The statement by the Philippines Tariff Commission about competition policy is an evidence that the government should issue anti-competitive practices in the country. The first solution seemed a long shot at the moment, with the administration of President Rodrigo Duterte seeking to pass the Comprehensive Tax Reform Program (CTRP). Marya Salamat March 25, 2014 George San Mateo, Oil deregulation law, Piston. The transparency of the oil prices has been an issue for the consumers as oil price hikes have not stopped since the law was approved by the congress. In his petition, he said that the Sec. Marya Salamat February 10, 2015 1 Comment Oil cartel in the Philippines, Oil deregulation law, oil price hike. The definition states that pricing below average variable cost in order to match the lower price of the competitor shall not be considered predatory pricing unlike what was perceived to be pricing for purpose of discouraging a potential competitor in entering the market. Security, Unique Dist. While it has the potential to increase government income from petroleum, it will also mean higher rates for consumers. Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I GENERAL PROVISIONS. Lastly, because of the hastened transition, he pointed out that Sec. All he said points out to the question, whether or not the execution of deregulating the oil industry conflicts the mandate of free competition under section 19, Article XII of the 1987 constitution. 68, and Executive Orders signed to increase Trade and Investment Liberalization. 8479 in August 1999 as a source, the first part of our literature review will discuss the unconstitutional provisions R. A. Lastly, he also pointed out that reviewing the wisdom of the law is not a power of the judiciary, that power is only vested in the congress. 19 is anti-competitive, thus it is contrary to what the constitution says. The most controversial issue surrounding the act is the overpriced petroleum products and frequent increases, with vague reasons, but seldom rollbacks like a two-step-forward-one-step-backward situation. Included here are policies that ensure a competitive environment, which is in line with the goal of the Oil Deregulation Law. 2 Answers. 8479 is cleared of any constitutional flaws. With the eradication of the Oil Price Stabilization Fund (OPSF), a buffer fund was made to cover increases of petroleum products, with the exception of premium gasoline. In effect, Philippine legislature has been adamant in ratifying laws both in realization of this provision and the protection of consumers, examples of which are R. A. No. Other solutions include abolition of the value-added tax (VAT) on oil, which found a major proponent in the person of Manuel “Mar” Roxas (Senate Bill 1962), further diversify our sources of energy to decrease dependence on oil (such as the development of renewable sources, but this is another topic altogether), and country-to- country agreements on oil products. I see that if one takes away something, another has to take its place – re-regulation. 8479 mainly, the transition phase and the full deregulation phase. Even though there are more than 600 companies in the industry and competition seems to be fair within the oil industry,8 the problem still exists — the high prices of petroleum products which has a domino effect to everything in the country. Third, the law will sire an even more powerful oligopoly whose power to the market will take advantage of the consumers’ general welfare. If the idustry is deregulated quality of products can decline and there could be consolidation of existing providers leading to monopoly pricing of oil and gas. It also claimed that an indefinite period of time would only discourage new players for they hoped that the price regulation would be lifted within a reasonable time. However, President Benigno Simeon C. Aquino himself was firm that deregulation will not be repealed, claiming that it will only create an artificial picture of low fuel prices while keeping the pressure on the resources of the government. REVIEW OF RELATED LITERATURE INTRODUCTION The researchers will cover four important topics central to the thesis. Since 1985, it was required to keep 115 days of supply. Issues about the oil market today, regarding possible oligopoly, predatory pricing, and consumer well-being should be taken a look at. 18 Although there are no developed legislation relating to anti-trust and monopoly activities, a competition policy framework is a strong backbone to safeguard consumer welfare. To provide a more broad view on the matter being discussed, the author interviewed five people from different sectors and of different specializations. Because of this, the study will be able to give comparison as to the success of other deregulation laws. C. Objectives of the Study The objective of the study is to provide a more accurate assessment on the unconstitutionality of the Oil Deregulation Law. 9 Part of the competition policy framework is the liberalization and deregulation of select Philippine industries such as the maritime industry, civil aviation, telecommunications, energy and utilities. In addition, oil is not a perishable product. HAVEN’T FOUND ESSAY YOU WANT? 25 The petitioner claimed that acceleration of the transition phase was pro-oligopoly, anti-competition, and anti-people for the reason that the short transition period was not enough to establish true competition in the local oil industry. 8479 which could have given the incoming competitors tough time to be able to keep up with the resources that the big three companies already own. The automatic oil pricing mechanism was maintained in order to estimate the local prices of gasoline products in the global market. D. Significance of the Study In the Philippines, the downstream oil industry remains a highly controversial aspect of the economy in spite, or perhaps because of, the implementation of full deregulation that started in 1998. What was the economic state of the Philippines before the enforcement of the RA 8479? Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I. This site contains quotes, articles, ebooks, and other related documents on Philippine historical studies.Philippine History Source Materials. Consumers and transport groups alike have thus repeatedly called for temporary or permanent reestablishment of price controls, only to be ignored by a government firm in the belief that deregulation as part of a liberalized approach to the economy will ultimately benefit the country in the long run. 24 And because of that, the law is a very vital and grave abuse of discretion on the part of the legislative and executive branches of government. There was a time when the country had four refining (Bataan Refining, Filoil, Caltex, Shell) and six marketing companies (Esso, Filoil, Caltex, Getty, Mobil, Shell). 8180, which is the law discussed in the Supreme Court decision, was enacted. Then, it would bring about a free interaction of market forces that would eventually lead to hindrance of fair competition in the market. 11” The oil industry brought in a fair amount of new competitors, now there are about 600 competitors in the market and it’s safe to say that the law is achieving its goal. That’s why it’s important to know whether or not the law is economically beneficial to the Filipino people, and this policy issue paper will help the researchers determine the same. 8180, to be unconstitutional1, is a brief history of the Philippine oil industry. AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY AND FOR OTHER PURPOSES. Section 1. If, however, the opposite has been concluded and the oil deregulation is in fact deemed to attain its goals, the government must focus its energies towards ensuring that the expected benefits are actually felt by consumers. Working 24/7, 100% Purchase 28 As Garcia listen to these counter arguments, he said that he was just asking for the constitutionality of Sec. 8180 AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of representative of the Philippines in Congress assembled: CHAPTER I – GENERAL PROVISIONS SECTION 1. But repealing the Deregulation Law is not the ultimate answer to the rise in oil … 8479 which grants for the five-month transition phase, shortened by Pres. Watch Queue Queue The 4% tariff differential from R. A. Tinker v. Des Moines Indep. The first one is the goal of the oil deregulation law, to have a perfect competition in the oil market. They also claim that the short transition period was not against the mandate of the constitution because the new competitors were given enough time to set up their businesses in the manner captured at least 3% of the market share. Second, it will block the entry of effective competitors. If you have any problems with writing, feel free to ask our writers for help! Short Title. 8479 February 10, 1998. The minimum inventory level requirement was also removed from the R. A. He also said that true competition exists only when there can be a sizable number of players, and at that time there was only 3% of the market share which belongs to new competitors. Petron Corp. , a respondent, pointed out that a short transition period is beneficial to new players coming in for they will be able to set up their business properly within a manageable time, to set up their prices, taking into account their investment and operating costs. The CTRP includes the maintenance of the current VAT on oil products, and a three-phase increase in excise tax on oil. DigitalEssay.net is ready to help with any kind of academic writing! Data-gathering will take place within Metro Manila and during the 2nd term of the academic year 2013 – 2014. However, for every action, anticipate the consequences. The people are forced to just accept whatever reason the oil companies and the Department of Energy gives. 19 Article XII “which commands the state to prohibit or regulate monopolies for public interest,” the oil deregulation law have become one of the most questionable laws in the country. 8479, which is to deregulate and liberalize the downstream oil industry to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply, environmentally clean and high-quality gasoline products, would be demoralize. II. 12. The first one was declared by the Supreme Court unconstitutional in November 5, 1997 for mainly three reasons. 20 In this topic, a case study of the petition of honorable Enrique T. Garcia in 1999 against the 1998 Oil Deregulation Law is essential to know if R. A. It may also reduce the problem brought by the weakness of the Philippine peso. No. The transition period should last up to five months following the enactment of the law but with the power granted to him at that time, President Fidel V. Ramos accelerated the start of full deregulation through E. O. Boys Who Cry? • Republic Act. Accompanying oil deregulation was the abolishment of the OPSF. The newer act retains almost everything except the unconstitutional provisions present in the previous law. The DOE should give the consumers assurance on the pricing, for they are obliged to monitor increases in the gas prices from time to time. Rallyists also seek an oil price rollback and the nationalization of the oil industry in the country. - This Act shall be known as the “Downstream Oil Industry Deregulation Act of 1996.” SEC. The high court, however, denied the petition on the grounds, basically, that the argument of the petitioner is not against the law itself, but just against the timeliness of the provided duration for the full deregulation phase. No. The verdict will be given later if indeed the oil deregulation is not against the goal of the constitution as well as the law itself, which is to make the oil market competitive that runs with fair prices. 