Case Digest: Bureau of Customs Employees
Association v. Teves, et al.
G.R. No. 181704 : December 6, 2011
BUREAU OF CUSTOMS EMPLOYEES
ASSOCIATION (BOCEA), represented by its
National President (BOCEA National Executive
Council) Mr. Romulo A. Pagulayan,Petitioner, v.
HON. MARGARITO B. TEVES, in his capacity
as Secretary of the Department of Finance, HON.
NAPOLEON L. MORALES, in his capacity as
Commissioner of the Bureau of Customs, HON.
LILIAN B. HEFTI, in her capacity as
Commissioner of the Bureau of Internal Revenue,
Respondents.
VILLARAMA, JR., J.:
FACTS:
Former President Gloria Macapagal-Arroyo signed
into law R.A. No. 9335. RA [No.] 9335 was enacted
to optimize the revenue-generation capability and
collection of the Bureau of Internal Revenue (BIR)
and the Bureau of Customs (BOC). The law intends
to encourage BIR and BOC officials and employees
to exceed their revenue targets by providing a system
of rewards and sanctions through the creation of a
Rewards and Incentives Fund (Fund) and a Revenue
Performance Evaluation Board (Board). It covers all
officials and employees of the BIR and the BOC with
at least six months of service, regardless of
employment status.
Contending that the enactment and implementation of
R.A. No. 9335 are tainted with constitutional
infirmities in violation of the fundamental rights of
its members, petitioners directly filed the present
petition before this Court against respondents.
BOCEA asserted that in view of the
unconstitutionality of R.A. No. 9335 and its IRR, and
their adverse effects on the constitutional rights of
BOC officials and employees, direct resort to this
Court is justified. BOCEA argued, among others, that
its members and other BOC employees are in great
danger of losing their jobs should they fail to meet
the required quota provided under the law, in clear
violation of their constitutional right to security of
tenure, and at their and their respective families
prejudice.
Respondents countered that R.A. No. 9335 and its
IRR do not violate the right to due process and right
to security of tenure of BIR and BOC employees. The
OSG stressed that the guarantee of security of tenure
under the 1987 Constitution is not a guarantee of
perpetual employment. R.A. No. 9335 and its IRR
provided a reasonable and valid ground for the
dismissal of an employee which is germane to the
purpose of the law. Likewise, R.A. No. 9335 and its
IRR provided that an employee may only be
separated from the service upon compliance with
substantive and procedural due process. The OSG
added that R.A. No. 9335 and its IRR must enjoy the
presumption of constitutionality.
In Abakada, the Court declared Section 12of R.A.
No. 9335 creating a Joint Congressional Oversight
Committee to approve the IRR as unconstitutional
and violative of the principle of separation of powers.
However, the constitutionality of the remaining
provisions of R.A. No. 9335 was upheld pursuant to
Section 13of R.A. No. 9335. The Court also held that
until the contrary is shown, the IRR of R.A. No. 9335
is presumed valid and effective even without the
approval of the Joint Congressional Oversight
Committee.
ISSUE: Whether or not R.A. No. 9335 and its IRR
violate the rights of BOCEAs members to: (a) equal
protection of laws, (b) security of tenure and (c) due
process?
HELD: Ruling in Abakada is adopted.
REMEDIAL LAW: actions; parties
Prefatorily, we note that it is clear, and in fact
uncontroverted, that BOCEA has locus standi.
BOCEA impugns the constitutionality of R.A. No.
9335 and its IRR because its members, who are rank-
and-file employees of the BOC, are actually covered
by the law and its IRR. BOCEAs members have a
personal and substantial interest in the case, such that
they have sustained or will sustain, direct injury as a
result of the enforcement of R.A. No. 9335 and its
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IRR.
CONSTITUTIONAL LAW: administrative
agencies
The principle of separation of powers ordains that
each of the three great branches of government has
exclusive cognizance of and is supreme in matters
falling within its own constitutionally allocated
sphere. Necessarily imbedded in this doctrine 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." This doctrine is based on the
ethical principle that such 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. However, this principle of non-delegation
of powers admits of numerous exceptions, one of
which is the delegation of legislative power to
various specialized administrative agencies like the
Board in this case.
