G.R. No. 168056, October 18, 2005
Case Parties/Title: ABAKADA Guro Party List Officer Samson S. Alcantara, et al. vs. The Hon. Executive Secretary Eduardo R. Ermita; Aquilino Q. Pimentel, Jr., et al. vs. Executive Secretary Eduardo R. Ermita, et al.; Association of Pilipinas Shell Dealers, Inc., et al. vs. Cesar V. Purisima, et al.; Francis Joseph G. Escudero vs. Cesar V. Purisima, et al.; and Bataan Governor Enrique T. Garcia, Jr. vs. Hon. Eduardo R. Ermita, et al.

FACTS

Motions for Reconsideration were filed challenging the Court’s September 1, 2005 Decision upholding the constitutionality of Republic Act No. 9337 (the VAT Reform Act). The motions raised several grounds: 1) by petitioners Escudero, et al., arguing that the bicameral conference committee’s deletion of “no pass-on provisions” for petroleum products and power generation services constituted grave abuse of discretion, that the law violated the constitutional rule on the exclusive origination of revenue bills, and that the stand-by authority for the Executive to increase the VAT rate constituted undue delegation of legislative power; 2) by petitioner Garcia, arguing the law was arbitrary, oppressive, and inequitable for burdening consumers with higher prices compared to a 3% gross tax; and 3) by petitioners Association of Pilipinas Shell Dealers, Inc., arguing that specific provisions (Sections 110(A)(2), 110(B), and 114(C) of the NIRC, as amended) were unconstitutional for being arbitrary, oppressive, confiscatory, and for violating due process, equal protection, and the constitutional requirement for a progressive tax system.

ISSUE

The primary issues for reconsideration were: 1) Whether the bicameral conference committee committed grave abuse of discretion in deleting the “no pass-on provisions”; 2) Whether R.A. No. 9337 violated the constitutional rule on the exclusive origination of revenue bills; 3) Whether the stand-by authority for the Executive to increase the VAT rate constituted undue delegation of legislative power; 4) Whether the law was arbitrary, oppressive, and inequitable for burdening consumers; and 5) Whether specific amended NIRC provisions on input VAT credit and withholding were unconstitutional for violating due process, equal protection, and the mandate for a progressive tax system.

RULING

The Court denied the motions for reconsideration and affirmed its September 1, 2005 Decision. On the first issue, the Court held the bicameral conference committee properly acted on the differences between the House and Senate bills regarding the no-pass on provisions. The presence of the provision in the House version and its absence in the Senate version constituted a conflict that the committee was mandated to settle. The deletion also aligned the law with the nature of VAT as a consumption tax ultimately borne by the end-consumer. On the second issue, the Court reiterated its ruling from Tolentino vs. Secretary of Finance that the constitutional requirement (Article VI, Section 24) pertains to the origination of the bill, not the final law. The Senate has the power to propose amendments, even extensive ones, to revenue bills originating in the House, and this does not violate the Constitution. On the third issue, the Court maintained that the stand-by authority granted to the President, based on specific quantitative conditions, did not constitute undue delegation of legislative power. On the fourth issue, the Court found the argument that the law was arbitrary and oppressive unpersuasive. On the fifth issue, the Court upheld the constitutionality of the challenged NIRC provisions, finding they were not arbitrary, oppressive, confiscatory, and did not violate due process, equal protection, or the progressive tax mandate. The Court emphasized that the internal rules of the House regarding its conference committee panel’s conduct are beyond judicial inquiry, and mere failure to conform to parliamentary usage does not invalidate an action agreed upon by the requisite number of members.