ABAKADA GROUP PARTY LIST vs.

ERMITA
(From San Beda Law Journal Case Update)
FACTS:
G.R. No. 168056
Before RA 9337 took effect, petitioners ABAKADA GURO Party
List et al filed a petition for prohiition !"estionin# the constit"tionality
of $ection %, &, and ' of RA 9337 a(endin# $ections )*', )*7, and )*+
respecti,ely of the -.R/0 1hese !"estioned pro,isions contain a "nifor(
pro,iso a"thori2in# the President "pon reco((endation of the $ecretary
of 3inance, to raise the 4A1 rate to )56 effecti,e 7an"ary ), 5**' after
certain conditions pro,ided for in the la8 ha,e een satisfied to 8it9
:i; 4A1 collection as a percenta#e of GDP of the pre,io"s year
e<ceeds 5 %=& 6 or
:ii; -ational #o,ern(ent deficit as a percenta#e of GDP of the
pre,io"s year e<ceeds ) >6
Petitioners ar#"e that the la8 is "nconstit"tional as it constit"tes
aandon(ent y /on#ress of its e<cl"si,e a"thority to fi< the rate of
ta<es "nder Article 4. $ection 5+:5; of the )9+7 /onstit"tion0
1hey content that dele#atin# to the President the le#islati,e po8er to
ta< is contrary to rep"licanis(0 1hey insist that acco"ntaility,
responsiility, and transparency sho"ld dictate the actions of /on#ress
and they sho"ld not pass so the President the decision to i(pose ta<es0
1hey also ar#"e that the la8 also effecti,ely n"llified the President?s
po8er of control, 8hich incl"des the a"thority to set aside and n"llify the
acts of her s"ordinates like the $ecretary of 3inance y (andatin# the
fi<in# of the ta< rate y the President "pon the reco((endation of the
$ecretary of 3inance0
G.R. No. 16820
$enator A!"ino Pi(entel 7r0 et al filed a petition for certiorari
contendin# that the increase in the 4A1 rate to )56 contin#ent on any of
the t8o conditions pro,ided for in the la8 ein# satisfied ,iolates the d"e
process cla"se e(odied in Article ..., $ection . of the /onstit"tion, as it
i(poses an "nfair and additional ta< "rden on the people in that :); the
)56 increase is a(i#"o"s eca"se it does not state if the date 8o"ld e
ret"rned to the ori#inal)*6 if the conditions are no lon#er satisfied@ :5;
the rate is "nfair and "nreasonale as the people are "ns"re of the
applicale 4at rate fro( year to year@ and :3; the increase in the 4A1 rate,
8hich is s"pposed to e an incenti,e to the President to raise the 4A1
collection to at least 5 %=&6 of the GDP of the pre,io"s year, sho"ld only
e ased on fiscal ade!"acy0
Petitioners f"rther clai( that the incl"sion of the stand y
a"thority #ranted to the President y the Bica(eral /onference
/o((ittee is a ,iolation of the noAa(end(ent r"le "pon last readin# if a
ill laid do8n in Article 4., $ection 5':5; of the /onstit"tion0
G.R. No. 168!61
1hereafter, a petition for prohiition 8as filed y the Association
of Pilipinas $hell Dealers, .nc0 et al assailin# the follo8in# pro,isions of
RA 93379
); $ection +, a(endin# $ection ))* :A;:5; if the -.R/,
re!"irin# that the inp"t ta< on depreciale #oods shall e
a(orti2ed o,er a '*A(onth period, if the ac!"isition,
e<cl"din# the 4A1 co(ponents, e<ceeds )B pesos
5; $ection +, a(endin# $ection ))*:B; of the -.R/, i(posin# to
7*6 li(it on the a(o"nt of inp"t ta< to e credited a#ainst
the o"tp"t ta<@ and
3; $ection )5, a(endin# $ection ))%:/0; of the -.R/,
a"thori2in# the Go,ern(ent or any of its political
s"di,isions, instr"(entalities or a#encies, incl"din# GO//s
to ded"ct a &6 final 8ithholdin# ta< on #ross pay(ents of
#oods and ser,ices, 8hich are s"Cect to )*6 4A1 "nder
$ections )*' :sale of #oods and properties; and )*+ :sale of
ser,ices and "se or lease of properties; of the -.R/
Petitioners contend that these pro,isions are "nconstit"tional for
ein# aritrary, oppressi,e, e<cessi,e, and confiscatory0
Accordin# to petitioners, the contested sections i(pose li(itations