CONSTITUTIONAL LAW: equal protection
clause
Equal protection simply provides that all persons or
things similarly situated should be treated in a similar
manner, both as to rights conferred and
responsibilities imposed. The purpose of the equal
protection clause is to secure every person within a
states jurisdiction against intentional and arbitrary
discrimination, whether occasioned by the express
terms of a statute or by its improper execution
through the states duly constituted authorities. In
other words, the concept of equal justice under the
law requires the state to govern impartially, and it
may not draw distinctions between individuals solely
on differences that are irrelevant to a legitimate
governmental objective.
CONSTITUTIONAL LAW: due process
The essence of due process is simply an opportunity
to be heard, or as applied to administrative
proceedings, a fair and reasonable opportunity to
explain ones side. BOCEAs apprehension of
deprivation of due process finds its answer in Section
7 (b) and (c) of R.A. No. 9335. The concerned BIR or
BOC official or employee is not simply given a target
revenue collection and capriciously left without any
quarter. R.A. No. 9335 and its IRR clearly give due
consideration to all relevant factors that may affect
the level of collection.
As the Court is not a trier of facts, the investigation
on the veracity of, and the proper action on these
anomalies are in the hands of the Executive branch.
Correlatively, the wisdom for the enactment of this
law remains within the domain of the Legislative
branch. We merely interpret the law as it is. The
Court has no discretion to give statutes a meaning
detached from the manifest intendment and language
thereof. Just like any other law, R.A. No. 9335 has in
its favor the presumption of constitutionality, and to
justify its nullification, there must be a clear and
unequivocal breach of the Constitution and not one
that is doubtful, speculative, or argumentative. We
have so declared in Abakada, and we now reiterate
that R.A. No. 9335 and its IRR are constitutional.
DISMISSED.
SUFFICIENT TEST
Ynot vs Intermediate Appellate CourtGR No. L-
74457, March 20, 1987FACTS:In 1980 President
Marcos amended Executive Order No. 626-A
which orders that nocarabao and carabeef shall
be transported from one province to another; such
violation shall
besubject to confiscation and forfeiture by the gov
ernment, to be distributed to charitableinstitution
s and other similar institutions as the Chairman of
the National Meat InspectionCommission may see
fit for the carabeef and to deserving farmers
through dispersal as theDirector of Animal
Industry may see fit in the case of
the carabaos.On January 13, 1984, Petitioner’s 6 c
arabaos were confiscated by the police stationcom
mander of Barotac Nuevo, Iloilo for having been
transported from Masbate to Iloilo inviolation of
EO 626-A. He issued a writ for
replevin
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, challenging the constitutionality of saidEO. The
trial court sustained the confiscation of the
animals and declined to rule on the validityof the
law on the ground that it lacked authority to do
so. Its decision was affirmed by the IAC.Hence,
this petition for review filed by
Petitioner.ISSUE:Whether or not police power is
properly enforcedHELD: NO. The protection
of the general welfare is the particular function of
the police power which both restraints and is
restrained by due process. The police power is
simply defined as
the power inherent in the State to regulate liberty
and property for the promotion of thegeneral
welfare. As long as the activity or the property has
some relevance to the public welfare,its regulation
under the police power is not only proper but
necessary. In the case at bar, E.O.626-A has
the same lawful subject as the original executive
order (E.O. 626 as cited in Toribiocase) but NOT
the same lawful method. The reasonable
connection between the means employedand the
purpose sought to be achieved by the questioned
measure is missing. The challengedmeasure is an
invalid exercise of the police power because the
method employed to conserve thecarabaos is not
reasonably necessary to the purpose of the law
and, worse, is unduly oppressive.
Emmanuel Pelaez vs Auditor General
In 1964, President Ferdinand Marcos issued
executive orders creating 33 municipalities – this
was purportedly pursuant to Section 68 of the
Revised Administrative Code which provides in
part:
The President may by executive order define the
boundary… of any… municipality… and may
change the seat of government within any
subdivision to such place therein as the public
welfare may require…
The then Vice President, Emmanuel Pelaez, as a
taxpayer, filed a special civil action to prohibit the
auditor general from disbursing funds to be
appropriated for the said municipalities. Pelaez
claims that the EOs were unconstitutional. He said
that Section 68 of the RAC had been impliedly
repealed by Section 3 of RA 2370 which provides
that barrios may “not be created or their
boundaries altered nor their names changed”
except by Act of Congress. Pelaez argues: “If the
President, under this new law, cannot even create
a barrio, how can he create a municipality which
is composed of several barrios, since barrios are
units of municipalities?”
