G.R. No. 168056 (ABAKADA Guro Party List Officer Samson S. Alcantara, et al. vs.

The
Hon. Executive Secretary Eduardo R. Ermita); G.R. No. 168207 (Aquilino Q. Pimentel, Jr.,
et al. vs. Executive Secretary Eduardo R. Ermita, et al.); G.R. No. 168461 (Association of
Pilipinas Shell Dealers, Inc., et al. vs. Cesar V. Purisima, et al.); G.R. No. 168463 (Francis
Joseph G. Escudero vs. Cesar V. Purisima, et al); 'and G.R. No. 168730 (Bataan Governor
Enrique T. Garcia, Jr. vs. Hon. Eduardo R. Ermita, et al.)

FACTS:

Prior to the effectivity of R.A. No. 9337, herein petitioners ABAKADA GURO Party List, et
al. filed before the court a petition for prohibition on May 27, 2005 assailing the constitutionality
of Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of
the National Internal Revenue Code (NIRC).

Section 4 of such act imposes a 10% VAT on sale of goods and properties, While Section 5
imposes a 10% VAT on importation of goods, and Section 6 imposes a 10% VAT on sale of
services and use or lease of properties. Said 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 specified conditions have been satisfied. Petitioners argue that
the law is unconstitutional.

ISSUE:

Whether or not the R.A. No. 9337 or the Vat Reform Act is constitutional?

RULING:

NO. The Court is not persuaded. Article VI, Section 24 of the Constitution provides:

Sec. 24 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.
As the Court stated in its Decision, the right to credit the input tax is a mere creation of law. Prior
to the enactment of multi-stage sales taxation, the sales taxes paid at every level of distribution
are not recoverable from the taxes payable. With the advent of Executive Order No. 273
imposing a 10% multi-stage tax on all sales, it was only then that the crediting of the input tax
paid on purchase or importation of goods and services by VAT-registered persons against the
output tax was established. This continued with the Expanded VAT Law (R.A. No. 7716), and
The Tax Reform Act of 1997 (R.A. No. 8424). The right to credit input tax as against the output
tax is clearly a privilege created by law, a privilege that also the law can limit. It should be
stressed that a person has no vested right in statutory privileges.

WHEREFORE, the Motions for Reconsideration are hereby DENIED WITH FINALITY. The
temporary restraining order issued by the Court is LIFTED.