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Garcia vs. Executive Secretary

THE FACTS After years of imposing significant controls over the downstream oil industry in the

Philippines, the government decided in March 1996 to pursue a policy of deregulationby enacting Republic Act No !1!" #RA No !1!"$ or the %&ownstream 'il (ndustry &eregulation Act of 1996)

RA No !1!", however, met strong opposition, and rightly so, as this *ourt concludedin its November +, 199 decision in Tatad vs. Secretary of Department of Energy -./-./ 0e  struc down the law as invalid because the three ey provisions intended topromote free competition were shown to achieve the opposite result2 contrary to itsintent, RA No !1!"3s provisions on tariff differential, inventory re4uirements, andpredatory pricing inhibited fair competition, encouraged monopolistic power, andinterfered with the free interaction of maret forces 0e declared5

RA No !1!"  needs provisions to vouchsafe free and faircompetition he need for these vouchsafing provisions cannot beoverstated Before deregulation, P7R'N,  87::  and *A:7; had no real competitors but did not have a free run of the maretbecause government controls both the pricing and non<pricingaspects of the oil industry After deregulation, P7R'N, 87:: and *A:7;  remain unthreatened by real competition yet are nolonger sub=ect to control by government with respect to their pricingand non<pricing decisions he aftermath of RA No !1!"  is aderegulated maret where competition can be corrupted and wheremaret forces can be manipulated by oligopolies->/->/ 

Notwithstanding the e?istence of a separability clause among its provisions, we strucdown RA No !1!" in its entirety because its offensive provisions permeated the wholelaw and were the principal tools to carry deregulation into effect *ongress responded to our &ecision in Tatad   by enacting on @ebruary 1", 199! a newoil deregulation law, RA No !9 his time, *ongress e?cluded the offensiveprovisions found in the invalidated law Nonetheless, petitioner Barcia again sought todeclare the new oil deregulation law unconstitutional on the ground that it violatedArticle ;((, 8ection 19 of the *onstitution-/-/  e specifically ob=ected to 8ection 19 ofRA No !9 which, in essence, prescribed the period for removal of price control ongasoline and other finished petroleum products and set the time for the full deregulationof the local downstream oil industry he assailed provision reads5

87* 19 Start of Full Deregulation.  C @ull deregulation of the (ndustry shallstart five #+$ months following the effectivity of this Act5 Provided, however ,hat when the public interest so re4uires, the President may accelerate thestart of full deregulation upon the recommendation of the &'7  and the&epartment of @inance #&'@$ when the prices of crude oil and petroleum

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products in the world maret are declining and the value of the peso in relationto the D8 dollar is stable, taing into account relevant trends and prospects5Provided, further, hat the foregoing provision notwithstanding, the five #+$<month ransition Phase shall continue to apply to :PB, regular gasoline anderosene as socially<sensitive petroleum products and said petroleum

products shall be covered by the automatic pricing mechanism during the saidperiod Dpon the implementation of full deregulation as provided herein, the ransitionPhase is deemed terminated and the following laws are repealed5 #a$ Republic Act No 61>, as amended2 #b$ 8ection + of 7?ecutive 'rder No 1., as amended2

 #c$ :etter of (nstruction No 1>1, dated 'ctober 1+, 19!2

 #d$ :etter of (nstruction No 11, dated November .", 19!, as amended2 #e$ :etter of (nstruction No 16", dated May 9, 19!+2

 #f$ Presidential &ecree No 1!!92 and

 #g$ Presidential &ecree No 19+6, as amended by 7?ecutive 'rder No 

1>5

Provided, however, hat in case full deregulation is started by the President in thee?ercise of the authority provided in this 8ection, the foregoing laws shall continue to bein force and effect with respect to :PB, regular gasoline and erosene for the rest of thefive #+$<month periodPetitioner Barcia contended that implementing full deregulation and removing pricecontrol at a time when the maret is still dominated and controlled by an oligopoly -+/-+/

 would be contrary to public interest, as it would only provide an opportunity for the Eig >to engage in price<fi?ing and overpricing e averred that 8ection 19 of RA No !9 is %glaringly pro<oligopoly, anti<competition, and anti<people,) and thus ased the *ourtto declare the provision unconstitutional

