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PHILIPPINEJURISPRUDENCEFULLTEXT
TheLawphilProjectArellanoLawFoundation
G.R.No.101273July3,1992
ENRIQUET.GARCIAvs.THEEXECUTIVESECRETARY,ETAL.

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.101273July3,1992

CONGRESSMANENRIQUET.GARCIA(SecondDistrictofBataan),petitioner,
vs.
THEEXECUTIVESECRETARY,THECOMMISSIONEROFCUSTOMS,THENATIONALECONOMICANDDEVELOPMENT
AUTHORITY,THETARIFFCOMMISSION,THESECRETARYOFFINANCE,andTHEENERGYREGULATORYBOARD,
respondents.

FELICIANO,J.:

On 27 November 1990, the President issued Executive Order No. 438 which imposed, in addition to any other duties, taxes and
charges imposed by law on all articles imported into the Philippines, an additional duty of five percent (5%) ad valorem. This
additionaldutywasimposedacrosstheboardonallimportedarticles,includingcrudeoilandotheroilproductsimportedintothe
Philippines.Thisadditionaldutywassubsequentlyincreasedfromfivepercent(5%)advaloremtoninepercent(9%)advaloremby
thepromulgationofExecutiveOrderNo.443,dated3January1991.

On24July1991,theDepartmentofFinancerequestedtheTariffCommissiontoinitiatetheprocessrequiredbytheTariffandCustoms
Codefortheimpositionofaspecificlevyoncrudeoilandotherpetroleumproducts,coveredbyHSHeadingNos.27.09,27.10and
27.11ofSection104oftheTariffandCustomsCodeasamended.Accordingly,theTariffCommission,followingtheprocedureset
forthinSection401oftheTariffandCustomsCode,scheduledapublichearingtogiveinterestedpartiesanopportunitytobeheard
andtopresentevidenceinsupportoftheirrespectivepositions.

Meantime, Executive Order No. 475 was issued by the President, on 15 August 1991 reducing the rate of additional duty on all
importedarticlesfromninepercent(9%)tofivepercent(5%)advalorem,exceptinthecasesofcrudeoilandotheroilproductswhich
continuedtobesubjecttotheadditionaldutyofninepercent(9%)advalorem.

Uponcompletionofthepublichearings,theTariffCommissionsubmittedtothePresidenta"ReportonSpecialDutyonCrudeOiland
OilProducts"dated16August1991,forconsiderationandappropriateaction.Seven(7)dayslater,thePresidentissuedExecutive
OrderNo.478,dated23August1991,whichlevied(inadditiontotheaforementionedadditionaldutyofninepercent(9%)advalorem
andallotherexistingadvaloremduties)aspecialdutyofP0.95perliterorP151.05perbarrelofimportedcrudeoilandP1.00perliter
ofimportedoilproducts.

InthepresentPetitionforCertiorari,ProhibitionandMandamus,petitionerassailsthevalidityofExecutiveOrdersNos.475and478.
HearguesthatExecutiveOrdersNos.475and478areviolativeofSection24,ArticleVIofthe1987Constitutionwhichprovidesas
follows:

Sec.24:Allappropriation,revenueortariffbills,billsauthorizingincreaseofthepublicdebt,billsoflocalapplication,
andprivatebillsshalloriginateexclusivelyintheHouseofRepresentatives,buttheSenatemayproposeorconcur
withamendments.

HecontendsthatsincetheConstitutionveststheauthoritytoenactrevenuebillsinCongress,thePresidentmaynotassume
suchpowerbyissuingExecutiveOrdersNos.475and478whichareinthenatureofrevenuegeneratingmeasures.

Petitioner further argues that Executive Orders No. 475 and 478 contravene Section 401 of the Tariff and Customs Code, which
SectionauthorizesthePresident,accordingtopetitioner,toincrease,reduceorremovetariffdutiesortoimposeadditionaldutiesonly
whennecessarytoprotectlocalindustriesorproductsbutnotforthepurposeofraisingadditionalrevenueforthegovernment.

