ABAKADA Vs Ermita - 168056 - September 1, 2005 - J

ENBANC
ABAKADA GURO PARTY LIST

(Formerly
AASJAS)
OFFICERS
SAMSON S. ALCANTARA and ED
VINCENTS.ALBANO,
Petitioners,
versus
THE HONORABLE EXECUTIVE

SECRETARY EDUARDO ERMITA
HONORABLE SECRETARY OF THE
DEPARTMENTOFFINANCECESAR
PURISIMA
and
HONORABLE
COMMISSIONER OF INTERNAL
REVENUE GUILLERMO PARAYNO,
JR.,
Respondents.
xx
AQUILINO Q. PIMENTEL, JR.,

LUISA P. EJERCITOESTRADA,
G.R.No.168056
Present:
DAVIDE,JR.,C.J.,
PUNO,
PANGANIBAN,
QUISUMBING,
YNARESSANTIAGO,
SANDOVALGUTIERREZ,
CARPIO,
AUSTRIAMARTINEZ,
CORONA,
CARPIOMORALES,
CALLEJO,SR.,
AZCUNA,
TINGA,
CHICONAZARIO,and
GARCIA,JJ.
G.R.No.168207
JINGGOY E. ESTRADA, PANFILO

M. LACSON, ALFREDO S. LIM,
JAMBY A.S. MADRIGAL, AND
SERGIOR.OSMEAIII,
Petitioners,
versus
EXECUTIVE
SECRETARY
EDUARDO R. ERMITA, CESAR V.
PURISIMA,
SECRETARY
OF
FINANCE,
GUILLERMO
L.
PARAYNO,JR.,COMMISSIONEROF
THE BUREAU OF INTERNAL
REVENUE,
Respondents.
xx
ASSOCIATION
OF
PILIPINAS
SHELL DEALERS, INC. represented
byitsPresident,ROSARIOANTONIO
PETRON DEALERS ASSOCIATION
represented by its President, RUTH E.
BARBIBI
ASSOCIATION
OF
CALTEX DEALERS OF THE
PHILIPPINES represented by its
President,MERCEDITASA.GARCIA
ROSARIO ANTONIO doing business
under the name and style of ANB
NORTH SHELL SERVICE STATION
LOURDESMARTINEZdoingbusiness
under the name and style of SHELL
GATE N. DOMINGO BETHZAIDA
TAN doing business under the name
and style of ADVANCE SHELL
STATION
REYNALDO
P.
MONTOYA doing business under the
name and style of NEW LAMUAN
SHELL SERVICE STATION EFREN
SOTTOdoingbusinessunderthename
and style of RED FIELD SHELL
SERVICE
STATION
DONICA
CORPORATION represented by its
President, DESI TOMACRUZ RUTH
G.R.No.168461
E. MARBIBI doing business under the

name and style of R&R PETRON
STATIONPETERM.UNGSONdoing
business under the name and style of
CLASSIC
STAR
GASOLINE
SERVICE
STATION
MARIAN
SHEILA A. LEE doing business under
thenameandstyleofNTEGASOLINE
& SERVICE STATION JULIAN
CESAR P. POSADAS doing business
under the name and style of
STARCARGA
ENTERPRISES
ADORACION MAEBO doing business
under the name and style of CMA
MOTORISTS CENTER SUSAN M.
ENTRATA doing business under the
name and style of LEONAS
GASOLINE STATION and SERVICE
CENTER
CARMELITA
BALDONADO doing business under
thenameandstyleofFIRSTCHOICE
SERVICE CENTER MERCEDITAS
A. GARCIA doing business under the
name and style of LORPED SERVICE
CENTER RHEAMAR A. RAMOS
doing business under the name and
style of RJRAM PTT GAS STATION
MA. ISABEL VIOLAGO doing
business under the name and style of
VIOLAGOPTT SERVICE CENTER
MOTORISTS
HEART
VicePresident
for
Operations,
JOSELITO
F.
FLORDELIZA
MOTORISTS
HARVARD
VicePresident
for
Operations,
JOSELITO
F.
FLORDELIZA
MOTORISTS
HERITAGE
VicePresident
for
Operations,
JOSELITO
F.
FLORDELIZA
PHILIPPINE
STANDARD
OIL
VicePresident
for
Operations,
JOSELITO
F.
FLORDELIZA
ROMEO MANUEL doing business
underthenameandstyleofROMMAN
GASOLINE STATION ANTHONY
ALBERT CRUZ III doing business
under the name and style of TRUE
SERVICESTATION,
Petitioners,
versus
CESAR V. PURISIMA, in his capacity

as Secretary of the Department of
Finance and GUILLERMO L.
PARAYNO, JR., in his capacity as
CommissionerofInternalRevenue,
Respondents.
xx
FRANCIS JOSEPH G. ESCUDERO,

VINCENT
CRISOLOGO,
EMMANUELJOELJ.VILLANUEVA,
RODOLFO G. PLAZA, DARLENE
ANTONINOCUSTODIO, OSCAR G.
MALAPITAN,
BENJAMIN
C.
AGARAO, JR. JUAN EDGARDO M.
ANGARA, JUSTIN MARC SB.
CHIPECO, FLORENCIO G. NOEL,
MUJIV S. HATAMAN, RENATO B.
MAGTUBO, JOSEPH A. SANTIAGO,
TEOFISTODL.GUINGONAIII,RUY
ELIAS C. LOPEZ, RODOLFO Q.
AGBAYANI and TEODORO A.
CASIO,
Petitioners,
versus
CESAR V. PURISIMA, in his capacity

asSecretaryofFinance,GUILLERMO
L. PARAYNO, JR., in his capacity as
CommissionerofInternalRevenue,and
EDUARDO R. ERMITA, in his
capacityasExecutiveSecretary,
G.R.No.168463
Respondents.
xx
BATAAN GOVERNOR ENRIQUE T.

GARCIA,JR.
Petitioner,
versus
HON. EDUARDO R. ERMITA, in his

capacity as the Executive Secretary
HON. MARGARITO TEVES, in his
capacityasSecretaryofFinanceHON.
JOSEMARIOBUNAG,inhiscapacity
astheOICCommissioneroftheBureau
of Internal Revenue and HON.
ALEXANDER AREVALO, in his
capacity as the OIC Commissioner of
theBureauofCustoms,
Respondents.
G.R.No.168730
Promulgated:
September1,2005
xx
DECISION
AUSTRIAMARTINEZ,J.:
Theexpensesofgovernment,havingfortheirobjecttheinterestofall,shouldbeborneby
everyone, and the more man enjoys the advantages of society, the more he ought to hold himself
honoredincontributingtothoseexpenses.
AnneRobertJacquesTurgot(17271781)
Frenchstatesmanandeconomist
Mounting budget deficit, revenue generation, inadequate fiscal allocation for education,
increased emoluments for health workers, and wider coverage for full valueadded tax benefits
[1]
thesearethereasonswhyRepublicActNo.9337(R.A.No.9337) wasenacted.Reasons,the
wisdomofwhich,theCourtevenwithitsextensiveconstitutionalpowerofreview,cannotprobe.
The petitioners in these cases, however, question not only the wisdom of the law, but also
perceivedconstitutionalinfirmitiesinitspassage.
Every law enjoys in its favor the presumption of constitutionality. Their arguments
notwithstanding,petitionersfailedtojustifytheircallfortheinvalidityofthelaw.Hence,R.A.No.
9337isnotunconstitutional.
LEGISLATIVEHISTORY
R.A.No.9337isaconsolidationofthreelegislativebillsnamely,HouseBillNos.3555and
3705,andSenateBillNo.1950.
[2]
House Bill No. 3555 was introduced on first reading on January 7, 2005. The House
CommitteeonWaysandMeansapprovedthebill,insubstitutionofHouseBillNo.1468,which
Representative(Rep.)EricD.SingsonintroducedonAugust8,2004. The President certified the
bill on January 7, 2005 for immediate enactment. On January 27, 2005, the House of
Representativesapprovedthebillonsecondandthirdreading.
[3]
HouseBillNo.3705 ontheotherhand,substitutedHouseBillNo.3105introducedby
Rep.SalacnibF.Baterina,andHouseBillNo.3381introducedbyRep.JacintoV.Paras.Itsmother
bill is House Bill No. 3555. The House Committee on Ways and Means approved the bill on
February 2, 2005. The President also certified it as urgent on February 8, 2005. The House of
RepresentativesapprovedthebillonsecondandthirdreadingonFebruary28,2005.
[4]
Meanwhile,theSenateCommitteeonWaysandMeansapprovedSenate Bill No. 1950
on March 7, 2005, in substitution of Senate Bill Nos. 1337, 1838 and 1873, taking into
considerationHouseBillNos.3555and3705.SenatorRalphG.RectosponsoredSenateBillNo.
1337, while Senate Bill Nos. 1838 and 1873 were both sponsored by Sens. Franklin M. Drilon,
JuanM.FlavierandFrancisN.Pangilinan.ThePresidentcertifiedthebillonMarch11,2005,and
wasapprovedbytheSenateonsecondandthirdreadingonApril13,2005.
On the same date, April 13, 2005, the Senate agreed to the request of the House of
Representativesforacommitteeconferenceonthedisagreeingprovisionsoftheproposedbills.
Before long, the Conference Committee on the Disagreeing Provisions of House Bill No.
3555,HouseBillNo.3705,andSenateBillNo.1950,afterhavingmetanddiscussedinfullfree
andconference,recommendedtheapprovalofitsreport,whichtheSenatedidonMay10,2005,
andwiththeHouseofRepresentativesagreeingtheretothenextday,May11,2005.
On May 23, 2005, the enrolled copy of the consolidated House and Senate version was
transmittedtothePresident,whosignedthesameintolawonMay24,2005.Thus,cameR.A.No.
9337.
[5]
July 1, 2005 is the effectivity date of R.A. No. 9337. When said date came, the Court
issued a temporary restraining order, effective immediately and continuing until further orders,
enjoiningrespondentsfromenforcingandimplementingthelaw.
Oral arguments were held on July 14, 2005. Significantly, during the hearing, the Court
speakingthroughMr.JusticeArtemioV.Panganiban,voicedtherationaleforitsissuanceofthe
temporaryrestrainingorderonJuly1,2005,towit:
J.PANGANIBAN:...ButbeforeIgointothedetailsofyourpresentation,letmejusttellyoua
little background. You know when the law took effect on July 1, 2005, the
CourtissuedaTROatabout5oclockintheafternoon.Butbeforethat,there
wasalotofcomplaintsairedontelevisionandonradio.Somepeopleinagas
station were complaining that the gas prices went up by 10%. Some people
were complaining that their electric bill will go up by 10%. Other times
people riding in domestic air carrier were complaining that the prices that
theyll have to pay would have to go up by 10%. While all that was being
aired,peryourpresentationandperourownunderstandingofthelaw,thats
not true. Its not true that the evat law necessarily increased prices by 10%
uniformlyisntit?
ATTY.BANIQUED:No,YourHonor.

