EN
BANC
FRANCISCO
S. TATAD,
Petitioner,
G. R. No. 124360
November 5, 1997
-versus-
THE
SECRETARY OF THE DEPARTMENT OF ENERGYAND
THE SECRETARY OF THE DEPARTMENT OF FINANCE,
Respondents.
____________________________________________________
EDCEL
C. LAGMAN, JOKER P. ARROYO, ENRIQUE
GARCIA,
WIGBERTO TANADA, FLAG HUMAN RIGHTS
FOUNDATION,
INC., FREEDOM FROM DEBT COALITION [FDC],
SANLAKAS,
Petitioners,
G. R. No. 127867
November 5, 1997
-versus-
HON.
RUBEN TORRES in his capacity as
Executive
Secretary,
HON. FRANCISCO VIRAY, in his capacity as
Secretary
of Energy,
CALTEX
PHILIPPINES, INC., PETRON
CORPORATION
and
PILIPINASSHELL CORPORATION,
Respondents.
D
E C I S I O N
PUNO, J.:
The petitions
at bar challenge the constitutionality
of Republic Act No. 8180 entitled "An Act Deregulating the Downstream
Oil
Industry and For Other Purposes".[1]
R. A. No. 8180 ends twenty six (26) years of government regulation of
the
downstream oil industry. Few cases carry a surpassing importance on the
life of every Filipino as these petitions for the upswing and downswing
of our economy materially depend on the oscillation of oil.
First, the
facts without the fat. Prior
to 1971, there was no government agency regulating the oil industry
other
than those dealing with ordinary commodities. Oil companies were free
to
enter and exit the market without any government interference. There
were
four [4] refining companies [Shell, Caltex, Bataan Refining Company and
Filoil Refining] and six [6] petroleum marketing companies [Esso,
Filoil,
Caltex, Getty, Mobil and Shell], then operating in the country.[2]
In 1971, the
country was driven to its knees by
a crippling oil crisis. The government, realizing that petroleum and
its
products are vital to national security and that their continued supply
at reasonable prices is essential to the general welfare, enacted the
Oil
Industry Commission Act.[3]
It created the Oil Industry Commission [OIC] to regulate the business
of
importing, exporting, re-exporting, shipping, transporting, processing,
refining, storing, distributing, marketing and selling crude oil,
gasoline,
kerosene, gas and other refined petroleum products. The OIC was vested
with the power to fix the market prices of petroleum products, to
regulate
the capacities of refineries, to license new refineries and to regulate
the operations and trade practices of the industry.[4]
In addition to
the creation of the OIC, the government
saw the imperious need for a more active role of Filipinos in the oil
industry.
Until the early seventies, the downstream oil industry was controlled
by
multinational companies. All the oil refineries and marketing companies
were owned by foreigners whose economic interests did not always
coincide
with the interest of the Filipino. Crude oil was transported to the
country
by foreign-controlled tankers. Crude processing was done locally by
foreign-owned
refineries and petroleum products were marketed through foreign-owned
retail
outlets. On November 9, 1973, President Ferdinand E. Marcos boldly
created
the Philippine National Oil Corporation [PNOC] to break the control by
foreigners of our oil industry.[5]
PNOC engaged in the business of refining, marketing, shipping,
transporting,
and storing petroleum. It acquired ownership of ESSO Philippines and
Filoil
to serve as its marketing arm. It bought the controlling shares of
Bataan
Refining Corporation, the largest refinery in the country.[6]
PNOC later put up its own marketing subsidiary Petrophil. PNOC
operated
under the business name PETRON Corporation. For the first time, there
was
a Filipino presence in the Philippine oil market.cralaw:red
In 1984,
President Marcos through Section 8 of
Presidential Decree No. 1956, created the Oil Price Stabilization Fund
[OPSF] to cushion the effects of frequent changes in the price of oil
caused
by exchange rate adjustments or increase in the world market prices of
crude oil and imported petroleum products. The fund is used (1) to
reimburse
the oil companies for cost increases in crude oil and imported
petroleum
products resulting from exchange rate adjustment and/or increase in
world
market prices of crude oil, and (2) to reimburse oil companies for cost
underrecovery incurred as a result of the reduction of domestic prices
of petroleum products. Under the law, the OPSF may be sourced from:
1. any increase in the tax collection
from ad
valorem tax or customs duty imposed on petroleum products subject to
tax
under P.D. No. 1956 arising from exchange rate adjustment,
2. any increase in the tax collection as
a
result
of the lifting of tax exemptions of government corporations, as may be
determined by the Minister of Finance in consultation with the Board of
Energy,
3. any additional amount to be imposed
on
petroleum
products to augment the resources of the fund through an appropriate
order
that may be issued by the Board of Energy requiring payment of persons
or companies engaged in the business of importing, manufacturing and/or
marketing petroleum products, or
4. any resulting peso costs differentials
in
case the actual peso costs paid by oil companies in the importation of
crude oil and petroleum products is less than the peso costs computed
using
the reference foreign exchange rate as fixed by the Board of Energy.[7]
By 1985, only
three [3] oil companies were operating
in the country Caltex, Shell and the government-owned PNOC.
In May, 1987,
President Corazon C. Aquino signed
Executive Order No. 172 creating the Energy Regulatory Board to
regulate
the business of importing, exporting, re-exporting, shipping,
transporting,
processing, refining, marketing and distributing energy resources "when
warranted and only when public necessity requires." The Board had the
following
powers and functions:
1. Fix and regulate the prices of
petroleum
products;
2. Fix and regulate the rate schedule or
prices
of piped gas to be charged by duly franchised gas companies which
distribute
gas by means of underground pipe system;
3. Fix and regulate the rates of pipeline
concessionaries
under the provisions of R. A. No. 387, as amended;
4. Regulate the capacities of new
refineries
or additional capacities of existing refineries and license refineries
that may be organized after the issuance of [E. O. No. 172] under such
terms and conditions as are consistent with the national interest; and
5. Whenever the Board has determined that
there
is a shortage of any petroleum product, or when public interest so
requires,
it may take such steps as it may consider necessary, including the
temporary
adjustment of the levels of prices of petroleum products and the
payment
to the Oil Price Stabilization Fund by persons or entities engaged in
the
petroleum industry of such amounts as may be determined by the Board,
which
may enable the importer to recover its cost of importation.[8]
On December 9,
1992, Congress enacted R. A. No. 7638
which created the Department of Energy to prepare, integrate,
coordinate,
supervise and control all plans, programs, projects, and activities of
the government in relation to energy exploration, development,
utilization,
distribution and conservation.[9]
The thrust of the Philippine energy program under the law was toward
privatization
of government agencies related to energy, deregulation of the power and
energy industry and reduction of dependency on oil-fired plants.[10]
The law also aimed to encourage free and active participation and
investment
by the private sector in all energy activities. Section 5[e] of the law
states that "at the end of four [4] years from the effectivity of this
Act, the Department shall, upon approval of the President, institute
the
programs and timetable of deregulation of appropriate energy projects
and
activities of the energy industry."
Pursuant to the
policies enunciated in R. A. No.
7638, the government approved the privatization of Petron Corporation
in
1993. On December 16, 1993, PNOC sold 40% of its equity in Petron
Corporation
to the Aramco Overseas Company.cralaw:red
In March 1996,
Congress took the audacious step
of deregulating the downstream oil industry. It enacted R.A. No. 8180,
entitled the "Downstream Oil Industry Deregulation Act of 1996." Under
the deregulated environment, "any person or entity may import or
purchase
any quantity of crude oil and petroleum products from a foreign or
domestic
source, lease or own and operate refineries and other downstream oil
facilities
and market such crude oil or use the same for his own requirement,"
subject
only to monitoring by the Department of Energy.[11]
The deregulation
process has two phases: the transition
phase and the full deregulation phase. During the transition phase,
controls
of the non-pricing aspects of the oil industry were to be lifted. The
following
were to be accomplished: (1) liberalization of oil importation,
exportation,
manufacturing, marketing and distribution, (2) implementation of an
automatic
pricing mechanism, (3) implementation of an automatic formula to set
margins
of dealers and rates of haulers, water transport operators and pipeline
concessionaires, and (4) restructuring of oil taxes. Upon full
deregulation,
controls on the price of oil and the foreign exchange cover were to be
lifted and the OPSF was to be abolished.cralaw:red
The first phase
of deregulation commenced on August
12, 1996. On February 8, 1997, the President implemented the full
deregulation
of the Downstream Oil Industry through E. O. No. 372.cralaw:red
The petitions at
bar assail the constitutionality
of various provisions of R. A No. 8180 and E. O. No. 372.cralaw:red
In G. R. No.
124360, petitioner Francisco S. Tatad
seeks the annulment of section 5[b] of R. A. No. 8180. Section 5[b]
provides:
b) Any law to the contrary
notwithstanding and
starting with the effectivity of this Act, tariff duty shall be imposed
and collected on imported crude oil at the rate of three percent (3%)
and
imported refined petroleum products at the rate of seven percent (7%),
except fuel oil and LPG, the rate for which shall be the same as that
for
imported crude oil: Provided, That beginning on January 1, 2004
the tariff rate on imported crude oil and refined petroleum products
shall
be the same: Provided, further, That this provision may be
amended
only by an Act of Congress.
The petition is
anchored on three arguments:
First,
that the imposition of different
tariff rates on imported crude oil and imported refined petroleum
products
violates the equal protection clause. Petitioner contends that the
3%-7%
tariff differential unduly favors the three existing oil refineries and
discriminates against prospective investors in the downstream oil
industry
who do not have their own refineries and will have to source refined
petroleum
products from abroad.cralaw:red
Second,
that the imposition of different
tariff rates does not deregulate the downstream oil industry but
instead
controls the oil industry, contrary to the avowed policy of the law.
Petitioner
avers that the tariff differential between imported crude oil and
imported
refined petroleum products bars the entry of other players in the oil
industry
because it effectively protects the interest of oil companies with
existing
refineries. Thus, it runs counter to the objective of the law "to
foster
a truly competitive market."
Third,
that the inclusion of the tariff
provision in section 5(b) of R. A. No. 8180 violates Section 26[1]
Article
VI of the Constitution requiring every law to have only one subject
which
shall be expressed in its title. Petitioner contends that the
imposition
of tariff rates in section 5[b] of R. A. No. 8180 is foreign to the
subject
of the law which is the deregulation of the downstream oil industry.cralaw:red
In G. R. No.
127867, petitioners Edcel C. Lagman,
Joker P. Arroyo, Enrique Garcia, Wigberto Tanada, Flag Human Rights
Foundation,
Inc., Freedom from Debt Coalition [FDC] and Sanlakas contest the
constitutionality
of Section 15 of R. A. No. 8180 and E. O. No. 392. Section 15 provides:
Sec. 15. Implementation of Full
Deregulation.-
Pursuant to Section 5[e] of Republic Act No. 7638, the DOE shall, upon
approval of the President, implement the full deregulation of the
downstream
oil industry not later than March 1997. As far as practicable, the DOE
shall time the full deregulation when the prices of crude oil and
petroleum
products in the world market are declining and when the exchange rate
of
the peso in relation to the US dollar is stable. Upon the
implementation
of the full deregulation as provided herein, the transition phase is
deemed
terminated and the following laws are deemed repealed:
E. O. No. 372
states in full, viz.:
WHEREAS, Republic Act No. 7638, otherwise
known
as the "Department of Energy Act of 1992," provides that, at the end of
four years from its effectivity last December 1992, "the Department (of
Energy) shall, upon approval of the President, institute the programs
and
time table of deregulation of appropriate energy projects and
activities
of the energy sector;"
WHEREAS, Section 15 of Republic Act No.
8180,
otherwise known as the "Downstream Oil Industry Deregulation Act of
1996,"
provides that "the DOE shall, upon approval of the President, implement
full deregulation of the downstream oil industry not later than March,
1997. As far as practicable, the DOE shall time the full deregulation
when
the prices of crude oil and petroleum products in the world market are
declining and when the exchange rate of the peso in relation to the US
dollar is stable;"
WHEREAS, pursuant to the recommendation
of the
Department of Energy, there is an imperative need to implement the full
deregulation of the downstream oil industry because of the following
recent
developments: (i) depletion of the buffer fund on or about 7 February
1997
pursuant to the Energy Regulatory Board's Order dated 16 January 1997;
(ii) the prices of crude oil had been stable at $21-$23 per barrel
since
October 1996 while prices of petroleum products in the world market had
been stable since mid-December of last year. Moreover, crude oil prices
are beginning to soften for the last few days while prices of some
petroleum
products had already declined; and (iii) the exchange rate of the peso
in relation to the US dollar has been stable for the past twelve (12)
months,
averaging at around P26.20 to one US dollar;
WHEREAS, Executive Order No. 377 dated 31
October
1996 provides for an institutional framework for the administration of
the deregulated industry by defining the functions and responsibilities
of various government agencies;
WHEREAS, pursuant to Republic Act No.
8180, the
deregulation of the industry will foster a truly competitive market
which
can better achieve the social policy objectives of fair prices and
adequate,
continuous supply of environmentally-clean and high quality petroleum
products;
NOW, THEREFORE, I, FIDEL V. RAMOS,
President
of the Republic of the Philippines, by the powers vested in me by law,
do hereby declare the full deregulation of the downstream oil industry.
In assailing
Section 15 of R. A. No. 8180 and E.
O. No. 392, petitioners offer the following submissions:
First, Section 15 of R. A. No.
8180
constitutes
an undue delegation of legislative power to the President and the
Secretary
of Energy because it does not provide a determinate or determinable
standard
to guide the Executive Branch in determining when to implement the full
deregulation of the downstream oil industry. Petitioners contend that
the
law does not define when it is practicable for the Secretary of Energy
to recommend to the President the full deregulation of the downstream
oil
industry or when the President may consider it practicable to declare
full
deregulation. Also, the law does not provide any specific standard to
determine
when the prices of crude oil in the world market are considered to be
declining
nor when the exchange rate of the peso to the US dollar is considered
stable.
Second, petitioners aver that E.
O. No.
392 implementing the full deregulation of the downstream oil industry
is
arbitrary and unreasonable because it was enacted due to the alleged
depletion
of the OPSF fund a condition not found in R. A. No. 8180.
Third, Section 15 of R. A. No.
8180 and
E. O. No. 392 allow the formation of a de facto cartel among
the
three existing oil companies Petron, Caltex and Shell in
violation
of the constitutional prohibition against monopolies, combinations in
restraint
of trade and unfair competition.
Respondents, on
the other hand, fervently defend
the constitutionality of R. A. No. 8180 and E. O. No. 392. In addition,
respondents contend that the issues raised by the petitions are not
justiciable
as they pertain to the wisdom of the law. Respondents further aver that
petitioners have no locus standi as they did not sustain nor
will
they sustain direct injury as a result of the implementation of R. A.
No.
8180.
The petitions
were heard by the Court on September
30, 1997. On October 7, 1997, the Court ordered the private respondents
oil companies "to maintain the status quo and to cease and desist from
increasing the prices of gasoline and other petroleum fuel products for
a period of thirty (30) days.subject to further orders as
conditions
may warrant."
We shall now
resolve the petitions on the merit.
The petitions raise procedural and substantive issues bearing on the
constitutionality
of R. A. No. 8180 and E. O. No. 392. The procedural issues are: (1)
whether
or not the petitions raise a justiciable controversy, and (2) whether
or
not the petitioners have the standing to assail the validity of the
subject
law and executive order. The substantive issues are: (1) whether or not
section 5 (b) violates the one title one subject requirement of
the
Constitution; (2) whether or not the same section violates the equal
protection
clause of the Constitution; (3) whether or not Section 15 violates the
constitutional prohibition on undue delegation of power; (4) whether or
not E. O. No. 392 is arbitrary and unreasonable; and (5) whether or not
R. A. No. 8180 violates the constitutional prohibition against
monopolies,
combinations in restraint of trade and unfair competition.cralaw:red
We shall first
tackle the procedural issues. Respondents
claim that the avalanche of arguments of the petitioners assail the
wisdom
of R. A. No. 8180. They aver that deregulation of the downstream oil
industry
is a policy decision made by Congress and it cannot be reviewed, much
less
be reversed by this Court. In constitutional parlance, respondents
contend
that the petitions failed to raise a justiciable controversy.cralaw:red
Respondents'
joint stance is unnoteworthy. Judicial
power includes not only the duty of the courts to settle actual
controversies
involving rights which are legally demandable and enforceable, but also
the duty to determine whether or not there has been grave abuse of
discretion
amounting to lack or excess of jurisdiction on the part of any branch
or
instrumentality of the government.[12]
The courts, as guardians of the Constitution, have the inherent
authority
to determine whether a statute enacted by the legislature transcends
the
limit imposed by the fundamental law. Where a statute violates the
Constitution,
it is not only the right but the duty of the judiciary to declare such
act as unconstitutional and void.[13]
We held in the recent case of Tanada v. Angara:[14]
In seeking to nullify an act of the
Philippine
Senate on the ground that it contravenes the Constitution, the petition
no doubt raises a justiciable controversy. Where an action of the
legislative
branch is seriously alleged to have infringed the Constitution, it
becomes
not only the right but in fact the duty of the judiciary to settle the
dispute. The question thus posed is judicial rather than political. The
duty to adjudicate remains to assure that the supremacy of the
Constitution
is upheld. Once a controversy as to the application or interpretation
of
a constitutional provision is raised before this Court, it becomes a
legal
issue which the Court is bound by constitutional mandate to decide.