'n &ecember 1, 1999, in Garcia vs. Corona !""" Garcia case#,-6/-6/  we  deniedpetitioner Barcia3s plea for nullity 0e declined to rule on the constitutionality of 8ection19 of RA No !9 as we found the 4uestion replete with policy considerations2 in the

 words of Fustice Gnares<8antiago, the ponente of the !""" Garcia case 5

(t bears reiterating at the outset that the deregulation of the oilindustry is a policy determination of the highest order (t isun4uestionably a priority program of Bovernment he Department

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of Energy $ct of !""% e?pressly mandates that the development andupdating of the e?isting Philippine energy program %shall include apolicy direction towards deregulation of the power and energyindustry) 

Be that as it may,  e are not concerned ith hether or notthere should !e deregulation. This is outside our "urisdiction.The "udgment on the issue is a settled matter and only Congresscan reverse it. ??? ??? ??? Reduced to its basic arguments, it can be seen that the challenge inthis petition is not against the legality of deregulation Petitioner doesnot e?pressly challenge deregulation The issue, #uite sim$ly, isthe timeliness or the isdom of the date hen full deregulation

should !e effective. %n this regard, hat constitutes reasona!le time is not for "udicialdetermination. Reasonable time involves the appraisal of a greatvariety of relevant conditions, political, social and economic hey arenot within the appropriate range of evidence in a court of =ustice (t

 would be an e?travagant e?tension of =udicial authority to assert =udicial notice as the basis for the determination -7mphasis supplied/

Dndaunted, petitioner Barcia is again before us in the present petition for certiorariseeing a categorical declaration from this *ourt of the unconstitutionality of 8ection 19of RA No !9 THE &ET%T%'( Petitioner Barcia does not deny that the present petition for certiorari  raises the sameissue of the constitutionality of 8ection 19 of RA No !9, which was already thesub=ect of the !""" Garcia case e disagrees, however, with the allegation that theprior rulings of the *ourt in the two oil deregulation cases-/-/ amount to res &udicatathat would effectively bar the resolution of the present petition e reasons that res

 &udicata  will not apply, as the earlier cases did not completely resolve the controversyand were not decided on the merits Moreover, he maintains that the present caseinvolves a matter of overarching and overriding importance to the national economy andto the public and cannot be sacrificed for technicalities lie res &udicata.-!/-!/

 o further support the present petition, petitioner Barcia invoes the following additionalgrounds to nullify 8ection 19 of RA No !951 8ubse4uent events after the lifting of price control in 199 have confirmed the

continued e?istence of the Eig > oligopoly and its overpricing of finishedpetroleum products2

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 . he unabated overpricing of finished petroleum products by the Eig > oligopoly is

gravely and undeniably detrimental to the public interest2 > No longer may the bare and blatant constitutionality of the lifting of price control

be glossed over through the e?pediency of legislative wisdom or =udgment callin the face of the Eig > oligopoly3s characteristic, definitive, and continuedoverpricing2

  o avoid declaring the lifting of price control on finished petroleum products as

unconstitutional is to consign to the dead letter dustbin the solemn and e?plicitconstitutional command for the regulation of monopoliesHoligopolies-9/-9/

 THE C')*T+S *)%(G -e resolve to dismiss the $etition.