J.PANGANIBAN:Itisnot?
ATTY. BANIQUED : Its not, because, Your Honor, there is an Executive Order that granted the
Petroleumcompaniessomesubsidy...interrupted
J.PANGANIBAN:Thatscorrect...
ATTY.BANIQUED:...andthereforethatwasmeanttotempertheimpact...interrupted
J.PANGANIBAN:...mitigatingmeasures...
ATTY.BANIQUED:Yes,YourHonor.
J.PANGANIBAN:Asamatteroffactapartofthemitigatingmeasureswouldbetheeliminationof
theExciseTaxandtheimportduties.Thatiswhy,itisnotcorrecttosaythat
theVATastopetroleumdealersincreasedpricesby10%.
J.PANGANIBAN:Andtherefore,thereisnojustificationforincreasingtheretailpriceby10%to
covertheEVattax.Ifyouconsidertheexcisetaxandtheimportduties,the
NetTaxwouldprobablybeintheneighborhoodof7%?Wearenotgoinginto
exact figures I am just trying to deliver a point that different industries,
different products, different services are hit differently. So its not correct to
saythatallpricesmustgoupby10%.
ATTY.BANIQUED:Youreright,YourHonor.
J. PANGANIBAN : Now. For instance, Domestic Airline companies, Mr. Counsel, are at present
imposed a Sales Tax of 3%. When this EVat law took effect the Sales Tax
was also removed as a mitigating measure. So, therefore, there is no
justificationtoincreasethefaresby10%atbest7%,correct?
ATTY.BANIQUED:Iguessso,YourHonor,yes.
J. PANGANIBAN : There are other products that the people were complaining on that first day,
werebeingincreasedarbitrarilyby10%.Andthatsonereasonamongmany
others this Court had to issue TRO because of the confusion in the
implementation. Thats why we added as an issue in this case, even if its
tangentially taken up by the pleadings of the parties, the confusion in the
implementationoftheEvat.Ourpeopleweresubjectedtothemercyofthat
confusion of an across the board increase of 10%, which you yourself now
admitandIthinkeventheGovernmentwilladmitisincorrect.Insomecases,
it should be 3% only, in some cases it should be 6% depending on these
mitigating measures and the location and situation of each product, of each
service,ofeachcompany,isntit?
J. PANGANIBAN : Alright. So thats one reason why we had to issue a TRO pending the
clarificationofalltheseandwewishthegovernmentwilltaketimetoclarify
allthesebymeansofamoredetailedimplementingrules,incasethelawis
[6]
upheldbythisCourt....
TheCourtalsodirectedthepartiestofiletheirrespectiveMemoranda.
G.R.No.168056
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al., filed a
petitionforprohibitiononMay27,2005.TheyquestiontheconstitutionalityofSections4,5and6
of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the National Internal
RevenueCode(NIRC).Section4imposesa10%VATonsaleofgoodsandproperties,Section5
imposes a 10% VAT on importation of goods, and Section 6 imposes a 10% VAT on sale of
services and use or lease of properties. These questioned provisions contain a uniform proviso
authorizingthePresident,uponrecommendationoftheSecretaryofFinance,toraisetheVATrate
to12%,effectiveJanuary1,2006,afteranyofthefollowingconditionshavebeensatisfied,towit:
...ThatthePresident,upontherecommendationoftheSecretaryofFinance,shall,effective
January1,2006,raisetherateofvalueaddedtaxtotwelvepercent(12%),afteranyofthefollowing
conditionshasbeensatisfied:
(i) Valueadded tax collection as a percentage of Gross Domestic Product (GDP) of the
previousyearexceedstwoandfourfifthpercent(24/5%)or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one
andonehalfpercent(1%).
Petitionersarguethatthelawisunconstitutional,asitconstitutesabandonmentbyCongress
of its exclusive authority to fix the rate of taxes under Article VI, Section 28(2) of the 1987
PhilippineConstitution.
G.R.No.168207
OnJune9,2005,Sen.AquilinoQ.Pimentel,Jr.,etal.,filedapetitionforcertiorarilikewise
assailingtheconstitutionalityofSections4,5and6ofR.A.No.9337.
AsidefromquestioningthesocalledstandbyauthorityofthePresidenttoincreasetheVAT
rateto12%,onthegroundthatitamountstoanunduedelegationoflegislativepower,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,asitimposesanunfairandadditionaltaxburdenonthepeople,inthat:(1)the12%
increaseisambiguousbecauseitdoesnotstateiftheratewouldbereturnedtotheoriginal10%if
the conditions are no longer satisfied (2) the rate is unfair and unreasonable, as the people are
unsureoftheapplicableVATratefromyeartoyearand(3)theincreaseintheVATrate,whichis
supposedtobeanincentivetothePresidenttoraisetheVATcollectiontoatleast24/5oftheGDP
ofthepreviousyear,shouldonlybebasedonfiscaladequacy.
PetitionersfurtherclaimthattheinclusionofastandbyauthoritygrantedtothePresident
bytheBicameralConferenceCommitteeisaviolationofthenoamendmentruleuponlastreading
ofabilllaiddowninArticleVI,Section26(2)oftheConstitution.
G.R.No.168461
Thereafter, a petition for prohibition was filed on June 29, 2005, by the Association of
PilipinasShellDealers,Inc.,etal.,assailingthefollowingprovisionsofR.A.No.9337:
1)Section8,amendingSection110(A)(2)oftheNIRC,requiringthattheinputtaxondepreciable
goods shall be amortized over a 60month period, if the acquisition, excluding the VAT
components,exceedsOneMillionPesos(P1,000,000.00)
2)Section8,amendingSection110(B)oftheNIRC,imposinga70%limitontheamountofinput
taxtobecreditedagainsttheoutputtaxand
3) Section 12, amending Section 114 (c) of the NIRC, authorizing the Government or any of its
politicalsubdivisions,instrumentalitiesoragencies,includingGOCCs,todeducta5%final
withholding tax on gross payments of goods and services, which are subject to 10% VAT
underSections106(saleofgoodsandproperties)and108(saleofservicesanduseorlease
ofproperties)oftheNIRC.
Petitionerscontendthattheseprovisionsareunconstitutionalforbeingarbitrary,oppressive,
excessive,andconfiscatory.
Petitionersargumentispremisedontheconstitutionalrightofnondeprivationoflife,liberty
orpropertywithoutdueprocessoflawunderArticleIII,Section1oftheConstitution.According
to petitioners, the contested sections impose limitations on the amount of input tax that may be
claimed.Petitionersalsoarguethattheinputtaxpartakesthenatureofapropertythatmaynotbe
confiscated, appropriated, or limited without due process of law. Petitioners further contend that
likeanyotherpropertyorpropertyright,theinputtaxcreditmaybetransferredordisposedof,and
that by limiting the same, the government gets to tax a profit or valueadded even if there is no
profitorvalueadded.
Petitioners also believe that these provisions violate the constitutional guarantee of equal
protection of the law under Article III, Section 1 of the Constitution, as the limitation on the
creditable input tax if: (1) the entity has a high ratio of input tax or (2) invests in capital
equipmentor(3)hasseveraltransactionswiththegovernment,isnotbasedonrealandsubstantial
differencestomeetavalidclassification.
Lastly,petitionerscontendthatthe70%limitisanythingbutprogressive,violativeofArticle
VI,Section28(1)oftheConstitution,andthatitisthesmallerbusinesseswithhigherinputtaxto
outputtaxratiothatwillsuffertheconsequencesthereofforitwipesoutwhatevermeagermargins
thepetitionersmake.
G.R.No.168463
SeveralmembersoftheHouseofRepresentativesledbyRep.FrancisJosephG.Escudero
filedthispetitionforcertiorarionJune30,2005.TheyquestiontheconstitutionalityofR.A.No.
9337onthefollowinggrounds:
1) Sections 4, 5, and 6 of R.A. No. 9337 constitute an undue delegation of legislative power, in
violationofArticleVI,Section28(2)oftheConstitution
2) The Bicameral Conference Committee acted without jurisdiction in deleting the no pass on
provisionspresentinSenateBillNo.1950andHouseBillNo.3705and
3) Insertion by the Bicameral Conference Committee of Sections 27, 28, 34, 116, 117, 119, 121,
[7]
125, 148, 151, 236, 237 and 288, which were present in Senate Bill No. 1950, violates
ArticleVI,Section24(1)oftheConstitution,whichprovidesthatallappropriation,revenue
ortariffbillsshalloriginateexclusivelyintheHouseofRepresentatives
G.R.No.168730
On the eleventh hour, Governor Enrique T. Garcia filed a petition for certiorari and
prohibition on July 20, 2005, alleging unconstitutionality of the law on the ground that the
limitation on the creditable input tax in effect allows VATregistered establishments to retain a
portionofthetaxestheycollect,thusviolatingtheprinciplethattaxcollectionandrevenueshould
be solely allocated for public purposes and expenditures. Petitioner Garcia further claims that
allowing these establishments to pass on the tax to the consumers is inequitable, in violation of
ArticleVI,Section28(1)oftheConstitution.
RESPONDENTSCOMMENT
The Office of the Solicitor General (OSG) filed a Comment in behalf of respondents.
Preliminarily,respondentscontendthatR.A.No.9337enjoysthepresumptionofconstitutionality
andpetitionersfailedtocastdoubtonitsvalidity.
RelyingonthecaseofTolentinovs.SecretaryofFinance,235SCRA
630(1994),respondentsarguethattheproceduralissuesraisedbypetitioners,i.e.,legalityofthe
bicameral proceedings, exclusive origination of revenue measures and the power of the Senate
concomitant thereto, have already been settled. With regard to the issue of undue delegation of
legislative power to the President, respondents contend that the law is complete and leaves no
discretiontothePresidentbuttoincreasetherateto12%onceanyofthetwoconditionsprovided
thereinarise.
Respondentsalsorefutepetitionersargumentthattheincreaseto12%,aswellasthe70%
limitationonthecreditableinputtax,the60monthamortizationonthepurchaseorimportationof
capitalgoodsexceedingP1,000,000.00,andthe5%finalwithholdingtaxbygovernmentagencies,
is arbitrary, oppressive, and confiscatory, and that it violates the constitutional principle on
progressivetaxation,amongothers.
Finally, respondents manifest that R.A. No. 9337 is the anchor of the governments fiscal
reformagenda.Areforminthevalueaddedsystemoftaxationisthecorerevenuemeasurethat
will tilt the balance towards a sustainable macroeconomic environment necessary for economic
growth.
ISSUES
TheCourtdefinedtheissues,asfollows:
PROCEDURALISSUE
WhetherR.A.No.9337violatesthefollowingprovisionsoftheConstitution:
a.ArticleVI,Section24,and
b.ArticleVI,Section26(2)
SUBSTANTIVEISSUES
1.WhetherSections4,5and6ofR.A.No.9337,amendingSections106,107and108oftheNIRC,
violatethefollowingprovisionsoftheConstitution:
a.ArticleVI,Section28(1),and
2.WhetherSection8ofR.A.No.9337,amendingSections110(A)(2)and110(B)oftheNIRCand
Section 12 of R.A. No. 9337, amending Section 114(C) of the NIRC, violate the following
provisionsoftheConstitution:
b.ArticleIII,Section1

RULINGOFTHECOURT
Asaprelude,theCourtdeemsitapttorestatethegeneralprinciplesandconceptsofvalue
addedtax(VAT),astheconfusionandinevitably,litigation,breedsfromafallaciousnotionofits
nature.
TheVATisataxonspendingorconsumption.Itisleviedonthesale,barter,exchangeor
[8]
lease of goods or properties and services. Being an indirect tax on expenditure, the seller of
[9]
goodsorservicesmaypassontheamountoftaxpaidtothebuyer, withtheselleractingmerely
[10]
as a tax collector.
The burden of VAT is intended to fall on the immediate buyers and
ultimately,theendconsumers.
Incontrast,adirecttaxisataxforwhichataxpayerisdirectlyliableonthetransactionor
[11]
business it engages in, without transferring the burden to someone else.
Examples are
[12]
individualandcorporateincometaxes,transfertaxes,andresidencetaxes.
InthePhilippines,thevalueaddedsystemofsalestaxationhaslongbeeninexistence,albeit
in a different mode. Prior to 1978, the system was a singlestage tax computed under the cost
deduction method and was payable only by the original sellers. The singlestage system was
subsequently modified, and a mixture of the cost deduction method and tax credit method was
[13]
used to determine the valueadded tax payable.
Under the tax credit method, an entity can
credit against or subtract from the VAT charged on its sales or outputs the VAT paid on its
[14]
purchases,inputsandimports.
It was only in 1987, when President Corazon C. Aquino issued Executive Order No. 273,
thattheVATsystemwasrationalizedbyimposingamultistagetaxrateof0%or10%onallsales
[15]
usingthetaxcreditmethod.
[16]
E.O.No.273wasfollowedbyR.A.No.7716ortheExpandedVATLaw,
R.A.No.8241
[17]
[18]
ortheImprovedVATLaw,
R.A.No.8424ortheTaxReformActof1997,
andfinally,the
presentlybeleagueredR.A.No.9337,alsoreferredtobyrespondentsastheVATReformAct.
TheCourtwillnowdiscusstheissuesinlogicalsequence.
PROCEDURALISSUE
I.
WhetherR.A.No.9337violatesthefollowingprovisionsoftheConstitution:
a.ArticleVI,Section24,and
A.TheBicameralConferenceCommittee
Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral Conference
Committeeexceededitsauthorityby:
1)InsertingthestandbyauthorityinfavorofthePresidentinSections4,5,and6ofR.A.No.9337
2)DeletingentirelythenopassonprovisionsfoundinboththeHouseandSenatebills
3)Insertingtheprovisionimposinga70%limitontheamountofinputtaxtobecreditedagainstthe
outputtaxand
4)IncludingtheamendmentsintroducedonlybySenateBillNo.1950regardingotherkindsoftaxes
inadditiontothevalueaddedtax.
Petitioners now beseech the Court to define the powers of the Bicameral Conference
Committee.
Itshouldbeborneinmindthatthepowerofinternalregulationanddisciplineareintrinsicin
anylegislativebodyfor,asunerringlyelucidatedbyJusticeStory,[i]fthepowerdidnotexist,it
wouldbeutterlyimpracticabletotransactthebusinessofthenation,eitheratall,oratleast
[19]
withdecency,deliberation,andorder.
Thus, Article VI, Section 16 (3) of the Constitution
provides that each House may determine the rules of its proceedings. Pursuant to this inherent
constitutionalpowertopromulgateandimplementitsownrulesofprocedure,therespectiverules
ofeachhouseofCongressprovidedforthecreationofaBicameralConferenceCommittee.
Thus,RuleXIV,Sections88and89oftheRulesofHouseofRepresentativesprovidesas
follows:
Sec.88.ConferenceCommittee.IntheeventthattheHousedoesnotagreewiththeSenate
ontheamendmenttoanybillorjointresolution,thedifferencesmaybesettledbytheconference
committeesofbothchambers.
In resolving the differences with the Senate, the House panel shall, as much as possible,
adheretoandsupporttheHouseBill.IfthedifferenceswiththeSenatearesosubstantialthatthey
materially impair the House Bill, the panel shall report such fact to the House for the latters
appropriateaction.
Sec.89.ConferenceCommitteeReports....Eachreportshallcontainadetailed,sufficiently
explicitstatementofthechangesinoramendmentstothesubjectmeasure.
...
TheChairmanoftheHousepanelmaybeinterpellatedontheConferenceCommitteeReport
priortothevotingthereon.TheHouseshallvoteontheConferenceCommitteeReportinthesame
mannerandprocedureasitvotesonabillonthirdandfinalreading.
RuleXII,Section35oftheRulesoftheSenatestates:
Sec.35.IntheeventthattheSenatedoesnotagreewiththeHouseofRepresentativesonthe
provisionofanybillorjointresolution,thedifferencesshallbesettledbyaconferencecommitteeof
both Houses which shall meet within ten (10) days after their composition. The President shall
designate the members of the Senate Panel in the conference committee with the approval of the
Senate.

Each Conference Committee Report shall contain a detailed and sufficiently explicit
statement of the changes in, or amendments to the subject measure, and shall be signed by a
majorityofthemembersofeachHousepanel,votingseparately.
AcomparativepresentationoftheconflictingHouseandSenateprovisionsandareconciled
versionthereofwiththeexplanatorystatementoftheconferencecommitteeshallbeattachedtothe
report.
...
The creation of such conference committee was apparently in response to a problem, not
addressed by any constitutional provision, where the two houses of Congress find themselves in
disagreement over changes or amendments introduced by the other house in a legislative bill.
Giventhatoneofthemostbasicpowersofthelegislativebranchistoformulateandimplementits
ownrulesofproceedingsandtodisciplineitsmembers,maytheCourtthendelveintothedetails
of how Congress complies with its internal rules or how it conducts its business of passing
legislation? Note that in the present petitions, the issue is not whether provisions of the rules of
both houses creating the bicameral conference committee are unconstitutional, but whether the
bicameralconferencecommitteehasstrictlycompliedwiththerulesofbothhouses,thereby
remainingwithinthejurisdictionconferreduponitbyCongress.
[20]
In the recent case of Farias vs. The Executive Secretary,
the Court En Banc,
unanimouslyreiteratedandemphasizeditsadherencetotheenrolledbilldoctrine,thus,declining
therein petitioners plea for the Court to go behind the enrolled copy of the bill. Assailed in said
casewasCongressscreationoftwosetsofbicameralconferencecommittees,thelackofrecordsof
saidcommitteesproceedings,theallegedviolationofsaidcommitteesoftherulesofbothhouses,
andthedisappearanceordeletionofoneoftheprovisionsinthecompromisebillsubmittedbythe
bicameral conference committee. It was argued that such irregularities in the passage of the law
nullifiedR.A.No.9006,ortheFairElectionAct.
Strikingdownsuchargument,theCourtheldthus:

Under the enrolled bill doctrine, the signing of a bill by the Speaker of the House and the
Senate President and the certification of the Secretaries of both Houses of Congress that it was
passed are conclusive of its due enactment. A review of cases reveals the Courts consistent
adherencetotherule.TheCourtfindsnoreasontodeviatefromthesalutaryruleinthiscase
where the irregularities alleged by the petitioners mostly involved the internal rules of
Congress,e.g.,creationofthe2ndor3rdBicameralConferenceCommitteebytheHouse.This
CourtisnottheproperforumfortheenforcementoftheseinternalrulesofCongress,whether
House or Senate. Parliamentary rules are merely procedural and with their observance the
courtshavenoconcern.WhateverdoubtstheremaybeastotheformalvalidityofRep.Act
No.9006mustberesolvedinitsfavor.TheCourtreiteratesitsrulinginArroyo vs. De Venecia,
viz.:
Butthecases, both here and abroad, in varying forms of expression, all