Even a
sideglance at the petitions will reveal that
petitioners have raised constitutional issues which deserve the
resolution
of this Court in view of their seriousness and their value as
precedents.
Our statement of facts and definition of issues clearly show that
petitioners
are assailing R. A. No. 8180 because its provisions infringe the
Constitution
and not because the law lacks wisdom. The principle of separation of
power
mandates that challenges on the constitutionality of a law should be
resolved
in our courts of justice while doubts on the wisdom of a law should be
debated in the halls of Congress. Every now and then, a law may be
denounced
in court both as bereft of wisdom and constitutionally infirmed. Such
denunciation
will not deny this Court of its jurisdiction to resolve the
constitutionality
of the said law while prudentially refusing to pass on its wisdom.
The effort of
respondents to question the locus
standi of petitioners must also fall on barren ground. In language
too lucid to be misunderstood, this Court has brightlined its liberal
stance
on a petitioner's locus standi where the petitioner is able to
craft
an issue of transcendental significance to the people.[15]
In Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v.
Tan,[16]
We stressed:
Objections to taxpayers' suit for lack of
sufficient
personality, standing or interest are, however, in the main procedural
matters. Considering the importance to the public of the cases at bar,
and in keeping with the Court's duty, under the 1987 Constitution, to
determine
whether or not the other branches of government have kept themselves
within
the limits of the Constitution and the laws and that they have not
abused
the discretion given to them, the Court has brushed aside
technicalities
of procedure and has taken cognizance of these petitions.
There is not a
dot of disagreement between the petitioners
and the respondents on the far reaching importance of the validity of R
A No. 8180 deregulating our downstream oil industry. Thus, there is no
good sense in being hypertechnical on the standing of petitioners for
they
pose issues which are significant to our people and which deserve our
forthright
resolution.
We shall now
track down the substantive issues.
In G. R. No. 124360 where petitioner is Senator Tatad, it is contended
that Section 5[b] of R. A. No. 8180 on tariff differential violates the
provision[17]
of the Constitution requiring every law to have only one subject which
should be expressed in its title. We do not concur with this
contention.
As a policy, this Court has adopted a liberal construction of the one
title
one subject rule. We have consistently ruled[18]
that the title need not mirror, fully index or catalogue all contents
and
minute details of a law. A law having a single general subject
indicated
in the title may contain any number of provisions, no matter how
diverse
they may be, so long as they are not inconsistent with or foreign to
the
general subject, and may be considered in furtherance of such subject
by
providing for the method and means of carrying out the general subject.[19]
We hold that Section 5[b] providing for tariff differential is germane
to the subject of R. A. No. 8180 which is the deregulation of the
downstream
oil industry. The section is supposed to sway prospective investors to
put up refineries in our country and make them rely less on imported
petroleum.[20]
We shall, however, return to the validity of this provision when We
examine
its blocking effect on new entrants to the oil market.cralaw:red
We shall now
slide to the substantive issues in
G. R. No. 127867. Petitioners assail Section 15 of R. A. No. 8180 which
fixes the time frame for the full deregulation of the downstream oil
industry.
We restate its pertinent portion for emphasis, viz.:
Sec. 15. Implementation of Full
Deregulation.-
Pursuant to section 5[e] of Republic Act No. 7638, the DOE shall, upon
approval of the President, implement the full deregulation of the
downstream
oil industry not later than March 1997. As far as practicable, the DOE
shall time the full deregulation when the prices of crude oil and
petroleum
products in the world market are declining and when the exchange rate
of
the peso in relation to the US dollar is stable.
Petitioners
urge that the phrases "as far as practicable,"
"decline of crude oil prices in the world market" and "stability of the
peso exchange rate to the US dollar" are ambivalent, unclear and
inconcrete
in meaning. They submit that they do not provide the "determinate or
determinable
standards" which can guide the President in his decision to fully
deregulate
the downstream oil industry. In addition, they contend that E. O. No.
392
which advanced the date of full deregulation is void for it illegally
considered
the depletion of the OPSF fund as a factor.
The power of
Congress to delegate the execution
of laws has long been settled by this Court. As early as 1916 in
Compania
General de Tabacos de Filipinas vs. The Board of Public Utility
Commissioners,[21]
this Court through Mr. Justice Moreland, held that "the true
distinction
is between the delegation of power to make the law, which necessarily
involves
a discretion as to what it shall be, and conferring authority or
discretion
as to its execution, to be exercised under and in pursuance of the law.
The first cannot be done; to the latter no valid objection can be
made."
Over the years, as the legal engineering of men's relationship became
more
difficult, Congress has to rely more on the practice of delegating the
execution of laws to the executive and other administrative agencies.
Two
tests have been developed to determine whether the delegation of the
power
to execute laws does not involve the abdication of the power to make
law
itself. We delineated the metes and bounds of these tests in Eastern
Shipping
Lines, Inc. VS. POEA,[22]
thus:
There are two accepted tests to determine
whether
or not there is a valid delegation of legislative power, viz:
the
completeness test and the sufficient standard test. Under the first
test,
the law must be complete in all its terms and conditions when it leaves
the legislative such that when it reaches the delegate the only thing
he
will have to do is to enforce it. Under the sufficient standard test,
there
must be adequate guidelines or limitations in the law to map out the
boundaries
of the delegate's authority and prevent the delegation from running
riot.
Both tests are intended to prevent a total transference of legislative
authority to the delegate, who is not allowed to step into the shoes of
the legislature and exercise a power essentially legislative.
The validity of
delegating legislative power is now
a quiet area in our constitutional landscape. As sagely observed,
delegation
of legislative power has become an inevitability in light of the
increasing
complexity of the task of government. Thus, courts bend as far back as
possible to sustain the constitutionality of laws which are assailed as
unduly delegating legislative powers. Citing Hirabayashi v. United
States[23]
as authority, Mr. Justice Isagani A. Cruz states "that even if the law
does not expressly pinpoint the standard, the courts will bend over
backward
to locate the same elsewhere in order to spare the statute, if it can,
from constitutional infirmity."[24]
Given the groove
of the Court's rulings, the attempt
of petitioners to strike down Section 15 on the ground of undue
delegation
of legislative power cannot prosper. Section 15 can hurdle both the
completeness
test and the sufficient standard test. It will be noted that Congress
expressly
provided in R. A. No. 8180 that full deregulation will start at the end
of March 1997, regardless of the occurrence of any event. Full
deregulation
at the end of March 1997 is mandatory and the Executive has no
discretion
to postpone it for any purported reason. Thus, the law is complete on
the
question of the final date of full deregulation. The discretion given
to
the President is to advance the date of full deregulation before the
end
of March 1997. Section 15 lays down the standard to guide the judgment
of the President he is to time it as far as practicable when the
prices of crude oil and petroleum products in the world market are
declining
and when the exchange rate of the peso in relation to the US dollar is
stable.cralaw:red
Petitioners
contend that the words "as far as
practicable," "declining" and "stable" should have been defined in R.
A.
No. 8180 as they do not set determinate or determinable standards. The
stubborn submission deserves scant consideration. The dictionary
meanings
of these words are well settled and cannot confuse men of reasonable
intelligence.
Webster defines "practicable" as meaning possible to practice or
perform,
"decline" as meaning to take a downward direction, and "stable" as
meaning
firmly established.[25]
The fear of petitioners that these words will result in the exercise of
executive discretion that will run riot is thus groundless. To be sure,
the Court has sustained the validity of similar, if not more general
standards
in other cases.[26]
It ought to
follow that the argument that E. O.
No. 392 is null and void as it was based on indeterminate standards set
by R. A. 8180 must likewise fail. If that were all to the attack
against
the validity of E. O. No. 392, the issue need not further detain our
discourse.
But petitioners further posit the thesis that the Executive misapplied
R. A. No. 8180 when it considered the depletion of the OPSF fund as a
factor
in fully deregulating the downstream oil industry in February 1997. A
perusal
of Section 15 of R. A. No. 8180 will readily reveal that it only
enumerated
two factors to be considered by the Department of Energy and the Office
of the President, viz.: (1) the time when the prices of crude
oil
and petroleum products in the world market are declining, and (2) the
time
when the exchange rate of the peso in relation to the US dollar is
stable.
Section 15 did not mention the depletion of the OPSF fund as a factor
to
be given weight by the Executive before ordering full deregulation. On
the contrary, the debates in Congress will show that some of our
legislators
wanted to impose as a pre-condition to deregulation a showing that the
OPSF fund must not be in deficit.[27]
We therefore hold that the Executive department failed to follow
faithfully
the standards set by R. A. No. 8180 when it considered the extraneous
factor
of depletion of the OPSF fund. The misappreciation of this extra factor
cannot be justified on the ground that the Executive department
considered
anyway the stability of the prices of crude oil in the world market and
the stability of the exchange rate of the peso to the dollar. By
considering
another factor to hasten full deregulation, the Executive department
rewrote
the standards set forth in R. A. 8180. The Executive is bereft of any
right
to alter either by subtraction or addition the standards set in R. A.
No.
8180 for it has no power to make laws. To cede to the Executive the
power
to make law is to invite tyranny, indeed, to transgress the principle
of
separation of powers. The exercise of delegated power is given a strict
scrutiny by courts for the delegate is a mere agent whose action cannot
infringe the terms of agency. In the cases at bar, the Executive
co-mingled
the factor of depletion of the OPSF fund with the factors of decline of
the price of crude oil in the world market and the stability of the
peso
to the US dollar. On the basis of the text of E. O. No. 392, it is
impossible
to determine the weight given by the Executive department to the
depletion
of the OPSF fund. It could well be the principal consideration for the
early deregulation. It could have been accorded an equal significance.
Or its importance could be nil. In light of this uncertainty, We rule
that
the early deregulation under E. O. No. 392 constitutes a misapplication
of R. A. No. 8180.cralaw:red
We now come to
grips with the contention that
some provisions of R. A. No. 8180 violate Section 19 of Article XII of
the 1987 Constitution. These provisions are:
(1) Section 5[b] which states "Any
law
to the contrary notwithstanding and starting with the effectivity of
this
Act, tariff duty shall be imposed and collected on imported crude oil
at
the rate of three percent (3%) and imported refined petroleum products
at the rate of seven percent (7%) except fuel oil and LPG, the rate for
which shall be the same as that for imported crude oil. Provided, that
beginning on January 1, 2004 the tariff rate on imported crude oil and
refined petroleum products shall be the same. Provided, further, that
this
provision may be amended only by an Act of Congress."
(2) Section 6 which states "To
ensure the
security and continuity of petroleum crude and products supply, the DOE
shall require the refiners and importers to maintain a minimum
inventory
equivalent to ten percent (10%) of their respective annual sales volume
or forty (40) days of supply, whichever is lower;" and
(3) Section 9[b] which states "To
ensure
fair competition and prevent cartels and monopolies in the downstream
oil
industry, the following acts shall be prohibited:
(b) Predatory pricing which means
selling or
offering to sell any product at a price unreasonably below the industry
average cost so as to attract customers to the detriment of competitors.
On the other
hand, Section 19 of Article XII of the
Constitution allegedly violated by the aforestated provisions of R. A.
No. 8180 mandates: "The State shall regulate or prohibit monopolies
when
the public interest so requires. No combinations in restraint of trade
or unfair competition shall be allowed."
A monopoly is a
privilege or peculiar advantage
vested in one or more persons or companies, consisting in the exclusive
right or power to carry on a particular business or trade, manufacture
a particular article, or control the sale or the whole supply of a
particular
commodity. It is a form of market structure in which one or only a few
firms dominate the total sales of a product or service.[28]
On the other hand, a combination in restraint of trade is an agreement
or understanding between two or more persons, in the form of a
contract,
trust, pool, holding company, or other form of association, for the
purpose
of unduly restricting competition, monopolizing trade and commerce in a
certain commodity, controlling its, production, distribution and price,
or otherwise interfering with freedom of trade without statutory
authority.[29]
Combination in restraint of trade refers to the means while monopoly
refers
to the end.[30]
Article 186 of
the Revised Penal Code and Article
28 of the New Civil Code breathe life to this constitutional policy.
Article
186 of the Revised Penal Code penalizes monopolization and creation of
combinations in restraint oftrade,[31]
while Article 28 of the New Civil Code makes any person who shall
engage
in unfair competition liable for damages.[32]
Respondents aver
that Sections 5(b), 6 and 9(b)
implement the policies and objectives of R. A. No. 8180. They explain
that
the 4% tariff differential is designed to encourage new entrants to
invest
in refineries. They stress that the inventory requirement is meant to
guaranty
continuous domestic supply of petroleum and to discourage fly-by-night
operators. They also submit that the prohibition against predatory
pricing
is intended to protect prospective entrants. Respondents manifested to
the Court that new players have entered the Philippines after
deregulation
and have now captured 3%-5% of the oil market.cralaw:red
The validity of
the assailed provisions of R.
A. No. 8180 has to be decided in light of the letter and spirit of our
Constitution, especially Section 19, Article XII. Beyond doubt, the
Constitution
committed us to the free enterprise system but it is a system impressed
with its own distinctness. Thus, while the Constitution embraced free
enterprise
as an economic creed, it did not prohibit per se the operation of
monopolies
which can, however, be regulated in the public interest.[33]
Thus, too, our free enterprise system is not based on a market of pure
and unadulterated competition where the State pursues a strict
hands-off
policy and follows the let-the-devil devour the hindmost rule.
Combinations
in restraint of trade and unfair competitions are absolutely proscribed
and the proscription is directed both against the State as well as the
private sector.[34]
This distinct free enterprise system is dictated by the need to achieve
the goals of our national economy as defined by Section 1, Article XII
of the Constitution which are: more equitable distribution of
opportunities,
income and wealth; a sustained increase in the amount of goods and
services
produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all,
especially
the underprivileged. It also calls for the State to protect Filipino
enterprises
against unfair competition and trade practices.cralaw:red
Section 19,
Article XII of our Constitution is
anti-trust in history and in spirit. It espouses competition. The
desirability
of competition is the reason for the prohibition against restraint of
trade,
the reason for the interdiction of unfair competition, and the reason
for
regulation of unmitigated monopolies. Competition is thus the
underlying
principle of Section 19, Article XII of our Constitution which cannot
be
violated by R. A. No. 8180. We subscribe to the observation of Prof.
Gellhorn
that the objective of anti-trust law is "to assure a competitive
economy,
based upon the belief that through competition producers will strive to
satisfy consumer wants at the lowest price with the sacrifice of the
fewest
resources. Competition among producers allows consumers to bid for
goods
and services, and thus matches their desires with society's opportunity
costs."[35]
He adds with appropriateness that there is a reliance upon "the
operation
of the 'market' system [free enterprise] to decide what shall be
produced,
how resources shall be allocated in the production process, and to whom
the various products will be distributed. The market system relies on
the
consumer to decide what and how much shall be produced, and on
competition,
among producers to determine who will manufacture it."
Again, we
underline in scarlet that the fundamental
principle espoused by Section 19, Article XII of the Constitution is
competition
for it alone can release the creative forces of the market. But the
competition
that can unleash these creative forces is competition that is fighting
yet is fair. Ideally, this kind of competition requires the presence of
not one, not just a few but several players. A market controlled by one
player [monopoly] or dominated by a handful of players [oligopoly] is
hardly
the market where honest-to-goodness competition will prevail.
Monopolistic
or oligopolistic markets deserve our careful scrutiny and laws which
barricade
the entry points of new players in the market should be viewed with
suspicion.cralaw:red
Prescinding from
these baseline propositions,
we shall proceed to examine whether the provisions of R. A. No. 8180 on
tariff differential, inventory reserves, and predatory prices imposed
substantial
barriers to the entry and exit of new players in our downstream oil
industry.
If they do, they have to be struck down for they will necessarily
inhibit
the formation of a truly competitive market. Contrariwise, if they are
insignificant impediments, they need not be stricken down.cralaw:red
In the cases at
bar, it cannot be denied that
our downstream oil industry is operated and controlled by an oligopoly,
a foreign oligopoly at that. Petron, Shell and Caltex stand as the only
major league players in the oil market. All other players belong to the
lilliputian league. As the dominant players, Petron, Shell and Caltex
boast
of existing refineries of various capacities. The tariff differential
of
4% therefore works to their immense benefit. Yet, this is only one edge
of the tariff differential. The other edge cuts and cuts deep in the
heart
of their competitors. It erects a high barrier to the entry of new
players.
New players that intend to equalize the market power of Petron, Shell
and
Caltex by building refineries of their own will have to spend billions
of pesos. Those who will not build refineries but compete with them
will
suffer the huge disadvantage of increasing their product cost by 4%.
They
will be competing on an uneven field. The argument that the 4% tariff
differential
is desirable because it will induce prospective players to invest in
refineries
puts the cart before the horse. The first need is to attract new
players
and they cannot be attracted by burdening them with heavy
disincentives.
Without new players belonging to the league of Petron, Shell and
Caltex,
competition in our downstream oil industry is an idle dream.cralaw:red
The provision on
inventory widens the balance
of advantage of Petron, Shell and Caltex against prospective new
players.
Petron, Shell and Caltex can easily comply with the inventory
requirement
of R. A. No. 8180 in view of their existing storage facilities.
Prospective
competitors again will find compliance with this requirement difficult
as it will entail a prohibitive cost. The construction cost of storage
facilities and the cost of inventory can thus scare prospective
players.
