The Patient Protection And Affordable Care Act - 2030 Words

In 2011, the Agency for Healthcare Research and Quality recorded that Americans made nearly 40 million hospital stays (Pfuntner). Each of these stays in each of the 4,000 hospitals and medical centers across the nation produced, at the very least, one medical record. Every healthcare provider needs to process and maintain these records with haste and accuracy. Failure to do so can result in a multitude of repercussions, ranging from the mistreatment of patients to errors in reporting to insurance that create a cycle of rising costs for both patients and healthcare providers. ERP systems, or Electronic Medical Records system as it has come to be known in the healthcare industry aim to serve a field with an exponentially growing need for†¦show more content†¦Increased volume is not the only concern stemming from the bill when implanting ERP; employers, individuals, and healthcare providers must now maintain more detailed patient records to ensure that patients qualify for cove rage. Implementing an ERP system is a huge undertaking, and failure is not only a possibility, but fairly likely. The Government Accountability Office reported in 2008 that almost half of the US government’s IT projects had to be revamped because of funding issues or change of project scope, and half of those projects needed restructuring twice or more (GAO). One of the more recent projects responsible for headaches was heavily scrutinized in the public eye from day one. In October 2013, the US government launched HealthCare.gov, a health insurance exchange website operating under the parameters set by the Affordable Care Act that was designed to assist American citizens in enrolling in health insurance plans provided by third party carriers or Medicaid. Almost immediately after launch, the website’s data center, managed by Verizon, suffered an equipment failure, causing the site to go down completely for at least a day. Stress tests were not completed until the day prior to launch, and the mind numbingly long loading times

Essay about Arts in Public Schools - 2035 Words

Arts in Public Schools All around the United States, art programs are being cut out of the budget in public schools. The arts include dance, band, chorus, theatre, film, drawing, painting, photography and literary arts. Some school board members feel these art programs are not necessary and do not benefit the students in any way. Elementary, middle, and high school students are forced to quit their passion and feel that their talents are not supported by their schools. Although many are not aware, there is a strong connection between arts education and academic achievement. Unfortunately, due to budget cuts in many public schools, the art classes are first on the list to be cut. It is important that the students, parents and teachers†¦show more content†¦Music, dance, drama, painting and drawing teachers try to incorporate academic lessons into their art classes. Students can be learning both art and academic topics at the same time. This can benefit the students extremely b ecause it will not only engage the students in helpful activities, but it will keep them interested in learning the different topics. For example, schools may play music in the halls to introduce the students to culture that may help them to be open to learning new things in all of their classes. The painting teacher may have her student’s paint a picture of a historical event they learned about in their history class and discuss it in front of the class. The music teacher may ask the students to pick a certain song that reminds them of a book they read in their English class and explain to the class why the song reminds them of that certain book. The dance teacher might assign a dance to the students that will get them thinking of a subject to write their paper on for writing class. The possibilities are endless as to how to mix academics into the arts. It is important to do so to keep the creative juices flowing in the young minds of the students in public schools. By parti cipating in an arts course, students are fueling their cognitive developments and areShow MoreRelatedPublic Schools Is Not A Martial Arts1041 Words   |  5 PagesAnother view those that may initially be opposed to jiu jitsu in public schools is that it encourages violence. Some people may think that jiu jitsu teaches people to be more efficiently violent, and we should not teach our youths this martial art. However, Jiu jitsu, much like many other martial arts, is not a martial art that the purpose and intention of learning is violence or inflicting harm upon others. 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[Fine Arts] can connect people more deeply to the world and open them to new ways of seeing, creating the foundation to forge social bonds and community cohesion,† (qtd in Smith 2). Maiers expresses, â€Å" Because fine arts education typically is not considered core curriculum or included on high-stakesRead MoreThe Importance of Funding Music and Art Programs for Young Students Across America1685 Words   |  7 Pagesand art programs in schools are perceived to many as extracurricular activities rather than important subjects that are vital to a students learning and skill development. The truth of the matter is that encouraging music and art education in public schools has a much larger impact on student’s grades, academic performance, and the economy than the majority people realize. 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Understanding Child and Young Person Development Free Essays

Unit title: Understand child and young person development Unit number: CYP Core 3 Question 4 4. 1 Analyse the importance of early identification of speech, language and communication delays and disorders and the potential risks of late recognition. It is essential that speech, language and communication delays and disorders are noticed early so the relevant interventions can be used to support the child or young person. We will write a custom essay sample on Understanding Child and Young Person Development or any similar topic only for you Order Now Answer the questions below. 1. How can observation be used to identify speech, language and communication delays? 2. What should you do if you have concerns about a child’s development of speech, language and communication skills? 3. What would be the risks if these delays were not identified? Use your answers to help you analyse the importance of early identification of speech, language and communication delays and disorders and the potential risks in late recognition. The early years are a time for rapid learning and development in a child’s life. Language is very important to learning since it helps the child to store information in an organized way and to express the child’s thoughts. If a child has difficulty in communicating with others due to a speech and language delay or disorder the child will be at a disadvantage. The child will have many problems. The child may fail to understand instructions given by the adult and this may be interpreted as misbehaviour. For example the child has been instructed to put away the task and line up to go for the music lesson to another room at school. However the child has not understood what has to be done because of his inability to process the information. Instead the child goes and has a drink of water and takes out his lunch box. Teaching in schools is usually done through verbal description and instruction. The adult presents learning situations with the use of language or speech. Failure to understand means the child will be unable to store or use information provided. For example the child has to play a board game with three other children and so has to follow specific instructions shown by the adult according to the rules of the game. A child with language delay has limited resources for demonstrating knowledge and explaining their reasoning. For example the child wants to explain to the teacher the properties of a three dimension solid but finds it difficult to do so because of language delay. Oral language serves as a precursor to literary skills. For example the child first has to be a good communicator and then uses this skill to interact with others. Then the child uses vocabulary to understand and experience stories, songs, poems and rhymes. The child begins to enjoy reading and writing. Language ability is central to the ability to establish friendship with other children. The child has to be able to communicate and talk to his peers and form social relationships with them. For example the children use language to imagine at role play and develop social skills. There are a number of reasons why children experience difficulties and delays in speech, language and communication development. The causes may be due to ear infection where the child is unable to hear words or hear distorted sounds, or find it confusing and tiring to focus on verbal communication. The ear fluid may pose a problem for the child and sounds are muffled and not clear to the child’s hearing. The child may be experiencing specific difficulty in using their oral muscles effectively and this may affect speech. For example a child with cerebral palsy does not have much control over the mouth and the muscles around it and so cannot form the words properly. The child may say ‘b’ sound instead of ‘v’ and so the meaning of the word could be totally different-base for vase. Sometimes speech and language difficulties are passed down families. For example stammering or lisping. Problem’s during pregnancy and birth can also affect the child’s developing brain and contribute to speech and language difficulties as part of a wider developmental delay. For example a mother may experience bleeding of the placenta during pregnancy and this may affect the unborn child. The child born thus may be able to say certain sounds but not be able to speak clearly as the vocal chords may be affected or due to damage in the brain that controls language. There may be a recognised syndrome or disorder that causes language difficulty for the child and is not able to communicate with others. The child may have a lack of stimulation and support to provide the rich language experience necessary to develop speech, language and communication skills. For example at school, the setting may not have an enabling environment to stimulate the child’s different interests necessary for acquiring language. The books, music, songs and so on may not stimulate and interest the child. For most children