MELO, J.,
Dissenting:
With all due respect to my
esteemed colleague, Mr. Justice Puno, who has, as usual, prepared a
well-written and comprehensive
ponencia, I regret I
cannot share the view that
Republic Act No. 8180 should
be struck down as violative of the Constitution.
The law in question, Republic Act No. 8180, otherwise known as the Downstream Oil Deregulation Act of 1996, contains, inter alia, the following provisions which have become the subject of the present controversy, to wit:
Sec. 5. Liberalization of Downstream Oil Industry and Tariff Treatment.
xxx xxx xxx
(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 [1957]).
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 [1994]), we held that members of Congress may properly challenge the validity of an official act of any department of the government only upon showing that the assailed official act affects or impairs their rights and prerogatives as legislators. In Kilosbayan, Inc., et al. vs. Morato, et al. (246 SCRA 540 [1995]), this Court further clarified that “if the complaint is not grounded on the impairment of the power of Congress, legislators do not have standing to question the validity of any law or official action.”
Republic Act No.
8180 clearly does not violate or impair prerogatives, powers, and rights of
Congress, or the individual members thereof, considering that the assailed
official act is the very act of Congress itself authorizing the full
deregulation of the downstream oil industry.
Neither can petitioners sue as taxpayers or concerned citizens. A condition
sine qua non for the institution of a taxpayer’s suit is an
allegation that the assailed action is an unconstitutional exercise of the
spending powers of Congress or that it constitutes an illegal disbursement of
public funds. The instant consolidated
petitions do not allege that the assailed provisions of the law amount to an
illegal disbursement of public money.
Hence, petitioners cannot, even as taxpayers or concerned citizens,
invoke this Court’s power of judicial review.
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[1], Article VI of the Constitution.
It is not required that a provision of law be expressed in the title
thereof as long as the provision in question is embraced within the subject
expressed in the title of the law. The
“title of a bill does not have to be a catalogue of its contents and will
suffice if the matters embodied in the text are relevant to each other and may
be inferred from the title.” (Association
of Small Landowners in the Phils., Inc. vs. Sec. of Agrarian Reform, 175 SCRA 343
[1989]). An “act having a
single general subject, indicated in the title, may contain any number of
provisions, no matter how diverse they may be, so long as they are not
inconsistent with or foreign to the general subject, and may be considered in furtherance
of such subject by providing for the method and means of carrying out the
general object.” [Sinco, Phil.
Political Law, 11th ed., p. 225].
The
questioned tariff provision in Section 5 [b] was provided as a means to implement
the deregulation of the downstream oil industry and hence, is germane to the
purpose of the assailed law. The general
subject of
Republic
Act No. 8180, as expressed in its title, “An Act Deregulating the
Downstream Oil Industry, and for the Other Purposes”, necessarily implies that
the law provides for the means for such deregulation. One such means is the imposition of the
differential tariff rates which are provided to encourage new investors as well
as existing players to put up new refineries.
The aforesaid provision is thus germane to, and in furtherance of, the
object of deregulation. The trend of
jurisprudence, ever since Sumulong
vs. COMELEC (73 Phil. 288 [1941]), is to give the above-stated
constitutional requirement a liberal interpretation. Hence, there is indeed substantial compliance
with said requirement.
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 [1994]), where we ruled that the conference committee can even
include an amendment in the nature of a substitute so long as such amendment is
germane to the subject of the bill before it.
Lastly, in view of the “enrolled bill theory” pronounced by this Court as early as 1947 in the case of Mabanag vs. Lopez Vito (78 Phil. 1 [1947]), the duly authenticated copy of the bill, signed by the proper officers of each house, and approved by the President, is conclusive upon the courts not only of its provisions but also of its due enactment.
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 [1931]). This is a valid delegation since what the
delegate performs is a matter of detail whereas the statute remains complete in
all essential matters. Section 15 falls
under this kind of delegated authority.
Notably, the only aspect with respect to which the President can
exercise “discretion” is the determination of whether deregulation may be
implemented on or before March, 1997, the deadline set by Congress. If he so decides, however, certain conditions
must first be satisfied, to wit: (1) the
prices of crude oil and petroleum products in the world market are declining,
and (2) the exchange rate of the peso in relation to the US Dollar is
stable. Significantly, the so-called
“discretion” pertains only to the ascertainment of the existence of conditions
which are necessary for the effectivity of the law and not a discretion as to
what the law shall be.
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.
The
existence of a tariff differential with regard to imported crude oil and
imported finished products is nothing new or novel. In fact, prior to the passage of
Republic Act No.
8180, there existed a 10% tariff differential resulting from the imposition
of a 20% tariff rate on imported finished petroleum products and 10% on
imported crude oil [based on Executive Order No. 115]. Significantly, Section 5[b] of the assailed
law effectively lowered the tariff rates from 20% to 7% for imported refined
petroleum products, and 10% to 3% for imported crude oil, or a reduction of the
differential from 10% to 4%. This
provision is certainly favorable to all in the downstream oil industry, whether
they be existing or new players. It thus
follows that the 4% tariff differential aims to ensure the stable supply of
petroleum products by encouraging new entrants to put up oil refineries in the
Further,
the assailed tariff differential is likewise not violative of the equal
protection clause of the Constitution.
It is germane to the declared policy of
Republic Act No.
8180 which is to achieve (1) fair prices; and (2) adequate and continuous
supply of environmentally-clean and high quality petroleum products. Said adequate and continuous supply of
petroleum products will be achieved if new investors or players are enticed to
engage in the business of refining crude oil in the country. Existing refining companies, are similarly
encouraged to put up additional refining companies. All of this can be made possible in view of
the lower tariff duty on imported crude oil than that levied on imported
refined petroleum products. In effect,
the lower tariff rates will enable the refiners to recoup their investments
considering that they will be investing billions of pesos in putting up their
refineries in the
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 [1994]); Ledesma vs. NLRC, 246 SCRA 247
[1995]).
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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