Section 12 of Republic Act No. 9335, creating a Joint Congressional Oversight Committee with the power to approve the Implementing Rules and Regulations (IRR) of the law, is unconstitutional as it constitutes an encroachment on executive power (implementation of laws) and violates the principles of separation of powers, bicameralism, and the presentment clause. However, the remainder of RA 9335 is constitutional and remains in force and effect due to the law's separability clause.

Republic Act No. 9335, the Attrition Act of 2005, was enacted to improve the revenue-generation capabilities of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). The law established a system of rewards for officials and employees who exceed revenue targets and sanctions for those who fall short, funded by a Rewards and Incentives Fund and overseen by a Revenue Performance Evaluation Board for each agency. This legislative measure was part of broader tax reform efforts aimed at enhancing government revenue collection.

• Republic Act No. 9335 (Attrition Act of 2005) was enacted to optimize revenue collection by the BIR and BOC by creating a Rewards and Incentives Fund and a Revenue Performance Evaluation Board.
• The Fund is sourced from collections exceeding revenue targets, and incentives are allocated to BIR and BOC personnel.
• The Boards in BIR and BOC are composed of representatives from DOF, DBM, NEDA, BIR, BOC, rank-and-file employees, and officials.
• The Boards have duties including prescribing rules for fund allocation, setting criteria for removal from service for not meeting targets, and terminating personnel.
• The DOF, DBM, NEDA, BIR, BOC, and CSC were tasked to promulgate the IRR, subject to approval by a Joint Congressional Oversight Committee (JCOC) created under Section 12 of RA 9335.
• Petitioners, as taxpayers, challenged RA 9335's constitutionality, arguing it transforms public servants into mercenaries, violates equal protection, unduly delegates power to fix revenue targets, and that the JCOC violates separation of powers.
• The IRR for RA 9335 was approved by the JCOC on May 22, 2006, after which the JCOC became functus officio.

• The system of rewards and incentives under RA 9335 transforms BIR and BOC officials and employees into "mercenaries and bounty hunters," undermining their duty to serve with integrity and inviting corruption.
• Limiting the rewards and incentives system only to BIR and BOC personnel violates the equal protection clause, as there is no valid basis for distinguishing them from officials and employees of other government agencies.
• RA 9335 unduly delegates the power to fix revenue targets to the President without sufficient standards, making it easy to dismiss BIR or BOC personnel through unrealistic targets.
• The creation of a Joint Congressional Oversight Committee (JCOC) under Section 12 of RA 9335, with the power to approve the IRR, violates the doctrine of separation of powers by allowing legislative participation in the implementation and enforcement of the law.

• The petition is premature as there is no actual case or controversy, and petitioners have not asserted any right or claim that necessitates judicial review.
• The allegation that the reward system will breed mercenaries is speculative and insufficient to invalidate the law.
• RA 9335 validly classifies the BIR and BOC due to their distinct revenue-generating functions, thus not violating the equal protection clause.
• The law provides sufficient standards to guide the executive in implementing its provisions, including the fixing of revenue targets.
• The creation of the congressional oversight committee enhances, rather than violates, the separation of powers by ensuring fulfillment of legislative policy and checking executive power.

• Whether the petition presents an actual case or controversy ripe for judicial adjudication.
• Whether RA 9335's system of rewards and incentives violates the principle of public accountability.
• Whether RA 9335 violates the equal protection clause by limiting its scope to BIR and BOC personnel.
• Whether RA 9335 involves an undue delegation of legislative power to the President to fix revenue targets.
• Whether Section 12 of RA 9335, creating a Joint Congressional Oversight Committee to approve the IRR, violates the doctrine of separation of powers.
• Whether the unconstitutionality of Section 12 of RA 9335 renders the entire law unconstitutional.

• While the petition was procedurally infirm for lack of a specific legal claim or direct adverse effect on petitioners, the Court resolved the constitutional issues due to public interest.
• RA 9335 does not violate public accountability; public officers may be rewarded for exemplary performance, and the law includes safeguards against abuse.
• RA 9335 does not violate the equal protection clause; the classification of BIR and BOC personnel is reasonable and based on substantial distinctions (their primary function of revenue generation), germane to the law's purpose.
• RA 9335 does not involve undue delegation of legislative power; the law provides sufficient standards (policy to optimize revenue, revenue targets based on BESF approved by DBCC) to guide the President and implementing agencies. The law also ensures security of tenure by providing standards for removal.
• Section 12 of RA 9335, creating the Joint Congressional Oversight Committee with power to approve the IRR, is unconstitutional. This constitutes a legislative veto, allowing Congress to interfere in the implementation and enforcement of the law, which is an executive function, and also violates bicameralism and the presentment requirement for legislative acts.
• The unconstitutionality of Section 12 does not render the entire RA 9335 unconstitutional due to the separability clause (Section 13) and because the remaining provisions form a complete and intelligible law. The IRR, having been published, are presumed valid and effective even without JCOC approval. The petition was PARTIALLY GRANTED.