denytothecourtsthepowertoinquireintoallegationsthat,inenactingalaw,a
HouseofCongressfailedtocomplywithitsownrules,intheabsenceofshowing
that there was a violation of a constitutional provision or the rights of private
individuals.InOsmeav.Pendatun,itwasheld:Atanyrate,courtshavedeclaredthat
the rules adopted by deliberative bodies are subject to revocation, modification or
waiver at the pleasure of the body adopting them. And it has been said that
Parliamentary rules are merely procedural, and with their observance, the
courts have no concern. They may be waived or disregarded by the legislative
body. Consequently, mere failure to conform to parliamentary usage will not
invalidatetheaction(takenbyadeliberativebody)whentherequisitenumber
[21]
ofmembershaveagreedtoaparticularmeasure.
(Emphasissupplied)
Theforegoingdeclarationisexactlyinpointwiththepresentcases,wherepetitionersallege
irregularities committed by the conference committee in introducing changes or deleting
[22]
provisions in the House and Senate bills. Akin to the Farias case,
the present petitions also
raise an issue regarding the actions taken by the conference committee on matters regarding
Congress compliance with its own internal rules. As stated earlier, one of the most basic and
inherent power of the legislature is the power to formulate rules for its proceedings and the
discipline of its members. Congress is the best judge of how it should conduct its own business
expeditiouslyandinthemostorderlymanner.Itisalsothesole
concern of Congress to instill discipline among the members of its conference committee if it
believesthatsaidmembersviolatedanyofitsrulesofproceedings.Eventheexpandedjurisdiction
ofthisCourtcannotapplytoquestionsregardingonlytheinternaloperationofCongress,thus,the
Courtiswonttodenyareviewoftheinternalproceedingsofacoequalbranchofgovernment.
Moreover, as far back as 1994 or more than ten years ago, in the case of Tolentino vs.
[23]
SecretaryofFinance,
theCourtalreadymadethepronouncementthat[i]fachangeisdesired
inthepractice[oftheBicameralConferenceCommittee]itmustbesoughtinCongresssince
this question is not covered by any constitutional provision but is only an internal rule of
each house.
[24]
To date, Congress has not seen it fit to make such changes adverted to by the
Court.Itseems,therefore,thatCongressfindsthepracticesofthebicameralconferencecommittee
tobeveryusefulforpurposesofpromptandefficientlegislativeaction.
Nevertheless,justtoputmindsateasethatnoblatantirregularitiestaintedtheproceedings
ofthebicameralconferencecommittees,theCourtdeemsitnecessarytodwellontheissue.The
Courtobservesthattherewasanecessityforaconferencecommitteebecauseacomparisonofthe
provisionsofHouseBillNos.3555and3705ononehand,andSenateBillNo.1950ontheother,
revealsthattherewereindeeddisagreements.Aspointedoutinthepetitions,saiddisagreements
wereasfollows:
HouseBillNo.3555
HouseBillNo.3705
SenateBillNo.1950
WithregardtoStandByAuthorityinfavorofPresident
Providesfor12%VATonevery
sale of goods or properties
(amending Sec. 106 of NIRC)
12% VAT on importation of
goods (amending Sec. 107 of
NIRC) and 12% VAT on sale
of services and use or lease of
properties (amending Sec. 108
ofNIRC)
Providesfor12%VATingeneralon Providesforasinglerateof10%
sales of goods or properties and
VAT on sale of goods or
reduced rates for sale of certain
properties(amendingSec.106of
locally manufactured goods and
NIRC), 10% VAT on sale of
petroleum products and raw
services including sale of
materials to be used in the
electricity
by
generation
manufacture thereof (amending Sec.
companies, transmission and
106 of NIRC) 12% VAT on
distribution companies, and use
importation of goods and reduced
or lease of properties (amending
rates for certain imported products
Sec.108ofNIRC)
including
petroleum
products
(amending Sec. 107 of NIRC) and
12%VATonsaleofservicesanduse
or lease of properties and a reduced
rate for certain services including
power generation (amending Sec.
108ofNIRC)
Withregardtothenopassonprovision
Nosimilarprovision
Provides that the VAT imposed on Provides that the VAT imposed
powergenerationandonthesaleof
on sales of electricity by
petroleum products shall be
generation companies
and
absorbed by generation companies
services
of
transmission
orsellers,respectively,andshallnot
companies and distribution
bepassedontoconsumers
companies, as well as those of
franchise grantees of electric
utilities shall not apply to
residential
endusers.VATshallbeabsorbed
by generation, transmission, and
distributioncompanies.
Withregardto70%limitoninputtaxcredit
Provides that the input tax

credit for capital goods on
which a VAT has been paid
shallbeequallydistributedover
5yearsorthedepreciablelifeof
suchcapitalgoodstheinputtax
credit for goods and services
other than capital goods shall
not exceed 5% of the total
amount of such goods and
services and for persons
engaged in retail trading of
goods, the allowable input tax
credit shall not exceed 11% of
the total amount of goods
purchased.
Nosimilarprovision
Providesthattheinputtaxcredit
forcapitalgoodsonwhichaVAT
has been paid shall be equally
distributed over 5 years or the
depreciable life of such capital
goods the input tax credit for
goods and services other than
capital goods shall not exceed
90%oftheoutputVAT.
WithregardtoamendmentstobemadetoNIRCprovisionsregardingincomeandexcisetaxes
Nosimilarprovision
Nosimilarprovision
Provided for amendments to

several
NIRC
provisions
regarding corporate income,
percentage, franchise and excise
taxes
ThedisagreementsbetweentheprovisionsintheHousebillsandtheSenatebillwerewith
regardto(1)whatrateofVATistobeimposed(2)whetheronlytheVATimposedonelectricity
generation, transmission and distribution companies should not be passed on to consumers, as
proposedintheSenatebill,orboththeVATimposedonelectricitygeneration,transmissionand
distributioncompaniesandtheVATimposedonsaleofpetroleumproductsshouldnotbepassed
on to consumers, as proposed in the House bill (3) in what manner input tax credits should be
limited(4)andwhethertheNIRCprovisionsoncorporateincometaxes,percentage,franchiseand
excisetaxesshouldbeamended.
Therebeingdifferencesand/ordisagreementsontheforegoingprovisionsoftheHouseand
Senate bills, the Bicameral Conference Committee was mandated by the rules of both houses of
Congress to act on the same by settling said differences and/or disagreements. The Bicameral
ConferenceCommitteeactedonthedisagreeingprovisionsbymakingthefollowingchanges:
1.WithregardtothedisagreementontherateofVATtobeimposed,itwouldappearfrom
the Conference Committee Report that the Bicameral Conference Committee tried to bridge the
gapinthedifferencebetweenthe10%VATrateproposedbytheSenate,andthevariousrateswith
12% as the highest VAT rate proposed by the House, by striking a compromise whereby the
present 10% VAT rate would be retained until certain conditions arise, i.e., the valueadded tax
collectionasapercentageofgrossdomesticproduct(GDP)ofthepreviousyearexceeds24/5%,
orNationalGovernmentdeficitasapercentageofGDPofthepreviousyearexceeds1%,whenthe
President, upon recommendation of the Secretary of Finance shall raise the rate of VAT to 12%
effectiveJanuary1,2006.
2. With regard to the disagreement on whether only the VAT imposed on electricity
generation, transmission and distribution companies should not be passed on to consumers or
whetherboththeVATimposedonelectricitygeneration,transmissionanddistributioncompanies
andtheVATimposedonsaleofpetroleumproductsmaybepassedontoconsumers,theBicameral
Conference Committee chose to settle such disagreement by altogether deleting from its Report
anynopassonprovision.
3.Withregardtothedisagreementonwhetherinputtaxcreditsshouldbelimitedornot,the
Bicameral Conference Committee decided to adopt the position of the House by putting a
limitation on the amount of input tax that may be credited against the output tax, although it
crafteditsownlanguageastotheamountofthelimitationoninputtaxcreditsandthemannerof
computingthesamebyprovidingthus:
(A)CreditableInputTax....
...
Provided,Theinputtaxongoodspurchasedorimportedinacalendarmonthforuse
intradeorbusinessforwhichdeductionfordepreciationisallowedunderthisCode,
shall be spread evenly over the month of acquisition and the fiftynine (59)
succeeding months if the aggregate acquisition cost for such goods, excluding the
VAT component thereof, exceeds one million Pesos (P1,000,000.00): PROVIDED,
however,thatiftheestimatedusefullifeofthecapitalgoodislessthanfive(5)years,
as used for depreciation purposes, then the input VAT shall be spread over such
shorterperiod:...
(B)Excess Output or Input Tax. If at the end of any taxable quarter the output tax
exceeds the input tax, the excess shall be paid by the VATregistered person. If the
input tax exceeds the output tax, the excess shall be carried over to the succeeding
quarterorquarters:PROVIDEDthattheinputtaxinclusiveofinputVATcarriedover
from the previous quarter that may be credited in every quarter shall not exceed
seventy percent (70%) of the output VAT: PROVIDED, HOWEVER, THAT any
inputtaxattributabletozeroratedsalesbyaVATregisteredpersonmayathisoption
berefundedorcreditedagainstotherinternalrevenuetaxes,...
4.WithregardtotheamendmentstootherprovisionsoftheNIRConcorporateincometax,
franchise, percentage and excise taxes, the conference committee decided to include such
amendments and basically adopted the provisions found in Senate Bill No. 1950, with some
changesastotherateofthetaxtobeimposed.
UndertheprovisionsofboththeRulesoftheHouseofRepresentativesandSenateRules,
theBicameralConferenceCommitteeismandatedtosettlethedifferencesbetweenthedisagreeing
provisions in the House bill and the Senate bill. The term settle is synonymous to reconcile and
[25]
harmonize.
To reconcile or harmonize disagreeing provisions, the Bicameral Conference
Committeemaythen(a)adoptthespecificprovisionsofeithertheHousebillorSenatebill,(b)
decidethatneitherprovisionsintheHousebillortheprovisionsintheSenatebillwould
be carried into the final form of the bill, and/or (c) try to arrive at a compromise between the
disagreeingprovisions.
In the present case, the changes introduced by the Bicameral Conference Committee on
disagreeingprovisionsweremeantonlytoreconcileandharmonizethedisagreeingprovisionsfor
it did not inject any idea or intent that is wholly foreign to the subject embraced by the original
provisions.
The socalled standby authority in favor of the President, whereby the rate of 10% VAT
wantedbytheSenateisretaineduntilsuchtimethatcertainconditionsarisewhenthe12%VAT
wantedbytheHouseshallbeimposed,appearstobeacompromisetotrytobridgethedifference
intherateofVATproposedbythetwohousesofCongress.Nevertheless,suchcompromiseisstill
totallywithinthesubjectofwhatrateofVATshouldbeimposedontaxpayers.
Thenopassonprovisionwasdeletedaltogether.Inthetranscriptsoftheproceedingsofthe
Bicameral Conference Committee held on May 10, 2005, Sen. Ralph Recto, Chairman of the
SenatePanel,explainedthereasonfordeletingthenopassonprovisioninthiswise:
...thethinkingwasjusttokeeptheVATlawortheVATbillsimple.Andwewerethinking
thatnosectorshouldbeabeneficiaryoflegislativegrace,neithershouldanysectorbediscriminated
on. The VAT is an indirect tax. It is a pass ontax. And lets keep it plain and simple. Lets not
confusethebillandputanopassonprovision.TwothirdsoftheworldhaveaVATsystemandin
this twothirds of the globe, I have yet to see a VAT with a no passthough provision. So, the
[26]
thinkingoftheSenateisbasicallysimple,letskeeptheVATsimple.
(Emphasissupplied)
Rep. Teodoro Locsin further made the manifestation that the no passon provision never
[27]
reallyenjoyedthesupportofeitherHouse.
With regard to the amount of input tax to be credited against output tax, the Bicameral
ConferenceCommitteecametoacompromiseonthepercentagerateofthelimitationorcapon
such input tax credit, but again, the change introduced by the Bicameral Conference Committee
wastotallywithintheintentofbothhousestoputacaponinputtaxthatmaybe
credited against the output tax. From the inception of the subject revenue bill in the House of
Representatives,oneofthemajorobjectiveswastoplugaglaringloopholeinthetaxpolicyand
administrationbycreatingvitalrestrictionsontheclaimingofinputVATtaxcredits...and[b]y
introducing limitations on the claiming of tax credit, we are capping a major leakage that has
[28]
placedourcollectioneffortsatanapparentdisadvantage.
AstotheamendmentstoNIRCprovisionsontaxesotherthanthevalueaddedtaxproposed
in Senate Bill No. 1950, since said provisions were among those referred to it, the conference
committeehadtoactonthesameanditbasicallyadoptedtheversionoftheSenate.
Thus,allthechangesormodificationsmadebytheBicameralConferenceCommitteewere
germanetosubjectsoftheprovisionsreferred
toitforreconciliation.Suchbeingthecase,theCourtdoesnotseeanygraveabuseofdiscretion
amountingtolackorexcessofjurisdictioncommittedbytheBicameralConferenceCommittee.In
[29]
the earlier cases of Philippine Judges Association vs. Prado
and Tolentino vs. Secretary of
[30]
Finance,
theCourtrecognizedthelongstandinglegislativepracticeofgivingsaidconference
committeeamplelatitudeforcompromisingdifferencesbetweentheSenateandtheHouse.Thus,
intheTolentinocase,itwasheldthat:
...itiswithinthepowerofaconferencecommitteetoincludeinitsreportanentirelynew
provisionthatisnotfoundeitherintheHousebillorintheSenatebill.Ifthecommitteecanpropose
anamendmentconsistingofoneortwoprovisions,thereisnoreasonwhyitcannotproposeseveral
provisions, collectively considered as an amendment in the nature of a substitute, so long as such
amendmentisgermanetothesubjectofthebillsbeforethecommittee.Afterall,itsreportwasnot
finalbutneededtheapprovalofbothhousesofCongresstobecomevalidasanactofthelegislative
department.ThechargethatinthiscasetheConferenceCommitteeactedasathirdlegislative
[31]
chamberisthuswithoutanybasis.
(Emphasissupplied)
B. R.A. No. 9337 Does Not Violate Article VI, Section 26(2) of the
ConstitutionontheNoAmendmentRule
ArticleVI,Sec.26(2)oftheConstitution,states:
No bill passed by either House shall become a law unless it has passed three readings on
separatedays,andprintedcopiesthereofinitsfinalformhavebeendistributedtoitsMembersthree
days before its passage, except when the President certifies to the necessity of its immediate
enactmenttomeetapubliccalamityoremergency.Uponthelastreadingofabill,noamendment
theretoshallbeallowed,andthevotethereonshallbetakenimmediatelythereafter,andtheyeasand
naysenteredintheJournal.
Petitionersargumentthatthepracticewhereabicameralconferencecommitteeisallowedto
addordeleteprovisionsintheHousebillandtheSenatebillafterthesehadpassedthreereadings
is in effect a circumvention of the no amendment rule (Sec. 26 (2), Art. VI of the 1987
Constitution),failstoconvincetheCourttodeviatefromitsrulingintheTolentinocasethat:
NoristhereanyreasonforrequiringthattheCommitteesReportinthesecasesmusthave
undergonethreereadingsineachofthetwohouses.Ifthatbethecase,therewouldbenoendto
negotiationsinceeachhousemayseekmodificationofthecompromisebill....
Art.VI.26(2)must,therefore,beconstruedasreferringonlytobillsintroducedforthe
[32]
firsttimeineitherhouseofCongress,nottotheconferencecommitteereport.
(Emphasis
supplied)
TheCourtreiteratesherethatthenoamendmentrulerefersonlytotheproceduretobe
followed by each house of Congress with regard to bills initiated in each of said respective
houses,beforesaidbillistransmittedtotheotherhouseforitsconcurrenceoramendment.
Verily,toconstruesaidprovisioninawayastoproscribeanyfurtherchangestoabillafterone
househasvotedonitwouldleadtoabsurdityasthiswouldmeanthattheotherhouseofCongress
wouldbedeprivedofitsconstitutionalpowertoamendorintroducechangestosaidbill.Thus,Art.
VI,Sec.26(2)oftheConstitutioncannotbetakentomeanthattheintroductionbytheBicameral
Conference Committee of amendments and modifications to disagreeing provisions in bills that
havebeenacteduponbybothhousesofCongressisprohibited.

