02 Garcia - v. - Corona20210511 12 9i4zpc

EN BANC
[G.R. No. 132451. December 17, 1999.]
CONGRESSMAN ENRIQUE T. GARCIA , petitioner, vs. HON.

RENATO C. CORONA, in his capacity as the Executive
Secretary, HON. FRANCISCO VIRAY, in his capacity as the
Secretary of Energy, CALTEX PHILIPPINES INC., PILIPINAS
SHELL PETROLEUM CORP. and PETRON CORP., respondents.
Teodoro M. Jumamil for petitioner.

Villagas Maglaya & Associates for Petron Corporation.
Quiason Makalintal Barot Torres & Ibarra for Pilipinas Shell Petroleum
Corporations.
SYNOPSIS
The Supreme Court previously declared Republic Act No. 8180

unconstitutional and its implementing Executive Order No. 392 void. It was
struck down as invalid because three key provisions intended to promote free
competition were shown to achieve the opposite result. Because of this
precedent, Congress enacted Republic Act No. 8479, a new deregulation law,
without the offending provisions of the earlier law. Petitioner herein brought
this petition seeking to declare Section 19 thereof, which sets the time of full
deregulation, unconstitutional. After failing in his attempts to incorporate in the
law, as a member of Congress, the economic theory he espoused, petitioner
came to the Supreme Court to undo a violation, which he claimed Congress had
committed. The issue herein is the timeliness or the wisdom of the date when
full deregulation should be effective.
The Supreme Court ruled that what constitutes reasonable time is not for
judicial determination. Reasonable time involves the appraisal of a great variety
of relevant conditions, political, social and economic. They are not within the
appropriate range of evidence in a court of justice. It would be an extravagant
extension of judicial authority to assert judicial notice as the basis for the
determination. Reasonable time will prove the wisdom or folly of the
deregulation program for which Congress and not the Court is accountable. The
petition was dismissed.
SYLLABUS
1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; ART. XII, SEC. 19

THEREOF, ANTI-TRUST IN HISTORY AND SPIRIT; CONSTRUED. — The Supreme
Court ruling in Tatad vs. Secretary of the Department of Energy and Lagman, et
al. vs. Hon. Ruben Torres, et al ., 281 SCRA 330 (1997), is categorical that the
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Constitution's Article XII, Section 19, is anti-trust in history and spirit. It
espouses competition. The Court has stated that only competition which is fair
can release the creative forces of the market. It ruled that the principle which
underlies the constitutional provision is competition. Thus: 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. The Court subscribes 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 procedures 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."
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." ECTIcS
2. ID.; ID.; ID.; OIL DEREGULATION LAW (R.A. 8479); MONOPOLY;

DEFINED. — R.A. 8479, the present deregulation law, was enacted to implement
Article XII, Section 19 of the Constitution which provides: 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. This is
so because the Government believes that deregulation will eventually prevent
monopoly. The simplest form of monopoly exists when there is only one seller
or producer of a product or service for which there are no substitutes. In its
more complex form, monopoly is defined as the joint acquisition or
maintenance by members of a conspiracy, formed for that purpose, of the
power to control and dominate trade and commerce in a commodity to such an
extent that they are able, as a group, to exclude actual or potential competitors
from the field, accompanied with the intention and purpose to exercise such
power. Where two or three or a few companies act in concert to control market
prices and resultant profits, the monopoly is called an oligopoly or cartel. It is a
combination in restraint of trade.
3. ID.; ID.; ID.; ID.; PURPOSE THEREOF. — It bears reiterating at the

outset that the deregulation of the oil industry is a policy determination of the
highest order. It is unquestionably a priority program of Government. The
Department of Energy Act of 1992, Republic Act No. 7638, expressly mandates
that the development and updating of the existing Philippine energy program
"shall include a policy direction towards deregulation of the power and energy
industry."
4. ID.; ID.; ID.; ID.; WISDOM THEREOF, OUTSIDE THE AUTHORITY OF
THE SUPREME COURT TO CONSIDER. — The Court agrees with the pleadings of
public and private respondents that put forth the argument that the challenged
provision is a policy decision of Congress and that the wisdom of the provision
is outside the authority of this Court to consider. This Court ruled in Morfe vs.
Mutuc, 22 SCRA 424, at 450-51 (1968): (I)t is well to remember that this Court,
in the language of Justice Laurel, "does not pass upon question or wisdom,
justice or expediency of legislation." As expressed by Justice Tuason: "It is not
the province of the courts to supervise legislation and keep it within the bounds
of propriety and common sense. That is primarily and exclusively a legislative
concern." There can be no possible objection then to the observation of Justice
Montemayor: "As long as laws do not violate any Constitutional provision, the
Courts merely interpret and apply them regardless of whether or not they are
wise or salutary." For they, according to Justice Labrador, "are not supposed to
override legitimate policy and . . . never inquire into the wisdom of the law." It
is thus settled, to paraphrase Chief Justice Concepcion in Gonzales vs.
Commission on Elections, that only congressional power or competence, not
the wisdom of the action taken, may be the basis for declaring a statute invalid.
This is as it ought to be. The principle of separation of powers has in the main
wisely allocated the respective authority of each department and confined its
jurisdiction to such a sphere. There would then be intrusion not allowable under
the Constitution if on a matter left to the discretion of a coordinate branch, the
judiciary would substitute its own. If there be adherence to the rule of law, as
there ought to be, the last offender should be the courts of justice, to which
rightly litigants submit their controversy precisely to maintain unimpaired the
supremacy of legal norms and prescriptions. The attack on the validity of the
challenged provision likewise insofar as there may be objections, even if valid
and cogent, on its wisdom cannot be sustained. For this Court to declare
unconstitutional the key provision around which the law's anti-trust measures
are clustered would mean a constitutionally interdicted distrust of the wisdom
of Congress and of the determined exercise of executive power. Having decided
that deregulation is the policy to follow, Congress and the President have the
duty to set up the proper and effective machinery to ensure that it works. This
is something which cannot be adjudicated into existence. This Court is only an
umpire of last resort whenever the Constitution or a law appears to have been
violated. There is no showing of a constitutional violation in this case.
5. ID.; ID.; ID.; ID.; EFFECTIVITY THEREOF; WHAT CONSTITUTES

REASONABLE TIME, NOT FOR JUDICIAL DETERMINATION. — The issue is the
timeliness or the wisdom of the date when full deregulation should be effective.
In this regard, what constitutes reasonable time is not for judicial
determination. Reasonable time involves the appraisal of a great variety of
relevant conditions, political, social and economic. They are not within the
determination. What petitioner decries as unsuccessful is not a final result. It is
only a beginning. The Court is not inclined to stifle deregulation as enacted by
Congress from its very start. The Court leaves alone the program of
deregulation at this stage. Reasonable time will prove the wisdom or folly of the
deregulation program for which Congress and not the Court is accountable.

6. ID.; ID.; ID.; ID.; PROVIDED FOR ANTI-TRUST MEASURES, WHICH
CONGRESS BELIEVED WILL PROMOTE FREE AND FAIR COMPETITION. — Article
186 of the Revised Penal Code, as amended, punishes as a felony the creation
of monopolies and combinations in restraint of trade. The Solicitor General, on
the other hand, cites provisions of R.A. 8479 intended to prevent competition
from being corrupted or manipulated. Section 11, entitled "Anti-Trust
Safeguards," defines and prohibits cartelization and predatory pricing. It
penalizes the persons and officers involved with imprisonment of three (3) to
seven (7) years and fines ranging from One million to Two million pesos. For
this purpose, a Joint Task Force from the Department of Energy and
Department of Justice is created under Section 14 to investigate and order the
prosecution of violations. Sections 8 and 9 of the Act, meanwhile, direct the
Departments of Foreign Affairs, Trade and Industry, and Energy to undertake
strategies, incentives and benefits, including international information
campaigns, tax holidays and various other agreements and utilizations, to
invite and encourage the entry of new participants. Section 6 provides for
uniforms tariffs at three percent (3%). Section 13 of the Act provides for
"Remedies," under which the filing of actions by government prosecutors and
the investigation of private complaints by the Task Force is provided. Sections
14 and 15 provide how the Department of Energy shall monitor and prevent the
occurrence of collusive pricing in the industry. It can be seen, therefore, that
instead of the price controls advocated by the petitioner, Congress has enacted
anti-trust measures which it believes will promote free and fair competition.
Upon the other hand, the disciplined, determined consistent and faithful
execution of the law is the function of the President. As stated by public
respondents, the remedy against unreasonable price increases is not the
nullification of Section 19 of R.A. 8479 but the setting into motion of its various
other provisions.
PANGANIBAN, J., separate opinion:

1. CONSTITUTIONAL LAW; JUDICIARY; POWER OF JUDICIAL REVIEW;
WHEN POLICIES AND ACTS OF THE POLITICAL DEPARTMENTS OF GOVERNMENT
MAYBE VOIDED; CASE AT BAR. — This is where the power of judicial review
comes in — to examine the legal effects of these new economic paradigms and,
in the present controversy, to check whether the present Oil Deregulation Law
(RA 8479) restrains rather than promotes free trade, in contravention of the
Constitution. True, the President and Congress, not this Court, have the power
and the prerogative to determine whether to adopt such market policies and, if
so, under what conditions and circumstances. However, all such policies and
their ramifications must conform to the Constitution. Otherwise, this Court has
the duty to strike them down, not because they are unwise or inconvenient, but
because they are constitutionally impermissible. Doctrinally, policies and acts
of the political departments of government may be voided by this Court on
either of two grounds — infringement of the Constitution or grave abuse of
discretion. An infringement may be proven by demonstrating that the words of
the law directly contradict a provision of the fundamental law, or by presenting
proof that the law authorizes or enables the respondents to violate the
Constitution.
2. ID.; ID.; ID.; COURTS CANNOT INQUIRE INTO THE WISDOM OR
EXPEDIENCY OF THE ACTS OF THE EXECUTIVE OR THE LEGISLATIVE
DEPARTMENT; EXCEPTION CONSTRUED. — It is not within the province of the
judiciary to determine whether five months is indeed short and, for that matter,
what length of time is adequate. That is a matter of legislation addressed to the
discretion of our policy makers. It is basic to our form of government that the
Court cannot inquire into the wisdom or expediency of the acts of the executive
or the legislative department, unless there is a clear showing of constitutional
infirmity or grave abuse of discretion amounting to lack or excess of
jurisdiction. "By grave abuse of discretion is meant such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere
abuse of discretion is not enough. It must be grave abuse of discretion, as when
the power is exercised in an arbitrary or despotic manner by reason of passion
or personal hostility, and must be so patent and so gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform the duty enjoined or
to act at all in contemplation of law." These jurisprudential elements of
arbitrariness, despotism, passion and hostility have not been shown to exist
under the present circumstances.
3. ID.; NATIONAL ECONOMY AND PATRIMONY; MONOPOLY, DEFINED. —
In Tatad v. Secretary of the Department of Energy , 281 SCRA 330, 355;
November 5, 1997, this Court defined a monopoly and a combination in
restraint of trade as follows: "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. 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. Combination in restraint of trade refers to the means, while
monopoly refers to the end."
4. ID.; ID.; DEREGULATION, CONSTRUED. — In essence, deregulation

shifts the burden of price control from the government to the "market forces" in
order (1) to eliminate government intervention that may "do more harm than
good" and (2) to achieve a truly competitive market of fair prices. It is also
aimed at removing government abuse and corruption in price-setting. At
bottom, deregulation is supposed to provide the best goods and services at the
cheapest prices.
QUISUMBING, J., concurring:
1. CONSTITUTIONAL LAW; JUDICIARY; SUPREME COURT; POWER AND

