Tatad vs Secretary of Energy

G.R. No. 124360, November 5, 1997

Petitioner: Francis Tatad

Respondents: The Secretary of the Department of Energy and the Secretary of the
Department of Finance

Facts:

In December 9, 1992, the Department of Energy was created (through the enactment of
R.A. No. 7638) to control energy-related government activities. In March 1996, R.A. No.
8180 (Downstream Oil Industry Deregulation Act of 1996) was enacted in pursuance to
the deregulation of the power and energy thrust under R.A. 7638. Under the R.A. No.
8180, any person or entity was allowed to import and market crude oil and petroleum
products, and to lease or own and operate refineries and other downstream oil facilities.

Petitioner Francisco Tatad questions the constitutionality of Section 5 of R.A. No. 8180
since the imposition of tariff violates the equal protection clause and bars the entry of
others in the oil industry business. Also, the inclusion of tariff violates Section 26 (1) of
Article VI of the constitution requiring every law to have only one subject which shall be
expressed in its title.

In a separate petition (G.R. 127867), petitioners Edcel Lagman, Joker Arroyo, Enrique
Garcia, Wigberto Tanada, Flag Human Rights Foundation, Inc., Freedom from Debt
Coalition and Sanlakas argued that R.A. No. 8180, specifically Section 15 is
unconstitutional because it: (1) gives undue delegation of legislative power to the
President and the Secretary of Energy by not providing a determinate or determinable
standard to guide the Executive Branch in determining when to implement the full
deregulation of the downstream oil industry; (2) Executive Order No. 392, an order
declaring the implementation of the full deregulation of the downstream oil industry, is
arbitrary and unreasonable because it was enacted due to the alleged depletion of the
Oil Price Stabilization Plan- a condition not found in R.A. No. 8180; and (3) Section 15
of R.A. No. 8180 and E.O. No. 392 allow the formation of a de facto cartel among
Petron, Caltex and Shell in violation of constitutional prohibition against monopolies,
combinations in restraint of trade and unfair competition.

Respondents, on the other hand, declares the petitions not justiciable (cannot be settled
by the court) and that the petitioners have no locus standi since they did not sustain
direct injury as a result of the implementation of R.A. No. 8180.

Issues:

1. Whether or not R.A. no. 8180 is unconstitutional.

2. Whether or not E. O. no. 392 is arbitrary and unreasonable.
3. Whether or not Section 5 of R.A. no. 8180 violates Section 26(1), Article VI of the
Constitution.
4. Whether or not Section 15 of R.A. no. 8180 constitutes undue delegation of
legislative power.

Held:

1. No, R.A. No. 8180 is unconstitutional. It violated Section 19, Article XII of the
Constitution prohibiting monopolies, combinations in restraint of trade and unfair
competition. The deregulation act only benefits Petron, Shell and Caltex, the three
major league players in the oil industry.
2. Yes, Executive Order No. 392 was arbitrary and unreasonable and therefore
considered void. The depletion of OFSP is not one of the factors enumerated in R.A.
No. 8180 to be considered in declaring full deregulation of the oil industry. Therefore,
the executive department, in its declaration of E.O. No. 392, failed to follow faithfully the
standards set in R.A. No. 8180, making it void.
3. No, section 5 of R.A. No. 8180 does not violate Section 26(1), Article VI of the
Constitution. A law having a single general subject indicated in the title may
contain any number of provisions as long as they are not inconsistent with the
foreign subject. Section 5 providing for tariff differential is germane to the subject
of the deregulation of the downstream industry which is R.A. No 8180, therefore it
does not violate the one title-one subject rule (The 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)
4. No, Section 15 did not violate the constitutional prohibition on undue delegation of
legislative power. The tests to determine the validity of delegation of legislative power
are the completeness test and the sufficiency test.  The completeness test demands
that the law must be complete in all its terms and conditions such that when it reaches
the delegate, all it must do is enforce it. The sufficiency test demand an adequate
guideline or limitation in the law to delineate the delegate’s authority. Section 15
provides for the time to start the full deregulation, which answers the completeness test.
It also laid down standard guide for the judgement 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 peso to dollar is stable- which answers the
sufficiency test.

In People v. Vera, the Court laid down a guideline on how to distinguish which

power may or may not be delegated by Congress, to wit:

"The true distinction", says Judge Ranney, "is between the delegation of power to
make the law, which necessarily involves a discretion as to what it shall be, and
conferring an authority or discretion as to its execution, to be exercised under
and in pursuance of the law. The first cannot done; to the latter no valid objection
can be made." (Cincinnati, W. & Z.R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio
St., 77, 88 See also, Sutherland on Statutory Construction, sec. 68.)

Decision:
The petitions were granted. R.A. No. 8180 was declared unconstitutional and E.O. No.
372 void.