Abakada vs.

Ermita
September 01, 2005
Austria-Martinez J
Facts:
- R.A. No. 9337 is a consoi!ation o" t#ree e$isati%e bis name&'
1. House Bill No. 3555 - Substitute o" (ouse )i No. 1*+, (An Act Restructuring the
Value-Added Tax)
2. House Bill No. 3705 - Substitute o" (ouse )i No. 3105 an! (ouse )i No. 33,1. -ts
.mot#er bi/ is (ouse )i No. 3555. (An Act Amending Sections 106, 107, 108, 10,
110 and 111 o! the "ational #nternal Re$enue %ode o! 17)
3. Senate Bill No. 1950 - Substitute o" Senate )i Nos. 1337, 1,3, an! 1,73, ta0in$ into
consi!eration (ouse )i Nos. 3555 an! 3705.
- Ma& 2*, 2005 1 2#e 3resi!ent si$ne! t#e consoi!ate! bi.
- Ju& 01, 2005 - 2#e e""ecti%it& !ate o" RA No 9337. (o4e%er 4#en t#e sai! !ate came, t#e
court issue! a 2R5, e""ecti%e imme!iate& an! continuin$ unti "urt#er or!ers, en6oinin$
respon!ents "rom en"orcin$ an! impementin$ t#e a4.
Issue: 75N RA 9337 is constitutiona8
Petitioners:
- Petitioners filed a petition for prohibition on May 27, 2005, questioning the constitutionality of
Sections 4, 5 and 6 of R! "o #$$7, a%ending Sections &06, &07 and &0' of the "ational
(nternal Re)enue *ode +"(R*,
- .hese questioned pro)isions contain a unifor% proviso authorizing the President, upon
reco%%endation of the Secretary of /inance, to raise the VAT rate to 12%, effecti)e 0anuary
&, 2006, after any of the follo1ing conditions ha)e been satisfied2
+i, 3alue-added ta4 collection as a percentage of 5ross 6o%estic Product +56P, of the
pre)ious year e4ceeds t1o and four-fifth percent +2 4758,9 or
+ii, "ational go)ern%ent deficit as a percentage of 56P of the pre)ious year e4ceeds
one and one-half percent +& :8,
- .he la1 is unconstitutional, as it constitutes abandonment by Congress of its exclusive
authority to fix the rate of taxes under !rticle 3(, Section 2'+2, of the &#'7 Philippine
*onstitution
- Sections *, 5, an! + o" R.A. No. 9337 constitute an undue delegation of legislatie !o"er, in
%ioation o" Artice 9-, Section 2,:2; o" t#e <onstitution. 2#e $rant o" stand-&' authorit' to t#e
3resi!ent to increase t#e 9A2 rate is a %irtua ab!ication b& <on$ress o" its e=cusi%e po4er to
ta= because suc# !ee$ation is not 4it#in t#e pur%ie4 o" Section 2, :2;, Artice 9- o" t#e
<onstitution
#es!ondents:
- Respon!ents conten! t#at t#e a4 is compete an! leaes no discretion to t$e President but to
increase t#e rate to 12> once an& o" t#e t4o con!itions pro%i!e! t#erein arise.

- R.A. No. 9337 is t#e anc#or o" t#e $o%ernment?s "isca re"orm a$en!a "or economic $ro4t#.
#uling : RA ((7 is constitutional
- 2#e stand-&' authorit' in "a%or o" t#e 3resi!ent appears to be a co%!ro%ise to tr& to bri!$e
t#e !i""erence in t#e rate o" 9A2 propose! b& t#e t4o #ouses o" <on$ress.
- 2#e .no-amen!ment rue/ re"ers on& to t#e proce!ure to be "oo4e! b& eac# #ouse o"
<on$ress 4it# re$ar! to bis initiate! in eac# o" sai! respecti%e #ouses, be"ore sai! bi is
transmitte! to t#e ot#er #ouse "or its concurrence or amen!ment.
- 2#ere is no un!ue !ee$ation o" @e$isati%e po4ers.

- )The power to ascertain facts is such a power which may be delegated. There is
nothing essentially legislative in ascertaining the existence of facts or conditions as the
basis of the taking into effect of a law. That is a mental process common to all branches
of the government.
- -t is simp& a !ee$ation o" ascertainment o" "acts upon 4#ic# en"orcement an!
a!ministration o" t#e increase rate un!er t#e a4 is contin$ent. 2#e e$isature #as ma!e
t#e operation o" t#e 12> rate e""ecti%e Januar& 1, 200+, contin$ent upon a speci"ie! "act
or con!ition. It leaes t$e entire o!eration or non-o!eration of t$e 1&' rate u!on
factual %atters outside of t$e control of t$e e(ecutie.
- 2#ere is no un!ue !ee$ation o" e$isati%e po4er but on& o" t#e !iscretion as to t#e
e=ecution o" a a4. 2#is is constitutiona& permissibe. <on$ress !oes not ab!icate its
"unctions or un!u& !ee$ate po4er 4#en it !escribes 4#at 6ob must be !one, 4#o must
!o it, an! 4#at is t#e scope o" #is aut#orit&A in our compe= econom& t#at is "reBuent&
t#e on& 4a& in 4#ic# t#e e$isati%e process can $o "or4ar!.