there is no clear reason as to why there is a delay in the development of speech, language and communication skills. Therefore, an adult should never assume that the child’s speech, language and communication problems are due to hearing loss. It may be that the child is experiencing communicating difficulties that are unrelated to their hearing problems because the child may not have acquired the vocabulary necessary to express his thoughts and actions. It is important to observe the child carefully, closely and to listen to them in different situations to ensure that the teacher is clear about what their needs are, their strengths and difficulties. It is important to observe the child in a range of settings and in both structured and unstructured situations. For example the child can be observed in the classroom; playground or lunch hall and the assessor can identify the child’s needs and plan the next step for the child’s development in speech, language and communication skills. Some children who begin settings with an apparent delay in their skills quickly progress as the child experiences language rich activities. Other children who are shy take a while to develop confidence to speak and express themselves because the child may be shy or reserved by nature. The most reliable assessor will take into account the child’s views, parents’ knowledge of the child and observations from all professionals who are involved with the development of the child. Assessment should be a continuous process and over a period of time so that one can gather evidence to inform and enable appropriate and timely support and provision for the child. The assessor should never be tempted to â€Å"wait and see†. There is a â€Å"window of opportunity†: if a child’s speech, language and communication skills are similar to his peers by age 5 12years then the child is making good progress. If it is not, then the child needs support at an early stage over a period of 2 years so that the child can progress and be at the same level as his peers so it is always better to start now when the problem has been identified. The assessor will enquire about the child’s hearing and request a test if necessary. The assessor will check physiological factors affecting development like vision, cleft palate, motor difficulties. The assessor will show particular awareness and sensitivity to, the needs of a child learning English as an additional language. To encourage and develop the child’s speech, language and communication skills most effectively, the adult needs to position herself face to face as the adult plays and talks to the children. The adult needs to shift her gaze between the activity the child does and the child. For example when the child sees the face of the adult it allows the child to understand the facial expressions and the lip pattern help the child to understand words. The adult must make sure that the child is paying attention each time the adult talks to the child. For example at circle time the teacher must ensure that the child is facing her and not be distracted. The child must be able to concentrate and not play with a piece of string found on the mat. The adult must keep language simple and avoid long and complicated sentences when talking and giving instructions to the child. Long winded sentences confuse and distract the child and the child may not be able to follow. At group time the adult must make sure that the child is seeing the adult’s face. This will help the child to understand emotions and facial expressions when the child is being read a story. The adult must use gestures since this will help and encourage the child to become good communicators. Learning to listen and speak emerges out of non-verbal communication like eye contact, facial expressions and hand gestures. The adult must ensure that there is no background noise that will affect the ability of the child to hear what the adult is saying. If there is noise the child will distracted and lose interest in the lesson. The adult should have knowledge of the child’s use of a dummy at home and should discourage parents to use it because problems arise in speech and the child may not be able to speak and pronounce words clearly. Sucking habits impede progress in speech, language and communication skills since the child interacts less socially with his peers and people around the child. The movement of the tongue is restricted and the child does not talk as much if the child did not have the dummy in the mouth. The dummy should be given to the child at bedtime or when really required and not to keep the child quiet. The adult should talk at a natural pace. If the adult speaks too fast the child will not understand what is being spoken. If the adult speaks very slowly the child loses interest and attention gets diverted since the child has a short attention span. If a child is shouted at and given commands then the child’s speech gets hampered. Shouting, by the child is viewed as unpleasant and jarring to the ear and the lip pattern gets distorted. The child may develop a fear and become withdrawn and afraid in the adult’s presence. If an adult in the school setting is concerned about the speech, language and communication skills of a child then the adult must discuss it with the parents. The adult can approach the parents in a sensitive manner and say the child has a problem with these particular speech sounds and not say that they cannot understand what the child says. With permission the school can seek specialist help so that the child’s needs can be supported appropriately at the right time and right age keeping all the other factors that help towards the building of good speech, language and communication skills. If the child has a delay in speech development, the child will not understand language spoken to them. The child will develop a range of sound speech inappropriate for their age. The child will not develop use of words and sentences appropriate to their age. The child may use language inappropriately. For example saying phrases that do not make sense in context or repeating chunks of language without any meaning. The child may find it unusually difficult to follow rules or join in conversation by looking, taking turns, sharing, interest in a subject and so on. The child may show frustration and be upset and may withdraw from conversation due to non-fluency in language. Sometimes the parents are very anxious about the child’s speech and then this reflects on the child’s behaviour and development. If an adult observes that the child is non-fluent that continues more than 6 months then the adult have to take serious action and appropriate measures should be adopted because it has been seen that with extra support, the child makes good progress. Speech, language and communication difficulties are common among children. Early identification therefore prevents difficulties later on especially in talking, listening, literacy and making friends. How to cite Understanding Child and Young Person Development, Papers

Supporting Aged Communities Community Participation

Question: 1. Evaluating health care processes designed to promote continuum of care that support empowering the older age people. 2. Analysing the way that primary health care processes have adopted to empower older people. Answer: Introduction The primary health care (PHC) is the 360-degree collaborative functionality of health care providers to provide health care services as per the culture, physical environment, and the socio-political and economic structure of a particular community. This healthcare process is guided by principles that include multisectoral collaboration, equity, accessibility, community participation and empowerment (LeMone et al. 2015). In this study, a critical evaluation of primary health care processes and clear analysis of the ways that primary health care processes have adopted is performed to address the empowerment of older people in the primary healthcare services. This critical evaluation and analysis help to understand the application of primary health care principles to empower older people in health and community services. The Primary Health Care Functionality and Principles to Empower old Age Group in Health and Community Services According to Lacas Rockwood (2012), the functionality of primary health care depends on five guiding principles that structure the complete processes, procedures and working in this healthcare sector. These five principles are accessibility, public participation, health promotion, use of technology and intersectoral collaboration. Each and every kind of process developed in PHC system depends on either one or more of these guiding principles. De Maeseneer et al. (2011) studied that primary health care concerns to empower aged group services involve care continuity, providing clinical community services, supporting self-management, education, integrating illness prevention, promoting health and community care development with primary health care approaches. All these processes are shaped as per the guiding principles of PHC. However, Lacas Rockwood (2012) indicated that random and unexpected changes like population demographics, more chronic illnesses, increased healthcare demand and lack of health awareness lead to a depreciation in primary health care services implemented for the old age group. Morley et al. (2013) studied the rationale provided by WHO to empower old age group services in primary health care at the universal level. This rationale indicates there is around 600 million old age people (above 60 years) globally that will accelerate to double by 2025. Till that time every single aged person will face certain chronic health conditions. Therefore, the increasing demands of old age public health care implement the requirement to address the demographic trends and empower healthcare services for the old age group. The PHC services are very effective means to promote and support quality healthcare at local and community level. Smith et al. (2012) studied that primary health care centres are most effective, accessible and workable sources for old age people to gather health recovery. These are principle vehicles to deliver effective old age health care services at the community as well as local level. These PHC centres acquire and implement different approaches or processes that specifically address the health care needs of old age group. These approaches function by adopting certain specific strategies and ways to empower old age group healthcare by providing special care, attention and service delivery. The report critically analysis the existing PHC processes and ways that enhance PHC functionality to address old age empowerment in the community and local healthcare services. 