SOUTHERN CROSS vs. CeMAP (TRIXIE) 5.
DTI: Expressed disagreement with the conclusion of the Tariff Commission
August 3, 2005 | Tinga, J. | Taxation
PETITIONER: SOUTHERN CROSS CEMENT CORPORATION
RESPONDENTS: CEMENT MANUFACTURERS ASSOCIATION OF THE
PHILIPPINES, THE SECRETARY OF THE DEPARTMENT OF TRADE AND
INDUSTRY, THE SECRETARY OF THE DEPARTMENT OF FINANCE and
THE COMMISSIONER OF THE BUREAU OF CUSTOMS
SUMMARY: SMA was enacted by Congress. PHILCEMCOR filed a petition
with the DTI. DTI issued a provisional safeguard measure and referred the petition
to the TC. TC denied the petition. PHILCEMCOR appealed to the CA. Southern
Cross appealed. DTI imposed a definitive safeguard measure. Southern Cross filed
a TRO and Petition for Review with the CTA. PHILCEMCOR accused Southern
Cross of forum shopping and filed with the SC. SC held in its Decision that: CA
had no jurisdiction, CA erred in ruling that the DTI was not bound by the decision
of the TC and no evidence of malice to warrant forum shopping. SC held in its
Resolution that: the power of taxation has been delegated by Congress with the
enactment of the SMA and positive final determination of the TC is indispensable.
DOCTRINES: First, Congress possesses inherent powers to impose tariffs and
imposts. Second, under the Safeguards Measures Act, Congress assigned to the
Department of Trade and Industry Secretary and the Tariff Commission their
respective functions in the legislature scheme of things. Third, Section 5 operates
as a limitation validly imposed by Congress on the presidential authority to impose
tariffs and imposts and the positive final determination of the Commission
operates as an indispensable requisite to the imposition of the safeguard measure.
FACTS:
1. Resolution revolves around Republic Act No. 880 (Safeguards Measures Act
or SMA) which was enacted by Congress after the Philippines ratified the
General Agreement of Tariff and Trade and the World Trade Organization
Agreement (GATT and WTO). The law provides the structure and mechanics
for the imposition of emergency measures, including the imposition of tariffs,
to protect domestic industries and producers from increased imports which
inflict or could inflict serious injury on them.
2. Philippine Cement Manufacturers Corporation (PHILCEMCOR): filed
a petition with the Department of Trade and Industry (DTI) for the imposition
of safeguard measures on gray Portland cement.
3. DTI: Issued a provisional safeguard measure and referred the application to
the Tariff Commission (TC) to investigate and determine whether or not to
impose a definitive safeguard measure on imports of gray Portlan cement.
4. TC: Held public hearings, conducted investigations and determined in its
formal investigation report: “the elements of serious injury and immiment
threat of serious injury not having been established, it is hereby recommended
no definitive general safeguard measure to be imposed on the importation of
gray Portland cement”.
but denied the application for safeguard measures of PHILCEMCOR. Sought
for the opinion of the Secretary of Justice (SOJ) whether it could still impose
a definitive safeguard measure notwithstanding the negative finding.
6. PHILCEMCOR: Challenged the decision/denial. Prayed to the Court of
Appeals to render judgment independently of the report.
7. CA: Partially granted the petition. Held it had jurisdiction over the petition
for certiorari ruled the department was not bound by the factual findings of
the Tariff Commission as they are merely recommendary and they fall within
the ambit of the Secretary’s discretionary review however, it refused to annul
the findings of the Tariff Commission.
8. Southern Cross Cement (Southern Cross): filed the present petition.
9. DTI: Imposed a definitive safeguard measure on the importation of gray
Portland cement in the amount of Php 20.60/kg for three years as there was
‘no longer any legal impediment in deciding on the application’.
10. Southern Cross: filed an urgent application for a temporary restraining order
and/or writ of preliminary injuction seeking to enjoin its enforcement.
11. PHILCEMCOR: filed an opposition (jurisdiction over application).
12. Southern Cross: filed a petition for review with the CTA.
13. PHILCEMCOR: argued forum shopping before the SC.
14. SC: Whether the decision of the Department of Trade and Industry Secretary
is appealable to the Court of Tax Appeals or the Court of Appeals – CTA;
CA has no jurisdiction.
15. SC: Assuming that the Court of Appeals had jurisdiction, whether its decision
was made in accordance with law – NO; CA erred in ruling the department
secretary was not bound by the negative determination of the TC.
16. PHILCEMCOR and DTI: filed motions for reconsideration to the SC.
17. Southern Cross: filed an urgent motion, prayed for a cease-and-desist order.
18. PHILCEMCOR: filed a petition for extension of the safeguard measure.
ISSUES:
1. W/N positive final determination of the Tariff Commission is required to
impose tariffs and imposts – YES (INDISPENSIBLE REQUIREMENT).
2. W/N public and private respondents are enjoined from taking further action
– YES (DENIED WITH FINALITY).
