Case Summary (G.R. No. 220978)
Pertinent Dates and Administrative Acts
Executive Order No. 438 (27 Nov 1990) imposed a 5% ad valorem additional duty on all imports; EO No. 443 (3 Jan 1991) increased that additional duty to 9% ad valorem. On 24 July 1991 the Department of Finance requested the Tariff Commission to initiate proceedings under the Tariff and Customs Code for imposition of a specific levy on crude oil and certain petroleum products. EO No. 475 (15 Aug 1991) reduced the ad valorem additional duty to 5% generally but retained 9% for crude oil and oil products. The Tariff Commission issued a report (16 Aug 1991), and EO No. 478 (23 Aug 1991) imposed, in addition to the retained 9% ad valorem duty, a specific duty of P0.95 per liter (P151.05 per barrel) on imported crude oil and P1.00 per liter on imported oil products. EO No. 517 (30 Apr 1992) later lifted the ad valorem additional duty generally but preserved the 9% ad valorem and the special duty for selected oil products.
Petitioner’s Claims and Relief Sought
Petitioner challenged the validity of EO Nos. 475 and 478 on two grounds: (1) constitutional — that the imposition of revenue/tariff measures by Executive Order violated Section 24, Article VI of the 1987 Constitution (origination clause that appropriation, revenue or tariff bills must originate in the House of Representatives); and (2) statutory — that Section 401 of the Tariff and Customs Code authorizes presidential action only to protect local industries and not for the purpose of raising revenue. Petitioner sought injunctive relief restraining implementation of EOs 475 and 478 and related remedies.
Legal Question Presented
Whether EO Nos. 475 and 478 are constitutionally and legally valid under the 1987 Constitution and the Tariff and Customs Code — specifically whether the President, by executive order, was authorized to impose or retain additional ad valorem duties and to levy a special specific duty on imported crude oil and oil products.
Controlling Constitutional and Statutory Provisions
- Constitution (1987): Section 24, Article VI (origination clause): all appropriation, revenue or tariff bills shall originate exclusively in the House of Representatives. Section 28(2), Article VI: Congress may, by law, authorize the President to fix, within specified limits and subject to limitations and restrictions, tariff rates, import/export quotas and other duties or imposts within the national development framework.
- Tariff and Customs Code: Section 104 incorporates tariff schedules and authorizes revision of rates “upon recommendation of the National Economic and Development Authority.” Section 401 (“Flexible Clause”) grants the President, upon recommendation of NEDA and subject to prescribed limitations and procedures (including Tariff Commission investigation and public hearings in specified cases), the power to increase, reduce or remove rates, establish import quotas or ban imports, and impose additional duties (with specified numerical limits and procedural requirements).
Court’s Threshold Determination on Mootness
The Court found the petition not moot despite subsequent EO No. 517 because that EO expressly preserved the 9% ad valorem additional duty and the special specific duty with respect to crude oil and certain oil products, thereby leaving live controversy as to those levies.
Constitutional Analysis and Delegation to the Executive
The Court rejected petitioner’s argument that Section 24 of Article VI absolutely precludes the President from imposing duties by executive order. It emphasized Section 28(2) of Article VI which expressly authorizes Congress to delegate to the President the power to fix tariff rates and other duties within specified limits and subject to restrictions. The Tariff and Customs Code — Sections 104 and 401 — are the implementing congressional statutes that constituted such a delegation. Accordingly, presidential action under those statutory delegations is constitutionally permissible if exercised within the statutory framework and limits.
Statutory Interpretation of the Tariff and Customs Code
The Court examined Section 401’s language and rejected petitioner’s narrow interpretation that presidential authority under that section is limited solely to measures “to protect local industries and products.” The Court explained that neither Section 104 nor Section 401 confines presidential action exclusively to protectionist objectives. Section 401 expressly conditions presidential powers on purposes such as “the interest of national economy, general welfare and/or national security,” and establishes specific numerical limits and procedural safeguards. The language “protective” and “protection” in the Code does not carry the exclusive meaning that petitioner ascribed.
Policy and Practical Considerations Adopted by the Court
The Court noted practical and policy considerations supporting a broader reading: (1) customs administration is a principal government reven
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Facts
- On 27 November 1990, the President issued Executive Order No. 438 imposing an additional duty of five percent (5%) ad valorem on all articles imported into the Philippines, in addition to any other duties, taxes and charges imposed by law.
