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Case #10.

ABAKADA vs Ermita


For resolution are the various motion for reconsideration of the Court's decision
upholding the constitutionality of RA No. 9337 or the VAT Reform Act. The motions are
filed by petitioners in GR No. 168463, Escudero, et al., in GR No. 168730 by Bataan
Governor Garcia and in GR No. 168461 by petitioners Association of Pilipinas Shell
Dealers Inc. Respondents filed their consolidated comment and petitioner Garcia filed
his reply. Petitioners Escudero, 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. 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. 9337’s 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.

Issue: Whether there is an undue delegation of legislative power to the

Executive's standby authority especially on account of his recommendatory power.


No there is no undue delegation of the legislative power but only of the discretion
as to the execution of the law. 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. Congress granted the Secretary of Finance the authority to
ascertain the existence of a fact, namely, whether by December 31, 2005, the value-
added tax collection as a percentage of GDP of the previous year exceeds two and
four-fifth percent (24/5%) or the national government deficit as a percentage of GDP of
the previous year exceeds one and one-half percent (1½%). If either of these two
instances has occurred, the Secretary of Finance, by legislative mandate, must submit
such information to the President. Then the 12% VAT rate must be imposed by the
President effective January 1, 2006. CONGRESS DOES NOT ABDICATE ITS
AUTHORITY; in our complex economy that is frequently the only way in which the
legislative process can go forward. 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 did not delegate the power to tax but the mere implementation of
the law. The intent and will to increase the VAT rate to 12% came from Congress and
the task of the President is to simply execute the legislative policy. That Congress
chose to use the GDP as a benchmark to determine economic growth is not within the
province of the Court to inquire into, its task being to interpret the law.



Republic Act No. 7719 or the National Blood Services Act of 1994 was enacted into law
in 1994. It seeks to provide an adequate supply of safe blood by promoting voluntary
blood donation and by regulating blood banks in the country.

Section 7 of R.A. 7719 provides:

“All commercial blood banks shall be phased-out over a period of 2 years after
the effectivity of this Act, extendable to a maximum period of 2 years by the

Consequently, the Secretary of DOH promulgated the Implementing Rules and

Regulations of said law. It is provided in the IRR that the DOH shall effect the phasing-
out of all commercial blood banks over a period of two 2 years and the decision to
extend for another 2 years shall be based on the result of a careful study and review of
the blood supply and demand and public safety.

Years prior to the passage of RA 7719, petitioners have already been operating
commercial blood banks under Republic Act No. 1517. This law allowed the
establishment and operation by licensed physicians of blood banks and blood
processing laboratories.

Meanwhile, in the international scene, concern for the safety of blood and blood
products intensified when AIDS was first described in 1979. In response to this, the
International Society of Blood Transfusion formulated the Code of Ethics for Blood
Donation and Transfusion.

In 1994, based on a study of the New Tropical Medicine Foundation, with the assistance
of the U.S. Agency for International Development (USAID), it was shown that the
Philippines heavily relied on commercial sources of blood. The study likewise revealed
that most of the donors of commercial blood banks are paid donors. On the other hand,
blood donors of government-run hospitals are mostly voluntary. The study further found
that blood sold by persons to blood commercial banks are three times more likely to
have infections or blood transfusion transmissible diseases like malaria, Hepatitis B and

So, when RA 7719 was passed and the subsequent issuance of its IRR by the
Secretary of Health, the petitioners consisting of commercial blood banks and other
intervenors challenged the constitutionality of Section 7 of RA 7719 and it’s IRR. They
contend that:

1. The phase out of commercial or free standing blood banks is unconstitutional

because it is an improper and unwarranted delegation of legislative power.
According to petitioners, the Act was incomplete when it was passed by the
Legislature, and the latter failed to fix a standard to which the Secretary of Health
must conform in the performance of his functions.
2. The law and its IRR violate the equal protection clause because it unduly
discriminates against commercial or free standing blood banks in a manner that
is not germane to the purpose of the law.
3. The phase out of the commercial blood banks will be disadvantageous to them
as it will affect their businesses and existing contracts with hospitals and other
health institutions, hence Section 7 of the Act violates the non-impairment clause
provided by the Constitution.



Republic Act No. 7719 or the National Blood Services Act of 1994 is complete in itself. It
is clear from the provisions of the Act that the Legislature intended primarily to
safeguard the health of the people and has mandated several measures to attain this
objective. One of these is the phase out of commercial blood banks in the country. The
law has sufficiently provided a definite standard for the guidance of the Secretary of
Health in carrying out its provisions, that is, the promotion of public health by providing a
safe and adequate supply of blood through voluntary blood donation. By its provisions, it
has conferred the power and authority to the Secretary of Health as to its execution, to
be exercised under and in pursuance of the law.

The authority of Secretary of Health to promulgate IRR for the act is clearly defined
under Section 11 of RA 7719 which provides that the implementation of the provisions
of the Act shall be in accordance with the rules and regulations to be promulgated by
the Secretary, within 60 days from the approval hereof.


Legislature never intended for the law to create a situation in which unjustifiable
discrimination and inequality shall be allowed. To effectuate its policy, a classification
was made between nonprofit blood banks/centers and commercial blood banks.

1. The act was based on substantial distinctions. The former operates for purely
humanitarian reasons and as a medical service while the latter is motivated by
profit. Also, while the former wholly encourages voluntary blood donation, the
latter treats blood as a sale of commodity.
2. The classification, and the consequent phase out of commercial blood banks is
germane to the purpose of the law, that is, to provide the nation with an adequate
supply of safe blood by promoting voluntary blood donation and treating blood
transfusion as a humanitarian or medical service rather than a commodity.
3. The Legislature intended for the general application of the law. Its enactment was
not solely to address the peculiar circumstances of the situation nor was it
intended to apply only to the existing conditions.
4. The law applies equally to all commercial blood banks without exception.