• Actual Case and Controversy — A condition sine qua non for the exercise of judicial power, requiring a conflict of legal rights and an assertion of opposite legal claims susceptible of judicial adjudication. The Court noted petitioners' failure to show a personal stake or injury but proceeded due to public interest.
• Ripeness for Adjudication — A constitutional question is ripe when the governmental act challenged has a direct adverse effect on the individual challenging it. The Court found the petition procedurally infirm on this ground but still took cognizance.
• Presumption of Constitutionality — Laws enacted by Congress enjoy a strong presumption of constitutionality, requiring a clear and unequivocal breach of the Constitution for nullification. This presumption was applied in upholding most provisions of RA 9335.
• Public Office as a Public Trust (Accountability of Public Officers) — Public officers must at all times be accountable to the people and serve with utmost responsibility, integrity, loyalty, and efficiency. The Court held that a system of rewards for exemplary performance is not anathema to this principle.
• Equal Protection Clause — Guarantees equality under the same conditions and among persons similarly situated. It allows for valid classification based on substantial distinctions, germane to the law's purpose, not limited to existing conditions, and applying equally to all members of the class. The Court found the classification of BIR/BOC personnel valid.
• Delegation of Legislative Power (Completeness Test and Sufficient Standard Test) — A law is complete if it sets forth the policy to be executed. It provides a sufficient standard if it lays down adequate guidelines to map out the boundaries of the delegate's authority. The Court found RA 9335 met these tests for fixing revenue targets.
• Security of Tenure — An employee cannot be dismissed from service for causes other than those provided by law and only after due process. The Court found RA 9335 provides a reasonable yardstick for removal (failure to meet targets by 7.5%) analogous to inefficiency, subject to due process.
• Separation of Powers — The legislative, executive, and judicial branches of government are distinct and co-equal, and one branch cannot encroach upon the powers of another. The Court held that the JCOC's power to approve IRR (legislative veto) under Section 12 of RA 9335 violated this by allowing Congress to participate in law implementation, an executive function, and to exercise judicial power by determining the IRR's conformity with the law.
• Congressional Oversight — Congress's power to monitor bureaucratic compliance, determine agency propriety, eliminate waste, prevent executive usurpation, and assess conformity with public interest. The Court distinguished between valid oversight (scrutiny, investigation) and unconstitutional legislative vetoes.
• Legislative Veto — A statutory provision requiring the President or an administrative agency to present proposed IRRs to Congress (or a committee) which retains a right to approve or disapprove them before they take effect. The Court declared this unconstitutional.
• Bicameralism — Legislative power is vested in Congress, consisting of the Senate and House of Representatives, and a valid exercise of legislative power generally requires the act of both chambers. The JCOC's approval of IRR by a committee, not the full Congress, violates this.
• Presentment Clause — Every bill passed by Congress shall, before it becomes a law, be presented to the President for approval or veto. The JCOC's approval of IRR, if considered a legislative act, would require presentment to the President, which was not provided.
• Separability Clause — A provision in a statute stating that if any part of the statute is declared invalid, the remainder shall not be affected. The Court applied this to uphold the rest of RA 9335 after striking down Section 12.
• Publication of Administrative Rules — Administrative rules and regulations must be published in full if their purpose is to enforce or implement existing law pursuant to a valid delegation to be effective. The IRR of RA 9335 were published and thus presumed valid and effective.

• "Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the benefit of the public for whom he holds it in trust."
• "To invalidate RA 9335 based on petitioners' baseless supposition is an affront to the wisdom not only of the legislature that passed it but also of the executive which approved it."
• "The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate."
• "All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class."
• "From the moment the law becomes effective, any provision of law that empowers Congress or any of its members to play any role in the implementation or enforcement of the law violates the principle of separation of powers and is thus unconstitutional."
• "In exercising discretion to approve or disapprove the IRR based on a determination of whether or not they conformed with the provisions of RA 9335, Congress arrogated judicial power unto itself, a power exclusively vested in this Court by the Constitution."

