Case Summary (G.R. No. 181704)
Key Dates
• Republic Act No. 9335 (Attrition Act of 2005) signed into law January 25, 2005; effective February 11, 2005
• Implementing Rules and Regulations (IRR) approved May 22, 2006; effective June 14, 2006
• Petition filed directly with the Supreme Court March 3, 2008
• Decision rendered December 6, 2011
Applicable Law
• 1987 Philippine Constitution (decision post-1990)
• Republic Act No. 9335, “Attrition Act of 2005,” establishing a Rewards and Incentives Fund and a Revenue Performance Evaluation Board for the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC)
• IRR of R.A. No. 9335
Legislative Scheme of R.A. No. 9335
Purpose: Optimize revenue collection by the BIR and BOC through rewards for exceeding targets and sanctions, including removal, for falling short.
Rewards and Incentives Fund: Funded by a percentage of excess collections as determined by the Development Budget and Coordinating Committee (DBCC).
Revenue Performance Evaluation Board: Composed of DOF, DBM, NEDA, BIR and BOC officials, plus rank-and-file and management representatives. Duties include prescribing rules for fund distribution, setting removal criteria for underperformers, and annual reporting to Congress.
Implementation and Performance Contracts
Pursuant to IRR Sec. 25(b), BOC disseminated performance contracts in early 2008 requiring lower-ranking officials to accept allocated revenue targets and consent to removal under R.A. No. 9335 and its IRR if targets were missed by 7.5% or more. Noncompliance threatened personnel with reassignment or floating status.
Petitioner’s Allegations and Procedural History
BOCEA claimed targets were unachievable due to reduced tariff rates, tax breaks, natural calamities, and economic factors. It alleged coercion by Commissioner Morales and Deputy Commissioner Umali to force signatures, harassment of union officers, and denial of requested copies of performance contracts. After futile dialogues and correspondence (February 2008), BOCEA filed the present petition asserting violations of its members’ due process, equal protection, and security of tenure rights, and challenged unlawful delegation and bill of attainder provisions.
Respondents’ Position
The Office of the Solicitor General maintained that R.A. No. 9335 and its IRR (except Section 12 struck down in Abakada Guro Party List v. Purisima) are constitutional:
• Security of tenure is not absolute and may be limited by valid, reasonable grounds tied to revenue performance, analogous to inefficiency under civil service law.
• Due process is assured through substantive and procedural safeguards in the Act, its IRR, and appeal rights before the CSC or Office of the President.
• Classification of BIR and BOC employees for attrition purposes is rationally related to their unique revenue-raising function.
• Delegation to the Board meets completeness and sufficient-standard tests.
• The Act is not a bill of attainder as it provides processes, not punitive legislative decrees without trial.
Issues Presented
- Violation of due process rights
- Denial of equal protection
- Infringement of security of tenure
- Undue delegation of legislative power to the Revenue Performance Evaluation Board
- Whether R.A. No. 9335 constitutes a bill of attainder
Prior Ruling in Abakada Guro Party List v. Purisima
• Section 12 (Joint Congressional Oversight Committee) declared unconstitutional for violating separation of powers.
• Remainder of R.A. No. 9335 upheld; IRR presumed valid despite lack of congressional oversight approval.
Supreme Court’s Decision and Rationale
- Locus Standi: BOCEA has a direct, substantial interest and may challenge constitutionality.
- Undue Delegation: Sections 2, 4, 5, and 7 of R.A. No. 9335 set clear policy, standards, and limits (completeness and sufficient-standard tests), thereby validatin
Case Syllabus (G.R. No. 181704)
Facts
- On January 25, 2005, R.A. No. 9335 (Attrition Act of 2005) was signed into law and took effect on February 11, 2005.
- The Act’s declared policy (Sec. 2) is to optimize revenue-generation of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) by creating a Rewards and Incentives Fund and a Revenue Performance Evaluation Board.
- It covers all BIR and BOC officials and employees with at least six months of service, regardless of employment status.
- The Fund is sourced from collections in excess of DBCC-determined revenue targets; rewards and incentives are allocated proportionally to each bureau’s contribution to the excess.
- Each bureau’s Board is composed of representatives from DOF, DBM, NEDA, BIR or BOC, two rank-and-file members, and one management representative; it issues rules for fund allocation, removal criteria, performance evaluation, and reports annually to Congress.
- The implementing rules and regulations (IRR) were approved on May 22, 2006, published May 30, 2006, and became effective 15 days thereafter.
- In early 2008, BOC officials began requiring rank-and-file employees to sign Performance Contracts under Sec. 25(b) IRR and Sec. 7 of the Act, binding them to individual revenue targets and voluntary submission to removal procedures if targets were missed.
- BOCEA members alleged that targets were unattainable due to reduced tariffs, tax exemptions, natural calamities and other economic factors, and that some employees were coerced to sign; most rank-and-file employees and union officers refused.
- BOCEA sought informal dialogue and sent letters to BOC officials (including Deputy Commissioner Umali) to halt harassment and contract execution; they received denials of coercion.
- On March 3, 2008, BOCEA filed a Rule 65 petition directly with the Supreme Court, praying for certiorari, prohibition, and injunctive relief to declare R.A. 9335 and its IRR unconstitutional and to enjoin their implementation.
Procedural History
- BOCEA’s petition challenged the Act and IRR on grounds of due process, equal protection, security of tenure, undue delegation of legislative power, and alleged bill of attainder.
- Res