It has be held settled in the case of Philippine Association of Service Exporters, Inc. v.
Drilon, that the non-impairment clause of the Constitution must yield to the loftier
purposes targeted by the government. The right granted by this provision must submit
to the demands and necessities of the State’s power of regulation.

Furthermore, the freedom to contract is not absolute; all contracts and all rights are
subject to the police power of the State and not only may regulations which affect them
be established by the State, but all such regulations must be subject to change from
time to time, as the general well-being of the community may require, or as the
circumstances may change, or as experience may demonstrate the necessity.
In the instant case, the National Blood Services Act was enacted in the exercise of the
State’s police power in order to promote and preserve public health and safety. The
promotion of public health is a fundamental obligation of the State. The health of the
people is a primordial governmental concern.

Lastly, it has been found that commercial blood banking is not safe because a donor
who expects payment for his blood will not tell the truth about his illnesses and will deny
any risky social behavior such as sexual promiscuity which increases the risk of having
syphilis or AIDS.



This case is a petition for certiorari and prohibition brought by members of Congress
representing the legislative districts in South Cotobato, Zamboanga del Norte, Basilan,
Lanao del Norte and Zamboanga City. They challenged thevalidity of a provision of
R.A. No. 6734 or Organic Act for the Autonomous Region in Muslim Mindanao,
authorizing the President of the Philippines to "merge" by administrative determination
the regions remaining after the establishment of the Autonomous Region.

Congress passed R.A. No. 6734 pursuant to Art. X, Section 18 of the 1987 Constitution
calling for a plebiscite to be held in 12 provinces and 8 cities in Mindanao plus the
province of Palawan and the city of Puerto Princessa.

Four provinces voted in favor of creating an autonomous region. These are the
provinces of Lanao del Sur, Maguindanao, Sulu and Tawi-Tawi. In accordance with the
constitutional provision, these provinces became the Autonomous Region in Muslim

With respect to those that did not vote for the inclusion in Autonomous Region, Art. 19,
Section 13 of R.A. No. 6734 provides that they shall remain in the existing
administrative regions. Provided, however, that the President may, by administrative
determination, merge the existing regions.

Pursuant to this provision, then President Aquino issued EO 429 which provided for the
Reorganization of the Administrative Regions in Mindanao. Thus:

1. Misamis Occidental became part of Region IX.

2. Oroquieta City, Tangub City and Ozamiz City became parts of Region IX.
3. South Cotobato became part of Region XII.
4. General Santos City, became part of Region XII.
5. Lanao del Norte became part of Region IX.
6. Iligan City and Marawi City became part of Region IX.

Before the petitioners brought the matter to the SC, the first wrote then President
Aquino protesting E.O. No. 429. But it was unheeded.

In their petition to the SC, they contend that:

1. Sec. 13, Art. 19, R.A. 6734 is specific to the point that the provinces and cities
which did not vote for inclusion in the Autonomous Region shall remain in the
existing administrative regions.

2. The President's authority under RA 6734 to "merge existing regions" cannot be

construed to include the authority to reorganize them. To do so will violate the
rules of statutory construction. Moreover, while this reorganization does not affect
the apportionment of congressional representatives, the same is not valid under
Sec. 13, Art. XIX of R.A. 6734 and ordinance appended to the 1986 Constitution
apportioning the seats of the House of Representatives of Congress to the
different legislative districts in provinces and cities.

3. Art. 19, Section 13 of R.A. No. 6734 is unconstitutional because it unduly

delegates legislative power to the President by authorizing him to "merge the
existing regions" which provides no standard for the exercise of the power

The Solicitor General defends the reorganization of regions in Mindanao by E.O. No.
429 stating that:

1. It is a mere incident of the President’s power of general supervision over local

governments and control of executive departments, bureaus and offices under
Art. X, Section 16 and Art. VII, Section 17.

2. There is no undue delegation of legislative power but only a grant of the power to
"fill up" or provide the details of legislation because Congress did not have the
facility to provide for them.
3. P.D. No. 1416, as amended by P.D. No. 1772 which provides that the President
shall have the continuing authority to reorganize the National Government.

SC Ruling:

The Supreme Court, in resolving the issue, recalled and discussed the nature of
administrative regions and the basis and purpose for their creation.

In 1968, the President was authorized, with the help of a Commission on

Reorganization, to reorganize the different executive departments, bureaus, offices,
agencies and instrumentalities of the government, including banking or financial
institutions and corporations owned or controlled by it by virtue of R.A. No. 5435. The
purpose was to promote "simplicity, economy and efficiency in the government."

Thus, when the President merged and reorganized the existing regions following the
establishment of the Autonomous Region in Muslim Mindanao pursuant to RA 6734, he
merely followed the pattern set in previous legislation dating back to the initial
organization of administrative regions in 1972.

Thus, a legislative standard need not be expressed. It may simply be gathered or

implied. It does not also necessary be in the law challenged because it may be
embodied in other statutes on the same subject as that of the challenged legislation.

In the instant case, the standard is to be found in the same policy underlying the grant
to the President in R.A. No. 5435 which is "to promote simplicity, economy and
efficiency in the government to enable it to pursue programs consistent with national
goals for accelerated social and economic development and to improve the service in
the transaction of the public business."

Lastly, the contention of the petitioners that the authority of the President under RA
6734 does not include reorganization is bereft of merit. RA 6734 provides that "the
President may by administrative determination merge the existing regions." This means
that while these provinces and cities are to remain in the regions as designated upon
the creation of the Autonomous Region, they may nevertheless be regrouped with
contiguous provinces forming other regions as the exigency of administration may