EN BANC

[G.R. No. 124360. November 5, 1997.]

FRANCISCO S. TATAD , petitioner, vs. THE SECRETARY OF THE

DEPARTMENT OF ENERGY AND THE SECRETARY OF THE
DEPARTMENT OF FINANCE, respondents.

[G.R. No. 127867. November 5, 1997.]

EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA,

WIGBERTO TAÑADA, FLAG HUMAN RIGHTS FOUNDATION,
INC., FREEDOM FROM DEBT COALITION (FDC), SANLAKAS,
petitioners, vs. HON. RUBEN TORRES in his capacity as the
Executive Secretary, HON. FRANCISCO VIRAY, in his
capacity as the Secretary of Energy, CALTEX Philippines,
Inc., PETRON Corporation and PILIPINAS SHELL
Corporation, respondents.

Brillantes, Navarro, Jumamil, Arcilla, Escolin and Martinez Law Office for
petitioner in G.R. No. 124360.
Sanidad, Abaya, Cortez, Te Madrid, Viterbo & Tan Law Firm for
petitioners in G.R. No. 127867.
Alfonso M. Cruz Law Offices for Enrique Garcia.

SYNOPSIS

Republic Act No. 8180, or the Downstream Oil Industry Regulation Act
of 1996, was enacted by Congress for the purpose of deregulating the
downstream oil industry. Its validity was challenged on the following
constitutional grounds: a) that the imposition of different tariff rates on
imported crude oil and imported refined petroleum products violates the
equal protection clause; b) the imposition of different tariff rates does not
deregulate the downstream oil industry but instead controls the oil industry;
c) the inclusion of the tariff provision in Section 5(b) of RA 8180 violates the
one title-one subject requirement of the Constitution; d) that Section 15
thereof constitutes undue delegation of legislative power to the President
and the Secretary of Energy and violates the constitutional prohibition
against monopolies; and e) that Executive Order No. 392 implementing R.A.
8180 is arbitrary and unreasonable because it was enacted due to the
alleged depletion of OPSF fund — a condition not found in the law.
This Court has adopted a liberal construction of the one title-one
subject rule. A law having a single general subject indicated in the title may
contain any number of provisions, so long as they are not inconsistent with
or foreign to the general subject, and may be considered in furtherance of
such subject by providing for the method and means of carrying out the
general subject. Section 5(b) providing for tariff differential is germane to the
subject of R.A. No. 8180 which is the deregulation of the downstream oil
industry.
Section 15 can hurdle both completeness test and the sufficient
standard test. 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.
Section 15 of R.A. No. 8180 did not mention the depletion of the OPSF
fund as basis of deregulation, thus said extraneous factor constitutes a
misapplication of R.A. No. 8180.
The 4% tariff differential and the inventory requirement are significant
barriers which discourage new players to enter the market. As the dominant
players, Petron, Shell and Caltex boast of existing refineries of various
capacities and easily comply with the inventory requirement as against
prospective new players.
The offending provisions of R.A. No. 8180 so permeate its essence that
the entire law has to be struck down. R.A. No. 8180 with its anti-competition
provisions cannot be allowed by this Court to stand even while Congress is
working to remedy its defects. TIAEac

SYLLABUS

1. Â CONSTITUTIONAL LAW; JUDICIARY; JUDICIAL POWER,

CONSTRUED. — Judicial power includes not only the duty of the courts to
settle actual controversies involving rights which are legally demandable and
enforceable, but also the duty to determine whether or not there has been
grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the government. The courts, as
guardians of the Constitution, have the inherent authority to determine
whether a statute enacted by the legislature transcends the limit imposed by
the fundamental law. Where a statute violates the Constitution, it is not only
the right but the duty of the judiciary to declare such act as unconstitutional
and void. EcSCHD

2. Â ID.; ID.; ISSUES ASSAILING THE CONSTITUTIONALITY OF R.A.

8180, JUSTICIABLE. — Even a sideglance at the petitions will reveal that
petitioners have raised constitutional issues which deserve the resolution of
this Court in view of their seriousness and their value as precedents. Our
statement of facts and definition of issues clearly show that petitioners are
assailing R.A. No. 8180 because its provisions infringe the Constitution and
not because the law lacks wisdom. The principle of separation of power
mandates that challenges on the constitutionality of a law should be
resolved in our courts of justice while doubts on the wisdom of a law should
be debated in the halls of Congress. Every now and then, a law may be
denounced in court both as bereft of wisdom and constitutionally infirmed.
Such denunciation will not deny this Court of its jurisdiction to resolve the
constitutionality of the said law while prudentially refusing to pass on its
wisdom.
3. Â REMEDIAL LAW; ACTIONS; PARTIES; TECHNICALITIES SUCH AS
PERSONALITY, STANDING OR INTEREST, ARE BRUSHED ASIDE WHERE
ISSUES ARE OF PUBLIC IMPORTANCE. — The effort of respondents to
question the locus standi of petitioners must also fall on barren ground. In
language too lucid to be misunderstood, this Court has brightlined its liberal
stance on a petitioner's locus standi where the petitioner is able to craft an
issue of transcendental significance to the people. In Kapatiran ng mga
Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan , we stressed: ". . .
Objections to taxpayers' suit for lack of sufficient personality, standing or
interest are, however, in the main procedural matters. Considering the
importance to the public of the cases at bar, and in keeping with the Court's
duty, under the 1987 Constitution, to determine whether or not the other
branches of government have kept themselves within the limits of the
Constitution and the laws and that they have not abused the discretion given
to them, the Court has brushed aside technicalities of procedure and has
taken cognizance of these petitions." There is not a dot of disagreement
between the petitioners and the respondents on the far reaching importance
of the validity of RA No. 8180 deregulating our downstream oil industry.
Thus, there is no good sense in being hypertechnical on the standing of
petitioners for they pose issues which are significant to our people and which
deserve our forthright resolution.
4. Â CONSTITUTIONAL LAW; CONGRESS; ONE TITLE-ONE SUBJECT
RULE; LITERALLY CONSTRUED. — As a policy, this Court has adopted a liberal
construction of the one title-one subject rule. We have consistently ruled
that the title need not mirror, fully index or catalogue all contents and
minute details of a law. A law having a single general subject indicated in
the title may contain any number of provisions, no matter how diverse they
may be, so long as they are not inconsistent with or foreign to the general
subject, and may be considered in furtherance of such subject by providing
for the method and means of carrying out the general subject.
5. Â ID.; ID.; ID.; SECTION 5(B) PROVIDING FOR TARIFF
DIFFERENTIAL, GERMANE TO DEREGULATION OF DOWNSTREAM OIL
INDUSTRY. — We hold that Section 5(b) providing for tariff differential is
germane to the subject of R.A. No. 8180 which is the deregulation of the
downstream oil industry. The section is supposed to sway prospective
investors to put up refineries in our country and make them rely less on
imported petroleum.
6. Â ID.; ID.; POWER TO DELEGATE EXECUTION OF LAWS; TESTS. —
The power of Congress to delegate the execution of laws has long been
settled by this Court. As early as 1916 in Compania General de Tabacos de
Filipinas vs. The Board of Public Utility Commissioners , this Court, thru Mr.
Justice Moreland, held that "the true distinction is between the delegation of
power to make the law, which necessarily involves a discretion as to what it
shall be, and conferring authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot be done; to
the latter no valid objection can be made." Over the years, as the legal
engineering of men's relationship became more difficult, Congress has to
rely more on the practice of delegating the execution of laws to the
executive and other administrative agencies. Two tests have been
developed to determine whether the delegation of the power to execute laws
does not involve the abdication of the power to make law itself. We
delineated the metes and bounds of these tests in Eastern Shipping Lines,
Inc. vs. POEA , thus: "There are two accepted tests to determine whether or
not there is a valid delegation of legislative power, viz.: the completeness
test and the sufficient standard test. Under the first test, the law must be
complete in all its terms and conditions when it leaves the legislative such
that when it reaches the delegate the only thing he will have to do is to
enforce it. Under the sufficient standard test, there must be adequate
guidelines or limitations in the law to map out the boundaries of the
delegate's authority and prevent the delegation from running riot. Both tests
are intended to prevent a total transference of legislative authority to the
delegate, who is not allowed to step into the shoes of the legislature and
exercise a power essentially legislative."
caAICE

7. Â ID.; ID.; ID.; ID.; EVEN IF THE LAW DOES NOT EXPRESSLY
PINPOINT THE STANDARD, COURTS WILL BEND BACKWARD TO LOCATE THE
SAME ELSEWHERE. — The validity of delegating legislative power is now a
quiet area in our constitutional landscape. As sagely observed, delegation of
legislative power has become an inevitability in light of the increasing
complexity of the task of government. Thus, courts bend as far back as
possible to sustain the constitutionality of laws which are assailed as unduly
delegating legislative powers. Citing Hirabayashi v. United States as
authority, Mr. Justice Isagani A. Cruz states "that even if the law does not
expressly pinpoint the standard, the courts will bend over backward to locate
the same elsewhere in order to spare the statute, if it can, from
constitutional infirmity."
8. Â ID.; ID.;. SECTION 15 OF R.A. 8180, NOT UNDUE DELEGATION
OF POWER. — Given the groove of the Court's rulings, the attempt of
petitioners to strike down Section 15 on the ground of undue delegation of
legislative power cannot prosper. Section 15 can hurdle both the
completeness test and the sufficient standard test. It will be noted that
Congress expressly provided in R.A. No. 8180 that full deregulation will start
at the end of March 1997, regardless of the occurrence of any event. Full
deregulation at the end of March 1997 is mandatory and the Executive has
no discretion to postpone it for any purported reason. Thus, the law is
complete on the question of the final date of full deregulation. The discretion
given to the President is to advance the date of full deregulation before the
end of March 1997. Section 15 lays down the standard to guide the
judgment of the President — he is to time it as far as practicable when the
prices of crude oil and petroleum products in the world market are declining
and when the exchange rate of the peso in relation to the US dollar is stable.
Petitioners contend that the words "as far as practicable," "declining" and
"stable" should have been defined in R.A. No. 8180 as they do not set
determinate or determinable standards. The stubborn submission deserves
scant consideration. The dictionary meanings of these words are well settled
and cannot confuse men of reasonable intelligence. Webster defines
"practicable" as meaning possible to practice or perform, "decline" as
meaning to take a downward direction, and "stable" as meaning firmly
established. The fear of petitioners that these words will result in the
exercise of executive discretion that will run riot is thus groundless. To be
sure, the Court has sustained the validity of similar, if not more general
standards in other cases.
9. Â ID.; ID.; DELEGATION OF POWER; EXECUTIVE IS BEREFT OF ANY
RIGHT TO ALTER THE STANDARD SET IN R.A. 8 180 BY CONSIDERING THE
DEPLETION OF OIL PRICE STABILIZATION FUND (OPSF) AS A FACTOR IN
FULLY DEREGULATING THE DOWNSTREAM OIL INDUSTRY IN FEBRUARY 1997.
— The Executive department failed to follow faithfully the standards set by
R.A. No. 8180 when it considered the extraneous factor of depletion of the
OPSF fund. The misappreciation of this extra factor cannot be justified on the
ground that the Executive department considered anyway the stability of the
prices of crude oil in the world market and the stability of the exchange rate
of the peso to the dollar. By considering another factor to hasten full
deregulation, the Executive department rewrote the standards set forth in
R.A. 8180. The Executive is bereft of any right to alter either by subtraction
or addition the standards set in R.A. No. 8180 for it has no power to make
laws. To cede to the Executive the power to make law is to invite tyranny,
indeed, to transgress the principle of separation of powers. The exercise of
delegated power is given a strict scrutiny by courts for the delegate is a
mere agent whose action cannot infringe the terms of agency. In the cases
at bar, the Executive co-mingled the factor of depletion of the OPSF fund
with the factors of decline of the price of crude oil in the world market and
the stability of the peso to the US dollar. On the basis of the text of E.O. No.
392, it is impossible to determine the weight given by the Executive
department to the depletion of the OPSF fund. It could well be the principal
consideration for the early deregulation. It could have been accorded an
equal significance. Or its importance could be nil. In light of this uncertainty,
we rule that early deregulation under E.O. No. 392 constitutes a
misapplication of R.A. No. 8180.
10. Â ID.; NATIONAL ECONOMY AND PATRIMONY; MONOPOLY AND
COMBINATION IN RESTRAINT OF TRADE, DEFINED. — 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.
11. Â ID.; ID.; FREE ENTERPRISE SYSTEM DID NOT PER SE PROHIBIT
THE OPERATION OF MONOPOLIES. — While the Constitution embraced free
enterprise as an economic creed, it did not prohibit per se the operation of
monopolies which can, however, be regulated in the public interest. Thus
too, our free enterprise system is not based on a market of pure and
unadulterated competition where the State pursues a strict hands-off policy
and follows the let-the-devil devour the hindmost rule. Combinations in
restraint of trade and unfair competitions are absolutely proscribed and the
proscription is directed both against the State as well as the private sector.
This distinct free enterprise system is dictated by the need to achieve the
goals of our national economy as defined by Section 1, Article XII of the
Constitution which are: more equitable distribution of opportunities, income
and wealth; a sustained increase in the amount of goods and services
produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially the
underprivileged. It also calls for the State to protect Filipino enterprises
against unfair competition and trade practices.
12. Â ID.; ID.; ID.; COMPETITION, UNDERLYING PRINCIPLE. — 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. DCHIAS

13. Â ID.; ID.; ID.; TARIFF DIFFERENTIAL OF 4% WORKS TO THE

IMMENSE BENEFIT OF THE THREE MAJOR LEAGUE PLAYERS IN THE OIL
MARKET. — In the cases at bar, it cannot be denied that our downstream oil
industry is operated and controlled by an oligopoly, a foreign oligopoly at
that, Petron, Shell and Caltex stand as the only major league players in the
oil market. All other players belong to the lilliputian league. As the dominant
players, Petron, Shell and Caltex boast of existing refineries of various
capacities. The tariff differential of 4% therefore works to their immense
benefit. Yet, this is only one edge of the tariff differential. The other edge
cuts and cuts deep in the heart of their competitors. It erects a high barrier
to the entry of new players. New players that intend to equalize the market
power of Petron, Shell and Caltex by building refineries of their own will have
to spend billions of pesos. Those who will not build refineries but compete
with them will suffer the huge disadvantage of increasing their product cost
by 4%. They will be competing on an uneven field. The argument that the
4% tariff differential is desirable because it will induce prospective players to
invest in refineries puts the cart before the horse. The first need is to attract
new players and they cannot be attracted by burdening them with heavy
disincentives. Without new players belonging to the league of Petron, Shell
and Caltex, competition in our downstream oil industry is an idle dream.
14. Â ID.; ID.; ID.; ID.; PROVISION ON INVENTORY WIDENS BALANCE
OF ADVANTAGE OF THREE MAJOR OIL COMPANIES AGAINST PROSPECTIVE
NEW PLAYERS. — The provision on inventory widens the balance of
advantage of Petron, Shell and Caltex against prospective new players.
Petron, Shell and Caltex can easily comply with the inventory requirement of
R.A. No. 8180 in view of their existing storage facilities. Prospective
competitors again will find compliance with this requirement difficult as it will
entail a prohibitive cost. The construction cost of storage facilities and the
cost of inventory can thus scare prospective players. Their net effect is to
further occlude the entry points of new players, dampen competition and
enhance the control of the market by the three (3) existing oil companies.
15. Â ID.; ID.; ID.; ID.; PREDATORY PRICING IS ANTI-COMPETITIVE. —
Finally, we come to the provision on predatory pricing which is defined as ". .
. selling or offering to sell any product at a price unreasonably below the
industry average cost so as to attract customers to the detriment of
competitors." Respondents contend that this provision works against Petron,
Shell and Caltex and protects new entrants. The ban on predatory pricing
cannot be analyzed in isolation. Its validity is interlocked with the barriers
imposed by R.A. No. 8180 on the entry of new players. The inquiry should be
to determine whether predatory pricing on the part of the dominant oil
companies is encouraged by the provisions in the law blocking the entry of
new players. Text-writer Hovenkamp, gives the authoritative answer and we
quote: ". . . The rationale for predatory pricing is the sustaining of losses
today that will give a firm monopoly profits in the future. The monopoly
profits will never materialize, however, if the market is flooded with new
entrants as soon as the successful predator attempts to raise its price.
Predatory pricing will be profitable only if the market contains significant
barriers to new entry." As aforediscussed, the 4% tariff differential and the
inventory requirement are significant barriers which discourage new players
to enter the market. Considering these significant barriers established by
R.A. No. 8180 and the lack of players with the comparable clout of PETRON,
SHELL and CALTEX, the temptation for a dominant player to engage in
predatory pricing and succeed is a chilling reality. Petitioners' charge that
this provision on predatory pricing is anti-competitive is not without reason.
Respondents belittle these barriers with the allegation that new players have
entered the market since deregulation. A scrutiny of the list of the alleged
new players will, however, reveal that not one belongs to the class and
category of PETRON, SHELL and CALTEX. Indeed, there is no showing that
any of these new players intends to install any refinery and effectively
compete with these dominant oil companies. In any event, it cannot be
gainsaid that the new players could have been more in number and more
impressive in might if the illegal entry barriers in R.A. No. 8180 were not
erected.
16. Â STATUTORY CONSTRUCTION; STATUTES; WHERE PART OF A
STATUTE IS VOID WHILE ANOTHER PART IS VALID, THE VALID PORTION, IF
SEPARABLE FROM THE INVALID, MAY STAND AND BE ENFORCED;
EXCEPTION. — ". . . The general rule is that where part of a statute is void as
repugnant to the Constitution, while another part is valid, the valid portion, if
separable from the invalid, may stand and be enforced. The presence of a
separability clause in a statute creates the presumption that the legislature
intended separability, rather than complete nullity of the statute. To justify
this result, the valid portion must be so far independent of the invalid portion
that it is fair to presume that the legislature would have enacted it by itself if
it had supposed that it could not constitutionally enact the other. Enough
must remain to make a complete, intelligible and valid statute, which carries
out the legislative intent. . . . The exception to the general rule is that when
the parts of a statute are so mutually dependent and connected, as
conditions, considerations, inducements, or compensations for each other,
as to warrant a belief that the legislature intended them as a whole, the
nullity of one part will vitiate the rest. In making the parts of the statute
dependent, conditional, or connected with one another the legislature
intended the statute to be carried out as a whole and would not have
enacted it if one part is void, in which case if some parts are
unconstitutional, all the other provisions thus dependent, conditional, or
connected must fall with them."
17. Â CONSTITUTIONAL LAW; CONGRESS; R.A. NO. 8180,
UNCONSTITUTIONAL. — R.A. No. 8180 contains a separability clause. Section
23 provides that "if for any reason, any section or provision of this Act is
declared unconstitutional or invalid, such parts not affected thereby shall
remain in full force and effect." This separability clause notwithstanding, we
hold that the offending provisions of R.A. No. 8180 so permeate its essence
that the entire law has to be struck down. The provisions on tariff differential,
inventory and predatory pricing are among the principal props of R.A. No.
8180. Congress could not have deregulated the downstream oil industry
without these provisions. Unfortunately, contrary to their intent, these
provisions on tariff differential, inventory and predatory pricing inhibit fair
competition, encourage monopolistic power and interfere with the free
interaction of market forces. R.A. No. 8180 needs provisions to vouchsafe
free and fair competition. The need for these vouchsafing provisions cannot
be overstated. Before deregulation, PETRON, SHELL and CALTEX had no real
competitors but did not have a free run of the market because government
controls both the pricing and non-pricing aspects of the oil industry. After
deregulation, PETRON, SHELL and CALTEX remain unthreatened by real
competition yet are no longer subject to control by government with respect
to their pricing and non-pricing decisions. The aftermath of R.A. No. 8180 is a
deregulated market where competition can be corrupted and where market
forces can be manipulated by oligopolies. R.A. No. 8180 is declared
unconstitutional and E.O. NO. 372 void.
18. Â ID.; SUPREME COURT; GUARDIAN NOT ONLY OF THE PEOPLE'S
POLITICAL RIGHTS BUT THEIR ECONOMIC RIGHTS AS WELL. — 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 offend the
Constitution. Striking down R.A. No. 8180 may cost losses in quantifiable
terms to the oil oligopolists. But the loss in tolerating the tampering of our
Constitution is not quantifiable in pesos and centavos. More worthy of
protection than the supra-normal profits of private corporations is the
sanctity of the fundamental principles of the Constitution. Indeed when
confronted by a law violating the Constitution, the Court has no option but to
strike it down dead. Lest it is missed, the Constitution is a covenant that
grants and guarantees both the political and economic rights of the people.
The Constitution mandates this Court to be the guardian not only of the
people's political rights but their economic rights as well. The protection of
the economic rights of the poor and the powerless is of greater importance
to them for they are concerned more with the esoterics of living and less
with the esoterics of liberty. Hence, for as long as the Constitution reigns
supreme so long will this Court be vigilant in upholding the economic rights
of our people especially from the onslaught of the powerful. Our defense of
the people's economic rights may appear heartless because it cannot be
half-hearted.