Their net effect is to further occlude the entry points of new players,
dampen competition and enhance the control of the market by the three
[3]
existing oil companies.cralaw:red
Finally, We come
to the provision on predatory
pricing which is defined as "selling or offering to sell any product at
a price unreasonably below the industry average cost so as to attract
customers
to the detriment of competitors." Respondents contend that this
provision
works against Petron, Shell and Caltex and protects new entrants. The
ban
on predatory pricing cannot be analyzed in isolation. Its validity is
interlocked
with the barriers imposed by R. A. No. 8180 on the entry of new
players.
The inquiry should be to determine whether predatory pricing on the
part
of the dominant oil companies is encouraged by the provisions in the
law
blocking the entry of new players. Text-writer Hovenkamp,[36]
gives the authoritative answer and We quote:
The rationale for predatory pricing is
the
sustaining
of losses today that will give a firm monopoly profits in the future.
The
monopoly profits will never materialize, however, if the market is
flooded
with new entrants as soon as the successful predator attempts to raise
its price. Predatory pricing will be profitable only if the market
contains
significant barriers to new entry.
As
afore-discussed, the 4% tariff differential and
the inventory requirement are significant barriers which discourage new
players to enter the market. Considering these significant barriers
established
by R. A. No. 8180 and the lack of players with the comparable clout of
Petron, Shell and Caltex, the temptation for a dominant player to
engage
in predatory pricing and succeed is a chilling reality. Petitioners'
charge
that this provision on predatory pricing is anti-competitive is not
without
reason.
Respondents
belittle these barriers with the allegation
that new players have entered the market since deregulation. A scrutiny
of the list of the alleged new players will, however, reveal that not
one
belongs to the class and category of Petron, Shell and Caltex. Indeed,
there is no showing that any of these new players intends to install
any
refinery and effectively compete with these dominant oil companies. In
any event, it cannot be gainsaid that the new players could have been
more
in number and more impressive in might if the illegal entry barriers in
R. A. No. 8180 were not erected.cralaw:red
We come to the
final point. We now resolve the
total effect of the untimely deregulation, the imposition of 4% tariff
differential on imported crude oil and refined petroleum products, the
requirement of inventory and the prohibition on predatory pricing on
the
constitutionality of R. A. No. 8180. The question is whether these
offending
provisions can be individually struck down without invalidating the
entire
R. A. No. 8180. The ruling case law is well stated by author Agpalo,[37]
viz.:
The general rule is that where part of a
statute
is void as repugnant to the Constitution, while another part is valid,
the valid portion, if separable from the invalid, may stand and be
enforced.
The presence of a separability clause in a statute creates the
presumption
that the legislature intended separability, rather than complete
nullity
of the statute. To justify this result, the valid portion must be so
far
independent of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed that it
could not constitutionally enact the other. Enough must remain to make
a complete, intelligible and valid statute, which carries out the
legislative
intent.
The exception to the general rule is that
when
the parts of a statute are so mutually dependent and connected, as
conditions,
considerations, inducements, or compensations for each other, as to
warrant
a belief that the legislature intended them as a whole, the nullity of
one part will vitiate the rest. In making the parts of the statute
dependent,
conditional, or connected with one another, the legislature intended
the
statute to be carried out as a whole and would not have enacted it if
one
part is void, in which case if some parts are unconstitutional, all the
other provisions thus dependent, conditional, or connected must fall
with
them.
R. A. No. 8180
contains a separability clause. Section
23 provides that "if for any reason, any section or provision of this
Act
is declared unconstitutional or invalid, such parts not affected
thereby
shall remain in full force and effect." This separability clause
notwithstanding,
we hold that the offending provisions of R. A. No. 8180 so permeate its
essence that the entire law has to be struck down. The provisions on
tariff
differential, inventory and predatory pricing are among the principal
props
of R. A. No. 8180. Congress could not have deregulated the downstream
oil
industry without these provisions. Unfortunately, contrary to their
intent,
these provisions on tariff differential, inventory and predatory
pricing
inhibit fair competition, encourage monopolistic power and interfere
with
the free interaction of market forces. R. A. No. 8180 needs provisions
to vouchsafe free and fair competition. The need for these vouchsafing
provisions cannot be overstated. Before deregulation, Petron, Shell and
Caltex had no real competitors but did not have a free run of the
market
because government controls both the pricing and non-pricing aspects of
the oil industry. After deregulation, Petron, Shell and Caltex remain
unthreatened
by real competition yet are no longer subject to control by government
with respect to their pricing and non-pricing decisions. The aftermath
of R. A. No. 8180 is a deregulated market where competition can be
corrupted
and where market forces can be manipulated by oligopolies.
The fall-out
effects of the defects of R. A. No.
8180 on our people have not escaped Congress. A lot of our leading
legislators
have come out openly with bills seeking the repeal of these odious and
offensive provisions in R. A. No. 8180. In the Senate, Senator Freddie
Webb has filed S. B. No. 2133 which is the result of the hearings
conducted
by the Senate Committee on Energy. The hearings revealed that (1) there
was a need to level the playing field for the new entrants in the
downstream
oil industry, and (2) there was no law punishing a person for selling
petroleum
products at unreasonable prices. Senator Alberto G. Romulo also filed
S.
B. No. 2209 abolishing the tariff differential beginning January 1,
1998.
He declared that the amendment "would mean that instead of just three
[3]
big oil companies there will be other major oil companies to provide
more
competitive prices for the market and the consuming public." Senator
Heherson
TAlvarez, one of the principal proponents of R. A. No. 8180, also
filed
S. B. No. 2290 increasing the penalty for violation of its Section 9.
It
is his opinion as expressed in the explanatory note of the bill that
the
present oil companies are engaged in cartelization despite R. A. No.
8180, viz.:
Since the downstream oil industry was
fully
deregulated
in February 1997, there have been eight (8) fuel price adjustments made
by the three oil majors, namely: Caltex Philippines, Inc.; Petron
Corporation;
and Pilipinas Shell Petroleum Corporation. Very noticeable in the price
adjustments made, however, is the uniformity in the pump prices of
practically
all petroleum products of the three oil companies. This, despite the
fact,
that their selling rates should be determined by a combination of any
of
the following factors: the prevailing peso-dollar exchange rate at the
time payment is made for crude purchases, sources of crude, and
inventory
levels of both crude and refined petroleum products. The abovestated
factors
should have resulted in different, rather than identical prices.
The fact that the three [3] oil
companies'
petroleum
products are uniformly priced suggests collusion, amounting to
cartelization,
among Caltex Philippines, Inc., Petron Corporation and Pilipinas Shell
Petroleum Corporation to fix the prices of petroleum products in
violation
of paragraph (a), Section 9 of R. A. No. 8180.
To deter this pernicious practice and to
assure
that present and prospective players in the downstream oil industry
conduct
their business with conscience and propriety, cartel-like activities
ought
to be severely penalized.
Senator
Francisco S. Tatad also filed S. B. No. 2307
providing for a uniform tariff rate on imported crude oil and refined
petroleum
products. In the explanatory note of the bill, he declared in no
uncertain
terms that "the present set-up has raised serious public concern over
the
way the three oil companies have uniformly adjusted the prices of oil
in
the country, an indication of a possible existence of a cartel or a
cartel-like
situation within the downstream oil industry. This situation is mostly
attributed to the foregoing provision on tariff differential, which has
effectively discouraged the entry of new players in the downstream oil
industry."
In the House of
Representatives, the moves to
rehabilitate R. A. No. 8180 are equally feverish. Representative
Leopoldo
E. San Buenaventura has filed H. B. No. 9826 removing the tariff
differential
for imported crude oil and imported refined petroleum products. In the
explanatory note of the bill, Rep. Buenaventura explained:
As we now experience, this difference in
tariff
rates between imported crude oil and imported refined petroleum
products,
unwittingly provided a built-in-advantage for the three existing oil
refineries
in the country and eliminating competition which is a must in a free
enterprise
economy. Moreover, it created a disincentive for other players to
engage
even initially in the importation and distribution of refined petroleum
products and ultimately in the putting up of refineries. This tariff
differential
virtually created a monopoly of the downstream oil industry by the
existing
three oil companies as shown by their uniform and capricious pricing of
their products since this law took effect, to the great disadvantage of
the consuming public.
Thus, instead of achieving the desired
effects
of deregulation, that of free enterprise and a level playing field in
the
downstream oil industry, R. A. 8180 has created an environment
conducive
to cartelization, unfavorable, increased, unrealistic prices of
petroleum
products in the country by the three existing refineries.
Representative
Marcial C. Punzalan, Jr., filed H.
B. No. 9981 to prevent collusion among the present oil companies by
strengthening
the oversight function of the government, particularly its ability to
subject
to a review any adjustment in the prices of gasoline and other
petroleum
products. In the explanatory note of the bill, Rep. Punzalan, Jr., said:
To avoid this, the proposed bill seeks to
strengthen
the oversight function of government, particularly its ability to
review
the prices set for gasoline and other petroleum products. It grants the
Energy Regulatory Board [ERB] the authority to review prices of oil and
other petroleum products, as may be petitioned by a person, group or
any
entity, and to subsequently compel any entity in the industry to submit
any and all documents relevant to the imposition of new prices. In
cases
where the Board determines that there exist collusion, economic
conspiracy,
unfair trade practice, profiteering and/or overpricing, it may take any
step necessary to protect the public, including the readjustment of the
prices of petroleum products. Further, the Board may also impose the
fine
and penalty of imprisonment, as prescribed in Section 9 of R. A. 8180,
on any person or entity from the oil industry who is found guilty of
such
prohibited acts.
By doing all of
the above, the measure will effectively
provide Filipino consumers with a venue where their grievances can be
heard
and immediately acted upon by government.Thus,
this bill stands to benefit the Filipino consumer by making the
price-setting
process more transparent and making it easier to prosecute those who
perpetrate
such prohibited acts as collusion, overpricing, economic conspiracy and
unfair trade.
Representative
Sergio A.FApostol filed H. B.
No. 10039 to remedy an omission in R. A. No. 8180 where there is no
agency
in government that determines what is "reasonable" increase in the
prices
of oil products. Representative Dante O. Tinga, one of the principal
sponsors
of R. A. No. 8180, filed H. B. No. 10057 to strengthen its anti-trust
provisions.
He elucidated in its explanatory note:
The definition of predatory pricing,
however,
needs to be tightened up particularly with respect to the definitive
benchmark
price and the specific anti-competitive intent. The definition in the
bill
at hand which was taken from the Areeda-Turner test in the United
States
on predatory pricing resolves the questions. The definition reads,
"Predatory
pricing means selling or offering to sell any oil product at a price
below
the average variable cost for the purpose of destroying competition,
eliminating
a competitor or discouraging a competitor from entering the market."
The appropriate
actions which may be resorted to
under the Rules of Court in conjunction with the oil deregulation law
are
adequate. But to stress their availability and dynamism, it is a good
move
to incorporate all the remedies in the law itself. Thus, the present
bill
formalizes the concept of government intervention and private suits to
address the problem of antitrust violations. Specifically, the
government
may file an action to prevent or restrain any act of cartelization or
predatory
pricing, and if it has suffered any loss or damage by reason of the
antitrust
violation it may recover damages. Likewise, a private person or entity
may sue to prevent or restrain any such violation which will result in
damage to his business or property, and if he has already suffered
damage
he shall recover treble damages. A class suit may also be allowed.
To make the DOE
Secretary more effective in the
enforcement of the law, he shall be given additional powers to gather
information
and to require reports.cralaw:red
Representative
Erasmo B. Damasing filed H. B.
No. 7885 and has a more unforgiving view of R. A. No. 8180. He wants it
completely repealed. He explained:
Contrary to the projections at the time
the
bill
on the Downstream Oil Industry Deregulation was discussed and debated
upon
in the plenary session prior to its approval into law, there aren't any
new players or investors in the oil industry. Thus, resulting in
practically
a cartel or monopoly in the oil industry by the three [3] big oil
companies,
Caltex, Shell and Petron. So much so, that with the deregulation now
being
partially implemented, the said oil companies have succeeded in
increasing
the prices of most of their petroleum products with little or no
interference
at all from the government. In the month of August, there was an
increase
of Fifty centavos (50¢) per liter by subsidizing the same with the
OPSF, this is only temporary as in March 1997, or a few months from
now,
there will be full deregulation [Phase II] whereby the increase in the
prices of petroleum products will be fully absorbed by the consumers
since
OPSF will already be abolished by then. Certainly, this would make the
lives of our people, especially the unemployed ones, doubly difficult
and
unbearable.
The much-ballyhooed coming in of new
players
in the oil industry is quite remote considering that these prospective
investors cannot fight the existing and well established oil companies
in the country today, namely, Caltex, Shell and Petron. Even if these
new
players will come in, they will still have no chance to compete with
the
said three [3] existing big oil companies considering that there is an
imposition of oil tariff differential of 4% between importation of
crude
oil by the said oil refineries paying only 3% tariff rate for the said
importation and 7% tariff rate to be paid by businessmen who have no
oil
refineries in the Philippines but will import finished petroleum/oil
products
which is being taxed with 7% tariff rates.
So, if only to help the many who are poor
from
further suffering as a result of unmitigated increase in oil products
due
to deregulation, it is a must that the Downstream Oil Industry
Deregulation
Act of 1996, or R.A. 8180 be repealed completely.
Various
resolutions have also been filed in the Senate
calling for an immediate and comprehensive review of R. A. No. 8180 to
prevent the downpour of its ill effects on the people. Thus, S. Res.
No.
574 was filed by Senator Gloria M. Macapagal entitled Resolution
"Directing
the Committee on Energy to Inquire Into The Proper Implementation of
the
Deregulation of the Downstream Oil Industry and Oil Tax Restructuring
As
Mandated Under R. A. Nos. 8180 and 8184, In Order to Make The Necessary
Corrections In the Apparent Misinterpretation Of The Intent And
Provision
Of The Laws And Curb The Rising Tide Of Disenchantment Among The
Filipino
Consumers And Bring About The Real Intentions And Benefits Of The Said
Law." Senator Blas P. Ople filed S. Res. No. 664 entitled resolution
"Directing
the Committee on Energy To Conduct An Inquiry In Aid Of Legislation To
Review The Government's Oil Deregulation Policy In Light Of The
Successive
Increases In Transportation, Electricity And Power Rates, As well As Of
Food And Other Prime Commodities And Recommend Appropriate Amendments
To
Protect The Consuming Public." Senator Ople observed:
WHEREAS, since the passage of R. A. No.
8180,
the Energy Regulatory Board [ERB] has imposed successive increases in
oil
prices which has triggered increases in electricity and power rates,
transportation
fares, as well as in prices of food and other prime commodities to the
detriment of our people, particularly the poor;
WHEREAS, the new players that were
expected to
compete with the oil cartel-Shell, Caltex and Petron-have not come in;
WHEREAS, it is imperative that a review
of the
oil deregulation policy be made to consider appropriate amendments to
the
existing law such as an extension of the transition phase before full
deregulation
in order to give the competitive market enough time to develop;
WHEREAS, the review can include the
advisability
of providing some incentives in order to attract the entry of new oil
companies
to effect a dynamic competitive market;
WHEREAS, it may also be necessary to
defer the
setting up of the institutional framework for full deregulation of the
oil industry as mandated under Executive Order No. 377 issued by
President
Ramos last October 31, 1996.
Senator Alberto
G. Romulo filed S. Res. No. 769 entitled
resolution "Directing the Committees on Energy and Public Services In
Aid
Of Legislation To Assess The Immediate Medium And Long Term Impact of
Oil
Deregulation On Oil Prices And The Economy." Among the reasons for the
resolution is the finding that "the requirement of a 40-day stock
inventory
effectively limits the entry of other oil firms in the market with the
consequence that instead of going down oil prices will rise."
Parallel
resolutions have been filed in the House
of Representatives. Representative Dante O. Tinga filed H. Res. No.
1311
"Directing The Committee on Energy To Conduct An Inquiry, In Aid of
Legislation,
Into The Pricing Policies And Decisions Of The Oil Companies Since The
Implementation of Full Deregulation Under the Oil Deregulation Act [R.
A. No. 8180] For the Purpose of Determining In the Context Of The
Oversight
Functions Of Congress Whether The Conduct Of The Oil Companies, Whether
Singly Or Collectively, Constitutes Cartelization Which Is A Prohibited
Act Under R.A. No. 8180, And What Measures Should Be Taken To Help
Ensure
The Successful Implementation Of The Law In Accordance With Its Letter
And Spirit, Including Recommending Criminal Prosecution Of the Officers
Concerned Of the Oil Companies If Warranted By The Evidence, And For
Other
Purposes." Representatives Marcial C. Punzalan, Jr. Dante O. Tinga and
Antonio E. Bengzon III filed H.R. No. 894 directing the House Committee
on Energy to inquire into the proper implementation of the deregulation
of the downstream oil industry. House Resolution No. 1013 was also
filed
by Representatives Edcel C. Lagman, Enrique TGarcia, Jr. and Joker
P.
Arroyo urging the President to immediately suspend the implementation
of
E. O. No. 392.cralaw:red
In recent memory
there is no law enacted by the
legislature afflicted with so much constitutional deformities as R. A.
No. 8180. Yet, R. A. No. 8180 deals with oil, a commodity whose supply
and price affect the ebb and flow of the lifeblood of the nation. Its
shortage
of supply or a slight, upward spiral in its price shakes our economic
foundation.