Thus, petitioner questions first the constitutionality and second the legality of Executive Orders Nos. 475 and 478, and asks us to
restraintheimplementationofthoseExecutiveOrders.Wewillexaminethesequestionsinthatorder.

Beforedoingso,however,theCourtnotesthattherecentpromulgationofExecutiveOrderNo.507didnotrendertheinstantPetition
mootandacademic.ExecutiveOrderNo.517whichisdated30April1992providesasfollows:

Sec.1.LiftingoftheAdditionalDuty.Theadditionaldutyinthenatureofadvaloremimposedonallimportedarticles
prescribed by the provisions of Executive Order No. 443, as amended, is hereby liftedProvided, however, that the
selected articles covered by HS Heading Nos. 27.09 and 27.10 of Section 104 of the Tariff and Customs Code, as
amended, subject of Annex "A" hereof, shall continue to be subject to the additional duty of nine (9%) percent ad
valorem.

Undertheabovequotedprovision,crudeoilandotheroilproductscontinuetobesubjecttotheadditionaldutyofninepercent
(9%)advaloremunderExecutiveOrderNo.475andtothespecialdutyofP0.95perliterofimportedcrudeoilandP1.00per
literofimportedoilproductsunderExecutiveOrderNo.478.

Turningfirsttothequestionofconstitutionality,underSection24,ArticleVIoftheConstitution,theenactmentofappropriation,revenue
andtariffbills,likeallotherbillsis,ofcourse,withintheprovinceoftheLegislativeratherthantheExecutiveDepartment.Itdoesnot
follow,however,thatthereforeExecutiveOrdersNos.475and478,assumingtheymaybecharacterizedasrevenuemeasures,are
prohibitedtothePresident,thattheymustbeenactedinsteadbytheCongressofthePhilippines.Section28(2)ofArticleVIofthe
Constitutionprovidesasfollows:

(2)TheCongressmay,bylaw,authorizethePresidenttofixwithinspecifiedlimits,andsubjecttosuchlimitationsand
restrictions as it may impose, tariffrates, import and export quotas, tonage and wharfage dues, and other duties or
impostswithintheframeworkofthenationaldevelopmentprogramoftheGovernment.(Emphasissupplied)

There is thus explicit constitutional permission 1 to Congress to authorize the President "subject to such limitations and
restrictionsis[Congress]mayimpose"tofix"withinspecificlimits""tariffrates...andotherdutiesorimposts..."
The relevant congressional statute is the Tariff and Customs Code of the Philippines, and Sections 104 and 401, the pertinent
provisionsthereof.ThesearetheprovisionswhichthePresidentexplicitlyinvokedinpromulgatingExecutiveOrdersNos.475and

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478.Section104oftheTariffandCustomsCodeprovidesinrelevantpart:

Sec.104.Alltariffsections,chapters,headingsandsubheadingsandtheratesofimportdutyunderSection104of
PresidentialDecreeNo.34andallsubsequentamendmentsissuedunderExecutiveOrdersandPresidentialDecrees
areherebyadoptedandformpartofthisCode.

Thereshallbelevied,collected,andpaiduponallimportedarticlestheratesofdutyindicatedintheSectionunderthis
sectionexceptasotherwisespecificallyprovidedforinthisCode:Provided,that,themaximumrateshallnotexceed
onehundredpercentadvalorem.

TheratesofdutyhereinprovidedorsubsequentlyfixedpursuanttoSectionFourHundredOneofthisCodeshallbe
subjecttoperiodicinvestigationbytheTariffCommissionandmayberevisedbythePresidentuponrecommendation
oftheNationalEconomicandDevelopmentAuthority.

xxxxxxxxx

(Emphasissupplied)

Section401ofthesameCodeneedstobequotedinfull:

Sec.401.FlexibleClause.

