Tax Case Digest: ABAKADA Guro Party List vs.

Ermita GR No
168056
By PactaSuntServanda - July 08, 2014
ABAKADA Guro Party List vs. Ermita
G.R. No. 168056 September 1, 2005

Facts:
ABAKADA GURO Party List, et al., filed a petition for prohibition o questioning the constitutionality of
Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the
National Internal Revenue Code (NIRC).
Section 4 imposes a 10% VAT on sale of goods and properties;
Section 5 imposes a 10% VAT on importation of goods; and
Section 6 imposes a 10% VAT on sale of services and use or lease of properties;

These provisions contain a provision which authorizing the President, upon recommendation of the
Secretary of Finance, to raise the VAT rate to 12%, effective January 1, 2006, after specified
conditions have been satisfied.

Issues:
Whether or not there is a violation of Article VI, Section 24 of the Constitution.

Whether or not there is undue delegation of legislative power in violation of Article VI Sec 28(2) of
the Constitution.

Whether or not there is a violation of the due process and equal protection of the Constitution.

Ruling:
No, the revenue bill exclusively originated in the House of Representatives, the Senate was acting
within its constitutional power to introduce amendments to the House bill when it included provisions
in Senate Bill No. 1950 amending corporate income taxes, percentage, and excise and franchise
taxes.
No, there is no undue delegation of legislative power but only of the discretion as to the execution of
a law. This is constitutionally permissible. 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. In this case, it is not a delegation of legislative power but a delegation of
ascertainment of facts upon which enforcement and administration of the increased rate under the
law is contingent.

No, the power of the State to make reasonable and natural classifications for the purposes of
taxation has long been established. Whether it relates to the subject of taxation, the kind of property,
the rates to be levied, or the amounts to be raised, the methods of assessment, valuation and
collection, the State’s power is entitled to presumption of validity. As a rule, the judiciary will not
interfere with such power absent a clear showing of unreasonableness, discrimination, or
arbitrariness.