FUNCTION; LIMITED TO THE INTERPRETATION AND APPLICATION OF THE LAW.
— However, I find his contentions to be lacking legal basis, even if his proposal
appears to be expedient, or even beneficial, especially to the poor. As the Court
said in Tañada vs. Tuvera , 146 SCRA 446 (1986). "[T)his Court is not called
upon to rule on the wisdom of the law or to repeal it or modify it if we find it
impractical. That is not our function. That function belongs to the legislator. Our
task is merely to interpret and apply the law as conceived and approved by the
political departments of the government in accordance with the prescribed
procedure." Consequently, to heed the petitioner's prayer, this Court would
have to legislate, a power granted only to Congress. The operation of a statute
may be duly suspended only by authority of the legislature. Indeed, a
suspension of a valid statute must rest upon legislative action; it may not be
effected solely by a judicial act. Clearly it is a policy decision of the legislative
and executive departments in whose turf the Court must not tread, under the
principle of separation of powers.
2. ID.; ID.; ID.; ID.; POLITICAL QUESTION; CONSTRUED; APPLICATION IN

CASE AT BAR. — The term "political question" connotes what it means in
ordinary parlance, namely, a question of policy. It refers to "those questions
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." It is
concerned with issues dependent upon the wisdom, not legality, of a particular
measure. The judiciary does not directly settle policy issues. Under our system
of government, policy issues are within the domain of the political branches of
government and of the people themselves as the repository of all state powers.
In PLDT vs. National Telecommunications Commission , 190 SCRA 717 (1990)
the ultimate considerations cited in matters affecting vital industries, are the
public need, public interest, and the common good. In that case, the Court said:
"Free competition in the industry may also provide the answer to a much-
desired improvement in the quality and delivery of this type of public utility, to
improved technology, fast and handy mobile service, and reduced user
dissatisfaction." Similarly, the above-mentioned considerations could undergird
the nation's energy and other economic policies. The liberalization of the oil
industry is a reform program initiated by Congress to free the government from
the obligation of infusing funds to subsidize increases in the prices of oil
products. Such funds may now be utilized for other much needed programs
with a public purpose.
3. ID.; STATUTES; PRESUMPTION OF CONSTITUTIONALITY FAVORED;

INFRINGEMENT MUST BE PROVED AND ESTABLISHED; NOT PRESENT IN CASE AT
BAR. — Well established is the principle that every law has in its favor the
presumption of constitutionality. To declare a law unconstitutional, the
repugnancy of that law to the Constitution must be clear and unequivocal. But
the Court recognizes that even if a law is aimed at the attainment of some
public good, still its provisions cannot infringe upon constitutional rights. That
infringement, however, must be proved and established persuasively to
invalidate a provision of a law, if not the entire law itself.
DECISION

YNARES-SANTIAGO, J : p
On November 5, 1997, this Court in Tatad v. Secretary of the Department

of Energy and Lagman, et al., v. Hon. Ruben Torres, et al . , 1 declared Republic
Act No. 8180, entitled "An Act Deregulating the Downstream Oil Industry and
For Other Purposes", unconstitutional, and its implementing Executive Order
No. 392 void. LLphil
R.A. 8180 was struck down as invalid because three key provisions
intended to promote free competition were shown to achieve the opposite
result. More specifically, this Court ruled that its provisions on tariff differential,
stocking of inventories, and predatory pricing inhibit fair competition,
encourage monopolistic power, and interfere with the free interaction of the
market forces.
While R.A. 8180 contained a separability clause, it was declared

unconstitutional in its entirety since the three (3) offending provisions so
permeated the law that they were so intimately the esse of the law. Thus, the
whole statute had to be invalidated.
As a result of the Tatad decision, Congress enacted Republic Act No.
8479, a new deregulation law without the offending provisions of the earlier
law. Petitioner Enrique T. Garcia, a member of Congress, has now brought this
petition seeking to declare Section 19 thereof, which sets the time of full
deregulation, unconstitutional. After failing in his attempts to have Congress
incorporate in the law the economic theory he espouses, petitioner now asks
us, in the name of upholding the Constitution, to undo a violation which he
claims Congress has committed.
The assailed Section 19 of R.A. 8479 states in full:
SECTION 19. Start of Full Deregulation. — Full deregulation of
the Industry shall start five (5) months following the effectivity of this
Act: Provided, however, That when the public interest so requires, the
President may accelerate the start of full deregulation upon the
recommendation of the DOE and the Department of Finance (DOF)
when the prices of crude oil and petroleum products in the world
market are declining and the value of the peso in relation to the US
dollar is stable, taking into account relevant trends and prospects;
Provided, further, That the foregoing provision notwithstanding, the
five (5)-month Transition Phase shall continue to apply to LPG, regular
gasoline and kerosene as socially-sensitive petroleum products and
said petroleum products shall be covered by the automatic pricing
mechanism during the said period.
Upon the implementation of full deregulation as provided herein,
the Transition Phase is deemed terminated and the following laws are
repealed:
a) Republic Act No. 6173, as amended;
b) Section 5 of Executive Order No. 172, as amended;
c) Letter of Instruction No. 1431, dated October 15, 1984;
d) Letter of Instruction No. 1441, dated November 20, 1984,
as amended;
e) Letter of Instruction No. 1460, dated May 9, 1985;
f) Presidential Decree No. 1889; and
g) Presidential Decree No. 1956, as amended by Executive

Order No. 137:
Provided, however, That in case full deregulation is started by
the President in the exercise of the authority provided in this Section,
the foregoing laws shall continue to be in force and effect with respect
to LPG, regular gasoline and kerosene for the rest of the five (5)-month
period.
Petitioner contends that Section 19 of R.A. 8479, which prescribes the

period for the removal of price control on gasoline and other finished products
and for the full deregulation of the local downstream oil industry, is patently
contrary to public interest and therefore unconstitutional because within the
short span of five months, the market is still dominated and controlled by an
oligopoly of the three (3) private respondents, namely, Shell, Caltex and Petron.
The objective of the petition is deceptively simple. It states that if the
constitutional mandate against monopolies and combinations in restraint of
trade 2 is to be obeyed, there should be indefinite and open-ended price
controls on gasoline and other oil products for as long as necessary. This will
allegedly prevent the "Big 3" — Shell, Caltex and Petron — from price-fixing and
overpricing. Petitioner calls the indefinite retention of price controls as "partial
deregulation".
The grounds relied upon in the petition are: cdasia
A.
SECTION 19 OF R.A. NO. 8479 WHICH PROVIDES FOR FULL
DEREGULATION FIVE (5) MONTHS OR EARLIER FOLLOWING THE
EFFECTIVITY OF THE LAW, IS GLARINGLY PRO-OLIGOPOLY, ANTI-
COMPETITION AND ANTI-PEOPLE, AND IS THEREFORE PATENTLY
UNCONSTITUTIONAL FOR BEING IN GROSS AND CYNICAL
CONTRAVENTION OF THE CONSTITUTIONAL POLICY AND COMMAND
EMBODIED IN ARTICLE XII, SECTION 19 OF THE 1987 CONSTITUTION
AGAINST MONOPOLIES AND COMBINATIONS IN RESTRAINT OF TRADE.
B.
SAID SECTION 19 OF R.A. No. 8479 IS GLARINGLY PRO-OLIGOPOLY,
ANTI-COMPETITION AND ANTI-PEOPLE, FOR THE FURTHER REASON
THAT IT PALPABLY AND CYNICALLY VIOLATES THE VERY OBJECTIVE
AND PURPOSE OF R.A. NO. 8479, WHICH IS TO ENSURE A TRULY
COMPETITIVE MARKET UNDER A REGIME OF FAIR PRICES.
C.
SAID SECTION 19 OF R.A. No. 8479, BEING GLARINGLY PRO-
OLIGOPOLY, ANTI-COMPETITION AND ANTI-PEOPLE, BEING PATENTLY
UNCONSTITUTIONAL AND BEING PALPABLY VIOLATIVE OF THE LAW'S
POLICY AND PURPOSE OF ENSURING A TRULY COMPETITIVE MARKET
UNDER A REGIME OF FAIR PRICES, IS A VERY GRAVE AND GRIEVOUS
ABUSE OF DISCRETION ON THE PART OF THE LEGISLATIVE AND
EXECUTIVE BRANCHES OF GOVERNMENT.
D.
PREMATURE FULL DEREGULATION UNDER SECTION 19 OF R.A. NO.
8479 MAY AND SHOULD THEREFORE BE DECLARED NULL AND VOID
EVEN AS THE REST OF ITS PROVISIONS REMAIN IN FORCE, SUCH AS
THE TRANSITION PHASE OR PARTIAL DEREGULATION WITH PRICE
CONTROLS THAT ENSURES THE PROTECTION OF THE PUBLIC INTEREST
BY PREVENTING THE BIG 3 OLIGOPOLY'S PRICE-FIXING AND
OVERPRICING. 3
The issues involved in the deregulation of the downstream oil industry are
of paramount significance. The ramifications, international and local in scope,
are complex. The impact on the nation's economy is pervasive and far-
reaching. The amounts involved in the oil business are immense. Fluctuations in
the supply and price of oil products have a dramatic effect on economic
development and public welfare. As pointed out in the Tatad decision, few
cases carry a surpassing importance on the daily life of every Filipino. The
issues affect everybody from the poorest wage-earners and their families to the
richest entrepreneurs, from industrial giants to humble consumers.
Our decision in this case is complicated by the unstable oil prices in the
world market. Even as this case is pending, the price of OPEC oil is escalating to
record levels. We have to emphasize that our decision has nothing to do with
worldwide fluctuations in oil prices and the counter-measures of Government
each time a new development takes place.
The most important part of deregulation is freedom from price control.
Indeed, the free play of market forces through deregulation and when to
implement it represent one option to solve the problems of the oil-consuming
public. There are other considerations which may be taken into account such as
the reduction of taxes on oil products, the reinstitution of an Oil Price
Stabilization Fund, the choice between government subsidies taken from the
regular taxpaying public on one hand and the increased costs being shouldered
only by users of oil products on the other, and most important, the immediate
repeal of the Oil Deregulation Law as wrong policy. Petitioner wants the setting
of prices to be done by Government instead of being determined by free
market forces. His preference is continued price control with no fixed end in
sight. A simple glance at the factors surrounding the present problems
besetting the oil industry shows that they are economic in nature.
R.A. 8479, the present deregulation law, was enacted to implement Article
XII, Section 19 of the Constitution which provides:
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.
This is so because the Government believes that deregulation will
eventually prevent monopoly. The simplest form of monopoly exists when there
is only one seller or producer of a product or service for which there are no
substitutes. In its more complex form, monopoly is defined as the joint
acquisition or maintenance by members of a conspiracy, formed for that
purpose, of the power to control and dominate trade and commerce in a
commodity to such an extent that they are able, as a group, to exclude actual
or potential competitors from the field, accompanied with the intention and
purpose to exercise such power. 4
Where two or three or a few companies act in concert to control market
prices and resultant profits, the monopoly is called an oligopoly or cartel. It is a
combination in restraint of trade. dctai
The perennial shortage of oil supply in the Philippines is exacerbated by

