Abakada Guro Party List, et al vs Exec. Sec.

Ermita

Facts: 

Petitioners allege that the grant of stand-by authority to the President to increase the
VAT rate is an abdication by Congress of its exclusive power to tax because such
delegation is not covered by Section 28 (2), Article VI Consti. They argue that VAT is a
tax levied on the sale or exchange of goods and services which can’t 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. 

Issue: Whether or not the RA 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? NO 

Held: The powers which Congress is prohibited from delegating are those which are
strictly, or inherently and exclusively, legislative. Purely legislative power which can
never be delegated is the authority to make a complete law- complete as to the time
when it shall take effect and as to whom it shall be applicable, and to determine the
expediency of its enactment. It is the nature of the power and not the liability of its use
or the manner of its exercise which determines the validity of its delegation. 

The exceptions are: 

(a) delegation of tariff powers to President under Constitution

(b) delegation of emergency powers to President under Constitution

(c) delegation to the people at large 

(d) delegation to local governments 

(e) delegation to administrative bodies 

For the delegation to be valid, it must be complete and it must fix a standard. A
sufficient standard is one which defines legislative policy, marks its limits, maps out its
boundaries and specifies the public agency to apply it. 
In this case, it is not a delegation of legislative power BUT a delegation of ascertainment
of facts upon which enforcement and administration of the increased rate under the law
is contingent. The legislature has made the operation of the 12% rate effective January
1, 2006, contingent upon a specified fact or condition. It leaves the entire operation or
non-operation of the 12% rate upon factual matters outside of the control of the
executive. No discretion would be exercised by the President. Highlighting the absence
of discretion is the fact that the word SHALL is used in the common proviso. The use of
the word SHALL connotes a mandatory order. Its use in a statute denotes an imperative
obligation and is inconsistent with the idea of discretion.