1. According to Beard Bloom (2015), one of the most outstanding and effective primary healthcare processes is the development of age-friendly primary health care. This process is the application of public participation and intersectoral collaboration principles of PHC to deliver old age care empowerment. This process will enable autonomy, combat ageism and support aged health policies at all levels as per WHO. Along with the biological factors, the environmental factors also helps to enhance physical and mental well-being. Therefore, the age-friendly environment provides a specifically determined primary health care ways that work to induce a friendly environment for this age group empowering their healthcare processes (Blas Kurup, 2010). Clegg et al. (2013) studied that age-friendly process in PHC works to improve professional training and education, specific PHC management system for old age group and making healthcare accessibility easier for old age to enhance empowerment. Petterson et al. (2012) studied that 90% of Australian primary healthcare system in response to changing demographics, disabilities of old age and lack of accessibility, have adopted residential aged care assessment and services process to support old age health care empowerment. This process highly addresses the health promotion and accessibility principles of PHC where residential health care is facilitated to comfort and empower the old age vulnerable unable to access the PHC facilities. These residential services are meant to overrule the accessibility issue PHC services for old age people. This process delivers independent living, self-management, comfortable healthcare and specific attention for the old age group of community or local area. Huntley et al. (2012) studied that Victorian aged care centres adopt the agenda of residential care to improve quality and accessibility of PHC service delivery to old age vulnerable. Another PHC process studied by Smith et al. (2012) is an older people acute assessment and management unit in PHC centres. This process is application of accessibility, use of technology and intersectoral collaboration PHC principles in healthcare. This unit functions to improve onsite complex care, ensures safety and provide discharge options like community, home transition care packages to old age group. This process in considered collaboration of multidisciplinary assessment, tailored treatment and consultation care planning processes. The unit established in primary care centres works to manage both patient and organization outcomes. Lacas Rockwood (2012) studied one similar process adopted by Australian Department of Health known as Health assessment for people aged 75 years and older. This process provides a structured process to access the health issues specifically for the old age group. The assessment tools and techniques are designed as per old age health assessment requir ements. Therefore, this process empowers old age care maintenance by determining their physical, functional social and psychological issues of health. Bostock Steptoe (2012) studied another process to provide effective primary health care for old age group is the improvement in safety, performance and accountability. This PHC process is the application of public participation, intersectoral collaboration and health promotion principles. This process functions a framework developed to deliver quick GP services assessment, coordinative healthcare working and prevention of health risk. There are different strategies involves in developing this strong framework to provide quality and safety for old age in PHC environment. The Australian Capital territory primary health care framework involves this process as a very important part to establish quality and safety. 2. The primary health care processes depend on different ways or strategies that help the professional to attain the vision of their particular PHC improvement empowering healthcare for old age. Beard Bloom (2015) studied the ways adopted to deliver age-friendly PHC environment benefiting old age group. There are three key themes of this process that are manipulating the attitudes of professionals, adapting PHC management and making easier accessibility. In the very first theme, the attitude is modified with training and education to change the disrespectful, dismissive, ignorant and careless treatment attitude of professionals. For PHC management strategy to overcome gender issue and language hindrance are managed with effective communication. The health literacy, efficient resources, cost management and minimising waiting times were ways adopted to deliver easier accessibility in PHC scenario. Lacas Rockwood (2012) studied that special consultation services, continuity of care an d changing the physical environment for old people also support age-friendly primary health care. According to Petterson et al. (2012), residential aged care assessment and services are service options provided by PHC that helps to address the special care needs of old age group. The strategies for this process involve provider-user partnership, education, self-management and self-care. The provider-user partnership helps to deliver collaborative and integrated health care beneficial for both users as well as providers. In this partnership sharing to responsibility is the major process that delivers self-management. The strategy of education helps the professional in delivering effective knowledge to the patient that is beneficial for their health. Further, self-management and care are part of education where the vulnerable is taught the ways to manage their own health in an effective manner. In this manner, residential aged care delivers old age empowerment in health care. Smith et al. (2012) studied the ways adopted to address the process of the assessment and management unit in PHC centres. The strategy was to perform assessment of patient medication, patient continence, patient immunisation, physical function, psychological function and patient social function. This overall assessment strategy helps to understand the overall health condition, nutrition status, social activities, oral health and dentition for the old age group. This process uses the most recent technologies like electronic data, e-prescriptions, medical records etc. to manage the care process. This assessment process is a detailed one specifically designed for 75 years and above patients to address empowerment and quality PHC services. According to Bostock Steptoe (2012) for quality, performance, safety and accountability betterment process in PHC services involves various action areas that promote quality and safety for the old age group. The very first action involves following national authorities, policies and regulations provided for the old age group to establish performance in primary health care. The second action is to implement or manipulate organization infrastructure as per the requirements of old age patient or provide special care zones in the organization for old age group patients. The next action or strategy is to promote innovation and research related to old age treatment and care. Further, the action involves effective processes to monitor and evaluate the health and well-being outcomes to establish quality in healthcare of old age people (Berwick, 2010). Conclusion The contemporary processes of primary healthcare of elder people are completely involved in addressing the principles and vision of effective health care in coming future. Some of the most justified processes that address the PHC principles application in healthcare scenario and are helpful in empowering old people healthcare are, the age-friendly environment, residential aged care, assessment and management unit for elders and improving safety, quality, performance and accountability in PHC functionality. The ways or strategies that are helpful in delivering effective processes involve education, staff training, proper management, professionalism, and much more. These ways for each specific process are evaluated in the report indicating that these processes persist a promising approach of providing good healthcare for older people in primary health care. With the use of such effectual processes, it would be easier to manage the increasing older health demands in coming future global ly. References Books Berwick, D. M. (2010).Escape fire: designs for the future of health care. John Wiley Sons. Blas, E., Kurup, A. S. (2010).Equity, social determinants and public health programmes. World Health Organization. LeMone, P., Burke, K., Dwyer, T., Levett-Jones, T., Moxham, L., Reid-Searl, K. (2015).Medical-surgical nursing. Pearson Higher Education AU. Journals Beard, J. R., Bloom, D. E. (2015). Towards a comprehensive public health response to population ageing.Lancet (London, England),385(9968), 658-661. Bostock, S., Steptoe, A. (2012). Association between low functional health literacy and mortality in older adults: longitudinal cohort study.Bmj,344, e1602. Clegg, A., Young, J., Iliffe, S., Rikkert, M. O., Rockwood, K. (2013). Frailty in elderly people.The Lancet,381(9868), 752-762. De Maeseneer, J., Willems, S., De Sutter, A., Van de Geuchte, I., Billings, M. (2011). Primary health care as a strategy for achieving equitable care. Health Systems Knowledge Network of the World Health Organizations Commission on Social Determinants of Health. Huntley, A. L., Johnson, R., Purdy, S., Valderas, J. M., Salisbury, C. (2012). Measures of multimorbidity and morbidity burden for use in primary care and community settings: a systematic review and guide.The Annals of Family Medicine,10(2), 134-141. Lacas, A., Rockwood, K. (2012). Frailty in primary care: a review of its conceptualization and implications for practice.BMC medicine,10(1), 1. Morley, J. E., Vellas, B., van Kan, G. A., Anker, S. D., Bauer, J. M., Bernabei, R., ... Fried, L. P. (2013). Frailty consensus: a call to action.Journal of the American Medical Directors Association,14(6), 392-397. Petterson, S. M., Liaw, W. R., Phillips, R. L., Rabin, D. L., Meyers, D. S., Bazemore, A. W. (2012). Projecting US primary care physician workforce needs: 2010-2025.The Annals of Family Medicine,10(6), 503-509. Smith, S. M., Soubhi, H., Fortin, M., Hudon, C., ODowd, T. (2012). Managing patients with multimorbidity: systematic review of interventions in primary care and community settings.

