Abakda

facts: On May 24, 2005, the President signed into law Republic Act 9337 or the VAT Reform Act.
There was a TRO issued by the Court before the law could take effect on July 1 2005 which enjoined
government from implanting the law in response to a slew of petitions for certiorari and prohibition
questioning the constitutionality of the new law. ABAKADA GURO Party List challenged the
constitutionality of RA No. 9337 particularly Sections 4, 5 and 6 amending Sections 106, 107 and
108, respectively, of the National Internal Revenue Code (NIRC). These questioned provisions
contain 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 any of the following conditions
have been satisfied, to wit: That the President, upon the recommendation of the Secretary of Finance,
shall, effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any
of the following conditions hasmbeen satisfied: 4.a Value-added tax collection as a percentage of
Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%); or
4.b National government deficit as a percentage of GDP of the previous year exceeds one and one-
half percent (1 ½%). Petitioners argue that the law is unconstitutional, as it constitutes abandonment
by Congress of its exclusive authority to fix the rate of taxes under Article VI, Section 28(2) of the
1987 Philippine Constitution. They argue that VAT is a tax levied on the sale or exchange of goods
and services which cannot be included within the purview of tariffs under the exemption delegation
since this refers to customs duties, tolls or tribute payable upon merchandise to the government and
usually imposed on imported/exported goods. They also said that the President has powers to cause,
influence or create the conditions provided by law to bring about the conditions precedent. Moreover,
they allege that no guiding standards are made by law as to how the Secretary of Finance will make
the recommendation. They claim, nonetheless, that any recommendation of the Secretary of Finance
can easily be brushed aside by the President since the former is a mere alter ego of the latter, such
that, ultimately, it is the President who decides whether to impose the increased tax rate or not. Aside
from questioning the so-called stand-by authority of the President to increase the VAT rate to 12%, on
the ground that it amounts to an undue delegation of legislative power, petitioners also contend that
the increase in the VAT rate to 12% contingent on any of the two conditions being satisfies violates
the due process clause embodied in Art. 3, Sec. 1 of the Constitution, as it imposes an unfair and
additional tax burden on the people in that: 1. The 12% increase is ambiguous because it does not
state if the rate would be returned to the original 10% if the conditions are no longer satisfied; 2. The
rate is unfair and unreasonable, as the people are unsure of the applicable VAT rate from year to year;
and 3. The increase in the VAT rate, which is supposed to be an incentive to the President to raise the
VAT collection to at least 2 4/5 of the GDP of the previous year, should only be based on fiscal
adequacy. Petitioners’ further claim that the inclusion of a stand-by authority granted to the President
by the Bicameral Conference Committee is a violation of the “no amendment rule” upon last reading
of a bill laid down in Art. 6, Sec. 26(2) of the Constitution.

issue: WON RA 9337 has violated the provisions in Art. 6, Sec. 24 and 26(2) of the Constitution.
WON there was an undue delegation of legislative power in violation of Art. 6, Sec. 28 par. 1 and 2
of the Constitution. WON there was a violation of the due process and equal protection under Art. 3,
Sec. 1 of the Constitution.
rulings: RA 9337 has not violated the provisions. The revenue bill exclusively originated in the HOR,
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,
excise and franchise taxes. Verily, Art. 6, Sec. 24 of the Constitution does not contain any prohibition
or limitation on the extent of the amendments that may be introduced by the Senate to the House
revenue bill. 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. The equal protection clause under the Constitution means that “no
arturo tolentino case: facts: The valued-added tax (VAT) is levied on the sale, barter or exchange of
goods and properties as well as on the sale or exchange of services. It is equivalent to 10% of the
gross selling price or gross value in money of goods or properties sold, bartered or exchanged or of
the gross receipts from the sale or exchange of services. Republic Act No. 7716 seeks to widen the
tax base of the existing VAT system and enhance its administration by amending the National Internal
Revenue Code. The Chamber of Real Estate and Builders Association (CREBA) contends that the
imposition of VAT on sales and leases by virtue of contracts entered into prior to the effectivity of the
law would violate the constitutional provision of “non-impairment of contracts.” issue: Whether R.A.
No. 7716 is unconstitutional on ground that it violates the constitutional provision of “nonimpairment
of contracts.”? ruling No. The Supreme Court the contention of CREBA, that the imposition of the
VAT on the sales and leases of real estate by virtue of contracts entered into prior to the effectivity of
the law would violate the constitutional provision of non-impairment of contracts, is only slightly
less abstract but nonetheless hypothetical. It is enough to say that the parties to a contract cannot,
through the exercise of prophetic discernment, fetter the exercise of the taxing power of the State.
For not only are existing laws read into contracts in order to fix obligations as between parties, but
the reservation of essential attributes of sovereign power is also read into contracts as a basic
postulate of the legal order. The policy of protecting contracts against impairment presupposes the
maintenance of a government which retains adequate authority to secure the peace and good order of
society. In truth, the Contract Clause has never been thought as a limitation on the exercise of the
State's power of taxation save only where a tax exemption has been granted for a valid consideration.
Further, the Supreme Court held the validity of Republic Act No. 7716 in its formal and substantive
aspects as this has been raised in the various cases before it. To sum up, the Court holds: (1) That the
procedural requirements of the Constitution have been complied with by Congress in the enactment
of the statute; (2) That judicial inquiry whether the formal requirements for the enactment of statutes
- beyond those prescribed by the Constitution - have been observed is precluded by the principle of
separation of powers; (3) That the law does not abridge freedom of speech, expression or the press,
nor interfere with the free exercise of religion, nor deny to any of the parties the right to an
education; and (4) That, in view of the absence of a factual foundation of record, claims that the law
is regressive, oppressive and confiscatory and that it violates vested rights protected under the
Contract Clause are prematurely raised and do not justify the grant of prospective relief by writ of
prohibition. The petitions are DISMISSED.