Tatad v.

DOE

History
 In 1971, oil crisis. Enacted Oil Industry Commission Act -> created Oil Industry Commission
(OIC) to regulate the business of importing products
o OIC has power to fix market prices
 1973: Marcos created Phil. National Oil Corp. (PNOC) to break control by foreigners of our oil.
PNOC refines, stores and ships petroleum.
o PNOC owned ESSO and Filoil and Bataan Refining Corp -> Soon, Petron
 1984: Marcos created Oil Price Stabilization Fund (OPSF) to cushion effects of frequent changes
in the price of oil
o OPSF sourced from taxes
 1985: Caltex, Shell, PNOC
 1992: DOE was created to control all programs of gov related to energy
o purpose toward privatization of gov agencies related to energy
o deregulation of power and reduction of dependency on oil-fired plants
 March 1996: “Downstream Oil Industry Deregulation Act of 1996”
o To allow any person to import or purchase crude oil from foreign or domestic source,
lease or own and operate refineries for his own requirement
o 2 phases
 Transition
 Controls of the non-pricing aspects to be lifted
 Liberalization of oil importation, etc
 Full Deregulation
 Controls on the price of oil and OPSF to be abolished

Facts
 Feb 8, 1997: Full deregulation
 Petitioner assails constitutionality of both RA 8180 and EO 372
o Seeks annulment of Sec. 5(b) of RA 8180 (Tatad)
 “tariff duty shall be imposed on imported crude oil at 3% and imported refined
petroleum products at 7%”
o Seeks annulment of Sec. 15 RA 8180 and EO 392 or DOE Act
 Sec. 15: “upon approval of Pres, DOE shall implement deregulation not later than
March 1997, and time it when the prices in world market are declining and when
exchange rate of peso in relation to US dollar is stable”
 EO 372: “DOE, upon approval of Pres, institute the programs and time table of
deregulation

Issues & Ratio

WON Sec. 5(b) violates the one title-one subject requirement of the Constitution. NO.
 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.

WON Sec. 15 violates constitutional prohibition on undue delegation of power. NO.

 Delegation of legislative power has become and inevitability in light of the increasing complexity
of task of gov.
  Also, it passed both the completeness and sufficient standard test, which is necessary to
determine a valid delegation.
o Congress expressly provided that full deregulation starts at the end of March 1997 and is
mandatory
o The discretion of Pres. is merely to advance the date of full regulation before the end of
March 1997.
 However, Executive dept. should not have considered the factor of depletion of OPSF Fund to
hasten the full deregulation.

WON RA 8180 on tariff differential, inventory reserves, and predatory prices imposed barriers
to the entry and exit of new players in our downstream oil industry. YES.
 The tariff differential of 4% works to the immense benefit of Petron, Shell and Caltex (as a foreign
oligopoly).
 Those who will compete with them will suffer the huge disadvantage of increasing their product
cost by 4%.
 The first need is to attract new players without heavy disincentives. Thus, the argument that tariff
diff is desirable bec it will induce players to invest in refineries, puts the cart before the horse.
 The provision on inventory also benefits the three main players, as they can easily comply with
it in view of their existing storage facilities.
 Finally, the ban on predatory pricing. The penal sanction will deters new players from entering
the oil market and the practice of lowering prices is now condemned as a criminal act. Hence,
the prohibition should be removed.

Thus, the total effect of the untimely deregulation, the imposition of 4% tariff differential, the
requirement of inventory and the prohibition on predatory pricing renders the whole RA 8180
unconstitutional.