KAPUNAN, J., concurring opinion:

1. Â CONSTITUTIONAL LAW; SUPREME COURT; WITH BOUNDEN

DUTY TO DECIDE ALL CASES INVOLVING THE CONSTITUTIONALITY OF LAWS.
— Admittedly, the wisdom of political and economic decisions are outside
the scrutiny of the Court. However, the political question is not some mantra
that will automatically cloak executive orders and laws (or provisions
thereof) with legitimacy. It is this Court's bounden duty under Sec. 4(2), Art.
VIII of the 1987 Constitution to decide all cases involving the constitutionality
of laws and under Sec. l of the same article, "to determine whether or not
there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government."
2. Â ID.; CONGRESS; RA 8180 (DOWNSTREAM OIL INDUSTRY
DEREGULATION ACT OF 1996); SECTION 5 THEREOF IMPOSING 4% TARIFF
DIFFERENTIAL BETWEEN IMPORTED CRUDE OIL AND IMPORTED REFINED
PETROLEUM PRODUCTS, STRUCK DOWN FOR BEING AN OBSTACLE TO THE
ENTRY OF NEW PLAYERS IN THE OIL MARKET. — Respondents are one in
asserting that the 4% tariff differential between imported crude oil and
imported refined petroleum products under Section 5 of RA 8180 is intended
to encourage the new entrants to put up their own refineries in the country.
The advantages of domestic refining cannot be discounted, but we must
view this intent in the proper perspective. The primary purpose of the
deregulation law is to open up the market and establish free competition.
The priority of the deregulation law, therefore, is to encourage new oil
companies to come in first. Incentives to encourage the building of local
refineries should be provided after the new oil companies have entered the
Philippine market and are actively participating therein. The threshold
question therefore is, is the 4% tariff differential a barrier to the entry of new
oil companies in the Philippine market? It is. Since the prospective oil
companies do not (as yet) have local refineries, they would have to import
refined petroleum products, on which a 7% tariff duty is imposed. On the
other hand, the existing oil companies already have domestic refineries and,
therefore, only import crude oil which is taxed at a lower rate of 3%. Tariffs
are part of the costs of production. Hence, this means that with the 4% tariff
differential (which becomes an added cost) the prospective players would
have higher production costs compared to the existing companies and it is
precisely this factor which could seriously affect its decision to enter the
market. Viewed in this light, the tariff differential between imported crude oil
and refined petroleum products becomes an obstacle to the entry of new
players in the Philippine oil market. It defeats the purpose of the law and
should thus be struck down. DTAHEC

3. Â ID., ID., ID.; SECTIONS 6 AND 9, DECLARED

UNCONSTITUTIONAL. — The same rationale holds true for the two other
assailed provisions (Section 6 and 9) in the Oil Deregulation law. The
primordial purpose of the law, J. Kapunan reiterates, is to create a truly free
and competitive market. To achieve this goal, provisions that show the
possibility, or even the merest hint, of deterring or impeding the ingress of
new blood in the market should be eliminated outright. He is confident that
our lawmakers can formulate other measures that would accomplish the
same purpose (insure security and continuity of petroleum crude products
supply and prevent fly by night operators, in the case of the minimum
inventory requirement, for instance) but would not have on the downside the
effect of seriously hindering the entry of prospective traders in the market.
The overriding consideration, which is the public interest and public benefit
calls for the levelling of the playing fields for the existing oil companies and
the prospective new entrants. Only when there are many players in the
market will free competition reign and economic development begin.
Consequently, Section 6 and Section 9(b) of R.A. No. 8180 should similarly
be struck down. AaDSTH

PANGANIBAN, J., concurring opinion:

1. Â CONSTITUTIONAL LAW; SUPREME COURT; HAS THE DUTY, NOT

JUST THE POWER, TO DETERMINE WHETHER A LAW OR A PART THEREOF
OFFENDS THE CONSTITUTION. — Under the Constitution, this Court has — in
appropriate cases — the DUTY, not just the power, to determine whether a
law or a part thereof offends the Constitution and, if so, to annul and set it
aside. Because a serious challenge has been hurled against the validity of
one such law, namely RA 8180 — its criticality having been preliminarily
determined from the petition, comments, reply and, most tellingly, the oral
argument on September 30, 1997 — this Court, in the exercise of its
mandated judicial discretion, issued the status quo order to prevent the
continued enforcement and implementation of a law that was prima facie
found to be constitutionally infirm. Indeed, after careful final deliberation,
said law is now ruled to be constitutionally defective thereby disabling
respondent oil companies from exercising their erstwhile power, granted by
such defective statute, to determine prices by themselves.
2. Â ID.; ID.; HAS NO POWER TO PASS UPON THE WISDOM, MERITS
AND PROPRIETY OF THE ACTS OF ITS CO-EQUAL BRANCHES IN
GOVERNMENT. — Concededly, this Court has no power to pass upon the
wisdom, merits and propriety of the acts of its co-equal branches in
government. However, it does have the prerogative to uphold the
Constitution and to strike down and annul a law that contravenes the
Charter. From such duty and prerogative, it shall never shirk or shy away.
3. Â ID.; ID.; UPHOLDS CONSTITUTIONAL ADHERENCE TO A TRULY
COMPETITIVE ECONOMY BY INVALIDATING RA. 8180. — By annulling RA
8180, this Court is not making a policy statement against deregulation. Quite
the contrary, it is simply invalidating a pseudo deregulation law which in
reality restrains free trade and perpetuates a cartel, an oligopoly. The Court
is merely upholding constitutional adherence to a truly competitive economy
that releases the creative energy of free enterprise. It leaves to Congress, as
the policy-setting agency of the government, the speedy crafting of a
genuine, constitutionally justified oil deregulation law.

MELO, J., dissenting opinion:

1. Â REMEDIAL LAW; ACTIONS; POLITICAL QUESTION IS NOT A

JUSTICIABLE CONTROVERSY; IMPOSITION OF DIFFERENT TARIFF RATES ON
IMPORTED CRUDE OIL AND IMPORTED REFINED PETROLEUM PRODUCTS, A
POLITICAL QUESTION. — 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 natural of political questions, hence, clearly beyond the
ambit of judicial inquiry.
cCAIDS

2. Â CONSTITUTIONAL LAW; POLITICAL QUESTION, CONSTRUED. — 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]).
3. Â REMEDIAL LAW; ACTIONS; PARTIES; PROPER PARTIES;
MEMBERS OF CONGRESS; ASSAILED ACTS MUST AFFECT OR IMPAIR THEIR
RIGHTS AND PREROGATIVES AS LEGISLATORS; CASE AT BAR. — 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.
4. Â ID.; ID.; ID.; ID.; AS TAXPAYERS OR CONCERNED CITIZENS;
ASSAILED ACTION MUST BE AN UNCONSTITUTIONAL EXERCISE OF SPENDING
POWER OF CONGRESS; ABSENCE OF ALLEGATION OF ILLEGAL
DISBURSEMENT OF PUBLIC MONEY IN CASE AT BAR. — 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.
5. Â ID.; ID.; ID.; ID.; ID.; INTEREST OF PERSON ASSAILING THE
CONSTITUTIONALITY OF STATUTE MUST BE DIRECT AND PERSONAL;
ABSENCE OF SUCH INTEREST IN CASE AT BAR. — Petitioners, including Flag,
FDC, and Sanlakas, can not 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.
6. Â CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; ONE TITLE-
ONE SUBJECT RULE; PROVISION OF LAW NEED NOT BE EXPRESSED IN THE
TITLE OF LAW; PROVISION MUST BE EMBRACED WITHIN SUBJECT EXPRESSED
IN TITLE. — 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)
7. Â ID.; ID.; ID.; ID.; ID.; TARIFF PROVISION IN SEC. 5 (B) OF RA
8180, GERMANE TO THE PURPOSE OF SAID LAW. — 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 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.
8. Â ID., ID.; ID.; CONFERENCE COMMITTEE; CAN INCLUDE AN
AMENDMENT TO A HOUSE OR SENATE BILL PROVIDED IT IS GERMANE TO
THE SUBJECT THEREOF. — 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.
9. Â ID.; ID.; "ENROLLED BILL THEORY"; CONSTRUED. — 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.
10. Â ID.; ID.; DELEGATION OF LEGISLATIVE POWER; CONSTRUED. —
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.
11. Â ID; ID.; ID.; SUFFICIENT STANDARDS TEST; COMPLIED WITH IN
R.A. 8180. — 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, the factors to be considered by the President
and/or Secretary of Energy in implementing full deregulation are, as
mentioned, determinate and determinable.
12. Â ID.; ID.; R.A. 8180; NOT VIOLATIVE OF CONSTITUTIONAL
PROHIBITION AGAINST MONOPOLIES, COMBINATION OF TRADES 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 4%
tariff differential aims to ensure the stable supply of petroleum products by
encouraging new entrants to put up oil refineries in the Philippines and to
discourage fly-by-night importers. 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. caHASI

13. Â ID.; ID.; ID.; NOT VIOLATIVE OF THE EQUAL PROTECTION

CLAUSE. — The assailed tariff differential is likewise not violative of the
equal protection clause of the Constitution. It is germane to the declared
policy of Republic Act No. 8180 which is to achieve (1) fair prices; and (2)
adequate and continuous supply of environmentally-clean and high quality
petroleum products. Said adequate and continuous supply of petroleum
products will be achieved if new investors or players are enticed to engage
in the business of refining crude oil in the country. Existing refining
companies, are similarly encouraged to put up additional refining
companies. All of this can be made possible in view of the lower tariff duty
on imported crude oil than that levied on imported refined petroleum
products. In effect, the lower tariff rates will enable the refiners to recoup
their investments considering that they will be investing billions of pesos in
putting up their refineries in the Philippines. That incidentally the existing
refineries will be benefited by the tariff differential does not negate the fact
that the intended effect of the law is really to encourage the construction of
new refineries, whether by existing players or by new players. cDIHES

14. Â REMEDIAL LAW; SUPREME COURT; NOT A TRIER OF FACTS. —

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]).

FRANCISCO, J., dissenting opinion:

1. Â CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; LAW-

MAKING POWER; ONE SUBJECT-ONE TITLE RULE; OBJECT OF THE RULE. —
The Constitution mandates that "every bill passed by Congress shall
embrace only one subject which shall be expressed in the title thereof." The
object sought to be accomplished by this mandatory requirement has been
explained by the Court in the vintage case of Central Capiz v. Ramirez, thus:
"The object sought to be accomplished and the mischief proposed to be
remedied by this provision are well known. Legislative assemblies, for the
dispatch of business, often pass bills by their titles only without requiring
them to be read. A specious title sometimes covers legislation which, if its
real character had been disclosed, would not have commanded assent. To
prevent surprise and fraud on the legislature is one of the purposes this
provision was intended to accomplish. Before the adoption of this provision
the title of a statute was often no indication of its subject or contents.
2. Â ID.; ID.; ID.; ID.; TO BE GIVEN A PRACTICAL RATHER THAN A
TECHNICAL CONSTRUCTION. — The interpretation of "one subject-one title"
rule, however, is never intended to impede or stifle legislation. The
requirement is to be given a practical rather than a technical construction
and it would be sufficient compliance if the title expresses the general
subject and all the provisions of the enactment are germane and material to
the general subject.
3. Â ID.; ID.; ID.; ID.; RULE REQUIRES THAT THE TITLE SHOULD NOT
COVER LEGISLATION INCONGRUOUS IN ITSELF. — Congress is not required to
employ in the title of an enactment, language of such precision as to mirror,
fully index or catalogue all the contents and the minute details therein. All
that is required is that the title should not cover legislation incongruous in
itself, and which by no fair intendment can be considered as having a
necessary or proper connection. Hence, the title "An Act Amending Certain
Sections of Republic Act.
4. Â ID; ID.; ID.; ID.; ID.; CASE AT BAR. — In the case at bar, the title
"An Act Deregulating The Downstream Oil Industry, And For Other Purposes"
is adequate and comprehensive to cover the imposition of tariff rates. The
tariff provision under Section 5 (b) is one of the means of effecting
deregulation. It must be observed that even prior to the passage of Republic
Act No. 8180 oil products have always been subject to tariff and surely
Congress is cognizant of such fact. The imposition of the seven percent (7%)
and three percent (3%) duties on imported gasoline and refined petroleum
products and on crude oil, respectively, are germane to the deregulation of
the oil industry. The title, in fact, even included the broad and all-
encompassing phrase "And For Other Purposes" thereby indicating the
legislative intent to cover anything that has some relation to or connection
with the deregulation of the oil industry. The tax provision is a mere tool and
mechanism considered essential by Congress to fulfill Republic Act No.
8180's objective of fostering a competitive market and achieving the social
policy objectives of fair prices. To curtail any adverse impact which the tariff
treatment may cause by its application, and perhaps in answer to
petitioners' apprehension Congress included under the assailed section a
proviso that will effectively eradicate the tariff difference in the treatment of
refined petroleum products and crude oil by stipulating "that beginning on
January 1, 2004 the tariff rate on imported crude oil and refined petroleum
products shall be the same."
5. Â POLITICAL LAW; POLITICAL QUESTION; ISSUE WHETHER TARIFF
FOSTERS A TRULY COMPETITIVE MARKET, NOT WITHIN THE POWER OF THE
COURT TO RESOLVE. — The contention that tariff "does not foster a truly
competitive market" and therefore restrains trade and does not help achieve
the purpose of deregulation is an issue not within the power of the Court to
resolve. Nonetheless, the Court's pronouncement in Tio vs. Videogram
Regulatory Board appears to be worth reiterating: The power to impose
taxes is one so unlimited in force and so searching in extent, that the courts
scarcely venture to declare that it is subject to any restrictions whatever,
except such as rest in the discretion of the authority which exercises it. EcDTIH

6. Â CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT;

LEGISLATIVE BICAMERAL CONFERENCE COMMITTEE; PERMITTED TO DRAFT
ESSENTIALLY A NEW BILL. — Any objection on the validity of provisions
inserted by the legislative bicameral conference committee has been passed
upon by the Court in the recent case of Tolentino v. Secretary of Finance ,
which, in my view, laid to rest any doubt as to the validity of the bill
emerging out of a Conference Committee. The Court in that case, speaking
through Mr. Justice Mendoza, said: "As to the possibility of an entirely new
bill emerging out of a Conference Committee, it has been explained: 'Under
Congressional rules of procedure, conference committees are not expected
to make any material change in the measure at issue, either by deleting
provisions to which both houses have already agreed or by inserting new
provisions. But this is a difficult provision to enforce. Note the problem when
one house amends a proposal originating in either house by striking out
everything following the enacting clause and substituting provisions which
make it an entirely new bill. The versions are now altogether different,
permitting a conference committee to draft essentially a new bill. . . ' "
7. Â ID.; BILL OF RIGHTS; EQUAL PROTECTION CLAUSE;
CLASSIFICATION BASED ON SUBSTANTIAL DISQUALIFICATIONS; CASE AT BAR.
— The other contention of petitioners that Section 5(b) "violates the equal
protection of the laws enshrined in Article III, Section 1 of the Constitution"
deserves a short shrift for the equal protection clause does not forbid
reasonable classification based upon substantial distinctions where the
classification is germane to the purpose of the law and applies equally to all
the members of the class. The imposition of three percent (3%) tariff on
crude oil, which is four percent (4%) lower than those imposed on refined oil
products, as persuasively argued by the Office of the Solicitor General, is
based on the substantial distinction that importers of crude oil, by necessity,
have to establish and maintain refinery plants to process and refine the
crude oil thereby adding to their production costs. To encourage these
importers to set up refineries involving huge expenditures and investments
which peddlers and importers of refined petroleum products do not shoulder,
Congress deemed it appropriate to give a lower tariff rate to foster the entry
of new "players" and investors in line with the law's policy to create a
competitive market. The residual contention that there is no substantial
distinction in the imposition of seven percent (7%) and three percent (3%)
tariff since the law itself will level the tariff rates between the imported
crude oil and refined petroleum products come January 1, 2004, to my mind,
is addressed more to the legislative's prerogative to provide for the duration
and period of effectivity of the imposition. If Congress, after consultation,
analysis of material data and due deliberations, is convinced that by January
1, 2004, the investors and importers of crude oil would have already
recovered their huge investments and expenditures in establishing refineries
and plants then it is within its prerogative to lift the tariff differential. Such
matter is well within the pale of legislative power which the Court may not
fetter. Besides, this again is in line with Republic Act No. 8180's avowed
policy to foster a truly competitive market which can achieve the social
policy objectives of fair, if not lower, prices.
8. Â ID.; POLITICAL QUESTION; QUERY ON WHY LOWERING OF
PRICES OF OIL PRODUCTS SHOULD BE PENALIZED, NOT FOR THIS COURT TO
TRAVERSE. — The query on why lowering of prices should be penalized and
the broad scope of predatory pricing is not for this Court to traverse the
same being reserved for Congress. The Court should not lose sight of the
fact that its duty under Article 5 of the Revised Penal Code is not to
determine, define and legislate what act or acts should be penalized, but
simply to report to the Chief Executive the reasons why it believes an act
should be penalized, as well as why it considers a penalty excessive.
9. Â ID.; LEGISLATIVE DEPARTMENT; DELEGATION OF POWER; TEST.
— The settled rule is that the legislative department may not delegate its
power. Any attempt to abdicate it is unconstitutional and void, based on the
principle of potestas delegata non delegare potest. In testing whether a
statute constitutes an undue delegation of legislative power or not, it is
usual to inquire whether the statute was complete in all its terms and
provisions when it left the hands of the legislative so that nothing was left to
the judgment of any other appointee or delegate of the legislature. An
enactment is said to be incomplete and invalid if it does not lay down any
rule or definite standard by which the administrative officer may be guided
in the exercise of the discretionary powers delegated to it.
10. Â ID.; ID.; ID.; GUIDELINE ON HOW TO DISTINGUISH WHICH
POWER MAY OR MAY NOT BE DELEGATED. — In People v. Vera, the Court laid
down a guideline on how to distinguish which power may or may not be
delegated by Congress, to wit: " 'The true distinction,' said Judge Ranney, 'is
between the delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring an authority or
discretion as to its execution, to be exercised under and in pursuance of the
law. The first cannot be done; to the latter no valid objection can be made.'
(Cincinnati, W. & Z.R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio St., 77,
88 See also, Sutherland on Statutory Construction, Sec. 68.)"
11. Â ID.; ID.; ID.; THERE IS NOTHING LEGISLATIVE IN ASCERTAINING
THE EXISTENCE OF FACTS OR CONDITIONS AS BASIS OF EFFICACY OF LAW.
— Applying these parameters, J. Francisco fails to see any taint of
unconstitutionality that could vitiate the validity of Section 15. The discretion
to ascertain when may the prices of crude oil in the world market be deemed
"declining" or when may the peso-dollar exchange rate be considered
"stable" relates to the assessment and appreciation of facts. There is nothing
essentially legislative in ascertaining the existence of facts or conditions as
the basis of the taking into effect of a law so as to make the provision an
undue delegation of legislative power.
12. Â ID., ID.; ID.; NO UNDUE DELEGATION BY ABSENCE OF LACK OF
DEFINITIONS OF TERMS. — The alleged lack of definitions of the terms
employed in the statute does not give rise to undue delegation either for the
words of the statute, as a rule, must be given its literal meaning.
 13. Â ID.; ID.; WITH LATITUDE TO PROVIDE THAT LAW MAY TAKE
EFFECT UPON HAPPENING OF FUTURE CONTINGENCY. — Petitioners'
contentions are concerned with the details of execution by the executive
officials tasked to implement deregulation. No proviso in Section 15 may be
construed as objectionable for the legislature has the latitude to provide that
a law may take effect upon the happening of future specified contingencies
leaving to some other person or body the power to determine when the
specified contingency has arisen.
14. Â ID.; EXECUTIVE DEPARTMENT; EXECUTIVE ORDER NO. 392,
CONSTITUTIONAL. — The policy of Republic Act No. 8180 is to deregulate the
downstream oil industry and to foster a truly competitive market which could
lead to fair prices and adequate supply of environmentally clean and high-
quality petroleum products. This is the guiding principle installed by
Congress upon which the executive department of the government must
conform. Section 15 of Republic Act No. 8180 sufficiently supplied the metes
and bounds for the execution of full deregulation. In fact, a cursory reading
of Executive Order No. 392 which advanced deregulation to February 8,
1997 convincingly shows the determinable factors or standards, enumerated
under Section 15, which were taken into account by the Chief Executive in
declaring full deregulation. J. Francisco cannot see his way clear on how or
why Executive Order No. 392, as professed by petitioners, may be declared
unconstitutional for adding the "depletion of buffer fund" as one of the
grounds for advancing the deregulation. The enumeration of factors to be
considered for full deregulation under Section 15 did not proscribe the Chief
Executive from acknowledging other instances that can equally assuage
deregulation. What is important is that the Chief Executive complied with
and met the minimum standards supplied by the law. Executive Order No.
392 may not, therefore, be branded as unconstitutional.
15. Â ID.; POLITICAL QUESTION; MATTERS WHICH FUNDAMENTALLY
STRIKE AT THE WISDOM OF THE LAW AND THE POLICY ADOPTED BY
CONGRESS. — Petitioners' vehement objections on the short seven (7)
month transition period under Section 15 and the alleged resultant de facto
formation of cartel are matters which fundamentally strike at the wisdom of
the law and the policy adopted by Congress. These are outside the power of
the courts to settle; thus J. Francisco fails to see the need to digress any
further.
16. Â REMEDIAL LAW; SUPREME COURT; ISSUE PERTAINING TO THE
EFFICACY OF INCORPORATING IN THE LAW ADMINISTRATIVE SANCTIONS,
OUTSIDE THE COURT'S SPHERE AND COMPETENCE. — The administrative
fine under Section 20 is claimed to be inconsistent with deregulation. The
imposition of administrative fine for failure to meet the reportorial and
minimum inventory requirements, far from petitioners' submission, are
geared towards accomplishing the noble purpose of the law. The inventory
requirement ensures the security and continuity of petroleum crude and
products supply, while the reportorial requirement is a mere devise for the
Department of Energy to monitor compliance with the law. In any event, the
issue pertains to the efficacy of incorporating in the law the administrative
sanctions which lies outside the Court's sphere and competence.
17. Â CONSTITUTIONAL LAW; SEPARATION OF POWERS; ISSUE OF
WHETHER OR NOT THE LAW FAILED TO ACHIEVE ITS POLICY, MATTER
CLEARLY BEYOND THIS COURT'S DOMAIN. — Nothing is so fundamental in
our system of government than its division into three distinct and
independent branches, the executive, the legislative and the judiciary, each
branch having exclusive cognizance of matters within its jurisdiction, and
supreme within its own sphere. It is true that there is sometimes an
inevitable overlapping and interlacing of functions and duties between these
departments. But this elementary tenet remains: the legislative is vested
with the power to make law, the judiciary to apply and interpret it. In cases
like this, "the judicial branch of the government has only one duty — to lay
the article of the Constitution which is invoked beside the statute which is
challenged and to decide whether the latter squares with the former." This
having been done and finding no constitutional infirmity therein, the Court's
task is finished. Now whether or not the law fails to achieve its avowed policy
because Congress did not carefully evaluate the long term effects of some of
its provisions is a matter clearly beyond this Court's domain.
18. Â REMEDIAL LAW; COURTS; WILL RESOLVE EVERY PRESUMPTION
IN FAVOR OF STATUTES' VALIDITY. — The question of validity of every
statute is first determined by the legislative department of the government,
and the courts will resolve every presumption in favor of its validity. The
courts will assume that the validity of the statute was fully considered by the
legislature when adopted. The wisdom of advisability of a particular statute
is not a question for the courts to determine. If a particular statute is within
the constitutional power of the legislative to enact, it should be sustained
whether the courts agree or not in the wisdom of its enactment. This Court
continues to recognize that in the determination of actual cases and
controversies, it must reflect the wisdom and justice of the people as
expressed through their representatives in the executive and legislative
branches of government. Thus, the presumption is always in favor of
constitutionality for it is likewise always presumed that in the enactment of a
law or the adoption of a policy it is the people who speak through their
representatives. This principle is one of caution and circumspection in the
exercise of the grave and delicate function of judicial review.aSCHIT