the further fact that the importation, refining, and marketing of this precious
commodity are in the hands of a cartel, local but made up of foreign-owned
corporations. Before the start of deregulation, the three private respondents
controlled the entire oil industry in the Philippines.
It bears reiterating at the outset that the deregulation of the oil industry is
a policy determination of the highest order. It is unquestionably a priority
program of Government. The Department of Energy Act of 1992 5 expressly
mandates that the development and updating of the existing Philippine energy
program "shall include a policy direction towards deregulation of the power and
energy industry."
Be that as it may, we are not concerned with whether or not there should
be deregulation. This is outside our jurisdiction. The judgment on the issue is a
settled matter and only Congress can reverse it. Rather, the question that we
should address here is — are the method and the manner chosen by
Government to accomplish its cherished goal offensive to the Constitution? Is
indefinite price control in the manner proposed by petitioner the only feasible
and legal way to achieve it?
Petitioner has taken upon himself a most challenging task.
Unquestionably, the direction towards which the nation's efforts at economic
and social upliftment should be addressed is a function of Congress and the
President. In the exercise of this function, Congress and the President have
obviously determined that speedy deregulation is the answer to the
acknowledged dominion by oligopolistic forces of the oil industry. Thus,
immediately after R.A. 8180 was declared unconstitutional in the Tatad case,
Congress took resolute steps to fashion new legislation towards the objective of
the earlier law. Invoking the Constitution, petitioner now wants to slow down
the process.
While the Court respects the firm resolve displayed by Congress and the
President, all departments of Government are equally bound by the sovereign
will expressed in the commands of the Constitution. There is a need for utmost
care if this Court is to faithfully discharge its duties as arbitral guardian of the
Constitution. We cannot encroach on the policy functions of the two other great
departments of Government. But neither can we ignore any overstepping of
constitutional limitations. Locating the correct balance between legality and
policy, constitutional boundaries and freedom of action, and validity and
expedition is this Court's dilemma as it resolves the legitimacy of a
Government program aimed at giving every Filipino a more secure, fulfilling and
abundant life.
Our ruling in Tatad is categorical that the Constitution's Article XII, Section
19, is anti-trust in history and spirit. It espouses competition. We have stated
that only competition which is fair can release the creative forces of the market.
We ruled that the principle which underlies the constitutional provision is
competition. Thus:
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." 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." 6
In his recital of the antecedent circumstances, petitioner repeats in

abbreviated form the factual findings and conclusions which led the Court to
declare R.A. 8180 unconstitutional. The foreign oligopoly or cartel formed by
respondents Shell, Caltex and Petron, their indulging in price-fixing and
overpricing, their blockade tactics which effectively obstructed the entry of
genuine competitors, the dangers posed by the oil cartel to national security
and economic development, and other prevailing sentiments are stated as
axiomatic truths. They are repeated in capsulized context as the current
background facts of the present petition.
The empirical existence of this deplorable situation was precisely the

reason why Congress enacted the oil deregulation law. The evils arising from
conspiratorial acts of monopoly are recognized as clear and present. But the
enumeration of the evils by our Tatad decision was not for the purpose of
justifying continued government control, especially price control. The objective
was, rather, the opposite. The evils were emphasized to show the need for free
competition in a deregulated industry. And to be sure, the measures to address
these evils are for Congress to determine, but they have to meet the test of
constitutional validity.
The Court respects the legislative finding that deregulation is the policy
answer to the problems. It bears stressing that R.A. 8180 was declared invalid
not because deregulation is unconstitutional. The law was struck down
because, as crafted, three key provisions plainly encouraged the continued
existence if not the proliferation of the constitutionally proscribed evils of
monopoly and restraint of trade.
In sharp contrast, the present petition lacks a factual foundation
specifically highlighting the need to declare the challenged provision
unconstitutional. There is a dearth of relevant, reliable, and substantial
evidence to support petitioner's theory that price control must continue even as
Government is trying its best to get out of regulating the oil industry. The facts
of the petition are, in the main, a general dissertation on the evils of monopoly.
Petitioner overlooks the fact that Congress enacted the deregulation law
exactly because of the monopoly evils he mentions in his petition. Congress
instituted the lifting of price controls in the belief that free and fair competition
was the best remedy against monopoly power. In other words, petitioner's facts
are also the reasons why Congress lifted price controls and why the President
accelerated the process. The facts adduced in favor of continued and indefinite
price control are the same facts which supported what Congress believes is an
exercise of wisdom and discretion when it chose the path of speedy
deregulation and rejected Congressman Garcia's economic theory. LLjur
The petition states that it is using the very thoughts and words of the
Court in its Tatad decision. Those thoughts and words, however, were directed
against the tariff differential, the inventory requirement, and predatory pricing,
not against deregulation as a policy and not against the lifting of price controls.
A dramatic, at times expansive and grandiloquent, reiteration of the same

background circumstances narrated in Tatad does not squarely sustain
petitioner's novel thesis that there can be deregulation without lifting price
controls.
Petitioner may call the industry subject to price controls as deregulated.

In enacting the challenged provision, Congress, on the other hand, has declared
that any industry whose prices and profits are fixed by government authority
remains a highly regulated one.
Petitioner, therefore, engages in a legal paradox. He fails to show how
there can be deregulation while retaining government price control.
Deregulation means the lifting of control, governance and direction through
rule or regulation. It means that the regulated industry is freed from the
controls, guidance, and restrictions to which it used to be subjected. The use of
the word "partial" to qualify deregulation is sugar-coating. Petitioner is really
against deregulation at this time.
Petitioner states that price control is good. He claims that it was the
regulation of the importation of finished oil products which led to the exit of
competitors and the consolidation and dominion of the market by an oligopoly,
not price control. Congress and the President think otherwise.
The argument that price control is not the villain in the intrusion and
growth of monopoly appears to be pure theory not validated by experience.
There can be no denying the fact that the evils mentioned in the petition arose
while there was price control. The dominance of the so-called "Big 3" became
entrenched during the regime of price control. More importantly, the
ascertainment of the cause and the method of dismantling the oligopoly thus
created are a matter of legislative and executive choice. The judicial process is
equipped to handle legality but not wisdom of choice and the efficacy of
solutions.
Petitioner engages in another contradiction when he puts forward what he
calls a self-evident truth. He states that a truly competitive market and fair
prices cannot be legislated into existence. However, the truly competitive
market is not being created or fashioned by the challenged legislation. The
market is simply freed from legislative controls and allowed to grow and
develop free from government interference. R.A. 8479 actually allows the free
play of supply and demand to dictate prices. Petitioner wants a government
official or board to continue performing this task. Indefinite and open-ended
price control as advocated by petitioner would be to continue a regime of
legislated regulation where free competition cannot possibly flourish. Control is
the antithesis of competition. To grant the petition would mean that the
Government is not keen on allowing a free market to develop. Petitioner's "self-
evident truth" thus supports the validity of the provision of law he opposes.
New players in the oil industry intervened in this case. According to them,
it is the free market policy and atmosphere of deregulation which attracted and
brought the new participants, themselves included, into the market. The
intervenors express their fear that this Court would overrule legislative policy
and replace it with petitioner's own legislative program.
The factual allegations of the intervenors have not been refuted and we
see no reason to doubt them. Their argument that the co-existence of many
viable rivals create free market conditions induces competition in product
quality and performance and makes available to consumers an expanded range
of choices cannot be seriously disputed.
On the other hand, the pleadings of public and private respondents both
put forth the argument that the challenged provision is a policy decision of
Congress and that the wisdom of the provision is outside the authority of this
Court to consider. We agree. As we have ruled in Morfe v. Mutuc 7 :
(I)t is well to remember that this Court, in the language of Justice
Laurel, "does not pass upon question or wisdom, justice or expediency
of legislation." As expressed by Justice Tuason: "It is not the province of
the courts to supervise legislation and keep it within the bounds of
propriety and common sense. That is primarily and exclusively a
legislative concern." There can be no possible objection then to the
observation of Justice Montemayor: "As long as laws do not violate any
Constitutional provision, the Courts merely interpret and apply them
regardless of whether or not they are wise or salutary." For they,
according to Justice Labrador, "are not supposed to override legitimate
policy and . . . never inquire into the wisdom of the law."
It is thus settled, to paraphrase Chief Justice Concepcion in
Gonzales v. Commission on Elections, that only congressional power or
competence, not the wisdom of the action taken, may be the basis for
declaring a statute invalid. This is as it ought to be. The principle of
separation of powers has in the main wisely allocated the respective
authority of each department and confined its jurisdiction to such a
sphere. There would then be intrusion not allowable under the
Constitution if on a matter left to the discretion of a coordinate branch,
the judiciary would substitute its own. If there be adherence to the rule
of law, as there ought to be, the last offender should be the courts of
justice, to which rightly litigants submit their controversy precisely to
maintain unimpaired the supremacy of legal norms and prescriptions.
The attack on the validity of the challenged provision likewise insofar
as there may be objections, even if valid and cogent, on its wisdom
cannot be sustained.
In this petition, Congressman Garcia seeks to revive the long settled issue
of the timeliness of full deregulation, which issue he had earlier submitted to
this Court by way of a Partial Motion for Reconsideration in the Tatad case. In
our Resolution dated December 3, 1997, which has long become final and
executory, we stated:
We shall first resolve petitioner Garcia's linchpin contention that
the full deregulation decreed by R.A. No. 8180 to start at the end of
March 1997 is unconstitutional. For prescinding from this premise,
petitioner suggests that "we simply go back to the transition period,
price control will be revived through the automatic pricing mechanism
based on Singapore Posted Prices. The Energy Regulatory Board . . .
would play a limited and ministerial role of computing the monthly
price ceiling of each and every petroleum fuel product, using the
automatic pricing formula. While the OPSF would return, this coverage
would be limited to monthly price increases in excess of P0.50 per
liter."
We are not impressed by petitioner Garcia's submission.
Petitioner has no basis in condemning as unconstitutional per se the
date fixed by Congress for the beginning of the full deregulation of the
downstream oil industry. Our Decision merely faulted the Executive for
factoring the depletion of OPSF in advancing the date of full
deregulation to February 1997. Nonetheless, the error of the Executive
is now a non-issue for the full deregulation set by Congress itself at the
end of March 1997 has already come to pass. March 1997 is not an
arbitrary date. By that date, the transition period has ended and it was
expected that the people would have adjusted to the role of market
forces in shaping the prices of petroleum and its products. The choice
of March 1997 as the date of full deregulation is a judgment of
Congress and its judgment call cannot be impugned by this Court. 8
Reduced to its basic arguments, it can be seen that the challenge in this
petition is not against the legality of deregulation. Petitioner does not expressly
challenge deregulation. The issue, quite simply, is the timeliness or the wisdom
of the date when full deregulation should be effective.
In this regard, what constitutes reasonable time is not for judicial
determination. Reasonable time involves the appraisal of a great variety of
relevant conditions, political, social and economic. They are not within the
determination. 9
We repeat that what petitioner decries as unsuccessful is not a final
result. It is only a beginning. The Court is not inclined to stifle deregulation as
enacted by Congress from its very start. We leave alone the program of
deregulation at this stage. Reasonable time will prove the wisdom or folly of the
deregulation program for which Congress and not the Court is accountable.
Petitioner argues further that the public interest requires price controls
while the oligopoly exists, for that is the only way the public can be protected
from monopoly or oligopoly pricing. But is indefinite price control the only
feasible and legal way to enforce the constitutional mandate against
oligopolies? cdrep
Article 186 of the Revised Penal Code, as amended, punishes as a felony

the creation of monopolies and combinations in restraint of trade. The Solicitor
General, on the other hand, cites provisions of R.A. 8479 intended to prevent
competition from being corrupted or manipulated. Section 11, entitled "Anti-
Trust Safeguards", defines and prohibits cartelization and predatory pricing. It
penalizes the persons and officers involved with imprisonment of three (3) to
seven (7) years and fines ranging from One million to Two million pesos. For
this purpose, a Joint Task Force from the Department of Energy and
Department of Justice is created under Section 14 to investigate and order the
prosecution of violations.
Sections 8 and 9 of the Act, meanwhile, direct the Departments of Foreign