The Auditor General countered that there was no
repeal and that only barrios were barred from
being created by the President. Municipalities are
exempt from the bar and that a municipality can
be created without creating barrios. He further
maintains that through Sec. 68 of the RAC,
Congress has delegated such power to create
municipalities to the President.
ISSUE: Whether or not Congress has delegated
the power to create barrios to the President by
virtue of Sec. 68 of the RAC.
HELD: No. There was no delegation
here. Although Congress may delegate to another
branch of the government the power to fill in the
details in the execution, enforcement or
administration of a law, it is essential, to forestall a
violation of the principle of separation of powers,
that said law: (a) be complete in itself — it must
set forth therein the policy to be executed, carried
out or implemented by the delegate — and (b) fix
a standard — the limits of which are sufficiently
determinate or determinable — to which the
delegate must conform in the performance of his
functions. In this case, Sec. 68 lacked any such
standard. Indeed, without a statutory declaration
of policy, the delegate would, in effect, make or
formulate such policy, which is the essence of
every law; and, without the aforementioned
standard, there would be no means to determine,
with reasonable certainty, whether the delegate
has acted within or beyond the scope of his
authority.
Further, although Sec. 68 provides the qualifying
clause “as the public welfare may require” –
which would mean that the President may exercise
such power as the public welfare may require – is
present, still, such will not replace the standard
needed for a proper delegation of power. In the
first place, what the phrase “as the public welfare
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may require” qualifies is the text which
immediately precedes hence, the proper
interpretation is “the President may change the
seat of government within any subdivision to such
place therein as the public welfare may require.”
Only the seat of government may be changed by
the President when public welfare so requires and
NOT the creation of municipality.
The Supreme Court declared that the power to
create municipalities is essentially and eminently
legislative in character not administrative (not
executive).
ABAKADA GURO VS SEC ERMITA
Facts: On May 24, 2005, the President signed into
law Republic Act9337 or the VAT Reform Act.
Before the law took effect on July 1, 2005, the
Court issued a TRO enjoining government from
implementing the law in response to a slew of
petitions for certiorari and prohibition
questioning the constitutionality of the new law.
The challenged section of R.A. No. 9337 is
the common proviso in Sections 4, 5 and 6: “That
the President, upon the recommendation of the
Secretary of Finance, shall, effective January 1,
2006, raise the rate of value-added tax to 12%,
after any of the following conditions has been
satisfied:
(i) Value-added tax collection as a percentage of
Gross Domestic Product (GDP) of the previous
year exceeds two and four-fifth percent (2 4/5%);
or (ii) National government deficit as a percentage
of GDP of the previous year exceeds one and one-
half percent (1½%)”
Petitioners allege that the grant of stand-by
authority to the President to increase the VAT rate
is an abdication by Congress of its exclusive power
to tax because such delegation is not covered by
Section 28 (2), Article VI Consti. They argue that
VAT is a tax levied on the sale or exchange of
goods and services which can’t be included within
the purview of tariffs under the exemption
delegation since this refers to customs duties, tolls
or tribute payable upon merchandise to the
government and usually imposed on
imported/exported goods. They also said that the
President has powers to cause, influence or create
the conditions provided by law to bring about the
conditions precedent. Moreover, they allege that
no guiding standards are made by law as to how
the Secretary of Finance will make the
recommendation.
Issue: Whether or not the RA 9337's stand-by
authority to the Executive to increase the VAT
rate, especially on account of the recommendatory
power granted to the Secretary of Finance,
constitutes undue delegation of legislative power?
NO
Held: 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 is
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. 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.
The exceptions are:
(a) delegation of tariff powers to President under
Constitution
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(b) delegation of emergency powers to President
under Constitution
(c) delegation to the people at large
(d) delegation to local governments
(e) delegation to administrative bodies
For the delegation to be valid, it must
be complete and it must fix a standard. A
sufficient standard is one which defines legislative
policy, marks its limits, maps out its boundaries
and specifies the public agency to apply it.
