Abakada Guro vs Ermita

Abakada Guro v. ErmitaG.R. No. 168056, July 5, 2005J. Puno En BancFacts:

Motions for Reconsideration filed by petitioners, ABAKADA Guro party List Officer and et
al.,insist that the bicameral conference committee should not even have acted on the no passon provisions since there is no disagreement between House Bill Nos. 3705 and 3555 on the one
hand, and Senate Bill No. 1950 on the other, with regard to the no pass-on provision for the sale
of service for power generation because both the Senate and the House were in agreement that
the VAT burden for the sale of such service shall not be passed on to the end-consumer. As to the
no pass-on provision for sale of petroleum products, petitioners argue that the fact that
the presence of such a no pass-on provision in the House version and the absence thereof in the
Senate Bill means there is no conflict because a House provision cannot be in conflict with
something that does not exist. Escudero, et. al., also contend that Republic Act No. 9337 grossly
violates the constitutional imperative on exclusive origination of revenue bills under Section 24
of Article VI of the Constitution when the Senate introduced amendments not connected with
VAT. Petitioners Escudero, et al., also reiterate that R.A. No. 9337s 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. They submit that
the recommendatory power given to the Secretary of Finance in regard to the occurrence
of either of two events using the Gross Domestic Product (GDP) as a benchmark necessarily and
inherently required extended analysis and evaluation, as well as policy making. Petitioners also
reiterate their argument that the input tax is a property or a property right. Petitioners also
contend that even if the right to credit the input VAT is merely a statutory privilege, it has already
evolved into a vested right that the State cannot remove.
Issue:
Whether or not the R.A. No. 9337 or the Vat Reform Act is constitutional?
Held:
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 persons 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. The Motions for Reconsideration are hereby
DENIED WITH FINALITY. The temporary restraining order issued by the Court is LIFTED