With all due respect to my esteemed colleague, Mr. Justice Puno, who has, as usual, prepared a well-written and comprehensive ponencia, I regret I cannot share the view that Republic Act No. 8180 should be struck down as violative of the Constitution.
The law in question, Republic Act No. 8180, otherwise known as the Downstream Oil Deregulation Act of 1996, contains, inter alia, the following provisions which have become the subject of the present controversy, to wit:
SEC. 5. Liberalization of Downstream Oil Industry and Tariff Treatment. –
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(b) Any law to the contrary notwithstanding and starting with the effectivity of this act, tariff duty shall be imposed and collected on imported crude oil at the rate of (3%) and imported refined petroleum products at the rate of seven percent (7%), except fuel oil and LPG, the rate for which shall be the same as that for imported 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.
SEC. 6. Security of Supply. – To ensure the security and continuity of petroleum crude and products supply, the DOE shall require the refiners and importers to maintain a minimum inventory equivalent to ten percent (10%) of their respective annual sales volume or forty (40) days of supply, whichever is lower.
xxx xxx xxx
SEC. 9. Prohibited Acts. – To ensure fair competition and prevent cartels and monopolies in the downstream oil industry, the following acts are hereby 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.
xxx xxx xxx
SEC. 15. Implementation of Full Deregulation. – Pursuant to Section 5 [e] of Republic Act No. 7638, the DOE [Department of Energy] shall, upon approval of the President, implement the full deregulation of the downstream oil industry not later than March 1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude oil and petroleum products in the world market are declining and when the exchange rate of the peso in relation to the US Dollar is stable…
In G.R. No. 124360, petitioners therein pray that the aforequoted Section 5 [b] be declared null and void. However, despite its pendency, President Ramos, pursuant to the above-cited Section 15 of the assailed law, issued Executive Order No. 392 on 22 January 1997 declaring the full deregulation of the downstream oil industry effective February 8, 1997. A few days after the implementation of said Executive Order, the second consolidated petition was filed (G.R. No. 127867), seeking, inter alia, the declaration of the unconstitutionality of Section 15 of the law on various grounds.
I submit that the instant consolidated petitions should be denied. In support of my view, I shall discuss the arguments of the parties point by point.
1. The instant petitions do not raise a justiciable controversy as the issues raised therein pertain to the wisdom and reasonableness of the provisions of the assailed law. The contentions made by petitioners, that the “imposition of different tariff rates on imported crude oil and imported refined petroleum products will not foster a truly competitive market, nor will it level the playing fields” and that said imposition “does not deregulate the downstream oil industry, instead, it controls the oil industry, contrary to the avowed policy of the law,” are clearly policy matters which are within the province of the political departments of the government. These submissions require a review of issues that are in the nature of political questions, hence, clearly beyond the ambit of judicial inquiry.
A political question refers to a question of policy or to issues which, under the Constitution, are to be decided by the people in their sovereign capacity, or in regard to which full discretionary authority has been delegated to the legislative or executive branch of the government. Generally, political questions are concerned with issues dependent upon the wisdom, not the legality, of a particular measure (Tañada vs. Cuenco, 100 Phil 101 ).
Notwithstanding the expanded judicial power of this Court under Section 1, Article VIII of the Constitution, an inquiry on the above-stated policy matters would delve on matters of wisdom which are exclusively within the legislative powers of Congress.
2. The petitioners do not have the necessary locus standi to file the instant consolidated petitions. Petitioners Lagman, Arroyo, Garcia, Tañada, and Tatad assail the constitutionality of the above-stated laws through the instant consolidated petitions in their capacity as members of Congress, and as taxpayers and concerned citizens. However, the existence of a constitutional issue in a case does not per se confer or clothe a legislator with locus standi to bring suit. In Phil. Constitution Association [PHILCONSA] vs. Enriquez (235 SCRA 506 ), we held that members of Congress may properly challenge the validity of an official act of any department of the government only upon showing that the assailed official act affects or impairs their rights and prerogatives as legislators. In Kilosbayan, Inc., et al. vs. Morato, et al. (246 SCRA 540 ), this Court further clarified that “if the complaint is not grounded on the impairment of the power of Congress, legislators do not have standing to question the validity of any law or official action.”