Studies show that the areas most impacted by the movement of oil are
food
manufacture, land transport, trade, electricity and water.[38]
At a time when our economy is in a dangerous downspin, the perpetuation
of R. A. No. 8180 threatens to multiply the number of our people with
bent
backs and begging bowls. R. A. No. 8180 with its anti-competition
provisions
cannot be allowed by this Court to stand even while Congress is working
to remedy its defects.cralaw:red
The Court,
however, takes note of the plea of
Petron, Shell and Caltex to lift our restraining order to enable them
to
adjust upward the price of petroleum and petroleum products in view of
the plummeting value of the peso. Their plea, however, will now have to
be addressed to the Energy Regulatory Board as the effect of the
declaration
of unconstitutionality of R. A. No. 8180 is to revive the former laws
it
repealed.[39]
The length of our return to the regime of regulation depends on
Congress
which can fasttrack the writing of a new law on oil deregulation in
accord
with the Constitution.cralaw:red
With this
Decision, some circles will chide the
Court for interfering with an economic decision of Congress. Such
criticism
is charmless for the Court is annulling R. A. No. 8180 not because it
disagrees
with deregulation as an economic policy but because as cobbled by
Congress
in its present form, the law violates the Constitution. The right call,
therefore, should be for Congress to write a new oil deregulation law
that
conforms with the Constitution and not for this Court to shirk its duty
of striking down a law that offends the Constitution. Striking down R.
A. No. 8180 may cost losses in quantifiable terms to the oil
oligopolists.
But the loss in tolerating the tampering of our Constitution is not
quantifiable
in pesos and centavos. More worthy of protection than the supra-normal
profits of private corporations is the sanctity of the fundamental
principles
of the Constitution. Indeed when confronted by a law violating the
Constitution,
the Court has no option but to strike it down dead. Lest it is missed,
the Constitution is a covenant that grants and guarantees both the
political
and economic rights of the people. The Constitution mandates this Court
to be the guardian not only of the people's political rights but their
economic rights as well. The protection of the economic rights of the
poor
and the powerless is of greater importance to them for they are
concerned
more with the exoterics of living and less with the esoterics of
liberty.
Hence, for as long as the Constitution reigns supreme so long will this
Court be vigilant in upholding the economic rights of our people
especially
from the onslaught of the powerful. Our defense of the people's
economic
rights may appear heartless because it cannot be half-hearted.cralaw:red
IN VIEW WHEREOF,
the petitions are granted. R.
A. No. 8180 is declared unconstitutional and E. O. No. 372 void.cralaw:red
SO ORDERED.cralaw:red
Regalado, Davide,
Jr., Romero, Bellosillo
and Vitug, JJ., concur.
Mendoza, J.,
concurs in the result.
Narvasa, CJ.,
is on leave.
Separate Opinions
PANGANIBAN, J.,
Concurring:
I concur with the lucid and convincing
ponencia
of Mr. Justice Reynato S. Puno. I write to stress two points:
1. The Issue
Is Whether Oil Companies May Unilaterally
Fix Prices, Not Whether This Court May Interfere in Economic Questions.chanrobles virtual law library
With the issuance
of the status quo order
on October 7, 1997 requiring the three respondent oil companies
Petron,
Shell and Caltex "to cease and desist from increasing the prices
of gasoline and other petroleum fuel products for a period of thirty
[30]
days," the Court has been accused of interfering in purely economic
policy
matters[1]
or, worse, of arrogating unto itself price-regulatory powers.[2]
Let it be emphasized that We have no desire nay, We have no
power
to intervene in, to change or to repeal the laws of economics, in the
same
manner that We cannot and will not nullify or invalidate the laws of
physics
or chemistry.cralaw:red
The issue here is
not whether the Supreme Court
may fix the retail prices of petroleum products, Rather, the issue is
whether
R. A. 8180, the law allowing the oil companies to unilaterally set,
increase
or decrease their prices, is valid or constitutional.cralaw:red
Under the
Constitution,[3]
this Court has in appropriate cases the DUTY, not just the
power, to determine whether a law or a part thereof offends the
Constitution
and, if so, to annul and set it aside.[4]
Because a serious challenge has been hurled against the validity of one
such law, namely R. A. 8180 its criticality having been
preliminarily
determined from the petition, comments, reply and, most tellingly, the
oral argument on September 30, 1997 this Court, in the exercise
of
its mandated judicial discretion, issued the status quo order
to
prevent the continued enforcement and implementation of a law that was prima
facie found to be constitutionally infirm. Indeed,
after
careful
final deliberation, said law is now ruled to be constitutionally
defective
thereby disabling respondent oil companies from exercising their
erstwhile
power, granted by such defective statute, to determine prices by
themselves.cralaw:red
Concededly, this
Court has no power to pass upon
the wisdom, merits and propriety of the acts of its co-equal branches
in
government. However, it does have the prerogative to uphold the
Constitution
and to strike down and annul a law that contravenes the Charter.[5]
From such duty and prerogative, it shall never shirk or shy away.cralaw:red
By annulling R.
A. 8180, this Court is not making
a policy statement against deregulation. Quite the contrary, it is
simply
invalidating a pseudo-deregulation law which in reality restrains free
trade and perpetuates a cartel, an oligopoly. The Court is merely
upholding
constitutional adherence to a truly competitive economy that releases
the
creative energy of free enterprise. It leaves to Congress, as the
policy-setting
agency of the government, the speedy crafting of a genuine,
constitutionally
justified oil deregulation law.cralaw:red
2. Everyone,
Rich or Poor, Must Share in the
Burdens of Economic Dislocation.chanrobles virtual law library
Much has been
said and will be said about the
alleged negative effect of this Court's holding on the oil giants'
profit
and loss statements. We are not unaware of the disruptive impact of the
depreciating peso on the retail prices of refined petroleum products.
But
such price-escalating consequence adversely affects not merely these
oil
companies which occupy hallowed places among the most profitable
corporate
behemoths in our country. In these critical times of widespread
economic
dislocations, abetted by currency fluctuations not entirely of domestic
origin, all sectors of society agonize and suffer. Thus, everyone, rich
or poor, must share in the burdens of such economic aberrations.cralaw:red
I can understand
foreign investors who see these
price adjustments as necessary consequences of the country's adherence
to the free market, for that, in the first place, is the magnet for
their
presence here. Understandably, their concern is limited to bottom lines
and market share. But in all these mega companies, there are also
Filipino
entrepreneurs and managers. I am sure there are patriots among them who
realize that, in times of economic turmoil, the poor and the
underprivileged
proportionately suffer more than any other sector of society. There is
a certain threshold of pain beyond which the disadvantaged cannot
endure.
Indeed, it has been wisely said that "if the rich who are few will not
help the poor who are many, there will come a time when the few who are
filled cannot escape the wrath of the many who are hungry." Kaya't
sa
mga kababayan nating kapitalista at may kapangyarihan, nararapat lamang
na makiisa tayo sa mga walang palad at mahihirap sa mga araw ng
pangangailangan.
Huwag na nating ipagdiinan ang kawalan ng tubo, o maging and
panandaliang
pagkalugi. At sa mga mangangalakal na ganid at walang puso: hirap na
hirap
na po ang ating mga kababayan. Makonsiyensya naman kayo!
KAPUNAN, J.,
Separate
Opinion:
Lately, the Court has been perceived
[albeit
erroneously] to be an unwelcome interloper in affairs and concerns best
left to legislators and policy-makers. Admittedly, the wisdom of
political
and economic decisions are outside the scrutiny of the Court. However,
the political question doctrine is not some mantra that will
automatically
cloak executive orders and laws [or provisions thereof] with
legitimacy.
It is this Court's bounden duty under Sec. 4[2], Art. VIII of the 1987
Constitution to decide all cases involving the constitutionality of
laws
and under Sec. 1 of the same article, "to determine whether or not
there
has been a grave abuse of discretion amounting to lack or excess of
jurisdiction
on the part of any branch or instrumentality of the Government."
In the instant
case, petitioners assail the constitutionality
of certain provisions found in R. A. No. 8180, otherwise known as the
"Downstream
Oil Industry Deregulation Act of 1996" To avoid accusations of undue
interference
with the workings of the two other branches of government, this
discussion
is limited to the issue of whether or not the assailed provisions are
germane
to the law or serve the purpose for which it was enacted.cralaw:red
The objective of
the deregulation law is quite
simple. As aptly enunciated in Sec. 2 thereof, it is to "foster a truly
competitive market which can better achieve the social policy
objectives
of fair prices and adequate, continuous supply of environmentally-clean
and high quality petroleum products." The key, therefore, is free
competition
which is commonly defined as:
The act or action of seeking to gain what
another
is seeking to gain at the same time and usually under or as if under
fair
or equitable rules and circumstances: a common struggle for the same
object
especially among individuals of relatively equal standing xxx a market
condition in which a large number of independent buyers and sellers
compete
for identical commodity, deal freely with each other, and retain the
right
of entry and exit from the market. [Webster's Third International
Dictionary].
and in a
landscape where our oil industry is dominated
by only three major oil firms, this translates primarily into the
establishment
of a free market conducive to the entry of new and several and oil
companies
in the business. Corollarily, it means the removal of any and all
barriers
that will hinder the influx of prospective players. It is a truism in
economics
that if there are many players in the market, healthy competition will
ensue and in order to survive and profit the competitors will try to
outdo
each other in terms of quality and price. The result: better quality
products
and competitive prices. In the end, it will be the public that benefits
[which is ultimately the most important goal of the law]. Thus, it is
within
this framework that we must determine the validity of the assailed
provisions.
I.chanrobles virtual law libraryThe 4% Tariff Differential
Sec. 5.
Liberalization of Downstream Oil Industry
and Tariff Treatment.
b) Any law to the contrary
notwithstanding and
starting with the effectivity of this Act, tariff duty shall be imposed
and collected on imported crude oil at the rate of three percent (3%)
and
imported refined petroleum products at the rate of seven percent (7%),
except fuel oil and LPG, the rate for which shall be the same as that
for
imported crude oil: Provided, That beginning on January 1, 2004
the tariff rate on imported crude oil and refined petroleum products
shall
be the same: Provided, further, That this provision may be
amended
only by an Act of Congress;
Respondents are
one in asserting that the 4% tariff
differential between imported crude oil and imported refined petroleum
products is intended to encourage the new entrants to put up their own
refineries in the country. The advantages of domestic refining cannot
be
discounted, but we must view this intent in the proper perspective. The
primary purpose of the deregulation law is to open up the market and
establish
free competition. The priority of the deregulation law, therefore, is
to
encourage new oil companies to come in first. Incentives to encourage
the
building of local refineries should be provided after the new oil
companies
have entered the Philippine market and are actively participating
therein.
The threshold
question therefore is, is the 4%
tariff differential a barrier to the entry of new oil companies in the
Philippine market?
It is. Since the
prospective oil companies do
not [as yet] have local refineries, they would have to import refined
petroleum
products, on which a 7% tariff duty is imposed. On the other hand, the
existing oil companies already have domestic refineries and, therefore,
only import crude oil which is taxed at a lower rate of 3%. Tariffs are
part of the costs of production. Hence, this means that with the 4%
tariff
differential (which becomes an added cost) the prospective players
would
have higher production costs compared to the existing oil companies and
it is precisely this factor which could seriously affect its decision
to
enter the market.cralaw:red
Viewed in this
light, the tariff differential
between imported crude oil and refined petroleum products becomes an
obstacle
to the entry of new players in the Philippine oil market. It defeats
the
purpose of the law and should thus be struck down.cralaw:red
Public
respondents contend that "a higher tariff
rate is not the overriding factor confronting a prospective
trader/importer
but, rather, his ability to generate the desired internal rate of
return
[IRR] and net present value [NPV]. In other words, if said
trader/importer,
after some calculation, finds that he can match the price of locally
refined
petroleum products and still earn the desired profit margin, despite a
higher tariff rate, he will be attracted to embark in such business. A
tariff differential does not per se make the business of importing
refined
petroleum product a losing proposition."[1]
The problem with
this rationale, however, is that
it is highly speculative. The opposite may well hold true. The point is
to make the prospect of engaging in the oil business in the Philippines
appealing, so why create a barrier in the first place?
There is likewise
no merit in the argument that
the removal of the tariff differential will revive the 10% [for crude
oil]
and 20% [for refined petroleum products] tariff rates that prevailed
before
the enactment of R. A. No. 8180. What petitioners are assailing is the
tariff differential. Phrased differently, why is the tariff duty
imposed
on imported petroleum products not the same as that imposed on imported
crude oil? Declaring the tariff differential void is not equivalent to
declaring the tariff itself void. The obvious consequence thereof would
be that imported refined petroleum products would now be taxed at the
same
rate as imported crude oil which R. A. No. 8180 has specifically set at
3%. The old rates have effectively been repealed by Sec. 24 of the same
law.[2]
II.chanrobles virtual law libraryThe Minimum Inventory
Requirementand
the
Prohibition Against Predatory Pricing
Sec. 6. Security of Supply.-
To
ensure the security and continuity of petroleum crude and products
supply,
the DOE shall require the refiners and importers to maintain a minimum
inventory equivalent to ten percent [10%] of their respective annual
sales
volume or forty [40] days of supply, whichever is lower.
Sec. 9. Prohibited Acts.- To
ensure
fair competition and prevent cartels and monopolies in the downstream
oil
industry, the following acts are hereby prohibited:
b) Predatory pricing which means
selling or
offering
to sell any product at a price unreasonably below the industry average
cost so as to attract customers to the detriment of competitors.
The same
rationale holds true for the two other assailed
provisions in the Oil Deregulation law. The primordial purpose of the
law,
I reiterate, is to create a truly free and competitive market. To
achieve
this goal, provisions that show the possibility, or even the merest
hint,
of deterring or impeding the ingress of new blood in the market should
be eliminated outright. I am confident that our lawmakers can formulate
other measures that would accomplish the same purpose [insure security
and continuity of petroleum crude products supply and prevent fly by
night
operators, in the case of the minimum inventory requirement, for
instance]
but would not have on the downside the effect of seriously hindering
the
entry of prospective traders in the market.
The overriding
consideration, which is the public
interest and public benefit, calls for the levelling of the playing
fields
for the existing oil companies and the prospective new entrants. Only
when
there are many players in the market will free competition reign and
economic
development begin.
Consequently, Section 6 and Section 9[b] of R.
A. No. 8180 should similarly be struck down.
III.chanrobles virtual law libraryConclusion
Respondent oil
companies vehemently deny the "cartelization"
of the oil industry. Their parallel business behaviour and uniform
pricing
are the result of competition, they say, in order to keep their share
of
the market. This rationale fares well when oil prices are lowered, i.e.
when one oil company rolls back its prices, the others follow suit so
as
not to lose its market. But how come when one increases its prices the
others likewise follow? Is this competition at work?
Respondent oil
companies repeatedly assert that
due to the devaluation of the peso, they had to increase the prices of
their oil products, otherwise, they would lose, as they have allegedly
been losing specially with the issuance of a temporary restraining
order
by the Court. However, what we have on record are only the self-serving
lamentations of respondent oil companies. Not one has presented hard
data,
independently verified, to attest to these losses. Mere allegations are
not sufficient but must be accompanied by supporting evidence. What
probably
is nearer the truth is that respondent oil companies will not make as
much
profits as they have in the past if they are not allowed to increase
the
prices of their products everytime the value of the peso slumps. But in
the midst of worsening economic difficulties and hardships suffered by
the people, the very customers who have given them tremendous profits
throughout
the years, is it fair and decent for said companies not to bear a bit
of
the burden by forgoing a little of their profits?
PREMISES
CONSIDERED, I vote that Section 5[b],
Section 6 and Section 9[b] of R. A. No. 8180 be declared
unconstitutional.
MELO, J.,
Dissenting:
With all due respect to my esteemed
colleague,
Mr. Justice Puno, who has, as usual, prepared a well-written and
comprehensive
ponencia, I regret I cannot share the view that Republic Act No. 8180
should
be struck down as violative of the Constitution.
The law in
question, Republic Act No. 8180, otherwise
known as the Downstream Oil Deregulation Act of 1996, contains,
inter
alia, the following provisions which have become the subject of the
present controversy, to wit:
Sec. 5. Liberalization of Downstream Oil
Industry
and Tariff Treatment.
(b). Any law to the contrary
notwithstanding
and starting with the effectivity of this act, tariff duty shall be
imposed
and collected on imported crude oil at the rate of (3%) and imported
refined
petroleum products at the rate of seven percent (7%), except fuel oil
and
LPG, the rate for which shall be the same as that for imported crudeoil:
Provided, That beginning on January 1, 2004 the tariff rate on
imported
crude oil and refined petroleum products shall be the same: Provided,
further, That this provision may be amended only by an Act of
Congress.
Sec. 6. Security of Supply.
To
ensure
the security and continuity of petroleum crude and products supply, the
DOE shall require the refiners and importers to maintain a minimum
inventory
equivalent to ten percent (10%) of their respective annual sales volume
or forty (40) days of supply, whichever is lower.
Sec. 9. Prohibited Acts.-
To
ensure
fair competition and prevent cartels and monopolies in the downstream
oil
industry, the following acts are hereby prohibited:
b) Predatory pricing which means
selling or
offering
to sell any product at a price unreasonably below the industry average
cost so as to attract customers to the detriment of competitors.
Sec. 15. Implementation of Full
Deregulation.-
Pursuant to Section 5[e] of Republic Act No. 7638, the DOE [Department
of Energy] shall, upon approval of the President, implement the full
deregulation
of the downstream oil industry not later than March 1997. As far as
practicable,
the DOE shall time the full deregulation when the prices of crude oil
and
petroleum products in the world market are declining and when the
exchange
rate of the peso in relation to the US Dollar is stable.