DECISION

PUNO, J :p

The petitions at bar challenge the constitutionality of Republic Act No.

8180 entitled "An Act Deregulating the Downstream Oil Industry and For
Other Purposes". 1 R.A. No. 8180 ends twenty six (26) years of government
regulation of the downstream oil industry. Few cases carry a surpassing
importance on the life of every Filipino as these petitions for the upswing
and downswing of our economy materially depend on the oscillation of oil. prcd

First, the facts without the fat. Prior to 1971, there was no government
agency regulating the oil industry other than those dealing with ordinary
commodities. Oil companies were free to enter and exit the market without
any government interference There were four (4) refining companies (Shell,
Caltex, Bataan Refining Company and Filoil Refining) and six (6) petroleum
marketing companies (Esso, Filoil, Caltex, Getty, Mobil and Shell), then
operating in the country. 2
In 1971, the country was driven to its knees by a crippling oil crisis. The
government, realizing that petroleum and its products are vital to national
security and that their continued supply at reasonable prices is essential to
the general welfare, enacted the Oil Industry Commission Act. 3 It created
t h e Oil Industry Commission (OIC) to regulate the business of importing,
exporting, re-exporting, shipping, transporting, processing, refining, storing,
distributing, marketing and selling crude oil, gasoline, kerosene, gas and
other refined petroleum products. The OIC was vested with the power to fix
the market prices of petroleum products, to regulate the capacities of
refineries, to license new refineries and to regulate the operations and trade
practices of the industry. 4
In addition to the creation of the OIC, the government saw the
imperious need for a more active role of Filipinos in the oil industry. Until the
early seventies, the downstream oil industry was controlled by multinational
companies. All the oil refineries and marketing companies were owned by
foreigners whose economic interests did not always coincide with the
interest of the Filipino. Crude oil was transported to the country by foreign-
controlled tankers. Crude processing was done locally by foreign-owned
refineries and petroleum products were marketed through foreign-owned
retail outlets. On November 9, 1973, President Ferdinand B. Marcos boldly
created the Philippine National Oil Corporation (PNOC) to break the control
by foreigners of our oil industry. 5 PNOC engaged in the business of refining,
marketing, shipping, transporting, and storing petroleum. It acquired
ownership of ESSO Philippines and Filoil to serve as its marketing arm. It
bought the controlling shares of Bataan Refining Corporation, the largest
refinery in the country. 6 PNOC later put up its own marketing subsidiary —
Petrophil. PNOC operated under the business name PETRON Corporation. For
the first time, there was a Filipino presence in the Philippine oil market.
In 1984, President Marcos through Section 8 of Presidential Decree No.
1956, created the Oil Price Stabilization Fund (OPSF) to cushion the effects of
frequent changes in the price of oil caused by exchange rate adjustments or
increase in the world market prices of crude oil and imported petroleum
products. The fund is used (1) to reimburse the oil companies for cost
increases in crude oil and imported petroleum products resulting from
exchange rate adjustment and/or increase in world market prices of crude
oil, and (2) to reimburse oil companies for cost underrecovery incurred as a
result of the reduction of domestic prices of petroleum products. Under the
law, the OPSF may be sourced from:
 1. Â any increase in the tax collection from ad valorem tax or
customs duty imposed on petroleum products subject to tax
under P.D. No. 1956 arising from exchange rate adjustment,

2. Â any increase in the tax collection as a result of the lifting of tax

exemptions of government corporations, as may be determined
by the Minister of Finance in consultation with the Board of
Energy,

3. Â any additional amount to be imposed on petroleum products to

augment the resources of the fund through an appropriate order
that may be issued by the Board of Energy requiring payment of
persons or companies engaged in the business of importing,
manufacturing and/or marketing petroleum products, or

4. Â any resulting peso costs differentials in case the actual peso

costs paid by oil companies in the importation of crude oil and
petroleum products is less than the peso costs computed using
the reference foreign exchange rate as fixed by the Board of
Energy. 7

By 1985, only three (3) oil companies were operating in the country —
Caltex, Shell and the government-owned PNOC.
In May, 1987, President Corazon C. Aquino signed Executive Order No.
172 creating the Energy Regulatory Board to regulate the business of
importing, exporting, re-exporting, shipping, transporting, processing,
refining, marketing and distributing energy resources "when warranted and
only when public necessity requires." The Board had the following powers
and functions:

1. Â Fix and regulate the prices of petroleum products;

2. Â Fix and regulate the rate schedule or prices of piped gas to be

charged by duly franchised gas companies which distribute gas
by means of underground pipe system;

3. Â Fix and regulate the rates of pipeline concessionaries under the

provisions of R.A. No. 387, as amended . . .;

4. Â Regulate the capacities of new refineries or additional

capacities of existing refineries and license refineries that may
be organized after the issuance of (E.O. No. 172) under such
terms and conditions as are consistent with the national interest;
and

5. Â Whenever the Board has determined that there is a shortage of

any petroleum product, or when public interest so requires, it
may take such steps as it may consider necessary, including the
temporary adjustment of the levels of prices of petroleum
products and the payment to the Oil Price Stabilization Fund . . .
by persons or entities engaged in the petroleum industry of such
amounts as may be determined by the Board, which may enable
the importer to recover its cost of importation. 8
 On December 9, 1992, Congress enacted R.A. No. 7638 which created
the Department of Energy to prepare, integrate, coordinate, supervise and
control all plans, programs, projects, and activities of the government in
relation to energy exploration, development, utilization, distribution and
conservation. 9 The thrust of the Philippine energy program under the law
was toward privatization of government agencies related to energy,
deregulation of the power and energy industry and reduction of dependency
on oil-fired plants. 10 The law also aimed to encourage free and active
participation and investment by the private sector in all energy activities.
Section 5(e) of the law states that "at the end of four (4) years from the
effectivity of this Act, the Department shall, upon approval of the President,
institute the programs and timetable of deregulation of appropriate energy
projects and activities of the energy industry."
Pursuant to the policies enunciated in R.A. No. 7638, the government
approved the privatization of Petron Corporation in 1993. On December 16,
1993, PNOC sold 40% of its equity in Petron Corporation to the Aramco
Overseas Company. LexLib

I n March 1996, Congress took the audacious step of deregulating the

downstream oil industry. It enacted R.A. No. 8180, entitled the "Downstream
Oil Industry Deregulation Act of 1996." Under the deregulated environment,
"any person or entity may import or purchase any quantity of crude oil and
petroleum products from a foreign or domestic source, lease or own and
operate refineries and other downstream oil facilities and market such crude
oil or use the same for his own requirement," subject only to monitoring by
the Department of Energy. 11
The deregulation process has two phases: the transition phase and the
full deregulation phase. During the transition phase, controls of the non-
pricing aspects of the oil industry were to be lifted. The following were to be
accomplished: (1) liberalization of oil importation, exportation,
manufacturing, marketing and distribution, (2) implementation of an
automatic pricing mechanism, (3) implementation of an automatic formula to
set margins of dealers and rates of haulers, water transport operators and
pipeline concessionaires, and (4) restructuring of oil taxes. Upon full
deregulation, controls on the price of oil and the foreign exchange cover
were to be lifted and the OPSF was to be abolished.
The first phase of deregulation commenced on August 12, 1996.
On February 8, 1997, the President implemented the full deregulation
of the Downstream Oil Industry through E.O. No. 392.
The petitions at bar assail the constitutionality of various provisions of
R.A. No. 8180 and E.O. No. 392.
In G.R. No. 124360, petitioner Francisco S. Tatad seeks the annulment
of section 5 (b) of R.A. No. 8180. Section 5 (b) provides:
"b) Â Any law to the contrary notwithstanding and starting
with the effectivity of this Act, tariff duty shall be imposed and
collected on imported crude oil at the rate of three percent (3%) and
imported refined petroleum products at the rate of seven percent
 (7%), except fuel oil and LPG, the rate for which shall be the same as
that for imported crude oil: Provided, That beginning on January 1,
2004 the tariff rate on imported crude oil and refined petroleum
products shall be the same: Provided, further, That this provision may
be amended only by an Act of Congress."
The petition is anchored on three arguments:
First, that the imposition of different tariff rates on imported crude oil
and imported refined petroleum products violates the equal protection
clause. Petitioner contends that the 3%-7% tariff differential unduly favors
the three existing oil refineries and discriminates against prospective
investors in the downstream oil industry who do not have their own
refineries and will have to source refined petroleum products from abroad.
Second, that the imposition of different tariff rates does not deregulate
the downstream oil industry but instead controls the oil industry, contrary to
the avowed policy of the law. Petitioner avers that the tariff differential
between imported crude oil and imported refined petroleum products bars
the entry of other players in the oil industry because it effectively protects
the interest of oil companies with existing refineries. Thus, it runs counter to
the objective of the law "to foster a truly competitive market."
Third, that the inclusion of the tariff provision in section 5(b) of R.A. No.
8180 violates Section 26(1) Article VI of the Constitution requiring every law
to have only one subject which shall be expressed in its title. Petitioner
contends that the imposition of tariff rates in section 5(b) of R.A. No. 8180 is
foreign to the subject of the law which is the deregulation of the downstream
oil industry.
In G.R. No. 127867, petitioners Edcel C. Lagman, Joker P. Arroyo,
Enrique Garcia, Wigberto Tañada, Flag Human Rights Foundation, Inc.,
Freedom from Debt Coalition (FDC) and Sanlakas contest the
constitutionality of section 15 of R.A. No. 8180 and E.O. No. 392. Section 15
provides:
"Sec. 15. Â 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
E.O. No. 392 states in full, viz.:
"WHEREAS, Republic Act No. 7638, otherwise known as the
"Department of Energy Act of 1992, " provides that, at the end of four
years from its effectivity last December 1992, "the Department (of
Energy) shall, upon approval of the President, institute the programs
and time table of deregulation of appropriate energy projects and
 activities of the energy sector;
"WHEREAS, Section 15 of Republic Act No. 8180, otherwise
known as the "Downstream Oil Industry Deregulation Act of 1996,"
provides that "the DOE shall, upon approval of the President,
implement full deregulation of the downstream oil industry not later
than March, 1997. As far as practicable, the DOE shall time the full
deregulation when the prices of crude oil and petroleum products in
the world market are declining and when the exchange rate of the
peso in relation to the US dollar is stable;
"WHEREAS, pursuant to the recommendation of the
Department of Energy, there is an imperative need to implement the
full deregulation of the downstream oil industry because of the
following recent developments: (i) depletion of the buffer fund on or
about 7 February 1997 pursuant to the Energy Regulatory Board's
Order dated 16 January 1997; (ii) the prices of crude oil had been
stable at $21-$23 per barrel since October 1996 while prices of
petroleum products in the world market had been stable since mid-
December of last year. Moreover, crude oil prices are beginning to
soften for the last few days while prices of some petroleum products
had already declined; and (iii) the exchange rate of the peso in
relation to the US dollar has been stable for the past twelve (12)
months, averaging at around P26.20 to one US dollar;
"WHEREAS, Executive Order No. 377 dated 31 October 1996
provides for an institutional framework for the administration of the
deregulated industry by defining the functions and responsibilities of
various government agencies;
"WHEREAS, pursuant to Republic Act No. 8180, the
deregulation of the industry will foster a truly competitive market
which can better achieve the social policy objectives of fair prices and
adequate, continuous supply of environmentally-clean and high
quality petroleum products;
"NOW, THEREFORE, I, FIDEL V. RAMOS, President of the
Republic of the Philippines, by the powers vested in me by law, do
hereby declare the full deregulation of the downstream oil industry."
In assailing section 15 of R.A. No. 8180 and E.O. No. 392, petitioners
offer the following submissions:
First, section 15 of R.A. No. 8180 constitutes an undue delegation of
legislative power to the President and the Secretary of Energy because it
does not provide a determinate or determinable standard to guide the
Executive Branch in determining when to implement the full deregulation of
the downstream oil industry. Petitioners contend that the law does not define
when it is practicable for the Secretary of Energy to recommend to the
President the full deregulation of the downstream oil industry or when the
President may consider it practicable to declare full deregulation. Also, the
law does not provide any specific standard to determine when the prices of
crude oil in the world market are considered to be declining nor when the
exchange rate of the peso to the US dollar is considered stable.
Second, petitioners aver that E.O. No. 392 implementing the full
deregulation of the downstream oil industry is arbitrary and unreasonable
because it was enacted due to the alleged depletion of the OPSF fund — a
condition not found in R.A. No. 8180.
Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the formation
of a de facto cartel among the three existing oil companies — Petron, Caltex
and Shell — in violation of the constitutional prohibition against monopolies,
combinations in restraint of trade and unfair competition.
Respondents, on the other hand, fervently defend the constitutionality
of R.A. No. 8180 and E.O. No. 392. In addition, respondents contend that the
issues raised by the petitions are not justiciable as they pertain to the
wisdom of the law. Respondents further aver that petitioners have no locus
standi as they did not sustain nor will they sustain direct injury as a result of
the implementation of R.A. No. 8180.
The petitions were heard by the Court on September 30, 1997. On
October 7, 1997, the Court ordered the private respondents oil companies
"to maintain the status quo and to cease and desist from increasing the
prices of gasoline and other petroleum fuel products for a period of thirty
(30) days . . . subject to further orders as conditions may warrant."
We shall now resolve the petitions on the merit. The petitions raise
procedural and substantive issues bearing on the constitutionality of R.A. No.
8180 and E.O. No. 392. The procedural issues are: (1) whether or not the
petitions raise a justiciable controversy, and (2) whether or not the
petitioners have the standing to assail the validity of the subject law and
executive order. The substantive issues are: (1) whether or not section 5(b)
violates the one title — one subject requirement of the Constitution; (2)
whether or not the same section violates the equal protection clause of the
Constitution; (3) whether or not section 15 violates the constitutional
prohibition on undue delegation of power; (4) whether or not E.O. No. 392 is
arbitrary and unreasonable; and (5) whether or not R.A. No. 8180 violates
the constitutional prohibition against monopolies, combinations in restraint
of trade and unfair competition.
We shall first tackle the procedural issues. Respondents claim that the
avalanche of arguments of the petitioners assail the wisdom of R.A. No.
8180. They aver that deregulation of the downstream oil industry is a policy
decision made by Congress and it cannot be reviewed, much less be
reversed by this Court. In constitutional parlance, respondents contend that
the petitions failed to raise a justiciable controversy.
Respondents' joint stance is unnoteworthy. Judicial power includes not
only the duty of the courts to settle actual controversies involving rights
which are legally demandable and enforceable, but also the duty to
determine whether or not there has been grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government. 12 The courts, as guardians of the
Constitution, have the inherent authority to determine whether a statute
enacted by the legislature transcends the limit imposed by the fundamental
law. Where a statute violates the Constitution, it is not only the right but the
duty of the judiciary to declare such act as unconstitutional and void. 13 We
held in the recent case of Tañada v. Angara: 14
"xxx xxx xxx
In seeking to nullify an act of the Philippine Senate on the
ground that it contravenes the Constitution, the petition no doubt
raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it
becomes not only the right but in fact the duty of the judiciary to
settle the dispute. The question thus posed is judicial rather than
political. The duty to adjudicate remains to assure that the
supremacy of the Constitution is upheld. Once a controversy as to the
application or interpretation of a constitutional provision is raised
before this Court, it becomes a legal issue which the Court is bound
by constitutional mandate to decide."
Even a sideglance at the petitions will reveal that petitioners have
raised constitutional issues which deserve the resolution of this Court in view
of their seriousness and their value as precedents. Our statement of facts
and definition of issues clearly show that petitioners are assailing R.A. No.
8180 because its provisions infringe the Constitution and not because the
law lacks wisdom. The principle of separation of power mandates that
challenges on the constitutionality of a law should be resolved in our courts
of justice while doubts on the wisdom of a law should be debated in the halls
of Congress. Every now and then, a law may be denounced in court both as
bereft of wisdom and constitutionally infirmed. Such denunciation will not
deny this Court of its jurisdiction to resolve the constitutionality of the said
law while prudentially refusing to pass on its wisdom. cdrep

