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Sunday, July 22, 2012

Tatad v. Executive Secretary, G.R. No. 124360, November 5,

1997

DECISION
(En Banc)

PUNO, J.:

I. THE FACTS
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Petitioners assailed §5(b) and §15 of R.A. No. 8180, the Downstream Oil Industry
▼ 2012 (26)
Deregulation Act of 1996.
▼ July (8)
§5(b) of the law provided that “tariff duty shall be imposed . . . on imported crude Arnault v. Nazareno, G.R. No. L-3820,
July 18, 195...
oil at the rate of three percent (3%) and imported refined petroleum products at the rate of
seven percent (7%) . . .” On the other hand, §15 provided that “[t]he DOE shall, upon In re Garcia, G.R. No. _____, August
approval of the President, implement the full deregulation of the downstream oil industry 15, 1961
not later than March 1997. As far as practicable, the DOE shall time the full deregulation Tatad v. Executive Secretary, G.R.
when the prices of crude oil and petroleum products in the world market are declining and No. 124360, Nov...
when the exchange rate of the peso in relation to the US dollar is stable . . .” Angara v. Electoral Commission,
G.R. No. L-45081, ...
Petitioners argued that §5(b) on tariff differential violates the provision of the Bayan v. Zamora, G.R. No. 138570,
October 10, 2000...
Constitution requiring every law to have only one subject which should be expressed in its
title. Tañada, et al., v. Angara, et al., G.R.
No. 118295...
They also contended that the phrases “as far as practicable,” “decline of crude oil Kuroda v. Jalandoni, G.R. No. L-2662,
prices in the world market” and “stability of the peso exchange rate to the US dollar” are March 26, 19...
ambivalent, unclear and inconcrete since they do not provide determinate or determinable Manila Prince Hotel v. GSIS, G.R.
standards that can guide the President in his decision to fully deregulate the downstream No. 122156, Febr...
oil industry. ► April (1)

Petitioners also assailed the President’s E.O. No. 392, which proclaimed the full ► March (3)
deregulation of the downstream oil industry in February 1997. They argued that the ► February (11)
Executive misapplied R.A. No. 8180 when it considered the depletion of the OPSF fund as ► January (3)
a factor in the implementation of full deregulation.
► 2011 (11)
Finally, they asserted that the law violated §19, Article XII of the Constitution
prohibiting monopolies, combinations in restraint of trade and unfair competition Followers

II. THE ISSUES

1. Did §5(b) violate the one title-one subject requirement of the Constitution?
2. Did §15 violate the constitutional prohibition on undue delegation of power?
3. Was E.O. No. 392 arbitrary and unreasonable?
4. Did R.A. No. 8180 violate §19, Article XII of the Constitution prohibiting
monopolies, combinations in restraint of trade and unfair competition?

III. THE RULING

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[The Court GRANTED the petition. It DECLARED R.A. No. 8180 unconstitutional
and E.O. No. 372 void.]

