Garcia V Executive Sec

Garcia v.
Executive Secretary energy program "shall include a policy direction towards

deregulation of the power and energy industry."
Facts: In 1996, the government decided to pursue a policy of
deregulation by enacting R.A. No. 8180 or the "Downstream Be that as it may, we are not concerned with whether or not
Oil Industry Deregulation Act of 1996.” However, in Tatad v. there should be deregulation. This is outside our jurisdiction.
Secretary of Department of Energy, the Court struck down the The judgment on the issue is a settled matter and only
law as invalid because the three key provisions intended to Congress can reverse it.
promote free competition were shown to achieve the opposite
result; contrary to its intent, R.A. No. 8180’s provisions on xxx xxx xxx
tariff differential, inventory requirements, and predatory
pricing inhibited fair competition, encouraged monopolistic Reduced to its basic arguments, it can be seen that the
power, and interfered with the free interaction of market challenge in this petition is not against the legality of
forces. deregulation. Petitioner does not expressly challenge
deregulation. The issue, quite simply, is the timeliness or the
Congress responded to the SC’s Decision in Tatad by enacting wisdom of the date when full deregulation should be effective.
a new oil deregulation law, R.A. No. 8479. This time,
Congress excluded the offensive provisions found in the In this regard, what constitutes reasonable time is not for
invalidated law. Nonetheless, petitioner Garcia again sought to judicial determination. Reasonable time involves the
declare the new oil deregulation law unconstitutional on the appraisal of a great variety of relevant conditions, political,
ground that it violated Article XII, Section 19 of the social and economic. They are not within the appropriate
Constitution. He specifically objected to Section 19 of R.A. range of evidence in a court of justice. It would be an
No. 8479 which, in essence, prescribed the period for removal extravagant extension of judicial authority to assert
of price control on gasoline and other finished petroleum judicial notice as the basis for the determination.
products and set the time for the full deregulation of the local
downstream oil industry. Hence, the present petition for certiorari seeking a categorical
declaration of the unconstitutionality of Section 19 of R.A.
SEC. 19. Start of Full Deregulation. – Full deregulation of the No. 8479.
Industry shall start five (5) months following the effectivity of
this Act: Provided, however, That when the public interest so Issue: WON Section 19 of R.A. No. 8479 is unconstitutional
requires, the President may accelerate the start of full
deregulation upon the recommendation of the DOE and the Held: NO. The Court dismissed the petition.
Department of Finance (DOF) when the prices of crude oil and
petroleum products in the world market are declining and the In asking the Court to declare Section 19 of R.A. No. 8479 as
value of the peso in relation to the US dollar is stable, taking unconstitutional for contravening Section 19, Article XII of
into account relevant trends and prospects; Provided, further, the Constitution, petitioner Garcia invokes the exercise by this
That the foregoing provision notwithstanding, the five (5)- Court of its power of judicial review, which power is
month Transition Phase shall continue to apply to LPG, expressly recognized under Section 4(2), Article VIII of the
regular gasoline and kerosene as socially-sensitive petroleum Constitution. Through such power, the judiciary enforces and
products and said petroleum products shall be covered by the upholds the supremacy of the Constitution. For a court to
automatic pricing mechanism during the said period. exercise this power, certain requirements must first be met,
namely:
Petitioner Garcia contended that implementing full
deregulation and removing price control at a time when the (1) an actual case or controversy calling for the exercise of
market is still dominated and controlled by an oligopoly would judicial power;
be contrary to public interest, as it would only provide an (2) the person challenging the act must have "standing" to
opportunity for the Big 3 to engage in price-fixing and challenge; he must have a personal and substantial interest in
overpricing. He averred that Section 19 of R.A. No. 8479 is the case such that he has sustained, or will sustain, direct
"glaringly pro-oligopoly, anti-competition, and anti-people," injury as a result of its enforcement;
and thus asked the Court to declare the provision (3) the question of constitutionality must be raised at the
unconstitutional. earliest possible opportunity; and
(4) the issue of constitutionality must be the very lis mota of
In Garcia v. Corona (1999 Garcia case), the SC denied the case.
petitioner Garcia’s plea for nullity. The SC declined to rule on
the constitutionality of Section 19 of R.A. No. 8479 as it found The petition fails to satisfy the very first of these requirements
the question replete with policy considerations; in the words of – the existence of an actual case or controversy calling for the
Justice Ynares-Santiago, the ponente of the 1999 Garcia case: exercise of judicial power.
It bears reiterating at the outset that the deregulation of the oil Petitioner Garcia insists that by adopting a policy of full
industry is a policy determination of the highest order. It is deregulation through the removal of price controls at a time
unquestionably a priority program of Government. The when an oligopoly still exists, Section 19 of R.A. No. 8479
Department of Energy Act of 1992 expressly mandates that contravenes the Constitutional directive to regulate or prohibit