The effort of respondents to question the locus standi of petitioners

must also fall on barren ground. In language too lucid to be misunderstood,
this Court has brightlined its liberal stance on a petitioner's locus standi
where the petitioner is able to craft an issue of transcendental significance
to the people. 15 I n Kapatiran ng mga Naglilingkod sa Pamahalaan ng
Pilipinas, Inc. v. Tan, 16 we stressed:
"xxx xxx xxx
Objections to taxpayers' suit for lack of sufficient personality,
standing or interest are, however, in the main procedural matters.
Considering the importance to the public of the cases at bar, and in
keeping with the Court's duty, under the 1987 Constitution, to
determine whether or not the other branches of government have
kept themselves within the limits of the Constitution and the laws and
that they have not abused the discretion given to them, the Court has
brushed aside technicalities of procedure and has taken cognizance of
these petitions."
There is not a dot of disagreement between the petitioners and the
respondents on the far reaching importance of the validity of RA No. 8180
deregulating our downstream oil industry. Thus, there is no good sense in
being hypertechnical on the standing of petitioners for they pose issues
which are significant to our people and which deserve our forthright
resolution.
We shall now track down the substantive issues. In G.R. No. 124360
where petitioner is Senator Tatad, it is contended that section 5(b) of R.A.
No. 8180 on tariff differential violates the provision 17 of the Constitution
requiring every law to have only one subject which should be expressed in
its title. We do not concur with this contention. As a policy, this Court has
adopted a liberal construction of the one title - one subject rule. We have
consistently ruled 18 that the title need not mirror, fully index or catalogue all
contents and minute details of a law. A law having a single general subject
indicated in the title may contain any number of provisions, no matter how
diverse they may be, so long as they are not inconsistent with or foreign to
the general subject, and may be considered in furtherance of such subject
by providing for the method and means of carrying out the general subject.
19 We hold that section 5(b) providing for tariff differential is germane to the
subject of R.A. No. 8180 which is the deregulation of the downstream oil
industry. The section is supposed to sway prospective investors to put up
refineries in our country and make them rely less on imported petroleum. 20
We shall, however, return to the validity of this provision when we examine
its blocking effect on new entrants to the oil market.
We shall now slide to the substantive issues in G.R. No. 127867.
Petitioners assail section 15 of R.A. No. 8180 which fixes the time frame for
the full deregulation of the downstream oil industry. We restate its pertinent
portion for emphasis, viz.:
"Sec. 15. Â Implementation of Full Deregulation . — Pursuant
to section 5(e) of Republic Act No. 7638, the DOE shall, upon approval
of the President, implement the full deregulation of the downstream
oil industry not later than March 1997. As far as practicable, the DOE
shall time the full deregulation when the prices of crude oil and
petroleum products in the world market are declining and when the
exchange rate of the peso in relation to the US dollar is stable. . ."
Petitioners urge that the phrases "as far as practicable," "decline of
crude oil prices in the world market" and "stability of the peso exchange rate
to the US dollar" are ambivalent, unclear and inconcrete in meaning. They
submit that they do not provide the "determinate or determinable
standards" which can guide the President in his decision to fully deregulate
the downstream oil industry. In addition, they contend that E.O. No. 392
which advanced the date of full deregulation is void for it illegally considered
the depletion of the OPSF fund as a factor.
The power of Congress to delegate the execution of laws has long been
settled by this Court. As early as 1916 in Compañia General de Tabacos de
Filipinas vs. The Board of Public Utility Commissioners , 21 this Court thru, Mr.
Justice Moreland, held that "the true distinction is between the delegation of
power to make the law, which necessarily involves a discretion as to what it
shall be, and conferring authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot be done; to
the latter no valid objection can be made." Over the years, as the legal
engineering of men's relationship became more difficult, Congress has to
rely more on the practice of delegating the execution of laws to the
executive and other administrative agencies. Two tests have been
developed to determine whether the delegation of the power to execute laws
does not involve the abdication of the power to make law itself. We
delineated the metes and bounds of these tests in Eastern Shipping Lines,
Inc. vs. POEA , 22 thus:
"There are two accepted tests to determine whether or not
there is a valid delegation of legislative power, viz.: the completeness
test and the sufficient standard test. Under the first test, the law must
be complete in all its terms and conditions when it leaves the
legislative such that when it reaches the delegate the only thing he
will have to do is to enforce it. Under the sufficient standard test,
there must be adequate guidelines or limitations in the law to map
out the boundaries of the delegate's authority and prevent the
delegation from running riot. Both tests are intended to prevent a
total transference of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and exercise a power
essentially legislative."
The validity of delegating legislative power is now a quiet area in our
constitutional landscape. As sagely observed, delegation of legislative power
has become an inevitability in light of the increasing complexity of the task
of government. Thus, courts bend as far back as possible to sustain the
constitutionality of laws which are assailed as unduly delegating legislative
powers. Citing Hirabayashi v. United States 23 as authority, Mr. Justice
Isagani A. Cruz states "that even if the law does not expressly pinpoint the
standard, the courts will bend over backward to locate the same elsewhere
in order to spare the statute, if it can, from constitutional infirmity." 24
Given the groove of the Court's rulings, the attempt of petitioners to
strike down section 15 on the ground of undue delegation of legislative
power cannot prosper. Section 15 can hurdle both the completeness test
and the sufficient standard test. It will be noted that Congress expressly
provided in R.A. No. 8180 that full deregulation will start at the end of March
1997, regardless of the occurrence of any event. Full deregulation at the end
of March 1997 is mandatory and the Executive has no discretion to postpone
it for any purported reason. Thus, the law is complete on the question of the
final date of full deregulation. The discretion given to the President is to
advance the date of full deregulation before the end of March 1997. Section
15 lays down the standard to guide the judgment of the President — he is to
time it as far as practicable when the prices of crude oil and petroleum
products in the world market are declining and when the exchange rate of
the peso in relation to the US dollar is stable.
Petitioners contend that the words "as far as practicable," "declining"
and "stable" should have been defined in R.A. No. 8180 as they do not set
determinate or determinable standards. The stubborn submission deserves
scant consideration. The dictionary meanings of these words are well settled
and cannot confuse men of reasonable intelligence. Webster defines
"practicable" as meaning possible to practice or perform, "decline" as
meaning to take a downward direction, and "stable" as meaning firmly
established. 25 The fear of petitioners that these words will result in the
exercise of executive discretion that will run riot is thus groundless. To be
sure, the Court has sustained the validity of similar, if not more general
standards in other cases. 26
It ought to follow that the argument that E.O. No. 392 is null and void
as it was based on indeterminate standards set by R.A. 8180 must likewise
fail. If that were all to the attack against the validity of E.O. No. 392, the
issue need not further detain our discourse. But petitioners further posit the
thesis that the Executive misapplied R.A. No. 8180 when it considered the
depletion of the OPSF fund as a factor in fully deregulating the downstream
oil industry in February 1997. A perusal of section 15 of R.A. No. 8180 will
readily reveal that it only enumerated two factors to be considered by the
Department of Energy and the Office of the President, viz.: (1) the time when
the prices of crude oil and petroleum products in the world market are
declining, and (2) the time when the exchange rate of the peso in relation to
the US dollar is stable. Section 15 did not mention the depletion of the OPSF
fund as a factor to be given weight by the Executive before ordering full
deregulation. On the contrary, the debates in Congress will show that some
of our legislators wanted to impose as a pre-condition to deregulation a
showing that the OPSF fund must not be in deficit. 27 We therefore hold that
the Executive department failed to follow faithfully the standards set by R.A.
No. 8180 when it considered the extraneous factor of depletion of the OPSF
fund. The misappreciation of this extra factor cannot be justified on the
ground that the Executive department considered anyway the stability of the
prices of crude oil in the world market and the stability of the exchange rate
of the peso to the dollar. By considering another factor to hasten full
deregulation, the Executive department rewrote the standards set forth in
R.A. 8180. The Executive is bereft of any right to alter either by subtraction
or addition the standards set in R.A. No. 8180 for it has no power to make
laws. To cede to the Executive the power to make law is to invite tyranny,
indeed, to transgress the principle of separation of powers. The exercise of
delegated power is given a strict scrutiny by courts for the delegate is a
mere agent whose action cannot infringe the terms of agency. In the cases
at bar, the Executive co-mingled the factor of depletion of the OPSF fund
with the factors of decline of the price of crude oil in the world market and
the stability of the peso to the US dollar. On the basis of the text of E.O. No.
392, it is impossible to determine the weight given by the Executive
department to the depletion of the OPSF fund. It could well be the principal
consideration for the early deregulation. It could have been accorded an
equal significance. Or its importance could be nil. In light of this uncertainty,
we rule that the early deregulation under E.O. No. 392 constitutes a
misapplication of R.A. No. 8180.
We now come to grips with the contention that some provisions of R.A.
No. 8180 violate section 19 of Article XII of the 1987 Constitution. These
provisions are:

(1) Â Section 5 (b) which states — "Any law to the contrary

 notwithstanding and starting with the effectivity of this Act, tariff
duty shall be imposed and collected on imported crude oil at the
rate of three percent (3%) and imported refined petroleum
products at the rate of seven percent (7%) except fuel oil and
LPG, the rate for which shall be the same as that for imported
crude oil. Provided, that beginning on January 1, 2004 the tariff
rate on imported crude oil and refined petroleum products shall
be the same. Provided, further, that this provision may be
amended only by an Act of Congress."

(2) Â Section 6 which states — "To ensure the security and

continuity of petroleum crude and products supply, the DOE shall
require the refiners and importers to maintain a minimum
inventory equivalent to ten percent (10%) of their respective
annual sales volume or forty (40) days of supply, whichever is
lower," and cdphil

(3) Â Section 9 (b) which states — "To ensure fair competition and
prevent cartels and monopolies in the downstream oil industry,
the following acts shall be prohibited:

xxx xxx xxx

(b) Â Predatory pricing which means selling or offering

to sell any product at a price unreasonably below the industry
average cost so as to attract customers to the detriment of
competitors."

On the other hand, section 19 of Article XII of the Constitution allegedly

violated by the aforestated provisions of R.A. No. 8180 mandates: "The State
shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed."
A monopoly is a privilege or peculiar advantage vested in one or more
persons or companies, consisting in the exclusive right or power to carry on
a particular business or trade, manufacture a particular article, or control the
sale or the whole supply of a particular commodity. It is a form of market
structure in which one or only a few firms dominate the total sales of a
product or service. 28 On the other hand, a combination in restraint of trade
is an agreement or understanding between two or more persons, in the form
of a contract, trust, pool, holding company, or other form of association, for
the purpose of unduly restricting competition, monopolizing trade and
commerce in a certain commodity, controlling its production, distribution
and price, or otherwise interfering with freedom of trade without statutory
authority. 29 Combination in restraint of trade refers to the means while
monopoly refers to the end. 30
Article 186 of the Revised Penal Code and Article 28 of the New Civil
Code breathe life to this constitutional policy. Article 186 of the Revised
Penal Code penalizes monopolization and creation of combinations in
restraint of trade, 31 while Article 28 of the New Civil Code makes any person
who shall engage in unfair competition liable for damages. 32
 Respondents aver that sections 5(b), 6 and 9(b) implement the policies
and objectives of R.A. No. 8180. They explain that the 4% tariff differential is
designed to encourage new entrants to invest in refineries. They stress that
the inventory requirement is meant to guaranty continuous domestic supply
of petroleum and to discourage fly-by-night operators. They also submit that
the prohibition against predatory pricing is intended to protect prospective
entrants. Respondents manifested to the Court that new players have
entered the Philippines after deregulation and have now captured 3%-5% of
the oil market.
The validity of the assailed provisions of R.A. No. 8180 has to be
decided in light of the letter and spirit of our Constitution, especially section
19, Article XII. Beyond doubt, the Constitution committed us to the free
enterprise system but it is a system impressed with its own distinctness.
Thus, while the Constitution embraced free enterprise as an economic creed,
it did not prohibit per se the operation of monopolies which can, however be
regulated in the public interest. 33 Thus too, our free enterprise system is not
based on a market of pure and unadulterated competition where the State
pursues a strict hands-off policy and follows the let-the-devil devour the
hindmost rule. Combinations in restraint of trade and unfair competitions are
absolutely proscribed and the proscription is directed both against the State
as well as the private sector. 34 This distinct free enterprise system is
dictated by the need to achieve the goals of our national economy as
defined by section 1, Article XII of the Constitution which are: more equitable
distribution of opportunities, income and wealth; a sustained increase in the
amount of goods and services produced by the nation for the benefit of the
people; and an expanding productivity as the key to raising the quality of life
for all, especially the underprivileged. It also calls for the State to protect
Filipino enterprises against unfair competition and trade practices.
Section 19, Article XII of our Constitution is anti-trust in history and in
spirit. It espouses competition. The desirability of competition is the reason
for the prohibition against restraint of trade, the reason for the interdiction of
unfair competition, and the reason for regulation of unmitigated monopolies.
Competition is thus the underlying principle of section 19, Article XII of our
Constitution which cannot be violated by R.A. No. 8180. We subscribe to the
observation of Prof. Gellhorn that the objective of anti-trust law is "to assure
a competitive economy, based upon the belief that through competition
producers will strive to satisfy consumer wants at the lowest price with the
sacrifice of the fewest resources. Competition among producers allows
consumers to bid for goods and services, and thus matches their desires with
society's opportunity costs." 35 He adds with appropriateness that there is a
reliance upon "the operation of the 'market' system (free enterprise) to
decide what shall be produced, how resources shall be allocated in the
production process, and to whom the various products will be distributed.
The market system relies on the consumer to decide what and how much
shall be produced, and on competition, among producers to determine who
will manufacture it."
Again, we underline in scarlet that the fundamental principle espoused
by section 19, Article XII of the Constitution is competition for it alone can
release the creative forces of the market. But the competition that can
unleash these creative forces is competition that is fighting yet is fair.
Ideally, this kind of competition requires the presence of not one, not just a
few but several players. A market controlled by one player (monopoly) or
dominated by a handful of players (oligopoly) is hardly the market where
honest-to-goodness competition will prevail. Monopolistic or oligopolistic
markets deserve our careful scrutiny and laws which barricade the entry
points of new players in the market should be viewed with suspicion.
Prescinding from these baseline propositions, we shall proceed to
examine whether the provisions of R.A. No. 8180 on tariff differential,
inventory reserves, and predatory prices imposed substantial barriers to the
entry and exit of new players in our downstream oil industry. If they do, they
have to be struck down for they will necessarily inhibit the formation of a
truly competitive market. Contrariwise, if they are insignificant impediments,
they need not be stricken down.
In the cases at bar, it cannot be denied that our downstream oil
industry is operated and controlled by an oligopoly, a foreign oligopoly at
that. Petron, Shell and Caltex stand as the only major league players in the
oil market. All other players belong to the lilliputian league. As the dominant
players, Petron, Shell and Caltex boast of existing refineries of various
capacities. The tariff differential of 4% therefore works to their immense
benefit. Yet, this is only one edge of the tariff differential. The other edge
cuts and cuts deep in the heart of their competitors. It erects a high barrier
to the entry of new players. New players that intend to equalize the market
power of Petron, Shell and Caltex by building refineries of their own will have
to spend billions of pesos. Those who will not build refineries but compete
with them will suffer the huge disadvantage of increasing their product cost
by 4%. They will be competing on an uneven field. The argument that the
4% tariff differential is desirable because it will induce prospective players to
invest in refineries puts the cart before the horse. The first need is to attract
new players and they cannot be attracted by burdening them with heavy
disincentives. Without new players belonging to the league of Petron, Shell
and Caltex, competition in our downstream oil industry is an idle dream.
The provision on inventory widens the balance of advantage of Petron,
Shell and Caltex against prospective new players. Petron, Shell and Caltex
can easily comply with the inventory requirement of R.A. No. 8180 in view of
their existing storage facilities. Prospective competitors again will find
compliance with this requirement difficult as it will entail a prohibitive cost.
The construction cost of storage facilities and the cost of inventory can thus
scare prospective players. Their net effect is to further occlude the entry
points of new players, dampen competition and enhance the control of the
market by the three (3) existing oil companies.
Finally, we come to the provision on predatory pricing which is defined
as ". . . selling or offering to sell any product at a price unreasonably below
the industry average cost so as to attract customers to the detriment of
competitors." Respondents contend that this provision works against Petron,
Shell and Caltex and protects new entrants. The ban on predatory pricing
cannot be analyzed in isolation. Its validity is interlocked with the barriers
imposed by R.A. No. 8180 on the entry of new players. The inquiry should be
to determine whether predatory pricing on the part of the dominant oil
companies is encouraged by the provisions in the law blocking the entry of
new players. Text-writer Hovenkamp, 36 gives the authoritative answer and
we quote:
"xxx xxx xxx
"The rationale for predatory pricing is the sustaining of losses
today that will give a firm monopoly profits in the future. The
monopoly profits will never materialize, however, if the market is
flooded with new entrants as soon as the successful predator
attempts to raise its price. Predatory pricing will be profitable only if
the market contains significant barriers to new entry."
As aforediscussed, the 4% tariff differential and the inventory
requirement are significant barriers which discourage new players to enter
the market. Considering these significant barriers established by R.A. No.
8180 and the lack of players with the comparable clout of PETRON, SHELL
and CALTEX, the temptation for a dominant player to engage in predatory
pricing and succeed is a chilling reality. Petitioners' charge that this provision
on predatory pricing is anti-competitive is not without reason.
Respondents belittle these barriers with the allegation that new
players have entered the market since deregulation. A scrutiny of the list of
the alleged new players will, however, reveal that not one belongs to the
class and category of PETRON, SHELL and CALTEX. Indeed, there is no
showing that any of these new players intends to install any refinery and
effectively compete with these dominant oil companies. In any event, it
cannot be gainsaid that the new players could have been more in number
and more impressive in might if the illegal entry barriers in R.A. No. 8180
were not erected.
We come to the final point. We now resolve the total effect of the
untimely deregulation, the imposition of 4% tariff differential on imported
crude oil and refined petroleum products, the requirement of inventory and
the prohibition on predatory pricing on the constitutionality of R.A. No. 8180.
The question is whether these offending provisions can be individually struck
down without invalidating the entire R.A. No. 8180. The ruling case law is
well stated by author Agpalo, 37 viz.:
"xxx xxx xxx
T h e general rule is that where part of a statute is void as
repugnant to the Constitution, while another part is valid, the valid
portion, if separable from the invalid, may stand and be enforced. The
presence of a separability clause in a statute creates the presumption
that the legislature intended separability, rather than complete nullity
of the statute. To justify this result, the valid portion must be so far
independent of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed that it
could not constitutionally enact the other. Enough must remain to
 make a complete, intelligible and valid statute, which carries out the
legislative intent. . .
The exception to the general rule is that when the parts of a
statute are so mutually dependent and connected, as conditions,
considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, the
nullity of one part will vitiate the rest. In making the parts of the
statute dependent, conditional, or connected with one another, the
legislature intended the statute to be carried out as a whole and
would not have enacted it if one part is void, in which case if some
parts are unconstitutional, all the other provisions thus dependent,
conditional, or connected must fall with them."cdtech