 (n asing the *ourt  to declare 8ection 19 of RA No !9  as unconstitutional forcontravening 8ection 19, Article ;(( of the *onstitution, petitioner Barcia invoes thee?ercise by this *ourt  of its power of =udicial review, which power is e?presslyrecogniIed under 8ection #.$, Article J((( of the *onstitution-1"/-1"/  he power of

 =udicial review is the power of the courts to test the validity of e?ecutive and legislativeacts for their conformity with the *onstitution-11/-11/  hrough such power, the =udiciaryenforces and upholds the supremacy of the *onstitution-1./-1./  @or a court to e?ercisethis power, certain re4uirements must first be met, namely5 #1$ an actual case or controversy calling for the e?ercise of =udicial power2 #.$ the person challenging the act must have %standing) to challenge2 he

must have a personal and substantial interest in the case such that hehas sustained, or will sustain, direct in=ury as a result of itsenforcement2

 #>$ the 4uestion of constitutionality must be raised at the earliest possible

opportunity2 and #$ the issue of constitutionality must be the very lis mota of the case-1>/-1>/ 

 Actual Case Controversy Susceptible of Judicial Determination he petition fails to satisfy the very first of these re4uirements C the e?istence of anactual case or controversy calling for the e?ercise of =udicial power An actual case orcontroversy is one that involves a conflict of legal rights, an assertion of opposite legalclaims suscepti'le of &udicial resolution2 the case must not be moot or academic orbased on extra-legal or other similar considerations not cognizable by a court of

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 justice. 8tated otherwise, it is not the mere e?istence of a conflict or controversy that will authoriIe the e?ercise by the courts of its power of review2 more importantly, theissue involved must be susceptible of =udicial determination 7?cluded from these are4uestions of policy or wisdom, otherwise referred to as political 4uestions5

As Ta(ada vs. Cuenco puts it, political 4uestions refer %to those4uestions which, under the *onstitution, are to be decided by thepeople in their sovereign capacity, or in regard to which fulldiscretionary authority has 'een delegated to the legislative ore)ecutive 'ranch of government ) hus, if an issue is clearlyidentified by the text of the Constitution as matters fordiscretionary action by a particular branch of government or tothe people themselves then it is held to be a political uestion (n the classic formulation of Fustice Erennan in *a+er vs. Carr ,%-p/rominent on the surface of any case held to involve a political4uestion is found a te?tually demonstrable constitutional commitment

of the issue to a coordinate political department2 or a lac! of judicially discoverable and manageable standards for resolvingit" or the impossibility of deciding #ithout an initial policydetermination of a !ind clearly for non-judicial discretion" or theimpossibility of a court3s undertaing independent resolution withoute?pressing lac of the respect due coordinate branches ofgovernment2 or an unusual need for un4uestioning adherence to apolitical decision already made2 or the potentiality of embarrassmentfrom multifarious pronouncements by various departments on the one4uestion)-1/-1/ -7mphasis supplied/

 Petitioner Barcia3s issues fit snugly into the political 4uestion mold, as he insists that byadopting a policy of full deregulation through the removal of price controls at a time

 when an oligopoly still e?ists, 8ection 19 of RA No !9  contravenes the*onstitutional directive to regulate or prohibit monopolies-1+/-1+/  under Article ;((,8ection 19 of the *onstitution his 8ection states5 

he 8tate shall regulate or prohibit monopolies when the publicinterest so re4uires No combinations in restraint of trade or unfaircompetition shall be allowed 

Read correctly, this constitutional provision does not declare an outright prohibition ofmonopolies (t simply allows the 8tate to act %when pu'lic interest so reuires)2 eventhen, no outright prohibition is mandated, as the 8tate may choose to regulate ratherthan to prohibit wo elements must concur before a monopoly may be regulated orprohibited5

 1 here in fact e?ists a monopoly or an oligopoly, and

 . Public interest re4uires its regulation or prohibition

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 0hether a monopoly e?ists is a 4uestion of fact 'n the other hand, the 4uestions of #1$

 what public interest re4uires and #.$ what the 8tate reaction shall be essentially re4uirethe e?ercise of discretion on the part of the 8tate

 