1. NO, §5(b) DID NOT violate the one title-one subject requirement of the
Constitution.

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 Edgardo Luardo Jr.
As a policy, this Court has adopted a liberal construction of the one title-one Follow 46
subject rule. [T]he title need not mirror, fully index or catalogue all contents and minute
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details of a law. A law having a single general subject indicated in the title may contain any
number of provisions, no matter how diverse they may be, so long as they are not
inconsistent with or foreign to the general subject, and may be considered in furtherance
of such subject by providing for the method and means of carrying out the general Labels
subject. [S]ection 5(b) providing for tariff differential is germane to the subject of R.A. No.
8180 which is the deregulation of the downstream oil industry. The section is supposed to 2011 bar exam results (1)
sway prospective investors to put up refineries in our country and make them rely less on 20th century fox v. CA (1)
imported petroleum. 3 readings on separate days (1)
349 pepsi crowns case (1)
2. NO , §15 DID NOT violate the constitutional prohibition on undue abadilla 5 (1)
delegation of power. actual case or controversy (1)
alibi (1)
Two tests have been developed to determine whether the delegation of the power
angara v. electoral commission (1)
to execute laws does not involve the abdication of the power to make law itself. We
delineated the metes and bounds of these tests in Eastern Shipping Lines, Inc. VS. POEA, ARMM elections (1)
thus: arnault v. nazareno (1)
There are two accepted tests to determine whether or not there is a valid delegation of arroyo v. de lima (1)
legislative power, viz: the completeness test and the sufficient standard test. Under the first test, the bar exams (1)
law must be complete in all its terms and conditions when it leaves the legislative such that when it bayan v. zamora (1)
reaches the delegate the only thing he will have to do is to enforce it. Under the sufficient standard cacho-olivares v. ermita (1)
test, there must be adequate guidelines or limitations in the law to map out the boundaries of the chavez v. gonzales and ntc (1)
delegate's authority and prevent the delegation from running riot. Both tests are intended to prevent
checkpoints case (1)
a total transference of legislative authority to the delegate, who is not allowed to step into the shoes
china bank v. CA (1)
of the legislature and exercise a power essentially legislative.
columbia pictures v. flores (1)
xxx xxx xxx combinations and restraint of trade (1)
comprehensive agrarian reform program
Section 15 can hurdle both the completeness test and the sufficient standard test. (2)
It will be noted that Congress expressly provided in R.A. No. 8180 that full deregulation will constitutionality of checkpoints (2)
start at the end of March 1997, regardless of the occurrence of any event. Full contempt power of senate (1)
deregulation at the end of March 1997 is mandatory and the Executive has no discretion control test (1)
to postpone it for any purported reason. Thus, the law is complete on the question of the custodial investigation (1)
final date of full deregulation. The discretion given to the President is to advance the date david v. arroyo (1)
of full deregulation before the end of March 1997. Section 15 lays down the standard decision in in re charges of plagiarism v.
to guide the judgment of the President --- he is to time it as far as practicable when the justice del castillo (1)
prices of crude oil and petroleum products in the world market are declining and when delegation of power (1)
the exchange rate of the peso in relation to the US dollar is stable. dissent of justice ma. lourdes sereno (1)
economic protectionism (1)
Petitioners contend that the words “as far as practicable,” “declining” and “stable” election synchronization (1)
should have been defined in R.A. No. 8180 as they do not set determinate or
equity structure in public utilities (1)
determinable standards. The stubborn submission deserves scant consideration. The
dictionary meanings of these words are well settled and cannot confuse men of exclusionary rule (1)
reasonable intelligence. Webster defines “practicable” as meaning possible to practice or filipino first policy (2)
perform, “decline” as meaning to take a downward direction, and “stable” as meaning foreign military troops in the phils. (1)
firmly established. The fear of petitioners that these words will result in the exercise of fortun v. arroyo (1)
executive discretion that will run riot is thus groundless. To be sure, the Court has freedom of expression (1)
sustained the validity of similar, if not more general standards in other cases. freedom of religion (1)
freedom of speech (1)
3. YES, E.O. No. 392 was arbitrary and unreasonable. freedom of the press (3)
gamboa v. teves (1)
A perusal of section 15 of R.A. No. 8180 will readily reveal that it only enumerated
two factors to be considered by the Department of Energy and the Office of the President, general warrant (1)
viz.: (1) the time when the prices of crude oil and petroleum products in the world market globalization (1)
are declining, and (2) the time when the exchange rate of the peso in relation to the US GMA TRO (1)
dollar is stable. Section 15 did not mention the depletion of the OPSF as a factor to be grosjean v. american press (1)
given weight by the Executive before ordering full deregulation. On the contrary, the hacienda luisita (2)
debates in Congress will show that some of our legislators wanted to impose as a pre- hello garci (1)
condition to deregulation a showing that the OPSF fund must not be in deficit. We HLI v. PARC decision july 5 2011 (1)
therefore hold that the Executive department failed to follow faithfully the standards set by HLI v. PARC resolution nov. 22 2011 (1)
R.A. No. 8180 when it considered the extraneous factor of depletion of the OPSF fund.
holdover of elected ARMM officials (1)
The misappreciation of this extra factor cannot be justified on the ground that the
iglesia ni cristo v. CA (1)
Executive department considered anyway the stability of the prices of crude oil in the world
market and the stability of the exchange rate of the peso to the dollar. By considering impeachment of cj corona (1)
another factor to hasten full deregulation, the Executive department rewrote the standards implied powers (1)
set forth in R.A. 8180. The Executive is bereft of any right to alter either by subtraction or in re garcia (1)
addition the standards set in R.A. No. 8180 for it has no power to make laws. To cede to incompatible offices (1)
the Executive the power to make law is to invite tyranny, indeed, to transgress the principle incorporation clause (2)
of separation of powers. The exercise of delegated power is given a strict scrutiny by ineligibility of the President to run for re-
courts for the delegate is a mere agent whose action cannot infringe the terms of agency. election (1)
In the cases at bar, the Executive co-mingled the factor of depletion of the OPSF fund with inherent powers (1)
the factors of decline of the price of crude oil in the world market and the stability of the investigation in aid of legislation (1)
peso to the US dollar. On the basis of the text of E.O. No. 392, it is impossible to jose midas marquez (1)