C. R.A. No. 9337 Does Not Violate Article VI, Section 24 of the
ConstitutiononExclusiveOriginationofRevenueBills
ComingtotheissueofthevalidityoftheamendmentsmaderegardingtheNIRCprovisions
on corporate income taxes and percentage, excise taxes. Petitioners refer to the following
provisions,towit:
Section27
RatesofIncomeTaxonDomesticCorporation
28(A)(1)
TaxonResidentForeignCorporation
28(B)(1)
IntercorporateDividends
34(B)(1)
IntercorporateDividends
116
TaxonPersonsExemptfromVAT
117
PercentageTaxondomesticcarriersandkeepersofGarage
119
Taxonfranchises
121
TaxonbanksandNonBankFinancialIntermediaries
148
ExciseTaxonmanufacturedoilsandotherfuels
151
ExciseTaxonmineralproducts
236
Registrationrequirements
237
Issuanceofreceiptsorsalesorcommercialinvoices
288
DispositionofIncrementalRevenue
Petitioners claim that the amendments to these provisions of the NIRC did not at all
originate from the House. They aver that House Bill No. 3555 proposed amendments only
regardingSections106,107,108,110and114oftheNIRC,whileHouseBillNo.3705proposed
amendmentsonlytoSections106,107,108,109,110and111oftheNIRCthus,theothersections
oftheNIRCwhichtheSenateamendedbutwhichamendmentswerenotfoundintheHousebills
arenotintendedtobeamendedbytheHouseofRepresentatives.Hence,theyarguethatsincethe
proposed amendments did not originate from the House, such amendments are a violation of
ArticleVI,Section24oftheConstitution.
Theargumentdoesnotholdwater.
ArticleVI,Section24oftheConstitutionreads:
Sec. 24. 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
RepresentativesbuttheSenatemayproposeorconcurwithamendments.
Inthepresentcases,petitionersadmitthatitwasindeedHouseBillNos.3555and3705that
initiatedthemoveforamendingprovisionsoftheNIRCdealingmainlywiththevalueaddedtax.
UpontransmittalofsaidHousebillstotheSenate,theSenatecameoutwithSenateBillNo.1950
proposingamendmentsnotonlytoNIRCprovisionsonthevalueaddedtaxbutalsoamendments
to NIRC provisions on other kinds of taxes. Is the introduction by the Senate of provisions not
dealing directly with the value added tax, which is the only kind of tax being amended in the
House bills, still within the purview of the constitutional provision authorizing the Senate to
proposeorconcurwithamendmentstoarevenuebillthatoriginatedfromtheHouse?
TheforegoingquestionhadbeensquarelyansweredintheTolentinocase,whereintheCourt
held,thus:
...Tobeginwith,itisnotthelawbuttherevenuebillwhichisrequiredbytheConstitution
tooriginateexclusivelyintheHouseofRepresentatives.Itisimportanttoemphasizethis,becausea
billoriginatingintheHousemayundergosuchextensivechangesintheSenatethattheresultmay
be a rewriting of the whole. . . . At this point, what is important to note is that, as a result of the
Senateaction,adistinctbillmaybeproduced.Toinsistthatarevenuestatuteandnotonlythe
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 Senates power not only to
concurwithamendmentsbutalsotoproposeamendments.Itwouldbetoviolatethecoequalityof
legislativepowerofthetwohousesofCongressandinfactmaketheHousesuperiortotheSenate.
Given,then,thepoweroftheSenatetoproposeamendments,theSenatecanpropose
itsownversionevenwithrespecttobillswhicharerequiredbytheConstitutiontooriginatein
theHouse.
...
Indeed,whattheConstitutionsimplymeansisthattheinitiativeforfilingrevenue,tariffor
taxbills,billsauthorizinganincreaseofthepublicdebt,privatebillsandbillsoflocalapplication
must come from the House of Representatives on the theory that, elected as they are from the
districts,themembersoftheHousecanbeexpectedtobemoresensitivetothelocalneedsand
problems.Ontheotherhand,thesenators,whoareelectedatlarge,areexpectedtoapproach
thesameproblemsfromthenationalperspective.Bothviewsaretherebymadetobearonthe
[33]
enactmentofsuchlaws.
(Emphasissupplied)
Since there is no question that the revenue bill exclusively originated in the House of
Representatives,theSenatewasactingwithinits
constitutional power to introduce amendments to the House bill when it included provisions in
Senate Bill No. 1950 amending corporate income taxes, percentage, excise and franchise taxes.
Verily,ArticleVI,Section24oftheConstitutiondoesnotcontainanyprohibitionorlimitationon
theextentoftheamendmentsthatmaybeintroducedbytheSenatetotheHouserevenuebill.
Furthermore,theamendmentsintroducedbytheSenatetotheNIRCprovisionsthathadnot
beentouchedintheHousebillsarestillinfurtheranceoftheintentoftheHouseininitiatingthe
subject revenue bills. The Explanatory Note of House Bill No. 1468, the very first House bill
introducedonthefloor,whichwaslatersubstitutedbyHouseBillNo.3555,stated:
Oneofthechallengesfacedbythepresentadministrationistheurgentanddauntingtaskof
solving the countrys serious financial problems. To do this, government expenditures must be
strictlymonitoredandcontrolledandrevenuesmustbesignificantlyincreased.Thismaybeeasier
saidthandone,butourfiscalauthoritiesarestilloptimisticthegovernmentwillbeoperatingona
balancedbudgetbytheyear2009.Infact,severalmeasuresthatwillresulttosignificantexpenditure
savings have been identified by the administration. It is supported with a credible package of
revenue measures that include measures to improve tax administration and control the
leakagesinrevenuesfromincometaxesandthevalueaddedtax(VAT).(Emphasissupplied)
Rep.EricD.Singson,inhissponsorshipspeechforHouseBillNo.3555,declaredthat:
In the budget message of our President in the year 2005, she reiterated that we all
acknowledgedthatontopofouragendamustbetherestorationofthehealthofourfiscalsystem.
Inordertoconsiderablylowertheconsolidatedpublicsectordeficitandeventuallyachievea
balancedbudgetbytheyear2009,weneedtoseizewindowsofopportunitieswhichmightseem
poignant in the beginning, but in the long run prove effective and beneficial to the overall
statusofoureconomy.Onesuchopportunityisareviewofexistingtaxrates,evaluatingthe
[34]
relevancegivenourpresentconditions.
(Emphasissupplied)
Notably therefore, the main purpose of the bills emanating from the House of
Representativesistobringinsizeablerevenuesforthegovernment
tosupplementourcountrysseriousfinancialproblems,andimprovetaxadministrationandcontrol
oftheleakagesinrevenuesfromincometaxesandvalueaddedtaxes.Asthesehousebillswere
transmitted to the Senate, the latter, approaching the measures from the point of national
perspective,canintroduceamendmentswithinthepurposesofthosebills.Itcanprovideforways
thatwouldsoftentheimpactoftheVATmeasureontheconsumer,i.e.,bydistributingtheburden
acrossallsectorsinsteadofputtingitentirelyontheshouldersoftheconsumers.Thesponsorship
speechofSen.RalphRectoonwhytheprovisionsonincometaxoncorporationwereincludedis
worthquoting:
Allinall,theproposaloftheSenateCommitteeonWaysandMeanswillraiseP64.3billion
in additional revenues annually even while by mitigating prices of power, services and petroleum
products.
However,notallofthiswillbewrungoutofVAT.Infact,onlyP48.7billionamountisfrom
the VAT on twelve goods and services. The rest of the tab P10.5 billion will be picked by
corporations.
What we therefore prescribe is a burden sharing between corporate Philippines and the
consumer.Whyshouldthelatterbearallthepain?Whyshouldthefiscalsalvationbeonlyonthe
burdenoftheconsumer?
Thecorporateworldsequityisinformoftheincreaseinthecorporateincometaxfrom32to
35percent,butupto2008only.ThiswillraiseP10.5 billion a year. After that, the rate will slide
back,nottoitsoldrateof32percent,buttwonotcheslower,to30percent.
Clearly, we are telling those with the capacity to pay, corporations, to bear with this
emergency provision that will be in effect for 1,200 days, while we put our fiscal house in order.
Thisfiscalmedicinewillhaveanexpirydate.
Fortheirassistance,arewardoftaxreductionawaitsthem.Weintendtokeepthelengthof
theirsacrificebrief.Wewouldliketoassurethemthatnotbecausethereisalightattheendofthe
tunnel,thisgovernmentwillkeeponmakingthetunnellong.
Theresponsibilitywillnotrestsolelyonthewearyshouldersofthesmallman.Bigbusiness
[35]
willbetheretosharetheburden.
As the Court has said, the Senate can propose amendments and in fact, the amendments
madeonprovisionsinthetaxonincomeofcorporationsaregermanetothepurposeofthehouse
billswhichistoraiserevenuesforthegovernment.
Likewise, the Court finds the sections referring to other percentage and excise taxes
germanetothereformstotheVATsystem,asthesesectionswouldcushiontheeffectsofVATon
consumers.Consideringthatcertaingoodsandserviceswhichweresubjecttopercentagetaxand
excisetaxwouldnolongerbeVATexempt,theconsumerwouldbeburdenedmoreastheywould
be paying the VAT in addition to these taxes. Thus, there is a need to amend these sections to
softentheimpactofVAT.Again,inhissponsorshipspeech,Sen.Rectosaid:
However,forpowerplantsthatrunonoil,wewillreducetozerothepresentexcisetaxon
bunkerfuel,tolessentheeffectofaVATonthisproduct.
ForelectricutilitieslikeMeralco,wewillwipeoutthefranchisetaxinexchangeforaVAT.
And in the case of petroleum, while we will levy the VAT on oil products, so as not to
destroy the VAT chain, we will however bring down the excise tax on socially sensitive products
suchasdiesel,bunker,fuelandkerosene.
...
What do all these exercises point to? These are not contortions of giving to the left hand
what was taken from the right. Rather, these sprang from our concern of softening the impact of
VAT,sothatthepeoplecancushiontheblowofhigherpricestheywillhavetopayasaresultof
[36]
VAT.
TheothersectionsamendedbytheSenatepertainedtomattersoftaxadministrationwhich
arenecessaryfortheimplementationofthechangesintheVATsystem.
To reiterate, the sections introduced by the Senate are germane to the subject matter and
purposesofthehousebills,whichistosupplementourcountrysfiscaldeficit,amongothers.Thus,
theSenateactedwithinitspowertoproposethoseamendments.
SUBSTANTIVEISSUES
I.
WhetherSections4,5and6ofR.A.No.9337,amendingSections106,107and108oftheNIRC,
violatethefollowingprovisionsoftheConstitution:

A.NoUndueDelegationofLegislativePower
Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and Escudero, et al.
contendincommonthatSections4,5and6ofR.A.No.9337,amendingSections106,107and
108, respectively, of the NIRC giving the President the standby authority to raise the VAT rate
from10%to12%whenacertainconditionismet,constitutesunduedelegationofthelegislative
powertotax.
Theassailedprovisionsreadasfollows:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended to read as
follows:
SEC.106.ValueAddedTaxonSaleofGoodsorProperties.
(A)RateandBaseofTax.Thereshallbelevied,assessedandcollectedoneverysale,
barterorexchangeofgoodsorproperties,avalueaddedtaxequivalenttotenpercent
(10%)ofthegrosssellingpriceorgrossvalueinmoneyofthegoodsorproperties
sold,barteredorexchanged,suchtaxtobepaidbythesellerortransferor:provided,
thatthePresident,upontherecommendationoftheSecretaryofFinance,shall,
effective January 1, 2006, raise the rate of valueadded tax to twelve percent
(12%),afteranyofthefollowingconditionshasbeensatisfied.
(i) valueaddedtaxcollectionasapercentageofGrossDomesticProduct
(GDP) of the previous year exceeds two and fourfifth percent (2 4/5%)
or
(ii) national government deficit as a percentage of GDP of the previous year

exceedsoneandonehalfpercent(1%).
SEC. 5. Section 107 of the same Code, as amended, is hereby further amended to read as
follows:
SEC.107.ValueAddedTaxonImportationofGoods.
(A)InGeneral.Thereshallbelevied,assessedandcollectedoneveryimportationof
goodsavalueaddedtaxequivalenttotenpercent(10%)basedonthetotalvalueused
by the Bureau of Customs in determining tariff and customs duties, plus customs
duties, excise taxes, if any, and other charges, such tax to be paid by the importer
prior to the release of such goods from customs custody: Provided, That where the
customsdutiesaredeterminedonthebasisofthequantityorvolumeofthegoods,
the valueadded tax shall be based on the landed cost plus excise taxes, if any:
provided,further,thatthePresident,upontherecommendationoftheSecretary
ofFinance,shall,effectiveJanuary1,2006,raisetherateofvalueaddedtaxto
twelvepercent(12%)afteranyofthefollowingconditionshasbeensatisfied.
(i)valueaddedtaxcollectionasapercentageofGrossDomesticProduct(GDP)
ofthepreviousyearexceedstwoandfourfifthpercent(24/5%)or
SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read as
follows:
SEC.108.ValueaddedTaxonSaleofServicesandUseorLeaseofProperties
(A) Rate and Base of Tax. There shall be levied, assessed and collected, a value
addedtaxequivalenttotenpercent(10%)ofgrossreceiptsderivedfromthesaleor
exchangeofservices:provided,thatthePresident,upontherecommendationof
theSecretaryofFinance,shall,effectiveJanuary1,2006,raisetherateofvalue
added tax to twelve percent (12%), after any of the following conditions has
beensatisfied.
(i)valueaddedtaxcollectionasapercentageofGrossDomesticProduct(GDP)
ofthepreviousyearexceedstwoandfourfifthpercent(24/5%)or
exceedsoneandonehalfpercent(1%).(Emphasissupplied)
PetitionersallegethatthegrantofthestandbyauthoritytothePresidenttoincreasetheVAT
rateisavirtualabdicationbyCongressofitsexclusivepowertotaxbecausesuchdelegationisnot
withinthepurviewofSection28(2),ArticleVIoftheConstitution,whichprovides:
The Congress may, by law, authorize the President to fix within specified limits, and may
impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or
impostswithintheframeworkofthenationaldevelopmentprogramofthegovernment.
They argue that the VAT is a tax levied on the sale, barter or exchange of goods and
properties as well as on the sale or exchange of services, which cannot be included within the
purview of tariffs under the exempted delegation as the latter refers to customs duties, tolls or
tribute payable upon merchandise to the government and usually imposed on goods or
merchandiseimportedorexported.
Petitioners ABAKADA GURO Party List, et al., further contend that delegating to the
Presidentthelegislativepowertotaxiscontrarytorepublicanism.Theyinsistthataccountability,
responsibilityandtransparencyshoulddictatetheactionsofCongressandtheyshouldnotpassto
thePresidentthedecisiontoimposetaxes.Theyalsoarguethatthelawalsoeffectivelynullified
thePresidentspowerofcontrol,whichincludestheauthoritytosetasideandnullifytheactsofher
subordinatesliketheSecretaryofFinance,bymandatingthefixingofthetaxratebythePresident
upontherecommendationoftheSecretaryofFinance.
PetitionersPimentel,etal.averthatthePresidenthasamplepowerstocause,influenceor
createtheconditionsprovidedbythelawtobringabouteitherorboththeconditionsprecedent.
Ontheotherhand,petitionersEscudero, et al. find bizarre and revolting the situation that