Affairs, Trade and Industry, and Energy to undertake strategies, incentives and
benefits, including international information campaigns, tax holidays and
various other agreements and utilizations, to invite and encourage the entry of
new participants. Section 6 provides for uniform tariffs at three percent (3%).
Section 13 of the Act provides for "Remedies", under which the filing of
actions by government prosecutors and the investigation of private complaints
by the Task Force is provided. Sections 14 and 15 provide how the Department
of Energy shall monitor and prevent the occurrence of collusive pricing in the
industry.
It can be seen, therefore, that instead of the price controls advocated by
the petitioner, Congress has enacted anti-trust measures which it believes will
promote free and fair competition. Upon the other hand, the disciplined,
determined, consistent and faithful execution of the law is the function of the
President. As stated by public respondents, the remedy against unreasonable
price increases is not the nullification of Section 19 of R.A. 8479 but the setting
into motion of its various other provisions.
For this Court to declare unconstitutional the key provision around which
the law's anti-trust measures are clustered would mean a constitutionally
interdicted distrust of the wisdom of Congress and of the determined exercise
of executive power.
Having decided that deregulation is the policy to follow, Congress and the
President have the duty to set up the proper and effective machinery to ensure
that it works. This is something which cannot be adjudicated into existence.
This Court is only an umpire of last resort whenever the Constitution or a law
appears to have been violated. There is no showing of a constitutional violation
in this case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Bellosillo, Melo, Puno, Kapunan, Mendoza, Quisumbing, Purisima, Pardo,

Buena and De Leon, Jr., JJ., concur.
Davide, Jr., C.J. , concurs in the result. I also join Mr. Justice Panganiban in
his separate opinion.
Vitug, J., concurs in the result.

Panganiban, J., please see separate opinion.
Gonzaga-Reyes, J., took no part; spouse with counsel for intervenors.
Separate Opinions
PANGANIBAN, J.:
In essence, deregulation shifts the burden of price control from the

government to the "market forces" in order (1) to eliminate government
intervention that may "do more harm than good" 1 and (2) to achieve a truly
competitive market of fair prices. 2 It is also aimed at removing government
abuse and corruption in price-setting. At bottom, deregulation is supposed to
provide the best goods and services at the cheapest prices.
The policy, however, is not an infallible cure to abuse, for the evil sought
to be avoided may well pass on to the market players, particularly when they
combine to restrain trade or engage in unfair competition. In the words of Prof.
Romulo L. Neri of the Asian Institute of Management, "[t]he market is motivated
by price and profits (and sadly, not by moral values [or public interest]). The
market does not automatically supply those who need (no matter how badly
they need it) but only those who have the money to buy." 3
The buzz words of the third millennium are "deregulation," "globalization"
and "liberalization." Territorial frontiers are virtually erased by these schemes,
as goods and services are exchanged across borders unhampered by traditional
tariffs, taxes, currency controls, quantitative restrictions and other protective
barriers. Thus, states and governments tend to surrender some of their
authorities and powers to the "market" and to the renewed energy of laissez
faire, such that the threats to civil liberties and human rights, including
economic rights, may shift from government abuses to the more bedeviling
market forces that transcend boundaries and sovereignties. In developing
countries more than in developed ones, such threats are real and ever present.
Judicial Review to Check Abuses

This is where the power of judicial review comes in — to examine the
legal effects of these new economic paradigms and, in the present controversy,
to check whether the present Oil Deregulation Law (RA 8479) restrains rather
than promotes free trade, in contravention of the Constitution. True, the
President and Congress, not this Court, have the power and the prerogative to
determine whether to adopt such market policies and, if so, under what
conditions and circumstances. However, all such policies and their ramifications
must conform to the Constitution. Otherwise, this Court has the duty to strike
them down, not because they are unwise or inconvenient, but because they are
constitutionally impermissible.
Doctrinally, policies and acts of the political departments of government

may be voided by this Court on either of two grounds — infringement of the
Constitution or grave abuse of discretion. 4 An infringement may be proven by
demonstrating that the words of the law directly contradict a provision of the
fundamental law, or by presenting proof that the law authorizes or enables the
respondents to violate the Constitution.
Petitioner Garcia's Thesis on
Unconstitutionality Concerns Policy
Having set down the doctrinal legal parameters, let me now discuss the
petitioner's thesis. Petitioner Enrique T. Garcia anchors his position on the
alleged unconstitutionality of Section 19 of RA 8479, 5 which sets the full
deregulation of the oil industry five months from the effectivity of the law, on
the argument that said provision directly violates Section 19, Article XII of the
Constitution, which reads as follows: LLpr
"SECTION 19. 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."
He maintains that once Section 19 of RA 8479 is struck down, the

government will be able to fix and lower petroleum prices indefinitely while
awaiting the advent of "real" competition in the market.
Petitioner contends that the three largest oil companies (the "Big Three")
comprise an oligopoly of the downstream oil industry. Oligopolies, he claims,
"negate free market competition and fair prices." He submits that "regulation
through price control . . . is patently required by the public interest [and] the
failure to regulate the oligopoly through price control is patently inimical to the
national interest and patently negates, circumvents and contravenes Section
19, Article XII of the Constitution."
In Tatad v. Secretary of the Department of Energy, 6 this Court defined a

monopoly and a combination in restraint of trade as follows:
"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. 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. Combination in restraint of trade refers to
the means, while monopoly refers to the end."
In that case, RA 8180, the predecessor of RA 8479, was struck down by

this Court for being contrary to Section 19, Article XII of the Constitution. We
took this action because we found that its provisions on (1) tariff differential, (2)
minimum inventory and (3) predatory pricing "inhibit fair competition,
encourage monopolistic power and interfere with the free interaction of market
forces." We concluded, "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."
In my Concurring Opinion in Tatad, I labeled RA 8180 as "a pseudo

deregulation law which in reality restrains free trade and perpetuates a cartel,
an oligopoly" because of the aforecited three provisions, and because
petitioners therein demonstrated to the Court "that the Big Three oil companies
were producing and processing almost identical products which they were
selling to the general public at identical prices. When one company adjusted its
prices upwards or downwards, the other two followed suit at the same time and
by the same amount." 7
In his present Petition, petitioner persistently alleges that "[i]t is self-

evident truth that public interest requires the prevention of
monopolistic/oligopolistic pricing . . .," and that such "monopolistic/oligopolistic
pricing may be prevented only through price control during the regime of
monopoly/oligopoly or through a truly competitive market under a regime of
fair prices." In support of his allegations, he cites "self-evident truths [which]
have . . . been officially recognized and implemented during more than 20
years of price control before the passage of the two oil deregulation laws " and
which "have also been recognized and upheld by no less than the Supreme
Court En Banc in the Tatad and Lagman cases . . . ." He contends that "the Big
3 remain as strong and dominant as ever."
In other words, petitioner believes that there is no valid reason to lift price
control at this time when allegedly there still exists an oligopoly in the industry.
He proposes instead that government control should stand for an indefinite
period until the new players are able to capture a substantial part of the
market.
Unfortunately, however, the foregoing thematic statements and economic

theory of Petitioner Garcia are policy in nature and are arguments supporting
the wisdom of interim government price control. Indeed, "self-evident truths,"
economic theories, deeply-held beliefs, speculative assumptions and
generalizations may be the bases of legislative and executive actions, but they
cannot be substitutes for evidence and legal arguments in a judicial
proceeding. Considered judgment calls of the legislative and the executive
departments are the issues of whether the country should adopt the policy of
complete or partial deregulation, and when such policy should take effect and
over what products or services. These issues come within judicial determination
only when there is clear and substantial proof that said policy and its
concomitant variations are violative of the Constitution or are made by those
agencies in grave abuse of their discretion. LLphil
The Legal Issue Is Whether Petitioner

Has Submitted Sufficient Proof That the
Big Three Have Violated the Constitution
To be more specific, the pivotal issue before this Court is not whether it is
wiser and more beneficial to empower the government to fix fuel prices; rather,
it is whether petitioner has submitted enough factual bases to justify the legal
conclusion that the Big Three — Petron, Shell and Caltex — have combined
themselves "in restraint of trade or [to cause] unfair competition," to such an
extent as to legally justify a striking down of Section 19 of RA 8479. The task of
proving this issue is not easy; in fact, it is formidable and daunting. This is
because laws are prima facie presumed constitutional and, unless clearly
shown to be infirm, they will always be upheld. 8 So, too, regularity in the
performance of official functions is the postulate, and any allegation of grave
abuse or irregularity must be proven cogently.
Deregulation per se Is
Not Constitutionally Infirm
A close perusal of the assailed Section 19 of RA 8479 and Section 19 of
Article XII of the Constitution does not readily reveal their irreconcilability.
Indeed, even petitioner admits that the deregulation policy per se is not
contrary to the Constitution. Neither could it be successfully argued that the
implementation of such policy within the five-month phase-in period is per se
anathema to our fundamental law. It is his imperative task therefore to adduce
before the Court factual and legal bases to demonstrate clearly and cogently
the unconstitutionality of the acts of Congress and the President in adopting
and implementing full deregulation of petroleum prices at this time.
In this context, I have pored over the records of this case and searched
long and wide for such factual and legal bases but, other than presumptions
and generalizations that are unsupported by hard evidence, I could not find
any. Petitioner fails to substantiate his allegations that the three oil giants have
engaged, directly or indirectly, in an unholy alliance to fix prices and restrain
trade.
True, retail prices of petroleum products have been increased, to the

consternation of the public, but petitioner has not shown by specific fact or
clear proof how the questioned provision of RA 8479 has been used to
transgress the Constitution. He has not demonstrated that the Big Three
arbitrarily dictate and corrupt the price of oil in a manner violative of the
Constitution.
Petitioner merely resurrects and relies heavily on the arguments, the
statistics and the proofs he submitted two years ago in the first oil deregulation
case, Tatad v. Secretary of the Department of Energy . Needless to state, those
reasons were taken into consideration in said case, and they indeed helped
show the unconstitutionality of RA 8180. But exactly the same old grounds
cannot continue to support petitioner's present allegation that the major oil
companies — Petron, Shell and Caltex — persist to this date in their oligopolistic
practices, as a consequence of the current Oil Deregulation Law and in violation
of the Constitution. In brief, the legal cause and effect relationship has not been
amply shown.
Petitioner Has Not Proven

