Republika ng Pilipinas


Department of Justice





Opinion No. 73, Series of 2004




July 23, 2004




Undersecretary Cyril C. Del Callar


Department of Energy

Energy Center, Meritt Road, Fort Bonifacio Taguig, Metro Manila




This has reference to your request for confirmation of the position of the Department of Energy (DOE) that the President “is authorized to increase tariffs on  imported crude oil and petroleum products under Section 401 of the Tariff and Customs Code, in conjunction with Section 6 of Republic Act No, 8479, otherwise known as the “Downstream Oil Deregulation Act of 1998 (the “Oil Deregulation Act”), subject to international commitments under the WTO (World Trade Organization) and AFTA (ASEAN Free Trade Area)”.


The query, it appears, was prompted by what you claim as the need to exercise the said authority to raise tariff duties on crude oil and petroleum products considering the fiscal deficit that our’ government is presently experiencing as well as need to exercise prudence in the consumption of petroleum products.


Arguing in the affirmative, it is your position that the last proviso of Section 6 (a) of the Oil Deregulation Act, in conjunction with the general authority under Section 401 (a) of the Tarff and Customs Code, “confers upon the President sufficient flexibility in respect of adjusting tariffs upwards or downwards in order to address international commitments as well as keep the Philippines competitive in respect of tariffs levied by other countries on crude oil and petroleum products.”


We find this view legally tenable.


The present Constitution pertinently provides:


SEC. 24.  All appropriation, revenue or tariff bills, xxx shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.


xxx                                                                  xxx


SEC. 28.  xxx.


xxx                                                                  xxx


(2)      The Congress may, by law, authorize the President to fix within specified limits; and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government.1  (stress ours)


The aforequoted constitutional provisions are copiously clear and categorical that while the power to tax is a legislative function,2 Congress, as an exception to the cardinal principle of non-delegation of powers,3 is expressly authorized to delegate to the President its power to fix the “tariff rates,” among others, within specified limits, and subject to such limitations and restrictions as it may impose.  The reason for this delegation is the necessity, not to say the expediency, of giving the chief executive the authority to act immediately on certain matters affecting the national economy lest delay result in hardship to the people.4  It is recognized that the legislative process is much too cumbersome for the speedy solution of some economic problems especially those relating to foreign trade.5


This delegation was effected through Section 104 of the Tariff and Customs Code of the Philippines whereas the general details as well as the restrictions and limitations of such delegation are clearly spelled out in Section 401 of the said Code.  These two codal provisions, insofar as material, read:


SEC. 104.  Rates of Import Duty.  –


The rates of duty herein provided or subsequently fixed pursuant to Section four hundred one of this Code 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.


xxx                                                                  xxx


SEC. 401.  Flexible Clause.  –


(a)      In the interest of national economy, general welfare and/or national security, and subject to the limitations herein prescribed, the President, upon recommendation of the National Economic and Development Authority (hereinafter referred to as NEDA), is hereby empowered: (1) to increase, reduce, remove existing protective rates of import duty (including any necessary change in classification).  The existing rates may be increase or decreased to any level, in one or several states but in no case shall the increased rate of import duty be higher than a maximum of one hundred (100) per cent ad valorem; (2) to establish import quota or to ban imports or any commodity, as may be necessary: and (3) to impose an additional duty on all imports not exceeding ten (10) per cent ad valorem whenever necessary:  Provided, That upon periodic investigations by the Tariff Commission and recommendation of the NEDA, the President may cause a gradual reduction of protection levels granted in Section One Hundred and Four of this Code, including those subsequently granted pursuant to this Section.


(b)      Before any recommendation is submitted to the President by the NEDA pursuant to the provisions of this section, 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 afforded reasonable opportunity to be present, produce evidence and to be heard.  The Commission shall also hear the 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 termination of the public hearings.


(c)      The power of the President to increase or decrease rates of import duty within the limits fixed in subsection “e” shall include the authority to modify tile form of duty.  In modifying the form of duty, the corresponding ad valorem or specific equivalents of the duty with respect to import from the principal competing foreign country for the most recent representative period shall be used as bases.


