POLILAWREV SARMIENTO 62 PRINCIPLES AND STATE POLICIES

Garcia v. Executive Secretary (1992)

CASE SUMMARY
Congressman Garcia questioned the constitutionality and legality of Executive Order Nos.
475 and 478, which increased tariffs on imported crude and oil products, for encroaching
upon the powers of Congress to enact tax laws and for violating the Tariff and Customs
Code. The SC held that (a) Section 28(2), Article VI of the Constitution permitted Congress to
delegate by law to the President the power to fix tariffs, and that (b) nothing in the Tariff and
Customs Code prohibits the President from fixing tariffs to raise additional revenue for the
government.
Facts:
1.
Section 104 of the Tariff and Customs Code grants to the President the power to
revise tariff rates upon recommendation of NEDA. And, in the interest of national
economy, general welfare and/or national security, and subject to the limitations
specified therein, Section 401, (aka Flexible Clause) grants to the President the power,
inter alia, to increase, reduce, or remove existing protective rates of import duty, upon
recommendation of NEDA.
2.
Explicitly invoking the above provisions, the President issued the following
Executive Orders:
3. EO No. 438 (27 November 1990) Imposing 5% ad valorem additional duty
across the board on all imported articles;
4. EO No. 443 (3 January 1991) Increasing said additional rate to 9% ad valorem
duty;
5. EO No. 475 (15 August 1991) Reducing said additional rate back to 5% ad
valorem duty on all imported articles EXCEPT crude oil and other oil products; and
6. EO No. 478 (23 August 1991) Imposing additional 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, on top of the existing tariffs and the ones imposed above.
7.
Congressman Enrique T. Garcia (Second District of Bataan) filed a Petition for
Certiorari, Prohibition and Mandamus to question the constitutionality and legality of EO
No. 475 and 478, arguing, viz.:
8. Section 24, Article VI of the 1987 Constitution, 1 vests the authority to enact
revenue bills in Congress, the President may not assume such power by issuing
Executive Orders Nos. 475 and 478 which are in the nature of revenue-generating
measures.
9. Section 401 of the Tariff and Customs Code authorizes the President to increase,
reduce or remove tariff duties or to impose additional duties only when necessary
to protect local industries or products but not for the purpose of raising additional
revenue for the government, which EO Nos. 475 and 478 are supposedly meant
for.
Issue: (1) CONSTITUTIONALITY (RELEVANT ISSUE) Are the Presidents EO Nos. 475 and 478
unconstitutional for encroaching upon the legislative powers of Congress to impose tariffs?
NO
(2) LEGALITY Is the protection of local industries or products the only purpose for which the
President may exercise the tariff-fixing powers granted to him by Section 401 of the Tariff
1

1987 Constitution, Article VI, Sec. 24 reads:

Section 24. 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.

and Customs Code? (Or, Does Section 401 of the Tariff and Customs Code grant to the
President the power to adjust tariffs and duties to protect local industries or products, but
not to raise additional revenue for the government?) NO
Held/Ratio:
(1) RELEVANT: Constitutionality Permissible Delegation of Legislative (Tariff) Power
While it is true that the enactment of bills, including revenue or tariff bills, is within the
province of the Legislative rather than the Executive Department, under Section 24,
Article VI of the Constitution, it does not follow that EO Nos. 475 and 478, assuming they
may be characterized as revenue measures, are prohibited to the President because
Section 28(2) of Article VI of the Constitution explicitly permitted Congress to 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, tonage and
wharfage dues, and other duties or imposts within the framework of the national
development program of the Government.
(2) Legality The conformity of the EOs with the Tariff and Customs Code, the law that the
President invoked in issuing said EOs:
Petitioner Garcia argued that the President is authorized to act under the Tariff and
Customs Code only to protect local industries and products for the sake of the national
economy, general welfare and/or national security. Garcia added that the President
cannot exercise this power to raise revenue for the government.
In disagreeing with Petitioner Garcia, the Supreme Court held that:
First, there is nothing in the language of either Section 104 or of 401 of the Tariff and
Customs Code that suggest such a sharp and absolute limitation of authority. The
words protective and protection (found in Sections 104 and 401, respectively) are
simply not enough to support the very broad and encompassing limitation which
petitioner seeks to rest on those two (2) words.
Second, Petitioner's singular theory collides with a very practical fact that the
Bureau of Customs which administers the Tariff and Customs Code, is one of the two (2)
principal traditional generators or producers of governmental revenue, the other being
the Bureau of Internal Revenue.
Third, customs duties are frequently imposed for both revenue-raising and for
regulatory purposes. The levying of customs duties on imported goods may have in
some measure the effect of protecting local industries. Simultaneously, however, the
very same customs duties inevitably have the effect of producing governmental
revenues. It is very difficult to say which is the dominant or principal objective. In the
instant case 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. At the same time, it cannot be gainsaid that substantial
revenues for the government are raised by the imposition of such increased tariff rates
or special duty.
Fourth, it is extremely difficult to take seriously such a confined and closed view of the
legislative standards and policies summed up in Section 401. For instance the
protection of consumers, who after all constitute the very great bulk of our population, is
at the very least as important a dimension of the national economy, general welfare and
national security' as the protection of local industries. And so customs duties may be

reduced or even removed precisely for the purpose of protecting consumers from the
high prices and shoddy quality and inefficient service that tariff-protected and subsidized
local manufacturers may otherwise impose upon the community.

BOBBY JOHNSON O. SEBASTIAN