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 tarrif violates the equal protection clause and bars the entry of
others in the oil industry business. Also, the inclusion of tarrif 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 nolocus 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. 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.
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
demands an adequate guideline or limitation in the law to delineate the
delegates 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.

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