ABAKADA VS ERMITA

FACTS: Before R.A. No. 9337 took effect (July 1, 2005, petitioners ABAKADA GURO Party List,
et al., filed a petition for prohibition. Petitioners argue that the law is unconstitutional, as it
constitutes abandonment by Congress of its exclusive authority to fix the rate of taxes under
Article VI, Section 28(2) of the 1987 Philippine Constitution. They further contend that
Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of
the NIRC giving the President the stand-by authority to raise the VAT rate from 10% to 12%
when a certain condition is met, constitutes undue delegation of the legislative power to tax.
It states

. . . That the President, upon the recommendation of the Secretary of

Finance, shall, effective January 1, 2006, raise the rate of value-added tax
to twelve percent (12%), after any of the following conditions has been
satisfied:

(i) Value-added tax collection as a percentage of Gross Domestic

Product (GDP) of the previous year exceeds two and four-fifth percent (2
4/5%); or

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

year exceeds one and one-half percent (1 %).

ISSUE: Do Sections 4, 5 and 6 of R.A. No. 9337, giving the President the stand-by
authority to raise the VAT rate from 10% to 12% when a certain condition is met, constitutes
undue delegation of the legislative power to tax?

RULING: There is no undue delegation of legislative power but only of the discretion as to
the execution of a law. 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
authority. It is simply a delegation of ascertainment of facts upon which enforcement and
administration of the increase rate under the law is contingent. A (permissible delegation) is
valid only if the law (a) is complete in itself, setting forth therein the policy to be 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
performance of his functions. In this case, the legislature has made the operation of the 12%
rate effective January 1, 2006, contingent upon a specified fact or condition. It leaves the
entire operation or non-operation of the 12% rate upon factual matters outside of the control
of the executive. No discretion would be exercised by the President. Thus, it is the ministerial
duty of the President to immediately impose the 12% rate upon the existence of any of the
conditions specified by Congress.