand-by authority granted authority granted to the President by the Bicameral Conference Committee is a violation of the "no-amendment rule" upon last reading of a bill laid down in Article VI, Section 26(2) of the Constitution.
ISSUES: •
Whether or not R.A. No. 9337 unconstitutional as there was undue delegation.
•
Whether or not the RA 9337's stand-by authority to the Executive to increase the VAT rate, especially on account of the recommendatory power granted to the Secretary of Finance, constitutes undue delegation of legislative power.
RULING: •
YES The Court is not persuaded. Article VI, Section 24 of the Constitution provides that 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. The Court reiterates that in making his recommendation to the President on the existence of either of the two conditions, the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. He is acting as the agent of the legislative department, to determine and declare the event upon which its expressed will is to take effect. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented, considering that he possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate them. His function is to gather and collate statistical data and other pertinent information and verify if any of the two conditions laid out by Congress is present. In the same breath, the Court reiterates its finding that it is not a property or a property right, and a VAT-registered person’s entitlement to the creditable input tax is a mere statutory privilege. As the Court stated in its Decision, the right to credit the input tax is a mere creation of law. More importantly, the assailed provisions of R.A. No. 9337 already involve legislative policy and wisdom. So long as there is a public end for which R.A. No. 9337 was passed, the means through which such end shall be accomplished is for the legislature to choose so long as it is within constitutional bounds.
•
NO The powers which Congress is prohibited from delegating are those which are strictly, or inherently and exclusively, legislative. Purely legislative power which can never be delegated is the authority to make a complete law- complete as to the time when it shall take effect and as to whom it shall be applicable, and to determine the expediency of its enactment. It is the nature of the power and not the liability of its use or the manner of its exercise which determines the validity of its delegation. The Motions for Reconsideration were denied with finality. The temporary restraining order issued by the Court was lifted.