R.A. No. 8180 contains a separability clause. Section 23 provides that

"if for any reason, any section or provision of this Act is declared
unconstitutional or invalid, such parts not affected thereby shall remain in
full force and effect." This separability clause notwithstanding, we hold that
the offending provisions of R.A. No. 8180 so permeate its essence that the
entire law has to be struck down. The provisions on tariff differential,
inventory and predatory pricing are among the principal props of R.A. No.
8180. Congress could not have deregulated the downstream oil industry
without these provisions. Unfortunately, contrary to their intent, these
provisions on tariff differential, inventory and predatory pricing inhibit fair
competition, encourage monopolistic power and interfere with the free
interaction of market forces. R.A. No. 8180 needs provisions to vouchsafe
free and fair competition. The need for these vouchsafing provisions cannot
be overstated. Before deregulation, PETRON, SHELL and CALTEX had no real
competitors but did not have a free run of the market because government
controls both the pricing and non-pricing aspects of the oil industry. After
deregulation, PETRON, SHELL and CALTEX remain unthreatened by real
competition yet are no longer subject to control by government with respect
to their pricing and non-pricing decisions. The aftermath of R.A. No. 8180 is a
deregulated market where competition can be corrupted and where market
forces can be manipulated by oligopolies.
The fall out effects of the defects of R.A. No. 8180 on our people have
not escaped Congress. A lot of our leading legislators have come out openly
with bills seeking the repeal of these odious and offensive provisions in R.A.
No. 8180. In the Senate, Senator Freddie Webb has filed S.B. No. 2133 which
is the result of the hearings conducted by the Senate Committee on Energy.
The hearings revealed that (1) there was a need to level the playing field for
the new entrants in the downstream oil industry, and (2) there was no law
punishing a person for selling petroleum products at unreasonable prices.
Senator Alberto G. Romulo also filed S.B. No. 2209 abolishing the tariff
differential beginning January 1, 1998. He declared that the amendment ". . .
would mean that instead of just three (3) big oil companies there will be
other major oil companies to provide more competitive prices for the market
and the consuming public." Senator Heherson T . Alvarez, one of the
principal proponents of R.A. No. 8180, also filed S.B. No. 2290 increasing the
penalty for violation of its section 9. It is his opinion as expressed in the
explanatory note of the bill that the present oil companies are engaged in
cartelization despite R.A. No. 8180, viz.:
"xxx xxx xxx
"Since the downstream oil industry was fully deregulated in
February 1997, there have been eight (8) fuel price adjustments
made by the three oil majors, namely: Caltex Philippines, Inc.; Petron
Corporation; and Pilipinas Shell Petroleum Corporation. Very
noticeable in the price adjustments made, however, is the uniformity
in the pump prices of practically all petroleum products of the three
oil companies. This, despite the fact, that their selling rates should be
determined by a combination of any of the following factors: the
prevailing peso-dollar exchange rate at the time payment is made for
crude purchases, sources of crude, and inventory levels of both crude
and refined petroleum products. The abovestated factors should have
resulted in different, rather than identical prices.
The fact that the three (3) oil companies' petroleum products
are uniformly priced suggests collusion, amounting to cartelization,
among Caltex Philippines, Inc., Petron Corporation and Pilipinas Shell
Petroleum Corporation to fix the prices of petroleum products in
violation of paragraph (a), Section 9 of R.A. No. 8180.
To deter this pernicious practice and to assure that present and
prospective players in the downstream oil industry conduct their
business with conscience and propriety, cartel-like activities ought to
be severely penalized."
Senator Francisco S. Tatad also filed S.B. No. 2307 providing for a
uniform tariff rate on imported crude oil and refined petroleum products. In
the explanatory note of the bill, he declared in no uncertain terms that ". . .
the present set-up has raised serious public concern over the way the three
oil companies have uniformly adjusted the prices of oil in the country, an
indication of a possible existence of a cartel or a cartel-like situation within
the downstream oil industry. This situation is mostly attributed to the
foregoing provision on tariff differential, which has effectively discouraged
the entry of new players in the downstream oil industry."
In the House of Representatives, the moves to rehabilitate R.A. No.
8180 are equally feverish. Representative Leopoldo E. San Buenaventura has
filed H.B. No. 9826 removing the tariff differential for imported crude oil and
imported refined petroleum products. In the explanatory note of the bill,
Rep. Buenaventura explained:
"xxx xxx xxx
As we now experience, this difference in tariff rates between
imported crude oil and imported refined petroleum products,
unwittingly provided a built-in-advantage for the three existing oil
refineries in the country and eliminating competition which is a must
in a free enterprise economy. Moreover, it created a disincentive for
other players to engage even initially in the importation and
distribution of refined petroleum products and ultimately in the
putting up of refineries. This tariff differential virtually created a
monopoly of the downstream oil industry by the existing three oil
 companies as shown by their uniform and capricious pricing of their
products since this law took effect, to the great disadvantage of the
consuming public.
Thus, instead of achieving the desired effects of deregulation,
that of free enterprise and a level playing field in the downstream oil
industry , R.A. 8180 has created an environment conducive to
cartelization, unfavorable, increased, unrealistic prices of petroleum
products in the country by the three existing refineries."
Representative Marcial C. Punzalan, Jr., filed H.B. No. 9981 to prevent
collusion among the present oil companies by strengthening the oversight
function of the government particularly its ability to subject to a review any
adjustment in the prices of gasoline and other petroleum products. In the
explanatory note of the bill, Rep. Punzalan, Jr., said:
"xxx xxx xxx
To avoid this, the proposed bill seeks to strengthen the
oversight function of government, particularly its ability to review the
prices set for gasoline and other petroleum products. It grants the
Energy Regulatory Board (ERB) the authority to review prices of oil
and other petroleum products, as may be petitioned by a person,
group or any entity, and to subsequently compel any entity in the
industry to submit any and all documents relevant to the imposition
of new prices. In cases where the Board determines that there exist
collusion, economic conspiracy, unfair trade practice, profiteering
and/or overpricing, it may take any step necessary to protect the
public, including the readjustment of the prices of petroleum
products. Further, the Board may also impose the fine and penalty of
imprisonment, as prescribed in Section 9 of R .A. 8180, on any person
or entity from the oil industry who is found guilty of such prohibited
acts.
By doing all of the above, the measure will effectivity provide
Filipino consumers with a venue where their grievances can be heard
and immediately acted upon by government.
Thus, this bill stands to benefit the Filipino consumer by making
the price-setting process more transparent and making it easier to
prosecute those who perpetrate such prohibited acts as collusion,
overpricing, economic conspiracy and unfair trade." cdtai

Representative Sergio A.F. Apostol filed H.B. No. 10039 to remedy an

omission in R.A. No. 8180 where there is no agency in government that
determines what is "reasonable" increase in the prices of oil products.
Representative Dante O. Tinga , one of the principal sponsors of R.A. No.
8180, filed H.B. No. 10057 to strengthen its anti-trust provisions. He
elucidated in its explanatory note:
"xxx xxx xxx
The definition of predatory pricing, however, needs to be
tightened up particularly with respect to the definitive benchmark
price and the specific anti-competitive intent. The definition in the bill
at hand which was taken from the Areeda-Turner test in the United
States on predatory pricing resolves the questions. The definition
 reads, 'Predatory pricing means selling or offering to sell any oil
product at a price below the average variable cost for the purpose of
destroying competition, eliminating a competitor or discouraging a
competitor from entering the market.'
The appropriate actions which may be resorted to under the
Rules of Court in conjunction with the oil deregulation law are
adequate. But to stress their availability and dynamism, it is a good
move to incorporate all the remedies in the law itself. Thus, the
present bill formalizes the concept of government intervention and
private suits to address the problem of antitrust violations.
Specifically, the government may file an action to prevent or restrain
any act of cartelization or predatory pricing, and if it has suffered any
loss or damage by reason of the antitrust violation it may recover
damages. Likewise, a private person or entity may sue to prevent or
restrain any such violation which will result in damage to his business
or property, and if he has already suffered damage he shall recover
treble damages. A class suit may also be allowed.
To make the DOE Secretary more effective in the enforcement
of the law, he shall be given additional powers to gather information
and to require reports."
Representative Erasmo B. Damasing filed H.B. No. 7885 and has a
more unforgiving view of R.A. No. 8180. He wants it completely repealed. He
explained:
"xxx xxx xxx
Contrary to the projections at the time the bill on the
Downstream Oil Industry Deregulation was discussed and debated
upon in the plenary session prior to its approval into law, there aren't
any new players or investors in the oil industry. Thus, resulting in
practically a cartel or monopoly in the oil industry by the three (3) big
oil companies, Caltex, Shell and Petron. So much so, that with the
deregulation now being partially implemented, the said oil companies
have succeeded in increasing the prices of most of their petroleum
products with little or no interference at all from the government. In
the month of August, there was an increase of Fifty centavos (50¢)
per liter by subsidizing the same with the OPSF, this is only
temporary as in March 1997, or a few months from now, there will be
full deregulation (Phase II) whereby the increase in the prices of
petroleum products will be fully absorbed by the consumers since
OPSF will already be abolished by then. Certainly, this would make
the lives of our people, especially the unemployed ones, doubly
difficult and unbearable.
The much ballyhooed coming in of new players in the oil
industry is quite remote considering that these prospective investors
cannot fight the existing and well established oil companies in the
country today, namely, Caltex, Shell and Petron. Even if these new
players will come in, they will still have no chance to compete with
the said three (3) existing big oil companies considering that there is
an imposition of oil tariff differential of 4% between importation of
crude oil by the said oil refineries paying only 3% tariff rate for the
said importation and 7% tariff rate to be paid by businessmen who
 have no oil refineries in the Philippines but will import finished
petroleum/oil products which is being taxed with 7% tariff rates.
So, if only to help the many who are poor from further suffering
as a result of unmitigated increase in oil products due to
deregulation, it is a must that the Downstream Oil Industry
Deregulation Act of 1996, or R.A. 8180 be repealed completely ."
Various resolutions have also been filed in the Senate calling for an
immediate and comprehensive review of R.A. No. 8180 to prevent the
downpour of its ill effects on the people. Thus, S. Res. No. 574 was filed by
Senator Gloria M. Macapagal entitled Resolution "Directing the Committee on
Energy to Inquire Into The Proper Implementation of the Deregulation of the
Downstream Oil Industry and Oil Tax Restructuring As Mandated Under R.A.
Nos. 8180 and 8184, In Order to Make The Necessary Corrections In the
Apparent Misinterpretation Of The Intent And Provision Of The Laws And
Curb The Rising Tide Of Disenchantment Among The Filipino Consumers And
Bring About The Real Intentions And Benefits Of The Said Law." Senator Blas
P. Ople filed S. Res. No. 664 entitled resolution "Directing the Committee on
Energy To Conduct An Inquiry In Aid Of Legislation To Review The
Government's Oil Deregulation Policy In Light Of The Successive Increases In
Transportation, Electricity And Power Rates, As Well As Of Food And Other
Prime Commodities And Recommend Appropriate Amendments To Protect
The Consuming Public." Senator Ople observed:
"xxx xxx xxx
WHEREAS, since the passage of R.A. No. 8180, the Energy
Regulatory Board (ERB) has imposed successive increases in oil
prices which has triggered increases in electricity and power rates,
transportation fares, as well as in prices of food and other prime
commodities to the detriment of our people, particularly the poor;
WHEREAS, the new players that were expected to compete with
the oil cartel-Shell, Caltex and Petron-have not come in;
WHEREAS, it is imperative that a review of the oil deregulation
policy be made to consider appropriate amendments to the existing
law such as an extension of the transition phase before full
deregulation in order to give the competitive market enough time to
develop;
WHEREAS, the review can include the advisability of providing
some incentives in order to attract the entry of new oil companies to
effect a dynamic competitive market;
WHEREAS, it may also be necessary to defer the setting up of
the institutional framework for full deregulation of the oil industry as
mandated under Executive Order No. 377 issued by President Ramos
last October 31, 1996. . . ."
Senator Alberto G. Romulo filed S. Res. No. 769 entitled resolution
"Directing the Committees on Energy and Public Services In Aid of
Legislation To Assess The Immediate Medium And Long Term Impact of Oil
Deregulation On Oil Prices And The Economy." Among the reasons for the
resolution is the finding that "the requirement of a 40-day stock inventory
effectively limits the entry of other oil firms in the market with the
consequence that instead of going down oil prices will rise."
Parallel resolutions have been filed in the House of Representatives.
Representative Dante O . Tinga filed H. Res. No. 1311 "Directing The
Committee on Energy To Conduct An Inquiry, In Aid of Legislation, Into The
Pricing Policies And Decisions Of The Oil Companies Since The
Implementation of Full Deregulation Under The Oil Deregulation Act (R.A. No.
8180) For the Purpose of Determining In The Context Of The Oversight
Functions Of Congress Whether The Conduct Of The Oil Companies, Whether
Singly Or Collectively, Constitutes Cartelization Which Is A Prohibited Act
Under R.A. No. 8180, And What Measures Should Be Taken To Help Ensure
The Successful Implementation Of The Law In Accordance With Its Letter And
Spirit, Including Recommending Criminal Prosecution Of the Officers
Concerned Of the Oil Companies If Warranted By The Evidence, And For
Other Purposes." Representatives Marcial C . Punzalan, Jr., Dante O. Tinga
and Antonio E. Bengzon III filed H.R. No. 894 directing the House Committee
on Energy to inquire into the proper implementation of the deregulation of
the downstream oil industry. House Resolution No. 1013 was also filed by
Representatives Edcel C. Lagman, Enrique T. Garcia, Jr. and Joker P. Arroyo
urging the President to immediately suspend the implementation of E.O. No.
392.
In recent memory there is no law enacted by the legislature afflicted
with so much constitutional deformities as R.A. No. 8180. Yet, R.A. No. 8180
deals with oil, a commodity whose supply and price affect the ebb and flow
of the lifeblood of the nation. Its shortage of supply or a slight, upward spiral
in its price shakes our economic foundation. Studies show that the areas
most impacted by the movement of oil are food manufacture, land transport,
trade, electricity and water. 38 At a time when our economy is in a dangerous
downspin, the perpetuation of R.A. No. 8180 threatens to multiply the
number of our people with bent backs and begging bowls. R.A. No. 8180 with
its anti-competition provisions cannot be allowed by this Court to stand even
while Congress is working to remedy its defects.
The Court, however, takes note of the plea of PETRON, SHELL and
CALTEX to lift our restraining order to enable them to adjust upward the
price of petroleum and petroleum products in view of the plummeting value
of the peso. Their plea, however, will now have to be addressed to the
Energy Regulatory Board as the effect of the declaration of
unconstitutionality of R.A. No. 8180 is to revive the former laws it repealed.
39 The length of our return to the regime of regulation depends on Congress

which can fasttrack the writing of a new law on oil deregulation in accord
with the Constitution.
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. Striking down R.A. No. 8180 may cost losses in quantifiable
terms to the oil oligopolists. But the loss in tolerating the tampering of our
Constitution is not quantifiable in pesos and centavos. More worthy of
protection than the supra-normal profits of private corporations is the
sanctity of the fundamental principles of the Constitution. Indeed when
confronted by a law violating the Constitution, the Court has no option but to
strike it down dead. Lest it is missed, the Constitution is a covenant that
grants and guarantees both the political and economic rights of the people.
The Constitution mandates this Court to be the guardian not only of the
people's political rights but their economic rights as well. The protection of
the economic rights of the poor and the powerless is of greater importance
to them for they are concerned more with the esoterics of living and less
with the esoterics of liberty. Hence, for as long as the Constitution reigns
supreme so long will this Court be vigilant in upholding the economic rights
of our people especially from the onslaught of the powerful. Our defense of
the people's economic rights may appear heartless because it cannot be
half-hearted.
IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is declared
unconstitutional and E.O. No. 372 void.
SO ORDERED.
Regalado, Davide, Jr., Romero, Bellosillo and Vitug, JJ ., concur.
Mendoza, J ., concurs in the result.
Narvasa, C .J ., is on leave.

Separate Opinions
KAPUNAN, J ., concurring:

Lately, the Court has been perceived (albeit erroneously) to be an

unwelcome interloper in affairs and concerns best left to legislators and
policy-makers. Admittedly, the wisdom of political and economic decisions
are outside the scrutiny of the Court. However, the political question doctrine
is not some mantra that will automatically cloak executive orders and laws
(or provisions thereof) with legitimacy. It is this Court's bounden duty under
Sec. 4(2), Art. VIII of the 1987 Constitution to decide all cases involving the
constitutionality of laws and under Sec. 1 of the same article, "to determine
whether or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or instrumentality of the
Government."
In the instant case, petitioners assail the constitutionality of certain
provisions found in R.A. No. 8180, otherwise known as the "Downstream Oil
Industry Deregulation Act of 1996." To avoid accusations of undue
interference with the workings of the two other branches of government, this
discussion is limited to the issue of whether or not the assailed provisions
are germane to the law or serve the purpose for which it was enacted.
The objective of the deregulation law is quite simple. As aptly
enunciated in Sec. 2 thereof, it is to "foster a truly competitive market which
can better achieve the social policy objectives of fair prices and adequate,
continuous supply of environmentally-clean and high quality petroleum
products." The key, therefore, is free competition which is commonly defined
as:
The act or action of seeking to gain what another is seeking to
gain at the same time and usually under or as if under fair or
equitable rules and circumstances: a common struggle for the same
object especially among individuals of relatively equal standing . . . a
market condition in which a large number of independent buyers and
sellers compete for identical commodity, deal freely with each other,
and retain the right of entry and exit from the market. (Webster's
Third International Dictionary.)
and in a landscape where our oil industry is dominated by only three major
oil firms, this translates primarily into the establishment of a free market
conducive to the entry of new and several oil companies in the business.
Corollarily, it means the removal of any and all barriers that will hinder the
influx of prospective players. It is a truism in economics that if there are
many players in the market, healthy competition will ensue and in order to
survive and profit the competitors will try to outdo each other in terms of
quality and price. The result: better quality products and competitive prices.
In the end, it will be the public that benefits (which is ultimately the most
important goal of the law). Thus, it is within this framework that we must
determine the validity of the assailed provisions.
I
The 4% Tariff Differential
Sec. 5. Â Liberalization of Downstream Oil Industry and Tariff
Treatment. —
xxx xxx xxx
b) Â Any law to the contrary notwithstanding and starting
with the effectivity of this Act, tariff duty shall be imposed and
collected on imported crude oil at the rate of three percent (3%) and
imported refined petroleum products at the rate of seven percent
(7%), except fuel oil and LPG, the rate for which shall be the same as
that for imported crude oil: Provided, That beginning on January 1,
2004 the tariff rate on imported crude oil and refined petroleum
products shall be the same: Provided, further, That this provision may
be amended only by an Act of Congress;
Respondents are one in asserting that the 4% tariff differential
between imported crude oil and imported refined petroleum products is
intended to encourage the new entrants to put up their own refineries in the
country. The advantages of domestic refining cannot be discounted, but we
must view this intent in the proper perspective. The primary purpose of the
deregulation law is to open up the market and establish free competition.
The priority of the deregulation law, therefore, is to encourage new oil
companies to come in first. Incentives to encourage the building of local
refineries should be provided after the new oil companies have entered the
Philippine market and are actively participating therein.
The threshold question therefore is, is the 4% tariff differential a
barrier to the entry of new oil companies in the Philippine market?
It is. Since the prospective oil companies do not (as yet) have local
refineries, they would have to import refined petroleum products, on which a
7% tariff duty is imposed. On the other hand, the existing oil companies
already have domestic refineries and, therefore, only import crude oil which
is taxed at a lower rate of 3%. Tariffs are part of the costs of production.
Hence, this means that with the 4% tariff differential (which becomes an
added cost) the prospective players would have higher production costs
compared to the existing oil companies and it is precisely this factor which
could seriously affect its decision to enter the market.
cdll