RULING: Motions for Reconsideration are DENIED WITH FINALITY. Respondent
Secretary is hereby ENJOINED from taking any further action on the pending Petition
for Extension of the Safeguard Measure.
RATIO:
1. Section 28(2), Article VI: The Congress may, by law, authorize the President
to fix within specified limits, and subject to such limitations and restrictions
as it may impose, tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts within the framework of the national
development program of the Government.
 Impositions under Section 28(2), Article VI 6. Thus, the Department Secretary and the Tariff Commission may be regarded
First, it is Congress which authorizes the President to impose tariff as agents of Congress within their limited respective spheres, as ordained in
rates, import and export quotas, tonnage and wharfage dues, and the Safeguards Measures Act, in the implementation of the said law which
other duties or imposts. Authority cannot come from the Finance draws its strength from the plenary legislative power of taxation. Even
Department, the National Economic Development Authority, or the the President may be considered as an as an agent of Congress for the purpose
World Trade Organization, no matter how insistent or persistent of imposing safeguard measures. It is Congress which possesses inherent
these bodies may be. powers to impose tariffs and imposts. Without legislative authorization
through statute the President has no power, authority or right to impose such
Second, the authorization granted to the President must be embodied
safeguard measures as taxation is inherently legislative, not executive.
in a law. Hence, the justification cannot be supplied simply by
7. Congress may establish procedural framework under which such safeguard
inherent executive powers. It cannot arise from administrative or
measures may be imposed and assign the various offices in the government
executive orders promulgated by the executive branch or from the
bureaucracy respective tasks pursuant to the imposition of such measures, the
wisdom or whim of the President.
task assignment including the factual determination of whether the necessary
Third, authorization to the President can be exercised only within conditions exist to warrant such impositions. Under the Safeguards Measures
the specified limits set in the law and is further subject to limitations Act, Congress assigned (delegated) to the Department of Trade and
and restrictions which Congress may impose. Consequently, if Industry Secretary and the Tariff Commission their respective functions
Congress specifies that the tariff rates should not exceed a given in the legislature scheme of things.
amount, the President cannot impose a tariff rate that exceeds such 8. There is only one viable ground for challenging the legality of the limitations
amount. If Congress stipulates that no duties may be imposed on the and restrictions imposed by Congress under Section 28(2) Article VI and that
importation of corn, the President cannot impose duties on corn, no is the limitations and restrictions themselves violative of the Constitution.
matter how actively the local corn producers lobby the President. No matter how distasteful or noxious these limitations and restrictions may
Even the most picayune of limits or restrictions imposed by seem, the Court has no choice but to uphold their validity unless their
Congress must be observed by the President. constitutional infirmity can be demonstrated.
9. What are these limitations and restrictions that are material to the present
2. Secion 28(2), Article VI impositions fall within the realm of the power of
case? The Safeguards Measures Act provides for a limited framework in
taxation, a power which is within the sole province of the legislature under
which the President, through his alter egos, may impose safeguard measures
the Constitution. Without Section 28(2), Article VI, the executive branch has
in the form of tariffs and similar imposts. The limitation most relevant to this
no authority to impose tariffs and other similar tax levies involving the
case is contained in Section 5 of the Safeguards Measures Act (Conditions
importation of foreign goods.
for the Application of General Safeguard Measures).
3. If Section 28(2) Article VI didn’t exist, enactment of the Safeguard Measures
10. Section 5: “The Secretary shall apply a general safeguard measure upon a
Act by Congress would be voided on the ground that it would constitute an
positive final determination of the [Tariff] Commission that a product is
undue delegation of the legislative power to tax. The constitutional provision
being imported into the country in increased quantities, whether absolute or
shields such delegation from infirmity and should be recognized as an
relative to the domestic production, as to be a substantial cause of serious
exceptional grant of legislative power to the President, rather than the
injury or threat thereof to the domestic industry; however, in the case of non-
affirmation of an inherent executive power.
agricultural products,
4. Authority delegated to the President under may be exercised by the alter egos
11. Section 5 operates as a limitation validly imposed by Congress on the
of the President in accordance with legislative sanction. Generally, it is the
presidential authority to impose tariffs and imposts and the positive final
Secretary of Finance who acts as alter ego of the President for the purposes
determination operates as an indispensable requisite to the imposition of
of the exercise of power to impose tariffs. However, the Safeguard Measures
the safeguard measure and that it is the Tariff Commission which makes
Act provides an exceptional instance wherein it is the Department of Trade
such determination.
and Industry or Department of Agriculture Secretary, in their capacities as
alter egos, who is tasked by Congress to impose such measures (they have no
inherent power to levy tariffs and imports).
5. Tasking of the Tariff Commission under the Safeguards Measures Act should
be likewise construed within the same context as part and parcel of the
legislative delegation of its inherent power to impose tariffs and imposts
to the executive branch, subject to limitations and restrictions.