In G. R. No.
124360, petitioners therein pray that
the aforequoted Section 5[b] be declared null and void. However,
despite
its pendency, President Ramos, pursuant to the above-cited Section 15
of
the assailed law, issued Executive Order No. 392 on 22 January 1997
declaring
the full deregulation of the downstream oil industry effective February
8, 1997. A few days after the implementation of said Executive Order,
the
second consolidated petition was filed (G. R. No. 127867), seeking,
inter
alia, the declaration of the unconstitutionality of Section 15 of the
law
on various grounds.
I submit that the
instant consolidated petitions
should be denied. In support of my view, I shall discuss the arguments
of the parties point by point.cralaw:red
1. The instant
petitions do not raise a justiciable
controversy as the issues raised therein pertain to the wisdom and
reasonableness
of the provisions of the assailed law. The contentions made by
petitioners,
that the "imposition of different tariff rates on imported crude oil
and
imported refined petroleum products will not foster a truly competitive
market, nor will it level the playing fields" and that said imposition
"does not deregulate the downstream oil industry, instead, it controls
the oil industry, contrary to the avowed policy of the law," are
clearly
policy matters which are within the province of the political
departments
of the government. These submissions require a review of issues that
are
in the nature of political questions, hence, clearly beyond the ambit
of
judicial inquiry.cralaw:red
A political
question refers to a question of policy
or to issues which, under the Constitution, are to be decided by the
people
in their sovereign capacity, or in regard to which full discretionary
authority
has been delegated to the legislative or executive branch of the
government.
Generally, political questions are concerned with issues dependent upon
the wisdom, not the legality, of a particular measure (Tañada
vs.
Cuenco, 100 Phil 101 [1957]).cralaw:red
Notwithstanding
the expanded judicial power of
this Court under Section 1, Article VIII of the Constitution, an
inquiry
on the above-stated policy matters would delve on matters of wisdom
which
are exclusively within the legislative powers of Congress.cralaw:red
2. The
petitioners do not have the necessary locus
standi to file the instant consolidated petitions. Petitioners Lagman,
Arroyo, Garcia, Tanada, and Tatad assail the constitutionality of the
above-stated
laws through the instant consolidated petitions in their capacity as
members
of Congress, and as taxpayers and concerned citizens. However, the
existence
of a constitutional issue in a case does not per se confer or
clothe
a legislator with locus standi to bring suit. In Phil.
Constitution
Association [PHILCONSA] v. Enriquez (235 SCRA 506 [1994]), we held that
members of Congress may properly challenge the validity of an official
act of any department of the government only upon showing that the
assailed
official act affects or impairs their rights and prerogatives as
legislators.
In Kilosbayan, Inc., et al. vs. Morato, et al. (246 SCRA 540 [1995]),
this
Court further clarified that "if the complaint is not grounded on the
impairment
of the power of Congress, legislators do not have standing to question
the validity of any law or official action."
Republic Act No.
8180 clearly does not violate
or impair prerogatives, powers, and rights of Congress, or the
individual
members thereof, considering that the assailed official act is the very
act of Congress itself authorizing the full deregulation of the
downstream
oil industry.Neither can petitioners sue
as taxpayers or concerned citizens. A condition sine qua non for
the institution of a taxpayer's suit is an allegation that the assailed
action is an unconstitutional exercise of the spending powers of
Congress
or that it constitutes an illegal disbursement of public funds. The
instant
consolidated petitions do not allege that the assailed provisions of
the
law amount to an illegal disbursement of public money. Hence,
petitioners
cannot, even as taxpayers or concerned citizens, invoke this Court's
power
of judicial review.cralaw:red
Further,
petitioners, including Flag, FDC, and
Sanlakas, cannot be deemed proper parties for lack of a particularized
interest or elemental substantial injury necessary to confer on them
locus
standi. The interest of the person assailing the constitutionality of a
statute must be direct and personal. He must be able to show, not only
that the jaw is invalid, but also that he has sustained or is in
immediate
danger of sustaining some direct injury as a result of its enforcement,
and not merely that he suffers thereby in some indefinite way. It must
appear that the person complaining has been or is about to be denied
some
right or privilege to which he is lawfully entitled or that he is about
to be subjected to some burdens or penalties by reason of the statute
complained
of Petitioners have not established such kind of interest.cralaw:red
3. Section 5[b]
of Republic Act No. 8180 is not
violative of the "one title-one subject" rule under Section 26[1],
Article
VI of the Constitution. It is not required that a provision of law be
expressed
in the title thereof as long as the provision in question is embraced
within
the subject expressed in the title of the law. The "title of a bill
does
not have to be a catalogue of its contents and will suffice if the
matters
embodied in the text are relevant to each other and may be inferred
from
the title." (Association of Small Landowners in the Phils., Inc. vs.
Sec.
of Agrarian Reform, 175 SCRA 343 [1989]) An "act having a single
general
subject, indicated in the title, may contain any number of provisions,
no matter how diverse they may be, so long as they are not inconsistent
with or foreign to the general subject, and may be considered in
furtherance
of such subject by providing for the method and means of carrying out
the
general object." [Sinco, Phil. Political Law, 11th ed., p. 225].cralaw:red
The questioned
tariff provision in Section 5 [b]
was provided as a means to implement the deregulation of the downstream
oil industry and hence, is germane to the purpose of the assailed law.
The general subject of Republic Act No. 8180, as expressed in its
title,
"An Act Deregulating the Downstream Oil Industry, and for the Other
Purposes",
necessarily implies that the law provides for the means for such
deregulation.
One such means is the imposition of the differential tariff rates which
are provided to encourage new investors as well as existing players to
put up new refineries. The aforesaid provision is thus germane to, and
in furtherance of, the object of deregulation. The trend of
jurisprudence,
ever since Sumulong vs. COMELEC (73 Phil. 288 [1941]), is to give the
above-stated
constitutional requirement a liberal interpretation. Hence, there is
indeed
substantial compliance with said requirement.cralaw:red
Petitioners claim
that because the House version
of the assailed law did not impose any tariff rates but merely set the
policy of "zero differential" and that the Senate version did not set
or
fix any tariff, the tariff changes being imposed by the assailed law
was
never subject of any deliberations in both houses nor the Bicameral
Conference
Committee. I believe that this argument is bereft of merit.
The report of the Bicameral Conference Committee,
which was precisely formed to settle differences between the two houses
of Congress, was approved by members thereof only after a full
deliberation
on the conflicting provisions of the Senate version and the House
version
of the assailed law. Moreover, the joint explanatory statement of said
Committee which was submitted to both houses, explicitly states that
"while
sub-paragraph [b] is a modification, its thrust and style were
patterned
after the House's original sub-paragraph [b]." Thus, it cannot be
denied
that both houses were informed of the changes in the aforestated
provision
of the assailed law. No legislator can validly state that he was not
apprised
of the purposes, nature, and scope of the provisions of the law since
the
inclusion of the tariff differential was clearly mentioned in the
Bicameral
Conference Committee's explanatory note.cralaw:red
As regards the
power of the Bicameral Conference
Committee to include in its report an entirely new provision that is
neither
found in the House bill or Senate bill, this Court already upheld such
power in Tolentino vs. Sec. of Finance (235 SCRA 630 [1994]), where we
ruled that the conference committee can even include an amendment in
the
nature of a substitute so long as such amendment is germane to the
subject
of the bill before it.cralaw:red
Lastly, in view
of the "enrolled bill theory"
pronounced by this Court as early as 1947 in the case of Mabanag vs.
Lopez
Vito (78 Phil. 1 [1947]), the duly authenticated copy of the bill,
signed
by the proper officers of each house, and approved by the President, is
conclusive upon the courts not only of its provisions but also of its
due
enactment.cralaw:red
4. Section 15 of
Republic Act No. 8180 does not
constitute undue delegation of legislative power. Petitioners
themselves
admit that said section provides the Secretary of Energy and the
President
with the bases of (1) "practicability", (2) "the decline of crude oil
prices
in the world market", and (3) "the stability of the Peso exchange rate
in relation to the US Dollar", in determining the effectivity of full
deregulation.
To my mind, said bases are determinate and determinable guidelines,
when
examined in the light of the tests for permissible delegation.cralaw:red
The assailed law
satisfies the completeness test
as it is complete and leaves nothing more for the Executive Branch to
do
but to enforce the same. Section 2 thereof expressly provides that "it
shall be the policy of the State to deregulate the downstream oil
industry
to foster a truly competitive market which can better achieve the
social
policy objectives of fair prices and adequate, continuous supply of
environmentally-clean
and high-quality petroleum products." This provision manifestly
declares
the policy to be achieved through the delegate, that is, the full
deregulation
of the downstream oil industry toward the end of full and free
competition.
Section 15 further provides for all the basic terms and conditions for
its execution and thus belies the argument that the Executive Branch is
given complete liberty to determine whether or not to implement the
law.
Indeed, Congress did not only make full deregulation mandatory, but
likewise
set a deadline [that is, not later than March 1997], within which full
deregulation should be achieved.cralaw:red
Congress may
validly provide that a statute shall
take effect or its operation shall be revived or suspended or shall
terminate
upon the occurrence of certain events or contingencies the
ascertainment
of which may be left to some official agency. In effect, contingent
legislation
may be issued by the Executive Branch pursuant to a delegation of
authority
to determine some fact or state of things upon which the enforcement of
a law depends (Cruz, Phil. Political Law, 1996 ed., p. 96; Cruz vs.
Youngberg,
56 Phil. 234 [1931]). This is a valid delegation since what the
delegate
performs is a matter of detail whereas the statute remains complete in
all essential matters. Section 15 falls under this kind of delegated
authority.
Notably, the only aspect with respect to which the President can
exercise
"discretion" is the determination of whether deregulation may be
implemented
on or before March, 1997, the deadline set by Congress. If he so
decides,
however, certain conditions must first be satisfied, to wit: (1) the
prices
of crude oil and petroleum products in the world market are declining,
and (2) the exchange rate of the peso in relation to the US Dollar is
stable.
Significantly, the so-called "discretion" pertains only to the
ascertainment
of the existence of conditions which are necessary for the effectivity
of the law and not a discretion as to what the law shall be.cralaw:red
In the same vein,
I submit that the President's
issuance of Executive Order No. 392 last January 22, 1997 is valid as
contingent
legislation. All the Chief Executive did was to exercise his delegated
authority to ascertain and recognize certain events or contingencies
which
prompted him to advance the deregulation to a date earlier than March,
1997. Anyway, the law does not prohibit him from implementing the
deregulation
prior to March, 1997, as long as the standards of the law are met.cralaw:red
Further, the law
satisfies the sufficient standards
test. The words "practicable", "declining", and "stable", as used in
Section
15 of the assailed law are sufficient standards that saliently "map out
the boundaries of the delegate's authority by defining the legislative
policy and indicating the circumstances under which it is to be pursued
and effected." [Cruz, Phil. Political Law, 1996 ed., p. 98].
Considering
the normal and ordinary definitions of these standards, I believe that
the factors to be considered by the President and/or Secretary of
Energy
in implementing full deregulation are, as mentioned, determinate and
determinable.cralaw:red
It is likewise
noteworthy that the above-mentioned
factors laid down by the subject law are not solely dependent on
Congress.
Verily, oil pricing and the peso-dollar exchange rate are dependent on
the various forces working within the consumer market. Accordingly, it
would have been unreasonable, or even impossible, for the legislature
to
have provided for fixed and specific oil prices and exchange rates. To
require Congress to set forth specifics in the law would effectively
deprive
the legislature of the flexibility and practicability which subordinate
legislation is ultimately designed to provide. Besides, said specifics
are precisely the details which are beyond the competence of Congress,
and thus, are properly delegated to appropriate administrative agencies
and executive officials to "fill in". It cannot be gainsaid that the
detail
of the timing of full deregulation has been "filled in" by the
President,
upon the recommendation of the DOE, when he issued Executive Order No.
329.cralaw:red
5. Republic Act
No. 8180 is not violative of the
constitutional prohibition against monopolies, combinations in
restraint
of trade, and unfair competition. The three provisions relied upon by
petitioners
(Section 5 [b] on tariff differential; Section 6 on the 40-day minimum
inventory requirement; and Section 9 [b] on the prohibited act of
predatory
pricing) actually promote, rather than restrain, free trade and
competition.cralaw:red
The tariff
differential provided in the assailed
law does not necessarily make the business of importing refined
petroleum
products a losing proposition for new players. First, the decision of a
prospective trader/importer (subjected to the 7% tariff rate) to
compete
in the downstream oil industry as a new player is based solely on
whether
he can, based on his computations, generate the desired internal rate
of
return [IRR] and net present value [NPV] notwithstanding the imposition
of a higher tariff rate. Second, such a difference in tax treatment
does
not necessarily provide refiners of imported crude oil with a
significant
level of economic advantage considering the huge amount of investments
required in putting up refinery plants which will then have to be added
to said refiners' production cost. It is not unreasonable to suppose
that
the additional cost imputed by higher tariff can anyway be overcome by
a new player in the business of importation due to lower operating
costs,
lower capital infusion, and lower capital carrying costs. Consequently,
the resultant cost of imported finished petroleum and that of locally
refined
petroleum products may turn out to be approximately the same.cralaw:red
The existence of
a tariff differential with regard
to imported crude oil and imported finished products is nothing new or
novel. In fact, prior to the passage of Republic Act No. 8180, there
existed
a 10% tariff differential resulting from the imposition of a 20% tariff
rate on imported finished petroleum products and 10% on imported crude
oil [based on Executive Order No. 115]. Significantly, Section 5[b] of
the assailed law effectively lowered the tariff rates from 20% to 7%
for
imported refined petroleum products, and 10% to 3% for imported crude
oil,
or a reduction of the differential from 10% to 4%. This provision is
certainly
favorable to all in the downstream oil industry, whether they be
existing
or new players. It thus follows that the 4% tariff differential aims to
ensure the stable supply of petroleum products by encouraging new
entrants
to put up oil refineries in the Philippines and to discourage
fly-by-night
importers.cralaw:red
Further, the
assailed tariff differential is likewise
not violative of the equal protection clause of the Constitution. It is
germane to the declared policy of Republic Act No. 8180 which is to
achieve
(1) fair prices; and (2) adequate and continuous supply of
environmentally-clean
and high quality petroleum products. Said adequate and continuous
supply
of petroleum products will be achieved if new investors or players are
enticed to engage in the business of refining crude oil in the country.
Existing refining companies, are similarly encouraged to put up
additional
refining companies. All of this can be made possible in view of the
lower
tariff duty on imported crude oil than that levied on imported refined
petroleum products. In effect, the lower tariff rates will enable the
refiners
to recoup their investments considering that they will be investing
billions
of pesos in putting up their refineries in the Philippines. That
incidentally
the existing refineries will be benefited by the tariff differential
does
not negate the fact that the intended effect of the law is really to
encourage
the construction of new refineries, whether by existing players or by
new
players.cralaw:red
As regards the
40-day inventory requirement, it
must be emphasized that the 10% minimum requirement is based on the
refiners'
and importers' annual sales volume, and hence, obviously inapplicable
to
new entrants as they do not have an annual sales volume yet. Contrary
to
petitioners' argument, this requirement is not intended to discourage
new
or prospective players in the downstream oil industry. Rather, it
guarantees
"security and continuity of petroleum crude and products supply."
[Section
6, Republic Act No. 8180] This legal requirement is meant to weed out
entities
not sufficiently qualified to participate in the local downstream oil
industry.
Consequently, it is meant to protect the industry from fly-by-night
business
operators whose sole interest would be to make quick profits and who
may
prove unrealiable in the effort to provide an adequate and steady
supply
of petroleum products in the country. In effect, the aforestated
provision
benefits not only the three respondent oil companies but all entities
serious
and committed to put up storage facilities and to participate as
serious
players in the local oil industry. Moreover, it benefits the entire
consuming
public by its guarantee of an "adequate continuous supply of
environmentally-clean
and high quality petroleum products." It ensures that all companies in
the downstream oil industry operate according to the same high
standards,
that the necessary storage and distribution facilities are in place to
support the level of business activities involved, and that operations
are conducted in a safe and environmentally sound manner for the
benefit
of the consuming public.cralaw:red
Regarding the
prohibition against predatory pricing,
I believe that petitioners' argument is quite misplaced. The provision
actually protects new players by preventing, under pain of criminal
sanction,
the more established oil firms from driving away any potential or
actual
competitor by taking undue advantage of their size and relative
financial
stability. Obviously, the new players are the ones susceptible to
closing
down on account of intolerable losses which will be brought about by
fierce
competition with rival firms. The petitioners are merely working under
the presumption that it is the new players which would succumb to
predatory
pricing, and not the more established oil firms. This is not a factual
assertion but a rather baseless and conjectural assumption.cralaw:red
As to the alleged
cartel among the three respondent
oil companies, much as we suspect the same, its existence calls for a
finding
of fact which this Court is not in the position to make. We cannot be
called
to try facts and resolve factual issues such as this (Trade Unions of
the
Phils. vs. Laguesma, 236 SCRA 586 [1994]); Ledesma vs. NLRC, 246 SCRA
247
[1995]).cralaw:red
With respect to
the amendatory bills filed by
various Congressmen aimed to modify the alleged defects of Republic Act
No. 8180, I submit that such bills are the correct remedial steps to
pursue,
instead of the instant petitions to set aside the statute sought to be
amended. The proper forum is Congress, not this Court.cralaw:red
Finally, as to
the ponencia's endnote which cites
the plea of respondent oil companies for the lifting of the restraining
order against them to enable them to adjust the prices of petroleum and
petroleum products in view of the devaluation of our currency, I am
pensive
as to how the matter can be addressed to the obviously defunct Energy
Regulatory
Board. There has been a number of price increase in the meantime. Too
much
water has passed under the bridge. It is too difficult to turn back the
hands of time.cralaw:red
For all the
foregoing reasons, I, therefore, vote
for the outright dismissal of the instant consolidated petitions for
lack
of merit.