(d)      The Commissioner of Customs shall regularly furnish the Commission a copy of all customs import entries as filed in the Bureau of Customs.  The Commission, or its duly authorized representatives, shall have access to, and the right to copy all liquidated customs import entries and other documents appended thereto as finally filed in the Commission on Audit.


(e)      The NEDA shall promulgate rules and regulations necessary to carry out the provisions of this section.


(f)       Any Order issued by the President pursuant to the provisions of this section shall take effect thirty (30) days after promulgation, except in the imposition of additional duty not exceeding ten (10) per cent ad valorem which shall take effect at the discretion of President (underscoring supplied)


In case of tariff imposed on imported crude oil and other petroleum it may not be amiss to state that the President’s exercise of flexible powers are not subject solely to the parameters laid down in Section 401 of the Tariff and Customs Code.  Equally relevant thereto, is the Downstream Oil Deregulation Act of 1998, a special law dealing specifically with the imposition of tariff on crude oil and other petroleum products.  Section 6 of the said Act, insofar as pertinent, provides:


SEC. 6.  Tariff Treatment.  – (a) Any law to the contrary notwithstanding and starting with the effectivity of this Act, a single and uniform tariff duty shall be imposed and collected both on imported crude oil and imported refined petroleum products at the rate of three percent (3%):  Provided, however, That the President of the Philippines may, in the exercise of his powers, reduce such tariff rate when in his judgment such reduction is warranted, pursuant to Republic Act No. 1937, as amended, otherwise known as the Tariff and Customs CodeProvided, further, That beginning January 1, 2004 or upon implementation of the Uniform Tariff Program under the World Trade Organization and ASEAN Free Trade Area commitments, the tariff rate shall be automatically adjusted to the appropriate level notwithstanding the provisions under this Section.


xxx                                                                  xxx (emphasis added)


Construed in relation to the general grant of authority under Section 401 of the Tariff and Customs Code, it is undeniable that the last proviso of the foregoing provision authorizes the President to increase tariffs on crude oil and imported petroleum products to the appropriate level notwithstanding the previously imposed single and uniform tariff rate of three percent (3%).  Indeed, the said proviso shows the clear legislative intent to give the President an absolute free hand in adjusting the tariff rate to an appropriate level beginning January 1, 2004 or upon implementation of the Uniform Tariff Program under the WTO and AFTA commitments.  By legislative action, Congress has imposed a cut-off date when automatic adjustment of the tariff rate on imported crude and petroleum products can be made by the executive branch.  A contrary interpretation, i.e., that Congress permanently pegged the tariff rate on imported petroleum products at three (3) percent, is not only opposed to the clear intent of Republic Act No. 8479 but will also unduly restrict the “flexible tariff powers” of the President.


Moreover, it is a well-settled rule in statutory construction that the office of a proviso is either to limit the application of the enacting clause, section, or provision of a statute, or to except something therefrom, or to qualify or restrain its generality, or to exclude some possible ground of misinterpretation of it, as extending to cases not intended by the legislature to be brought within its purview.6  Indubitably, the last proviso qualifies the immediately preceding proviso authorizing the President, in the exercise of his tariff powers, to reduce the three percent (3%) tariff rate.


In line with the legislative policy and the foregoing considerations, it is thus reasonable to conclude that the law has made the following qualifications:  Prior to January 1, 2004, the intent of the framers is to impose the uniform and single three (3) percent rate on imported crude oil and other petroleum products; however, immediately beginning January 1, 2004 or upon the implementation of the Uniform Tariff Program of the World Trade Organization and the ASEAN Free Trade Area, whichever is earlier, the President has been given the widest leeway to adjust the tariff rate at the appropriate level.


Please be guided accordingly.


Very truly yours,





Acting Secretary




1Article VI, 1987 Constitution.


2See also, Tolentino vs. Dept. of Finance, 235 SCRA 630, 631.


3Malcolm, Philippine Constitutional Law, p. 266.


4Philippine Political Law by Justice Isagani A. Cruz, 1993 Edition, p. 86.




6Minis v. United States, 15 Pet 445, 10 L. ed. 791 (1838); Chartered Bank of India vs. Imperial, 48 Phil 931 (1921); U.S. vs. Santo Niño, 13 Phil 141 (1909); Arenas vs. City of San Carlos, G.R. No. 34024, April 5, 1978, 82 SCRA 318.


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