ABAKADA, et al. vs.

Ermita

Facts: They argue that the VAT is a tax levied on the sale, barter or exchange of goods and properties as
well as on the sale or exchange of services, which cannot be included within the purview of tariffs under
the exempted delegation as the latter refers to customs duties, tolls or tribute payable upon merchandise
to the government and usually imposed on goods or merchandise imported or exported. 
Petitioners ABAKADA GURO Party List, et al., further contend that delegating to the President the
legislative power to tax is contrary to republicanism. They insist that accountability, responsibility and
transparency should dictate the actions of Congress and they should not pass to the President the
decision to impose taxes. They also argue that the law also effectively nullified the President’s power of
control, which includes the authority to set aside and nullify the acts of her subordinates like the Secretary
of Finance, by mandating the fixing of the tax rate by the President upon the recommendation of the
Secretary of Finance.
Facts:
1. RA 9337: VAT Reform Act enacted on May 24, 2005.
2. Sec. 4 (sales of goods and properties), Sec. 5 (importation of goods) and Sec. 6 (services and lease of
property) of RA 9337, in collective, granted the Secretary of Finance the authority to ascertain:
a. whether by 12/31/05, the VAT collection as a percentage of the 2004 GDP exceeds 2.8% or
b. the nat’l gov’t deficit as a percentage of the 2004 GDP exceeds 1.5%

3. If either condition is met, the Sec of Finance must inform the President who, in turn, must impose the
12% VAT rate (from 10%) effective January 1, 2006.
4. ABAKADA maintained that Congress abandoned its exclusive authority to fix taxes and that RA 9337
contained a uniform proviso authorizing the President upon recommendation by the DOF Secretary to
raise VAT to 12%.
5. Sen Pimentel maintained that RA 9337 constituted undue delegation of legislative powers and a
violation of due process since the law was ambiguous and arbitrary. Same with Rep. Escudero.
6. Pilipinas Shell dealers argued that the VAT reform was arbitrary, oppressive and confiscatory.
7. Respondents countered that the law was complete, that it left no discretion to the President, and that it
merely charged the President with carrying out the rate increase once any of the 2 conditions arise.

Issue: WON there was undue delegation – No.

Ratio:
1. Constitution allows as under exempted delegation the delegation of tariffs, customs duties, and other
tolls, levies on goods imported and exported. VAT is tax levied on sales of goods and services which
could not fall under this exemption. Hence, its delegation if unqualified is unconstitutional.
2. Legislative power is authority to make a complete law. Thus, to be valid, a law must be complete in
itself, setting forth therein the policy and it must fix a standard, limits of which are sufficiently determinate
and determinable.
3. No undue delegation when congress describes what job must be done who must do it and the scope of
the authority given. (Edu v Ericta)
4. Sec of Finance was merely tasked to ascertain the existence of facts. All else was laid out.
5. Mainly ministerial for the sec to ascertain the facts and for the president to carry out the implementation
for the vat. They were agents of the legislative dept.
6. No delegation but mere implementation of the law.