a.Intheinterestofnationaleconomy,generalwelfareand/ornationalsecurity,andsubjecttothelimitationsherein
prescribed,thePresident, upon recommendation of the National Economic and Development Authority (hereinafter
referredtoasNEDA),isherebyempowered:(1)toincrease,reduceorremoveexistingprotectiveratesofimportduty
(includinganynecessarychangeinclassification).Theexistingratesmaybeincreasedordecreasedbutinnocase
shall the reduced rate of import duty be lower than the basic rate of ten (10) per cent ad valorem, nor shall the
increasedrateofimportdutybehigherthanamaximumofonehundred(100)percentadvalorem (2) to establish
importquotaortobanimportsofanycommodity,asmaybenecessaryand(3)toimposeanadditionaldutyonall
importsnotexceedingten(10)percentadvalorem,whenevernecessaryProvided,Thatuponperiodicinvestigations
bytheTariffCommissionandrecommendationoftheNEDA,thePresidentmaycauseagradualreductionofprotection
levelsgrantedinSectionOnehundredandfourofthisCode,includingthosesubsequentlygrantedpursuanttothis
section.

b.BeforeanyrecommendationissubmittedtothePresidentbytheNEDApursuanttotheprovisionsofthissection,
except in the imposition of an additional duty not exceeding ten (10) per cent ad valorem, the Commission shall
conduct an investigation in the course of which they shall hold public hearings wherein interested parties shall be
affordedreasonableopportunitytobepresent,produceevidenceandtobeheard.TheCommissionshallalsohearthe
views and recommendations of any government office, agency or instrumentality concerned. The Commission shall
submit their findings and recommendations to the NEDA within thirty (30) days after the termination of the public
hearings.

c.ThepowerofthePresidenttoincreaseordecreaseratesofimportdutywithinthelimitsfixedinsubsection"a"shall
includetheauthoritytomodifytheformofduty.Inmodifyingtheformofduty,thecorrespondingadvaloremorspecific
equivalents of the duty with respect to imports from the principal competing foreign country for the most recent
representativeperiodshallbeusedasbases.

d.TheCommissionerofCustomsshallregularlyfurnishtheCommissionacopyofallcustomsimportentriesasfiledin
theBureauofCustoms.TheCommissionoritsdulyauthorizedrepresentativesshallhaveaccessto,andtherightto
copyallliquidatedcustomsimportentriesandotherdocumentsappendedtheretoasfinallyfiledintheCommissionon
Audit.

e.TheNEDAshallpromulgaterulesandregulationsnecessarytocarryouttheprovisionsofthissection.

f. Any Order issued by the President pursuant to the provisions of this section shall take effect thirty (30) days after
promulgation,exceptintheimpositionofadditionaldutynotexceedingten(10)percentadvaloremwhichshalltake
effectatthediscretionofthePresident.(Emphasissupplied)

Petitioner,however,seekstoavoidthethrustofthedelegatedauthorizationsfoundinSections104and401oftheTariffandCustoms
Code,bycontendingthatthePresidentisauthorizedtoactundertheTariffandCustomsCodeonly"toprotectlocalindustriesand
productsforthesakeofthenationaleconomy,generalwelfareand/ornationalsecurity."2Hegoesontoclaimthat:

E.O.Nos.478and475havingnothingtodowhatsoeverwiththeprotectionoflocalindustriesandproductsforthesake
ofnationaleconomy,generalwelfareand/ornationalsecurity.Onthecontrary,theyworkinreverse,especiallyasto
crudeoil,anessentialproductwhichwedonothavetoprotect,sinceweproduceonlyminimalquantitiesandhaveto
importtherestofwhatweneed.

These Executive Orders are avowedly solely to enable the government to raise government finances, contrary to
Sections24and28(2)ofArticleVIoftheConstitution,aswellastoSection401oftheTariffandCustomsCode. 3
(Emphasisintheoriginal)

TheCourtisnotpersuaded.Inthefirstplace,thereisnothinginthelanguageofeitherSection104orof401oftheTariffandCustoms
Codethatsuggestsuchasharpandabsolutelimitationofauthority.Theentirecontentionofpetitionerisanchoredonjusttwo(2)
words,onefoundinSection401(a)(1):"existingprotectiveratesofimportduty,"andthesecondintheprovisofoundattheendof
Section401(a):"protectionlevelsgrantedinSection104ofthisCode...."Webelievethatthewords"protective"and''protection"
aresimplynotenoughtosupporttheverybroadandencompassinglimitationwhichpetitionerseekstorestonthosetwo(2)words.