Arbitrariness or Despotism
Petitioner harps at the five-month period of transition from price control to
full deregulation provided under Section 19 of RA 8479. He claims that such
short period is not enough to ensure a "truly competitive market" in the
supposed oligopoly of the oil industry. Again, his statement is not backed up by
evidentiary basis. He offers no substantial proof that Congress, in deciding to
lift price controls five months from the effectivity of RA 8475, gravely abused its
discretion. To repeat, it is not within the province of the judiciary to determine
whether five months is indeed short and, for that matter, what length of time is
adequate. That is a matter of legislation addressed to the discretion of our
policy makers.
It is basic to our form of government that the Court cannot inquire into
the wisdom or expediency of the acts of the executive or the legislative
department, unless there is a clear showing of constitutional infirmity or grave
abuse of discretion amounting to lack or excess of jurisdiction. 9 "By grave
abuse of discretion is meant such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not
enough. It must be grave abuse of discretion, as when the power is exercised in
an arbitrary or despotic manner by reason of passion or personal hostility, and
must be so patent and so gross as to amount to an evasion of a positive duty or
to a virtual refusal to perform the duty enjoined or to act at all in contemplation
of law." 10 These jurisprudential elements of arbitrariness, despotism, passion
and hostility have not been shown to exist under the present circumstances. cdll
Market Share of New Players

Has Increased Under RA 8479
Historically, deregulation as a policy in the downstream oil industry was
begun in 1996 when new players started to set up and operate their businesses
in the country. That was practically a full three years of operations, the last two
of which saw no significant barriers in terms of tariff differential, minimum
inventory or predatory pricing.
Obviously, the conditions prevailing when the Court struck down RA 8180
two years ago have not been proven to be prevalent at present. In 1996, the
new players had a market share of barely one percent. 11 The new players have
since expanded or increased in number (46 as of June 30, 1999), and they now
have about nine percent share of the market. 12 Significantly, these new
players have intervened in this case in defense of the law. These are the little
Davids who claim that with RA 8479 as their slingshot, they can, given enough
time, fight and win against the three erstwhile unbeatable Goliaths. Indeed,
they believe that the questioned provision has given them the impetus to
compete and thereby eventually show the benefits of deregulation; namely, the
best products at the cheapest prices.
With this factual backdrop and in the dire absence of contrary proof, it
would be specious to conclude that under the aegis of Section 19 of RA 8479,
the Big Three have restrained trade or unduly restrained competition.
Moreover, the three provisions in RA 8180 which were adjudged

abhorrent to the fundamental principles of free enterprise are no longer found
in RA 8479. The depletion of the Oil Price Stabilization Fund, the extraneous
factor that was considered by the President in accelerating the implementation
of full deregulation under RA 8180, was no longer taken into account in the
present milieu. The Court's reasons for declaring the unconstitutionality of RA
8180 are, therefore, not germane to the validity of RA 8479. The petitioner
cannot rely on the same rationale for the purpose of successfully assailing RA
8479. Indeed, he admits that "the Tatad and Lagman cases . . . did not consider
and adjudicate on the lifting of price control per se, under RA 8180, as an
issue."
Epilogue
In sum, I make no secret of my sympathy for petitioner's frustration at the
inability of our government to arrest the spiraling cost of fuel and energy. 13 I
hear the cry of the poor that life has become more miserable day by day. I feel
their anguish, pain and seeming hopelessness in securing their material needs.
However, the power to lower petroleum prices through the adoption or

the rejection of viable economic policies or theories does not lie in the Court or
its members. Furthermore, absent sufficient factual evidence and legal
moorings, I cannot vote to declare a law or any provision thereof to be
unconstitutional simply because, theoretically, such action may appear to be
wise or beneficial or practical. Neither can I attribute grave abuse of discretion
to another branch of government without an adequate showing of patent
arbitrariness, whim or caprice. Should I do so, I myself will be gravely abusing
my discretion, the very evil that petitioner attributes to the legislature.
WHEREFORE, I vote to DISMISS the Petition. LibLex
I fully concur in the ponencia of Justice Consuelo Ynares-Santiago. What I

would like to stress here and now is that, contrary to certain ill-informed
comments in media, petitioner's pleadings were thoroughly dissected at the
hearing where he and his counsel as well as the respondents amply presented
their arguments. Questions of law and policy were also illuminated from
different perspectives in sessions and in memoranda internally exchanged by
members of the Court. Right away, it must be added, no delay attended the
resolution of this petition. For while the Constitution allows two years, this case
was decided en banc in less than half that period, from the time of submission
of the parties' memoranda. Below is a full presentation of my view on the
controversy generated by petitioner's insistence that the Court overturn an act
passed by his own branch of government and approved by the Chief Executive.
At issue in this special civil action for certiorari under Rule 65 is the
constitutionality of Sec. 19 of Republic Act No. 8479, 1 entitled "An Act
Deregulating the Downstream Oil Industry and for other Purposes". The law was
enacted pursuant to the policy of the State to liberalize and deregulate the
downstream oil industry. R.A. 8479 is the remedial legislation passed by
Congress to cure the infirmities found in Republic Act No. 8180, the first oil
industry deregulation law, otherwise known as the "Downstream Oil Industry
Deregulation Act of 1996".
In a banc decision promulgated on November 5, 1997, the Court declared
R.A. 8180 unconstitutional for having transgressed the constitutional
prohibition against monopolies and combinations in restraint of trade,
specifically mandated in Section 19, Article XII of the Constitution.
Consequently, Executive Order No. 392 (E.O. 392) implementing the provision
of said law was voided. On December 3, 1997, the motions for reconsideration
were denied for utter lack of merit.
Now before us is a challenge to the second oil industry deregulation law,

R.A. 8479. The relevant factual and procedural antecedents of the present
petition are as follows:
In 1992, the Philippine government welcomed more liberal economic

policies and started the ground work for privatization of some government-
owned or controlled corporations and deregulation of the oil industry. In due
time, Congress enacted Republic Act No. 7638 on December 9, 1992. It created
the Department of Energy (DOE). Among others, it was tasked, at the end of
four years from the effectivity of R.A. No. 7638 and upon approval of the
President, to institute the "programs and the timetable for the deregulation of
appropriate projects and activities of the energy industry." 2
Following the intent of R.A. 7638, the Philippine National Oil Company
(PNOC) sold 40% of its equity in Petron Corporation to the Aramco Overseas
Company.
Sometime in March 1996, Congress made that daring step towards the
realization of liberating the oil industry from government regulation and
enacted R.A. 8180. On February 8, 1997, President Fidel V. Ramos issued E.O.
392, which signaled the implementation or start of deregulation in the oil
industry.
Senator Francisco Tatad and Congressmen Enrique Garcia, Edcel Lagman,

Joker Arroyo and Wigberto Tañada, among others, filed separate petitions
docketed as G.R. Nos. 124360 and 127867, before the Court. The petitioners
contended that some of the provisions of R.A. No. 8180 violated Section 19 of
Article XII of the 1987 Constitution, which states:
"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."
The challenged provisions in R.A. 8180 were:

(1) the provision on tariff differential found in Section 5 (b) which
states:
"Section 5 (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."
(2) the minimum inventory clause, in Section 6 which provides:

"Section 6. 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."
(3) the predatory pricing scheme in Section 9:

"Section 9. To ensure fair competition and prevent cartels
and monopolies in the downstream oil industry, the following acts shall
be prohibited:
xxx xxx xxx
"(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."

In declaring provisions of R.A. 8180 unconstitutional, the Court held:
". . . Petron, Shell and Caltex stand as the only major league
players in the oil market. . . . The tariff differential of 4% therefore
works to their immense benefit. . . . 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 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. . . .
"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.' . . . 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." 3
That decision came under sharp attack by critics who accused the Court of
improvidently intervening in the economic affairs of the State. Economists and
businessmen remarked that the decision was a major blow to economic reforms
and an additional burden to the government's already huge budget deficit as it
would require reinstating a subsidy on oil products. 4 Pertinent portions of the
Decision decreed:
"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 therefor 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. . . . Indeed when confronted by a law violating the
Constitution, the Court has no option but to strike it down dead. . . .
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.
IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is
declared unconstitutional and E.O. No. 372 [392] void." 5
Public respondents filed their consolidated motion for reconsideration.

Some of the new players, in the industry: Eastern Petroleum Corp., Seaoil
Petroleum Corp., Subic Bay Distribution, Inc., TWA, Inc., and Dubphil Gas
moved to intervene and aired their stand against the total nullification of R.A.
8180. They also averred that they were in favor of declaring the three offensive
provisions unconstitutional. Petitioner Enrique T. Garcia, likewise, filed a partial
motion for reconsideration and pushed for a return only to partial deregulation
in which the main features of deregulation would be allowed free reign, but the
retail price of oil products would still be regulated through the Energy
Regulatory Board.
The Court found no merit in the motion for reconsideration, motion for
intervention, and partial motion for reconsideration. Despite the separability
clause, the Court ruled that the three questioned provisions cannot be struck
down alone, for they were the ones intended to carry out the policy of the law
as embodied in Section 2. 6
On the question of the validity of E.O. 392, the Court held that the
Executive Department failed to follow faithfully the standards set by R.A. 8180
when it considered the extraneous factor of depletion of the Oil Price
Stabilization Fund (OPSF) fund, instead of limiting the basis for the acceleration
of full deregulation of the industry to only two factors, 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. 7 By considering another factor, the Executive Department rewrote
the standards set forth in R.A. 8180. 8 In light of the uncertainty of the
consideration given by the Executive department to the depletion of the OPSF
fund for the full deregulation of the oil industry, we ruled that E.O. 392
constituted a misapplication of R.A. 8180. In sum, the implementing order was
found void, while the basic law was held unconstitutional.
On reconsideration, our December 3, 1997 Resolution stressed that R.A.

8180 is unconstitutional because (1) it gave more power to an already powerful
oil oligopoly; (2) it blocked the entry of effective competitors; and (3) it will sire
an even more powerful oligopoly whose unchecked power will prejudice the
interest of the consumers and compromise the general welfare. 9 The Court
reiterated, however, that there was no impediment in re-enacting R.A. 8180
minus the provisions which are anti-competition.
Consequently, Congress fast-tracked a new oil deregulation law, R.A.