Republic Act No. 8180 clearly does not violate or impair prerogatives, powers, and rights of Congress, or the individual members thereof, considering that the assailed official act is the very act of Congress itself authorizing the full deregulation of the downstream oil industry. Neither can petitioners sue as taxpayers or concerned citizens. A condition sine qua non for the institution of a taxpayer’s suit is an allegation that the assailed action is an unconstitutional exercise of the spending powers of Congress or that it constitutes an illegal disbursement of public funds. The instant consolidated petitions do not allege that the assailed provisions of the law amount to an illegal disbursement of public money. Hence, petitioners cannot, even as taxpayers or concerned citizens, invoke this Court’s power of judicial review.
Further, petitioners, including FLAG, FDC, and Sanlakas, cannot be deemed proper parties for lack of a particularized interest or elemental substantial injury necessary to confer on them locus standi. The interest of the person assailing the constitutionality of a statute must be direct and personal. He must be able to show, not only that the law is invalid, but also that he has sustained or is in immediate danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way. It must appear that the person complaining has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute complained of Petitioners have not established such kind of interest.
3. Section 5 [b] of Republic Act No. 8180 is not violative of the “one title-one subject” rule under Section 26, Article VI of the Constitution. It is not required that a provision of law be expressed in the title thereof as long as the provision in question is embraced within the subject expressed in the title of the law. The “title of a bill does not have to be a catalogue of its contents and will suffice if the matters embodied in the text are relevant to each other and may be inferred from the title.” (Association of Small Landowners in the Phils., Inc. vs. Sec. of Agrarian Reform, 175 SCRA 343 ). An “act having a single general subject, indicated in the title, may contain any number of provisions, no matter how diverse they may be, so long as they are not inconsistent with or foreign to the general subject, and may be considered in furtherance of such subject by providing for the method and means of carrying out the general object.” [Sinco, Phil. Political Law, 11th ed., p. 225].
The questioned tariff provision in Section 5 [b] was provided as a means to implement the deregulation of the downstream oil industry and hence, is germane to the purpose of the assailed law. The general subject of Republic Act No. 8180, as expressed in its title, “An Act Deregulating the Downstream Oil Industry, and for the Other Purposes”, necessarily implies that the law provides for the means for such deregulation. One such means is the imposition of the differential tariff rates which are provided to encourage new investors as well as existing players to put up new refineries. The aforesaid provision is thus germane to, and in furtherance of, the object of deregulation. The trend of jurisprudence, ever since Sumulong vs. COMELEC (73 Phil. 288 ), is to give the above-stated constitutional requirement a liberal interpretation. Hence, there is indeed substantial compliance with said requirement.
Petitioners claim that because the House version of the assailed law did not impose any tariff rates but merely set the policy of “zero differential” and that the Senate version did not set or fix any tariff, the tariff changes being imposed by the assailed law was never subject of any deliberations in both houses nor the Bicameral Conference Committee. I believe that this argument is bereft of merit.
The report of the Bicameral Conference Committee, which was precisely formed to settle differences between the two houses of Congress, was approved by members thereof only after a full deliberation on the conflicting provisions of the Senate version and the House version of the assailed law. Moreover, the joint explanatory statement of said Committee which was submitted to both houses, explicitly states that “while sub-paragraph [b] is a modification, its thrust and style were patterned after the House’s original sub-paragraph [b].” Thus, it cannot be denied that both houses were informed of the changes in the aforestated provision of the assailed law. No legislator can validly state that he was not apprised of the purposes, nature, and scope of the provisions of the law since the inclusion of the tariff differential was clearly mentioned in the Bicameral Conference Committee’s explanatory note.
As regards the power of the Bicameral Conference Committee to include in its report an entirely new provision that is neither found in the House bill or Senate bill, this Court already upheld such power in Tolentino vs. Sec. of Finance (235 SCRA 630 ), where we ruled that the conference committee can even include an amendment in the nature of a substitute so long as such amendment is germane to the subject of the bill before it.
Lastly, in view of the “enrolled bill theory” pronounced by this Court as early as 1947 in the case of Mabanag vs. Lopez Vito (78 Phil. 1 ), the duly authenticated copy of the bill, signed by the proper officers of each house, and approved by the President, is conclusive upon the courts not only of its provisions but also of its due enactment.
4. Section 15 of Republic Act No. 8180 does not constitute undue delegation of legislative power. Petitioners themselves admit that said section provides the Secretary of Energy and the President with the bases of (1) “practicability”, (2) “the decline of crude oil prices in the world market”, and (3) “the stability of the Peso exchange rate in relation to the US Dollar”, in determining the effectivity of full deregulation. To my mind, said bases are determinate and determinable guidelines, when examined in the light of the tests for permissible delegation.
