Abakada Guro v. Ermita G.R. No.

168056, July 5, 2005

J. Puno
Facts: Motions for Reconsideration filed by petitioners, ABAKADA Guro
party List Officer and et al.,insist that the bicameral conference
committee should not even have acted on the no pass-on provisions
since there is no disagreement between House Bill Nos. 3705 and 3555
on the one hand, and Senate Bill No. 1950 on the other, with regard to
the no pass-on provision for the sale of service for power generation
because both the Senate and the House were in agreement that the
VAT burden for the sale of such service shall not be passed on to the
end-consumer. As to the no pass-on provision for sale of petroleum
products, petitioners argue that the fact that the presence of such a no
pass-on provision in the House version and the absence thereof in the
Senate Bill means there is no conflict because a House provision
cannot be in conflict with something that does not exist.Escudero, et.
al., also contend that Republic Act No. 9337 grossly violates the
constitutional imperative on exclusive origination of revenue bills
under Section 24 of Article VI of the Constitution when the Senate
introduced amendments not connected with VAT Petitioners Escudero,
et al., also reiterate that R.A. No. 9337s stand- by authority to the
Executive to increase the VAT rate, especially on account of the
recommendatory power granted to the Secretary of Finance,
constitutes undue delegation of legislative power. They submit that the
recommendatory power given to the Secretary of Finance in regard to
the occurrence of either of two events using the Gross Domestic
Product (GDP) as a benchmark necessarily and inherently required
extended analysis and evaluation, as well as policy making. Petitioners
also reiterate their argument that the input tax is a property or a
property right. Petitioners also contend that even if the right to credit
the input VAT is merely a statutory privilege, it has already evolved into
a vested right that the State cannot remove.
Issue: Whether or not the R.A. No. 9337 or the Vat Reform Act is
constitutional?
Held: The Court is not persuaded. Article VI, Section 24 of the
Constitution provides that All appropriation, revenue or tariff bills, bills
authorizing increase of the public debt, bills of local application, and
private bills shall originate exclusively in the House of Representatives,
but the Senate may propose or concur with amendments.
The Court reiterates that in making his recommendation to the
President on the existence of either of the two conditions, the
Secretary of Finance is not acting as the alter ego of the President or
even her subordinate. He is acting as the agent of the legislative

department, to determine and declare the event upon which its

expressed will is to take effect. The Secretary of Finance becomes the
means or tool by which legislative policy is determined and
implemented, considering that he possesses all the facilities to gather
data and information and has a much broader perspective to properly
evaluate them. His function is to gather and collate statistical data and
other pertinent information and verify if any of the two conditions laid
out by Congress is present.
In the same breath, the Court reiterates its finding that it is not a
property or a property right, and a VAT-registered persons entitlement
to the creditable input tax is a mere statutory privilege. As the Court
stated in its Decision, the right to credit the input tax is a mere
creation of law. More importantly, the assailed provisions of R.A. No.
9337 already involve legislative policy and wisdom. So long as there is
a public end for which R.A. No. 9337 was passed, the means through
which such end shall be accomplished is for the legislature to choose
so long as it is within constitutional bounds. The Motions for
Reconsideration are hereby DENIED WITH FINALITY. The temporary
restraining order issued by the Court is LIFTED