In this case, it is not a delegation of legislative
power BUT a delegation of ascertainment of facts
upon which enforcement and administration of
the increased 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. Its use in a statute
denotes an imperative obligation and is
inconsistent with the idea of discretion.
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. It is a clear directive to impose
the 12% VAT rate when the specified conditions
are present.
Congress just granted the Secretary of Finance
the authority to ascertain the existence of a fact---
whether by December 31, 2005, the VAT collection
as a percentage of GDP of the previous year
exceeds 2 4/5 % or the national government deficit
as a percentage of GDP of the previous year
exceeds one and 1½%. If either of these two
instances has occurred, the Secretary of Finance,
by legislative mandate, must submit such
information to the President.
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. 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.
Congress does not abdicate its functions or unduly
delegate power when it describes what job must be
done, who must do it, and what is the scope of his
authority; in our complex economy that is
frequently the only way in which the legislative
process can go forward.
There is no undue delegation of legislative power
but only of the discretion as to the execution of a
law. This is constitutionally permissible. Congress
did not delegate the power to tax but the mere
implementation of the law.
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CASE DIGEST (Transportation Law): Bantangas
CATV vs. C.A.
BATANGAS CATV, INC. vs. THE COURT OF
APPEALS, THE BATANGAS CITY
SANGGUNIANG PANLUNGSOD and
BATANGAS CITY MAYOR [G.R. No. 138810.
September 29, 2004]
FACTS:
On July 28, 1986, respondent Sangguniang
Panlungsod enacted Resolution No. 210 granting
petitioner a permit to construct, install, and
operate a CATV system in Batangas City. Section
8 of the Resolution provides that petitioner is
authorized to charge its subscribers the maximum
rates specified therein, “provided, however, that
any increase of rates shall be subject to the
approval of the Sangguniang Panlungsod.
Sometime in November 1993, petitioner increased
its subscriber rates from P88.00 to P180.00 per
month. As a result, respondent Mayor wrote
petitioner a letter threatening to cancel its permit
unless it secures the approval of respondent
Sangguniang Panlungsod, pursuant to Resolution
No. 210.
Petitioner then filed with the RTC, Branch 7,
Batangas City, a petition for injunction alleging
that respondent Sangguniang Panlungsod has no
authority to regulate the subscriber rates charged
by CATV operators because under Executive
Order No. 205, the National Telecommunications
Commission (NTC) has the sole authority to
regulate the CATV operation in the Philippines.
ISSUE :
may a local government unit (LGU) regulate the
subscriber rates charged by CATV operators
within its territorial jurisdiction?
HELD:
x x
The logical conclusion, therefore, is that in light of
the above laws and E.O. No. 436, the NTC
exercises regulatory power over CATV operators
to the exclusion of other bodies.
x x x
Like any other enterprise, CATV operation maybe
regulated by LGUs under the general welfare
clause. This is primarily because the CATV system
commits the indiscretion of crossing public
properties. (It uses public properties in order to
reach subscribers.) The physical realities of
constructing CATV system – the use of public
streets, rights of ways, the founding of structures,
and the parceling of large regions – allow an LGU
a certain degree of regulation over CATV
operators.
x x x
But, while we recognize the LGUs’ power under
the general welfare clause, we cannot sustain
Resolution No. 210. We are convinced that
respondents strayed from the well recognized
limits of its power. The flaws in Resolution No. 210
are: (1) it violates the mandate of existing laws
and (2) it violates the State’s deregulation policy
over the CATV industry.
LGUs must recognize that technical matters
concerning CATV operation are within the
exclusive regulatory power of the NTC.
ROMULO, MABANTA, BUENAVENTURA,
SAYOC & DE LOS ANGELES vs. HOME
DEVELOPMENT MUTUAL FUND
G.R. No. 131082 June 19, 2000
Facts: petitioner Romulo, Mabanta,
Buenaventura, Sayoc and De Los Angeles
(hereafter PETITIONER), a law firm, was
exempted for the period 1 January to 31
December 1995, from the Pag-IBIG Fund
coverage by respondent HDMF because of a
No.
superior retirement plan.
