8/9/2019 Tatad vs Sec
1/2
Tatad vs Sec. Department of Energy
Considering that oil is not endemic to thiscountry, history
shows that thegovernment has always been ndingways to alleviate the
oil industry. Thegovernment created laws accommodate
these innovations in the oil industry. Onesuch law is the
Downstream OilDeregulation ct of !""# or $ %!%&. Thislaw allows
that 'any person or entity mayimport or purchase any (uantity of
crudeoil and petroleum products from a foreignor domestic source,
lease or own andoperate reneries and other downstreamoil facilities
and mar)et such crude oil oruse the same for his own
re(uirement,*sub+ect only to monitoring by theDepartment of Energy.
Tatad assails the
constitutionality of the law. e claims,among others, that the
imposition ofdi-erent tari- rates on imported crude oiland imported
rened petroleum productsviolates the e(ual protection clause.
Tatadcontends that the /01/ tari- di-erentialunduly favors the
three e2isting oilreneries and discriminates againstprospective
investors in the downstreamoil industry who do not have their
ownreneries and will have to source renedpetroleum products from
abroad./ is to
be ta2ed on unrened crude products and1/ on rened crude
products.
3SS4E5 6hether or not $ %!%& isconstitutional.
E7D5 The SC declared theunconstitutionality of $ %!%&
because itviolated Sec !" of rt !8 of theConstitution. 3t violated
that provisionbecause it only strengthens oligopolywhich is
contrary to free competition. 3t
cannot be denied that our downstream oilindustry is operated and
controlled by anoligopoly, a foreign oligopoly at that.9etron,
Shell and Calte2 stand as the onlyma+or league players in the oil
mar)et. llother players belong to the lilliputianleague. s the
dominant players, 9etron,Shell and Calte2 boast of e2istingreneries
of various capacities. The tari-di-erential of :/ therefore wor)s
to theirimmense benet. ;et, this is only one
edge of the tari- di-erential. The otheredge cuts and cuts deep
in the heart oftheir competitors. 3t erects a high barrierto the
entry of new players.