8tripped to its core, what petitioner Barcia raises as an issue is the propriety ofimmediately and fully deregulating the oil industry 8uch determination essentiallydwells on the soundness or wisdom of the timing and manner of the deregulation*ongress wants to implement through RA No !9 Kuite clearly, the issue is not forus to resolve2 we cannot rule on when and to what e?tent deregulation should taeplace without passing upon the wisdom of the policy of deregulation that *ongress hasdecided upon o use the words of *a+er vs. Carr,-16/-16/  the ruling that petitionerBarcia ass re4uires -an initial policy determination of a +ind clearly for non&udicialdiscretion/ 2 the branch of government that was given by the people the full discretionaryauthority to formulate the policy is the legislative department

&irectly supporting our conclusion that Barcia raises a political 4uestion is his proposalto adopt instead a system of partial deregulation C a system he presents as moreconsistent with the *onstitutional %dictate) e avers that free maret forces #in a fullyderegulated environment$ cannot prevail for as long as the maret itself is dominated byan entrenched oligopoly (n such a situation, he claims that prices are not determinedby the free play of supply and demand, but instead by the entrenched and dominantoligopoly where overpricing and price<fi?ing are possible-1/-1/  hus, before fullderegulation can be implemented, he calls for an indefinite period of partial deregulationthrough imposition of price controls-1!/-1!/ 

Petitioner Barcia3s thesis readily reveals the political,-19/-19/  hence, non<=usticiable,nature of his petition2 the choice of undertaing full or partial deregulation is not for this*ourt  to mae Ey enacting the assailed provision C 8ection 19 C of RA No !9,*ongress already determined that the problems confronting the local downstream oilindustry are better addressed by removing all forms of prior controls and adopting aderegulated system his intent is e?pressed in 8ection . of the law5

 87* . Declaration of Policy  C (t shall be the policy of the 8tate toliberaliIe and deregulate the downstream oil industry in order toensure a truly competitive maret under a regime of fair prices,ade4uate and continuous supply of environmentally<clean and high<4uality petroleum products o this end, the 8tate shall promote andencourage the entry of new participants in the downstream oilindustry, and introduce ade4uate measures to ensure the attainmentof these goals

 (n Tatad ,  we declared that the fundamental principle espoused by 8ection 19, Article ;((of the *onstitution is competition-."/-."/  *ongress, by enacting RA No !9,determined that this ob=ective is better realiIed by liberaliIing the oil maret, instead ofcontinuing with a highly regulated system enforced by means of restrictive prior

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controls his legislative determination was a lawful e?ercise of *ongress3 prerogativeand one that this *ourt must respect and uphold Regardless of the individual opinionsof the Members of this *ourt, we cannot, acting as a body, 4uestion the wisdom of a co<e4ual department3s acts he courts do not involve themselves with or delve into thepolicy or wisdom of a statute2-.1/-.1/ it sits, not to review or revise legislative action, but

to enforce the legislative will-../

-../

  @or the *ourt to resolve a clearly non<=usticiablematter would be to debase the principle of separation of powers that has been tightly woven by the *onstitution into our republican system of government 

his same line of reasoning was what we used when we dismissed the first Barcia 

case he petitioner correctly noted that this is not a matter of res &udicata #as the

respondents invoed$, as the application of the principle of res &udicata presupposes

that there is a final =udgment or decree on the merits rendered by a court of competent

 &urisdiction o be e?act, we are simply declaring that then, as now, and for the same

reasons, we find that there is no =usticiable controversy that would =ustify the grant of thepetitionC'(C)S%'(

 o summariIe, we declare that the issues petitioner Barcia presented to this *ourt arenon<=usticiable matters that preclude the *ourt  from e?ercising its power of =udicialreview he immediate implementation of full deregulation of the local downstream oilindustry is a policy determination by *ongress which this *ourt cannot overturn withoutoffending the *onstitution and the principle of separation of powers hat the law failedin its ob=ectives because its adoption spawned the evils petitioner Barcia alludes todoes not warrant its nullification (n the words of Mr Fustice :eonardo A Kuisumbing in 

the 1999 Barcia case, -0a1 calculus of fear and pessimism ))) does not &ustify theremedy petitioner see+s2 that we overturn a law enacted 'y Congress and approved 'ythe Chief E)ecutive.