FRANCISCO, J.,
Dissenting:
The continuing
peso devaluation and the spiraling
cost of commodities have become hard facts of life nowadays. And the
wearies
are compounded by the ominous prospects of very unstable oil prices.
Thus,
with the goal of rationalizing the oil scheme, Congress enacted
Republic
Act No. 8180, otherwise known as the Downstream Oil Deregulation Act of
1996, the policy of which is "to foster a truly competitive market
which
can better achieve the social policy objectives of fair prices and
adequate,
continuous supply of environmentally-clean and high quality petroleum
products".[1]
But if the noble and laudable objective of this enactment is not
accomplished,
as to date oil prices continue to rise, can this Court be called upon
to
declare the statute unconstitutional or must the Court desist from
interfering
in a matter which is best left to the other branch/es of government?
The apparent
thrust of the consolidated petitions
is to declare, not the entirety, but only some isolated portions of
Republic
Act No. 8180 unconstitutional. This is clear from the grounds
enumerated
by the petitioners, to wit:
G. R. No.
124360
4.0. Grounds:
4.1.
THE IMPOSITION OF DIFFERENT TARIFF RATES
ON IMPORTED CRUDE OIL AND IMPORTED REFINED PETROLEUM PRODUCTS VIOLATES
THE EQUAL PROTECTION OF THE LAWS.
4.2.
THE IMPOSITION OF DIFFERENT TARIFF RATES
DOES NOT DEREGULATE THE DOWNSTREAM OIL INDUSTRY, INSTEAD, IT CONTROLS
THE
OIL INDUSTRY, CONTRARY TO THE AVOWED POLICY OF THE LAW.
4.3.
THE INCLUSION OF A TARIFF PROVISION IN
SECTION
5(b) OF THE DOWNSTREAM OIL INDUSTRY DEREGULATION LAW VIOLATES THE "ONE
SUBJECT-ONE TITLE" RULE EMBODIED IN ARTICLE VI, SECTION 26 (1) OF THE
CONSTITUTION.[2]
G.R. No. 127867
GROUNDS
THE IMPLEMENTATION OF FULL DEREGULATION
PRIOR
TO THE EXISTENCE OF A TRULY COMPETITIVE MARKET VIOLATES THE
CONSTITUTION
PROHIBITING MONOPOLIES, UNFAIR COMPETITION AND PRACTICES IN RESTRAINT
OF
TRADE. R.A. No. 8180 CONTAINS DISGUISED
REGULATIONS
IN A SUPPOSEDLY DEREGULATED INDUSTRY WHICH CREATE OR PROMOTE MONOPOLY
OF
THE INDUSTRY BY THE THREE EXISTING OIL COMPANIES.
THE REGULATORY AND PENAL PROVISIONS OF
R.A.
NO. 8180 VIOLATE THE EQUAL PROTECTION OF THE LAWS, DUE PROCESS OF LAW
AND
THE CONSTITUTIONAL RIGHTS OF AN ACCUSED TO BE INFORMED OF THE NATURE
AND
CAUSE OF THE ACCUSATION AGAINST HIM.[3]
And culled from
petitioners' arguments in support
of the above grounds, the provisions of Republic Act No. 8180 which
they
now impugn are:
A. Section 5[b] on the imposition of
tariff
which
provides: "Any law to the contrary notwithstanding and starting with
the
effectivity of this Act, tariff duty shall be imposed and collected on
imported crude oil at the rate of three percent (3%), and imported
refined
petroleum products at the rate of seven percent (7%), except fuel oil
and
LPB, the rate for which shall be the same as that for imported crude
oil: Provided, That beginning on January 1, 2004 the tariff
rate
on imported
crude oil and refined petroleum products shall be the same: Provided
further, That this provision may be amended only by an Act of
Congress." [Emphasis added].
B. Section 6 on the minimum inventory
requirement,
thus: "Security of Supply. To ensure the security and continuity
of petroleum crude and products supply, the DOE shall require the
refiners
and importers to maintain a minimum inventory equivalent to ten percent
(10%) of their respective annual sales volume or forty (40) days of
supply,
whichever is lower."
C. Section 9[b] on predatory pricing:
"Predatory
pricing which means selling or offering to sell any product at a price
unreasonably below the industry average cost so as to attract customers
to the detriment of competitors.
Any person, including but not limited to
the
chief operating officer or chief executive officer of the corporation
involved,
who is found guilty of any of the said prohibited acts shall suffer the
penalty of imprisonment for three [3] years and fine ranging from Five
hundred thousand pesos [P500,000] to One million pesos [P1,000,000].
D. Section 10 on the other prohibited
acts
which
states: "Other Prohibited Acts. To ensure compliance with the
provisions
of this Act, the failure to comply with any of the following shall
likewise
be prohibited: 1) submission of any reportorial requirements; 2)
maintenance
of the minimum inventory; and, 3) use of clean and safe (environment
and
worker-benign) technologies.
Any person, including but not limited to
the
chief operating officer or chief executive officer of the corporation
involved,
who is found guilty of any of the said prohibited acts shall suffer the
penalty of imprisonment for two [2] years and fine ranging from Two
hundred
fifty thousand pesos [P250,000] to Five hundred thousand pesos
[P500,000].
E. Section 15 on the implementation of
full
deregulation,
thus: "Implementation of Full Deregulation. Pursuant to Section
5[e]
of Republic Act No. 7683, the DOE shall, upon approval of the
President,
implement the full deregulation of the downstream oil industry not
later
than March, 1997. As far as practicable, the DOE shall time the full
deregulation
when the prices of crude oil and petroleum products in the world market
are declining and when the exchange rate of the peso in relation to the
US dollar is stable. Upon the implementation of the full deregulation
as
provided herein, the transition phase is deemed terminated and the
following
laws are deemed repealed: [Emphasis added].
F. Section 20 on the imposition of
administrative
fine: "Administrative Fine. The DOE may, after due notice and
hearing
impose a fine in the amount of not less than One hundred thousand pesos
[P100,000] but not more than One million pesos [P1,000,000] upon any
person
or entity who violates any of its reportorial and minimum inventory
requirements,
without prejudice to criminal sanctions."
Executive Order
No. 392, entitled "Declaring Full
Deregulation Of The Downstream Oil Industry" which declared the full
deregulation
effective February 8, 1997, is also sought to be declared
unconstitutional.
A careful
scrutiny of the arguments proffered
against the constitutionality of Republic Act No. 8180 betrays the
petitioners'
underlying motive of calling upon this Court to determine the wisdom
and
efficacy of the enactment rather than its adherence to the
Constitution.
Nevertheless, I shall address the issues raised if only to settle the
alleged
constitutional defects afflicting some provisions of Republic Act No.
8180.
To elaborate:
A. On the
imposition of tariff. Petitioners
argue that the existence of a tariff provision violated the "one
subject-one
title"[4]
rule under Article VI, Section 26[1] as the imposition of tariff rates
is "inconsistent with"[5]
and not at all germane to the deregulation of the oil industry. They
also
stress that the variance between the seven percent (7%) duty on
imported
gasoline and other refined petroleum products and three percent (3%)
duty
on crude oil gives a "4% tariff protection in favor of Petron, Shell
and
Caltex which own and operate refineries here".[6]
The provision, petitioners insist, "inhibits prospective oil players to
do business here because it will unnecessarily increase their product
cost
by 4%."[7]
In other words, the tariff rates "does not foster 'a truly competitive
market'."[8]
Also petitioners claim that both Houses of Congress never envisioned
imposing
the seven percent (7%) and three percent (3%) tariff on refined and
crude
oil products as both Houses advocated, prior to the holding of the
bicameral
conference committee, a "zero differential". Moreover, petitioners
insist
that the tariff rates violate "the equal protection of the laws
enshrined
in Article III, Section 1 of the Constitution"[9]
since the rates and their classification are not relevant in attaining
the avowed policy of the law, not based on substantial distinctions and
limited to the existing condition.cralaw:red
The Constitution
mandates that "every bill passed
by Congress shall embrace only one subject which shall be expressed in
the title thereof."[10]
The object sought to be accomplished by this mandatory requirement has
been explained by the Court in the vintage case of Central Capiz v.
Ramirez,[11]
thus:
The object sought
to be accomplished and the mischief
proposed to be remedied by this provision are well known. Legislative
assemblies,
for the dispatch of business, often pass bills by their titles only
without
requiring them to be read. A specious title sometimes covers
legislation
which, if its real character had been disclosed, would not have
commanded
assent. To prevent surprise and fraud on the legislature is one of the
purposes this provision was intended to accomplish. Before the adoption
of this provision the title of a statute was often no indication of its
subject or contents.cralaw:red
An evil this
constitutional requirement was intended
to correct was the blending in one and the same statute of such things
as were diverse in their nature, and were connected only to combine in
favor of all the advocates of each, thus often securing the passage of
several measures no one of which could have succeeded on its own
merits.
Mr. Cooley thus sums up in his review of the authorities defining the
objects
of this provision: "It may therefore be assumed as settled that the
purpose
of this provision was: First, to prevent hodge-podge or log-rolling
legislation;
second, to prevent surprise or fraud upon the legislature by means of
provisions
in bills of which the titles gave no information, and which might
therefore
be overlooked and carelessly and unintentionally adopted; and, third,
to
fairly apprise the people, through such publication of legislative
proceedings
as is usually made, of the subjects of legislation that are being
considered,
in order that they may have opportunity of being heard thereon by
petition
or otherwise if they shall so desire." [Cooley's Constitutional
Limitations,
p. 143].[12]
The
interpretation of "one subject-one title"
rule, however, is never intended to impede or stifle legislation. The
requirement
is to be given a practical rather than a technical construction and it
would be sufficient compliance if the title expresses the general
subject
and all the provisions of the enactment are germane and material to the
general subject.[13]
Congress is not required to employ in the title of an enactment,
language
of such precision as to mirror, fully index or catalogue all the
contents
and the minute details therein.[14]
All that is required is that the title should not cover legislation
incongruous
in itself, and which by no fair intendment can be considered as having
a necessary or proper connection.[15]
Hence, the title "An Act Amending Certain Sections of Republic Act
Numbered
One Thousand One Hundred Ninety-Nine, otherwise known as the
Agricultural
Tenancy Act of the Philippines" was declared by the Court sufficient to
contain a provision empowering the Secretary of Justice, acting through
a tenancy mediation division, to carry out a national enforcement
program,
including the mediation of tenancy disputes.[16]
The title "An Act Creating the Videogram Regulatory Board" was
similarly
declared valid and sufficient to embrace a regulatory tax provision,
i.e.,
the imposition of a thirty percent (30%) tax on the purchase price or
rental
rate, as the case may be, for every sale, lease or disposition of a
videogram
containing a reproduction of any motion picture or audiovisual program
with fifty percent (50%) of the proceeds of the tax collected accruing
to the province and the other fifty percent (50%) to the municipality
where
the tax is collected.[17]
Likewise, the title "An Act To Further Amend Commonwealth Act Numbered
One Hundred Twenty, as amended by Republic Act Numbered Twenty Six
Hundred
and Forty One" was declared sufficient to cover a provision limiting
the
allowable margin of profit to not more than twelve percent (12%)
annually
of its investments plus two-month operating expenses for franchise
holder
receiving at least fifty percent (50%) of its power from the National
Power
Corporation.[18]
In the case at
bar, the title "An Act Deregulating
The Downstream Oil Industry, And For Other Purposes" is adequate and
comprehensive
to cover the imposition of tariff rates. The tariff provision under
Section
5 [b] is one of the means of effecting deregulation. It must be
observed
that even prior to the passage of Republic Act No. 8180 oil products
have
always been subject to tariff and surely Congress is cognizant of such
fact. The imposition of the seven percent (7%) and three percent (3%)
duties
on imported gasoline and refined petroleum products and on crude oil,
respectively,
are germane to the deregulation of the oil industry. The title, in
fact,
even included the broad and all-encompassing phrase "And For Other
Purposes"
thereby indicating the legislative intent to cover anything that has
some
relation to or connection with the deregulation of the oil industry.
The
tax provision is a mere tool and mechanism considered essential by
Congress
to fulfill Republic Act No. 8180's objective of fostering a competitive
market and achieving the social policy objectives of a fair prices. To
curtail any adverse impact which the tariff treatment may cause by its
application, and perhaps in answer to petitioners' apprehension
Congress
included under the assailed section a proviso that will effectively
eradicate
the tariff difference in the treatment of refined petroleum products
and
crude oil by stipulating "that beginning on January 1, 2004 the tariff
rate on imported crude oil and refined petroleum products shall be the
same."
The contention
that tariff "does not foster a
truly competitive market"[19]
and, therefore, restrains trade and does not help achieve the purpose
of
deregulation is an issue not within the power of the Court to resolve.
Nonetheless, the Court's pronouncement in Tio vs. Videogram Regulatory
Board appears to be worth reiterating:
Petitioner also submits that the thirty
percent
(30%) tax imposed is harsh and oppressive, confiscatory, and in
restraint
of trade. However, it is beyond serious question that a tax does not
cease
to be valid merely because it regulates, discourages, or even
definitely
deters the activities taxed. The power to impose taxes is one so
unlimited
in force and so searching in extent, that the courts scarcely venture
to
declare that it is subject to any restrictions whatever, except such as
rest in the discretion of the authority which exercise it. In imposing
a tax, the legislature acts upon its constituents. This is, in general,
a sufficient security against erroneous and oppressive taxation.[20]
[Emphasis added]
Anent
petitioners' claim that both House Bill No.
5264 and Senate Bill No. 1253, [the precursor bills of Republic Act No.
8180], "did not impose any tariff rates but merely set the policy of
'zero
differential' in the House version, and nothing in the Senate version"[21]
is inconsequential. Suffice it to state that the bicameral conference
committee
report was approved by the conferees thereof only "after full and free
conference" on the disagreeing provisions of Senate Bill No. 1253 and
House
Bill No. 5264. Indeed, the "zero differential" on the tariff rates
imposed
in the House version was embodied in the law, save for a slight delay
in
its implementation to January 1, 2004. Moreover, any objection on the
validity
of provisions inserted by the legislative bicameral conference
committee
hasbeen passed upon by the Court in the recent case of Tolentino v.
Secretary
of Finance,[22]
which, in my view, laid to rest any doubt as to the validity of the
bill
emerging out of a Conference Committee. The Court in that case,
speaking
through Mr. Justice Mendoza, said:
As to the possibility of an entirely new
bill
emerging out of a Conference Committee, it has been explained:
Under congressional rules of procedure,
conference
committees are not expected to make any material change in the measure
at issue, either by deleting provisions to which both houses have
already
agreed or by inserting new provisions. But this is a difficult
provision
to enforce. Note the problem when one house amends a proposal
originating
in either house by striking out everything following the enacting
clause
and substituting provisions which make it an entirely new bill. The
versions
are now altogether different, permitting a conference committee to
draft
essentially a new bill.
The result is a third version, which is
considered
an "amendment in the nature of a substitute," the only requirement for
which being that the third version be germane to the subject of the
House
and Senate bills.
Indeed, this Court recently held that
it is
within
the power of a conference committee to include in its report an
entirely
new provision that is not found either in the House bill or in the
Senate
bill. If the committee can propose an amendment consisting of one or
two
provisions, there is no reason why it cannot propose several
provisions,
collectively considered as an "amendment in the nature of a
substitute,"
so long as such amendment is germane to the subject of the bills before
the committee. After all, its report was not final but needed the
approval
of both houses of Congress to become valid as an act of the legislative
department. The charge that in this case the Conference Committee acted
as a third legislative chamber is thus without any basis.
To be sure, nothing in the Rules [of the
Senate
and the House of Representatives] limits a conference committee to a
consideration
of conflicting provisions. But Rule XLVI, [Sec.] 112 of the Rules of
the
Senate is cited to the effect that "If there is no Rule applicable to a
specific case the precedents of the Legislative Department of the
Philippines
shall be resorted to, and as a supplement of these, the Rules contained
in Jefferson's Manual." The following is then quoted from the
Jefferson's
Manual:
The managers of a conference must
confine
themselves
to the differences committed to them and may not include subjects not
within
disagreements, even though germane to a question in issue.
Note that,
according to Rule XLIX, [Sec.] 112, in
case there is no specific rule applicable, resort must be to the
legislative
practice. The Jefferson's Manual is resorted to only as supplement. It
is common place in Congress that conference committee reports include
new
matters which, though germane, have not been committed to the
committee.
This practice was admitted by Senator Raul S. Roco, petitioner in G. R.
No. 115543, during the oral argument in these cases. Whatever, then,
may
be provided in the Jefferson's Manual must be considered to have been
modified
by the legislative practice. If a change is desired in the practice it
must be sought in Congress since this question is not covered by any
constitutional
provision but is only an internal rule of each house. Thus, Art. VI,
[Sec.]
16[3] of the Constitution provides that "Each House may determine the
rules
of its proceedings."