Inthesecondplace,petitioner'ssingulartheorycollideswithaverypracticalfactofwhichthisCourtmaytakejudicialnoticethatthe
BureauofCustomswhichadministerstheTariffandCustomsCode,isoneofthetwo(2)principaltraditionalgeneratorsorproducers
ofgovernmentalrevenue,theotherbeingtheBureauofInternalRevenue.(Thereisathirdagency,nontraditionalincharacter,that
generateslowerbutstillcomparablelevelsofrevenueforthegovernmentThePhilippineAmusementandGamesCorporation
[PAGCOR].)

In the third place, customs duties which are assessed at the prescribed tariff rates are very much like taxes which are frequently
imposedforbothrevenueraisingandforregulatorypurposes.4Thus,ithasbeenheldthat"customsduties"is"thenamegiven
totaxesontheimportationand exportation of commodities, the tariff or tax assessed upon merchandise imported from, or
exportedto,aforeigncountry." 5Thelevyingofcustomsdutiesonimportedgoodsmayhaveinsomemeasuretheeffectof
protecting local industries where such local industries actually exist and are producing comparable goods.
Simultaneously, however, the very same customs duties inevitably have the effect of producing governmental revenues.
Customsdutieslikeinternalrevenuetaxesarerarely,ifever,designedtoachieveonepolicyobjectiveonly.Mostcommonly,

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customs duties, which constitute taxes in the sense of exactions the proceeds of which become public funds 6 have
either or both the generation of revenue and the regulation of economic or social activity as their moving purposes and
frequently,itisverydifficulttosaywhich,inaparticularinstance,isthedominantorprincipalobjective.Intheinstantcase,
since the Philippines in fact produces ten (10) to fifteen percent (15%) of the crude oil consumed here, the imposition of
increased tariff rates and a special duty on imported crude oil and imported oil products may be seen to have some
"protective" impact upon indigenous oil production. For the effective, price of imported crude oil and oil products is
increased.Atthesametime,itcannotbegainsaidthatsubstantialrevenuesforthegovernmentareraisedbytheimposition
ofsuchincreasedtariffratesorspecialduty.

Inthefourthplace,petitioner'sconceptwhichheurgesustobuildintoourconstitutionalandcustomslaw,isastiflinglynarrowone.
Section401oftheTariffandCustomsCodeestablishesgeneralstandardswithwhichtheexerciseoftheauthoritydelegatedbythat
provisiontothePresidentmustbeconsistent:thatauthoritymustbeexercisedin"theinterestofnationaleconomy,generalwelfare
and/ornationalsecurity."Petitioner,however,insiststhatthe"protectionoflocalindustries"istheonlypermissibleobjectivethatcan
besecuredbytheexerciseofthatdelegatedauthority,andthattherefore"protectionoflocalindustries"isthesumtotalorthealpha
andtheomegaof"thenationaleconomy,generalwelfareand/ornationalsecurity."Wefinditextremelydifficulttotakeseriouslysuch
aconfinedandclosedviewofthelegislativestandardsandpoliciessummedupinSection401.Webelieve,forinstance,thatthe
protectionofconsumers,whoafterallconstitutetheverygreatbulkofourpopulation,isattheveryleastasimportantadimensionof
"thenationaleconomy,generalwelfareandnationalsecurity"astheprotectionoflocalindustries.Andsocustomsdutiesmaybe
reducedorevenremovedpreciselyforthepurposeofprotectingconsumersfromthehighpricesandshoddyqualityandinefficient
servicethattariffprotectedandsubsidizedlocalmanufacturersmayotherwiseimposeuponthecommunity.