the development and updating of the existing Philippine
monopolies under Article XII, Section 19 of the Constitution. Section 2. Declaration of Policy. – It shall be the policy of the
This Section states: State to liberalize and deregulate the downstream oil industry
in order to ensure a truly competitive market under a regime of
“The State shall regulate or prohibit monopolies when the fair prices, adequate and continuous supply of
public interest so requires. No combinations in restraint of environmentally-clean and high-quality petroleum products.
trade or unfair competition shall be allowed.” To this end, the State shall promote and encourage the entry of
new participants in the downstream oil industry, and introduce
Read correctly, this constitutional provision does not declare adequate measures to ensure the attainment of these goals.
an outright prohibition of monopolies. It simply allows the
State to act "when public interest so requires"; even then, no In Tatad, we declared that the fundamental principle espoused
outright prohibition is mandated, as the State may choose to by Section 19, Article XII of the Constitution is competition.
regulate rather than to prohibit. Two elements must concur Congress, by enacting R.A. No. 8479, determined that this
before a monopoly may be regulated or prohibited: objective is better realized by liberalizing the oil market,
instead of continuing with a highly regulated system enforced
1. There in fact exists a monopoly or an oligopoly, and by means of restrictive prior controls. This legislative
2. Public interest requires its regulation or prohibition. determination was a lawful exercise of Congress’ prerogative
and one that this Court must respect and uphold. Regardless of
Whether a monopoly exists is a question of fact. On the other the individual opinions of the Members of this Court, we
hand, the questions of (1) what public interest requires and (2) cannot, acting as a body, question the wisdom of a co-equal
what the State reaction shall be essentially require the exercise department’s acts. The courts do not involve themselves with
of discretion on the part of the State. or delve into the policy or wisdom of a statute; it sits, not to
review or revise legislative action, but to enforce the
Stripped to its core, what petitioner Garcia raises as an issue is legislative will. For the Court to resolve a clearly non-
the propriety of immediately and fully deregulating the oil justiciable matter would be to debase the principle of
industry. Such determination essentially dwells on the separation of powers that has been tightly woven by the
soundness or wisdom of the timing and manner of the Constitution into our republican system of government.
deregulation Congress wants to implement through R.A. No.
8497. Quite clearly, the issue is not for us to resolve; we This same line of reasoning was what we used when we
cannot rule on when and to what extent deregulation should dismissed the first Garcia case. The petitioner correctly noted
take place without passing upon the wisdom of the policy of that this is not a matter of res judicata (as the respondents
deregulation that Congress has decided upon. invoked), as the application of the principle of res judicata
presupposes that there is a final judgment or decree on the
To use the words of Baker v. Carr, the ruling that petitioner merits rendered by a court of competent jurisdiction. To be
Garcia asks requires "an initial policy determination of a kind exact, we are simply declaring that then, as now, and for the
clearly for non-judicial discretion"; the branch of government same reasons, we find that there is no justiciable controversy
that was given by the people the full discretionary authority to that would justify the grant of the petition.
formulate the policy is the legislative department.
To summarize, the Court declared that the issues petitioner
Directly supporting our conclusion that Garcia raises a Garcia presented to this Court are non-justiciable matters that
political question is his proposal to adopt instead a system of preclude the Court from exercising its power of judicial
partial deregulation – a system he presents as more consistent review. The immediate implementation of full deregulation of
with the Constitutional "dictate." He avers that free market the local downstream oil industry is a policy determination by
forces (in a fully deregulated environment) cannot prevail for Congress which this Court cannot overturn without offending
as long as the market itself is dominated by an entrenched the Constitution and the principle of separation of powers.
oligopoly. In such situation, he claims that prices are not
determined by the free play of supply and demand, but instead
by the entrenched and dominant oligopoly where overpricing
and price-fixing are possible. Thus, before full deregulation
can be implemented, he calls for an indefinite period of partial
deregulation through imposition of price controls.
Petitioner Garcia’s thesis readily reveals the political, hence,

non-justiciable, nature of his petition; the choice of
undertaking full or partial deregulation is not for this Court to
make. By enacting the assailed provision – Section 19 – of
R.A. No. 8479, Congress already determined that the problems
confronting the local downstream oil industry are better
addressed by removing all forms of prior controls and
adopting a deregulated system. This intent is expressed in
Section 2 of the law:

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Garcia v.

Executive Secretary energy program "shall include a policy direction towards

Petitioner Garcia’s thesis readily reveals the political, hence,

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