Abakada Guro vs Executive Secretary Ermita

GR No 168056
September 1, 2005

FACTS

RA 9337 (VAT REFORM ACT) imposes 10% Vat on sale of goods and properties, importation of
goods and sale of services and use or lease of properties.

Petitioner filed a petition alleging that it contains a uniform proviso authorizing the President,
upon recommendation of the Secretary of Finance, to raise the VAT rate to 12%, effective January 1,
2006, after satisfaction of two conditions.

Petitioners contended that VAT is a tax and that there is undue delegation of legislative power
as it constitutes abandonment by Congress of its exclusive authority to fix the rate of taxes by
passing the same to the President, in his stand-by authority.

Respondents claim that there is due delegation of power because the law is complete and
leaves no discretion to the President but to increase the rate to 12% once the two conditions are
satisfied.

ISSUES

Whether or not there is undue delegation of legislative power in violation of the Constitution.

RULING

There is no undue delegation of legislative power . 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.

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 Congress and the task of the President is
to simply execute the legislative policy. It leaves the entire operation or non-operation of the 12%
rate upon factual matters outside of the control of the executive

It is simply a delegation of ascertainment of facts upon which enforcement and administration

of the increase rate under the law is contingent. The legislature has made the operation of the 12%
rate effective January 1, 2006, contingent upon a specified fact or condition.