on the a(o"nt of inp"t ta< that (ay e clai(ed0 Petitioners also ar#"e
that the inp"t ta< partakes the nat"re of a property that (ay not e
confiscated, appropriated, or li(ited 8itho"t d"e process of la80
Petitioners f"rther content that like any other property or property ri#ht,
the inp"t ta< credit (ay e transferred or disposed of and that y li(itin#
the sa(e, the #o,ern(ent #ets to ta< a profit or ,al"e added e,en if these
is no profit or ,al"e added0
Petitioners also elie,e that these pro,isions ,iolate the
constit"tional #"arantee of e!"al protection of the la8 "nder Article ...,
$ection . of the /onstit"tion as the li(itation on the credile inp"t ta< if9
:); the entity has a hi#h rate of inp"t ta< or@ :5; in,ests in capital
e!"itale@ or :3; has se,eral transactions 8ith the #o,ern(ent, is not
ased on real and s"stantial differences to (eet a ,alid classification0
Lastly, petitioners contend that the 7*6 li(it is anythin# "t
pro#ressi,e ,iolati,e of Article 4., $ection 5+:); of he /onstit"tion, and
that it "s the s(aller "siness 8ith hi#her inp"t ta< ratio that 8ill s"ffer
the conse!"ences thereof for it 8ipes o"r 8hate,er (ea#er (ar#ins the
petitioners (ake0
G.R. No. 168!6"
$e,eral (e(ers of the Do"se of Representati,es led y rep
3rancis 7oseph Esc"dero filed this petition for certiorari0 1hey !"estion
the constit"tionality of RA no 9337 on the follo8in# #ro"nds9
)0 1he Bica(eral /onference /o((ittee acted 8itho"t C"risdiction
in deletin# the no pass on pro,isions present in $enate Bill -o0
)9&* and Do"se Bill -o 37*&@ and
50 .nsertion y the Bica(eral /onference /o((ittee of se,eral
pro,isions i(posin# ,ario"s rates of 4A1 ,iolates Article 4.,
$ection 5%:); of the /onstit"tion, 8hich pro,ides that all
appropriation, re,en"e or tariff ills shall ori#inate e<cl"si,ely in
the Do"se of Representati,es
Petitioners f"rther alle#e that the #rant of the stand y a"thority to
the President to increase the 4A1 rate is a ,irt"al adication y /on#ress
of its e<cl"si,e po8er to ta< eca"se s"ch dele#ation is not 8ithin the
p"r,ie8 of $ection 5+:5;, Article 4. of the /onstit"tion 8hich pro,ides9
1he /on#ress (ay, y la8, a"thori2e the President to fi< 8ithin
specified li(its, and (ay i(pose, tariff rates, i(port and e<port
!"otas, tonna#e and 8harfa#e d"es, and other d"ties or i(posts
8ithin the fra(e8ork of the national de,elop(ent pro#ra( of the
#o,ern(ent0
1hey ar#"e that the 4A1 is a ta< le,ied on the sale, arter, or
e<chan#e of #oods and properties as 8ell as on the sale or e<chan#e of
ser,ices, 8hich cannot e incl"ded 8ithin the p"r,ie8 of tariffs "nder the
e<e(pted dele#ation as the latter refers to c"sto(s d"ties, tolls or tri"te
payale "pon (erchandise to the #o,ern(ent and "s"ally i(posed on
#oods or (erchandise i(ported or e<ported0
Petitioners Esc"dero et al, find i2arre and re,oltin# the sit"ation
that the i(position of the )56 rate 8o"ld e s"Cect to the 8hi( of the
$ecretary of 3inance an "nelected "rea"crat, contrary to the principle of
no ta<ation 8itho"t representation0 1hey s"(it that the $ecretary of
3inance is not (andated to #i,e a fa,orale reco((endation and he (ay
not e,en #i,e his reco((endation0 Boreo,er, they alle#e that no #"idin#
standards are pro,ided in the la8 on 8hat asis and as to ho8 he 8ill
(ake his reco((endation0 1hey clai(, nonetheless that any
reco((endation of the $ecretary of 3inance can easily e r"shed aside
y the President since the for(er is a (ere alter e#o of the latter, s"ch that
"lti(ately it is the President 8ho decides 8hether to i(pose the increased
ta< rate or not
G.R. No. 168"0
Go,ernor Enri!"e 10 Garcia filed a petition for certiorari and
prohiition alle#in# the "nconstit"tionality of the la8 on the #ro"nd that