the imposition of the 12% rate would be subject to the whim of the Secretary of Finance, an
unelectedbureaucrat,contrarytotheprincipleofnotaxationwithoutrepresentation.Theysubmit
thattheSecretaryofFinanceisnotmandatedtogiveafavorablerecommendationandhemaynot
evengivehisrecommendation.Moreover,theyallegethatnoguidingstandardsareprovidedinthe
lawonwhatbasisandastohowhewillmakehisrecommendation.Theyclaim,nonetheless,that
anyrecommendationoftheSecretaryofFinancecaneasilybebrushedasidebythePresidentsince
the former is a mere alter ego of the latter, such that, ultimately, it is the President who decides
whethertoimposetheincreasedtaxrateornot.
Abriefdiscourseontheprincipleofnondelegationofpowersisinstructive.
The principle of separation of powers ordains that each of the three great branches of
government has exclusive cognizance of and is supreme in matters falling within its own
[37]
constitutionallyallocatedsphere.
Alogical
corollarytothedoctrineofseparationofpowersistheprincipleofnondelegationofpowers,as
expressedintheLatinmaxim:potestasdelegatanondelegaripotestwhichmeanswhathasbeen
[38]
delegated, cannot be delegated.
This doctrine is based on the ethical principle that such as
delegatedpowerconstitutesnotonlyarightbutadutytobeperformedbythedelegatethroughthe
[39]
instrumentalityofhisownjudgmentandnotthroughtheinterveningmindofanother.
WithrespecttotheLegislature,Section1ofArticleVIoftheConstitutionprovidesthatthe
LegislativepowershallbevestedintheCongressofthePhilippineswhichshallconsistofaSenate
and a House of Representatives. The powers which Congress is prohibited from delegating are
thosewhicharestrictly,orinherentlyandexclusively,legislative.Purelylegislativepower,which
canneverbedelegated,hasbeendescribedastheauthoritytomakeacompletelawcompleteas
tothetimewhenitshalltakeeffectandastowhomitshallbeapplicableandtodetermine
[40]
theexpediencyofitsenactment.
Thus,theruleisthatinorderthatacourtmaybejustifiedin
holding a statute unconstitutional as a delegation of legislative power, it must appear that the
powerinvolvedispurelylegislativeinnaturethatis,oneappertainingexclusivelytothelegislative
department. It is the nature of the power, and not the liability of its use or the manner of its
exercise,whichdeterminesthevalidityofitsdelegation.
Nonetheless, the general rule barring delegation of legislative powers is subject to the
followingrecognizedlimitationsorexceptions:
(1) Delegation of tariff powers to the President under Section 28 (2) of Article VI of the
Constitution
(2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of the
Constitution
(3)Delegationtothepeopleatlarge
(4)Delegationtolocalgovernmentsand
(5)Delegationtoadministrativebodies.
Ineverycaseofpermissibledelegation,theremustbeashowingthatthedelegationitselfis
valid. It is valid only if the law (a) is complete in itself, setting forth therein the policy to be
[41]
executed, carried out, or implemented by the delegate
and (b) fixes a standard the limits of
which are sufficiently determinate and determinable to which the delegate must conform in the
[42]
performance of his functions.
A sufficient standard is one which defines legislative policy,
marksitslimits,mapsoutitsboundariesandspecifiesthepublicagencytoapplyit.Itindicatesthe
[43]
circumstancesunderwhichthelegislativecommandistobeeffected.
Bothtestsareintended
topreventatotaltransferenceoflegislativeauthoritytothedelegate,whoisnotallowedtostep
[44]
intotheshoesofthelegislatureandexerciseapoweressentiallylegislative.
[45]
InPeoplevs.Vera,
theCourt,througheminentJusticeJoseP.Laurel,expoundedonthe
conceptandextentofdelegationofpowerinthiswise:
Intestingwhetherastatuteconstitutesanunduedelegationoflegislativepowerornot,itis
usual to inquire whether the statute was complete in all its terms and provisions when it left the
handsofthelegislaturesothatnothingwaslefttothejudgmentofanyotherappointeeordelegate
ofthelegislature.
...
The true distinction, says Judge Ranney, is between the delegation of power to make
the law, which necessarily involves a discretion as to what it shall be, and conferring an
authorityordiscretionastoitsexecution,tobeexercisedunderandinpursuanceofthelaw.
Thefirstcannotbedonetothelatternovalidobjectioncanbemade.
...
Itiscontended,however,thatalegislativeactmaybemadetotheeffectaslawafteritleaves
thehandsofthelegislature.Itistruethatlawsmaybemadeeffectiveoncertaincontingencies,asby
proclamationoftheexecutiveortheadoptionbythepeopleofaparticularcommunity.InWayman
vs.Southard,theSupremeCourtoftheUnitedStatesruledthatthelegislaturemaydelegateapower
notlegislativewhichitmayitselfrightfullyexercise.Thepowertoascertainfactsissuchapower
whichmaybedelegated.Thereisnothingessentiallylegislativeinascertainingtheexistenceof
facts or conditions as the basis of the taking into effect of a law. That is a mental process
commontoallbranchesofthegovernment.Notwithstandingtheapparenttendency,however,to
relax the rule prohibiting delegation of legislative authority on account of the complexity arising
fromsocialandeconomicforcesatworkinthismodernindustrialage,theorthodoxpronouncement
ofJudgeCooleyinhisworkonConstitutionalLimitationsfindsrestatementinProf.Willoughby's
treatiseontheConstitutionoftheUnitedStatesinthefollowinglanguagespeakingofdeclarationof
legislative power to administrative agencies: The principle which permits the legislature to
provide that the administrative agent may determine when the circumstances are such as
requiretheapplicationofalawisdefendeduponthegroundthatatthetimethisauthorityis
granted,theruleofpublicpolicy,whichistheessenceofthelegislativeact,isdeterminedby
the legislature. In other words, the legislature, as it is its duty to do, determines that, under
givencircumstances,certainexecutiveoradministrativeactionistobetaken,andthat,under
other circumstances, different or no action at all is to be taken. What is thus left to the
administrativeofficialisnotthelegislativedeterminationofwhatpublicpolicydemands,but
simply the ascertainment of what the facts of the case require to be done according to the
terms of the law by which he is governed. The efficiency of an Act as a declaration of
legislativewillmust,ofcourse,comefromCongress,buttheascertainmentofthecontingency
upon which the Act shall take effect may be left to such agencies as it may designate. The
legislature, then, may provide that a law shall take effect upon the happening of future
specifiedcontingenciesleavingtosomeotherpersonorbodythepowertodeterminewhenthe
[46]
specifiedcontingencyhasarisen.(Emphasissupplied).
[47]
InEduvs.Ericta,
theCourtreiterated:
WhatcannotbedelegatedistheauthorityundertheConstitutiontomakelawsandtoalter
and repeal them the test is the completeness of the statute in all its terms and provisions when it
leaves the hands of the legislature. To determine whether or not there is an undue delegation of
legislativepower,theinquirymustbedirectedtothescopeanddefinitenessofthemeasureenacted.
Thelegislativedoesnotabdicateitsfunctionswhenitdescribeswhatjobmustbedone,whois
todoit,andwhatisthescopeofhisauthority.Foracomplexeconomy,thatmaybetheonlyway
inwhichthelegislativeprocesscangoforward.Adistinctionhasrightfullybeenmadebetween
delegationofpowertomakethelawswhichnecessarilyinvolvesadiscretionastowhatitshall
be,whichconstitutionallymaynotbedone,anddelegationofauthorityordiscretionastoits
executiontobeexercisedunderandinpursuanceofthelaw,towhichnovalidobjectioncanbe
made.TheConstitutionisthusnottoberegardedasdenyingthelegislaturethenecessaryresources
[48]
offlexibilityandpracticability.(Emphasissupplied).
Clearly,thelegislaturemaydelegatetoexecutiveofficersorbodiesthepowertodetermine
certainfactsorconditions,orthehappeningofcontingencies,onwhichtheoperationofastatute
is,byitsterms,madetodepend,butthelegislaturemustprescribesufficientstandards,policiesor
[49]
limitations on their authority.
While the power to tax cannot be delegated to executive
agencies,detailsastotheenforcementandadministrationofanexerciseofsuchpowermaybeleft
tothem,includingthepowertodeterminetheexistenceoffactsonwhichitsoperationdepends.
[50]
Therationaleforthisisthatthepreliminaryascertainmentoffactsasbasisfortheenactment
oflegislationisnotofitselfalegislativefunction,butissimplyancillarytolegislation.Thus,the
duty of correlating information and making recommendations is the kind of subsidiary activity
which the legislature may perform through its members, or which it may delegate to others to
perform.Intelligentlegislationonthecomplicatedproblemsofmodernsocietyisimpossibleinthe
absence of accurate information on the part of the legislators, and any reasonable method of
[51]
securing such information is proper.
The Constitution as a continuously operative charter of
governmentdoesnotrequirethatCongressfindforitself
every fact upon which it desires to base legislative action or that it make for itself detailed
determinations which it has declared to be prerequisite to application of legislative policy to
[52]
particularfactsandcircumstancesimpossibleforCongressitselfproperlytoinvestigate.
In the present case, the challenged section of R.A. No. 9337 is the common proviso in
Sections4,5and6whichreadsasfollows:
That the President, upon the recommendation of the Secretary of Finance, shall, effective
January1,2006,raisetherateofvalueaddedtaxtotwelvepercent(12%),afteranyofthefollowing
conditionshasbeensatisfied:
(i) Valueadded tax collection as a percentage of Gross Domestic Product

(GDP)ofthepreviousyearexceedstwoandfourfifthpercent(24/5%)or
(ii)NationalgovernmentdeficitasapercentageofGDPofthepreviousyear
ThecasebeforetheCourtisnotadelegationoflegislativepower.Itissimplyadelegation
ofascertainmentoffactsuponwhichenforcementandadministrationoftheincreaserateunderthe
law is contingent. The legislature has made the operation of the 12% rate effective January 1,
2006,contingentuponaspecifiedfactorcondition.Itleavestheentireoperationornonoperation
ofthe12%rateuponfactualmattersoutsideofthecontroloftheexecutive.
NodiscretionwouldbeexercisedbythePresident.Highlightingtheabsenceofdiscretionis
thefactthatthewordshallisusedinthecommonproviso.Theuseofthewordshallconnotesa
mandatoryorder.Itsuseinastatutedenotesanimperativeobligationandisinconsistentwiththe
[53]
ideaofdiscretion.
Wherethelawisclearandunambiguous,itmustbetakentomeanexactly
[54]
whatitsays,andcourtshavenochoicebuttoseetoitthatthemandateisobeyed.
Thus,itistheministerialdutyofthePresidenttoimmediatelyimposethe12%rateuponthe
existenceofanyoftheconditionsspecifiedbyCongress.Thisisadutywhichcannotbeevadedby
thePresident.Inasmuchasthelawspecificallyusesthewordshall,theexerciseofdiscretionby
thePresidentdoesnotcomeintoplay.Itisacleardirectivetoimposethe12%VATratewhenthe
specifiedconditionsarepresent.Thetimeoftakingintoeffectofthe12%VATrateisbasedonthe
happening of a certain specified contingency, or upon the ascertainment of certain facts or
conditionsbyapersonorbodyotherthanthelegislatureitself.
TheCourtfindsnomerittothecontentionofpetitionersABAKADAGUROPartyList,etal.
thatthelaweffectivelynullifiedthePresidentspowerofcontrolovertheSecretaryofFinanceby
mandatingthefixingofthetaxratebythePresidentupontherecommendationoftheSecretaryof
Finance.TheCourtcannotalsosubscribetothepositionofpetitioners
Pimentel,etal.thatthewordshallshouldbeinterpretedtomeanmayinviewofthephraseupon
the recommendation of the Secretary of Finance. Neither does the Court find persuasive the
submission of petitioners Escudero, et al. that any recommendation by the Secretary of Finance
caneasilybebrushedasidebythePresidentsincetheformerisamerealteregoofthelatter.
When one speaks of the Secretary of Finance as the alter ego of the President, it simply
means that as head of the Department of Finance he is the assistant and agent of the Chief
Executive. The multifarious executive and administrative functions of the Chief Executive are
performed by and through the executive departments, and the acts of the secretaries of such
departments,suchastheDepartmentofFinance,performedandpromulgatedintheregularcourse
ofbusiness,are,unlessdisapprovedorreprobatedbytheChiefExecutive,presumptivelytheacts
oftheChiefExecutive.TheSecretaryofFinance,assuch,occupiesapoliticalpositionandholds
office in an advisory capacity, and, in the language of Thomas Jefferson, "should be of the
President'sbosomconfidence"and,inthelanguageofAttorneyGeneralCushing,issubjecttothe
[55]
directionofthePresident."
Inthepresentcase,inmakinghisrecommendationtothePresidentontheexistenceofeither
of the two conditions, the Secretary of Finance is not acting as the alter ego of the President or
evenhersubordinate.Insuchinstance,heisnotsubjecttothepowerofcontrolanddirectionofthe
President. He is acting as the agent of the legislative department, to determine and declare the
[56]
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
informationandverifyifanyofthetwoconditionslaidoutbyCongressispresent.Hispersonality
insuchinstanceisinrealitybutaprojectionofthatofCongress.Thus,beingtheagentofCongress
andnotofthePresident,thePresidentcannotalterormodifyornullify,orsetasidethefindingsof
theSecretaryofFinanceandtosubstitutethejudgmentoftheformerforthatofthelatter.
CongresssimplygrantedtheSecretaryofFinancetheauthoritytoascertaintheexistenceof
afact,namely,whetherbyDecember31,2005,thevalueaddedtaxcollectionasapercentageof
GrossDomesticProduct(GDP)ofthepreviousyearexceedstwoandfourfifthpercent(24/5%)or
thenationalgovernmentdeficitasapercentageofGDPofthepreviousyearexceedsoneandone
half percent (1%). If either of these two instances has occurred, the Secretary of Finance, by
legislativemandate,mustsubmitsuchinformationtothePresident.Thenthe12%VATratemust
be imposed by the President effective January 1, 2006. There is no undue delegation of
legislative power but only of the discretion as to the execution of a law. This is
[57]
constitutionally permissible.
Congress does not abdicate its functions or unduly delegate
power when it describes what job must be done, who must do it, and what is the scope of his
authorityinourcomplexeconomythatisfrequentlytheonlywayinwhichthelegislativeprocess
[58]
cangoforward.
AstotheargumentofpetitionersABAKADAGUROPartyList,etal.thatdelegatingtothe
President the legislative power to tax is contrary to the principle of republicanism, the same
deserves scant consideration. Congress did not delegate the power to tax but the mere
implementation of the law. The intent and will to increase the VAT rate to 12% came from
CongressandthetaskofthePresidentistosimplyexecutethelegislativepolicy.ThatCongress
chose to do so in such a manner is not within the province of the Court to inquire into, its task
[59]
beingtointerpretthelaw.
The insinuation by petitioners Pimentel, et al. that the President has ample powers to cause,
influenceorcreatetheconditionstobringabouteitherorboththeconditionsprecedentdoesnot
deserve any merit as this argument is highly speculative. The Court does not rule on allegations
which are manifestly conjectural, as these may not exist at all. The Court deals with facts, not
fancies on realities, not appearances. When the Court acts on appearances instead of realities,
justiceandlawwillbeshortlived.
B. The 12% Increase VAT Rate Does Not Impose an Unfair and
UnnecessaryAdditionalTaxBurden
Petitioners Pimentel, et al. argue that the 12% increase in the VAT rate imposes an unfair
andadditionaltaxburdenonthepeople.Petitionersalsoarguethatthe12%increase,dependenton
anyofthe2conditionssetforthinthecontestedprovisions,isambiguousbecauseitdoesnotstate
iftheVATratewouldbereturnedtotheoriginal10%iftheratesarenolongersatisfied.Petitioners
alsoarguethatsuchrateisunfairandunreasonable,asthepeopleareunsureoftheapplicableVAT
ratefromyeartoyear.
Under the common provisos of Sections 4, 5 and 6 of R.A. No. 9337, if any of the two
conditions set forth therein are satisfied, the President shall increase the VAT rate to 12%. The
provisionsofthelawareclear.Itdoesnotprovideforareturntothe10%ratenordoesitempower
thePresidenttosorevertif,aftertherateisincreasedto12%,theVATcollectiongoesbelowthe
24/5 of the GDP of the previous year or that the national government deficit as a percentage of
GDPofthepreviousyeardoesnotexceed1%.
Therefore,nostatutoryconstructionorinterpretationisneeded.Neithercanconditionsor
limitationsbeintroducedwherenoneisprovidedfor.Rewritingthelawisaforbiddengroundthat
[60]
onlyCongressmaytreadupon.
Thus,intheabsenceofanyprovisionprovidingforareturntothe10%rate,whichinthis
casetheCourtfindsnone,petitionersargumentis,atbest,purelyspeculative.Thereisnobasisfor
petitioners fear of a fluctuating VAT rate because the law itself does not provide that the rate
shouldgobackto10%iftheconditionsprovidedinSections4,5and6arenolongerpresent.The
ruleisthatwheretheprovisionofthelawisclearandunambiguous,sothatthereisnooccasion
for the court's seeking the legislative intent, the law must be taken as it is, devoid of judicial
[61]
additionorsubtraction.
PetitionersalsocontendthattheincreaseintheVATrate,whichwasallegedlyanincentive
tothePresidenttoraisetheVATcollectiontoatleast24/5oftheGDPofthepreviousyear,should
bebasedonfiscaladequacy.
Petitioners obviously overlooked that increase in VAT collection is not the only condition.
There is another condition, i.e., the national government deficit as a percentage of GDP of the
previousyearexceedsoneandonehalfpercent(1%).
Respondentsexplainedthephilosophybehindthesealternativeconditions:
1.VAT/GDPRatio>2.8%
The condition set for increasing VAT rate to 12% have economic or fiscal meaning. If
VAT/GDPislessthan2.8%,itmeansthatgovernmenthasweakornocapabilityofimplementing
theVATorthatVATisnoteffectiveinthefunctionofthetaxcollection.Therefore,thereisnovalue
toincreaseitto12%becausesuchactionwillalsobeineffectual.
2.NatlGovtDeficit/GDP>1.5%
The condition set for increasing VAT when deficit/GDP is 1.5% or less means the fiscal
condition of government has reached a relatively sound position or is towards the direction of a
balancedbudgetposition.Therefore,thereisnoneedtoincreasetheVATratesincethefiscalhouse
isinarelativelyhealthyposition.Otherwisestated,iftheratioismorethan1.5%,thereisindeeda
[62]
needtoincreasetheVATrate.
That the first condition amounts to an incentive to the President to increase the VAT
collectiondoesnotrenderitunconstitutionalsolongasthereisapublicpurposeforwhichthelaw
waspassed,whichinthiscase,ismainlytoraiserevenue.Infact,fiscaladequacydictatedtheneed
foraraiseinrevenue.
The principle of fiscal adequacy as a characteristic of a sound tax system was originally
statedbyAdamSmithinhisCanonsofTaxation(1776),as:
IV.Everytaxoughttobesocontrivedasbothtotakeoutandtokeepoutofthepocketsofthe
peopleaslittleaspossibleoverandabovewhatitbringsintothepublictreasuryofthestate.
[63]
Itsimplymeansthatsourcesofrevenuesmustbeadequatetomeetgovernmentexpenditures
[64]
andtheirvariations.
Thedireneedforrevenuecannotbeignored.Ourcountryisinaquagmireoffinancialwoe.
During the Bicameral Conference Committee hearing, then Finance Secretary Purisima bluntly
depictedthecountrysgloomystateofeconomicaffairs,thus:
First, let me explain the position that the Philippines finds itself in right now. We are in a
positionwhere90percentofourrevenueisusedfordebtservice.So,foreverypesoofrevenuethat
wecurrentlyraise,90goestodebtservice.Thatsinterestplusamortizationofourdebt.Soclearly,
thisisnotasustainablesituation.Thatsthefirstfact.
The second fact is that our debt to GDP level is way out of line compared to other peer
countries that borrow money from that international financial markets. Our debt to GDP is
approximatelyequaltoourGDP.Again,thatshowsyouthatthisisnotasustainablesituation.
ThethirdthingthatIdliketopointoutistheenvironmentthatwearepresentlyoperatingin
isnotasbenignaswhatitusedtobethepastfiveyears.
WhatdoImeanbythat?
Inthepastfiveyears,wevebeenluckybecausewewereoperatinginaperiodofbasically
globalgrowthandlowinterestrates.Thepastfewmonths,wehaveseenaninchingup,infact,a
rapidincreaseintheinterestratesintheleadingeconomiesoftheworld.And,therefore,ourability
to borrow at reasonable prices is going to be challenged. In fact, ultimately, the question is our
abilitytoaccessthefinancialmarkets.
WhenthePresidentmadeherspeechinJulylastyear,theenvironmentwasnotasbadasitis
now,atleastbasedontheforecastofmostfinancialinstitutions.So,wewereassumingthatraising
80 billion would put us in a position where we can then convince them to improve our ability to
borrowatlowerrates.Butconditionshavechangedonusbecausetheinterestrateshavegoneup.In
fact,justwithinthisroom,wetriedtoaccessthemarketforabilliondollarsbecauseforthisyear
alone,thePhilippineswillhavetoborrow4billiondollars.Ofthatamount,wehaveborrowed1.5
billion. We issued last January a 25year bond at 9.7 percent cost. We were trying to access last
weekandthemarketwasnotasfavorableanduptonowwehavenotaccessedandwemightpull
backbecausetheconditionsarenotverygood.
Sogiventhissituation,weattheDepartmentofFinancebelievethatwereallyneedtofront
endourdeficitreduction.Becauseitisdeficitthatiscausingtheincreaseofthedebtandwearein
whatwecalladebtspiral.Themoredebtyouhave,themoredeficityouhavebecauseinterestand
debtserviceeatsandeatsmoreofyourrevenue.Weneedtogetoutofthisdebtspiral.Andtheonly
way,Ithink,wecangetoutofthisdebtspiralisreallyhaveafrontendadjustmentinourrevenue
[65]
base.
The image portrayed is chilling. Congress passed the law hoping for rescue from an
inevitablecatastrophe.Whetherthelawisindeedsufficienttoanswerthestateseconomicdilemma
is not for the Court to judge. In the Farias case, the Court refused to consider the various
arguments raised therein that dwelt on the wisdom of Section 14 of R.A. No. 9006 (The Fair
ElectionAct),pronouncingthat:
. . . policy matters are not the concern of the Court. Government policy is within the
exclusivedominionofthepoliticalbranchesofthegovernment.ItisnotforthisCourttolookinto
the wisdom or propriety of legislative determination. Indeed, whether an enactment is wise or
unwise,whetheritisbasedonsoundeconomictheory,whetheritisthebestmeanstoachievethe
desired results, whether, in short, the legislative discretion within its prescribed limits should be
exercised in a particular manner are matters for the judgment of the legislature, and the serious
[66]
conflictofopinionsdoesnotsufficetobringthemwithintherangeofjudicialcognizance.
Inthesamevein,theCourtinthiscasewillnotdawdleonthepurposeofCongressorthe
executivepolicy,giventhatitisnotforthejudiciaryto"passuponquestionsofwisdom,justiceor
[67]
expediencyoflegislation.
II.
WhetherSection8ofR.A.No.9337,amendingSections110(A)(2)and110(B)oftheNIRCand
Section 12 of R.A. No. 9337, amending Section 114(C) of the NIRC, violate the following
provisionsoftheConstitution:
b.ArticleIII,Section1
A.DueProcessandEqualProtectionClauses
PetitionersAssociationofPilipinasShell Dealers, Inc., et al. argue that Section 8 of R.A.