Viewed in this light, the tariff differential between imported crude oil
and refined petroleum products becomes an obstacle to the entry of new
players in the Philippine oil market. It defeats the purpose of the law and
should thus be struck down.
Public respondents contend that ". . . a higher tariff rate is not the
overriding factor confronting a prospective trader/importer but, rather, his
ability to generate the desired internal rate of return (IRR) and net present
value (NPV). In other words, if said trader/importer, after some calculation,
finds that he can match the price of locally refined petroleum products and
still earn the desired profit margin, despite a higher tariff rate, he will be
attracted to embark in such business. A tariff differential does not per se
make the business of importing refined petroleum product a losing
proposition." 1
The problem with this rationale, however, is that it is highly
speculative. The opposite may well hold true. The point is to make the
prospect of engaging in the oil business in the Philippines appealing, so why
create a barrier in the first place?
There is likewise no merit in the argument that the removal of the tariff
differential will revive the 10% (for crude oil) and 20% (for refined petroleum
products) tariff rates that prevailed before the enactment of R.A. No. 8180.
What petitioners are assailing is the tariff differential. Phrased differently,
why is the tariff duty imposed on imported petroleum products not the same
as that imposed on imported crude oil? Declaring the tariff differential void is
not equivalent to declaring the tariff itself void. The obvious consequence
thereof would be that imported refined petroleum products would now be
taxed at the same rate as imported crude oil which R.A. No. 8180 has
specifically set at 3%. The old rates have effectively been repealed by Sec.
24 of the same law. 2
II
The Minimum Inventory Requirement and the Prohibition
 Against Predatory Pricing
SEC. 6. Â 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. Â 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) Â Predatory pricing which means selling or offering to sell
any product at a price unreasonably below the industry average cost
so as to attract customers to the detriment of competitors.
The same rationale holds true for the two other assailed provisions in
the Oil Deregulation law. The primordial purpose of the law, I reiterate, is to
create a truly free and competitive market. To achieve this goal, provisions
that show the possibility, or even the merest hint, of deterring or impeding
the ingress of new blood in the market should be eliminated outright. I am
confident that our lawmakers can formulate other measures that would
accomplish the same purpose (insure security and continuity of petroleum
crude products supply and prevent fly by night operators, in the case of the
minimum inventory requirement, for instance) but would not have on the
downside the effect of seriously hindering the entry of prospective traders in
the market.
The overriding consideration, which is the public interest and public
benefit, calls for the levelling of the playing fields for the existing oil
companies and the prospective new entrants. Only when there are many
players in the market will free competition reign and economic development
begin.
Consequently, Section 6 and Section 9(b) of R.A. No. 8180 should
similarly be struck down.
III
Conclusion
Respondent oil companies vehemently deny the "cartelization" of the
oil industry. Their parallel business behaviour and uniform pricing are the
result of competition, they say, in order to keep their share of the market.
This rationale fares well when oil prices are lowered, i.e. when one oil
company rolls back its prices, the others follow suit so as not to lose its
market. But how come when one increases its prices the others likewise
follow? Is this competition at work?
Respondent oil companies repeatedly assert that due to the
devaluation of the peso, they had to increase the prices of their oil products,
otherwise, they would lose, as they have allegedly been losing specially with
the issuance of a temporary restraining order by the Court. However, what
we have on record are only the self-serving lamentations of respondent oil
companies. Not one has presented hard data, independently verified, to
attest to these losses. Mere allegations are not sufficient but must be
accompanied by supporting evidence. What probably is nearer the truth is
that respondent oil companies will not make as much profits as they have in
the past if they are not allowed to increase the prices of their products
everytime the value of the peso slumps. But in the midst of worsening
economic difficulties and hardships suffered by the people, the very
customers who have given them tremendous profits throughout the years, is
it fair and decent for said companies not to bear a bit of the burden by
foregoing a little of their profits?
PREMISES CONSIDERED, I vote that Section 5(b), Section 6 and Section
9(b) of R.A. No. 8180 be declared unconstitutional.

PANGANIBAN, J ., concurring:

I concur with the lucid and convincing ponencia of Mr. Justice Reynato
S. Puno. I write to stress two points:
1. Â The Issue Is Whether Oil Companies May Unilaterally
Fix Prices, Not Whether This Court May

Interfere in Economic Questions

With the issuance of the status quo order on October 7, 1997 requiring
the three respondent oil companies — Petron, Shell and Caltex — "to cease
and desist from increasing the prices of gasoline and other petroleum fuel
products for a period of thirty (30) days," the Court has been accused of
interfering in purely economic policy matters 1 or, worse, of arrogating unto
itself price-regulatory powers. 2 Let it be emphasized that we have no desire
— nay, we have no power — to intervene in, to change or to repeal the laws
of economics, in the same manner that we cannot and will not nullify or
invalidate the laws of physics or chemistry.
The issue here is not whether the Supreme Court may fix the retail
prices of petroleum products. Rather, the issue is whether RA 8180, the law
allowing the oil companies to unilaterally set, increase or decrease their
prices, is valid or constitutional.
Under the Constitution, 3 this Court has — in appropriate cases — the
DUTY, not just the power, to determine whether a law or a part thereof
offends the Constitution and, if so, to annul and set it aside. 4 Because a
serious challenge has been hurled against the validity of one such law,
namely RA 8180 — its criticality having been preliminary determined from
the petition, comments, reply and, most tellingly, the oral argument on
September 30, 1997 — this Court, in the exercise of its mandated judicial
discretion, issued the status quo order to prevent the continued enforcement
and implementation of a law that was prima facie found to be
constitutionally infirm. Indeed, after careful final deliberation, said law is now
ruled to be constitutionally defective thereby disabling respondent oil
companies from exercising their erstwhile power, granted by such defective
statute, to determine prices by themselves.
Concededly, this Court has no power to pass upon the wisdom, merits
and propriety of the acts of its co-equal branches in government. However, it
does have the prerogative to uphold the Constitution and to strike down and
annul a law that contravenes the Charter. 5 From such duty and prerogative,
it shall never shirk or shy away.
cdta

By annulling RA 8180, this Court is not making a policy statement

against deregulation. Quite the contrary, it is simply invalidating a pseudo
deregulation law which in reality restrains free trade and perpetuates a
cartel, an oligopoly. The Court is merely upholding constitutional adherence
to a truly competitive economy that releases the creative energy of free
enterprise. It leaves to Congress, as the policy-setting agency of the
government, the speedy crafting of a genuine, constitutionally justified oil
deregulation law.
2. Â Everyone, Rich or Poor, Must Share in the Burdens of Economic
Dislocation
Much has been said and will be said about the alleged negative effect
of this Court's holding on the oil giants' profit and loss statements. We are
not unaware of the disruptive impact of the depreciating peso on the retail
prices of refined petroleum products. But such price-escalating consequence
adversely affects not merely these oil companies which occupy hallowed
places among the most profitable corporate behemoths in our country. In
these critical times of widespread economic dislocations, abetted by
currency fluctuations not entirely of domestic origin, all sectors of society
agonize and suffer. Thus, everyone, rich or poor, must share in the burdens
of such economic aberrations.
I can understand foreign investors who see these price adjustments as
necessary consequences of the country's adherence to the free market, for
that, in the first place, is the magnet for their presence here.
Understandably, their concern is limited to bottom lines and market share.
But in all these mega companies, there are also Filipino entrepreneurs and
managers. I am sure there are patriots among them who realize that, in
times of economic turmoil, the poor and the underprivileged proportionately
suffer more than any other sector of society. There is a certain threshold of
pain beyond which the disadvantaged cannot endure. Indeed, it has been
wisely said that "if the rich who are few will not help the poor who are many,
there will come a time when the few who are filled cannot escape the wrath
of the many who are hungry." Kaya't sa mga kababayan nating kapitalista at
may kapangyarihan, nararapat lamang na makiisa tayo sa mga walang palad
at mahihirap sa mga araw ng pangangailangan. Huwag na nating ipagdiinan
ang kawalan ng tubo, o maging ang panandaliang pagkalugi. At sa mga
mangangalakal na ganid at walang puso: hirap na hirap na po ang ating mga
kababayan. Makonsiyensya naman kayo!

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. Â Liberalization of Downstream Oil Industry and
Tariff Treatment. —
xxx xxx xxx
(b). Â 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 oils: 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. Â 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. Â 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) Â 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. Â 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. Â 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. Â 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) v. Enriquez (235 SCRA 506 [1994]), we held that members of
Congress may properly challenge the validity of an official act of any
department of the government only upon showing that the assailed official
act affects or impairs their rights and prerogatives as legislators. In
Kilosbayan, Inc., et al. vs. Morato, et al. (246 SCRA 540 [1995]), this Court
further clarified that "if the complaint is not grounded on the impairment of
the power of Congress, legislators do not have standing to question the
validity of any law or official action."
Republic Act No. 8180 clearly does not violate or impair prerogatives,
powers, and rights of Congress, or the individual members thereof,
considering that the assailed official act is the very act of Congress itself
authorizing the full deregulation of the downstream oil industry. cdti
 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, can not 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. Â Section 5(b) or 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 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. Â 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. prcd

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. 329.
5. Â Republic Act No. 8180 is not violative of the constitutional
prohibition against monopolies, combinations in restraint or 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. llcd

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 Philippines and to discourage fly-by-night importers.
Further, the assailed tariff differential is likewise not violative of the
equal protection clause of the Constitution. It is germane to the declared
policy of Republic Act No. 8180 which is to achieve (1) fair prices; and (2)
adequate and continuous supply of environmentally-clean and high quality
petroleum products. Said adequate and continuous supply of petroleum
products will be achieved if new investors or players are enticed to engage
in the business of refining crude oil in the country. Existing refining
companies, are similarly encouraged to put up additional refining
companies. All of this can be made possible in view of the lower tariff duty
on imported crude oil than that levied on imported refined petroleum
products. In effect, the lower tariff rates will enable the refiners to recoup
their investments considering that they will be investing billions of pesos in
putting up their refineries in the Philippines. That incidentally the existing
refineries will be benefited by the tariff differential does not negate the fact
that the intended effect of the law is really to encourage the construction of
new refineries, whether by existing players or by new players.
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 increases 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.

FRANCISCO, J ., dissenting:

The continuing peso devaluation and the spiraling cost of commodities

have become hard facts of life nowadays. And the wearies are compounded
by the ominous prospects of very unstable oil prices. Thus, with the goal of
rationalizing the oil scheme, Congress enacted Republic Act No. 8180,
otherwise known as the Downstream Oil Deregulation Act of 1996, the policy
of which is "to foster a truly competitive market which can better achieve
the social policy objectives of fair prices and adequate, continuous supply of
environmentally-clean and high quality petroleum products". 1 But if the
noble and laudable objective of this enactment is not accomplished, as to
date oil prices continue to rise, can this Court be called upon to declare the
statute unconstitutional or must the Court desist from interfering in a matter
which is best left to the other branch/es of government? cdpr

The apparent thrust of the consolidated petitions is to declare, not the

entirety, but only some isolated portions of Republic Act No. 8180
unconstitutional. This is clear from the grounds enumerated by the
petitioners, to wit:
G.R. No. 124360
"4.0. Grounds:
4.1.
"THE IMPOSITION OF DIFFERENT TARIFF RATES ON IMPORTED
CRUDE OIL AND IMPORTED REFINED PETROLEUM PRODUCTS
VIOLATES THE EQUAL PROTECTION OF THE LAWS.
 4.2.
"THE IMPOSITION OF DIFFERENT TARIFF RATES DOES NOT
DEREGULATE THE DOWNSTREAM OIL INDUSTRY, INSTEAD, IT
CONTROLS THE OIL INDUSTRY, CONTRARY TO THE AVOWED POLICY
OF THE LAW.
4.3.
"THE INCLUSION OF A TARIFF PROVISION IN SECTION 5(b) OF
THE DOWNSTREAM OIL INDUSTRY DEREGULATION LAW VIOLATES
THE 'ONE SUBJECT-ONE TITLE' RULE EMBODIED IN ARTICLE VI,
SECTION 26(1) OF THE CONSTITUTION." 2
G.R. No. 127867
"GROUNDS
"THE IMPLEMENTATION OF FULL DEREGULATION PRIOR TO THE
EXISTENCE OF A TRULY COMPETITIVE MARKET VIOLATES THE
CONSTITUTION PROHIBITING MONOPOLIES, UNFAIR COMPETITION
AND PRACTICES IN RESTRAINT OF TRADE.
"R.A. NO. 8180 CONTAINS DISGUISED REGULATIONS IN A
SUPPOSEDLY DEREGULATED INDUSTRY WHICH CREATE OR PROMOTE
MONOPOLY OF THE OIL INDUSTRY BY THE THREE EXISTING OIL
COMPANIES.
"THE REGULATORY AND PENAL PROVISIONS OF R.A. NO. 8180
VIOLATE THE EQUAL PROTECTION OF THE LAWS, DUE PROCESS OF
LAW AND THE CONSTITUTIONAL RIGHTS OF AN ACCUSED TO BE
INFORMED OF THE NATURE AND CAUSE OF THE ACCUSATION
AGAINST HIM." 3
And culled from petitioners' arguments in support of the above
grounds, the provisions of Republic Act No. 8180 which they now impugn
are:
A. Â Section 5(b) on the imposition of tariff which provides:
"Any law to the contrary notwithstanding and starting with the
effectivity of this Act, tariff duty shall be imposed and collected on
imported crude oil at the rate of three percent (3%), and imported
refined petroleum products at the rate of seven percent (7%), except
fuel oil and LPB, the rate for which shall be the same as that for
imported crude oil: Provided, That beginning on January 1, 2004 the
tariff rate on imported crude oil and refined petroleum products shall
be the same: Provided further, That this provision may be amended
only by an Act of Congress." [Emphasis added].
B. Â Section 6 on the minimum inventory requirement, thus:
"Security of Supply. — To ensure the security and continuity of
petroleum crude and products supply, the DOE shall require the
refiners and importers to maintain a minimum inventory equivalent to
ten percent (10%) of their respective annual sales volume or forty
(40) days of supply, whichever is lower."
C. Â Section 9(b) on predatory pricing: "Predatory pricing
which means selling or offering to sell any product at a price
unreasonably below the industry average cost so as to attract
customers to the detriment of competitors.
 "Any person, including but not limited to the chief
operating officer or chief executive officer of the corporation
involved, who is found guilty of any of the said prohibited acts
shall suffer the penalty of imprisonment for three (3) years and
fine ranging from Five hundred thousand pesos (P500,000) to
One million pesos (P1,000,000)."

D. Â Section 10 on the other prohibited acts which states:

"Other Prohibited Acts. — To ensure compliance with the provisions of
this Act, the failure to comply with any of the following shall likewise
be prohibited: 1) submission of any reportorial requirements; 2)
maintenance of the minimum inventory; and, 3) use of clean and safe
(environment and worker-benign) technologies.

"Any person, including but not limited to the chief

operating officer or chief executive officer of the corporation
involved, who is found guilty of any of the said prohibited acts
shall suffer the penalty of imprisonment for two (2) years and fine
ranging from Two hundred fifty thousand pesos (P250,000) to
Five hundred thousand pesos (P500,000)."

E. Â Section 15 on the implementation of full deregulation,

thus: "Implementation of Full Deregulation . — Pursuant to Section
5(e) of Republic Act No. 7683, the DOE shall, upon approval of the
President, implement the full deregulation of the downstream oil
industry not later than March, 1997. As far as practicable, the DOE
shall time the full deregulation when the prices of crude oil and
petroleum products in the world market are declining and when the
exchange rate of the peso in relation to the US dollar is stable. Upon
the implementation of the full deregulation as provided herein, the
transition phase is deemed terminated and the following laws are
deemed repealed: . . ." [Emphasis added].
F. Â Section 20 on the imposition of administrative fine:
"Administrative Fine . — The DOE may, after due notice and hearing
impose a fine in the amount of not less than One hundred thousand
pesos (P100,000) but not more than One million pesos (P1,000,000)
upon any person or entity who violates any of its reportorial and
minimum inventory requirements, without prejudice to criminal
sanctions."
Executive Order No. 392, entitled "Declaring Full Deregulation Of The
Downstream Oil Industry" which declared the full deregulation effective
February 8, 1997, is also sought to be declared unconstitutional.
A careful scrutiny of the arguments proffered against the
constitutionality of Republic Act No. 8180 betrays the petitioners' underlying
motive of calling upon this Court to determine the wisdom and efficacy of
the enactment rather than its adherence to the Constitution. Nevertheless, I
shall address the issues raised if only to settle the alleged constitutional
defects afflicting some provisions of Republic Act No. 8180. To elaborate:
A. Â On the imposition of tariff . Petitioners argue that the existence
of a tariff provision violated the "one subject-one title" 4 rule under Article VI,
Section 26 (1) as the imposition of tariff rates is "inconsistent with" 5 and not
at all germane to the deregulation of the oil industry. They also stress that
the variance between the seven percent (7%) duty on imported gasoline and
other refined petroleum products and three percent (3%) duty on crude oil
gives a "4% tariff protection in favor of Petron, Shell and Caltex which own
and operate refineries here". 6 The provision, petitioners insist, "inhibits
prospective oil players to do business here because it will unnecessarily
increase their product cost by 4%." 7 In other words, the tariff rates "does
not foster 'a truly competitive market'." 8 Also petitioners claim that both
Houses of Congress never envisioned imposing the seven percent (7%) and
three percent (3%) tariff on refined and crude oil products as both Houses
advocated, prior to the holding of the bicameral conference committee, a
"zero differential". Moreover, petitioners insist that the tariff rates violate
"the equal protection of the laws enshrined in Article III, Section 1 of the
Constitution" 9 since the rates and their classification are not relevant in
attaining the avowed policy of the law, not based on substantial distinctions
and limited to the existing condition.
The Constitution mandates that "every bill passed by Congress shall
embrace only one subject which shall be expressed in the title thereof". 10
The object sought to be accomplished by this mandatory requirement has
been explained by the Court in the vintage case of Central Capiz v. Ramirez,
11 thus:

"The object sought to be accomplished and the mischief

proposed to be remedied by this provision are well known. Legislative
assemblies, for the dispatch of business, often pass bills by their titles
only without requiring them to be read. A specious title sometimes
covers legislation which, if its real character had been disclosed,
would not have commanded assent. To prevent surprise and fraud on
the legislature is one of the purposes this provision was intended to
accomplish. Before the adoption of this provision the title of a statute
was often no indication of its subject or contents. LLjur

