TITLE: Francisco Tatad v Secretary of Department of Energy

G.R. NO. 124360 and 127867 DATE: 5 December 1997 (Resolution)

PONENTE: J. Puno TOPIC: Executive Misapplication
FACTS OF THE CASE:
Republic Act No. 8180, or the Downstream Oil Industry Regulation Act of 1996, was
enacted by Congress for the purpose of deregulating the downstream oil industry. Its validity
was challenged on the following constitutional ground that Section 15 thereof constitutes undue
delegation of legislative power to the President and the Secretary of Energy and violates the
constitutional prohibition against monopolies; and that Executive Order No. 392 implementing
R.A. 8180 is arbitrary and unreasonable because it was enacted due to the alleged depletion of
OPSF fund — a condition not found in the law.
The petitioners alleged that the Big Three oil companies – Petron, Shell and Caltex --
were producing and processing almost identical products which they were selling to the
general public at identical prices. When one company adjusted its prices upwards or
downwards, the other two followed suit at practically the same time, and by the same amount.
The aforementioned oil companies were able, among other things, to determine gas prices
because Republic Act 8180, the Oil Deregulation Law, lifted government controls over
downstream oil industry. Sec. 15 of RA No. 8180 constitutes an undue delegation of legislative
power to the President and the Sec. of Energy because it does not provide a determinate or
determinable standard to guide the Executive Branch in determining when to implement the full
deregulation of the downstream oil industry, and the law does not provide any specific
standard to determine when the prices of crude oil in the world market are considered to be
declining nor when the exchange rate of the peso to the US dollar is considered stable.
PROCEDURAL HISTORY:
Petition to challenge the constitutionality of Republic Act 8180 deregulating the Philippine oil industry.
This case addresses a range of issues, including, prohibition against monopolies, and the extent of judicial
authority. Motions for reconsideration and partial motions for reconsideration were filed by the parties of the
decision of the Supreme Court declaring R.A. No. 8180 unconstitutional on 3 November 1997.
STATEMENT OF ISSUE/S:
Whether or not Sec 15 of R.A. 8180 violates the constitutional prohibition on undue delegation of
power.
HOLDING
NO. Sec. 15 can hurdle both the completeness test and the sufficient standard test. RA No. 8180
provided that the full deregulation will start at the end of March 1997 regardless of the occurrence of any event.
Thus, the law is complete on the question of the final date of full deregulation. Sec. 15 lays down the standard to
guide the judgment of the President—he is to time it as far as practicable when the prices of crude oil and
petroleum in the world market are declining and when the exchange rate of the peso to the US dollar is
considered stable.
The settled rule is that the legislative department may not delegate its power. Any attempt to abdicate it
is unconstitutional and void, based on the principle of potestas delegate non delegare potest. In testing whether
a statute constitutes an undue delegation of legislative power or not, it is usual to inquire whether the statute
was complete in all its terms and provisions when it left the hands of the legislative so that nothing was left to
the judgment of any other appointee or delegate of the legislature. An enactment is said to be incomplete and

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invalid if it does not lay down any rule or definite standard by which the administrative officer may be guided in
the exercise of the discretionary powers delegated to it.
The choice and crafting of the standard to guide the exercise of delegated power is part of the lawmaking
process and lies within the exclusive jurisdiction of Congress. The standard cannot be altered in any way by the
Executive for the Executive cannot modify the will of the Legislature. The power of Congress to enact laws does
not include the right to pass unconstitutional laws. In fine, the Court did not usurp the power of Congress to
enact laws but merely discharged its bounden duty to check the constitutionality of laws when challenged in
appropriate cases. Our decision annulling R.A. 8180 is justified by the principle of check and balance. We hold
that power and obligation of this Court to pass upon the constitutionality of laws cannot be defeated by the fact
that the challenged law carries serious economic implications. This Court has struck down laws abridging the
political and civil rights of our people even if it has to often the other more powerful branches of government.
There is no reason why the Court cannot strike down R.A. No. 8180 that violates the economic rights of our
people even if it has to bridle the liberty of big business within reasonable bounds.
notes, if any:
There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz: the
completeness test and the sufficient standard test. Under the first test, the law must be complete in all its terms
and conditions when it leaves the legislative such that when it reaches the delegate the only thing he will have to
do is to enforce it. Under the sufficient standard test, there must be adequate guidelines or limitations in the law
to map out the boundaries of the delegate’s authority and prevent the delegation from running riot. 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.

"Sec. 15. Implementation of Full Deregulation. — Pursuant to section 5(e) of Republic Act No. 7638, the DOE
shall, upon approval of the President, implement the full deregulation of the downstream oil industry not later
than March 1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude oil and
petroleum products in the world market are declining and when the exchange rate of the peso in relation to the
US dollar is stable. . ."