the li(itation on the creditale inp"t ta< in effect allo8s 4A1 re#istered
estalish(ents to retain a portion of the ta<es they collect, th"s ,iolatin#
the principle that ta< collection and re,en"e sho"ld e solely allocated for
p"lic p"rposes and e<pendit"res0 Petitioner Garcia f"rther clai(s that
allo8in# these estalish(ents to pass on the ta< to the cons"(ers is
ine!"itale in ,iolation of Article 4. of the /onstit"tion0
R#s$o%&#%'(s Co))#%':
.n all these petitions, the Office if the $olicitor General O$G filed
a /o((ent on ehalf of respondents contendin# the proced"ral iss"es
raised y petitioners, i0e0 le#ality of the ica(eral proceedin#s, e<cl"si,e
ori#ination of re,en"e (eas"res and the po8er of the $enate conco(itant
thereto, are eyond C"dicial re,ie80 Fith re#ard to the iss"e of "nd"e
dele#ation of le#islati,e po8er to the President, respondents contend that
the la8 is co(plete and lea,es no discretion to the President "t to
increase the rate to )56 once any of the t8o conditions pro,ided therein
arise0
ISSUES AND RULING
PROCEDURAL ISSUES:
1. May the court delve into the details of how Congress complies
with its internal rules or how it conducts its business of passing
legislation?
-o, eca"se parlia(entary r"les are (erely proced"ral and 8ith their
oser,ance, the co"rt ha,e no concern0 1hey (ay e 8ai,ed or
disre#arded y the le#islati,e ody0 /onse!"ently, (ere fail"re to
confor( to parlia(entary "sa#e 8ill not in,alidate the action :taken y a
delierate ody; 8hen the re!"isite n"(er of (e(ers ha,e a#reed to a
partic"lar (eas"re0
One of the (ost asic and inherent po8ers of the le#islat"re is the
po8er to for("late r"les for its proceedin# and the discipline of its
(e(ers0 /on#ress is the est C"d#e of ho8 it sho"ld cond"ct its o8n
"siness e<peditio"sly and in (ost orderly (anner0 .t is the sole concern
of /on#ress to instill discipline a(on# the (e(ers of its conference
co((ittee if it elie,es that said (e(ers ,iolated any of its r"les of
proceedin#s0 E,en the e<panded C"risdiction of this /o"rt cannot apply to
!"estions re#ardin# only the internal operation of /on#ress, th"s the
/o"rt is 8ont to deny a re,ie8 of the internal proceedin#s of a coAe!"al
ranch of #o,ern(ent 0
3"rther(ore, "nder the Genrolled ill doctrineH, the si#nin# of a ill
y the $peaker of the Do"se and the $enate President and the certification
of the $ecretaries if oth Do"ses of /on#ress that it 8as passed are
concl"si,e of its dye enact(ent0
1he co"rt has no a"thority to deter(ine 8hether the ica(eral
conference co((ittee has strictly co(plied 8ith the r"les of oth ho"ses0
1he creation of s"ch conference co((ittee 8as apparently in response to
a prole(, not addressed y any constit"tional pro,ision, 8here the t8o
ho"ses of /on#ress find the(sel,es in disa#ree(ent o,er chan#es or
a(end(ents introd"ced y the other ho"se in a le#islati,e ill0 Gi,en that
one of the (ost asic po8ers of the le#islati,e ranch is to for("late and
i(ple(ents its o8n r"les of proceedin#s and to discipline its (e(ers,
the /o"rt (ay not del,e into the details of ho8 /on#ress co(plies 8ith
its internal r"les or ho8 it cond"cts its "siness of passin# le#islation0
-e,ertheless, C"st to p"t (inds to ease that no latant irre#"larities
tainted the proceedin#s of the ica(eral conference co((ittees, the
/o"rt dee(s its necessary to d8ell on the iss"e0
2. Did the Bicameral Conference Committee exceed its authority in
inserting a provision on the stand by authority to the resident!
and in deleting the no pass on provisions present in "enate Bill
#o 1$%& and 'ouse Bill #o $()&%! in violation of the *no
amendment rule+ upon last reading of a bill laid down in ,rticle
-.! "ection 2%/20 of the Constitution?