26 Subsequently, respondents claim that the decorum of full deregulation is a non-justifiable issue for it involves the perception of congress and the acceleration was also recommended by the DOE and DOF because of the two conditions that were discussed earlier. - This Act shall be known as the “Downstream Oil Industry Deregulation Act of 1996.” SEC.2. Which should hinder the big three oil companies make practices that are anti-competitive, which is prohibited by the law such as cartelizing their operations by taking advantage of deregulation. GENERAL PROVISIONS. The last three solutions presented explored what the government can do beyond tweaking the legal provisions of deregulation… 29 The Supreme Court Justice at that time, Corona, thought that his petition lacked legal basis even though it seem beneficial to the public. To further ensure that the rights of the consumers are protected, R. A. can send it to you via email. ICLG - Oil & Gas Laws and Regulations - covers common issues in oil and gas laws and regulations – including development of oil and natural gas,import/export of natural gas, LNG, import/export of oil, transportation, transmission and distribution and foreign investment – in 29 jurisdictions. This assumption will be studied later on. First, the provisions laid down were already advantageous to the major competitors; it will give more power to the oligopoly of the big three. GET YOUR CUSTOM ESSAY Relevance. The statement by the Philippines Tariff Commission about competition policy is an evidence that the government should issue anti-competitive practices in the country. AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY AND FOR OTHER PURPOSES. With the Constitution’s anti-monopolistic agenda particularly, Sec. While enumerating the grounds, this part will touch on the effects of the ODL to the oil industry, and to the people. 21 The judicial review also pointed out provisions that will make the oil industry be more attractive to potential competitors that should support the anti-trust protection of the R. A. 5 Its unconstitutionality was because of the violation against a Constitutional provision that states “the State shall regulate or prohibit monopolies when public interest so requires. This government policy shall promote laws and measures that will maintain the level of competition in markets as well as affect the industry structures. Section 14 of the Downstream Oil Industry Deregulation Act of 1998 mandates the DOE to monitor and publish daily international crude oil prices, as well as follow the movements of domestic oil … ”6 The Supreme Court points out that the act does not make a truly competitive market because of the 4% difference on the tax imposition on existing businesses versus new comers. Hi Al, your blog has been nominated for the Blogger Recognition Award. If the latter is the answer, then it’s affecting the Filipino majority negatively, meaning the deregulation of the oil industry is actually unconstitutional because it violates the for-the-people essence of our constitution. Section 1. No. 2003-05-006 The years that passed for Philippine deregulation of the oil industry has its own successes and failures. A. It is therefore in both private and public interests that the policy’s actual effect and its constitutionality be tested through empirical analyses. be credited to the deregulation of the oil industry. Phase one, the transition phase which started in August 1996, aims to take away control over non-pricing related aspects while phase two, the full deregulation phase, now includes the pricing itself, which abolishes the OPSF. The third solution had been in use when the, There has been a number of possible ways to make government policy on the oil industry better for the public. Ang may mga hawak nito ay ang The Big Three (shell, petron at Caltex) na kung saan sila-sila na lamang ang nagdidikta ng presyo ng langis dahil sa kanilang mga ispekulasyon ng di-umanong “shortage”. - It shall be PNOC, operating as PETRON, was the first Philippine-owned Corporation in the market. It is notable that the so-called Big 3 oil players (Petron, Chevron and Shell) used to corner nearly 100 percent of the Philippine petroleum market before the passage of the Downstream Oil Industry Deregulation Act of 1998. 27 Interposing economic arguments by the public respondents claim that price regulation is not beneficial to the public as well as to the economy. Republic Act No. Monopoly=higher prices to consumer. However, the actualization of the ideals of the framework seems lacking in the reality that most of these industries remain structurally monopolistic or oligopolistic. E. Scope and Limitations of the Study. Notably Petron Corp. at the top, followed by Pilipinas Shell and Chevron Corp. This video is unavailable. No. 1 decade ago . Proposed solution # 2 (scrap/repeal the Oil Deregulation Law) is therefore a better option. AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I GENERAL PROVISIONS SECTION I. These two aspects of the legislation piece must be in harmony together in order to work. AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled. – This Act shall be known as the "Downstream Oil Industry Deregulation Act of 1998. A petition was filed by Cong. 8479 will be analyzed to give a brief background regarding the law. 16 Sources of market failure are also discussed, which a monopoly can cause. His decision was supported by the DOE and DOF because of two reasons: (1) the prices of crude oil and petroleum products in the world market are beginning to be stable and on a downtrend since January 1998; and (2) the exchange rate of the peso in relation to the US dollar has been stable for the past three months, averaging at around P40.