No. 9337, amending Sections 110 (A)(2), 110 (B), and Section 12 of R.A. No. 9337, amending
Section114(C)oftheNIRCarearbitrary,oppressive,excessiveandconfiscatory.Theirargument
ispremisedontheconstitutionalrightagainstdeprivationoflife,libertyofpropertywithoutdue
processoflaw,asembodiedinArticleIII,Section1oftheConstitution.
Petitioners also contend that these provisions violate the constitutional guarantee of equal
protectionofthelaw.
The doctrine is that where the due process and equal protection clauses are invoked,
considering that they are not fixed rules but rather broad standards, there is a need for proof of
such persuasive character as would lead to such a conclusion. Absent such a showing, the
[68]
presumptionofvaliditymustprevail.
Section8ofR.A.No.9337,amendingSection110(B)oftheNIRCimposesalimitationon
theamountofinputtaxthatmaybecreditedagainsttheoutputtax.Itstates,inpart:[P]rovided,
that the input tax inclusive of the input VAT carried over from the previous quarter that may be
creditedineveryquartershallnotexceedseventypercent(70%)oftheoutputVAT:
InputTaxisdefinedunderSection110(A)oftheNIRC,asamended,asthevalueaddedtax
duefromorpaidbyaVATregisteredpersonontheimportationofgoodsorlocalpurchaseofgood
and services, including lease or use of property, in the course of trade or business, from a VAT
registeredperson,andOutputTaxisthevalueaddedtaxdueonthesaleorleaseoftaxablegoods
orpropertiesorservicesbyanypersonregisteredorrequiredtoregisterunderthelaw.
Petitionersclaimthatthecontestedsectionsimposelimitationsontheamountofinputtax
thatmaybeclaimed.Ineffect,aportionoftheinputtaxthathasalreadybeenpaidcannotnowbe
creditedagainsttheoutputtax.
Petitionersargumentisnotabsolute.Itassumesthattheinputtaxexceeds70%oftheoutput
tax,andtherefore,theinputtaxinexcessof70%remainsuncredited.However,totheextentthat
theinputtaxislessthan70%oftheoutputtax,then100%ofsuchinputtaxisstillcreditable.
Moreimportantly,theexcessinputtax,ifany,isretainedinabusinesssbooksofaccounts
and remains creditable in the succeeding quarter/s. This is explicitly allowed by Section 110(B),
whichprovidesthatiftheinputtaxexceedstheoutputtax,theexcessshallbecarriedovertothe
succeedingquarterorquarters.Inaddition,Section112(B)allowsaVATregisteredpersontoapply
fortheissuanceofataxcreditcertificateorrefundforanyunusedinputtaxes,totheextentthat
suchinputtaxeshavenotbeenappliedagainsttheoutputtaxes.Suchunusedinputtaxmaybeused
inpaymentofhisotherinternalrevenuetaxes.
The nonapplication of the unutilized input tax in a given quarter is not ad infinitum, as
petitionersexaggeratedlycontend.Theiranalysisoftheeffectofthe70%limitationisincomplete
and onesided. It ends at the net effect that there will be unapplied/unutilized inputs VAT for a
givenquarter.Itdoesnotproceedfurthertothefactthatsuchunapplied/unutilizedinputtaxmay
becreditedinthesubsequentperiodsasallowedbythecarryoverprovisionofSection110(B)or
thatitmaylateronberefundedthroughataxcreditcertificateunderSection112(B).
Therefore,petitionersargumentmustberejected.
Ontheotherhand,itappearsthatpetitionerGarciafailedtocomprehendtheoperationofthe
70%limitationontheinputtax.Accordingtopetitioner,thelimitationonthecreditableinputtax
ineffectallowsVATregisteredestablishmentstoretainaportionofthetaxestheycollect,which
violates the principle that tax collection and revenue should be for public purposes and
expenditures
Asearlierstated,theinputtaxisthetaxpaidbyaperson,passedontohimbytheseller,
whenhebuysgoods.Outputtaxmeanwhileisthetaxduetothepersonwhenhesellsgoods.In
computingtheVATpayable,threepossiblescenariosmayarise:
First,ifattheendofataxablequartertheoutputtaxeschargedbythesellerareequaltothe
inputtaxesthathepaidandpassedonbythesuppliers,thennopaymentisrequired
Second, when the output taxes exceed the input taxes, the person shall be liable for the
[69]
excess,whichhastobepaidtotheBureauofInternalRevenue(BIR)
and

Third, if the input taxes exceed the output taxes, the excess shall be carried over to the
succeedingquarterorquarters.Shouldtheinputtaxesresultfromzeroratedoreffectivelyzero
rated transactions, any excess over the output taxes shall instead be refunded to the taxpayer or
[70]
creditedagainstotherinternalrevenuetaxes,atthetaxpayersoption.
Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the input tax. Thus, a
personcancredithisinputtaxonlyuptotheextentof70%oftheoutputtax.Inlaymansterm,the
valueaddedtaxesthataperson/taxpayerpaidandpassedontohimbyasellercanonlybecredited
up to 70% of the valueadded taxes that is due to him on a taxable transaction. There is no
retentionofanytaxcollectionbecausetheperson/taxpayerhasalreadypreviouslypaidtheinput
taxtoaseller,andthesellerwillsubsequentlyremitsuchinputtaxtotheBIR.Thepartydirectly
[71]
liable for the payment of the tax is the seller.
What only needs to be done is for the
person/taxpayer to apply or credit these input taxes, as evidenced by receipts, against his output
taxes.
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue that the input tax
partakesthenatureofapropertythatmaynotbeconfiscated,appropriated,orlimitedwithoutdue
processoflaw.
Theinputtaxisnotapropertyorapropertyrightwithintheconstitutionalpurviewofthe
due process clause. A VATregistered persons entitlement to the creditable input tax is a mere
statutoryprivilege.
The distinction between statutory privileges and vested rights must be borne in mind for
persons have no vested rights in statutory privileges. The state may change or take away rights,
which were created by the law of the state, although it may not take away property, which was
[72]
vestedbyvirtueofsuchrights.
Undertheprevioussystemofsinglestagetaxation,taxespaidateverylevelofdistribution
are not recoverable from the taxes payable, although it becomes part of the cost, which is
deductiblefromthegrossrevenue.WhenPres.AquinoissuedE.O.No.273imposinga10%multi
stagetaxonallsales,itwasthenthatthecreditingoftheinputtaxpaidonpurchaseorimportation
[73]
ofgoodsandservicesbyVATregisteredpersonsagainsttheoutputtaxwasintroduced.
This
[74]
wasadoptedbytheExpandedVATLaw(R.A.No.7716),
andTheTaxReformActof1997
[75]
(R.A.No.8424).
The right to credit input tax as against the output tax is clearly a privilege
createdbylaw,aprivilegethatalsothelawcanremove,orinthiscase,limit.
Petitioners also contest as arbitrary, oppressive, excessive and confiscatory, Section 8 of

R.A.No.9337,amendingSection110(A)oftheNIRC,whichprovides:
SEC.110.TaxCredits.
(A)CreditableInputTax.
Provided,Thattheinputtaxongoodspurchasedorimportedinacalendarmonthforuseintradeor
business for which deduction for depreciation is allowed under this Code, shall be spread evenly
overthemonthofacquisitionandthefiftynine(59)succeedingmonthsiftheaggregateacquisition
cost for such goods, excluding the VAT component thereof, exceeds One million pesos
(P1,000,000.00):Provided,however,Thatiftheestimatedusefullifeofthecapitalgoodsislessthan
five (5) years, as used for depreciation purposes, then the input VAT shall be spread over such a
shorterperiod:Provided,finally,Thatinthecaseofpurchaseofservices,leaseoruseofproperties,
the input tax shall be creditable to the purchaser, lessee or license upon payment of the
compensation,rental,royaltyorfee.
The foregoing section imposes a 60month period within which to amortize the creditable
input tax on purchase or importation of capital goods with acquisition cost of P1 Million pesos,
exclusiveoftheVATcomponent.Suchspreadoutonlyposesadelayinthecreditingoftheinput
tax.Petitionersargumentiswithoutbasisbecausethetaxpayerisnotpermanentlydeprivedofhis
privilegetocredittheinputtax.
ItisworthmentioningthatCongressadmittedthatthespreadoutofthecreditableinputtax
[76]
in this case amounts to a 4year interestfree loan to the government.
In the same breath,
Congress also justified its move by saying that the provision was designed to raise an annual
[77]
revenueof22.6billion.
Thelegislaturealsodispelledthefearthattheprovisionwillfendoff
foreigninvestments,sayingthatforeigninvestorshaveothertaxincentivesprovidedbylaw,and
citingthecaseofChina,wheredespitea17.5%noncreditableVAT,foreigninvestmentswerenot
[78]
deterred.
Again, for whatever is the purpose of the 60month amortization, this involves
executiveeconomicpolicyandlegislativewisdominwhichtheCourtcannotintervene.
With regard to the 5% creditable withholding tax imposed on payments made by the
governmentfortaxabletransactions,Section12ofR.A.No.9337,whichamendedSection114of
theNIRC,reads:
SEC.114.ReturnandPaymentofValueaddedTax.
(C) Withholdingof ValueaddedTax.The Government or any of its political subdivisions,

