Principle of Non-Delegation of Powers

On “President’s Stand-by Authority” to raise the VAT rate from 10% to 12% under RA
9337: Does it constitute a virtual abdication by Congress of its exclusive power to tax.

They argue that VAT (a tax levied on the sale, barter or exchange of goods and
properties as well as on the sale or exchange of services) cannot be included within the
purview of tariffs under the exempted delegation as the latter refers to customs duties,
tolls or tribute payable upon merchandise to the government and usually imposed on
goods or merchandise imported or exported.

A logical corollary to the Doctrine of Separation of Powers is the Principle of Non-

Delegation of Powers, as expressed in the Latin maxim: potestas delegata non delegari
potest which means "what has been delegated, cannot be delegated."38 This doctrine
is based on the ethical principle that such as delegated power constitutes not only a
right but a duty to be performed by the delegate through the instrumentality of his own
judgment and not through the intervening mind of another.

With respect to the Legislature, Section 1 of Article VI of the Constitution provides that
"the Legislative power shall be vested in the Congress of the Philippines which shall
consist of a Senate and a House of Representatives." 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, has been described
as 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. Thus, the rule is that in order that a court may be justified in holding a
statute unconstitutional as a delegation of legislative power, it must appear that the
power involved is purely legislative in nature – that is, one appertaining exclusively to
the legislative department. 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.

Nonetheless, the general rule barring delegation of legislative powers is subject to the
following recognized limitations or exceptions:

1. Delegation of tariff powers to the President under Section 28 (2) of Article VI of the
Constitution;
2. Delegation of emergency powers to the President under Section 23 (2) of Article VI of
the Constitution;
3. Delegation to the people at large;
4. Delegation to local governments; and
5. Delegation to administrative bodies.

In every case of permissible delegation, there must be a showing that the

delegation itself is valid. It is valid only if the law (a) is complete in itself, setting forth
therein the policy to be executed, carried out, or implemented by the delegate; and (b)
fixes a standard — the limits of which are sufficiently determinate and determinable —
to which the delegate must conform in the performance of his functions. A sufficient
standard is one which defines legislative policy, marks its limits, maps out its boundaries
and specifies the public agency to apply it. It indicates the circumstances under which
the legislative command is to be effected. Both tests are intended to prevent a total
transference of legislative authority to the delegate, who is not allowed to step into the
shoes of the legislature and exercise a power essentially legislative.

In People vs. Vera, the Court, through eminent Justice Jose P. Laurel, expounded on
the concept and extent of delegation of power in this wise:

‘The true distinction ... is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or
discretion as to its execution, to be exercised under and in pursuance of the law. The
first cannot be done; to the latter no valid objection can be made.’

Clearly, the legislature may delegate to executive officers or bodies the power to
determine certain facts or conditions, or the happening of contingencies, on which the
operation of a statute is, by its terms, made to depend, but the legislature must
prescribe sufficient standards, policies or limitations on their authority. While the power
to tax cannot be delegated to executive agencies, details as to the enforcement and
administration of an exercise of such power may be left to them, including the power to
determine the existence of facts on which its operation depends.

The rationale for this is that the preliminary ascertainment of facts as basis for the
enactment of legislation is not of itself a legislative function, but is simply ancillary to
legislation. Thus, the duty of correlating information and making recommendations is the
kind of subsidiary activity which the legislature may perform through its members, or
which it may delegate to others to perform. Intelligent legislation on the complicated
problems of modern society is impossible in the absence of accurate information on the
part of the legislators, and any reasonable method of securing such information is
proper. The Constitution as a continuously operative charter of government does not
require that Congress find for itself every fact upon which it desires to base legislative
action or that it make for itself detailed determinations which it has declared to be
prerequisite to application of legislative policy to particular facts and circumstances
impossible for Congress itself properly to investigate.

The case before the Court is not a delegation of legislative power. It is simply a
delegation of ascertainment of facts upon which enforcement and administration of the
increase 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. 
Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon
the existence of any of the conditions specified by Congress. This is a duty which
cannot be evaded by the President. Inasmuch as the law specifically uses the word
shall, the exercise of discretion by the President does not come into play. It is a clear
directive to impose the 12% VAT rate when the specified conditions are present. The
time of taking into effect of the 12% VAT rate is based on the happening of a certain
specified contingency, or upon the ascertainment of certain facts or conditions by a
person or body other than the legislature itself.

Pimentel, et al. that the word shall should be interpreted to mean may in view of the
phrase "upon the recommendation of the Secretary of Finance." Neither does the Court
find persuasive the submission of petitioners Escudero, et al. that any recommendation
by the Secretary of Finance can easily be brushed aside by the President since the
former is a mere alter ego of the latter.

In the present case, 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. 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. His
personality in such instance is in reality but a projection of that of Congress. Thus, being
the agent of Congress and not of the President, the President cannot alter or modify or
nullify, or set aside the findings of the Secretary of Finance and to substitute the
judgment of the former for that of the latter.

Reference:  ABAKADA Guro Party List vs. Ermita, GR 168056 (2005 – En Banc)