Oil Deregulation in the Philippines free essay sample

Contained in a November 5, 1997 Supreme Court decision, which deemed the first oil deregulation law, the Republic Act No. 8180, to be unconstitutional1, is a brief history of the Philippine oil industry. Due to an oil crisis occurrence in 1997, the government created the Oil Industry Commission (OIC) to regulate the goings-on of businesses working with oil. The OIC can fix prices of petroleum products, control refinery capacities, license new refineries, and regulate the general operations of affected businesses. The digest also pointed out the control of foreign companies over the industry, where almost every operations in the country at the time is owned by these companies. To break the foreigners control, with President Marcos initiative, the Philippine National Oil Corporation (PNOC). PNOC, operating as PETRON, was the first Philippine-owned Corporation in the market. The Oil Price Stabilization Fund (OPSF) was then created,2 in 1984, as a buffer against the fluctuations in oil prices. Basically, the OPSF compensates by allowing companies to reimburse from the fund whenever prices change due to either exchange rate adjustments or world oil market prices. We will write a custom essay sample on Oil Deregulation in the Philippines or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Caltex, Shell, and PNOC, or Petron, were the only three remaining oil companies in the country came 1985. Under the Cory Aquino administration, the Energy Regulatory Board (ERB) was created with the purpose of, much the same as the functions of the OIC, regulating operations of oil companies with the addition of paying the OPSF to recover the importers expense from importing whenever there is petroleum product-deficit to temporarily adjust price levels, among others. 3 Department of Energy (DOE) was created on December 9, 1992, with its focus to privatize energy-related government agencies, to deregulate power and energy industry, and to reduce oil-fired plants dependency resulting to Petrons privatization in 1993. 4 In March 1996, Republic Act No. 8180, which is the law discussed in the Supreme Court decision, was enacted. This law aims to expel all government control over the oil industry and is to be done within two phases. 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. To make things official, six months after the first phase, President Ramos signed an Executive Order that fully deregulates the oil industry. The passage of the bill incited protests from groups with the Bagong Alyansang Makabayan (Bayan). In October 1997, because of a strike, the Supreme Court issued a temporary restraining order (TRO) against the law and, eventually, deemed as unconstitutional in the decision being discussed earlier on. 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. No combinations in restraint of trade or unfair competition shall be allowed. †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. Two months after, the act was replaced by the now-existing R. A. No. 8479. The newer act retains almost everything except the unconstitutional provisions present in the previous law. A petition was filed by Cong. Enrique Garcia criticizing the very short duration (five months) before the full deregulation phase be effective provided in Section 19 of the Act. Garcia states that the provided duration is too short, making it hard for new comers, and the market will still dominated by the big three, making it unconstitutional because theres still monopoly/oligopoly. 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. 7 Fast-forward to today, many petitions has been filed to repeal or amend the act but not one has been actually successful. 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. 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. Economically, is it really favorable to the Filipino people or the favor only applies to the corporations involved in the downstream oil industry? 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. B. Statement of the Problem The 1987 Constitution has entailed the adaptation of an implicit competition policy framework which refers to all laws, government policies and regulations aimed at the establishment and maintenance of competition that aims to promote, advance, and ensure competitive market conditions by the removal, as well as to redress anti-competitive results of, public and private restrictive practices. 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. 3247 (An Act to Prohibit Monopolies and Combinations in Restraint of Trade), The Philippine Corporation Code Batas Pambansa Blg. 68, and Executive Orders signed to increase Trade and Investment Liberalization. 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. However, the actualization of the ideals of the framework seems lacking in the reality that most of these industries remain structurally monopolistic or oligopolistic. A casual observer could commit to the rash conclusion of the ineffectiveness of the changed stance of the Philippine government. 10 The Oil Deregulation law was enacted to address this new framework of the Constitution. The law seeks to attain â€Å"a truly competitive market that runs with fair prices and a suitable supply of environmentally-clean and high quality petroleum products. 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. But for years it has been Petron Corp, Chevron Corp. , and Pilipinas Shell that are enjoying high market revenues. Up until now, the big three have remain to be most profitable in the market. Notably Petron Corp. at the top, followed by Pilipinas Shell and Chevron Corp. The big three still have 68% of the market share, which has improved from before but still with over a hundred of competitors, the number is staggering and it remains a question why the big three are still controlling the industry even with the oil deregulation law is in effect for 15 years. With the Constitution’s anti-monopolistic agenda particularly, Sec. 19 Article XII â€Å"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. 12 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. The time when the current oil deregulation law was enacted, February 1998, gasoline costs around just P12. 62 and now it went up to 300% ranging from P48. 65 to P54. 64 per liter. These gasoline prices are being questioned by the consumers for the price hikes are not supported by facts as to why gas prices need to be raise. The people are forced to just accept whatever reason the oil companies and the Department of Energy gives. 13 Given these issues, it would seem that the oil deregulation law is unconstitutional, a fact which the paper seeks to determine. 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. The study aims to determine whether the law is constitutional: Does its provisions and effects violates the constitutional provision to achieve market competitiveness for public welfare? Republic Act 8479 will be compared to deregulation laws in other countries. Because of this, the study will be able to give comparison as to the success of other deregulation laws. 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. Contrary to expectations, diesel and other petroleum product prices have consistently risen at a seemingly accelerating rate unfair to the average Filipino. 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. It is therefore in both private and public interests that the policy’s actual effect and its constitutionality be tested through empirical analyses. Results should be disseminated and scrupulously explained to the public at large to put to rest the clashing beliefs of the two concerned parties. If it has been found that the oil deregulation law is against the constitution or perhaps failed to induce competitiveness, the government would do well to reconsider and implement new policies or even revise or amend it for the sake of public welfare. 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. A democratic government such us the Philippines’ is, after all, by definition supposed to cater to public interest and welfare. E. Scope and Limitations of the Study The thesis aims to closely determine whether or not R. A. No. 8479, the Downstream Oil Industry Deregulation Act of 1998, is consistent with what the constitution provides for. The researchers will interview lawyers to see if there is an unconstitutional provision within the acts content and from economists to assess if the effects from the acts implementation is really in a positive note. Included in the interview will be possible solutions, amendments or replacements to the still-contentious Oil Deregulation Law. Data-gathering will take place within Metro Manila and during the 2nd term of the academic year 2013 2014. II. REVIEW OF RELATED LITERATURE INTRODUCTION The researchers will cover four important topics central to the thesis. The first topic covers the Competition Policy framework of the 1987 Constitution. Included here are policies that ensure a competitive environment, which is in line with the goal of the Oil Deregulation Law. Reviewing the framework will help determine whether the law is actually doing its job to keep the playing field levelled, preventing monopolies. The second one will be about the transition from RA 8180 to RA 8479. Using the petition of Rep. Garcia against the R. A. 8479 in August 1999 as a source, the first part of our literature review will discuss the unconstitutional provisions R. A. No. 8180 that was not present in the revamped R. A. No. 8479. To know what transpired before the passage of the RA 8479 is important as it will give context and will direct where the thesis will go. After scrapping all the unconstitutional provision that made the ODL of 1998 to be successfully enacted, does the new law is clear of any constitution-violation? Apparently not, as the third part will discuss the different reasons from various persons and groups why RA 8479 is unconstitutional. Sources used in this part will cover news articles, House and Senate bills. Discussed in this part are bills that seek to either amend or repeal the ODL, the grounds that makes the law unconstitutional and the violated provision in the Constitution. While enumerating the grounds, this part will touch on the effects of the ODL to the oil industry, and to the people. This part is relevant because the grounds that will be listed can be our bases as to what our recommendations will be. The main objective of the ODL is to promote a truly