-o, eca"se the GnoAa(end(ent r"leH refers only to the proced"re to
e follo8ed y each ho"se of /on#ress 8ith re#ard to ills initiated in
each of said respecti,e ho"ses efore said ill is trans(itted to the other
ho"se for its conc"rrence or a(end(ent0 Article 4., section 5':5; ("st
therefore e constr"ed as referrin# only to ills introd"ced fir the first
ti(e in either ho"se of /on#ress, not to the conference co((ittee report,
other8ise, there 8o"ld e no end to ne#otiation since each ho"se (ay
seek (odification of the co(pro(ise ill0
1he /o"rt reiterates here that ,erily, to constr"e said pro,ision in
a 8ay as to proscrie any f"rther chan#ers to a ill after one ho"se has
,oted on it 8o"ld lead to as"rdity as this 8o"ld (ean that the other
ho"se of /on#ress 8o"ld e depri,ed of its constit"tional po8er to
a(end or introd"ce chan#es to said ill0 1h"s, Art 4., $ection 5':5; of the
/onstit"tion cannot e taken to (ean that the introd"ction y the
Bica(eral /onference /o((ittee of a(end(ents and (odifications to
disa#reein# pro,isions in ills that ha,e een acted "pon y oth ho"ses
of /on#ress is prohiited0
(. .s the insertion by the Bicameral Conference Committee of
several provisions on corporate income taxes and percentage!
excise taxes! vocative of ,rticle -.! "ection 21/20 of he
Constitutional which provides that all appropriation! revenue or
tariff bills shall originate exclusively in the 'ouse of
2epresentatives?
-o, eca"se to e#in 8ith, it is not the la8 "t the re,en"e "ll 8hich
is re!"ired y the /onstit"tion to Gori#inate e<cl"si,elyH in the Do"se of
Representati,es0 .t is i(portant to e(phasi2e this eca"se a ill
ori#inatin# in the Do"se (ay "nder#o s"ch e<tensi,e chan#e sin the
$enate that the res"lt (ay e re8ritin# of the 8hole0 At this point, 8hat is
i(portant to note is that as a res"lt of the $enate actions, a distinct (ay e
prod"ced0 1o insist that a re,en"e stat"te and not only the ill 8hich
initiated the le#islati,e process c"l(inatin# in the enact(ent of the la8 I
("st e s"stantially e the sa(e as the Do"se ill 8o"ld e to deny the
$enator?s po8er not only to conc"r 8ith a(end(ents "t also to propose
a(end(ents0 .t 8o"ld e to ,iolate the coe!"ally of le#islati,e po8er of
the t8o ho"ses of /on#ress and in fact (ake the Do"se s"perior to he
$enate0
Gi,en, then the po8er of the $enate to propose a(end(ents the
$enate can propose its o8n ,ersion e,en 8ith respect to ills 8hich are
re!"ired y the /onstit"tion to ori#inate in the Do"se0 .ndeed, 8hat the
/onstit"tion si(ply (eans is that the initiati,e fir filin# re,en"e tariff, or
ta< ills, ills a"thori2in# increase of the p"lic det, pri,ate ills and
ills of local applications ("st co(e fro( the Do"se of Representati,es
on the theory that elected as they are fro( the districts, the (e(ers of
the Do"se can e e<pected to e (ore sensiti,e to the local needs and
prole(s0 On the other hand, he senators 8ho are elected at lar#e are
e<pected to approach the sa(e prole(s fro( the national perspecti,e0
Both ,ie8s are therey (ade to ear on the enact(ent of s"ch la8s0
1here is no !"estion that the re,en"e ill e<cl"si,ely ori#inated in
the Do"se of Representati,es, the $enate 8as actin# 8ithin its
constit"tional po8er to introd"ce a(end(ents to the Do"se ill 8hen it
incl"ded pro,isions in $enate Bill -o )9&* a(endin# corporate inco(e
ta<es, percenta#e, e<c"se and franchise 1a<es0 4erily, Article 4. $ection
5% of the /onstit"tion does not contain any prohiition or li(itation on
