Abakad Guro vs.

Ermita
Topic: Delegation of ascertainment of facts, not delegation of legislative power

Facts:
Petitioners: ABAKADA Guro Party List Officer Alcantara, et al.
Respondent: Hon. Exec. Secretary Eduardo R. Ermita
Contention:
Petitioners filed several motions for reconsideration of the Courts decision dated
September 1, 2005 upholding the constitutionality of Republic Act no. 9337 or the VAT
Reform act. One of the grounds for the motion is that RA no. 9337s stand-by authority to
the executive to increase the vat rate, especially on account of the effective
recommendatory power granted to the secretary of finance, constitutes undue delegation
of legislative authority.
Petitioners contends that the recommendatory power given to the Secretary of Finance in
regard to the occurrence of either two events using the Gross Domestic Product (GDP) as a
benchmark necessarily and inherently required extended analysis and evaluation, as well
as policy making.
Issue:
Whether or not there is a delegation of legislative power when recommendatory power
was granted to the Secretary of Finance.
Ruling:
No, there is no delegation of legislative power. The Court reiterates that in making his
recommendation to the President on the existence of either of the two conditions, the
Secretary of Finance is not acting as the alter ego of the President or even her subordinate.
He is acting as the agent of the legislative department, to determine and declare the event
upon which its expressed will is to take effect. The Secretary of Finance becomes the means
or tool by which legislative policy is determined and implemented, considering that he
possesses all the facilities to gather data and information and has a much broader
perspective to properly evaluate them. His function is to gather and collate statistical data
and other pertinent information and verify if any of the two conditions laid out by Congress
is present.
Congress granted the Secretary of Finance the authority to ascertain the existence of a fact,
namely, whether by December 31, 2005, the value-added tax collection as a percentage of
GDP of the previous year exceeds two and four-fifth percent (24/5%) or the national
government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1%). If either of these two instances has occurred, the Secretary of Finance, by

legislative mandate, must submit such information to the President. Then the 12% VAT
rate must be imposed by the President effective January 1, 2006. 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; in our complex economy that is
frequently the only way in which the legislative process can go forward. There is no undue
delegation of legislative power but only of the discretion as to the execution of a law.
The intent and will to increase the VAT rate to 12% came from Congress and the task of the
President is to simply execute the legislative policy. That Congress chose to use the GDP as
a benchmark to determine economic growth is not within the province of the Court to
inquire into, its task being to interpret the law.