The HDMF Board of Trustees, pursuant to Section
x
5 of Republic Act No. 7742, issued Board
Resolution No. 1011, Series of 1995, amending and
modifying the Rules and Regulations
Implementing R.A. No. 7742. As amended, Section
6
1 of Rule VII provides that for a company to be
entitled to a waiver or suspension of Fund
coverage, 3 it must have a plan providing for both
provident/retirement and housing benefits
superior to those provided under the Pag-IBIG
Fund.
PETITIONER submitted to the HDMF a letter
explaining that the Amendments to the Rules are
invalid. In that the amendments are void insofar
as they abolished the exemption granted by
Section 19 of P.D. 1752, as amended. The repeal of
such exemption involves the exercise of legislative
power, which cannot be delegated to HMDF.
HDMF disapproved PETITIONER’s application
on the ground that the requirement that there
should be both a provident retirement fund and a
housing plan is clear in the use of the phrase
“and/or,” and that the Rules Implementing R.A.
No. 7742 did not amend nor repeal Section 19 of
P.D. No. 1752 but merely implement the law. The
respondent Board was merely exercising its rule-
making power under Section 13 of P.D. No. 1752.
It had the option to use “and” only instead of “or”
in the rules on waiver in order to effectively
implement the Pag-IBIG Fund Law. By choosing
“and,” the Board has clarified the confusion
brought about by the use of “and/or” in Section 19
of P.D. No. 1752, as amended.
PETITIONER filed a petition for review before
the Court of Appeals but was dismissed.
Issue: Whether or not the board of HDMF
exceeded its delegated power.
Held: YES. The controversy lies in the legal
signification of the words “and/or.”
It seems to us clear from the language of the
enabling law that Section 19 of P.D. No. 1752
intended that an employer with a provident plan
or an employee housing plan superior to that of
the fund may obtain exemption from coverage. If
the law had intended that the employee [sic]
should have both a superior provident plan and a
housing plan in order to qualify for exemption, it
would have used the words “and” instead of
“and/or.”
Notably, paragraph (a) of Section 19 requires for
annual certification of waiver or suspension, that
the features of the plan or plans are superior to
the fund or continue to be so. The law obviously
contemplates that the existence of either plan is
considered as sufficient basis for the grant of an
exemption; needless to state, the concurrence of
both plans is more than sufficient. To require the
existence of both plans would radically impose a
more stringent condition for waiver which was not
clearly envisioned by the basic law. By removing
the disjunctive word “or” in the implementing
rules the respondent Board has exceeded its
authority.
It is without doubt that the HDMF Board has
rule-making power as provided in Section 51 17 of
R.A. No. 7742 and Section 13 18 of P.D. No. 1752.
However, it is well-settled that rules and
regulations, which are the product of a delegated
power to create new and additional legal
provisions that have the effect of law, should be
within the scope of the statutory authority granted
by the legislature to the administrative agency. 19
It is required that the regulation be germane to
the objects and purposes of the law, and be not in
contradiction to, but in conformity with, the
standards prescribed by law.
In the present case, when the Board of Trustees of
the HDMF required in Section 1, Rule VII of the
1995 Amendments to the Rules and Regulations
Implementing R.A. No. 7742 that employers
should have both provident/retirement and
housing benefits for all its employees in order to
qualify for exemption from the Fund, it effectively
amended Section 19 of P.D. No. 1752. And when
the Board subsequently abolished that exemption
through the 1996 Amendments, it repealed Section
19 of P.D. No. 1752. Such amendment and
subsequent repeal of Section 19 are both invalid,
as they are not within the delegated power of the
Board. The HDMF cannot, in the exercise of its
rule-making power, issue a regulation not
consistent with the law it seeks to apply. Indeed,
administrative issuances must not override,
supplant or modify the law, but must remain
consistent with the law they intend to carry out.
Only Congress can repeal or amend the law.
CASE DIGEST: Guingona, Jr. vs. Carague
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G.R. No. 94571. April 22, 1991
FACTS:
The 1990 budget consists of P98.4 Billion in
automatic appropriation (with P86.8 Billion for
debt service) and P155.3 Billion appropriated
under RA 6831, otherwise known as the General
Approriations Act, or a total of P233.5 Billion,
while the appropriations for the DECS amount to
P27,017,813,000.00.