the e<tent of the a(end(ents that (ay e introd"ced y the $enate to
Do"se re,en"e ill0
3"rther(ore, the a(end(ents introd"ced y the $enate to the
-.R/ pro,isions that had not een to"ched in the Do"se ills are still in
f"rtherance of the intent of the Do"se in initiatin# the s"Cect re,en"e
ills 8hich is to i(pro,e ta< ad(inistration and control, the leaka#es in
re,en"es fro( inco(e ta<es and the 4A10
1he sections introd"ced y the $enate are #er(ane to the s"Cect
(atter and p"rpose of the ho"se ills, 8hich is to s"pple(ent o"r
co"ntry?s fiscal deficit a(on# others0 1h"s the $enate acted 8ithin its
po8er to propose those a(end(ents0
SUBSTANTI*E ISSUES:
1. .s the stand by authority granted to the resident to increase he
rate of -,3 from 1&4 to 124 an undue delegation of legislative
power?
-o, eca"se there is no dele#ation of le#islati,e po8er in,ol,ed
in this case0 1here is "t si(ply a dele#ation of ascertain(ent of facts
"pon 8hich enforce(ent and ad(inistration of the increase rate "nder the
la8 is contin#ent /on#ress does not adicate its f"nctions or "nd"ly
dele#ate po8er 8hen it descries 8hat Co ("st e done, 8ho ("st do it
and 8hat "s the scope of his a"thority0 1he le#islati,e has (ade the
operation of the )56 rate effecti,e 7an"ary ), 5**' contin#ent "pon a
specified facts of condition0 .t lea,es the entire operation of nonAoperation
of the )56 rate "pon fact"al (atters o"tside of the control of the
e<ec"ti,e0
-o discretion 8o"ld e e<ercised y the President0 Di#hli#htin#
the asence of discretion is the fact that the 8ord GshallH is "sed in the
co((on pro,iso0 1he "se of the 8ord GshallH connotes a (andatory
order0 .ts "se in a stat"te denotes an i(perati,e oli#ation and is
inconsistent 8ith the idea of discretion0 1h"s, it is the (inisterial d"ty of
the President to i((ediately i(pose the )56 rate "pon the e<istence of
any if the conditions specified y /on#ress0 1his is a d"ty 8hich cannot
e e,aded y the President0 .t is a clear directi,e to i(pose the )56 4A1
rate 8hen the specified conditions are present0 1he ti(e of takin# into
effect of the )56 4A1 rate is ased on the happenin# of a certain
specified contin#ency, or "pon the ascertain(ent of certain facts or
conditions y a person or ody other than the le#islat"re itself0
1he /o"rt finds no (erit to the contention that the la8 effecti,ely
n"llified the President?s po8er of control o,er the $ecretary of 3inance y
(andatin# the fi<in# of the ta< rate y the President "pon the
reco((endation of the $ecretary of finance0 -either does the /o"rt find
the pers"asi,e the s"(ission that ay reco((endation y the $ec of
3inance can easily e r"shed aside y the President since the for(er is a
(ere alter e#o of the latter0
Fhen one speaks of the $ec of 3inance as the alter e#o of the
President, it si(ply (eans that as head of the Depart(ent of 3inance he is
the assistant and a#ent of the /hief E<ec"ti,e0 1he acts of the secretaries
of s"ch depart(ents s"ch as the Depart(ent of 3inance, perfor(ed and
pro("l#ated in the re#"lar co"rse of "siness, are "nless disappro,ed or
reproated y the /hief E<ec"ti,e, pres"(pti,ely the acts of the /hief
E<ec"ti,e0
.n the present case, in (akin# his reco((endation to the
President on the e<istence of either of the t8o conditions, the $ec of
3inance is not actin# as the alter e#o of the President or e,en her
s"ordinate0 .n s"ch instance, he is not s"Cect to the po8er of control and
direction of the President0 De is actin# as the a#ent of the le#islati,e