competitive market, but did the law actually do so? The last part of the literature review will give insights about the status of the oil industry as of today. As the main source of the last part, the fairly recent paper entitled Philippine Oil Deregulation and the Oil Crisis: A Policy Issue Paper by Marlou Mumar of University of the Philippines. The paper roughly discusses the oil crisis in general, the ODL and its effects, and various suggested solutions to lessen oil prices. To provide a more broad view on the matter being discussed, the author interviewed five people from different sectors and of different specializations. The Constitution provided in Section 19, Article XII that deregulation must be only allowed if the public needs such action. Thats why its 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. A. Competition Policy One of the most tremendous shift from the 1973 constitution to the 1987 constitution was the implementation of competition policy framework14 that will make sure that markets in the country is free from anti-competitive practices. This government policy shall promote laws and measures that will maintain the level of competition in markets as well as affect the industry structures. Since then, deregulation of select economic industries, such as civil aviation, telecommunication, electric power, and downstream oil industry, have been implemented. A review of the Philippine Tariff Commission’s statement regarding the competition policy will be used in order to have knowledge on market industries, deregulation, and competition laws in the country. Here, we learn that the oil deregulation law is a product of the competition policy that the 1987 constitution adapted. Competition policy contains actions to keep or create competiveness in economic industries, which taking away the power of the government to take control of it, is included. Deregulation and other measures are used in order to promote economic efficiency. Economic efficiency is comprised of three components namely: (1) Productive efficiency; (2) Allocative efficiency; and (3) Dynamic efficiency. All of these components are essential to achieve competitiveness in markets, correction of market failure, and enhancement of consumer welfare. 15 Market structures are also enumerated and described here. There are five (5) market structures that are given here specifically: (1) Perfect Competition; (2) Monopoly; (3) Natural Monopoly; (4) Monopolistic Competition; and (5) Oligopoly. The first one is the goal of the oil deregulation law, to have a perfect competition in the oil market. In this market structure, there are several players entering in and out of the industry, selling similar products with fair competition. Many argue that the oil industry is an oligopoly of the big three (Petron, Shell, and Caltex), meaning that they can influence the price and output of the market by themselves. This assumption will be studied later on. 16 Sources of market failure are also discussed, which a monopoly can cause. If there is a monopoly in a market, income distribution is minimal. Also, consumer welfare is not guaranteed for monopolistic practices produce abusive price controls and inefficient production. These things may sound familiar, for many people now complain about these things against the government regularly. 17 Discussion of anti-competitive agreements are also given. Horizontal agreements, where firms agree to the pricing of a good, giving them ability to control prices. In this agreement, collusion between companies happen. These things can be solved with prohibitions or authorizations, which are few examples of solution for anti-competitive practices. 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. The oil deregulation law’s goal is part of the framework that the constitution wants to achieve. The statement by the Philippines Tariff Commission about competition policy is an evidence that the government should issue anti-competitive practices in the country. Issues about the oil market today, regarding possible oligopoly, predatory pricing, and consumer well-being should be taken a look at. The literature gave the definition of an oligopolistic market and indications of anti-competitive practices. 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. 19 B. Transition from R. A. No. 8180 to R. A. No. 8479 In reviewing the constitutionality of the Republic Act 8479, it is necessary to know what was changed from the first oil deregulation law which was the Republic Act 8180, â€Å"An Act Deregulating the Downstream Oil Industry of 1996†. The petition of Rep. Garcia regarding the unconstitutionality of Sec. 19 of R. A. No. 8479 will be analyzed to give a brief background regarding the law. The first one was declared by the Supreme Court unconstitutional in November 5, 1997 for mainly three reasons. First, the provisions laid down were already advantageous to the major competitors; it will give more power to the oligopoly of the big three. Second, it will block the entry of effective competitors. Third, the law will sire an even more powerful oligopoly whose power to the market will take advantage of the consumers’ general welfare. 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. 8479 is cleared of any constitutional flaws. The petition seeks to know if the new oil deregulation law is indeed constitutional and will ensure equal competitive market and welfare of its consumers. He pointed out that the court’s power of judicial review should protect its people from laws that could harm their rights. The case focused on the changed provisions of R. A. 8479 particularly; the 4% tariff differential, minimum inventory level, and predatory pricing provisions. 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. The 4% tariff differential from R. A. 8180 was too much for the new competitors to compete with the established oil companies here in the country. With Sec. 6 of the R. A. No. 8479, they scrapped the former revision and imposed the tariff rates single and uniform for all players. The minimum inventory level requirement was also removed from the R. A. No. 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 last one was the issue on predatory pricing; Congressman Tinge suggested the Arena-Turner test and proposed to redefine predatory pricing. 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. 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. 8479. The law allows the free participation of the private sectors and cooperatives in developing more gasoline stations. Moreover, the law also requires that there should be initial public offering of shares equivalent to 10% of the capital investments by oil companies. 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. To further ensure that the rights of the consumers are protected, R. A. 8479 will form a task force with members of the DOJ and DOE to investigate anomalies in the deregulated oil industry. 22 The petitioner turned his attention to the phases that happened after the approval of the R. A. 8479 mainly, the transition phase and the full deregulation phase. In the transition phase, all non-pricing facets were lifted. 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. The automatic oil pricing mechanism was maintained in order to estimate the local prices of gasoline products in the global market. A market-oriented formula was also approved by the Energy Regulatory Board (ERB) to know the wholesale posted price of gasoline products to be determined by the adjustments of the Singapore Posting of refined petroleum products, the Singapore Import Parity or the crude landed cost. 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. 471 in March 14, 1998. 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. 00 to one US dollar. 23 Rep. Garcia pointed out four reasons for the unconstitutionality of R. A. 8479. In his petition, he said that the Sec. 19 of R. A. 8479 which grants for the five-month transition phase, shortened by Pres. Ramos, is pro-oligopoly, anti-competitive, and is against the economic welfare of the people. And therefore, the law was processed unconstitutionally for being foul and disparaging infringement of the constitutional policy and command embodied in Article XII, Section 19 of the 1987 constitution against monopolies and combinations in restraint of trade. It also violates the goal of the oil deregulation law, which is to make the oil market competitive under a system of fair prices. 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. Lastly, because of the hastened transition, he pointed out that Sec. 19 should be declared null and void for the transition and full deregulation should have price controls that should protect the public interest from the big three oligopoly’s price fixing and overpricing. 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. 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. 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. Because of this, he suggested that the transition phase should be prolonged while the big three are still dominating the market with price controls so that the public can be protected from a possible overpricing or fixed pricing from the big three. 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. 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. 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. 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. 27 Interposing economic arguments by the public respondents claim that price regulation is not beneficial to the public as well as to the economy. They added that the acceleration of full deregulation is based on existing conditions and sound economic theory. Shell Corp. filed a rejoinder and further added that if Sec. 19 were to be dismissed, there will never be full deregulation and would provide a new law that is different from what was already enacted. And, extending the transition period would bring back the automatic pricing mechanism which means that it will only replace the mode of price regulation by still another regulatory scheme. 28 As Garcia listen to these counter arguments, he said that he was just asking for the constitutionality of Sec. 19, not the essence of it. For he claims that Sec. 19 is anti-competitive, thus it is contrary to what the constitution says. He added that conviction against monopolies and combination in restraint of trade should be given legal consequence by the court. Garcia insists that the court should consider his petition that the downstream oil industry should go back to partial deregulation, in which the main features of deregulation would be allowed but the retail prices of petroleum products would still be regulated through an automatic pricing mechanism. 