Petitioners: ABAKADA GURO PARTY LIST (ii) National government deficit as a

(Formerly AASJAS) OFFICERS SAMSON S. percentage of GDP of the previous year exceeds
ALCANTARA and ED VINCENT S. one and one-half percent (1½%)”
ALBANORespondent: THE HONORABLE
EXECUTIVE SECRETARY EDUARDO Petitioners allege that the grant of
ERMITA; HONORABLE SECRETARY OF THE stand-by authority to the President to increase
DEPARTMENT OF FINANCE CESAR the VAT rate is an abdication by Congress of its
PURISIMA; and HONORABLE exclusive power to tax because such delegation
COMMISSIONER OF INTERNAL REVENUE is not covered by Section 28 (2), Article VI
GUILLERMO PARAYNO, JR Constitution. They argue that VAT is a tax levied
on the sale or exchange of goods and
Ponente: AUSTRIA-MARTINEZ, J.
services which can’t be included within the

FACTS: purview of tariffs under the exemption

delegation since this refers to customs duties,
On May 24, 2005, the President signed
tolls or tribute payable upon merchandise to the
into law Republic Act 9337 or the VAT Reform
government and usually imposed on
Act. Before the law took effect on July 1, 2005,
imported/exported goods. They also said that
the Court issued a TRO enjoining government
the President has powers to cause, influence or
from implementing the law in response to a slew
create the conditions provided by law to bring
of petitions for certiorari and prohibition
about the conditions precedent. Moreover, they
questioning the constitutionality of the new law.
allege that no guiding standards are made by
The challenged section of R.A. No. 9337
law as to how the Secretary of Finance will
is the common proviso in Sections 4, 5 and 6:
make the recommendation.
“That the President, upon the recommendation
of the Secretary of Finance, shall, effective
Aside from questioning the so-
January 1, 2006, raise the rate of value-added
called stand-by authority of the President to
tax to 12%, after any of the following conditions
increase the VAT rate to 12%, on the ground
has been satisfied:
that it amounts to an undue delegation of
legislative power, petitioners also contend that
(i) Value-added tax collection as a
the increase in the VAT rate to 12% contingent
percentage of Gross Domestic Product (GDP) of
on any of the two conditions being satisfied
the previous year exceeds two and four-fifth
violates the due process clause embodied in
percent (2 4/5%);
Article III, Section 1 of the Constitution, as it
imposes an unfair and additional tax burden on
the people, in that: (1) the 12% increase is
ambiguous because it does not state if the rate
would be returned to the original 10% if the applicable, and to determine the
conditions are no longer satisfied; (2) the rate is expediency of its enactment. It is the
unfair and unreasonable, as the people are nature of the power and not the liability
unsure of the applicable VAT rate from year to of its use or the manner of its exercise
year; and (3) the increase in the VAT rate, which determines the validity of its
which is supposed to be an incentive to the delegation.
President to raise the VAT collection to at least The Motions for Reconsideration
2 4/5 of the GDP of the previous year, should were denied with finality. The temporary
only be based on fiscal adequacy. restraining order issued by the Court
was lifted.
Petitioners’ further claim that the
inclusion of a stand-by authority granted to the
President by the Bicameral Conference
Committee is a violation of the "no-amendment
rule" upon last reading of a bill laid down in
Article VI, Section 26(2) of the Constitution.

ISSUES:

Whether or not the RA 9337's stand-by

authority to the Executive to increase
the VAT rate, especially on account of
the recommendatory power granted to
the Secretary of Finance, constitutes
undue delegation of legislative power.

RULING:

 NO
The powers which Congress is
prohibited from delegating are those
which are strictly, or inherently and
exclusively, legislative. Purely legislative
power which can never be delegated is
the authority to make a complete law-
complete as to the time when it shall
take effect and as to whom it shall be