"An evil this constitutional requirement was intended to correct

was the blending in one and the same statute of such things as were
diverse in their nature, and were connected only to combine in favor
of all the advocates of each, thus often securing the passage of
several measures no one of which could have succeeded on its own
merits. Mr. Cooley thus sums up in his review of the authorities
defining the objects of this provision: 'It may therefore be assumed as
settled that the purpose of this provision was: First, to prevent hodge-
podge or log-rolling legislation; second, to prevent surprise or fraud
upon the legislature by means of provisions in bills of which the titles
gave no information, and which might therefore be overlooked and
carelessly and unintentionally adopted; and, third , to fairly apprise
the people, through such publication of legislative proceedings as is
usually made, of the subjects of legislation that are being considered,
in order that they may have opportunity of being heard thereon by
petition or otherwise if they shall so desire.' (Cooley's Constitutional
Limitations, p. 143)." 12
The interpretation of "one subject-one title" rule, however, is never
intended to impede or stifle legislation. The requirement is to be given a
practical rather than a technical construction and it would be sufficient
compliance if the title expresses the general subject and all the provisions of
the enactment are germane and material to the general subject. 13 Congress
is not required to employ in the title of an enactment, language of such
precision as to mirror, fully index or catalogue all the contents and the
minute details therein. 14 All that is required is that the title should not cover
legislation incongruous in itself, and which by no fair intendment can be
considered as having a necessary or proper connection. 15 Hence, the title
"An Act Amending Certain Sections of Republic Act Numbered One Thousand
One Hundred Ninety-Nine, otherwise known as the Agricultural Tenancy Act
of the Philippines" was declared by the Court sufficient to contain a provision
empowering the Secretary of Justice, acting through a tenancy mediation
division, to carry out a national enforcement program, including the
mediation of tenancy disputes. 16 The title "An Act Creating the Videogram
Regulatory Board" was similarly declared valid and sufficient to embrace a
regulatory tax provision, i.e., the imposition of a thirty percent (30%) tax on
the purchase price or rental rate, as the case may be, for every sale, lease or
disposition of a videogram containing a reproduction of any motion picture
or audiovisual program with fifty percent (50%) of the proceeds of the tax
collected accruing to the province and the other fifty percent (50%) to the
municipality where the tax is collected. 17 Likewise, the title "An Act To
Further Amend Commonwealth Act Numbered One Hundred Twenty, as
amended by Republic Act Numbered Twenty Six Hundred and Forty One"
was declared sufficient to cover a provision limiting the allowable margin of
profit to not more than twelve percent (12%) annually of its investments
plus two-month operating expenses for franchise holder receiving at least
fifty percent (50%) of its power from the National Power Corporation. 18
In the case at bar, the title "An Act Deregulating The Downstream Oil
Industry, And For Other Purposes" is adequate and comprehensive to cover
the imposition of tariff rates. The tariff provision under Section 5 (b) is one of
the means of effecting deregulation. It must be observed that even prior to
the passage of Republic Act No. 8180 oil products have always been subject
to tariff and surely Congress is cognizant of such fact. The imposition of the
seven percent (7%) and three percent (3%) duties on imported gasoline and
refined petroleum products and on crude oil, respectively, are germane to
the deregulation of the oil industry. The title, in fact, even included the broad
and all-encompassing phrase "And For Other Purposes" thereby indicating
the legislative intent to cover anything that has some relation to or
connection with the deregulation of the oil industry. The tax provision is a
mere tool and mechanism considered essential by Congress to fulfill
Republic Act No. 8180's objective of fostering a competitive market and
achieving the social policy objectives of fair prices. To curtail any adverse
impact which the tariff treatment may cause by its application, and perhaps
in answer to petitioners' apprehension Congress included under the assailed
section a proviso that will effectively eradicate the tariff difference in the
treatment of refined petroleum products and crude oil by stipulating "that
beginning on January 1, 2004 the tariff rate on imported crude oil and
refined petroleum products shall be the same."
 The contention that tariff "does not foster a truly competitive market"
19 and therefore restrains trade and does not help achieve the purpose of
deregulation is an issue not within the power of the Court to resolve.
Nonetheless, the Court's pronouncement in Tio vs. Videogram Regulatory
Board appears to be worth reiterating:
"Petitioner also submits that the thirty percent (30%) tax
imposed is harsh and oppressive, confiscatory, and in restraint of
trade. However, it is beyond serious question that a tax does not
cease to be valid merely because it regulates, discourages, or even
definitely deters the activities taxed. The power to impose taxes is
one so unlimited in force and so searching in extent, that the courts
scarcely venture to declare that it is subject to any restrictions
whatever, except such as rest in the discretion of the authority which
exercises it. In imposing a tax, the Legislature acts upon its
constituents. This is, in general, a sufficient security against
erroneous and oppressive taxation." 20 [Emphasis added]
Anent petitioners' claim that both House Bill No. 5264 and Senate Bill
No. 1253, [the precursor bills of Republic Act No. 8180], "did not impose any
tariff rates but merely set the policy of 'zero differential' in the House
version, and nothing in the Senate version" 21 is inconsequential. Suffice it to
state that the bicameral conference committee report was approved by the
conferees thereof only "after full and free conference" on the disagreeing
provisions of Senate Bill No. 1253 and House Bill No. 5264. Indeed, the "zero
differential" on the tariff rates imposed in the House version was embodied
in the law, save for a slight delay in its implementation to January 1, 2004.
Moreover, any objection on the validity of provisions inserted by the
legislative bicameral conference committee has been passed upon by the
Court in the recent case of Tolentino v. Secretary of Finance , 22 which, in my
view, laid to rest any doubt as to the validity of the bill emerging out of a
Conference Committee. The Court in that case, speaking through Mr. Justice
Mendoza, said:
"As to the possibility of an entirely new bill emerging out of a
Conference Committee, it has been explained:

'Under congressional rules of procedure, conference

committees are not expected to make any material change in the
measure at issue, either by deleting provisions to which both
houses have already agreed or by inserting new provisions. But
this is a difficult provision to enforce. Note the problem when one
house amends a proposal originating in either house by striking
out everything following the enacting clause and substituting
provisions which make it an entirely new bill. The versions are
now altogether different, permitting a conference committee to
draft essentially a new bill. . . .'

"The result is a third version, which is considered an

'amendment in the nature of a substitute,' the only requirement for
which being that the third version be germane to the subject of the
House and Senate bills.
"Indeed, this Court recently held that it is within the power of a
conference committee to include in its report an entirely new
provision that is not found either in the House bill or in the Senate
bill. If the committee can propose an amendment consisting of one or
two provisions, there is no reason why it cannot propose several
provisions, collectively considered as an 'amendment in the nature of
a substitute,' so long as such amendment is germane to the subject
of the bills before the committee. After all, its report was not final but
needed the approval of both houses of Congress to become valid as
an act of the legislative department. The charge that in this case the
Conference Committee acted as a third legislative chamber is thus
without any basis.
xxx xxx xxx
"To be sure, nothing in the Rules [of the Senate and the House
of Representatives) limits a conference committee to a consideration
of conflicting provisions. But Rule XLVI, (Sec.) 112 of the Rules of the
Senate is cited to the effect that 'If there is no Rule applicable to a
specific case the precedents of the Legislative Department of the
Philippines shall be resorted to, and as a supplement of these, the
Rules contained in Jefferson's Manual.' The following is then quoted
from the Jefferson's Manual:

'The managers of a conference must confine themselves to

the differences committed to them . . . and may not include
subjects not within disagreements, even though germane to a
question in issue.'

"Note that, according to Rule XLIX, (Sec.) 112, in case there is

no specific rule applicable, resort must be to the legislative practice.
The Jefferson's Manual is resorted to only as supplement. It is
common place in Congress that conference committee reports
include new matters which, though germane, have not been
committed to the committee. This practice was admitted by Senator
Raul S. Roco petitioner in G.R. No. 115543, during the oral argument
in these cases. Whatever, then, may be provided in the Jefferson's
Manual must be considered to have been modified by the legislative
practice. If a change is desired in the practice it must be sought in
Congress since this question is not covered by any constitutional
provision but is only an internal rule of each house. Thus, Art. VI,
(Sec.) 16(3) of the Constitution provides that 'Each House may
determine the rules of its proceedings . . .
"This observation applies to the other contention that the Rules
of the two chambers were likewise disregarded in the preparation of
the Conference Committee Report because the Report did not contain
a 'detailed and sufficiently explicit statement of changes in, or
amendments to, the subject measure.' The Report used brackets and
capital letters to indicate the changes. This is a standard practice in
bill-drafting. We cannot say that in using these marks and symbols
the Committee violated the Rules of the Senate and the House.
Moreover, this Court is not the proper forum for the enforcement of
these internal Rules. To the contrary, as we have already ruled,
'parliamentary rules are merely procedural and with their observance
the courts have no concern.' Our concern is with the procedural
 requirements of the Constitution for the enactment of laws. As far as
these requirements are concerned, we are satisfied that they have
been faithfully observed in these cases." 23
The other contention of petitioners that Section 5(b) "violates the equal
protection of the laws enshrined in Article III, Section 1 of the Constitution" 24
deserves a short shrift for the equal protection clause does not forbid
reasonable classification based upon substantial distinctions where the
classification is germane to the purpose of the law and applies equally to all
the members of the class. The imposition of three percent (3%) tariff on
crude oil, which is four percent (4%) lower than those imposed on refined oil
products, as persuasively argued by the Office of the Solicitor General, is
based on the substantial distinction that importers of crude oil, by necessity,
have to establish and maintain refinery plants to process and refine the
crude oil thereby adding to their production costs. To encourage these
importers to set up refineries involving huge expenditures and investments
which peddlers and importers of refined petroleum products do not shoulder,
Congress deemed it appropriate to give a lower tariff rate to foster the entry
of new "players" and investors in line with the law's policy to create a
competitive market. The residual contention that there is no substantial
distinction in the imposition of seven percent (7%) and three percent (3%)
tariff since the law itself will level the tariff rates between the imported
crude oil and refined petroleum products come January 1, 2004, to my mind,
is addressed more to the legislative's prerogative to provide for the duration
and period of effectivity of the imposition. If Congress, after consultation,
analysis of material data and due deliberations, is convinced that by January
1, 2004, the investors and importers of crude oil would have already
recovered their huge investments and expenditures in establishing refineries
and plants then it is within its prerogative to lift the tariff differential. Such
matter is well within the pale of legislative power which the Court may not
fetter. Besides, this again is in line with Republic Act No. 8180's avowed
policy to foster a truly competitive market which can achieve the social
policy objectives of fair, if not lower, prices.
B. Â On the minimum inventory requirement. Petitioners' attack on
Section 6 is premised upon their belief that the inventory requirement is
hostile and not conducive for new oil companies to operate here, and unduly
favors Petron, Shell and Caltex, companies which according to them can
easily hurdle the requirement. I fail to see any legal or constitutional issue
here more so as it is not raised by a party with legal standing for petitioners
do not claim to be the owners or operators of new oil companies affected by
the requirement. Whether or not the requirement is advantageous,
disadvantageous or conducive for new oil companies hinges on
presumptions and speculations which is not within the realm of judicial
adjudication. It may not be amiss to mention here that according to the
Office of the Solicitor General "there are about thirty (30) new entrants in the
downstream activities . . ., fourteen (14) of which have started operation . . .,
eight (8) having commenced operation last March 1997, and the rest to
operate between the second quarter of 1997 and the year 2000". 25
Petitioners did not controvert this averment which thereby cast serious
doubt over their claim of "hostile" environment. LLphil

C. Â On predatory pricing. What petitioners bewail the most in

Section 9(b) is "the definition of 'predatory pricing' [which] is too broad in
scope and indefinite in meaning" 26 and the penal sanction imposed for its
violation. Petitioners maintain that it would be the new oil companies or
"players" which would lower their prices to gain a foothold on the market
and not Petron, Shell or Caltex, an occasion for these three big oil
"companies" to control the prices by keeping their average cost at a level
which will ensure their desired profit margin. 27 Worse, the penal sanction,
they add, deters new "players" from entering the oil market and the practice
of lowering prices is now condemned as a criminal act.
Petitioners' contentions are nebulous if not speculative. In the absence
of any concrete proof or evidence, the assertion that it will only be the new
oil companies which will lower oil prices remains a mere guess or suspicion.
And then again petitioners are not the proper party to raise the issue. The
query on why lowering of prices should be penalized and the broad scope of
predatory pricing is not for this Court to traverse the same being reserved for
Congress. The Court should not lose sight of the fact that its duty under
Article 5 of the Revised Penal Code is not to determine, define and legislate
what act or acts should be penalized, but simply to report to the Chief
Executive the reasons why it believes an act should be penalized, as well as
why it considers a penalty excessive, thus:
"ART. 5. Â Duty of the court in connection with acts which
should be repressed but which are nor covered by the law, and in
cases of excessive penalties. — Whenever a court has knowledge of
any act which it may deem proper to repress and which is not
punishable by law, it shall render the proper decision, and shall report
to the Chief Executive, through the Department of Justice, the
reasons which induce the court to believe that said act should be
made the subject of legislation.
"In the same way the court shall submit to the Chief Executive,
through the Department of Justice, such statement as may be
deemed proper, without suspending the execution of the sentence,
when a strict enforcement of the provisions of this Code would result
in the imposition of a clearly excessive penalty, taking into
consideration the degree of malice and the injury caused by the
offense."
Furthermore, in the absence of an actual conviction for violation of
Section 9 (b) and the appropriate appeal to this Court, I fail to see the need
to discuss any longer the issue as it is not ripe for judicial adjudication. Any
pronouncement on the legality of the sanction will only be advisory.
D. Â On other prohibited acts. In discussing their objection to
Section 10, together with Section 20, petitioners assert that these sanctions
"even provide stiff criminal and administrative penalties for failure to
maintain said minimum requirement and other regulations" and posed this
query: "Are these provisions consistent with the policy objective to level the
playing [field] in a truly competitive answer?" 28 A more circumspect
analysis of petitioners' grievance, however, does not present any legal
controversy. At best, their objection deals on policy considerations that can
be more appropriately and effectively addressed not by this Court but by
Congress itself.
E. Â On the implementation of full deregulation under Section 15,
and the validity of Executive Order No . 392. Petitioners stress that "Section
15 of Republic Act No. 8180 delegates to the Secretary of Energy and to the
President of the Philippines the power to determine when to fully deregulate
the downstream oil industry" 29 without providing for any standards "to
determine when the prices of crude oil in the world market are considered to
be 'declining'" 30 and when may the exchange rate be considered "stable"
for purposes of determining when it is "practicable" to declare full
deregulation. 31 In the absence of standards, Executive Order No. 392 which
implemented Section 15 constitute "executive lawmaking," 32 hence the
same should likewise be struck down as invalid. Petitioners additionally
decry the brief seven (7) month transition period under Section 15 of
Republic Act No. 8180. The premature full deregulation declared in Executive
Order No. 392 allowed Caltex, Petron, and Shell oil companies "to define the
conditions under which any 'new players' will have to adhere to in order to
become competitive in the new deregulated market even before such a
market has been created." 33 Petitioners are emphatic that Section 15 and
Executive Order No. 392 "have effectively legislated a cartel among
respondent oil companies, directly violating the Constitutional prohibition
against unfair trade practices and combinations in restraint of trade." 34
Section 15 of Republic Act No. 8180 provides for the implementation of
full deregulation. It states:
Section 15. Â On the implementation of full deregulation,
thus: "Implementation of Full Deregulation. — Pursuant to Section
5(e) of Republic Act No. 7683, the DOE shall, upon approval of the
President, implement the full deregulation of the downstream oil
industry not later than March, 1997. As far as practicable, the DOE
shall time the full deregulation when the prices of crude oil and
petroleum products in the world market are declining and when the
exchange rate of the peso in relation to the US dollar is stable. Upon
the implementation of the full deregulation as provided herein, the
transition phase is deemed terminated and the following laws are
deemed repealed: . . ." [Emphasis added].
It appears from the foregoing that deregulation has to be implemented
"not later than March 1997." The provision is unequivocal, i.e., deregulation
must be implemented on or before March 1997. The Secretary of Energy and
the President is devoid of any discretion to move the date of full
deregulation to any day later than March 1997. The second sentence which
provides that "[a]s far as practicable, the DOE shall time the full
deregulation when the prices of crude oil and petroleum products in the
world market are declining and when the exchange rate of the peso in
relation to the US dollar is stable" did not modify or reset to any other date
the full deregulation of downstream oil industry. Not later than March 1997
is a complete and definite period for full deregulation. What is conferred to
the Department of Energy in the implementation of full deregulation, with
the approval of the President, is not the power and discretion on what the
law should be. The provision of Section 15 gave the President the authority
to proceed with deregulation on or before, but not after, March 1997, and if
implementation is made before March, 1997, to execute the same, if
possible, when the prices of crude oil and petroleum products in the world
market are declining and the peso-dollar exchange rate is stable. But if the
implementation is made on March, 1997, the President has no option but to
implement the law regardless of the conditions of the prices of oil in the
world market and the exchange rates.
The settled rule is that the legislative department may not delegate its
power. Any attempt to abdicate it is unconstitutional and void, based on the
principle of potestas delegata non delegare potest. In testing whether a
statute constitutes an undue delegation of legislative power or not, it is
usual to inquire whether the statute was complete in all its terms and
provisions when it left the hands of the legislative so that nothing was left to
the judgment of any other appointee or delegate of the legislature. 35 An
enactment is said to be incomplete and invalid if it does not lay down any
rule or definite standard by which the administrative officer may be guided
in the exercise of the discretionary powers delegated to it. 36 In People v.
Vera, 37 the Court laid down a guideline on how to distinguish which power
may or may not be delegated by Congress, to wit:
"The true distinction', says Judge Ranney, 'is between the
delegation of power to make the law, which necessarily involves a
discretion as to what it shall be, and conferring an authority or
discretion as to its execution, to be exercised under and in pursuance
of the law. The first cannot be done; to the latter no valid objection
can be made.' (Cincinnati, W. & Z.R. Co. vs. Clinton County Comrs.
[1852]; 1 Ohio St., 77, 88 See also, Sutherland on Statutory
Construction, sec. 68.)"
Applying these parameters, I fail to see any taint of unconstitutionality
that could vitiate the validity of Section 15. The discretion to ascertain when
may the prices of crude oil in the world market be deemed "declining" or
when may the peso-dollar exchange rate be considered "stable" relates to
the assessment and appreciation of facts. There is nothing essentially
legislative in ascertaining the existence of facts or conditions as the basis of
the taking into effect of a law 38 so as to make the provision an undue
delegation of legislative power. The alleged lack of definitions of the terms
employed in the statute does not give rise to undue delegation either for the
words of the statute, as a rule, must be given its literal meaning. 39
Petitioners' contentions are concerned with the details of execution by the
executive officials tasked to implement deregulation. No proviso in Section
15 may be construed as objectionable for the legislature has the latitude to
provide that a law may take effect upon the happening of future specified
contingencies leaving to some other person or body the power to determine
when the specified contingency has arisen. 40 The instant petition is similarly
situated with the past cases, as summarized in the case of People v. Vera ,
where the Court ruled for the validity of several assailed statutes, to wit:
 "To the same effect are decisions of this court in Municipality of
Cardona vs. Municipality of Binangonan ([1917], 36 Phil. 547); Rubi
vs. Provincial Board of Mindoro ([1919], 39 Phil. 660), and Cruz vs.
Youngberg ([1931], 56 Phil. 234). In the first of these cases, this court
sustained the validity of a law conferring upon the Governor-General
authority to adjust provincial and municipal boundaries. In the second
case, this court held it lawful for the legislature to direct non-Christian
inhabitants to take up their habitation on unoccupied lands to be
selected by the provincial governor and approved by the provincial
board. In the third case, it was held proper for the legislature to vest
in the Governor-General authority to suspend or not, at his discretion,
the prohibition of the importation of foreign cattle, such prohibition to
be raised 'if the conditions of the country make this advisable or if
disease among foreign cattle has ceased to be a menace to the
agriculture and livestock of the lands.'" 41
If the Governor-General in the case of Cruz v. Youngberg 42 can
"suspend or not, at his discretion, the prohibition of the importation of cattle,
such prohibition to be raised 'if the conditions of the country make this
advisable or if disease among foreign cattles has ceased to be a menace to
the agriculture and livestock of the lands" then with more reason that
Section 15 of Republic Act No. 8180 can pass the constitutional challenge as
it has mandatorily fixed the effectivity date of full deregulation to not later
than March 1997, with or without the occurrence of stable peso-dollar
exchange rate and declining oil prices. Contrary to petitioners' protestations,
therefore, Section 15 is complete and contains the basic conditions and
terms for its execution. cdasia