This observation
applies to the other contention
that the Rules of the two chambers were likewise disregarded in the
preparation
of the Conference Committee Report because the Report did not contain a
"detailed and sufficiently explicit statement of changes in, or
amendments
to, the subject measure." The Report used brackets and capital letters
to indicate the changes. This is a standard practice in bill-drafting.
We cannot say that in using these marks and symbols the Committee
violated
the Rules of the Senate and the House. Moreover, this Court is not the
proper forum for the enforcement of these internal Rules. To the
contrary,
as we have already ruled, "parliamentary rules are merely procedural
and
with their observance the courts have no concern." Our concern is with
the procedural requirements of the Constitution for the enactment of
laws.
As far as these requirements are concerned, we are satisfied that they
have been faithfully observed in these cases.[23]
The other
contention of petitioners that Section
5[b] "violates the equal protection of the laws enshrined in Article
III,
Section 1 of the Constitution"[24]
deserves a short shrift for the equal protection clause does not forbid
reasonable classification based upon substantial distinctions where the
classification is germane to the purpose of the law and applies equally
to all the members of the class. The imposition of three percent (3%)
tariff
on crude oil, which is four percent (4%) lower than those imposed on
refined
oil products, as persuasively argued by the Office of the Solicitor
General,
is based on the substantial distinction that importers of crude oil, by
necessity, have to establish and maintain refinery plants to process
and
refine the crude oil thereby adding to their production costs. To
encourage
these importers to set up refineries involving huge expenditures and
investments
which peddlers and importers of refined petroleum products do not
shoulder,
Congress deemed it appropriate to give a lower tariff rate to foster
the
entry of new "players" and investors in line with the law's policy to
create
a competitive market. The residual contention that there is no
substantial
distinction in the imposition of seven percent (7%) and three percent
(3%)
tariff since the law itself will level the tariff rates between the
imported
crude oil and refined petroleum products come January 1, 2004, to my
mind,
is addressed more to the legislative's prerogative to provide for the
duration
and period of effectivity of the imposition. If Congress, after
consultation,
analysis of material data and due deliberations, is convinced that by
January
1, 2004, the investors and importers of crude oil would have already
recovered
their huge investments and expenditures in establishing refineries and
plants then it is within its prerogative to lift the tariff
differential.
Such matter is well within the pale of legislative power which the
Court
may not fetter. Besides, this again is in line with Republic Act No.
8180's
avowed policy to foster a truly competitive market which can achieve
the
social policy objectives of fair, if not lower, prices.cralaw:red
B. On the
minimum inventory requirement. Petitioners'
attack on Section 6 is premised upon their belief that the inventory
requirement
is hostile and not conducive for new oil companies to operate here, and
unduly favors Petron, Shell and Caltex, companies which according to
them
can easily hurdle the requirement. I fail to see any legal or
constitutional
issue here more so as it is not raised by a party with legal standing
for
petitioners do not claim to be the owners or operators of new oil
companies
affected by the requirement. Whether or not the requirement is
advantageous,
disadvantageous or conducive for new oil companies hinges on
presumptions
and speculations which is not within the realm of judicial
adjudication.
It may not be amiss to mention here that according to the Office of the
Solicitor General "there are about thirty [30] new entrants in the
downstream
activities, fourteen [14] of which have started operation, eight [8]
having
commenced operation last March 1997, and the rest to operate between
the
second quarter of 1997 and the year 2000."[25]
Petitioners did not controvert this averment which thereby cast serious
doubt over their claim of "hostile" environment.cralaw:red
C. On
predatory pricing. What petitioners
bewail the most in Section 9[b] is "the definition of 'predatory
pricing'
[which] is too broad in scope and indefinite in meaning"[26]
and the penal sanction imposed for its violation. Petitioners maintain
that it would be the new oil companies or "players" which would lower
their
prices to gain a foothold on the market and not Petron, Shell or
Caltex,
an occasion for these three big oil "companies" to control the prices
by
keeping their average cost at a level which will ensure their desired
profit
margin.[27]
Worse, the penal sanction, they add, deters new "players" from entering
the oil market and the practice of lowering prices is now condemned as
a criminal act.cralaw:red
Petitioners'
contentions are nebulous if not speculative.
In the absence of any concrete proof or evidence, the assertion that it
will only be the new oil companies which will lower oil prices remains
a mere guess or suspicion. And then again petitioners are not the
proper
party to raise the issue. The query on why lowering of prices should be
penalized and the broad scope of predatory pricing is not for this
Court
to traverse the same being reserved for Congress. The Court should not
lose sight of the fact that its duty under Article 5 of the Revised
Penal
Code is not to determine, define and legislate what act or acts should
be penalized, but simply to report to the Chief Executive the reasons
why
it believes an act should be penalized, as well as why it considers a
penalty
excessive, thus:
Art. 5. Duty of the court in connection
with
acts which should be repressed but which are nor covered by the law,
and
in cases of excessive penalties. Whenever a court has knowledge
of
any act which it may deem proper to repress and which is not punishable
by law, it shall render the proper decision, and shall report to the
Chief
Executive, through the Department of Justice, the reasons which induce
the court to believe that said act should be made the subject of
legislation.
In the same way the court shall submit to
the
Chief Executive, through the Department of Justice, such statement as
may
be deemed proper, without suspending the execution of the sentence,
when
a strict enforcement of the provisions of this Code would result in the
imposition of a clearly excessive penalty, taking into consideration
the
degree of malice and the injury caused by the offense.
Furthermore, in the absence of an actual
conviction
for violation of Section 9 [b] and the appropriate appeal to this
Court,
I fail to see the need to discuss any longer the issue as it is not
ripe
for judicial adjudication. Any pronouncement on the legality of the
sanction
will only be advisory.
D. On other
prohibited acts. In discussing
their objection to Section 10, together with Section 20, petitioners
assert
that these sanctions "even provide stiff criminal and administrative
penalties
for failure to maintain said minimum requirement and other regulations"
and posed this query: "Are these provisions consistent with the policy
objective to level the playing [field] in a truly competitive answer?"[28]
A more circumspect analysis of petitioners' grievance, however, does
not
present any legal controversy. At best, their objection deals on policy
considerations that can be more appropriately and effectively addressed
not by this Court but by Congress itself.
E. On the
implementation of full deregulation
under Section 15, and the validity of Executive Order No. 392.
Petitioners
stress that "Section 15 of Republic Act No. 8180 delegates to the
Secretary
of Energy and to the President of the Philippines the power to
determine
when to fully deregulate the downstream oil industry"[29]
without providing for any standards "to determine when the prices of
crude
oil in the world market are considered to be 'declining'"[30]
and when may the exchange rate be considered "stable" for purposes of
determining
when it is "practicable" to declare full deregulation.[31]
In the absence of standards, Executive Order No. 392 which implemented
Section 15 constitute "executive lawmaking,"[32]
hence the same should likewise be struck down as invalid. Petitioners
additionally
decry the brief seven [7] month transition period under Section 15 of
Republic
Act No. 8180. The premature full deregulation declared in Executive
Order
No. 392 allowed Caltex, Petron, and Shell oil companies "to define the
conditions under which any 'new players' will have to adhere to in
order
to become competitive in the new deregulated market even before such a
market has been created."[33]
Petitioners are emphatic that Section 15 and Executive Order No. 392
"have
effectively legislated a cartel among respondent oil companies,
directly
violating the Constitutional prohibition against unfair trade practices
and combinations in restraint of trade."[34]
Section 15 of
Republic Act No. 8180 provides for
the implementation of full deregulation. It states:
Section 15 on the implementation of full
deregulation,
thus: "Implementation of Full Deregulation. Pursuant to Section
5(e)
of Republic Act No. 7683, the DOE shall, upon approval of the
President,
implement the full deregulation of the downstream oil industry not
later
than March, 1997. As far as practicable, the DOE shall time the full
deregulation
when the prices of crude oil and petroleum products in the world market
are declining and when the exchange rate of the peso in relation to the
US dollar is stable. Upon the implementation of the full deregulation
as
provided herein, the transition phase is deemed terminated and the
following
laws are deemed repealed: [Emphasis added].
It appears from
the foregoing that deregulation has
to be implemented "not later than March 1997." The provision is
unequivocal, i.e., deregulation must be implemented on or
before March
1997.
The Secretary of Energy and the President is devoid of any discretion
to
move the date of full deregulation to any day later than March 1997.
The
second sentence which provides that "[a]s far as practicable, the DOE
shall
time the full deregulation when the prices of crude oil and petroleum
products
in the world market are declining and when the exchange rate of the
peso
in relation to the US dollar is stable" did not modify or reset to any
other date the full deregulation of downstream oil industry. Not later
than March 1997 is a complete and definite period for full
deregulation.
What is conferred to the Department of Energy in the implementation of
full deregulation, with the approval of the President, is not the power
and discretion on what the law should be. The provision of Section 15
gave
the President the authority to proceed with deregulation on or before,
but not after, March 1997, and if implementation is made before March,
1997, to execute the same, if possible, when the prices of crude oil
and
petroleum products in the world market are declining and the
peso-dollar
exchange rate is stable. But if the implementation is made on March
1997,
the President has no option but to implement the law regardless of the
conditions of the prices of oil in the world market and the exchange
rates.
The settled rule
is that the legislative department
may not delegate its power. Any attempt to abdicate it is
unconstitutional
and void, based on the principle of potestas delegata non delegare
potest.
In testing whether a statute constitutes an undue delegation of
legislative
power or not, it is usual to inquire whether the statute was complete
in
all its terms and provisions when it left the hands of the legislative
so that nothing was left to the judgment of any other appointee or
delegate
of the legislature.[35]
An enactment is said to be incomplete and invalid if it does not lay
down
any rule or definite standard by which the administrative officer may
be
guided in the exercise of the discretionary powers delegated to it.[36]
In People v. Vera,[37]
the Court laid down a guideline on how to distinguish which power may
or
may not be delegated by Congress, to wit:
"The true distinction", says Judge
Ranney, "is
between the delegation of power to make the law, which necessarily
involves
a discretion as to what it shall be, and conferring an authority or
discretion
as to its execution, to be exercised under and in pursuance of the law.
The first cannot done; to the latter no valid objection can be made."
(Cincinnati,
W. & Z.R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio St., 77, 88
See also, Sutherland on Statutory Construction, sec. 68.)
Applying these
parameters, I fail to see any taint
of unconstitutionality that could vitiate the validity of Section 15.
The
discretion to ascertain when may the prices of crude oil in the world
market
be deemed "declining" or when may the peso-dollar exchange rate be
considered
"stable" relates to the assessment and appreciation of facts. There is
nothing essentially legislative in ascertaining the existence of facts
or conditions as the basis of the taking into effect of a law[38]
so as to make the provision an undue delegation of legislative power.
The
alleged lack of definitions of the terms employed in the statute does
not
give rise to undue delegation either for the words of the statute, as a
rule, must be given its literal meaning.[39]
Petitioners' contentions are concerned with the details of execution by
the executive officials tasked to implement deregulation. No proviso in
Section 15 may be construed as objectionable for the legislature has
the
latitude to provide that a law may take effect upon the happening of
future
specified contingencies leaving to some other person or body the power
to determine when the specified contingency has arisen.[40]
The instant petition is similarly situated with the past cases, as
summarized
in the case of People v. Vera, where the Court ruled for the validity
of
several assailed statutes, to wit:
To the same effect are decisions of this
court
in Municipality of Cardona vs. Municipality of Binangonan ([1917], 36
Phil.
547); Rubi vs. Provincial Board of Mindoro ([1919], 39 Phil. 660), and
Cruz vs. Youngberg ([1931], 56 Phil. 234). In the first of these cases,
this court sustained the validity of a law conferring upon the
Governor-General
authority to adjust provincial and municipal boundaries. In the second
case, this court held it lawful for the legislature to direct
non-Christian
inhabitants to take up their habitation on unoccupied lands to be
selected
by the provincial governor and approved by the provincial board. In the
third case, it was held proper for the legislature to vest in the
Governor-General
authority to suspend or not, at his discretion, the prohibition of the
importation of foreign cattle, such prohibition to be raised "if the
conditions
of the country make this advisable or if disease among foreign cattle
has
ceased to be a menace to the agriculture and livestock of the lands."[41]
If the
Governor-General in the case of Cruz v. Youngberg[42]
can "suspend or not, at his discretion, the prohibition of the
importation
of cattle, such prohibition to be raised 'if the conditions of the
country
make this advisable or if disease among foreign cattles has ceased to
be
a menace to the agriculture and livestock of the lands" then with more
reason that Section 15 of Republic Act No. 8180 can pass the
constitutional
challenge as it has mandatorily fixed the effectivity date of full
deregulation
to not later than March 1997, with or without the occurrence of stable
peso-dollar exchange rate and declining oil prices. Contrary to
petitioners'
protestations, therefore, Section 15 is complete and contains the basic
conditions and terms for its execution.
To restate, the
policy of Republic Act No. 8180
is to deregulate the downstream oil industry and to foster a truly
competitive
market which could lead to fair prices and adequate supply of
environmentally
clean and high-quality petroleum products. This is the guiding
principle
installed by Congress upon which the executive department of the
government
must conform. Section 15 of Republic Act No. 8180 sufficiently supplied
the metes and bounds for the execution of full deregulation. In fact, a
cursory reading of Executive Order No. 392[43]
which advanced deregulation to February 8, 1997 convincingly shows the
determinable factors or standards, enumerated under Section 15, which
were
taken into account by the Chief Executive in declaring full
deregulation.
I cannot see my way clear on how or why Executive Order No. 392, as
professed
by petitioners, may be declared unconstitutional for adding the
"depletion
of buffer fund" as one of the grounds for advancing the deregulation.
The
enumeration of factors to be considered for full deregulation under
Section
15 did not proscribe the Chief Executive from acknowledging other
instances
that can equally assuage deregulation. What is important is that the
Chief
Executive complied with and met the minimum standards supplied by the
law.
Executive Order No. 392 may not, therefore, be branded as
unconstitutional.cralaw:red
Petitioners'
vehement objections on the short
seven (7) month transition period under Section 15 and the alleged
resultant
de facto formation of cartel are matters which fundamentally strike at
the wisdom of the law and the policy adopted by Congress. These are
outside
the power of the courts to settle; thus I fail to see the need to
digress
any further.cralaw:red
FOn the
imposition of administrative fine.
The administrative fine under Section 20 is claimed to be inconsistent
with deregulation. The imposition of administrative fine for failure to
meet the reportorial and minimum inventory requirements, far from
petitioners'
submission, are geared towards accomplishing the noble purpose of the
law.
The inventory requirement ensures the security and continuity of
petroleum
crude and products supply,[44]
while the reportorial requirement is a mere devise for the Department
of
Energy to monitor compliance with the law. In any event, the issue
pertains
to the efficacy of incorporating in the law the administrative
sanctions
which lies outside the Court's sphere and competence.cralaw:red
In fine, it seems
to me that the petitions dwell
on the insistent and recurrent arguments that the imposition of
different
tariff rates on imported crude oil and imported petroleum products is
violative
of the equal protection clause of the constitution; is not germane to
the
purpose of the law; does not foster a truly competitive market; extends
undue advantage to the existing oil refineries or companies; and
creates
a cartel or a monopoly of sort among Shell, Caltex and Petron in clear
contravention of the Constitutional proscription against unfair trade
practices
and combinations in restraint of trade. Unfortunately, this Court, in
my
view, is not at liberty to tread upon or even begin to discuss the
merits
and demerits of petitioners' stance if it is to be faithful to the time
honored doctrine of separation of powers the underlying principle
of our republican state.[45]
Nothing is so fundamental in our system of government than its division
into three distinct and independent branches, the executive, the
legislative
and the judiciary, each branch having exclusive cognizance of matters
within
its jurisdiction, and supreme within its own sphere. It is true that
there
is sometimes an inevitable overlapping and interlacing of functions and
duties between these departments. But this elementary tenet remains:
the
legislative is vested with the power to make law, the judiciary to
apply
and interpret it. In cases like this, "the judicial branch of the
government
has only one duty-to lay the article of the Constitution which is
invoked
beside the statute which is challenged and to decide whether the letter
squares with the former."[46]
This having been done and finding no constitutional infirmity therein,
the Court's task is finished. Now whether or not the law fails to
achieve
its avowed policy because Congress did not carefully evaluate the long
term effects of some of its provisions is a matter clearly beyond this
Court's domain.cralaw:red
Perhaps it bears
reiterating that the question
of validity of every statute is first determined by the legislative
department
of the government, and the courts will resolve every presumption in
favor
of its validity. The courts will assume that the validity of the
statute
was fully considered by the legislature when adopted. The wisdom or
advisability
of a particular statute is not a question for the courts to determine.
If a particular statute is within the constitutional power of the
legislature
to enact, it should be sustained whether the courts agree or not in the
wisdom of its enactment.[47]
This Court continues to recognize that in the determination of actual
cases
and controversies, it must reflect the wisdom and justice of the people
as expressed through their representatives in the executive and
legislative
branches of government. Thus, the presumption is always in favor of
constitutionality
for it is likewise always presumed that in the enactment of a law or
the
adoption of a policy it is the people who speak through their
representatives.
This principle is one of caution and circumspection in the exercise of
the grave and delicate function of judicial review[48].
Explaining this principle, Thayer said:
It can only disregard the Act when those
who
have the right to make laws have not merely made a mistake, but have
made
a very clear one-so clear that it is not open to rational question.