The said automatic appropriation for debt service
is authorized by PD No. 18, entitled “ Amending
Certain Provisions of Republic Act Numbered
Four Thousand Eight Hundred Sixty, as Amended
(Re: Foreign Borrowing Act), “by PD No. 1177,
entitled “Revising the Budget Process in Order to
Institutionalize the Budgetary Innovations of the
New Society,” and by PD No.1967, entitled “An
Act Strengthening the Guarantee and Payment
Positions of the Republic of the Philippines on its
Contingent Liabilities Arising out of Relent and
Guaranteed Loans by Appropriating Funds For
The Purpose.”
The petitioners were questioning the
constitutionality of the automatic appropriation
for debt service, it being higher than the budget
for education, therefore it is against Section 5(5),
Article XIV of the Constitution which mandates to
“assign the highest budgetary priority to
education.”
ISSUE:
Whether or not the automatic appropriation for
debt service is unconstitutional; it being higher
than the budget for education.
HELD:
No. While it is true that under Section 5(5), Article
XIV of the Constitution Congress is mandated to
“assign the highest budgetary priority to
education,” it does not thereby follow that the
hands of Congress are so hamstrung as to deprive
it the power to respond to the imperatives of the
national interest and for the attainment of other
state policies or objectives.
Congress is certainly not without any power,
guided only by its good judgment, to provide an
appropriation, that can reasonably service our
enormous debt…It is not only a matter of honor
and to protect the credit standing of the country.
More especially, the very survival of our economy
is at stake. Thus, if in the process Congress
appropriated an amount for debt service bigger
than the share allocated to education, the Court
finds and so holds that said appropriation cannot
be thereby assailed as unconstitutiona
atad v. Executive Secretary, G.R. No. 124360,
November 5, 1997
DECISION
(En Banc)
PUNO, J.:
I. THE FACTS
Petitioners assailed §5(b) and §15 of R.A. No.
8180, the Downstream Oil Industry Deregulation
Act of 1996.
§5(b) of the law provided that “tariff duty shall be
imposed . . . on imported crude 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 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
8
rate of the peso in relation to the US dollar
is stable . . .”
Petitioners argued that §5(b) on tariff differential
violates the provision of the Constitution requiring
every law to have only one subject which should
be expressed in its title.
They also contended that the phrases “as far as
practicable,” “decline of crude oil prices in the
world market” and “stability of the peso exchange
rate to the US dollar” are ambivalent, unclear and
inconcrete since they do not provide determinate
or determinable standards that can guide the
President in his decision to fully deregulate the
downstream oil industry.
Petitioners also assailed the President’s E.O. No.
392, which proclaimed the full deregulation of the
downstream oil industry in February 1997. They
argued that the Executive misapplied R.A. No.
8180 when it considered the depletion of the OPSF
fund as a factor in the implementation of full
deregulation.
Finally, they asserted that the law violated §19,
Article XII of the Constitution prohibiting
monopolies, combinations in restraint of trade and
unfair competition
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
[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.
As a policy, this Court has adopted a liberal
construction of the one title-one subject
rule. [T]he title need not mirror, fully index or
catalogue all contents and minute 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
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 sway
prospective investors to put up refineries in our
country and make them rely less on imported
petroleum.
2. NO, §15 DID NOT violate the constitutional
prohibition on undue delegation of power.
Two tests have been developed to determine
whether the delegation of the power to execute
laws does not involve the abdication of the power
9
to make law itself. We delineated the metes and
bounds of these tests in Eastern Shipping Lines,
Inc. VS. POEA, thus:
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.
xxx xxx xxx
Section 15 can hurdle both the completeness test
and the sufficient standard test. It will be noted
that Congress expressly provided in R.A. No. 8180
that full deregulation will start at the end of
March 1997, regardless of the occurrence of any
event. Full deregulation at the end of March 1997
is mandatory and the Executive has no discretion
to postpone it for any purported reason. Thus, the
law is complete on the question of the final date of
full deregulation. The discretion given to the
President is to advance the date of full
deregulation before the end of March 1997.
Section 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 products in the world market
are declining and when the exchange rate of the
peso in relation to the US dollar is stable.