8479, which was approved and duly signed on February 10, 1998. It took effect
on February 12, 1998 upon the completion of its publication in a newspaper of
general circulation.
Dissatisfied with the amendments incorporated into the new law by his
own colleagues in Congress, Honorable Enrique T. Garcia filed the instant
petition.
The Court is the ultimate guardian of our Constitution. By virtue of its

power of judicial review, it is duty-bound in an appropriate case to ascertain
whether a law is free from constitutional flaws. While favoring free competition
in the oil industry, the Court struck down R.A. 8180 because of provisions
therein that contravened the basic law, our Constitution. Before dwelling into
the issues now raised by the petitioner, we must determine whether R.A. 8479
truly cured the invalid portions of R.A. 8180. When we advocated vigilance in
upholding the economic rights of our people, we truly hoped that Congress
would address the defects of R.A. 8180 and not re-enact R.A. 8180 through the
guise of R.A. 8479.
It bears recalling, however, that when the Supreme Court mediates to

allocate constitutional boundaries or invalidates the acts of a coordinate body,
what it is upholding is not its own supremacy but the supremacy of the
Constitution. With this in mind, we now focus on the provisions of R.A. 8479, in
particular the 4% tariff differential, minimum inventory level, and predatory
pricing provisions, which aim to prevent the big three oil companies from taking
advantage of deregulation as a means of cartelizing their operations, and
thereby result in monopolistic and oligopolistic practices condemned by the
basic law of the land.
First, the 4% tariff differential. On December 31, 1997, after the Court
declared with finality that R.A. 8180 is unconstitutional, President Ramos issued
Executive Order No. 461. The Order imposed a three percent (3%) import duty
on petroleum products enumerated therein. The President's move avoided the
revival of the old tariff rates of 10% on crude oil and 20% on refined oil while
the legislative department was in the process of crafting a new oil deregulation
law. Noteworthy, Sec. 6 of R.A. 8479 imposed the same tariff treatment on
petroleum products. Section 6 reads:
"SEC. 6. a) Any law to the contrary notwithstanding and
starting with the effectivity of this Act, a single and uniform tariff duty
shall be imposed and collected both on imported crude oil and
imported refined petroleum products at the rate of three percent (3%):
Provided, however, That the President of the Philippines may, in the
exercise of his powers, reduce such tariff rate when on his judgment
such reduction is warranted, pursuant to Republic Act No. 1937, as
amended, otherwise known as the "Tariff and Customs Code":
Provided, further, That beginning January 1, 2004 or upon
implementation of the Uniform Tariff Program under the World Trade
Organization and ASEAN Free Trade Area commitments, the tariff rate
shall be automatically adjusted to the appropriate level
notwithstanding the provisions under this Section."
Second , the minimum inventory level requirement. R.A. 8479 eliminated

the provision in R.A. 8180 requiring the refiners and importers to maintain a
minimum inventory equivalent to ten percent (10%) of their respective annual
sales volume or forty (40) days' supply. The minimum inventory requirement
was removed, giving the new entrants opportunities to use their resources to be
more competitive.
Third, predatory pricing. In the December 3, 1997 Resolution of the Court

in G.R. Nos. 124360 and 127867, we expressed the view that the definition of
predatory pricing was too loose to be a real deterrent. 10 Congressman Dante
O. Tinga acknowledged in his explanatory note of House Bill 10057 (H.B.
10057) that the definition of predatory pricing needed specificity, particularly
with respect to the definitive benchmark price and the express anti-competitive
intent. He suggested the Areeda-Turner test and proposed to redefine
predatory pricing. Section 11 par. (b) of R.A. 8479 adopted Congressman
Tinga's recommendation, to wit:
"b) Predatory pricing which means selling or offering to sell
any oil product at a price below the seller's or offeror's average
variable cost for the purpose of destroying competition, eliminating a
competitor or discouraging a potential competitor from entering the
market: Provided, however, That pricing below average variable cost in
order to match the lower price of the competitor and not for the
purpose of destroying competition shall not be deemed predatory
pricing. For purposes of this prohibition, 'variable cost' as distinguished
from 'fixed cost', refers to costs such as utilities or raw materials,
which vary as the output increases or decreases and 'average variable
cost' refers to the sum of all variable costs divided by the number of
units of outputs."
To strengthen the anti-trust safeguards of R.A. 8479, respondents argue

that there are enough provisions to encourage entry of new participants. For
instance, R.A. 8479 allows for active participation of the private sector and
cooperatives in the retail of petroleum through joint ventures to establish
gasoline stations. Moreover, R.A. 8479 requires initial public offering of shares
equivalent to 10% of the capital investments by oil companies. Respondents
also cite that the enforcement of monitoring activities by the DOE encourages
consumer vigilance over unwarranted increase in the prices of petroleum
products. Another safeguard against collusion among oligopolists is the creation
of a task force with members from the DOE and the Department of Justice (DOJ)
to investigate complaints for violations of R.A. 8479. They assert that the mere
dominance of Petron, Pilipinas Shell, and Caltex, is not per se a combination in
restraint of trade. Combination in restraint of trade, they claim, is the means to
achieve monopoly.
Petitioner Garcia adverts to oil deregulation in phases. The new oil

deregulation law has two phases: (1) the transition phase and (2) the full
deregulation phase.
During the transition period, all non-pricing aspects were lifted. Although
the Oil Price Stabilization Fund was abolished, a buffer fund 11 was created to
cover increases in the prices of petroleum products, except premium gasoline.
The Automatic Oil Pricing Mechanism was maintained to approximate the
domestic prices of petroleum products in the international market. The Energy
Regulatory Board (ERB) approved a market-oriented formula to determine the
Wholesale Posted Price of petroleum products based solely on the changes of
either the Singapore Posting of refined petroleum products, the Singapore
Import Parity or the crude landed cost.
After the transition phase comes full deregulation as provided by Sec. 19

of R.A. 8479, which reads thus:
"Sec. 19. Start of Full Deregulation. — Full deregulation of the
Industry shall start five (5) months following the effectivity of this Act:
Provided however, That when the public interest so requires, the
recommendation of the Department of Energy (DOE) and the
Department of Finance (DOF) when the prices of crude oil and
petroleum products in the world market are declining and the value of
the peso in relation to the US dollar is stable, taking into account
relevant trends and prospects: Provided, further, That the foregoing
provision notwithstanding, the five (5)-month Transition Phase shall
continue to apply to LPG, regular gasoline and kerosene as socially-
sensitive petroleum products and said petroleum products shall be
covered by the automatic pricing mechanism during the said period."
12
Note that the abovecited transition phase of five months could be

abbreviated when public interest so requires. The President's power to
accelerate the start of full deregulation, however, depended upon the
recommendation of the Departments of Energy and Finance.
Accordingly as recommended, on March 14, 1998, President Ramos

issued E.O. 471 to accelerate the implementation of full deregulation.
Pertinently this E.O., which implements R.A. 8479, provides:
"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 19 of Republic Act No. 8479, otherwise

known as the 'Downstream Oil Industry Deregulation Act of 1998,'
provides that [T]that 'when the public interest so requires, the
recommendation of the Department of Energy (DOE) and the
Department of Finance (DOF) when the prices of crude oil and
petroleum products in the world market are declining and the value of
the peso in relation to the US dollar is stable, taking into account
relevant trends and prospects: Provided, further, That the foregoing
provision notwithstanding, the five (5)-month Transition Phase shall
continue to apply to LPG, regular gasoline and kerosene as socially-
sensitive petroleum products and said petroleum products shall be
covered by the automatic pricing mechanism during the said period;'
"WHEREAS, pursuant to the joint recommendation of the
Department of Energy and the Department of Finance, and in the
interest of the consuming public, recent developments favor the
acceleration of the start of full deregulation of the downstream oil
industry because: (i) the prices of crude oil and petroleum products in
the world market are beginning to be stable and on a downtrend since
January 1998; and (ii) the exchange rate of the peso in relation to the
US dollar has been stable for the past three months, averaging at
around P40.00 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. 8479, 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

Philippines, by the powers vested in me by law, do hereby declare the
full deregulation of the downstream oil industry; provided, however,
that LPG, regular gasoline and kerosene shall be covered by the
Automatic Pricing Formula pursuant to R.A. No. 8479." 13
The implementing guidelines for the acceleration of full deregulation of

the industry, set forth in E.O. 471, required the concurrence of two conditions,
viz.: (1) the downtrend of prices of oil and petroleum products, and (2) stability
of exchange rate of peso in relation to US dollar, taking into account relevant
trends and prospects.
However, E.O. 471 carried an additional proviso, the transition phase was
continued for LPG, regular gas and kerosene. These socially sensitive products
continued to be covered by the automatic pricing mechanism until July of 1998.
Only then was full deregulation of the industry effected, and the automatic
pricing mechanism was also lifted for LPG, regular gas and kerosene.
Turning now to herein petition, Congressman Enrique Garcia raised the

following issues to assail the provision implementing full deregulation of the oil
industry:
I. SECTION 19 OF R.A. NO. 8479 which provides for full deregulation
five (5) months or earlier following the effectivity of the law, is
glaringly pro-oligopoly, anti-competition and anti-people, and is
therefore patently unconstitutional for being in gross and cynical
contravention of the constitutional policy and command
embodied in Article XII, Section 19 of the 1987 Constitution
against monopolies and combinations in restraint of trade.
II. Said Section 19 of R.A. No. 8479 is glaringly pro-oligopoly, anti-

competition and anti-people, for the further reason that it
palpably and cynically violates the very objective and purpose of
R.A. No. 8479, which is to ensure a truly competitive market
under a regime of fair prices.
III. Said Section 19 of R.A. No. 8479, being glaringly pro-oligopoly,

anti-competition and anti-people, being patently unconstitutional
and being palpably violative of the law's policy and purpose of
ensuring a truly competitive market under a regime of fair prices,
is a very grave and grievous abuse of discretion on the part of
the legislative and executive branches of government.
IV. Premature full deregulation under Section 19 of R.A. No. 8479