The assailed law satisfies the completeness test as it is complete and leaves nothing more for the Executive Branch to do but to enforce the same. Section 2 thereof expressly provides that “it shall be the policy of the State to deregulate the downstream oil industry to foster a truly competitive market which can better achieve the social policy objectives of fair prices and adequate, continuous supply of environmentally-clean and high-quality petroleum products.” This provision manifestly declares the policy to be achieved through the delegate, that is, the full deregulation of the downstream oil industry toward the end of full and free competition. Section 15 further provides for all the basic terms and conditions for its execution and thus belies the argument that the Executive Branch is given complete liberty to determine whether or not to implement the law. Indeed, Congress did not only make full deregulation mandatory, but likewise set a deadline [that is, not later than March 1997], within which full deregulation should be achieved.
Congress may validly provide that a statute shall take effect or its operation shall be revived or suspended or shall terminate upon the occurrence of certain events or contingencies the ascertainment of which may be left to some official agency. In effect, contingent legislation may be issued by the Executive Branch pursuant to a delegation of authority to determine some fact or state of things upon which the enforcement of a law depends (Cruz, Phil. Political Law, 1996 ed., p. 96; Cruz vs. Youngberg, 56 Phil. 234 ). This is a valid delegation since what the delegate performs is a matter of detail whereas the statute remains complete in all essential matters. Section 15 falls under this kind of delegated authority. Notably, the only aspect with respect to which the President can exercise “discretion” is the determination of whether deregulation may be implemented on or before March, 1997, the deadline set by Congress. If he so decides, however, certain conditions must first be satisfied, to wit: (1) the prices of crude oil and petroleum products in the world market are declining, and (2) the exchange rate of the peso in relation to the US Dollar is stable. Significantly, the so-called “discretion” pertains only to the ascertainment of the existence of conditions which are necessary for the effectivity of the law and not a discretion as to what the law shall be.
In the same vein, I submit that the President’s issuance of Executive Order No. 392 last January 22, 1997 is valid as contingent legislation. All the Chief Executive did was to exercise his delegated authority to ascertain and recognize certain events or contingencies which prompted him to advance the deregulation to a date earlier than March, 1997. Anyway, the law does not prohibit him from implementing the deregulation prior to March, 1997, as long as the standards of the law are met.
Further, the law satisfies the sufficient standards test. The words “practicable”, “declining”, and “stable”, as used in Section 15 of the assailed law are sufficient standards that saliently “map out the boundaries of the delegate’s authority by defining the legislative policy and indicating the circumstances under which it is to be pursued and effected.” [Cruz, Phil. Political Law, 1996 ed., p. 98]. Considering the normal and ordinary definitions of these standards, I believe that the factors to be considered by the President and/or Secretary of Energy in implementing full deregulation are, as mentioned, determinate and determinable.
It is likewise noteworthy that the above-mentioned factors laid down by the subject law are not solely dependent on Congress. Verily, oil pricing and the peso-dollar exchange rate are dependent on the various forces working within the consumer market. Accordingly, it would have been unreasonable, or even impossible, for the legislature to have provided for fixed and specific oil prices and exchange rates. To require Congress to set forth specifics in the law would effectively deprive the legislature of the flexibility and practicability which subordinate legislation is ultimately designed to provide. Besides, said specifics are precisely the details which are beyond the competence of Congress, and thus, are properly delegated to appropriate administrative agencies and executive officials to “fill in”. It cannot be gainsaid that the detail of the timing of full deregulation has been “filled in” by the President, upon the recommendation of the DOE, when he issued Executive Order No. 392.
5. Republic Act No. 8180 is not violative of the constitutional prohibition against monopolies, combinations in restraint of trade, and unfair competition. The three provisions relied upon by petitioners (Section 5 [b] on tariff differential; Section 6 on the 40-day minimum inventory requirement; and Section 9 [b] on the prohibited act of predatory pricing) actually promote, rather than restrain, free trade and competition.
The tariff differential provided in the assailed law does not necessarily make the business of importing refined petroleum products a losing proposition for new players. First, the decision of a prospective trader/importer (subjected to the 7% tariff rate) to compete in the downstream oil industry as a new player is based solely on whether he can, based on his computations, generate the desired internal rate of return [IRR] and net present value [NPV] notwithstanding the imposition of a higher tariff rate. Second, such a difference in tax treatment does not necessarily provide refiners of imported crude oil with a significant level of economic advantage considering the huge amount of investments required in putting up refinery plants which will then have to be added to said refiners’ production cost. It is not unreasonable to suppose that the additional cost imputed by higher tariff can anyway be overcome by a new player in the business of importation due to lower operating costs, lower capital infusion, and lower capital carrying costs. Consequently, the resultant cost of imported finished petroleum and that of locally refined petroleum products may turn out to be approximately the same.
existence of a tariff differential with regard to imported crude oil and
imported finished products is nothing new or novel. In fact, prior to the passage of
Republic Act No.