Petitioners contend that the words “as far as
practicable,” “declining” and “stable” should
have been defined in R.A. No. 8180 as they do not
set determinate or determinable standards. The
stubborn submission deserves scant
consideration. The dictionary meanings of these
words are well settled and cannot confuse men of
reasonable intelligence. Webster defines
“practicable” as meaning possible to practice or
perform, “decline” as meaning to take a
downward direction, and “stable” as meaning
firmly established. The fear of petitioners that
these words will result in the exercise of executive
discretion that will run riot is thus groundless. To
be sure, the Court has sustained the validity of
similar, if not more general standards in other
cases.
3. YES, E.O. No. 392 was arbitrary and
unreasonable.
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, viz.: (1) the time when
the prices of crude oil and petroleum products in
the world market are declining, and (2) the time
when the exchange rate of the peso in relation to
the US dollar is stable. Section 15 did not
mention the depletion of the OPSF as a factor to
be given weight by the Executive before ordering
full deregulation. On the contrary, the debates in
Congress will show that some of our legislators
wanted to impose as a pre-condition to
deregulation a showing that the OPSF fund must
not be in deficit. We therefore hold that the
Executive department failed to follow faithfully
the standards set by R.A. No. 8180 when it
considered the extraneous factor of depletion of
the OPSF fund. The misappreciation of this extra
factor cannot be justified on the ground that the
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 another
factor to hasten full deregulation, the Executive
department rewrote the standards set forth in
R.A. 8180. The Executive is bereft of any right to
10
alter either by subtraction or addition the
standards set in R.A. No. 8180 for it has no power
to make laws. To cede to the Executive the power
to make law is to invite tyranny, indeed, to
transgress the principle of separation of
powers. The exercise of delegated power is given a
strict scrutiny by courts for the delegate is a mere
agent whose action cannot infringe the terms of
agency. In the cases at bar, the Executive co-
mingled the factor of depletion of the OPSF fund
with the factors of decline of the price of crude oil
in the world market and the stability of the peso to
the US dollar. On the basis of the text of E.O. No.
392, it is impossible to determine the weight given
by the Executive department to the depletion of
the OPSF fund. It could well be the principal
consideration for the early deregulation. It could
have been accorded an equal significance. Or its
importance could be nil. In light of this
uncertainty, we rule that the early deregulation
under E.O. No. 392 constitutes a misapplication
of R.A. No. 8180.
4. YES, R.A. No. 8180 violated §19, Article XII of
the Constitution prohibiting monopolies,
combinations in restraint of trade and unfair
competition.
[I]t cannot be denied that our downstream oil
industry is operated and controlled by an
oligopoly, a foreign oligopoly at that. Petron, Shell
and Caltex stand as the only major league players
in the oil market. All other players belong to the
lilliputian league. As the dominant players,
Petron, Shell and Caltex boast of existing
refineries of various capacities. The tariff
differential of 4% therefore works to their
immense benefit. Yet, this is only one edge of the
tariff differential. The other edge cuts and cuts
deep in the heart of their competitors. It erects a
high barrier to the entry of new players. New
players that intend to equalize the market power
of Petron, Shell and Caltex by building refineries
of their own will have to spend billions of pesos.
Those who will not build refineries but compete
with them will suffer the huge disadvantage of
increasing their product cost by 4%. They will be
competing on an uneven field. The argument that
the 4% tariff differential is desirable because it
will induce prospective players to invest in
refineries puts the cart 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 Petron, Shell and Caltex, competition
in our downstream oil industry is an idle dream.
The provision on inventory widens the balance of
advantage of Petron, Shell and Caltex against
prospective new players. Petron, Shell and Caltex
can easily comply with the inventory requirement
of R.A. No. 8180 in view of their existing storage
facilities. Prospective competitors again will find
compliance with this requirement difficult as it
will entail a prohibitive cost. The construction cost
of storage facilities and the cost of inventory can
thus scare prospective players. Their net effect is
to further occlude the entry points of new players,
dampen competition and enhance the control of
the market by the three (3) existing oil companies.
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 cost so as to attract
customers to the detriment of competitors.”