may and should therefore be declared null and void even as the
rest of its provisions remain in force, such as the transition phase
or partial deregulation with price controls that ensures the
protection of the public interest by preventing the big 3
oligopoly's price-fixing and overpricing.
These issues may be synthesized into one: Whether or not the full
implementation of deregulating the downstream oil industry as provided in
Section 19 of R.A. 8479 violates the Constitutional mandate of free competition
in a liberalized oil industry under Section 19, Article XII of the 1987 Philippine
Constitution?
Petitioner Garcia principally faults Section 19 of the new R.A. 8479 as well
as E.O. 471 now for violating the constitutional prohibition against monopoly,
and being anti-competition.
Petitioner claims that there was a premature full deregulation under
Section 19 of R.A. 8479. He protests the acceleration of the full implementation
of deregulation decreed under E.O. 471. Petitioner insists that the short
transition period is pro-oligopoly, anti-competition and anti-people and is
patently unconstitutional because the period is too short to establish true
competition in the local oil industry. True competition, he claims, exists only
when there can be a sizable number of players, and at present, the new players
comprise only 3% of the market share which does not put up real competition
against the "Big Three" oil companies (Caltex, Shell and Petron). What he
suggests is to prolong the transition phase or partial deregulation with price
controls while the big oil companies are still dominating the market, to ensure
the protection of the public interest and prevent the big three oligopolies from
fixing the price or overpricing. He further contends that the automatic oil
pricing mechanism will enable the domestic price of petroleum products to
approximate and promptly reflect the price of oil in the international market. He
also stressed that new players may come under an indefinite or open-ended
transition phase.
Commenting on the petition, respondents claim that the propriety of full
deregulation involves the wisdom of Congress and is therefore, a non-justiciable
issue. They counter petitioner's arguments by pointing out that the shortening
of the transition period and acceleration of full deregulation were decreed
pursuant to the joint recommendation of the DOE and DOF, based on the
concurring conditions of a downtrend of crude oil in world market and the
stability of the exchange rate of P40.00 to US$1.
The respondents argue that the short transition period is not violative of
the Constitution because the new players were given until July 1998 to set up
their businesses as they have in fact, and they have captured at least 3% of the
total oil market.
Respondent Petron asserts that full deregulation protects the public from
the greed and exploitation of business. Petron further contends that
competition can be ushered in only with the certainty of price deregulation and
the short transition period would guarantee the investors that within a
manageable period, they would be able to set prices, taking into account their
investment and operating costs. It claims an indefinite transition period would
discourage new investors because the new players had hoped that within a
reasonable time, price regulation would be lifted.
The Solicitor General filed a comment on behalf of the public
respondents, interposing economic arguments that price regulation reduces
economic efficiency and is prejudicial to the public. 14 Public respondents assert
that the acceleration of full deregulation is based on existing conditions and
sound economic theory.
Respondent Shell filed a rejoinder, stating that to prolong the transition

period will revive the automatic pricing mechanism which means that it will only
replace the mode of price regulation by still another regulatory scheme. It
argues that if Sec. 19 of R.A. 8479 were to be struck down, full deregulation will
never take place and it would render the entire law different from what was
passed by Congress.
Petitioner counters that he is questioning the constitutionality rather than

the wisdom of Sec. 19 of R.A. 8479; it is pro-oligopoly, hence patently
unconstitutional. Petitioner further avers that condemnation against monopolies
and combination in restraint of trade should be given legal sanction by the
Court. Petitioner maintains that the nullification of Sec. 19 of R.A. 8479 will
result in partial deregulation, where there will be no regulation as regards the
importation of petroleum products and the establishment of gas station, but oil
pricing would be regulated based on the Automatic Pricing Mechanism.
Note that during the review of R.A. 8180 by the Court in G.R. No. 127867,
petitioners Edcel C. Lagman, Arroyo, et al., likewise questioned the
constitutionality of Section 15 of R.A. No. 8180 15 as well as E.O. No. 392 16
which provided for the implementation of full deregulation. The Court decreed
thus:
". . . 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.
xxx xxx xxx
"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." 17
In G.R. No. 127867, Congressman Garcia filed an Urgent Motion for Partial
Reconsideration from the November 5, 1997, decision of the Court. He sought
to strike down only the premature full deregulation but maintain partial
deregulation under R.A. No. 8180 with price controls and price mechanism
based on Singapore Posted Prices. The Court resolved the issue this way:
"We shall first resolve petitioner Garcia's linchpin contention that
the full deregulation decreed by R.A. No. 8180 to start at the end of
March 1997 is unconstitutional. For prescinding from this premise
petitioner suggests that 'we simply go back to the transition period
under R.A. No. 8180.' Under the transition period, price control will be
revived through the automatic pricing mechanism based on Singapore
Posted Prices. The Energy Regulatory Board . . . would play a limited
and ministerial role of computing the monthly price ceiling of each and
every petroleum fuel product, using the automatic pricing formula. . . .
We are not impressed by petitioner Garcia's submission.
Petitioner has no basis in condemning as unconstitutional per se the
date fixed by Congress for the beginning of the full deregulation of the
downstream oil industry . . . The choice of March 1997 as the date of
full deregulation is a judgment of Congress and its judgment call
cannot be impugned by this Court." 18
Now in the present petition, Garcia insists on his old plea for a return only
to partial deregulation of the downstream oil industry, wherein the main
features of deregulation would be permitted but the retail prices of oil products
would still be regulated through an Automatic Pricing Mechanism.
However, I find his contentions to be lacking legal basis, even if his

proposal appears to be expedient, or even beneficial, especially to the poor. As
the Court said in Tañada vs. Tuvera, 19 "[T]his Court is not called upon to rule on
the wisdom of the law or to repeal it or modify it if we find it impractical. That is
not our function. That function belongs to the legislator. Our task is merely to
interpret and apply the law as conceived and approved by the political
departments of the government in accordance with the prescribed procedure."
20
For if we allow an open-ended transition period to maintain government

pricing regulation, we would have suspended the much-needed liberalization of
the downstream oil industry. It would certainly run counter to the government's
policy of allowing free interplay of market forces, with minimal government
supervision. In fact, it could defeat full deregulation to ensure fair competition
in the downstream oil industry, where new and prospective players are on even
level playing field with the Big Three.
Furthermore, to base the implementation of full deregulation on the

presence of a sizable number of new investors, as petitioner would want us to
do, would be to legislate a floating provision dependent on the happening of a
contingent event. To do so, would be to undermine the very purpose of the law,
which is to liberalize and deregulate the downstream oil industry in order to
ensure a truly competitive market under a regime of fair prices, adequate and
continuous supply, environmentally clean and high-quality petroleum products.
Consequently, to heed the petitioner's prayer, this Court would have to

legislate, a power granted only to Congress. The operation of a statute may be
duly suspended only by authority of the legislature. 21 Indeed, a suspension of a
valid statute must rest upon legislative action; 22 it may not be effected solely
by a judicial act. 23 Clearly it is a policy decision of the legislative and executive
departments in whose turf we must not tread, under the principle of separation
of powers. The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. 24 It refers to "those questions 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." 25 It is concerned
with issues dependent upon the wisdom, not legality, of a particular measure.
26 The judiciary does not directly settle policy issues. Under our system of
government, policy issues are within the domain of the political branches of
government and of the people themselves as the repository of all state powers.
27
In PLDT vs. National Telecommunications Commission , 28 the ultimate

considerations cited in matters affecting vital industries, are the public need,
public interest, and the common good. In that case, the Court said:
"Free competition in the industry may also provide the answer to
a much-desired improvement in the quality and delivery of this type of
public utility, to improved technology, fast and handy mobile service,
and reduced user dissatisfaction." 29
Similarly, the above-mentioned considerations could undergird the

nation's energy and other economic policies. The liberalization of the oil
industry is a reform program initiated by Congress to free the government from
the obligation of infusing funds to subsidize increases in the prices of oil
products. Such funds may now be utilized for other much needed programs
with a public purpose.
Well-established is the principle that every law has in its favor the
presumption of constitutionality. 30 To declare a law unconstitutional, the
repugnancy of that law to the Constitution must be clear and unequivocal. But
we recognize that even if a law is aimed at the attainment of some public good,
still its provisions cannot infringe upon constitutional rights. 31 That
infringement, however, must be proved and established persuasively to
invalidate a provision of a law, if not the entire law itself.
Petitioner ought to have demonstrated the need for the extension of the
transition period. But, in fact, he could not downplay the DOE report that new
players accounted for a sizable share of the market, some 18.1 percent of the
total product imports, and competing companies are keen in joining the
Philippine oil industry since the full implementation of deregulation. And, as
stressed by the public respondents in the rejoinder dated January 7, 1999:
"Since 1996, new players have taken a significant share in the
market, to wit: (a) seven (7) new players have entered the downstream
oil industry before RA No. 8180; (b) during the effectivity of RA No.
8180, twenty eight (28) new players have engaged in a number of
downstream oil industry activities; and (c) three (3) new players have
engaged in fuel bulk marketing, while two (2) new players have started
to establish gasoline service stations immediately before and during
the effectivity of RA No. 8479. At the same time, many more
companies have indicated their intention to enter the downstream oil
industry business." 32
The new players, according to industry experts, are gradually making a dent
in the local market and their share is expected to surge in a few years when
their retail stations are established. 33
However, the presence or entry of numerous players in the oil industry is

not a condition precedent before a full deregulated petroleum industry could be
had. But we recognize that it is precisely the implementation of full
deregulation that would serve to entice new players to compete against the so-
called Big Three. Hopefully, this move would prevent the powerful oil
companies from manipulating prices, to the prejudice of the consumers and the
public in general.
The petitioner strongly manifested his fears concerning pernicious

consequences of total lifting of price control in the oil industry. His main
concern is that the government might be helpless in case the Big 3 (Shell,
Petron and Caltex) overprice their petroleum products. But the people are not
without legal recourse. The public can manifest outright objections to
overpricing and report to the Department of Energy any unreasonable increase
in the prices of these oil products. The monitoring power of the DOE is
embodied in Sec. 14 of R.A. 8479, and its implementing rule, Section 18 of DOE
Circular No. 98-03-004, thus:
"R.A. 8479, Sec. 14 — Powers and Functions of the DOE and DOE
Secretary:
"Monitoring —
"a) The DOE shall monitor and publish daily international
crude oil prices, as well as follow the movements of domestic oil prices.
It shall likewise monitor the quality of petroleum products and stop the
operation of business involved in the sale of petroleum products which
do not comply with the national standards of quality that are aligned
with the national standards/protocols of quality. . . .
xxx xxx xxx
"d) Any report from any person of an unreasonable rise in the
prices of petroleum products shall be immediately acted upon. For this
purpose, the creation of DOE-DOJ Task Force is hereby mandated to
determine within thirty (30) days the merits of the report and initiate
the necessary actions warranted under the circumstances: Provided
that nothing herein shall prevent the said task force from investigating
and/or filing the necessary complaint with the proper court or agency
motu propio."
Department Circular No. 98-03-004, Sec. 18 — Powers and
Functions of the DOE and DOE Secretary
"Monitoring —
"The DOE shall monitor the following pursuant to Section 14 of
the Act. Any misrepresentation, mislabeling, concealment or fraud,
shall be subject to penalties under existing applicable laws.
a. Prices
"The DOE shall monitor and publish international oil prices as
well as follow the movement of domestic oil prices.
(1) Price Display Boards
For the convenience of the public, all retailers of petroleum
products shall display the prices of each type of petroleum
product sold in gasoline stations in prominently installed price
display boards with backgrounds preferably conforming to the
color coding scheme for the product, such as: green for Unleaded
Premium Gasoline, red for Premium Low Lead Gasoline, orange
for Regular Gasoline, yellow for Diesel Fuel, and white for
Kerosene. In the case of LPG (which has no product color), the
price display board may be light blue in color. The numeric
entries in these boards shall be at least six (6) inches in height.
The price display boards shall be properly installed and
labeled not later than June 30, 1998. Failure to comply with this
requirements shall be penalized pursuant to Section 24 of the
Act.
(2) Unreasonable Rise in Prices
Any report from any person of an unreasonable rise in the
prices of petroleum products shall be immediately acted upon by
the DOE-DOJ Task Force in accordance with Section 17 of this
IRR. The said Task force shall determine within thirty (30) days
the merits of the report and shall initiate the necessary actions
warranted under the circumstances."
A calculus of fear and pessimism, however, does not justify the remedy
petitioner seeks: that we now overturn a law enacted by Congress and
approved by the Chief Executive. The Court must act on valid legal reasons that
will explain why we should interfere with vital legislation. 34 To strike down a
provision of law we need a clear showing that what the Constitution prohibits,
the statute has allowed to be done. 35 Since there is no clear showing that
Section 19 of R.A. 8479 has violated the constitutional prohibition against
monopolies and combinations in restraint of trade, I vote that the present
petition be DISMISSED.
Footnotes
1. 281 SCRA 330 (1997).