Itseemsalsoimportanttonotethattariffratesarecommonlyestablishedandthecorrespondingcustomsdutiesleviedandcollected
uponarticlesandgoodswhicharenotfoundatallandnotproducedinthePhilippines.TheTariffandCustomsCodeisrepletewith
sucharticlesandcommodities:amongthemoreinterestingexamplesareivory(Chapter5,5.10)castoreumormusktakenfromthe
beaver(Chapter5,5.14)Olives(Chapter7,Notes)trufflesorEuropeanfungigrowingunderthesoilontreeroots(Chapter7,Notes)
dates(Chapter8,8.01)figs(Chapter8,8.03)caviar(Chapter16,16.01)aircraft(Chapter88,88.0l)specialdiagnosticinstruments
andapparatusforhumanmedicineandsurgery(Chapter90,Notes)XraygeneratorsXraytubes
Xrayscreens,etc.(Chapter90,90.20)etc.Insuchcases,customsdutiesmaybeseentobeimposedeitherforrevenuepurposes
purelyorperhaps,incertaincases,todiscourageanyimportationoftheitemsinvolved.Ineithercase,itisclearthatcustomsduties
areleviedandimposedentirelyapartfromwhetherornotthereareanycompetinglocalindustriestoprotect.

Accordingly,webelieveandsoholdthatExecutiveOrdersNos.475and478whichmaybeconcededtobesubstantiallymovedby
thedesiretogenerateadditionalpublicrevenues,arenot,forthatreasonalone,eitherconstitutionallyflawed,orlegallyinfirmunder
Section 401 of the Tariff and Customs Code. Petitioner has not successfully overcome the presumptions of constitutionality and
legalitytowhichthoseExecutiveOrdersareentitled.7

Theconclusionwehavereachedaboverendersitunnecessarytodealwithpetitioner'sadditionalcontentionthat,shouldExecutive
Orders Nos. 475 and 478 be declared unconstitutional and illegal, there should be a roll back of prices of petroleum products
equivalenttothe"resultingexcessmoneynotbeneededtoadequatelymaintaintheOilPriceStabilizationFund(OPSF)."8

WHEREFORE,premisesconsidered,thePetitionforCertiorari,ProhibitionandMandamus is hereby DISMISSED for lack of merit.

Costsagainstpetitioner.

SOORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Paras, Padilla, Bidin, GrioAquino, Medialdea, Regalado, Davide, Jr., Romero, Nocon and
Bellosilo,JJ.,concur.

Footnotes

1Thisprovisionalsoexistedinsubstantiallyidenticaltermsinthe1973Constitution(ArticleVIII,Section17[2]),andthe
1935Constitution(ArticleVI,Section22[2]).

2Petition,p.11Rollo,p.12underliningintheoriginal.

3Rollo,pp.1314.

4Lutzv.Araneta,98Phil.148(1955)Republicv.BacolodMurciaMillingCo.,Inc.,etal.,17SCRA632(1966)
ProgressiveDevelopmentCorp.v.QuezonCity,172SCRA629(1989).

5U.S.v.Sischo,262Fed.1001(1919)Flintv.StoneTraceyCompany,220US107(1910)KellerDorianCorp.v.
CommissionerofInternalRevenue,153F2d1006(1946).Thecloseaffinityof"customsduties"and"taxes"was
stressedalmostacenturyagointhefollowingexcerptfromPollockv.Farmers'LoanandTrustCompany(158US601
39LawEd.1108[1895]):

"Cooley,onTaxation,p.3,saysthattheword'duty'ordinarily'meansanindirecttax,imposedontheimportation,
exportation,orconsumptionofgoods'having'abroadermeaningthancustom,whichisadutyimposedonimportsor
exports'that'thetermimpostalsosignifiesanytax,tributeorduty,butitisseldomappliedtoanybuttheindirecttaxes.
Anexcisedutyisaninlandimpost,levieduponarticlesofmanufactureorsale,andalsouponlicensestopursue
certaintradesortodealincertaincommodities."(Emphasispartlyintheoriginalandpartlysupplied)

6CompaniaGeneraldeTabacosdeFilipinasv.CityofManila,etal.,118Phil.380(1963).

7NationalWaterworksandSewerageAuthorityv.Reyes,22SCRA905(1968)Seealso:Victorianov.ElizaldeRope
Workers'Union,59SCRA54(1974)ErmitaMalateHotelandMotelOperatorsAssociationInc.v.CityMayorofManila,
20SCRA849(1967).

8Rollo,pp.1416.

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