instrumentalities or agencies, including governmentowned or controlled corporations (GOCCs)
shall,beforemakingpaymentonaccountofeachpurchaseofgoodsandserviceswhicharesubject
tothevalueaddedtaximposedinSections106and108ofthisCode,deductandwithholdafinal
valueadded tax at the rate of five percent (5%) of the gross payment thereof: Provided, That the
paymentforleaseoruseofpropertiesorpropertyrightstononresidentownersshallbesubjecttoten
percent (10%) withholding tax at the time of payment. For purposes of this Section, the payor or
personincontrolofthepaymentshallbeconsideredasthewithholdingagent.
The valueadded tax withheld under this Section shall be remitted within ten (10) days
followingtheendofthemonththewithholdingwasmade.
Section114(C)merelyprovidesamethodofcollection,orasstatedbyrespondents,amore
simplified VAT withholding system. The government in this case is constituted as a withholding
agentwithrespecttotheirpaymentsforgoodsandservices.
Priortoitsamendment,Section114(C)providedfordifferentratesofvalueaddedtaxesto
bewithheld3%ongrosspaymentsforpurchasesofgoods6%ongrosspaymentsforservices
supplied by contractors other than by public works contractors 8.5% on gross payments for
servicessuppliedbypublicworkcontractorsor10%onpaymentfortheleaseoruseofproperties
orpropertyrightstononresidentowners.UnderthepresentSection114(C),thesedifferentrates,
except for the 10% on lease or property rights payment to nonresidents, were deleted, and a
uniformrateof5%isapplied.
The Court observes, however, that the law the used the word final. In tax usage, final, as
opposedtocreditable,meansfull.Thus,itisprovidedinSection114(C):finalvalueaddedtaxat
therateoffivepercent(5%).
InRevenueRegulationsNo.0298,implementingR.A.No.8424(TheTaxReformActof
1997),theconceptoffinalwithholdingtaxonincomewasexplained,towit:
SECTION2.57.WithholdingofTaxatSource
(A)FinalWithholdingTax.Underthefinalwithholdingtaxsystemtheamountofincometax
withheldbythewithholdingagentisconstitutedasfullandfinalpaymentoftheincometaxdue
fromthepayeeonthesaidincome.Theliabilityforpaymentofthetaxrestsprimarilyonthepayor
as a withholding agent. Thus, in case of his failure to withhold the tax or in case of
underwithholding,thedeficiencytaxshallbecollectedfromthepayor/withholdingagent.
(B)CreditableWithholdingTax.Underthecreditablewithholdingtaxsystem,taxeswithheld
oncertainincomepaymentsareintendedtoequaloratleastapproximatethetaxdueofthepayeeon
said income. Taxes withheld on income payments covered by the expanded withholding tax
(referredtoinSec.2.57.2oftheseregulations)andcompensationincome(referredtoinSec.2.78
alsooftheseregulations)arecreditableinnature.
Asappliedtovalueaddedtax,thismeansthattaxabletransactionswiththegovernmentare
subjecttoa5%rate,whichconstitutesasfullpaymentofthetaxpayableonthetransaction.This
represents the net VAT payable of the seller. The other 5% effectively accounts for the standard
input VAT (deemed input VAT), in lieu of the actual input VAT directly or attributable to the
[79]
taxabletransaction.

The Court need not explore the rationale behind the provision. It is clear that Congress
[80]
intendedtotreatdifferentlytaxabletransactionswiththegovernment.
Thisissupportedbythe
fact that under the old provision, the 5% tax withheld by the government remains creditable
againstthetaxliabilityofthesellerorcontractor,towit:
SEC.114.ReturnandPaymentofValueaddedTax.
(C)WithholdingofCreditableValueaddedTax.The Government or any of its political

subdivisions,instrumentalitiesoragencies,includinggovernmentownedorcontrolledcorporations
(GOCCs) shall, before making payment on account of each purchase of goods from sellers and
servicesrenderedbycontractorswhicharesubjecttothevalueaddedtaximposedinSections106
and108ofthisCode,deductandwithholdthevalueaddedtaxdueattherateofthreepercent(3%)
ofthegrosspaymentforthepurchaseofgoodsandsixpercent(6%)ongrossreceiptsforservices
renderedbycontractorsoneverysaleorinstallmentpaymentwhichshallbecreditableagainstthe
valueadded tax liability of the seller or contractor: Provided, however, That in the case of
government public works contractors, the withholding rate shall be eight and onehalf percent
(8.5%): Provided, further, That the payment for lease or use of properties or property rights to
nonresidentownersshallbesubjecttotenpercent(10%)withholdingtaxatthetimeofpayment.For
thispurpose,thepayororpersonincontrolofthepaymentshallbeconsideredasthewithholding
agent.
The valuedadded tax withheld under this Section shall be remitted within ten (10) days
followingtheendofthemonththewithholdingwasmade.(Emphasissupplied)
As amended, the use of the word final and the deletion of the word creditable exhibits
Congresss intention to treat transactions with the government differently. Since it has not been
shownthattheclasssubjecttothe5%finalwithholdingtaxhasbeenunreasonablynarrowed,there
is no reason to invalidate the provision. Petitioners, as petroleum dealers, are not the only ones
subjectedtothe5%finalwithholdingtax.Itappliestoallthosewhodealwiththegovernment.
Moreover, the actual input tax is not totally lost or uncreditable, as petitioners believe.
RevenueRegulationsNo.142005ortheConsolidatedValueAddedTaxRegulations2005issued
bytheBIR,providesthatshouldtheactualinputtaxexceed5%ofgrosspayments,theexcessmay
formpartofthecost.Equally,shouldtheactualinputtaxbelessthan5%,thedifferenceistreated
[81]
asincome.
Petitioners also argue that by imposing a limitation on the creditable input tax, the
governmentgetstotaxaprofitorvalueaddedevenifthereisnoprofitorvalueadded.
Petitioners stance is purely hypothetical, argumentative, and again, onesided. The Court
will not engage in a legal joust where premises are what ifs, arguments, theoretical and facts,
uncertain.AnydisquisitionbytheCourtonthispointwillonlybe,asShakespearedescribeslifein
[82]
Macbeth,
fullofsoundandfury,signifyingnothing.
Whatsmore,petitionerscontentionassumesthepropositionthatthereisnoprofitorvalue
added. It need not take an astute businessman to know that it is a matter of exception that a
businesswillsellgoodsorserviceswithoutprofitorvalueadded.Itcannotbeoverstressedthata
businessiscreatedpreciselyforprofit.
TheequalprotectionclauseundertheConstitutionmeansthatnopersonorclassofpersons
shallbedeprivedofthesameprotectionoflawswhichisenjoyedbyotherpersonsorotherclasses
[83]
inthesameplaceandinlikecircumstances.
The power of the State to make reasonable and natural classifications for the purposes of
taxation has long been established. Whether it relates to the subject of taxation, the kind of
property,theratestobelevied,ortheamountstoberaised,themethodsofassessment,valuation
andcollection,theStatespowerisentitledtopresumptionofvalidity.Asarule,thejudiciarywill
not interfere with such power absent a clear showing of unreasonableness, discrimination, or
[84]
arbitrariness.
Petitioners point out that the limitation on the creditable input tax if the entity has a high
ratioofinputtax,orinvestsincapitalequipment,orhasseveraltransactionswiththegovernment,
isnotbasedonrealandsubstantialdifferencestomeetavalidclassification.
Theargumentispedantic,ifnotoutrightbaseless.Thelawdoesnotmakeanyclassification
inthesubjectoftaxation,thekindofproperty,theratestobeleviedortheamountstoberaised,
themethodsofassessment,valuationandcollection.Petitionersallegeddistinctionsarebasedon
variablesthatbeardifferentconsequences.Whiletheimplementationofthelawmayyieldvarying
endresultsdependingononesprofitmarginandvalueadded,theCourtcannotgobeyondwhatthe
legislaturehaslaiddownandinterferewiththeaffairsofbusiness.
The equal protection clause does not require the universal application of the laws on all
persons or things without distinction. This might in fact sometimes result in unequal protection.
What the clause requires is equality among equals as determined according to a valid
classification.Byclassificationismeantthegroupingofpersonsorthingssimilartoeachotherin
[85]
certainparticularsanddifferentfromallothersinthesesameparticulars.
PetitionersbroughttotheCourtsattentiontheintroductionofSenateBillNo.2038bySens.
S.R.OsmeaIIIandMa.AnaConsueloA.S.MadrigalonJune6,2005,andHouseBillNo.4493by
Rep.EricD.Singson.Theproposedlegislationseekstoamendthe70%limitationbyincreasing
the same to 90%. This, according to petitioners, supports their stance that the 70% limitation is
arbitraryandconfiscatory.Onthisscore,sufficeittosaythatthesearestillproposedlegislations.
Until Congress amends the law, and absent any unequivocal basis for its unconstitutionality, the
70%limitationstays.
B.UniformityandEquitabilityofTaxation
ArticleVI,Section28(1)oftheConstitutionreads:
Theruleoftaxationshallbeuniformandequitable.TheCongressshallevolveaprogressive
systemoftaxation.
Uniformityintaxationmeansthatalltaxablearticlesorkindsofpropertyofthesameclass
shallbetaxedatthesamerate.Differentarticlesmaybetaxedatdifferentamountsprovidedthat
[86]
therateisuniformonthesameclasseverywherewithallpeopleatalltimes.
Inthiscase,thetaxlawisuniformasitprovidesastandardrateof0%or10%(or12%)on
allgoodsandservices.Sections4,5and6ofR.A.No.9337,amendingSections106,107and108,
respectively, of the NIRC, provide for a rate of 10% (or 12%) on sale of goods and properties,
importationofgoods,andsaleofservicesanduseorleaseofproperties.Thesesamesectionsalso
providefora0%rateoncertainsalesandtransaction.
Neitherdoesthelawmakeanydistinctionastothetypeofindustryortradethatwillbear
the70%limitationonthecreditableinputtax,5yearamortizationofinputtaxpaidonpurchaseof
capitalgoodsorthe5%finalwithholdingtaxbythegovernment.Itmustbestressedthattherule
of uniform taxation does not deprive Congress of the power to classify subjects of taxation, and
[87]
onlydemandsuniformitywithintheparticularclass.
R.A.No.9337isalsoequitable.Thelawisequippedwithathresholdmargin.TheVATrate
of 0% or 10% (or 12%) does not apply to sales of goods or services with gross annual sales or
[88]
receipts not exceeding P1,500,000.00.
Also, basic marine and agricultural food products in
[89]
their original state are still not subject to the tax,
thus ensuring that prices at the grassroots
levelwillremainaccessible.AswasstatedinKapatiranngmgaNaglilingkodsaPamahalaanng
[90]
Pilipinas,Inc.vs.Tan:
Thedisputedsalestaxisalsoequitable.Itisimposedonlyonsalesofgoodsorservicesby
persons engaged in business with an aggregate gross annual sales exceeding P200,000.00. Small
cornersarisaristoresareconsequentlyexemptfromitsapplication.Likewiseexemptfromthetax
aresalesoffarmandmarineproducts,sothatthecostsofbasicfoodandothernecessities,sparedas
theyarefromtheincidenceoftheVAT,areexpectedtoberelativelylowerandwithinthereachof
thegeneralpublic.

ItisadmittedthatR.A.No.9337putsapremiumonbusinesseswithlowprofitmargins,and
undulyfavorsthosewithhighprofitmargins.Congresswasnotoblivioustothis.Thus,toequalize
theweightyburdenthelawentails,thelaw,underSection116,imposeda3%percentagetaxon
VATexemptpersonsunderSection109(v),i.e.,transactionswithgrossannualsalesand/orreceipts
not exceeding P1.5 Million. This acts as a equalizer because in effect, bigger businesses that
qualifyforVATcoverageandVATexempttaxpayersstandonequalfooting.
Moreover,Congressprovidedmitigatingmeasurestocushiontheimpactoftheimposition
ofthetaxonthosepreviouslyexempt.Excisetaxesonpetroleumproducts
[91]
[92]
andnaturalgas
[93]
were reduced. Percentage tax on domestic carriers was removed.
Power producers are now
[94]
exemptfrompayingfranchisetax.
Asidefromthese,Congressalsoincreasedtheincometaxratesofcorporations,inorderto
distributetheburdenoftaxation.Domestic,foreign,andnonresidentcorporationsarenowsubject
[95]
to a 35% income tax rate, from a previous 32%.
Intercorporate dividends of nonresident
foreigncorporationsarestillsubjectto15%finalwithholdingtaxbutthetaxcreditallowedonthe
[96]
corporations domicile was increased to 20%.
The Philippine Amusement and Gaming
[97]
Corporation(PAGCOR)isnotexemptfromincometaxesanymore.
Eventhesalebyanartist
ofhisworksorservicesperformedfortheproductionofsuchworkswasnotspared.
Alltheseweredesignedtoease,aswellasspreadout,theburdenoftaxation,whichwould
otherwise rest largely on the consumers. It cannot therefore be gainsaid that R.A. No. 9337 is
equitable.
C.ProgressivityofTaxation
Lastly, petitioners contend that the limitation on the creditable input tax is anything but
regressive. It is the smaller business with higher input taxoutput tax ratio that will suffer the
consequences.
Progressivetaxationisbuiltontheprincipleofthetaxpayersabilitytopay.Thisprinciple
wasalsoliftedfromAdamSmithsCanonsofTaxation,anditstates:
I.Thesubjectsofeverystateoughttocontributetowardsthesupportofthegovernment,asnearlyas
possible,inproportiontotheirrespectiveabilitiesthatis,inproportiontotherevenuewhich
theyrespectivelyenjoyundertheprotectionofthestate.
Taxation is progressive when its rate goes up depending on the resources of the person
[98]
affected.
The VAT is an antithesis of progressive taxation. By its very nature, it is regressive. The
principleofprogressivetaxationhasnorelationwiththeVATsysteminasmuchastheVATpaidby
the consumer or business for every goods bought or services enjoyed is the same regardless of
income.In
otherwords,theVATpaideatsthesameportionofanincome,whetherbigorsmall.Thedisparity
liesintheincomeearnedbyapersonorprofitmarginmarkedbyabusiness,suchthatthehigher
theincomeorprofitmargin,thesmallertheportionoftheincomeorprofitthatiseatenbyVAT.A
converso,thelowertheincomeorprofitmargin,thebiggerthepartthattheVATeatsaway.Atthe
end of the day, it is really the lower income group or businesses with lowprofit margins that is
alwayshardesthit.
Nevertheless,theConstitutiondoesnotreallyprohibittheimpositionofindirecttaxes,like
theVAT.WhatitsimplyprovidesisthatCongressshall"evolveaprogressivesystemoftaxation."
TheCourtstatedintheTolentinocase,thus:
The Constitution does not really prohibit the imposition of indirect taxes which, like the
VAT,areregressive.WhatitsimplyprovidesisthatCongressshallevolveaprogressivesystemof
taxation.Theconstitutionalprovisionhasbeeninterpretedtomeansimplythatdirecttaxesare...to
bepreferred[and]asmuchaspossible,indirecttaxesshouldbeminimized.(E.FERNANDO,THE
CONSTITUTIONOFTHEPHILIPPINES221(Seconded.1977))Indeed,themandatetoCongress
isnottoprescribe,buttoevolve,aprogressivetaxsystem.Otherwise,salestaxes,whichperhapsare
theoldestformofindirecttaxes,wouldhavebeenprohibitedwiththeproclamationofArt.VIII,17
(1)ofthe1973ConstitutionfromwhichthepresentArt.VI,28(1)wastaken.Salestaxesarealso
regressive.
Resorttoindirecttaxesshouldbeminimizedbutnotavoidedentirelybecauseitisdifficult,if
notimpossible,toavoidthembyimposingsuchtaxesaccordingtothetaxpayers'abilitytopay.In
thecaseoftheVAT,thelawminimizestheregressiveeffectsofthisimpositionbyprovidingforzero
rating of certain transactions (R.A. No. 7716, 3, amending 102 (b) of the NIRC), while granting
[99]
exemptionstoothertransactions.(R.A.No.7716,4amending103oftheNIRC)
CONCLUSION
It has been said that taxes are the lifeblood of the government. In this case, it is just an
enema,afirstaidmeasuretoresuscitateaneconomyindistress.TheCourtisneitherblindnorisit
turningadeafearontheplightofthemasses.Butitdoesnothavethepanaceaforthemaladythat
thelawseekstoremedy.Asinothercases,theCourtcannotstrikedownalawasunconstitutional
simplybecauseofitsyokes.
Letusnotbeoverlyinfluencedbythepleathatforeverywrongthereisaremedy,andthat
thejudiciaryshouldstandreadytoaffordrelief.Thereareundoubtedlymanywrongsthejudicature
maynotcorrect,forinstance,thoseinvolvingpoliticalquestions....
Let us likewise disabuse our minds from the notion that the judiciary is the repository of
remedies for all political or social ills We should not forget that the Constitution has judiciously
allocated the powers of government to three distinct and separate compartments and that judicial
interpretationhastendedtothepreservationoftheindependenceofthethree,andazealousregard
oftheprerogativesofeach,knowingfullwellthatoneisnottheguardianoftheothersandthat,for
officialwrongdoing,eachmaybebroughttoaccount,eitherbyimpeachment,trialorbytheballot
[100]
box.
[101]
ThewordsoftheCourtinVeravs.Avelino
holdstruethen,asitstillholdstruenow.
Allthingsconsidered,thereisnoraisond'trefortheunconstitutionalityofR.A.No.9337.
WHEREFORE, Republic Act No. 9337 not being unconstitutional, the petitions in G.R.
Nos.168056,168207,168461,168463,and168730,areherebyDISMISSED.
There being no constitutional impediment to the full enforcement and implementation of