2. CONSTITUTION, Article XII, Section 19.
3. Rollo , pp. 15-16.
4. American Tobacco Co. v. United States , 328 U.S. 781; 90 L. Ed. 1575.
5. Republic Act No. 7638.
6. supra., at 358; citing Gellhorn, Anti Trust Law and Economics in a Nutshell,
1986 ed., p. 45.
7. 22 SCRA 424, at 450-51 (1968); citations omitted.
8. Tatad v. Secretary of the Department of Energy, 282 SCRA 337, 353 (1997).
9. Coleman v. Miller 307 U.S. 433; 59 S. Ct. 972; 83 L. Ed. 1385 (1939).
PANGANIBAN, J.:
1. See public respondent's Memorandum, p. 19, citing Samuelson and
Nordhaus, Economics, 1992 ed., p. 341.
2. § 2, RA 8479.
3. Neri, Economics and Public Policy, 1999 ed., p. 23. Parentheses in original
but brackets supplied.
4. Tañada v. Angara, 272 SCRA 18, May 2, 1997; Tatad v. Secretary of the
Department of Energy, infra; Santiago v. Guingona Jr., GR No. 134577,
November 18, 1998.
5. "Sec. 19. Start of Full Deregulation. — Full deregulation of the [Downstream
Oil] Industry shall start five (5) months following the effectivity of this Act:
Provided, however, That when the public interest so requires, the President
may accelerate the start of full deregulation upon the recommendation of the
DOE and the Department of Finance (DOF) when the prices of crude oil and
petroleum products in the world market are declining and the value of the
peso in relation to the US dollar is stable, taking into account relevant trends
and prospects . . . ."
6. 281 SCRA 330, 355; November 5, 1997; per Puno, J.
7. This quote is taken from a comment I made in Battles in the Supreme Court,
1998 ed., p. 121.
8. Lim v. Pacquing, 240 SCRA 649, January 27, 1995; Tano v. Socrates, 278
SCRA 154, 1997; Tan v. People, 290 SCRA 117, May 19, 1998.
9. Tañada v. Angara, supra; Santiago v. Guingona Jr., supra. See also Garcia v.
Comelec, 227 SCRA 100, October 5, 1993; Tañada v. Cuenco, 103 Phil 1051,
February 28, 1957; Magtajas v. Pryce Properties Corp., 223 SCRA 255, July
20, 1994.
10. Tañada v. Angara, supra, citing Zarate v. Olegario, 260 SCRA 1; October 7,
1996; San Sebastian College v. Court of Appeals, 197 SCRA 138, 144, May
15, 1991; Commissioner of Internal Revenue v. Court of Tax Appeals, 195
SCRA 444, 458, March 20, 1991; Simon v. Civil Service Commission, 215
SCRA 410, November 5, 1992; Bustamante v. Commissioner on Audit, 216
SCRA 134, 136, November 27, 1992.
11. Solicitor general's Memorandum, p. 44.
12. Ibid.
13. During the Oral Argument on July 13, 1999, I compared petitioner to a Don
Quixote bravely battling petroleum-powered windmills. If only for his gutsy
Quixotic quest, I have, like many members of the Court, lent a sympathetic
ear to petitioner, not only in this case but also in the earlier Tatad in which I
wrote a Concurring Opinion to the Court's Decision striking down RA 8180,
the Oil Deregulation Law then.
1. Rollo , pp. 40-47.

2. Section 5 [b] of R.A. 7638.
3. Tatad vs. Secretary of the Department of Energy, 281 SCRA 330, 359-360
(1997).
4. See Philippine Star issue of Dec. 4, 1997.
5. Supra, note 3 at 370.

6. Tatad vs. Secretary of the Department of Energy, 282 SCRA 337, 354 (1997).
7. Supra, note 3, at 353.
8. Ibid.
10. Supra, see note 6 at 345.
11. Section 17 of Republic Act Number 8479 — Buffer Fund : The President may,
when the interest of the consumers so requires, taking into account the rise
in the domestic prices of petroleum products, use the "Reserve Control
Account" as a buffer fund in the amount not exceeding Two billion nine
hundred million pesos (2,900,000,000.00) to cover increases in the prices of
petroleum products, except premium gasoline, during the Transition Phase
over the prices prevailing as of the date of the effectivity of this Act. . . . .
12. Rollo , p. 46.
13. "Annex 2" of Public Respondent's Comment.
14. See David Weimer and Aidan Vining, "Policy Analysis: Concepts and
Practice, 1992 ed., pp. 124, 126 — Comment — Solicitor General for Public
Respondents p. 15-16. According to the article, there have been two major
lines of criticism to the use of price regulation (1) regulators are quickly
captured by the firms that they regulate and (2) such regulation induces
inefficient and wasteful behavior. The outcome of such incentives are
inefficiency and overuse of capital under rate of return regulation.
15. 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:
xxx xxx xxx

16. xxx xxx xxx
"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 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;
xxx xxx xxx

17. Supra, note 3, at 352-353.
19. 146 SCRA 446 (1986).
20. Id., at 455, 456.
21. 73 Am. Jur. 2d. Sec. 374.
22. Id., citing Winslow v. Fleischner , 112 Or 23, 228 P 101, 34 ALR 826.
23. Id., citing King v. State, 87 Tenn 304, 10 SW 509.
24. Daza vs. Singson 180 SCRA 496, 500 (1989); citing Tanada vs. Cuenco, 103
Phil. 1051 (1957), Association of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform, 175 SCRA 343, 377 (1989).
25. Ibid.
26. Ibid.
27. Valmonte vs. Belmonte, Jr., 170 SCRA 256, 268 (1989).
28. 190 SCRA 717 (1990).
29. Id. at 737.

30. Basco vs. Phil. Amusements and Gaming Corporation, 197 SCRA 52, 68
(1991); citing Yu Cong Eng vs. Trinidad, 47 Phil. 385 (1925); Salas vs.
Jarencio, 46 SCRA 734 (1972); Peralta vs. COMELEC, 82 SCRA 30 (1978);
Abbas vs. COMELEC, 179 SCRA 287 (1989).
31. Salas vs. Jarencio, 46 SCRA 734, 749 (1972).
32. Public respondents' Rejoinder, p. 7.
33. The Philippine Star , November 23, 1998 issue.
34. Tolentino vs. Secretary of Finance, 235 SCRA 630, 674 (1994); citing
Alalayan vs. National Power Corp ., 24 SCRA 172 (1968); Cordero vs.
Cabatuando, 6 SCRA 418 (1962); Sumulong vs. COMELEC , 73 Phil. 288
(1941). As of December 10, 1999, Philippine Star, p. 26, reports that "the
deregulation of the oil industry under Republic Act (RA) 8479 has resulted in
the entry of 53 new players, 10 of which are foreign players. . . Their entry
has forced the industry to offer more competitive prices and products."
35. Morfe vs. Mutuc, 22 SCRA 424, 435 (1968).

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EN BANC

[G.R. No. 132451. December 17, 1999.]

CONGRESSMAN ENRIQUE T. GARCIA , petitioner, vs. HON.

Teodoro M. Jumamil for petitioner.

The Supreme Court previously declared Republic Act No. 8180

1. CONSTITUTIONAL LAW; 1987 CONSTITUTION; ART. XII, SEC. 19

2. ID.; ID.; ID.; OIL DEREGULATION LAW (R.A. 8479); MONOPOLY;

3. ID.; ID.; ID.; ID.; PURPOSE THEREOF. — It bears reiterating at the

5. ID.; ID.; ID.; ID.; EFFECTIVITY THEREOF; WHAT CONSTITUTES

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PANGANIBAN, J., separate opinion:

4. ID.; ID.; DEREGULATION, CONSTRUED. — In essence, deregulation

1. CONSTITUTIONAL LAW; JUDICIARY; SUPREME COURT; POWER AND

2. ID.; ID.; ID.; ID.; POLITICAL QUESTION; CONSTRUED; APPLICATION IN

3. ID.; STATUTES; PRESUMPTION OF CONSTITUTIONALITY FAVORED;

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On November 5, 1997, this Court in Tatad v. Secretary of the Department

While R.A. 8180 contained a separability clause, it was declared

g) Presidential Decree No. 1956, as amended by Executive

Petitioner contends that Section 19 of R.A. 8479, which prescribes the

The perennial shortage of oil supply in the Philippines is exacerbated by

In his recital of the antecedent circumstances, petitioner repeats in

The empirical existence of this deplorable situation was precisely the

A dramatic, at times expansive and grandiloquent, reiteration of the same

Petitioner may call the industry subject to price controls as deregulated.

Article 186 of the Revised Penal Code, as amended, punishes as a felony

Sections 8 and 9 of the Act, meanwhile, direct the Departments of Foreign

Bellosillo, Melo, Puno, Kapunan, Mendoza, Quisumbing, Purisima, Pardo,

Vitug, J., concurs in the result.

In essence, deregulation shifts the burden of price control from the

Judicial Review to Check Abuses

Doctrinally, policies and acts of the political departments of government

"SECTION 19. The State shall regulate or prohibit monopolies

He maintains that once Section 19 of RA 8479 is struck down, the

In Tatad v. Secretary of the Department of Energy, 6 this Court deﬁned a

In that case, RA 8180, the predecessor of RA 8479, was struck down by

In my Concurring Opinion in Tatad, I labeled RA 8180 as "a pseudo

In his present Petition, petitioner persistently alleges that "[i]t is self-

Unfortunately, however, the foregoing thematic statements and economic

The Legal Issue Is Whether Petitioner

True, retail prices of petroleum products have been increased, to the

Petitioner Has Not Proven

Market Share of New Players

Moreover, the three provisions in RA 8180 which were adjudged

However, the power to lower petroleum prices through the adoption or

WHEREFORE, I vote to DISMISS the Petition. LibLex

QUISUMBING, J., concurring:

I fully concur in the ponencia of Justice Consuelo Ynares-Santiago. What I

Now before us is a challenge to the second oil industry deregulation law,

In 1992, the Philippine government welcomed more liberal economic

Senator Francisco Tatad and Congressmen Enrique Garcia, Edcel Lagman,

The challenged provisions in R.A. 8180 were:

(2) the minimum inventory clause, in Section 6 which provides:

(3) the predatory pricing scheme in Section 9:

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Public respondents ﬁled their consolidated motion for reconsideration.

On reconsideration, our December 3, 1997 Resolution stressed that R.A.

Consequently, Congress fast-tracked a new oil deregulation law, R.A.