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TATAD,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE SECRETARY OF
THE DEPARTMENT OF FINANCE G.R. No. 127867 November 5, 1997
Facts:
The petitions at bar challenge the constitutionality of Republic Act No. 8180
entitled "An Act Deregulating the Downstream Oil Industry and For Other
Purposes". 1 R.A. No. 8180 ends twenty six (26) years of government
regulation of the downstream oil industry. Few cases carry a surpassing
importance on the life of every Filipino as these petitions for the upswing and
downswing of our economy materially depend on the oscillation of oil.
Prior to 1971, there was no government agency regulating the oil industry
other than those dealing with ordinary commodities. Oil companies were free
to enter and exit the market without any government interference. There
were four (4) refining companies (Shell, Caltex, Bataan Refining Company and
Filoil Refining) and six (6) petroleum marketing companies (Esso, Filoil, Caltex,
Getty, Mobil and Shell), then operating in the country.
In G.R. No. 124360, petitioner Francisco S. Tatad seeks the annulment of
section 5(b) of R.A. No. 8180. Section 5(b) provides:
b) Any law to the contrary notwithstanding and starting with the effectivity of
this Act, tariff duty shall be imposed and collected on imported crude oil at
the rate of three percent (3%) and imported refined petroleum products at
the rate of seven percent (7%), except fuel oil and LPG, the rate for which
shall be the same as that for imported crude oil: Provided, That beginning on
January 1, 2004 the tariff rate on imported crude oil and refined petroleum
products shall be the same: Provided, further, That this provision may be
amended only by an Act of Congress.
Issues:
(1) Whether or not the petitions raise a justiciable controversy
(2) Whether or not the petitioners have the standing to assail the validity of the law
(3) Whether or not Sec. 5(b) of RA 8180 violates the one title one subject
requirement of the Constitution
(4) Whether or not Sec. 15 of RA 8180 violates the constitutional prohibition on
undue delegation of power
(5) Whether or not RA 8180 violates the constitutional prohibition against
monopolies, combinations in restraint of trade and unfair competition
Held:
As to the first issue, judicial power includes not only the duty of the courts to settle
actual controversies involving rights which are legally demandable and enforceable,
but also the duty to determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or
Art. XII of the Constitution which cannot be violated by RA 8180. Petron, Shell and
Caltex stand as the only major league players in the oil market. As the dominant
players, they boast of existing refineries of various capacities. The tariff differential
of 4% on imported crude oil and refined petroleum products therefore works to their
immense benefit. 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 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 RA 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 most important question is whether the offending provisions can be individually
struck down without invalidating the entire RA 8180. The general rule is that where
part of a statute is void as repugnant to the Constitution, while another part is valid,
the valid portion, if separable from the invalid, may stand and be enforced. The
exception to the general rule is that when the parts of a statute are so mutually
dependent and connected, as conditions, considerations, inducements or
compensations for each other, as to warrant a belief that the legislature intended
them as a whole, the nullity of one part will vitiate the rest. RA 8180 contains a
separability clause. The separability clause notwithstanding, the Court held that the
offending provisions of RA 8180 so permeate its essence that the entire law has to
be struck down. The provisions on tariff differential, inventory and predatory pricing
are among the principal props of RA 8180. Congress could not have regulated the
downstream oil industry without these provisions. Unfortunately, contrary to their
intent, these provisions on tariff differential, inventory and predatory pricing inhibit
fair competition, encourage monopolistic power and interfere with the free
interaction of market forces.