SPONSORSHIP REMARKS OF HON. DANTE O. TIÑGA (LAKAS, TAGUIG-PATEROS) ON COMMITTEE REPORT NO. 1312 ON HOUSE BILL NO. 10363, 9 DECEMBER 1997

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Mr. Speaker:

 

With its recent rulings, the Supreme Court has all but interred Republic Act No. 8180, which is most commonly referred to as the Oil Deregulation Law.  But the High Tribunal, in the same breath, has in no uncertain terms permitted the law to be resurrected, of course this time it should be minus what it considers the incurably diseased parts, that is, the parts which led the court to ordain the burial of the statute.

 

It its main decision, the Supreme Court made it clear that it does not disagree with deregulation as an economic policy. (Decision dated November 5, 1997 in G.R. Nos. 124360 & 127867, p. 38).   And in the resolution denying the motions for reconsideration, it reiterated that it “did not condemn the economic policy of deregulation as unconstitutional.”  (Resolution dated December 3, 1997, p. 21).

 

It is therefore my distinct privilege, Mr. Speaker, to author, not only to sponsor which is what I did as regards the voided former law, the new oil deregulation measure.  The committee bill, House Bill No. 10363, which we are now submitting to this Body for passage is a consolidation of House Bill 10270, authored by Honorable Hernando B. Perez; House Bill No. 10292, authored by the Honorable Manuel Roxas II; House Bill No. 10302, by this Representation; House Bill No. 10305, authored by Honorable Miguel Romero; House Bill No. 10309, authored by Honorable Marcial Punzalan, Jr.; and House Bill 10314, authored by Honorable Leopoldo San Buenaventura.

 

In its resolution, the Supreme Court stressed that it is not its will “to return even temporarily to the regime of regulation” for such a move, according to the Supreme Court has “pernicious consequences.”  (Resolution dated Dec. 3, 1997, p. 21).  But it stressed too that, and I quote: “under our scheme of government the remedy to prevent the revival of an unwarranted status quo ante lies with Congress as only Congress can block the revival or the status quo ante or stop its continuation by immediately enacting the necessary remedial legislation.  (Resolution dated Dec. 3, 1997, p. 21).

 

Significantly, the Supreme Court has set the constitutional parameters along which Congress may fashion the new Oil Deregulation Law.  It even clarified that and I quote again: “There is no impediment in enacting Republic Act No. 8180 minus the provisions which are anti-competition.” (Resolution dated Dec. 3, 1997, p. 21).   But we should do more than that.  There is need to fortify the antitrust safeguards, institutionalize the mechanisms to redress antitrust violations and enhance the powers of the Secretary of the Department of Energy to gather information and to require reports for the purpose of curbing anti-monopolistic behavior.

 

The present bill does away with the much-criticized provision on tariff differential.  Instead, it mandates uniformity in the tariff treatment of imported crude oil and imported finished products.  The specific tariff duty rate may either be provided by Congress in the measure at hand, in which case it may be fixed during the period of amendments at 3%, or it may be left to the President of the Philippines pursuant to the authority delegated to him by Congress in the Tariff and Customs Code.

 

The present bill does not contain any provision on minimum inventory requirement.

 

The approach of the bill concerning predatory pricing is different, however.  Although the Supreme Court scuttled the erstwhile provision on predatory pricing, the Committee proposes that the new measure should prohibit predatory pricing, nevertheless. Such a proscription is the hallmark of any well-meaning antitrust legislation.

 

The Supreme Court, it will be noted, struck down the predatory pricing language in R. A. 8180 because, according to the Court, conceivably it could be used against new players and it was loosely constructed.  The predatory pricing provision in the present bill does not suffer from any such infirmity.  As a matter of fact, the Supreme Court, in its resolution, cited the objective of this Representation’s House Bill No. 10057 and the new definition of predatory pricing proposed therein and even used the bill in rejecting the government’s motion for reconsideration.  (Resolution dated Dec. 3, 1997, p. 21).  This Representation filed House Bill No. 10057 before the promulgation of the Supreme Court decision.  Justice Santiago Kapunan, who came out with a separate concurring and dissenting opinion implied that the amendment of the predatory pricing provision along the lines suggested in the said bill which are incorporated in the present bill, by the way, Mr. Speaker, will wipe out the original defect.

 

The definition in the bill at hand was taken largely from the Areeda-Tuner Test in the United States on predatory pricing, and in part from the Robinson-Patman Act, also of the United States.  The definition reads, and I quote: “Predatory pricing means selling or offering to sell any oil product at a price below the average variable cost for the purpose of destroying competition, eliminating a competitor or discouraging a competitor from entering the market.”

 

The Supreme Court Resolution of December 3, 1997 is quite explicit, Mr. Speaker, that the new oil deregulation law can do away with the transition phase and start of full deregulation upon the effectivity of the law.  As pointed out earlier, the Court ruled that all Congress has to do is to reenact R. A. No. 8180 sans the so-called offending provisions.   On the dispensability of the transition phase, the Court’s following pronouncements are relevant. May I quote:

 

“We shall first resolve petitioner Garcia’s linchpin contention that the full deregulation decreed by R. A. 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. 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 product, using the automatic pricing formula.  While the OPSF would return, its coverage would be limited to monthly price increases in excess of 50 centavos per liter.”

 

“We are not impressed by petitioner Garcia’s submission.  Petitioner has no basis as 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 the 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, it the transition phase 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 basic 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.”  (Decision dated November 5, 1997, pp. 17-18).

 

That is what the Supreme Court said.

 

Mr. Speaker, I have to concede though that the issue of whether to jump right away to full deregulation or install a transition phase is rich with political overtones.  But whatever we do, we cannot prevent the inexorable increase of oil prices upon the effectivity of this bill when it becomes a law unless a price subsidy is set up.  It is a rule of thumb according to the Department of Energy that each $ 1.00 per barrel increase in the cost of crude oil requires a weighted average of product price increase of 20 centavos per liter, and that each one peso per US $ devaluation requires a weighted average product price increase of 13 centavos per liter.

 

To help ensure the success of oil deregulation, apart from the new definition of predatory pricing, the present bill recommends the following additional features:

 

(1)      Institutionalization of the concept of government intervention and private suits to address the problem of antitrust violations.  Specifically, the government may file an action to prevent or restrain any act of cartelization or predatory pricing, and if it has suffered any loss or damage by reason of the antitrust violation it may recover damages.  Likewise, a remedy is made available to a private person who suffers loss or damage by reason of any act of cartelization or predatory pricing.

 

(2)      Requiring oil refiners to list their shares and offer 10% thereof to the public through the stock exchange.  It is hoped that this requirement will foster more transparency and accountability on the operations and pricing policies of the oil refiners and improve their public image.  For a listed company, among the data required to be disclosed are their quarterly financial statements, profit margins and pricing strategy.

 

(3)      Enhancing the data-gathering powers of the Secretary of the Department of Energy.

 

Mr. Speaker, the Supreme Court said, “the ball is now in our hall.”  So, this House must act swiftly but judiciously.

 

The Supreme Court supplied the answers to many of the constitutional and legal questions which Members of this House are wont to ask.  It is hoped, therefore, that the measure at hand will not be subjected to protracted debates and repetitious arguments.  After all, even the Supreme Court has acknowledged that oil deregulation is a progressive piece of legislation.

 

I respectfully urge our colleagues, therefore, to give new life to the oil deregulation policy by approving the present bill.

 

Thank you, Mr. Speaker.

 

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