depart(ent to deter(ine and declare the e,ent "pon 8hich its e<pressed
8ill is to take effect0 1he $ecretary of 3inance eco(es the (eans or tool
y 8hich le#islati,e policy is deter(ined and i(ple(ented considerin#
that the possesses all the facilities to #ather data and infor(ation and has
("ch roader perspecti,e to properly e,al"ate the(0 Dis f"nction is to
#ather and collate statistical date and other pertinent infor(ation and
,erily if any of the t8o conditions laid o"t y /on#ress is present0 Dis
personality in s"ch instance is in reality "t a proCection if that of
/on#ress0 1h"s ein# the a#ent of con#ress and not of the President, the
President cannot later or (odify or n"llify or set aside the findin#s of the
$ec of finance and to s"stit"te the C"d#(ent of the for(er for that of the
latter0
As to the ar#"(ent that dele#atin# to the president the le#islati,e
po8er to ac is contrary to the principle of rep"licanis(, the sa(e
deser,es scant consideration0 /on#ress did not dele#ate the po8er to ta<
"t the (ere i(ple(ent of the la80 1he intent and 8ill to increase the
4A1 rate to )56 ca(e fro( /on#ress chose to do in s"ch a (anner is not
8ithin the pro,ince if the /o"rt to in!"ire into, its task ein# to interpret
the la80
2. .s this contingent increase of the -,3 rate a violation of due
process as it imposes an unfair and additional tax burden on the
people.
-o it is not an "nfair and additional ta< "rden on the people eca"se
/on#ress passed the la8 hopin# for resc"e fro( an ine,itale financial
catastrophe0 Fhether the la8 is indeed s"fficient to ans8er the state?s
econo(ic dile((a is not for the /o"rt to C"d#e0 Go,ern(ent policy is
8ithin the e<cl"si,e do(inion of the political ranches of the
#o,ern(ent0 .t is not this co"rt to look into the 8isdo( or propriety of
le#islati,e deter(ination0 .ndeed, 8hether an enact(ent is 8ise or
"n8ise, 8hether it is ased on so"nd econo(ic theory, 8hether it is the
est (eans to achie,e the desired res"lt, 8hether in short the le#islati,e
discretion 8ithin its prescried li(its sho"ld e e<ercised in a partic"lar
(anner, are (atters for the C"d#(ent of the le#islat"re and the serio"s
conflict of opinions does not s"ffice to rin# the( 8ithin the ran#e of
C"dicial co#ni2ance0
.n the sa(e ,ein, the co"rt in this case 8ill not da8dle on the p"rpose
of the /on#ress or the e<ec"ti,e policy, #i,en that t is not for the C"diciary
to pass "pon !"estions of 8isdo(, C"stice or e<pediency of le#islation0
1he la8 clearly does not pro,ide for a ret"rn to the )*6 rate nor does
it e(po8er the President to so re,ert if, after the rate is increased to )56,
the 4at collection foes elo8 the 5 %=& 6 of the GDP of the pre,io"s year
or that the national #o,ern(ent deficit as a percenta#e of the GDP of the
pre,io"s year does not e<ceed ) >60 1herefore no stat"tory constr"ction
or interpretation is needed0 -either can conditions or li(itations e
introd"ced 8here none is pro,ided for0 1here is no asis for petitioners
feat of a fl"ct"atin# 4A1 rate eca"se the la8 itself does not pro,ide that
the rate sho"ld #o ack to )*6 if the conditions pro,ided in $ections %, &
and ' are no lon#er present0 1he r"le is that 8here the pro,ision of the
la8 "s clear and "na(i#"o"s, so that there is no occasion for the co"rt?s
seekin# the le#islati,e intent, the la8 ("st e taken as it is, de,oid of
C"dicial addition or s"traction0
(. Does the imposition of -,3 contravene the rules of uniformity
and e5uitability of taxation provided for in the Constitution?