29 The Supreme Court Justice at that time, Corona, thought that his petition lacked legal basis even though it seem beneficial to the public. He added that the job of the Supreme Court was just to interpret and apply the law as conceived and approved by other departments of the government in accordance with the prescribed procedure. The knowledge and to rescind or alter laws were the job of the legislation. Furthermore, he stated that if they allowed an open ended transition period with pricing regulation by the government, the liberalization of the downstream oil industry would have been suspended. Then, it would bring about a free interaction of market forces that would eventually lead to hindrance of fair competition in the market. He also pointed out that to execute full deregulation depending on the number of new players would be to legislate a floating provision reliant on the happening of a conditional event. In that way, the goal of R. A. 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. 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. Policy issues are within the domain of the political branches of government and of the people themselves as the repository of all state powers. 30 The case gave important information that will be needed in the study. It supplied a background on the changes covering the debunked R. A. 8180 to the R. A. 8479. The issues on the 4% percent tariff differential, minimum inventory level, and predatory pricing. All of these were changed or even removed from the first one. These three were the reasons for the declaration of the supreme court of the first oil deregulation‘s unconstitutionality. With these three gone, the R. A. 8479 should be cleared of any constitutional flaws. Petitioner Rep. Garcia thought otherwise. He insisted that the rushed transition period was unconstitutional for it is pro-oligopoly and it did not bring in fair competition in the market. With the rushed deregulation, it could have provided more power to the oligopoly to take control of prices and also the market. The court, respondents, and the petitioner acted upon the petition and in the end the court dismissed the petition for the reason that the petitioner failed to show that the law is violating the Sec. 19, Article XII of the constitution. Though Garcia pointed out interesting issues about the transition phase, he did not discuss the other cause of the acceleration of the deregulation which is the International Monetary Fund (IMF). The hasty transition together with the IMF’s role will be discussed on the thesis proper, for we believe that there other reasons that could have brought the transition to be accelerated. He was correct by saying that the accelerated deregulation was pro-oligopoly for the SC Chief Justice said that what was Garcia insists could be advantageous to the public. And, what is advantageous to the public is what the constitution wants for it is the protector of the people. The question on whether who will decide to repeal or even review oil deregulation law needs to be addressed. The Supreme Court said here that they do not have that power, and this issue will be talked about on the thesis part. C. What People, Groups Say About the Oil Deregulation Law Many are those who demand the amendment or the repeal of the ODL. The most relevant reason for those demands is that it does not comply with the Constitutional provision that says to prohibit monopolies. 31 But the researchers found more reasons for the laws amendment or repeal. Mostly politicians, they cited various inconsistencies and irregularities found on the ODL. Some proposing to amend the law simply because the goal of the law never came to fruition. This section will shed some light on the various reason found during research. Everything found in this section is relevant to the thesis, as these can be used as bases on the recommendations part of this study. In a 2008 article, the militant group Kilusang Mayo Uno (KMU) calls for the ODLs repeal and the removal of VAT on oil-related products. According to the KMU, pump prices at the time were P11 higher than what it should be. To support the claim, KMU presented a data. Dubai crude prices are pegged at $97/liter on two different dates: November 2007 and September 2008. The diesel prices here on the Philippines were P37. 95/liter and P49/liter respectively, showing the P11. 05 difference. This is because, according to the group, of the improper pricing imposed by the dominant oil companies, meaning monopoly is still present. The same is the reason why they want to repeal the law, because obviously the monopoly is still present. 32 Art. XII, Sec. 19 of the Constitution states the State shall regulate or prohibit monopolies when the public interest so requires. Supported by different transport groups, Bataan Rep. Enrique Garcia claims that the above-mentioned provision of the constitution is violated by the ODL. Citing the Supreme Court,33 he said that the control on the local oil industry is by foreign oligopolies. Also, he states the big three are the only relevant companies in the industry. The scrapping of the law, as he suggests, will ultimately free the people from their suffering from the prices set by oligopolies. 34 The Court of Appeals (CA) declares the ODL as unconstitutional. In the CAs ruling, Sec. 14 (e) of the ODL which gives Dept. of Energy (DOE) total control over the industry during national emergencies,35 violates the Art. VI, Sec. 23 of the Constitution. The Constitutional provision mandates the Congress to determine if theres a national emergency and a need to warrant the exercise of the Presidents emergency powers. 36, 37 1-Utak party list, led by Rep. Vigor Mendoza, says the ODL is vague, therefore unconstitutional. In Sec. 11 of the law, it defines two prohibited acts: cartelization and predatory pricing or unreasonable pricing. 38 Mendoza says that, first, in order to determine whether unreasonable pricing exists, there should be a crystal-clear definition of what fair price really meant which is not present in the ODL. The second act described in Sec. 11 is penal in nature and its enforcement will fail when theres a lack of guidelines in the law, making ODL unconstitutional. 39 Representatives Rufus Rodriguez and Maximo Rodriguez filed a bill repealing RA 8479 and reestablishing the OPSF. According to them, the ODL did not fulfill the goal it was written for. Instead of creating a truly competitive market, the law did the contrary. The promise that entrance of new entrants to the industry will create a competitive environment was broken as these new players get their sources from the big three, which will dictate the prices, ultimately violating the anti-monopoly provision of the Constitution. 40 The bill, to solve the problem with prices, wants to regulate the oil industry and to reintroduce the OPSF. With the fund present, it will lessen oil prices by balancing the price levels caused by fluctuations in the foreign exchange and additional costs from importation. The bill listed sources of the fund and the promulgation of the bills rules will be by the Secretary of Finance with the DOE Secretary as consultant. 41 Similar to the previous bill, HB 347 aims to regulate the downstream oil industry because of the same reasons. Unlike the previous one, this bill has a provision on how the industry will be regulated. The rules and its implementations will be formulated and issued by the DOE, with assistance from various government agencies, 60 days after this bills effectivity. Companies if found guilty of cartelization or monopolization, will be fined by at least P100,000 but not more than P1,000,000 plus possible business suspension or termination as determined by the DOE. The bill also includes a public information campaign to explain how the regulation works. 42 To summarize, the following are the grounds for the Oil Deregulation Law’s unconstitutionality: 1. That cartelization by the dominant companies is still present in the country, causing consistent price hikes, which is contrary to what the Oil Deregulation Law aims,43 ultimately violating the anti-monopoly provision of the Constitution44 2. That, during national emergencies, the DOE is vested with total control over the oil industry,45 which is contradictory with what the Constitution provides. The Constitution gives the Congress the responsibility (1) to determine whether the country is in a national emergency and when the country is, (2) to warrant the President to take control over any industry. 46 3. That the Oil Deregulation is vague, not defining what a â€Å"fair price† is, therefore the enforcement of the law will fail since there are no guidelines to determine whether an oil company is committing a crime, the unreasonable pricing,47 or not. The lack thereof now promotes monopolization as these big companies can increase their prices without thinking of any consequences. D. State of the Oil Industry Today The oil industry has changed over the years since the enactment of the Oil Deregulation Law. To review whether the said law is indeed free from constitutional flaws, we would have to take a look at the oil industry as of today. The effects of the R. A. 8479 should have been felt for its been a decade of progressively implementing the law. To know the state of the oil industry today, a review of a policy issue paper regarding the oil industry of today is needed. Marlou B. Mumar’s Philippine Oil Deregulation and the Oil Crisis: A Policy Issue Paper made in February 20, 2010 will be used to have a better background on what is the state of the oil market of today. The paper produced a brief a background about what went wrong with the oil market before the law was implemented. The deficit of the OPSF (Oil Price Stabilization Fund) that was used to cover up increases in gas prices was threatening to undermine the economy in 1995. Because of that, it triggered former Pres. Fidel V. Ramos to bring back the plan of creating the Oil Deregulation Law. An effort to avoid such fiscal deficit, the R. A. 8180 was enacted in 1996 which was later declared unconstitutional. The whole saga was discussed a while ago. Afterwards, a new oil deregulation law was implemented, which is now the R. A. 8479. Fifteen years have passed, six out of 10 Filipinos are in favor to scrap the law. 48 IBON foundation, an organization opposed to the oil deregulation law said that it just fortified the oligopoly of the big three for they are permitted to increase gas prices anytime. Due to this, other oil companies follow the trend and also pump the prices up resulting for a 535% increase in oil prices from 1996 to now. The effects of the law have not been felt by the consumers because of these high prices. 