8180, there existed a 10% tariff differential resulting from the imposition
of a 20% tariff rate on imported finished petroleum products and 10% on
imported crude oil [based on Executive Order No. 115]. Significantly, Section 5[b] of the assailed
law effectively lowered the tariff rates from 20% to 7% for imported refined
petroleum products, and 10% to 3% for imported crude oil, or a reduction of the
differential from 10% to 4%. This
provision is certainly favorable to all in the downstream oil industry, whether
they be existing or new players. It thus
follows that the 4% tariff differential aims to ensure the stable supply of
petroleum products by encouraging new entrants to put up oil refineries in the
the assailed tariff differential is likewise not violative of the equal
protection clause of the Constitution.
It is germane to the declared policy of
Republic Act No.
8180 which is to achieve (1) fair prices; and (2) adequate and continuous
supply of environmentally-clean and high quality petroleum products. Said adequate and continuous supply of
petroleum products will be achieved if new investors or players are enticed to
engage in the business of refining crude oil in the country. Existing refining companies, are similarly
encouraged to put up additional refining companies. All of this can be made possible in view of
the lower tariff duty on imported crude oil than that levied on imported
refined petroleum products. In effect,
the lower tariff rates will enable the refiners to recoup their investments
considering that they will be investing billions of pesos in putting up their
refineries in the
As regards the 40-day inventory requirement, it must be emphasized that the 10% minimum requirement is based on the refiners’ and importers’ annual sales volume, and hence, obviously inapplicable to new entrants as they do not have an annual sales volume yet. Contrary to petitioners’ argument, this requirement is not intended to discourage new or prospective players in the downstream oil industry. Rather, it guarantees “security and continuity of petroleum crude and products supply.” [Section 6, Republic Act No. 8180] This legal requirement is meant to weed out entities not sufficiently qualified to participate in the local downstream oil industry. Consequently, it is meant to protect the industry from fly-by-night business operators whose sole interest would be to make quick profits and who may prove unreliable in the effort to provide an adequate and steady supply of petroleum products in the country. In effect, the aforestated provision benefits not only the three respondent oil companies but all entities serious and committed to put up storage facilities and to participate as serious players in the local oil industry. Moreover, it benefits the entire consuming public by its guarantee of an “adequate continuous supply of environmentally-clean and high quality petroleum products.” It ensures that all companies in the downstream oil industry operate according to the same high standards, that the necessary storage and distribution facilities are in place to support the level of business activities involved, and that operations are conducted in a safe and environmentally sound manner for the benefit of the consuming public.
Regarding the prohibition against predatory pricing, I believe that petitioners’ argument is quite misplaced. The provision actually protects new players by preventing, under pain of criminal sanction, the more established oil firms from driving away any potential or actual competitor by taking undue advantage of their size and relative financial stability. Obviously, the new players are the ones susceptible to closing down on account of intolerable losses which will be brought about by fierce competition with rival firms. The petitioners are merely working under the presumption that it is the new players which would succumb to predatory pricing, and not the more established oil firms. This is not a factual assertion but a rather baseless and conjectural assumption.
As to the alleged cartel among the three respondent oil companies, much as we suspect the same, its existence calls for a finding of fact which this Court is not in the position to make. We cannot be called to try facts and resolve factual issues such as this (Trade Unions of the Phils. vs. Laguesma, 236 SCRA 586 ); Ledesma vs. NLRC, 246 SCRA 247 ).
With respect to the amendatory bills filed by various Congressmen aimed to modify the alleged defects of Republic Act No. 8180, I submit that such bills are the correct remedial steps to pursue, instead of the instant petitions to set aside the statute sought to be amended. The proper forum is Congress, not this Court.
Finally, as to the ponencia’s endnote which cites the plea of respondent oil companies for the lifting of the restraining order against them to enable them to adjust the prices of petroleum and petroleum products in view of the devaluation of our currency, I am pensive as to how the matter can be addressed to the obviously defunct Energy Regulatory Board. There has been a number of price increase in the meantime. Too much water has passed under the bridge. It is too difficult to turn back the hands of time.
For all the foregoing reasons, I, therefore, vote for the outright dismissal of the instant consolidated petitions for lack of merit.
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