-o, the la8 "s "nifor( as it pro,ides as a standard rate of *6 or )*6
:or )56; on all #oods and ser,ices0 $ection %, &, and ' of RA -o 9337,
a(endin# $ections 5*', 5*7, 5*+, respecti,ely of the -.R/, pro,ide for a
rate of )*6 :or )56; on sale of #oods and properties, i(portation of
#oods, and sale of ser,ices and "se or lease of properties0 1hese sa(e
sections also pro,ide for a *6 rate on certain sales and transactions0
Unifor(ity in ta<ation (eans that all ta<ale articles or kinds if
property of the sa(e class shall e ta<ed at the sa(e rate0 Different
articles (ay e ta<ed at different a(o"nts pro,ided that the rate is
"nifor( on the sa(e class e,ery8here 8ith all people at all ti(es0
-either does the la8 (ake any distinction as to the type of ind"stry or
trade that 8ill ear the 7*6 li(itation on the creditale inp"t ta<, & year
a(orti2ation of inp"t ta< paid on p"rchase of capital #oods or the &6
8ithholdin# ta< y the #o,ern(ent0 .t ("st e stressed that the r"le of
"nifor( ta<ation does not depri,e /on#ress of the po8er to classify
s"Cects of ta<ation and only de(ands "nifor(ity 8ithin the partic"lar
class0
RA -o 9337 is also e!"itale0 1he la8 is e!"ipped 8ith a threshold
(ar#in0 1he 4A1 rate of *6 or )*6 :or)56; does not apply to sales of
#oods or ser,ices 8ith #ross ann"al sales or receipts not e<ceedin#
P),&**,***0 Also asic (arine and a#ric"lt"ral food prod"cts in their
ori#inal state are still not s"Cect to ta<, th"s ens"rin# that prices at the
#rassroots le,el 8ill re(ain accessile0
.t is ad(itted that RA -o 9337 p"ts a pre(i"( on "siness 8ith lo8
profit (ar#ins and "nd"ly fa,ors those 8ith hi#h profit (ar#ins0 /on#ress
8as not oli,io"s to th"s0 1h"s to e!"ali2e the 8ei#hty "rden the la8
entails, the la8 "nder $ection ))' i(posed a 36 percenta#e ta< on 4A1
e<e(pt persons "nder $ection )*9 i0e0 transactions 8ith #ross ann"al
sales and=or receipts not e<ceedin# P)0& Billion0 1his acts as an e!"ali2er
eca"se in effect, "##er "siness that !"alify for 4A1 co,era#e and 4A1
e<e(pt ta<payers stand on e!"al footin#0 Boreo,er, con#ress pro,ided
(iti#atin# (eas"res to c"shion the i(pact of the i(position of the ta< on
those pre,io"sly e<e(pt0 E<cise ta<es on petrole"( prod"cts and nat"ral
#as 8ere red"ced0 Percenta#e ta< on do(estic carriers 8as re(o,ed0
Po8er prod"cers are not e<e(pt fro( payin# franchise ta<0
Aside fro( these, /on#ress also increased the inco(e ta< rates of
corporations in order to distri"te the "rden of ta<ation0 Do(estic,
forei#n and nonAresident corporations are no8 s"Cect to a 3&6 inco(e
ta< rate, fro( a pre,io"s 3560 .nterAcorporate di,idends of nonAresident
forei#n corporations are still s"Cect to )&6 final 8ithholdin# ta< "t the
ta< credit allo8ed on the corporation?s do(icile 8as increased to 5*60
1he Philippine A("se(ent and Ga(in# /orporation :PAG/OR; is not
e<e(pt fro( inco(e ta<es any(ore0 E,en the sale y an artist of his
8orks or ser,ices perfor(ed for the prod"ction of s"ch 8orks 8as not
spared0
All these 8ere desi#ned to ease, as 8ell as spread o"t the "rden of
ta<ation, 8hich 8o"ld other8ise rest lar#ely on the cons"(ers0 .t cannot
therefore e #ainsaid that RA 9337 is e!"itale0
1. Does the imposition of a )&4 limit on the amount of input tax to
be credited against the output tax militate against the
Constitutional mandate prescribing a progressive system of
taxation?