R.A. No. 9337, the temporary restraining order issued by the Court on July 1, 2005 is LIFTED
uponfinalityofhereindecision.
SOORDERED.
MA.ALICIAAUSTRIAMARTINEZ
AssociateJustice
WECONCUR:
HILARIOG.DAVIDE,JR.
ChiefJustice
REYNATOS.PUNO
ARTEMIOV.PANGANIBAN
AssociateJustice
AssociateJustice
LEONARDOA.QUISUMBING
CONSUELOYNARESSANTIAGO
AssociateJustice
AssociateJustice
ANGELINASANDOVALGUTIERREZ ANTONIOT.CARPIO
AssociateJustice
AssociateJustice
RENATOC.CORONA
AssociateJustice
ROMEOJ.CALLEJO,SR.
AssociateJustice
DANTEO.TINGA
AssociateJustice
CONCHITACARPIOMORALES
AssociateJustice
ADOLFOS.AZCUNA
AssociateJustice
MINITAV.CHICONAZARIO
AssociateJustice
CANCIOC.GARCIA
AssociateJustice
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitution,itisherebycertifiedthattheconclusions
intheaboveDecisionwerereachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourt.
HILARIOG.DAVIDE,JR.
ChiefJustice
[1]
EntitledAnActAmendingSections27,28,34,106,107,108,109,110,111,112,113,114,116,117,119,121,148,151,236,237,
and288oftheNationalInternalRevenueCodeof1997,AsAmendedandForOtherPurposes.
[2]
Entitled,AnActRestructuringtheValueAddedTax,AmendingforthePurposeSections106,107,108,110and114oftheNational
InternalRevenueCodeof1997,AsAmended,andForOtherPurposes.
[3]
Entitled,AnActAmendingSections106,107,108,109,110and111oftheNationalInternalRevenueCodeof1997,AsAmended,
andForOtherPurposes.
[4]
Entitled,AnActAmendingSections27,28,34,106,108,109,110,112,113,114,116,117,119,121,125,148,151,236,237and288
oftheNationalInternalRevenueCodeof1997,AsAmended,andForOtherPurposes.
[5]
Section26,R.A.No.9337.
[6]
TSN,July14,2005.
[7]
Section125oftheNationalInternalRevenueCode,asamended,wasnotamendedbyR.A.No.9337,ascanbegleanedfromthetitle
andbodyofthelaw.
[8]
Section105,NationalInternalRevenueofthePhilippines,asamended.
[9]
Ibid.
[10]
Deoferio,Jr.,V.A.andMamalateo,V.C.,TheValueAddedTaxinthePhilippines(FirstEdition2000).
[11]
Macedavs.Macaraig,Jr.,G.R.No.88291,May31,1991,197SCRA771.
[12]
Macedavs.Macaraig,Jr.,G.R.No.88291,June8,1993,223SCRA,217.
[13]
Id.,Deoferio,Jr.,V.A.andMamalateo,V.C.,TheValueAddedTaxinthePhilippines(FirstEdition2000).
[14]
CommissionerofInternalRevenuevs.Seagate,G.R.No.153866,February11,2005.
[15]
KapatiranngmgaNaglilingkodsaPamahalaanngPilipinas,Inc.vs.Tan,G.R.Nos.L81311,L81820,L81921,L82152,June30,
1988,163SCRA371.
[16]
Entitled,AnActRestructuringtheValueAddedTax(VAT)System,WideningitsTaxBaseandEnhancingitsAdministration,And
forthesePurposesAmendingandRepealingtheRelevantProvisionsoftheNationalInternalRevenueCode,asamended,andfor
otherPurposes.
[17]
Entitled,AnActAmendingRepublicActNo.7716,otherwiseknownastheValueAddedTaxLawandOtherPertinentProvisionsof
theNationalInternalRevenueCode,asAmended.
[18]
Entitled,AnActAmendingtheNationalInternalRevenueCode,asAmended,andforotherPurposes.
[19]
Story,Commentaries835(1833).
[20]
G.R.No.147387,December10,2003,417SCRA503.
[21]
Id.,pp.529530.
[22]
Supra.,Note20.
[23]
G.R.No.115455,August25,1994,235SCRA630.
[24]
Id.,p.670.
[25]
WestersThirdNewInternationalDictionary,p.1897.
[26]
TSN,BicameralConferenceCommitteeontheDisagreeingProvisionsofSenateBillNo.1950andHouseBillNos.3705and3555,
May10,2005,p.4.
[27]
Id.,p.3.
[28]
SponsorshipSpeechofRepresentativeTeves,inbehalfofRepresentativeJesliLapus,TSN,January7,2005,pp.3435.
[29]
G.R.No.105371,November11,1993,227SCRA703.
[30]
Supra,Note23.
[31]
Id.,p.668.
[32]
Id.,p.671.
[33]
Id.,pp.661663.
[34]
TranscriptofSessionProceedings,January7,2005,pp.1920.
[35]
JournaloftheSenate,SessionNo.67,March7,2005,pp.727728.
[36]
Id.,p.726.
[37]
SeeAngaravs.ElectoralCommission,No.45081,July15,1936,63Phil.139,156.
[38]
DefensorSantiagovs.CommissiononElections,G.R.No.127325,March19,1997,270SCRA106,153Peoplevs.Rosenthal,Nos.
46076&46077,June12,1939,68Phil.328ISAGANIA.CRUZ,PhilippinePoliticalLaw86(1996).JudgeCooleyenunciates
thedoctrineinthefollowingoftquotedlanguage:"Oneofthesettledmaximsinconstitutionallawis,thatthepowerconferred
uponthelegislaturetomakelawscannotbedelegatedbythatdepartmenttoanyotherbodyorauthority.Wherethesovereign
powerofthestatehaslocatedtheauthority,thereitmustremainandbytheconstitutionalagencyalonethelawsmustbemade
until the Constitution itself is changed. The power to whose judgment, wisdom, and patriotism this high prerogative has
been intrusted cannot relieve itself of the responsibility by choosing other agencies upon which the power shall be
devolved, nor can it substitute the judgment, wisdom, and patriotism of any other body for those to which alone the
peoplehaveseenfittoconfidethissovereigntrust."(CooleyonConstitutionalLimitations,8thed.,Vol.I,p.224)
[39]
UnitedStatesvs.Barrias,No.4349,September24,1908,11Phil.327,330.
[40]
16AmJur2d,ConstitutionalLaw,337.
[41]
Pelaezvs.AuditorGeneral,No.L23825,December24,1965,122Phil.965,974citingCalalangvs.Williams,No.47800,December
2,1940,70Phil.726PangasinanTransp.Co.vs.PublicServiceCommission,No.47065,June26,1940,70Phil.221Cruzvs.
Youngberg,No.34674,October26,1931,56Phil.234Alegrevs.CollectorofCustoms,No.30783,August27,1929,53Phil.
394etseq.
[42]
Pelaezvs.AuditorGeneral,supra,citingPeoplevs.LimHo,No.L120912,January28,1960,106Phil.887Peoplevs.Jolliffee,
No.L9553,May13,1959,105Phil677Peoplevs.Vera,No.45685,November16,1937,65Phil.56U.S.vs.NagTangHo,
No.L17122,February27,1922,43Phil.1CompaiaGeneraldeTabacosvs.BoardofPublicUtility,No.11216,March6,1916,
34Phil.136etseq.
[43]
Eduvs.Ericta,No.L32096,October24,1970,35SCRA481,497.
[44]
EasternShippingLines,Inc.vs.POEA,No.L76633,October18,1988,166SCRA533,543544.
[45]
No.45685,November16,1937,65Phil.56.
[46]
Id.,pp.115120.
[47]
Supra,note43.
[48]
Id.,pp.496497.
[49]
16C.J.S.,ConstitutionalLaw,138.
[50]
Ibid.
[51]
16AmJur2d,ConstitutionalLaw340.
[52]
Yajusvs.UnitedStates,321US414,88LEd834,64SCt.660,28OhioOps220.
[53]
ProvinceofBatangasvs.Romulo,G.R.No.152774,May27,2004Enriquezvs.CourtofAppeals,G.R.No.140473,January28,
2003,396SCRA377Codoyvs.Calugay,G.R.No.123486,August12,1999,312SCRA333.
[54]
Province of Batangas vs. Romulo, supra Quisumbing vs. Meralco, G.R. No. 142943, April 3, 2002, 380 SCRA 195 Agpalo,
StatutoryConstruction,1990ed.,p.45.
[55]
Villenavs.SecretaryofInterior,No.46570,April21,1939,67Phil451,463464.
[56]
Alunanvs.Mirasol,G.R.No.108399,July31,1997,276SCRA501,513514,citingPanamaRefiningCo.vs.Ryan,293U.S.388,
79L.Ed.469(1935).
[57]
Compaia General de Tabacos de Filipinas vs. The Board of Public Utility Commissioners, No. 11216, 34 Phil. 136 Cruz vs.
Youngberg,No.34674,October26,1931,56Phil.234Peoplevs.Vera,No.45685,November16,1937,65Phil.56,113Edu
vs.Ericta,No.L32096,October24,1970,35SCRA481Tatadvs.SecretaryoftheDepartmentofEnergy,G.R.No.124360,
November5,1997,281SCRA330Alunanvs.Mirasol,supra.
[58]
Bowlesvs.Willinghan,321US503,88lEd892,64SCt641,28OhioOps180.
[59]
UnitedResidentsofDominicanHill,Inc.vs.CommissionontheSettlementofLandProblems,G.R.No.135945,March7,2001,353
SCRA782CommissionerofInternalRevenuevs.Santos,G.R.No.119252,August18,1997,277SCRA617,630.
[60]
CommissiononInternalRevenuevs.AmericanExpressInternational,Inc.(PhilippineBranch),G.R.No.152609,June29,2005.
[61]
ActingCommissionerofCustomsvs.MERALCO,No.L23623,June30,1977,77SCRA469,473.
[62]
RespondentsMemorandum,pp.168169.
[63]
TheWealthofNations,BookV,ChapterII.
[64]
Chavezvs.Ongpin,G.R.No.76778,June6,1990,186SCRA331,338.
[65]
TSN,BicameralConferenceCommitteeontheDisagreeingProvisionsofSenateBillNo.1950andHouseBillNos.3705and3555,
April25,2005,pp.56.
[66]
G.R.No.147387,December10,2003,417SCRA503,524.
[67]
NationalHousingAuthorityvs.Reyes,G.R.No.L49439,June29,1983,123SCRA245,249.
[68]
Sisonvs.Ancheta,G.R.No.L59431,July25,1984,130SCRA654,661.
[69]
Section8,R.A.No.9337,amendingSection110(A)(B),NIRC.
[70]
Ibid.
[71]
CommissionerofInternalRevenuevs.BenguetCorp.,G.R.Nos.134587&134588,July8,2005.
[72]
UnitedParacaleMiningCo.vs.DelaRosa,G.R.Nos.6378687,April7,1993,221SCRA108,115.
[73]
E.O.No.273,Section1.
[74]
Section5.
[75]
Section110(B).
[76]
JournaloftheSenate,SessionNo.71,March15,2005,p.803.
[77]
Id.,SessionNo.67,March7,2005,p.726.
[78]
Id.,SessionNo.71,March15,2005,p.803.
[79]
RevenueRegulationsNo.142005,4.1142(a).
[80]
CommissionerofInternalRevenuevs.Philam,G.R.No.141658,March18,2005.
[81]
RevenueRegulationsNo.142005,Sec.4.1142.
[82]
ActV,SceneV.
[83]
PhilippineRuralElectricCooperativesAssociation,Inc.vs.DILG,G.R.No.143076,June10,2003,403SCRA558,565.
[84]
Aban,Benjamin,LawofBasicTaxationinthePhilippines(FirstEdition1994).
[85]
PhilippineJudgesAssociationcase,supra.,note29.
[86]
CommissionerofInternalRevenuevs.CourtofAppeals,G.R.No.119761,August29,1996,261SCRA236,249.
[87]
Keevs.CourtofTaxAppeals,No.L18080,April22,1963,117Phil682,688.
[88]
Section7,R.A.No.9337.
[89]
Ibid.
[90]
No.L81311,June30,1988,163SCRA371,383.
[91]
Section17,R.A.No.9337,amendingSection148,NIRC.
[92]
Section18,amendingSection151,NIRC.
[93]
[94]
[95]
Sections1and2,amendingSections27and28,NIRC.
[96]
[97]
Section1,amendingSection27(C),NIRC.
[98]
Reyesvs.Almanzor,G.R.Nos.4983946,April26,1991,196SCRA322,327.
[99]
Tolentinovs.SecretaryofFinance,G.R.No.115455,October30,1995,249SCRA628,659.
[100]
Veravs.Avelino,G.R.No.L543,August31,1946,77Phil.365.
[101]
Ibid.

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ENBANC

ABAKADA GURO PARTY LIST

THE HONORABLE EXECUTIVE

AQUILINO Q. PIMENTEL, JR.,

JINGGOY E. ESTRADA, PANFILO

E. MARBIBI doing business under the

CESAR V. PURISIMA, in his capacity

FRANCIS JOSEPH G. ESCUDERO,

CESAR V. PURISIMA, in his capacity

BATAAN GOVERNOR ENRIQUE T.

HON. EDUARDO R. ERMITA, in his

Butthecases, both here and abroad, in varying forms of expression, all

Provides that the input tax

Provided for amendments to

(ii) national government deficit as a percentage of GDP of the previous year

Ontheotherhand,petitionersEscudero, et al. find bizarre and revolting the situation that

(i) Valueadded tax collection as a percentage of Gross Domestic Product

PetitionersAssociationofPilipinasShell Dealers, Inc., et al. argue that Section 8 of R.A.

Petitioners also contest as arbitrary, oppressive, excessive and confiscatory, Section 8 of

(C) Withholdingof ValueaddedTax.The Government or any of its political subdivisions,

(C)WithholdingofCreditableValueaddedTax.The Government or any of its political

There being no constitutional impediment to the full enforcement and implementation of

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