Non-delegation of the power to tax under the Philippine Taxation Law

(Abakada Guro Party List v. Ermita [469 SCRA 1,122,123-124])

The Supreme Court sustained the constitutionality of R.A. 9337 authorizing the President to increase the VAT rate from 10% to 12% effective January 1, 2006 upon recommendation of the Secretary of Finance on the existence of either of the two conditions.


No, 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.

It complies with the
a. Completeness test
b. Sufficient-standard test

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. 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.

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.

In such instance, he is not subject to the power of control and direction of the President. 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.

Note: Cannot invoke flexible tariff clause. FTC does not include Tax rate, VAT. It only includes tariff rates, import and export of quotas.

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