49 The consumers don’t know much about the effects of the oil deregulation law because they tend to judge it by looking at the price hike that has happened. Even though the downstream oil industry has maintained a meek growth,50 with the new competitors have invested worth 30 billion pesos in the market, the people doubt that the entry of these new oil companies guarantee fair prices for them. Because of this, the people does not buy that the oil deregulation law attained its social objectives of just prices, sufficient, and constant delivery of clean and high quality gas products. 51 What the consumers do not know is that the cause of such high prices were not caused by the R. A. 8479. According to the Independent Review Committee in 2005, â€Å"The main cause of oil price increases was the effect of major peso devaluation and increases in the international price of oil especially since we import practically all our oil product requirements. To summarize it, the increase in oil prices was a result of the government suggesting the players to increase the prices over a long period of time rather than rising it one time big time. Without a doubt, there is an oil crisis ongoing today. 52 With the United States experiencing its worst economic state, the boom of high oil prices and as well as other economic things is inevitable. Former Pres. Gloria Macapagal-Arroyo describes this as an â€Å"oil crisis of global proportions. † Today, two futures markets namely, London-based International Petroleum Exchange (IPE) and the New York Mercantile Exchange (NYMEX) set the prices of petroleum. Here, many traders sell oil products in paper or also called as â€Å"paper oil† on which they sell at a higher price. This scenario has become abundant, and eventually become the reason for the price hikes that the country experiences for the Philippines, heavily depending on foreign oil production, buy petroleum when the cost is at its peak. This has become a huge investment for international oil players. It is said for every 570 â€Å"paper barrels of oil† there was only one underlying physical barrel of oil. The paper oil barrels pull the cost of the underlying barrel of oil, dictating the cost of oil. 53 This only refute what most people think about the price hikes that are going on, it has to be something about the supply and demand of it. It is said that 60% of today’s crude oil cost is pure assumption driven by large banks and circumvent funds. 54, 55 Also in the paper, the different alternatives on solving the oil crisis here in the Philippines. Through the simplified stakeholders analysis, where the author simplified proposed solutions by various stakeholders, the author explained how each of the solutions effects if its the alternative used. There are six proposals included in the paper to solve the crisis: (1) Better implementation of Oil Deregulation Law (ODL); (2) Amendment of the ODL; (3) Scrapping of the ODL; (4) Removal of the 12% VAT on oil; (5) Finding of alternative sources of energy; and (6) Country-to-country oil agreements. 56 The first alternative was based from an Independent Review Committee report on the ODL with Carlos Alindada as chair which tells that the law is actually needed, the oil prices are actually justified which is why oil companies are actually experiencing losses. The report has four recommendations: (a) more effective and regular monitoring oil prices; (b) better initiatives against illegal, unsafe, unfair practices in oil service stations; (c) DOE should be in an anti-subsidizing stand; and (d) to make Petron, partly government-owned, as a price moderator for price-basing since, the report pointed out, Petron is a refiner and a market leader. 57 The second alternative is for the laws amendment. With this, deregulation is still necessary, an improvement is just needed to achieve its actual goal a truly competitive market. One congressman is mentioned, namely Rep. Singson of Ilocos Sur, which made bills to amend the law for better information-dissemination and competition-promotion. The specific sections referenced are 14 (Monitoring) and 15 (Additional Powers of the DOE Secretary). 58 The third calls for its repeal. Consumer and Oil Price Watch (COPW) chairman Raul T. Concepcion calls for regulation since, under a deregulated arena, refineries opt to not use Dubai prices as their basis instead they use the Mean of Platts Singapore which is usually higher, and another factor for the prices is competition. Another point raised by Rep. Rufus Rodriguez of Cagayan de Oro in his House Bill 4262 is that the ODL does not actually foster competitive market and instead strengthened the power of the dominant companies, stressing out that the supply of the new entrants come from them hence prices are still controlled by the dominant companies. The bill also calls for the comeback of the OPSF. Much the same, Kilusang Mayo Uno (KMU) says oil cartel is still existent in spite of the deregulation. To support the claim, KMU presented a data. Dubai crude prices are pegged at $97/liter on two different dates: November 2007 and September 2008. The diesel prices here on the Philippines were P37. 95/liter and P49/liter respectively, showing an P11. 05 difference. 59

Oil Deregulation in the Philippines free essay sample

Contained in a November 5, 1997 Supreme Court decision, which deemed the first oil deregulation law, the Republic Act No. 8180, to be unconstitutional1, is a brief history of the Philippine oil industry. Due to an oil crisis occurrence in 1997, the government created the Oil Industry Commission (OIC) to regulate the goings-on of businesses working with oil. The OIC can fix prices of petroleum products, control refinery capacities, license new refineries, and regulate the general operations of affected businesses. The digest also pointed out the control of foreign companies over the industry, where almost every operations in the country at the time is owned by these companies. To break the foreigners control, with President Marcos initiative, the Philippine National Oil Corporation (PNOC). PNOC, operating as PETRON, was the first Philippine-owned Corporation in the market. The Oil Price Stabilization Fund (OPSF) was then created,2 in 1984, as a buffer against the fluctuations in oil prices. Basically, the OPSF compensates by allowing companies to reimburse from the fund whenever prices change due to either exchange rate adjustments or world oil market prices. We will write a custom essay sample on Oil Deregulation in the Philippines or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Caltex, Shell, and PNOC, or Petron, were the only three remaining oil companies in the country came 1985. Under the Cory Aquino administration, the Energy Regulatory Board (ERB) was created with the purpose of, much the same as the functions of the OIC, regulating operations of oil companies with the addition of paying the OPSF to recover the importers expense from importing whenever there is petroleum product-deficit to temporarily adjust price levels, among others. 3 Department of Energy (DOE) was created on December 9, 1992, with its focus to privatize energy-related government agencies, to deregulate power and energy industry, and to reduce oil-fired plants dependency resulting to Petrons privatization in 1993. 4 In March 1996, Republic Act No. 8180, which is the law discussed in the Supreme Court decision, was enacted. This law aims to expel all government control over the oil industry and is to be done within two phases. 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. To make things official, six months after the first phase, President Ramos signed an Executive Order that fully deregulates the oil industry. The passage of the bill incited protests from groups with the Bagong Alyansang Makabayan (Bayan). In October 1997, because of a strike, the Supreme Court issued a temporary restraining order (TRO) against the law and, eventually, deemed as unconstitutional in the decision being discussed earlier on. 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. No combinations in restraint of trade or unfair competition shall be allowed. †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. Two months after, the act was replaced by the now-existing R. A. No. 8479. The newer act retains almost everything except the unconstitutional provisions present in the previous law. A petition was filed by Cong. Enrique Garcia criticizing the very short duration (five months) before the full deregulation phase be effective provided in Section 19 of the Act. Garcia states that the provided duration is too short, making it hard for new comers, and the market will still dominated by the big three, making it unconstitutional because theres still monopoly/oligopoly. 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. 7 Fast-forward to today, many petitions has been filed to repeal or amend the act but not one has been actually successful. 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. 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. Economically, is it really favorable to the Filipino people or the favor only applies to the corporations involved in the downstream oil industry? 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. B. Statement of the Problem The 1987 Constitution has entailed the adaptation of an implicit competition policy framework which refers to all laws, government policies and regulations aimed at the establishment and maintenance of competition that aims to promote, advance, and ensure competitive market conditions by the removal, as well as to redress anti-competitive results of, public and private restrictive practices. 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. 3247 (An Act to Prohibit Monopolies and Combinations in Restraint of Trade), The Philippine Corporation Code Batas Pambansa Blg. 68, and Executive Orders signed to increase Trade and Investment Liberalization. 