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determine the weight given by the Executive department to the depletion of the OPSF justice mariano del castillo (2)
fund. It could well be the principal consideration for the early deregulation. It could have justice sereno's dissent in in re charges
been accorded an equal significance. Or its importance could be nil. In light of this of plagiarism vs. justice del castillo (1)
uncertainty, we rule that the early deregulation under E.O. No. 392 constitutes a kida v. senate (1)
misapplication of R.A. No. 8180. kuroda v. jalandoni (1)
laserna v. ddb (1)
4. YES, R.A. No. 8180 violated §19, Article XII of the Constitution prohibiting
liban v. gordon (1)
monopolies, combinations in restraint of trade and unfair competition.
lis mota (1)
[I]t cannot be denied that our downstream oil industry is operated and controlled by lumanog v. people (1)
an oligopoly, a foreign oligopoly at that. Petron, Shell and Caltex stand as the only major maguindanao massacre (1)
league players in the oil market. All other players belong to the lilliputian league. As the mandatory drug testing (1)
dominant players, Petron, Shell and Caltex boast of existing refineries of various manila hotel (1)
capacities. The tariff differential of 4% therefore works to their immense benefit. Yet, this is manila prince hotel v. gsis (1)
only one edge of the tariff differential. The other edge cuts and cuts deep in the heart of martial law (1)
their competitors. It erects a high barrier to the entry of new players. New players that meaning of the term capital in Sec. 11
intend to equalize the market power of Petron, Shell and Caltex by building refineries of Art. XII of the Constitution (1)
their own will have to spend billions of pesos. Those who will not build refineries but monopolies (1)
compete with them will suffer the huge disadvantage of increasing their product cost by moot and academic cases (1)
4%. They will be competing on an uneven field. The argument that the 4% tariff differential national patrimony (1)
is desirable because it will induce prospective players to invest in refineries puts the cart
new york times v. U.S. (1)
before the horse. The first need is to attract new players and they cannot be attracted by
burdening them with heavy disincentives. Without new players belonging to the league of office search (1)
Petron, Shell and Caltex, competition in our downstream oil industry is an idle dream. oil deregulation (1)
one title-one subject (1)
The provision on inventory widens the balance of advantage of Petron, Shell and p.s. bank v. senate impeachment court
Caltex against prospective new players. Petron, Shell and Caltex can easily comply with (1)
the inventory requirement of R.A. No. 8180 in view of their existing storage facilities. people v. exala (1)
Prospective competitors again will find compliance with this requirement difficult as it will Philippine National Red Cross (1)
entail a prohibitive cost. The construction cost of storage facilities and the cost of pimentel v. comelec (1)
inventory can thus scare prospective players. Their net effect is to further occlude the piracy (1)
entry points of new players, dampen competition and enhance the control of the market by plagiarism (3)
the three (3) existing oil companies. police lineup (1)
pollo v. david (1)
Finally, we come to the provision on predatory pricing which is defined as “. . .
selling or offering to sell any product at a price unreasonably below the industry average pormento v. estrada (1)
cost so as to attract customers to the detriment of competitors.” Respondents contend that power to promulgate rules of procedure
(1)
this provision works against Petron, Shell and Caltex and protects new entrants. The ban
on predatory pricing cannot be analyzed in isolation. Its validity is interlocked with the presentation of master tape in piracy
cases (1)
barriers imposed by R.A. No. 8180 on the entry of new players. The inquiry should be to
president's power to appoint ARMM
determine whether predatory pricing on the part of the dominant oil companies is OICs (1)
encouraged by the provisions in the law blocking the entry of new players. Text- prior restraint (3)
writer Hovenkamp gives the authoritative answer and we quote:
privacy of communications and
xxx xxx xxx correspondence (1)
The rationale for predatory pricing is the sustaining of losses today that will give a firm
probable cause for issuance of warrant
monopoly profits in the future. The monopoly profits will never materialize, however, if the market is of arrest (1)
flooded with new entrants as soon as the successful predator attempts to raise its price. Predatory probable cause for the issuance of a
pricing will be profitable only if the market contains significant barriers to new entry. search warrant (1)
RA 9165 (1)
As aforediscussed, the 4% tariff differential and the inventory requirement are requisites of judicial review (2)
significant barriers which discourage new players to enter the market. Considering these resolution in in re charges of plagiarism
significant barriers established by R.A. No. 8180 and the lack of players with the v. justice del castillo (1)
comparable clout of PETRON, SHELL and CALTEX, the temptation for a dominant player review/censorship of religious tv
to engage in predatory pricing and succeed is a chilling reality. Petitioners’ charge that this programs (1)
provision on predatory pricing is anti-competitive is not without reason. right against self-incrimination (1)
right against unreasonable search and
[R.A. No. 8180 contained a separability clause, but the High Tribunal held that the seizure (2)
offending provisions of the law so permeated its essence that it had to be struck down right of privacy (1)
entirely. The provisions on tariff differential, inventory and predatory pricing were among right to travel (1)
the principal props of R.A. No. 8180. Congress could not have deregulated the roberts v. CA (1)
downstream oil industry without these provisions.]
search and seizure (4)
search warrant (1)
Posted by Edgardo Luardo Jr. at 3:38 PM secrecy of foreign currency deposits (1)
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Labels: combinations and restraint of trade, delegation of power, monopolies, oil deregulation, one sjs v. ddb (1)
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