To restate, the policy of Republic Act No. 8180 is to deregulate the

downstream oil industry and to foster a truly competitive market which could
lead to fair prices and adequate supply of environmentally clean and high-
quality petroleum products. This is the guiding principle installed by
Congress upon which the executive department of the government must
conform. Section 15 of Republic Act No. 8180 sufficiently supplied the metes
and bounds for the execution of full deregulation. In fact, a cursory reading
of Executive Order No. 392 43 which advanced deregulation to February 8,
1997 convincingly shows the determinable factors or standards, enumerated
under Section 15, which were taken into account by the Chief Executive in
declaring full deregulation. I cannot see my way clear on how or why
Executive Order No. 392, as professed by petitioners, may be declared
unconstitutional for adding the "depletion of buffer fund" as one of the
grounds for advancing the deregulation. The enumeration of factors to be
considered for full deregulation under Section 15 did not proscribe the Chief
Executive from acknowledging other instances that can equally assuage
deregulation. What is important is that the Chief Executive complied with
and met the minimum standards supplied by the law. Executive Order No.
392 may not, therefore, be branded as unconstitutional.
Petitioner's vehement objections on the short seven (7) month
transition period under Section 15 and the alleged resultant de facto
formation of cartel are matters which fundamentally strike at the wisdom of
the law and the policy adopted by Congress. These are outside the power of
the courts to settle; thus I fail to see the need to digress any further.
F. Â On the imposition of administrative fine. The administrative fine
under Section 20 is claimed to be inconsistent with deregulation. The
imposition of administrative fine for failure to meet the reportorial and
minimum inventory requirements, far from petitioners' submission, are
geared towards accomplishing the noble purpose of the law. The inventory
requirement ensures the security and continuity of petroleum crude and
products supply, 44 while the reportorial requirement is a mere devise for
the Department of Energy to monitor compliance with the law. In any event,
the issue pertains to the efficacy of incorporating in the law the
administrative sanctions which lies outside the Court's sphere and
competence.
In fine, it seems to me that the petitions dwell on the insistent and
recurrent arguments that the imposition of different tariff rates on imported
crude oil and imported petroleum products is violative of the equal
protection clause of the constitution; is not germane to the purpose of the
law; does not foster a truly competitive market; extends undue advantage to
the existing oil refineries or companies; and creates a cartel or a monopoly
of sort among Shell, Caltex and Petron in clear contravention of the
Constitutional proscription against unfair trade practices and combinations in
restraint of trade. Unfortunately, this Court, in my view, is not at liberty to
tread upon or even begin to discuss the merits and demerits of petitioners'
stance if it is to be faithful to the time honored doctrine of separation of
powers — the underlying principle of out republican state. 45 Nothing is so
fundamental on our system of government than its division into three
distinct and independent branches, the executive, the legislative and the
judiciary, each branch having exclusive cognizance of matters within its
jurisdiction, and supreme within its own sphere, it is true that there is
sometimes an inevitable overlapping and interlacing of functions and duties
between these departments. But this elementary tenet remains: the
legislative is vested with the power to make law, the judiciary to apply and
interpret it, in cases like this, "the judicial branch of the government has only
one duty-to lay the article of the Constitution which is invoked beside the
statute which is challenged and to decide whether the latter squares with the
former." 46 This having been done and finding no constitutional infirmity
therein, the Court's task is finished. Now whether or not the law fails to
achieve its avowed policy because Congress did not carefully evaluate the
long term effects of some of its provisions is a matter clearly beyond this
Court's domain.
Perhaps it bears reiterating that the question of validity of every
statute is first determined by the legislative department of the government,
and the courts will resolve every presumption in favor of its validity. The
courts will assume that the validity of the statute was fully considered by the
legislature when adopted. The wisdom or advisability of a particular statute
is not a question for the courts to determine. If a particular statute is within
the constitutional power of the legislature to enact, it should be sustained
whether the courts agree or not in the wisdom of its enactment. 47 This
Court continues to recognize that in the determination of actual cases and
controversies, it must reflect the wisdom and justice of the people as
expressed through their representatives in the executive and legislative
branches of government. Thus, the presumption is always in favor of
constitutionality for it is likewise always presumed that in the enactment of a
law or the adoption of a policy it is the people who speak through their
representatives. This principle is one of caution and circumspection in the
exercise of the grave and delicate function of judicial review 48 . Explaining
this principle Thayer said,
"It can only disregard the Act when those who have the right to
make laws have not merely made a mistake, but have made a very
clear one-so clear that it is not open to rational question. That is the
standard of duty to which the courts bring legislative acts; that is the
test which they apply-not merely their own judgment as to
constitutionality, but their conclusion as to what judgment is
permissible to another department which the constitution has
charged with the duty of making it. This rule recognizes that, having
regard to the great, complex, ever-folding exigencies of government,
much will seem unconstitutional to one man, or body of men, may
reasonably not seem so to another; that the constitution often admits
of different interpretations; that there is often a range of choice and
judgment; that in such cases the constitution does not impose upon
the legislature any one specific opinion, but leaves open their range
of choice; and that whatever choice is rational is constitutional." 49
The petitions discuss rather extensively the adverse economic
implications of Republic Act No. 8180. They put forward more than anything
else, an assertion that an error of policy has been committed. Reviewing the
wisdom of the policies adopted by the executive and legislative departments
is not within the province of the Court.
It is safe to assume that the legislative branch of the government has
taken into consideration and has carefully weighed all points pertinent to the
law in question. We cannot doubt that these matters have been the object of
intensive research and study not that they have been subject of
comprehensive consultations with experts and debates in both houses of
Congress. Judicial review at this juncture will at best be limited and myopic.
For admittedly, this Court cannot ponder on the points raised in the petitions
with the same technical competence as that of the economic experts who
have contributed valuable hours of study and deliberation in the passage of
this law.
I realize that to invoke the doctrine of separation of powers at this
crucial time may be viewed by some as an act of shirking from our duty to
uphold the Constitution at all cost. Let it be remembered, however, that the
doctrine of separation of powers is likewise enshrined in our Constitution and
deserves the same degree of fealty. In fact, it carries more significance now
in the face of an onslaught of similar cases brought before this Court by the
opponents of almost every enacted law of major importance. It is true that
this Court is the last bulwark of justice and it is our task to preserve the
integrity of our fundamental law. But we cannot become, wittingly or
unwittingly, instruments of every aggrieved minority and losing legislator.
While the laudable objectives of the law are put on hold, this Court is faced
with the unnecessary burden of disposing of issues merely contrived to fall
within the ambit of judicial review . All that is achieved is delay which is
perhaps, sad to say, all that may have been intended in the first place.
Indeed, whether Republic Act No. 8180 or portions thereof are declared
unconstitutional, oil prices may continue to rise, as they depend not on any
law but on the volatile market and economic forces. It is therefore the
political departments of government that should address the issues raised
herein for the discretion to allow a deregulated oil industry and to determine
its viability is lodged with the people in their primary political capacity, which
as things stand, has been delegated to Congress.
In the end, petitioners are not devoid of a remedy. To paraphrase the
words of Justice Padilla in Kapatiran ng mga Naglilingkod sa Pamahalaan ng
Pilipinas v. Tan , 50 if petitioners seriously believe that the adoption and
continued application of Republic Act No. 8180 are prejudicial to the general
welfare or the interests of the majority of the people, they should seek
recourse and relief from the political branches of government, as they are
now doing by moving for an amendment of the assailed provisions in the
correct forum which is Congress or for the exercise of the people's power of
initiative on legislation. The Court following the time honored doctrine of
separation of powers, cannot substitute its judgment for that of the Congress
as to the wisdom, justice and advisability of Republic Act No. 8180. 51
ACCORDINGLY, finding no merit in the instant petitions I vote for their
outright dismissal. aisadc

Â
Footnotes

1. Â Downstream oil industry refers to the business of importing, exporting, re-

exporting, shipping, transporting, processing, refining, storing, distributing,
marketing and/or selling crude oil, gasoline, diesel, liquefied petroleum gas,
kerosene and other petroleum and crude oil products.

2. Â Paderanga & Paderanga, Jr., The Oil Industry in the Philippines, Philippine
Economic Journal, No. 65, Vol. 27, pp. 27-98 [1988].

3. Â Section 3, R.A. No. 6173.

4. Â Section 7, R.A. No. 6173.

5. Â P.D. No. 334.

6. Â Makasiar, G., Structural Response to the Energy Crisis: The Philippine Case.
Energy and Structural Change in the Asia Pacific Region: Papers and
Proceedings of the 13th Pacific Trade and Development Conference.
Published by the Philippine Institute for Development Studies/Asian
Development Bank and edited by Romeo M. Bautista and Seiji Naya, pp. 311-
312 (1984).
7. Â P.D. 1956 as amended by E.O. 137.

8. Â Section 3, E.O. No. 172.

9. Â R.A. No. 7638.

10. Â Section 5(b), R.A. No. 7638.

11. Â Section 5, R.A. No. 8180.

12. Â Section 1, Article VIII, 1987 Constitution.

13. Â Bondoc v. Pineda , 201 SCRA 792 (1991); Osmeña v. COMELEC, 199 SCRA
750 (1991).

14. Â G.R. No. 118295, May 2, 1997.

15. Â E.g. Garcia v. Executive Secretary, 211 SCRA 219 (1922); Osmeña v.
COMELEC, 199 SCRA (1991); Basco v. Pagcor , 197 SCRA 52 (1991); Daza v.
Singson, 180 SCRA 496 (1989), Araneta v. Dinglasan, 84 Phil. 368 (1949).

16. Â 163 SCRA 371 (1988).

17. Â Section 26(1) Article VI of the 1987 Constitution provides that "every bill
passed by the Congress shall embrace only one subject which shall be
expressed in the title thereof."

18. Â Tobias v. Abalos, 239 SCRA 106 (1994); Philippine Judges Association v.
Prado, 227 SCRA 703 (1993); Lidasan v. COMELEC , 21 SCRA 496 (1967).

19. Â Tio v. Videogram Regulatory Board, 151 SCRA 208 (1987)

20. Â Journal of the House of Representatives, December 13, 1995, p. 32.

21. Â 34 Phil. 136 citing Cincinnati, W. & Z.R.R. Co. vs. Clinton Country Commrs.
(1 Ohio St. 77)

22. Â 166 SCRA 533, 543-544.

23. Â 320 US 99.

24. Â Philippine Political Law, 1995 ed., p. 99.

25. Â Webster, New Third International Dictionary, 1993 ed., pp. 1780, 586 and
2218.

26. Â See e.g., Balbuna v. Secretary of Education, 110 Phil. 150 used the
standard "simplicity and dignity." People v. Rosenthal , 68 Phil. 328 ("public
interest"); Calalang v. Williams, 70 Phil. 726 ("public welfare"); Rubi v.
Provincial Board of Mindoro, 39 Phil. 669 ("interest of law and order").

27. Â See for example TSN of the Session of the Senate on November 14, 1995,
p. 19, view of Senator Gloria M. Arroyo.

28. Â Black's Law Dictionary, 6th edition, p. 1007.

29. Â Id., p. 266.

30. Â 54 Am Jur 2d 669.

31. Â Art. 186. Monopolies and combinations in restraint of trade. — The penalty
of prision correccional in its minimum period or a fine ranging from 200 to
6,000 pesos, or both, shall be imposed upon:

   1.  Any person who shall enter into any contract or agreement or
shall take part in any conspiracy or combination in the form of a trust or
otherwise, in restraint of trade or commerce to prevent by artificial means
free competition in the market.

   2.  Any person who shall monopolize any merchandise or object of

trade or commerce, or shall combine with any other person or persons to
monopolize said merchandise or object in order to alter the price thereof by
spreading false rumors or making use of any other article to restrain free
competition in the market;

   3.  Any person who, being a manufacturer, producer, or processor

of any merchandise or object of commerce or an importer of any
merchandise or object of commerce from any foreign country, either as
principal or agent, wholesaler or retailer, shall combine, conspire or agree in
any manner with any person likewise engaged in the manufacture,
production, processing, assembling or importation of such merchandise or
object of commerce or with any other persons not so similarly engaged for
the purpose of making transactions prejudicial to lawful commerce, or of
increasing the market price in any part of the Philippines, or any such
merchandise or object of commerce manufactured, produced, or processed,
assembled in or imported into the Philippines, or of any article in the
manufacture of which such manufactured, produced, processed, or imported
merchandise or object of commerce is used.

   If the offense mentioned in this article affects any food substance,
motor fuel or lubricants, or other articles of prime necessity the penalty shall
be that of prision mayor in its maximum and medium periods, it being
sufficient for the imposition thereof that the initial steps have been taken
toward carrying out the purposes of the combination.

xxx xxx xxx

   Whenever any of the offenses described above is committed by a

corporation or association, the president and each one of the directors or
managers of said corporation or association, who shall have knowingly
permitted or failed to prevent the commission of such offenses, shall be held
liable as principals thereof.

32. Â Art. 28. Unfair competition in agricultural, commercial or industrial

enterprises or in labor through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or highhanded method shall give
rise to a right of action by the person who thereby suffers damage.

33. Â Bernas, The Intent of the 1986 Constitution Writers (1995), p. 877;
Philippine Long Distance Telephone Co. v. National Telecommunications
Commission , 190 SCRA 717 (1990); Northern Cement Corporation v.
Intermediate Appellate Court, 158 SCRA 408 (1988); Philippine Ports
Authority v. Mendoza, 138 SCRA 496 (1985); Anglo-Fil Trading Corporation v.
 Lazaro, 124 SCRA 494 (1983).

34. Â Record of the Constitutional Commission, Volume III, p. 258.

35. Â Gellhorn , Anti Trust Law and Economics in a Nutshell, 1986 ed. p. 45.

36. Â Economics and Federal Anti-Trust Law, Hornbook Series, Student ed.,
1985 ed., p. 181.

37. Â Statutory Construction, 1986 ed., pp. 28-29.

38. Â IBON Facts and Figures, Vol. 18, No. 7, p. 5, April 15, 1995.

39. Â Cruz v. Youngberg, 56 Phil. 234 (1931).

KAPUNAN, J., concurring:

1. Â Public respondents' Comment, G.R. No. 127867, p. 39.

2. Â SEC. 24. Repealing Clause. — All laws, presidential decrees, executive

orders, issuances, rules and regulations or parts thereof, which are
inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

PANGANIBAN, J., concurring:

1. Â Consolidated Memorandum of Public Respondents, dated October 14, 1997.

2. Â Petron Corporation's Motion to Lift Temporary Restraining Order, dated

October 9, 1997, p. 16; Pilipinas Shell Corporation's Memorandum, dated
October 15, 1997, pp. 36-37.

3. Â Sections 1 & 5 of Article VIII of the Constitution provides:

   "Sec. 1. Â...

   Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable,
and to determine whether or not there has been a grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of any branch or
instrumentality of the Government."

   "Sec. 5.  The Supreme Court shall have the following powers:

   (1)  Exercise original jurisdiction over . . . petitions for certiorari,

prohibition, mandamus, quo warranto, and habeas corpus.

   (2)  Review, revise, reverse, modify, or affirm on appeal or

certiorari, as the law or Rules of Court may provide, final judgments and
orders of lower courts in:

   (a)  All cases in which the constitutionality or validity of any

treaty, international or executive agreement, law, presidential decree,
proclamation, order, instruction, ordinance, or regulation is in question.

xxx xxx xxx"

4. Â Osmeña vs. Comelec, 199 SCRA 750, July 30, 1991; Angara vs. Electoral
Commission , 63 Phil. 139, July 15, 1936.

5. Â Tañada vs. Angara, G.R. No. 118295, May 2, 1997, p. 26.

FRANCISCO, J., dissenting:

1. Â Section 2, Republic Act No. 8180.

2. Â Petition in G.R. No. 124360, p. 8.

3. Â Supplement to the Petition in G.R. No. 127867, p. 2.

4. Â Petition in G.R. No. 124360, p. 14.

5. Â Id.

6. Â Supplement to the Petition in G.R. No. 127867, p. 6.

7. Â Id.

8. Â Id.

9. Â Petition in G.R. No. 124360, p. 11.

10. Â Article VI, Section 26(1) Constitution.

11. Â 40 Phil. 883.

12. Â 40 Phil. at p. 891.

13. Â Sumulong v. Commission on Elections , 73 Phil. 288, 291.

14. Â Lidasan v. Commission on Elections , 21 SCRA 496, 501.

15. Â Blair v. Chicago, 26 S. Ct. 427, 201 U.S. 400, 50 L. Ed. 801.

16. Â Cordero v. Cabatuando, 6 SCRA 418.

17. Â Tio v. Videogram Regulatory Board, 151 SCRA 208.

18. Â Alalayan v. National Power Corp ., 24 SCRA 172.

19. Â Petition in G.R. No. 124360, p. 14.

20. Â 151 SCRA at 215.

21. Â "Petition in G.R. No. 124360, p. 15.

22. Â 235 SCRA 632.

23. Â 235 SCRA at pp. 667-671.

24. Â Petition in G.R. No. 124360, p. 11.

25. Â Comment of the Office of the Solicitor General in G.R. No. 127867, p. 33;
Rollo , p. 191.
26. Â Supplement to the Petition in G.R. No. 127867, p. 8.

27. Â Id.

28. Â Supplement to the Petition in G.R. No. 127867, p. 7.

29. Â Petition in G.R. No. 127867, p. 8.

30. Â Id.

31. Â Id.

32. Â Id., p. 10.

33. Â Petition in G.R. No. 127867, p. 13.

34. Â Id.

35. Â People v. Vera , 65 Phil. 56, 115, citing 6, R.C.L., p. 165.

36. Â Id., at p. 116, citing Scheter v. U.S ., 295 U.S., 495; 79 L. Ed., 1570; 55
Supt. Ct. Rep. 837; 97 A.L.R. 947; People ex rel.; Rice v. Wilson Oil Co., 364
III. 406; 4 N.E. [2d], 847; 107 A.L.R., 1500.

37. Â Id., at p. 117.

38. Â Id., at p. 118.

39. Â Globe-Mackay Cable and Radio Corporation v. NLRC, 206 SCRA 701, 711.

40. Â People v. Vera , supra, at pp. 119-120.

41. Â Id., at pp. 117-118.

42. Â 56 Phil. 234.

43. Â Executive Order No. 392 provides in full as follows:

   "EXECUTIVE ORDER NO. 392

   "DECLARING FULL DEREGULATION OF THE DOWNSTREAM OIL

INDUSTRY

   "WHEREAS, Republic Act No. 7638, otherwise known as the

'Department of Energy Act of 1992,' provides that, at the end of four years
from its effectivity last December 1992, 'the Department [of Energy] shall,
upon approval of the President, institute the programs and timetable of
deregulation of appropriate energy projects and activities of the energy
sector;

   "WHEREAS, Section 15 of Republic Act No. 8180, otherwise known as

the 'Downstream Oil Industry Deregulation Act of 1996,' provides that 'the
DOE shall, upon approval of the President, implement the full deregulation of
the downstream oil industry not later than March, 1997. As far as practicable,
the DOE shall time the full deregulation when the prices of crude oil and
petroleum products in the world market are declining and when the
exchange rate of the peso in relation to the US dollar is stable;'
    "WHEREAS, pursuant to the recommendation of the Department of
Energy, there is an imperative need to implement the full deregulation of the
downstream oil industry because of the following recent developments; (i)
depletion of the buffer fund on or about 7 February 1997 pursuant to the
Energy Regulator Board's Order dated 16 January 1997; (ii) the prices of
crude oil had been stable at $21-$23 per barrel since October 1996 while
prices of petroleum products in the world market had been stable since mid-
December of last year. Moreover, crude oil prices are beginning to soften for
the last few days while prices of some petroleum products had already
declined; and (iii) the exchange rate of the peso in relation to the US dollar
has been stable for the past twelve (12) months, averaging at around P26.20
to one US dollar;

   "WHEREAS, Executive Order No. 377 dated 31 October 1996 provides

for an institutional framework for the administration of the deregulated
industry by defining the functions and responsibilities of various government
agencies;

   "WHEREAS, pursuant to Republic Act No. 8180, the deregulation of the

industry will foster a truly competitive market which can better achieve the
social policy objectives of fair prices and adequate, continuous supply of
environmentally-clean and high quality petroleum products;

   "NOW, THEREFORE, I FIDEL V. RAMOS, President of the Republic of the

Philippines, by the powers vested in me by law, do hereby declare the full
deregulation, of the downstream oil industry.

   "The Executive Order shall take effect on 8 February 1997.

   "DONE in the City of Manila, this 22nd day of January in the year of Our
Lord, Nineteen Hundred and Ninety-Seven.

(Signed)

FIDEL V. RAMOS"

44. Â Section 6, Republic Act No. 8180.

45. Â Article II, Section 1, 1987 Constitution.

46. Â United States v. Butler , 297 U.S. 1.

47. Â Case v. Board of Health, 24 Phil. 250, 276.

48. Â The Lawyers Journal, January 31, 1949, p. 8.

49. Â Id., citing Thayer, James B., "The Origin and Scope of the American
Doctrine of Constitutional Lay", p. 9.

50. Â 163 SCRA 371.

51. Â Id., at p. 385.