• United States v. Matthews — Cited to support the principle that public officers may be lawfully rewarded for exemplary performance, specifically validating a law awarding customs officers a portion of net proceeds from forfeitures in smuggling cases.
• Dorsheimer v. United States — Referenced within the Matthews citation, stating that offering a portion of penalties to collectors stimulates their zeal in detecting fraudulent attempts to evade duties and taxes.
• Victoriano v. Elizalde Rope Workers' Union — Cited for its extensive discussion on the equal protection clause, emphasizing that equality is among equals and that classification is permissible if based on substantial distinctions and germane to the law's purpose.
• Macalintal v. Commission on Elections — Heavily relied upon for its discussion on congressional oversight, legislative veto, separation of powers, bicameralism, and presentment, particularly Justice Puno's opinion which was adopted in part. The Court used its reasoning to analyze the JCOC in RA 9335.
• Immigration and Naturalization Service v. Chadha — A U.S. Supreme Court case cited extensively as a leading authority that struck down legislative veto provisions for violating bicameralism and the presentment clause.
• Tatad v. Secretary of the Department of Energy — Cited for the rules on statutory construction regarding separability clauses, explaining when a valid portion of a statute can stand despite another part being void.
• Pelaez v. Auditor General — Cited for the tests of valid delegation of legislative power (completeness and sufficient standard).
• Eastern Shipping Lines, Inc. v. POEA — Cited for the sufficient standard test in delegation of legislative power.
• Panama Refining Co. v. Ryan — Justice Cardozo's dissent was cited for the concept of "canalized within banks that keep it from overflowing" regarding delegated power.
• Tañada v. Tuvera — Cited regarding the indispensable requisite of publication for laws to take effect and the recognition of the people's right to information on matters of public concern.

• Constitution, Article XI, Section 1 (Accountability of Public Officers) — States that public office is a public trust and outlines the duties of public officers. Relevant to the argument that RA 9335 undermines public accountability.
• Constitution, Article VI, Section 1 (Legislative Power) — Vests legislative power in the Congress of the Philippines (Senate and House of Representatives). Relevant to the discussion on bicameralism and legislative veto.
• Constitution, Article VI, Section 27(1) (Presentment Clause) — Requires every bill passed by Congress to be presented to the President for approval or veto. Relevant to declaring the legislative veto unconstitutional.
• RA 9335, Section 2 (Declaration of Policy) — States the policy to optimize revenue generation of BIR/BOC through rewards and sanctions. Cited to show the law's purpose and as a standard for delegation.
• RA 9335, Section 4 (Rewards and Incentives Fund) — Details the sourcing of the Fund and how revenue targets are determined (based on BESF submitted by President to Congress, determined by DBCC). Cited as providing sufficient standards for delegation.
• RA 9335, Section 7(b) and (c) (Powers and Functions of the Board) — Specifies criteria for removing officials falling short of targets by 7.5% and terminating personnel. Cited to show standards for removal and compliance with security of tenure.
• RA 9335, Section 8 (Liability of Officials, Examiners and Employees of the BIR and the BOC) — Provides for liability for negligence, abuses, malfeasance, or misfeasance. Cited as a safeguard against abuse of the reward system.
• RA 9335, Section 12 (Joint Congressional Oversight Committee) — Created the JCOC with power to approve the IRR. This section was declared unconstitutional.
• RA 9335, Section 13 (Separability Clause) — Provides that if any provision is declared invalid, the remainder shall remain in effect. Relied upon to uphold the rest of the Act.
• Administrative Code of 1987, Section 18, Chapter 4, Title II, Book IV (Bureau of Internal Revenue Functions) — Outlines BIR's functions, primarily assessing and collecting taxes. Cited to show the distinct nature of BIR justifying classification under equal protection.
• Administrative Code of 1987, Section 23 (Bureau of Customs Functions) — Outlines BOC's functions, primarily collecting customs duties and preventing smuggling. Cited to show the distinct nature of BOC justifying classification under equal protection.
• Civil Code, Article 2 — States when laws shall take effect (after 15 days publication unless otherwise provided). Relevant to the effectivity of the IRR.

• Justice Antonio T. Carpio — Concurred with the ponencia in declaring Section 12 of RA 9335 unconstitutional but offered a different view on the nature of the power to promulgate implementing rules, suggesting it is inherently executive, not delegated legislative power. (This point is discussed and refuted in footnote 63 of the main ponencia and further in Justice Tinga's concurring opinion).
• Justice Dante O. Tinga — Concurred fully with the majority's reasoning for declaring the legislative veto invalid. He elaborated on the legislative and executive phases of a law, positing that congressional involvement in implementation after a law's effectivity violates separation of powers. He also strongly refuted the view that the power to issue IRRs is inherently executive, affirming it as delegated legislative power. He emphasized that the unconstitutionality of the legislative veto in Section 12 of RA 9335 stems from violations of bicameralism and presentment, and encroachment on executive functions post-effectivity.