-o, eca"se the /onstit"tion does not really prohiit the i(position
of indirect ta<es, like the 4A10 Fhat it si(ply pro,ides is that /on#ress
shall e,ol,e a pro#ressi,e syste( of ta<ation0 1he constit"tional pro,ision
has een interpreted to (ean si(ply that direct ta<es are to e preferred
and as ("ch as possile indirect ta<es sho"ld e (ini(i2ed0 .ndeed, the
(andate to /on#ress is not to prescrie, "t to e,ol,e a pro#ressi,e ta<
syste(0
1he 4A1 is an antithesis of pro#ressi,e ta<ation0 By its ,ery nat"re, it
is re#ressi,e0 1he principle of pro#ressi,e ta<ation has no relation 8ith
the 4A1 syste( inas("ch the 4A1 paid y the cons"(er or "siness for
e,ery #oods o"#ht or ser,ices enCoyed is the sa(e re#ardless of inco(e0
.n other 8ords, the 4A1 paid eats the sa(e portion of an inco(e 8hether
i# or s(all0 1he disparity lied in the inco(e earned y a person or profit
(ar#in (arked y a "siness, s"ch that the hi#her the inco(e or profit
(ar#in, the s(aller the portion of the inco(e or profit that is eaten y
4A10 A con,erso, the lo8er the inco(e or profit (ar#in, the i##er the
part that the 4A1 eats a8ay0 At the end of the day, it is really the lo8er
inco(e #ro"p or "siness 8ith lo8 profit (ar#ins that is al8ays hardest
hit0
%. Does the provision re5uiring that the input taxes depreciable
goods shall be amorti6ed over a 7& month period! if the
ac5uisition! excluding the -,3 components! exceeds 1 Million
and imposing a )&4 limit on the amount of input tax to be
credited against the output tax! violate the due process and e5ual
protection clauses of he Constitution?
1here is no ,iolation of d"e process in this case eca"se inp"t ta< is
no a property or a property ri#ht 8ithin the constit"tional p"r,ie8 of the
d"e process cla"se0 A 4A1 re#istered person?s entitle(ent to he creditale
inp"t ta< is a (ere stat"tory pri,ile#e0 1he distinction et8een stat"tory
pri,ile#e0 1he distinction et8een stat"tory pri,ile#es and ,ested ri#hts
("st e orn in (ind for persons ha,e no ,ested ri#hts in stat"tory
pri,ile#es0 1he state (ay chan#e or take a8ay ri#hts, 8hich 8ere created
y the la8 of the state, altho"#h it (ay not take a8ay property, 8hich 8as
,ested y ,irt"e of s"ch ri#hts0

-either is the e!"al protection cla"se i(pin#ed eca"se he po8er of
the $tate to (ake reasonale and nat"ral classifications for the p"rposes
of ta<ation has lon# een estalished0 Fhether it relates to the s"Cect of
ta<ation the kind of property, the rates to e le,ied or the a(o"nts to e
raised the (ethods of assess(ent, ,al"ation and collection the $tate?s
po8er is entitled to pres"(ption of ,alidity0 As a r"le, the C"diciary 8ill
not interfere 8ith s"ch po8er asent a clear sho8in# of "nreasonaleness,
discri(ination or aritrariness0
Petitioner point o"t that the li(itation on the creditale inp"t ta< if the
entity has a hi#h ratio of inp"t or in,ests in capital e!"ip(ent or has
se,eral transactions 8ith the #o,ern(ent is not ased on real and
s"stantial differences to (eet a ,alid classification0 1he ar#"(ent is
pedantic, if not o"tri#ht aseless0 1he la8 does not (ake any
classification in the s"Cect of ta<ation, the kind of property, the rates to
e le,ied or the a(o"nts to e raised, the (ethods of assess(ent,
,al"ation and collection0 Petitioners? alle#ed distinctions are ased on
,ariale that ear different conse!"ences0 Fhile the i(ple(entation of
the la8 (ay yield ,aryin# end res"lts dependin# on one?s profit (ar#in
and ,al"e added, the /o"rt cannot #o eyond 8hat the le#islat"re has laid
do8n and interfere 8ith the affairs of "siness0 E!"al protection does not
re!"ire the "ni,ersal application of the la8s on all persons or thin#s
8itho"t distinction0 Fhat the cla"ses re!"ires is e!"ally a(on# e!"als as
deter(ined accordin# to a ,alid classification0 By classification is (eant
the #ro"pin# of persons or thin#s si(ilar to each other in certain
partic"lars and different fro( all others in these sa(e partic"lars0