- By Executive Order No. 443, dated 3 January 1991, the additional duty imposed by EO No. 438 was increased from five percent (5%) ad valorem to nine percent (9%) ad valorem.
- On 24 July 1991, the Department of Finance requested the Tariff Commission to initiate the process under the Tariff and Customs Code for the imposition of a specific levy on crude oil and other petroleum products covered by HS Heading Nos. 27.09, 27.10 and 27.11 of Section 104 of the Tariff and Customs Code as amended.
- The Tariff Commission, pursuant to Section 401 of the Tariff and Customs Code, scheduled public hearings to afford interested parties an opportunity to be heard and to present evidence.
- On 15 August 1991, the President issued Executive Order No. 475 reducing the rate of additional duty on all imported articles from nine percent (9%) to five percent (5%) ad valorem, except that crude oil and other oil products remained subject to the additional duty of nine percent (9%) ad valorem.
- After completion of public hearings, the Tariff Commission submitted to the President a "Report on Special Duty on Crude Oil and Oil Products" dated 16 August 1991.
- Seven days later, on 23 August 1991, the President promulgated Executive Order No. 478, levying, in addition to the additional duty of nine percent (9%) ad valorem and all other existing ad valorem duties, a special duty of P0.95 per liter or P151.05 per barrel of imported crude oil and P1.00 per liter of imported oil products.
- Executive Order No. 517 (dated 30 April 1992) later lifted the additional duty imposed by EO No. 443 generally, but expressly continued the additional duty of nine percent (9%) ad valorem on selected articles covered by HS Heading Nos. 27.09 and 27.10 (crude oil and oil products) and preserved the special duties imposed by EO No. 478.
Procedural History
- Petitioner Congressman Enrique T. Garcia filed a Petition for Certiorari, Prohibition and Mandamus challenging the validity of Executive Orders Nos. 475 and 478.
- Petitioner asserted that EO Nos. 475 and 478 violated Section 24, Article VI of the 1987 Constitution and contravened Section 401 of the Tariff and Customs Code.
- The Supreme Court (En Banc) heard the case and issued the decision delivered by Justice Feliciano on 3 July 1992.
- The Court dismissed the Petition for lack of merit and imposed costs against petitioner. The Roll includes concurrence by Narvasa, C.J., and Justices Gutierrez, Jr., Cruz, Paras, Padilla, Bidin, Grino-Aquino, Medialdea, Regalado, Davide, Jr., Romero, Nocon, and Bellosillo.
Issues Presented
- Whether Executive Orders Nos. 475 and 478, which imposed and preserved additional ad valorem duties and imposed a special specific duty on imported crude oil and oil products, are unconstitutional under Section 24, Article VI of the 1987 Constitution because they are revenue-generating measures that should originate in the House of Representatives.
- Whether EO Nos. 475 and 478 are illegal under Section 401 of the Tariff and Customs Code because petitioner contends Section 401 authorizes the President to act only to protect local industries or products and not to raise revenue.
Constitutional and Statutory Provisions Invoked
- Section 24, Article VI, 1987 Constitution: "All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments."
- Section 28(2), Article VI, 1987 Constitution: Congress may, by law, authorize the President to fix within specified limits, and subject to limitations and restrictions, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program.
- Tariff and Customs Code, Section 104 (quoted in relevant part): adopts tariff sections and rates, provides that rates fixed pursuant to Section 401 "shall be subject to periodic investigation by the Tariff Commission and may be revised by the President upon recommendation of the National Economic and Development Authority."
- Tariff and Customs Code, Section 401 (quoted in full): The "Flexible Clause" authorizes the President, upon NEDA recommendation and subject to stated limitations, to (a) increase, reduce, or remove existing protective rates of import duty (with maximum and minimum ad valorem limits), (b) establish import quotas or ban imports, and (c) impose an additional duty on all imports not exceeding ten percent (10%) ad valorem whenever necessary; it prescribes procedures for Tariff Commission investigations and public hearings, the authority to modify form of duty, data access provisions, and effective dates (30 days after promulgation, except additional duty under 1