Respondents contend that 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 barriers imposed by R.A. No. 8180 on the
entry of new players. The inquiry should be to
determine whether predatory pricing on the part
of the dominant oil companies is encouraged by
the provisions in the law blocking the entry of new
players. Text-writer Hovenkamp gives the
authoritative answer and we quote:
xxx xxx xxx
The rationale for predatory pricing is the
sustaining of losses today that will give a firm
11
monopoly profits in the future. The monopoly
profits will never materialize, however, if the
market is flooded with new entrants as soon as the
successful predator attempts to raise its
price. Predatory pricing will be profitable only if
the market contains significant barriers to new
entry.
As aforediscussed, the 4% tariff differential and
the inventory requirement are significant barriers
which discourage new players to enter the market.
Considering these significant barriers established
by R.A. No. 8180 and the lack of players with the
comparable clout of PETRON, SHELL and
CALTEX, the temptation for a dominant player to
engage in predatory pricing and succeed is a
chilling reality. Petitioners’ charge that this
provision on predatory pricing is anti-competitive
is not without reason.
[R.A. No. 8180 contained a separability clause, but
the High Tribunal held that the offending
provisions of the law so permeated its essence that it
had to be struck down entirely. The provisions on
tariff differential, inventory and predatory pricing
were among the principal props of R.A. No. 8180.
Congress could not have deregulated the
downstream oil industry without these provisions.]
G.R. No. L-34674 | October 26, 1931 | MAURICIO
CRUZ,
petitioner-appellant, vs.
STANTON YOUNGBERG, Director of the Burea
u of Animal Industry,
respondent-appellee. |
OSTRAND, J.:FACTS
:Petitioner Mauricio Cruz brought a petition
before the Court of First Instance of Manila for
theissuance of a writ of mandatory injunction
against the respondent Director of the Bureau
of Animal Industry, Stanton Youngberg, requiring
him to issue a permit for the landing of tenlarge
cattle imported by the petitioner and for the
slaughter thereof. Cruz attacked
theconstitutionality of Act No. 3155, which at
present prohibits the importation of cattle
fromforeign countries into the Philippine Islands.
He also asserted that the sole purpose of
theenactment was to prevent the introduction of
cattle diseases in the country. The respondent
asserted that the petition did not state facts
sufficient to constitute a causeof action. The
demurrer was based on two reasons: (1) that if Act
No. 3155 was
declaredunconstitutional and void, the petitioner
would not be entitled to the relief demandedbecau
se Act No. 3052 would automatically become effect
ive and would prohibit therespondent from giving
the permit prayed for; and (2) that Act No. 3155
was constitutionaland, therefore, valid. The CFI
dismissed the complaint because of petitioner’s
failure to fileanother complaint. The petitioner
appealed to the Supreme Court. Youngberg
contended that even if Act No. 3155 be declared
unconstitutional by the factalleged by the
petitioner in his complaint, still the petitioner can
not be allowed to importcattle from Australia for
the reason that, while Act No. 3155 were declared
unconstitutional,Act No. 3052
would automatically become effective.
ISSUES
:1.WON Act No. 3155 is unconstitutional
2.WON the lower court erred in not holding that
the power given by Act No. 3155 to theGovernor-
General to suspend or not, at his discretion, the
prohibition provided in theact constitutes an
unlawful delegation of the legislative
powers3.WON Act No. 3155 amended the Tariff
Law
RULING
1.
No. An unconstitutional statute can have no effect
to repeal former laws or parts of lawsby
implication. The court will not pass upon the
constitutionality of statutes unless it isnecessary to
do so. Aside from the provisions of Act No. 3052,
12
Act 3155 is entirely valid. The latter was passed by
the Legislature to protect the cattle industry of the
countryand to prevent the introduction of cattle
diseases through importation of foreign cattle.It is
now generally recognized that the promotion of
industries affecting the publicwelfare and the
development of the resources of the country are
objects within thescope of the police power. The
Government of the Philippine Islands has the
right to theexercise of the sovereign police power
in the promotion of the general welfare and
thepublic interest. At the time the Act No. 3155
was promulgated there was reasonablenecessity
therefore and it cannot be said that the
Legislature exceeded its power inpassing the Act.

2.

No. The true distinction is between the delegation

of power to make the law, whichnecessarily
involves discretion as to what it shall be, and
conferring an authority ordiscretion as to its
execution, to be exercised under and in pursuance
of the law. Thefirst cannot be done; to the latter
no valid objection can be made. There is no
unlawfuldelegation of legislative power in the case
at bar.

13