That
is the standard of duty to which the courts bring legislative acts;
that
is the test which they apply-not merely their own judgment as to
constitutionality,
but their conclusion as to what judgment is permissible to another
department
which the constitution has charged with the duty of making it. This
rule
recognizes that, having to the great, complex, ever-unfolding
exigencies
of regard government, much will seem unconstitutional to one man, or
body
of men, may reasonably not seem so to another; that the constitution
often
admits of different interpretations; that there is often a range of
choice
and judgment; that in such cases the constitution does not impose upon
the legislature any one specific opinion, but leaves open their range
of
choice; and that whatever choice is rational is constitutional.[49]
The petitions
discuss rather extensively the adverse
economic implications of Republic Act No. 8180. They put forward more
than
anything else, an assertion that an error of policy has been committed.
Reviewing the wisdom of the policies adopted by the executive and
legislative
departments is not within the province of the Court.
It is safe to
assume that the legislative branch
of the government has taken into consideration and has carefully
weighed
all points pertinent to the law in question. We cannot doubt that these
matters have been the object of intensive research and study nor that
they
have been subject of comprehensive consultations with experts and
debates
in both houses of Congress. Judicial review at this juncture will at
best
be limited and myopic. For admittedly, this Court cannot ponder on the
points raised in the petitions with the same technical competence as
that
of the economic experts who have contributed valuable hours of study
and
deliberation in the passage of this law.cralaw:red
I realize that to
invoke the doctrine of separation
of powers at this crucial time may be viewed by some as an act of
shirking
from our duty to uphold the Constitution at all cost. Let it be
remembered,
however, that the doctrine of separation of powers is likewise
enshrined
in our Constitution and deserves the same degree of fealty. In fact, it
carries more significance now in the face of an onslaught of similar
cases
brought before this Court by the opponents of almost every enacted law
of major importance. It is true that this Court is the last bulwark of
justice and it is our task to preserve the integrity of our fundamental
law. But we cannot become, wittingly or unwittingly, instruments of
every
aggrieved minority and losing legislator. While the laudable objectives
of the law are put on hold, this Court is faced with the unnecessary
burden
of disposing of issues merely contrived to fall within the ambit of
judicial
review. All that is achieved is delay which is perhaps, sad to say, all
that may have been intended in the first place.cralaw:red
Indeed, whether
Republic Act No. 8180 or portions
thereof are declared unconstitutional, oil prices may continue to rise,
as they depend not on any law but on the volatile market and economic
forces.
It is therefore the political departments of government that should
address
the issues raised herein for the discretion to allow a deregulated oil
industry and to determine its viability is lodged with the people in
their
primary political capacity, which as things stand, has been delegated
to
Congress.cralaw:red
In the end,
petitioners are not devoid of a remedy.
To paraphrase the words of Justice Padilla in Kapatiran ng mga
Naglilingkod
sa Pamahalaan ng Pilipinas v. Tan,[50]
if petitioners seriously believe that the adoption and continued
application
of Republic Act No. 8180 are prejudicial to the general welfare or the
interests of the majority of the people, they should seek recourse and
relief from the political branches of government, as they are now doing
by moving for an amendment of the assailed provisions in the correct
forum
which is Congress or for the exercise of the people's power of
initiative
on legislation. The Court following the time honored doctrine of
separation
of powers, cannot substitute its judgment for that of the Congress as
to
the wisdom, justice and advisability of Republic Act No. 8180.[51]
ACCORDINGLY,
finding no merit in the instant petitions,
I vote for their outright dismissal.cralaw:red
______________________________
Endnotes
[1]
Downstream oil industry refers to the business of importing, exporting,
re-exporting, shipping, transporting, processing, refining, storing,
distributing,
marketing and/or selling crude oil, gasoline, diesel, liquefied
petroleum
gas, kerosene and other petroleum and crude oil products.
[2]
Paderanga and Paderanga, Jr., The Oil Industry in the Philippines,
Philippine
Economic Journal, No. 65, Vol. 27, pp. 27-98 [1988].
[3]Section 3, R. A. No. 6173.
[4]Section 7, R. A. No. 6173.
[5]
P.D. No. 334.
[6]
Makasiar, G., Structural Response to the Energy Crisis: The Philippine
Case. Energy and Structural Change in the Asia Pacific Region: Papers
and
Proceedings of the 13th Pacific Trade and Development Conference.
Published
by the Philippine Institute for Development Studies/Asian Development
Bank
and edited by Romeo M. Bautista and Seiji Nava, pp. 311-312 [1984].
[7]
P. D. 1956 as amended by E. O. 137.
[8]Section 3, E. O. No. 172.
[9]
R. A. No. 7638.
[10]Section 5[b], R. A. No. 7638.
[11]Section 5, R. A. No. 8180.
[12]Section 1, Article VIII, 1987 Constitution.
[13]
Bondoc v. Pineda, 201 SCRA 792 [1991]; Osmena v. COMELEC, 199 SCRA 750
[1991].
[14]
G. R. No. 118295, May 2, 1997.
[15]
E.g. Garcia v. Executive Secretary, 211 SCRA 219 [1922]; Osmena v.
COMELEC,
199 SCRA [1991]; Basco v. Pagcor, 197 SCRA 52 [1991]; Daza v. Singson,
180 SCRA 496 [1989]; Araneta v. Dinglasan, 84 Phil. 368 [1949].
[16]
163 SCRA 371 [1988].
[17]Section 26[1] Article VI of the 1987 Constitution provides that "every
bill passed by the Congress shall embrace only one subject which shall
be expressed in the title thereof."
[18]
Tobias v. Abalos, 239 SCRA 106 [1994]; Philippine Judges Association v.
Prado, 227 SCRA 703 [1993]; Lidasan v. COMELEC, 21 SCRA 496 [1967].
[19]
Tio v. Videogram Regulatory Board, 151 SCRA 208 [1987].
[20]
Journal of the House of Representatives, December 13, 1995, p. 32.
[21]
34 Phil. 136 citing Cincinnati, W. & Z. R.R. Co. vs. Clinton
Country
Commrs. [1 Ohio St. 77].
[22]
166 SCRA 533, 543-544.
[23]
320 US 99.
[24]
Philippine Political Law, 1995 Ed., p. 99.
[25]
Webster, New third International Dictionary, 1993 Ed., pp. 1780, 586
and
2218.
[26]
See e.g., Balbuena v. Secretary of Education, 110 Phil. 150 used the
standard
"simplicity and dignity." People v. Rosenthal, 68 Phil. 328 ["public
interest"];
Calalang v. Williams, 70 Phil. 726 ["public welfare"]; Rubi v.
Provincial
Board of Mindoro, 39 Phil. 669 ["interest of law and order"].
[27]
See for example TSN of the Session of the Senate on November 14, 1995,
p. 19, view of Senator Gloria M. Arroyo.
[28]
Black's Law Dictionary, 6th Ed., p. 1007.
[29]
Id., p. 266.
[30]
54 Am Jur 2d 669.
[31]
Art. 186. Monopolies and combinations in restraint of trade. The
penalty of prision correccional in its minimum period or a fine ranging
from 200 to 6,000 pesos, or both, shall be imposed upon:chanroblesvirtuallawlibrary
1. Any person who shall
enter
into any contract or agreement or shall take part in any conspiracy or
combination in the form of a trust or otherwise, in restraint of trade
or commerce to prevent by artificial means free competition in the
market.
2. Any person who shall
monopolize
any merchandise or object of trade or commerce, or shall combine with
any
other person or persons to monopolize said merchandise or object in
order
to alter the price thereof by spreading false rumors or making use of
any
other article to restrain free competition in the market;
3. Any person who, being
a
manufacturer,
producer, or processor of any merchandise or object of commerce or an
importer
of any merchandise or object of commerce from any foreign country,
either
as principal or agent, wholesaler or retailer, shall combine, conspire
or agree in any manner with any person likewise engaged in the
manufacture,
production, processing, assembling or importation of such merchandise
or
object of commerce or with any other persons not so similarly engaged
for
the purpose of making transactions prejudicial to lawful commerce, or
of
increasing the market price in any part of the Philippines, or any such
merchandise or object of commerce manufactured, produced, or processed,
assembled in or imported into the Philippines, or of any article in the
manufacture of which such manufactured, produced, processed, or
imported
merchandise or object of commerce is used.
If
the offense mentioned in this article affects any food substance, motor
fuel or lubricants, or other articles of prime necessity the penalty
shall
be that of prision mayor in its maximum and medium periods, it being
sufficient
for the imposition thereof that the initial steps have been taken
toward
carrying out the purposes of the combination.
xxx
xxx
xxx
Whenever
any of the offenses described above is committed by a corporation or
association,
the president and each one of the directors or managers of said
corporation
or association, who shall have knowingly permitted or failed to prevent
the commission of such offenses, shall be held liable as principals
thereof.
[32]
Art. 28. Unfair competition in agricultural, commercial or industrial
enterprises
or in labor through the use of force, intimidation, deceit, machination
or any other unjust, oppressive or highhanded method shall give rise to
a right of action by the person who thereby suffers damage.
[33]
Bernas, The Intent of the 1986 Constitution Writers [1995], p. 877;
Philippine
Long Distance Telephone Co. v. National Telecommunications Commission,
190 SCRA 717 [1990]; Northern Cement Corporation v. Intermediate
Appellate
Court, 158 SCRA 408 [1988]; Philippine Ports Authority v. Mendoza, 138
SCRA 496 [1985]; Anglo-Fil Trading Corporation v. Lazaro, 124 SCRA 494
[1983].
[34]
Record of the Constitutional Commission, Volume III, p. 258.
[35]
Gellhorn, Anti Trust Law and Economics in a Nutshell, 1986 Ed. p. 45.
[36]
Economics and Federal Anti-Trust Law, Hornbook Series, Student Ed.,
1985
Ed., p. 181.
[37]
Statutory Construction, 1986 Ed., pp. 28-29.
[38]
Ibon Facts and Figures, Vol. 18, No. 7, p. 5, April 15, 1995.
[39]
Cruz v. Youngberg, 56 Phil. 234 [1931].
________________________________
PANGANIBAN, J.,
Concurring:
[1]
Consolidated Memorandum of Public Respondents dated October 14, 1997.
[2]
Petron Corporation's Motion to Lift Temporary Restraining Order, dated
October 9, 1997, p. 16; Pilipinas Shell Corporation's Memorandum, dated
October 15, 1997, pp. 36-37.
[3]
Sections 1 and 5 of Article VIII of the Constitution provides:chanroblesvirtuallawlibrary
Sec.
1.
Judicial
power includes the duty of the courts of justice to settle actual
controversies
involving rights which are legally demandable and enforceable, and to
determine
whether or not there has been a grave abuse of discretion amounting to
lack of or excess of jurisdiction on the part of any branch or
instrumentality
of the Government.
Sec. 5. The
Supreme
Court
shall have the following powers:chanroblesvirtuallawlibrary
(1) Exercise
original
jurisdiction over petitions for certiorari, prohibition, mandamus, quo
warranto, and habeas corpus.
(2)
Review, revise, reverse, modify, or affirm on appeal or certiorari, as
the law or Rules of Court may provide, final judgments and orders of
lower
courts in:chanroblesvirtuallawlibrary
(a)
All cases in which the constitutionality or validity of any treaty,
international
or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question.
xxx
xxx xxx
[4]
Osmeña vs. Comelec, 199 SCRA 750, July 30, 1991; Angara vs.
Electoral
Commission, 63 Phil. 139, July 15, 1936.
[5]
Tañada vs. Angara, G.R. No. 118295, May 2, 1997, p. 26.
____________________________
KAPUNAN, J.,
Separate Opinion:
[1]
Public Respondents' Comment, G. R. No. 127867, p. 39.
[2]Sec. 24. Repealing Clause.- All laws, presidential decrees,
executive
orders, issuances, rules and regulations or parts thereof, which are
inconsistent
with the provisions of this Act are hereby repealed or modified
accordingly.
____________________________
FRANCISCO, J.,
Dissenting:
[1]Section 2, Republic Act No. 8180.
[2]
Petition in G. R. No. 124360, p. 8.
[3]
Supplement to the Petition in G. R. No. 127867, p. 2.
[4]
Petition in G. R. No. 124360, p. 14.
[5]
Id.
[6]
Supplement to the Petition in G. R. No. 127867, p. 6.
[7]
Id.
[8]
Id.
[9]
Petition in G. R. No. 124360, p. 11.
[10]
Article VI, Section 26[1], Constitution.
[11]
40 Phil. 883.
[12]
40 Phil. at p. 891.
[13]
Sumulong v. Commission on Elections, 73 Phil. 288, 291.
[14]
Lidasan v. Commission on Elections, 21 SCRA 496, 501.
[15]
Blair v. Chicago, 26 S. Ct. 427, 201 U.S. 400, 50 L. Ed. 801.
[16]
Cordero v. Cabatuando, 6 SCRA 418.
[17]
Tio V. Videogram Regulatory Board, 151 SCRA 208.
[18]
Alalayan v. National Power Corp., 24 SCRA 172.
[19]
Petition in G. R. No. 124360, p. 14.
[20]
151 SCRA at 215.
[21]
Petition in G. R. No. 124360, p. 15.
[22]
235 SCRA 632.
[23]
235 SCRA at pp. 667-671.
[24]
Petition in G.R. No. 124360, p. 11.
[25]
Comment of the Office of the Solicitor General in G. R. No. 127867, p.
33; Rollo, p. 191.
[26]
Supplement to the Petition in G. R. No. 127867, p. 8.
[27]
Id.
[28]
Supplement to the Petition in G. R. No. 127867, p. 7.
[29]
Petition in G. R. No. 127867, p.8.
[30]
Id.
[31]
Id.
[32]
Id., p. 10.
[33]
Petition in G. R. No. 127867, p. 13.
[34]
Id.
[35]
People v. Vera, 65 Phil. 56, 115, citing 6, R.C.L., p. 165.
[36]
Id., at p. 116, citing Scheter v. U.S., 295 U.S., 495; 79 L. Ed., 1570;
55 Supt. Ct. Rep. 837; 97 A.L.R. 947; People ex rel.; Rice vs. Wilson
Oil
Co., 364 III, 406; 4 N.E. [2d], 847; 107 A.L.R., 1500.
[37]
Id., at p. 117.
[38]
Id., at p. 118.
[39]
Globe-Mackay Cable and Radio Corporation v. NLRC, 206 SCRA 701, 711.
[40]
People v. Vera, supra, at pp. 119-120.
[41]
Id., at pp. 117-118.
[42]
56 Phil. 234.
[43]
Executive Order No. 392 provides in full as follows:chanroblesvirtuallawlibrary
"EXECUTIVE ORDER NO. 392
"DECLARING FULL DEREGULATION
OF THE DOWNSTREAM OIL INDUSTRY
"WHEREAS, Republic Act No.
7638,
otherwise known as the 'Department of Energy Act of 1992,' provides
that,
at the end of four years from its effectivity last December 1992, 'the
Department [of Energy] shall, upon approval of the President, institute
the programs and timetable of deregulation of appropriate energy
projects
and activities of the energy sector;'
"WHEREAS, Section 15 of
Republic
Act No. 8180, otherwise known as the 'Downstream Oil Industry
Deregulation
Act of 1996,' provides that 'the DOE shall, upon approval of the
President,
implement the full deregulation of the downstream oil industry not
later
than March, 1997. As far as practicable, the DOE shall time the full
deregulation
when the prices of crude oil and petroleum products in the world market
are declining and when the exchange rate of the peso in relation to the
US dollar is stable;'
"WHEREAS, pursuant to the
recommendation
of the Department of Energy, there is an imperative need to implement
the
full deregulation of the downstream oil industry because of the
following
recent developments; (i) depletion of the buffer fund on or about 7
February
1997 pursuant to the Energy Regulator Board's Order dated 16 January
1997;
(ii) the prices of crude oil had been stable at $21 $23 per
barrel
since October 1996 while prices of petroleum products in the world
market
had been stable since mid-December of last year. Moreover, crude oil
prices
are beginning to soften for the last few days while prices of some
petroleum
products had already declined; and (iii) the exchange rate of the peso
in relation to the US dollar has been stable for the past twelve (12)
months,
averaging at around P26.20 to one US dollar;
"WHEREAS, Executive Order No.
377 dated 31 October 1996 provides for an institutional framework for
the
administration of the deregulated industry by defining the functions
and
responsibilities of various government agencies;
"WHEREAS, pursuant to Republic
Act No. 8180, the deregulation of the industry will foster a truly
competitive
market which can better achieve the social policy objectives of fair
prices
and adequate, continuous supply of environmentally-clean and high
quality
petroleum products;
"NOW, THEREFORE, I, FIDEL V.
RAMOS, President of the Republic of the Philippines, by the powers
vested
in me by law, do hereby declare the full deregulation, of the
downstream
oil industry.
"This Executive Order shall
take effect on 8 February 1997.
"DONE in the City of Manila,
this 22nd day of January in the year of Our Lord, Nineteen Hundred and
Ninety-Seven.
"(Sgd.) FIDEL V. RAMOS"
[44]Section 6, Republic Act No. 8180.
[45]
Article II, Section 1, 1987 Constitution.
[46]
United States vs. Butler, 297 U.S. 1.
[47]
Case v. Board of Health, 24 Phil. 250, 276.
[48]
The Lawyers Journal, January 31, 1949, p. 8.
[49]
Id., citing Thayer, James B., "The Origin and Scope of the American
Doctrine
of Constitutional Law", p. 9.
[50]
163 SCRA 371.
[51]
Id., at p. 385. |