Case Summary (G.R. No. 157584)
Key Dates
– March 1996: Enactment of R.A. 8180 (Downstream Oil Industry Deregulation Act)
– November 5, 1997: Supreme Court invalidates R.A. 8180 in Tatad v. Secretary of DOE
– February 10, 1998: Enactment of R.A. 8479 (new Oil Deregulation Law)
– December 17, 1999: Denial of petition in Garcia v. Corona (1999 Garcia case)
– April 2, 2009: Decision dismissing current petition
Applicable Law
– 1987 Constitution, Article VIII, Section 4(2) (judicial review power)
– 1987 Constitution, Article XII, Section 19 (regulation or prohibition of monopolies)
– R.A. 8479; relevant sections on deregulation policy and anti‐trust safeguards
Facts and Prior Rulings
After extensive government controls, R.A. 8180 was adopted to deregulate the downstream oil sector but was struck down for fostering oligopoly and impeding competition. Congress then enacted R.A. 8479, which set a five-month transition period before full deregulation via Section 19. Petitioner Garcia challenged this timing as “pro-oligopoly” and “anti‐competition.” In 1999 the Court declined to address the wisdom of deregulation timing, deeming it a policy matter beyond judicial review.
Issues Presented
- Whether Section 19 of R.A. 8479 contravenes Article XII, Section 19 of the 1987 Constitution by prematurely removing price controls in an allegedly oligopolistic market.
- Whether the controversy is justiciable or constitutes a non-reviewable political question.
- Whether the petition shows grave abuse of discretion by Congress.
Court’s Analysis – Non-Justiciability and Political Question Doctrine
– An actual case or controversy must be judicially determinable; issues of policy timing are political questions.
– Article XII, Section 19 grants the State discretion to “regulate or prohibit monopolies when the public interest so requires,” with no mandatory prohibition.
– Determining the timing and manner of deregulation involves policy judgments entrusted to the legislative branch and lacks judicially manageable standards.
Court’s Analysis – Separation of Powers and Grave Abuse of Discretion
– The Constitution prohibits courts from substituting their policy judgments for those of Congress.
– Although courts may review executive or legislative acts for grave abuse of discretion, petitioner Garcia did not demonstrate capricious or despotic legislative action.
– Congressional debates reflect thorough consideration; no proof was offered of an actual oligopoly or of collusion fulfilling criteria for grave abuse.
Court’s Analysis – Available Remedies and Lis Mota
– R.A. 8479 contains anti-trust safeguards
Case Syllabus (G.R. No. 157584)
Background of Downstream Oil Deregulation
- Prior to 1996, the Philippine downstream oil industry was subject to extensive government controls on pricing and non-pricing aspects.
- Republic Act No. 8180 (Downstream Oil Industry Deregulation Act of 1996) sought to liberalize the industry but was invalidated by this Court in Tatad v. Secretary of DOE (November 5, 1997) for fostering oligopoly and inhibiting fair competition.
- Key offensive provisions in R.A. No. 8180—tariff differential, inventory requirements, predatory pricing—were struck down as anticompetitive and irredeemable despite a separability clause.
- In response, Congress enacted Republic Act No. 8479 (Oil Deregulation Law of 1998), intentionally omitting the invalidated provisions and declaring a policy to liberalize and deregulate the downstream oil industry.
The Assailed Provision: Section 19, R.A. No. 8479
- “Start of Full Deregulation” provision mandating full deregulation five months after effectivity, subject to presidential acceleration when world crude prices decline and the peso is stable.
- A five-month transition phase with automatic pricing mechanism continued to apply to LPG, regular gasoline, and kerosene as socially-sensitive products.
- Upon full deregulation, specific price-control statutes and executive issuances were repealed, except that in a presidentially-accelerated deregulation, price controls on LPG, gasoline, and kerosene remained for the balance of the transition period.
Question Presented
- Whether Section 19 of R.A. No. 8479 contravenes Article XII, Section 19 of the Constitution by prematurely removing price controls in an industry allegedly dominated by an oligopoly (“Big 3”: Petron, Shell, Caltex) and thus failing to regulate or prohibit monopolies when the public interest so requires.
Procedural History
- Tatad v. DOE (1997): Invalidated R.A. No. 8180 in toto.
- Enactment of R.A. No. 8479 (February 10, 1998), excluding the offensive provisions.
- Garcia v. Corona (1999): Petition for nullity of Section 19, R.A. No. 8479 denied on grounds of political question—timing