G.R. No. 132451 , December 17, 1999
EN BANC: CONGRESSMAN ENRIQUE T. GARCIA, petitioner, vs. HON. RENATO C. CORONA, as Executive Secretary, HON. FRANCISCO VIRAY, as Secretary of Energy, CALTEX PHILIPPINES INC., PILIPINAS SHELL PETROLEUM CORP. and PETRON CORP., respondents.

FACTS

Petitioner Congressman Enrique T. Garcia assails the constitutionality of Section 19 of Republic Act No. 8479 , the Oil Deregulation Law, which mandates the start of full deregulation of the downstream oil industry. He argues that the law contravenes Section 19, Article XII of the Constitution , which requires the State to regulate or prohibit monopolies when public interest so requires and prohibits combinations in restraint of trade. Petitioner contends that the downstream oil industry is dominated by an oligopoly of three major companies (Caltex, Shell, and Petron), which negates free market competition and fair prices. He asserts that deregulation, in the presence of this oligopoly, effectively allows unrestrained market forces to set prices, thereby circumventing the constitutional mandate for state regulation to protect public interest. He posits that price control remains necessary until “real” competition emerges.

ISSUE

Whether Section 19 of R.A. No. 8479 , providing for full deregulation of the oil industry, is unconstitutional for allegedly violating the constitutional prohibition against monopolies and combinations in restraint of trade.

RULING

The petition is dismissed. In his separate opinion, Justice Panganiban concurs in the dismissal but elaborates on the Court’s role in reviewing economic policies under the Constitution. He clarifies that the power of judicial review extends to examining whether laws like the Oil Deregulation Law conform to constitutional mandates. The Court can strike down a law on two grounds: direct infringement of the Constitution or grave abuse of discretion by the political departments. However, the petitioner bears the heavy burden of proving such unconstitutionality beyond reasonable doubt. Justice Panganiban notes that while deregulation aims to shift price control to market forces to eliminate harmful government intervention and corruption, it is not an infallible cure. The threat of abuse can transfer from the government to market players, especially if they engage in anti-competitive behavior like forming cartels. Nevertheless, the mere existence of an oligopolistic market structure does not, by itself, render the deregulation law unconstitutional. The Court, in the earlier Tatad case, invalidated the prior deregulation law ( R.A. No. 8180 ) due to specific restrictive provisions (tariff differential, inventory requirements, predatory pricing) that actively inhibited competition and perpetuated oligopolistic control. Petitioner in the present case failed to demonstrate with similar factual and legal specificity that R.A. No. 8479 itself contains provisions that foster or mandate a restraint of trade. Absent clear proof that the law authorizes or enables constitutional violations, or that its enactment constituted grave abuse of discretion, the Court must respect the policy decision of Congress and the President to pursue deregulation. The wisdom or expediency of the law is not a judicial concern.