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. However, the actualization of the ideals of the framework seems lacking in the reality that most of these industries remain structurally monopolistic or oligopolistic. A casual observer could commit to the rash conclusion of the ineffectiveness of the changed stance of the Philippine government. 10 The Oil Deregulation law was enacted to address this new framework of the Constitution. The law seeks to attain â€Å"a truly competitive market that runs with fair prices and a suitable supply of environmentally-clean and high quality petroleum products. 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. But for years it has been Petron Corp, Chevron Corp. , and Pilipinas Shell that are enjoying high market revenues. Up until now, the big three have remain to be most profitable in the market. Notably Petron Corp. at the top, followed by Pilipinas Shell and Chevron Corp. The big three still have 68% of the market share, which has improved from before but still with over a hundred of competitors, the number is staggering and it remains a question why the big three are still controlling the industry even with the oil deregulation law is in effect for 15 years. With the Constitution’s anti-monopolistic agenda particularly, Sec. 19 Article XII â€Å"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. 12 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. The time when the current oil deregulation law was enacted, February 1998, gasoline costs around just P12. 62 and now it went up to 300% ranging from P48. 65 to P54. 64 per liter. These gasoline prices are being questioned by the consumers for the price hikes are not supported by facts as to why gas prices need to be raise. The people are forced to just accept whatever reason the oil companies and the Department of Energy gives. 13 Given these issues, it would seem that the oil deregulation law is unconstitutional, a fact which the paper seeks to determine. 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. The study aims to determine whether the law is constitutional: Does its provisions and effects violates the constitutional provision to achieve market competitiveness for public welfare? Republic Act 8479 will be compared to deregulation laws in other countries. Because of this, the study will be able to give comparison as to the success of other deregulation laws. 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. Contrary to expectations, diesel and other petroleum product prices have consistently risen at a seemingly accelerating rate unfair to the average Filipino. 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. It is therefore in both private and public interests that the policy’s actual effect and its constitutionality be tested through empirical analyses. Results should be disseminated and scrupulously explained to the public at large to put to rest the clashing beliefs of the two concerned parties. If it has been found that the oil deregulation law is against the constitution or perhaps failed to induce competitiveness, the government would do well to reconsider and implement new policies or even revise or amend it for the sake of public welfare. 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. A democratic government such us the Philippines’ is, after all, by definition supposed to cater to public interest and welfare. E. Scope and Limitations of the Study The thesis aims to closely determine whether or not R. A. No. 8479, the Downstream Oil Industry Deregulation Act of 1998, is consistent with what the constitution provides for. The researchers will interview lawyers to see if there is an unconstitutional provision within the acts content and from economists to assess if the effects from the acts implementation is really in a positive note. Included in the interview will be possible solutions, amendments or replacements to the still-contentious Oil Deregulation Law. Data-gathering will take place within Metro Manila and during the 2nd term of the academic year 2013 2014. II. REVIEW OF RELATED LITERATURE INTRODUCTION The researchers will cover four important topics central to the thesis. The first topic covers the Competition Policy framework of the 1987 Constitution. Included here are policies that ensure a competitive environment, which is in line with the goal of the Oil Deregulation Law. Reviewing the framework will help determine whether the law is actually doing its job to keep the playing field levelled, preventing monopolies. The second one will be about the transition from RA 8180 to RA 8479. Using the petition of Rep. Garcia against the R. A. 8479 in August 1999 as a source, the first part of our literature review will discuss the unconstitutional provisions R. A. No. 8180 that was not present in the revamped R. A. No. 8479. To know what transpired before the passage of the RA 8479 is important as it will give context and will direct where the thesis will go. After scrapping all the unconstitutional provision that made the ODL of 1998 to be successfully enacted, does the new law is clear of any constitution-violation? Apparently not, as the third part will discuss the different reasons from various persons and groups why RA 8479 is unconstitutional. Sources used in this part will cover news articles, House and Senate bills. Discussed in this part are bills that seek to either amend or repeal the ODL, the grounds that makes the law unconstitutional and the violated provision in the Constitution. While enumerating the grounds, this part will touch on the effects of the ODL to the oil industry, and to the people. This part is relevant because the grounds that will be listed can be our bases as to what our recommendations will be. The main objective of the ODL is to promote a truly competitive market, but did the law actually do so? The last part of the literature review will give insights about the status of the oil industry as of today. As the main source of the last part, the fairly recent paper entitled Philippine Oil Deregulation and the Oil Crisis: A Policy Issue Paper by Marlou Mumar of University of the Philippines. The paper roughly discusses the oil crisis in general, the ODL and its effects, and various suggested solutions to lessen oil prices. To provide a more broad view on the matter being discussed, the author interviewed five people from different sectors and of different specializations. The Constitution provided in Section 19, Article XII that deregulation must be only allowed if the public needs such action. Thats why its 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. A. Competition Policy One of the most tremendous shift from the 1973 constitution to the 1987 constitution was the implementation of competition policy framework14 that will make sure that markets in the country is free from anti-competitive practices. This government policy shall promote laws and measures that will maintain the level of competition in markets as well as affect the industry structures. Since then, deregulation of select economic industries, such as civil aviation, telecommunication, electric power, and downstream oil industry, have been implemented. A review of the Philippine Tariff Commission’s statement regarding the competition policy will be used in order to have knowledge on market industries, deregulation, and competition laws in the country. Here, we learn that the oil deregulation law is a product of the competition policy that the 1987 constitution adapted. Competition policy contains actions to keep or create competiveness in economic industries, which taking away the power of the government to take control of it, is included. Deregulation and other measures are used in order to promote economic efficiency. Economic efficiency is comprised of three components namely: (1) Productive efficiency; (2) Allocative efficiency; and (3) Dynamic efficiency. All of these components are essential to achieve competitiveness in markets, correction of market failure, and enhancement of consumer welfare. 15 Market structures are also enumerated and described here. There are five (5) market structures that are given here specifically: (1) Perfect Competition; (2) Monopoly; (3) Natural Monopoly; (4) Monopolistic Competition; and (5) Oligopoly. The first one is the goal of the oil deregulation law, to have a perfect competition in the oil market. In this market structure, there are several players entering in and out of the industry, selling similar products with fair competition. Many argue that the oil industry is an oligopoly of the big three (Petron, Shell, and Caltex), meaning that they can influence the price and output of the market by themselves. This assumption will be studied later on. 16 Sources of market failure are also discussed, which a monopoly can cause. If there is a monopoly in a market, income distribution is minimal. Also, consumer welfare is not guaranteed for monopolistic practices produce abusive price controls and inefficient production. These things may sound familiar, for many people now complain about these things against the government regularly. 17 Discussion of anti-competitive agreements are also given. Horizontal agreements, where firms agree to the pricing of a good, giving them ability to control prices. In this agreement, collusion between companies happen. These things can be solved with prohibitions or authorizations, which are few examples of solution for anti-competitive practices. 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. The oil deregulation law’s goal is part of the framework that the constitution wants to achieve. The statement by the Philippines Tariff Commission about competition policy is an evidence that the government should issue anti-competitive practices in the country. Issues about the oil market today, regarding possible oligopoly, predatory pricing, and consumer well-being should be taken a look at. The literature gave the definition of an oligopolistic market and indications of anti-competitive practices. 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. 19 B. Transition from R. A. No. 8180 to R. A. No. 8479 In reviewing the constitutionality of the Republic Act 8479, it is necessary to know what was changed from the first oil deregulation law which was the Republic Act 8180, â€Å"An Act Deregulating the Downstream Oil Industry of 1996†. The petition of Rep. Garcia regarding the unconstitutionality of Sec. 19 of R. A. No. 8479 will be analyzed to give a brief background regarding the law. The first one was declared by the Supreme Court unconstitutional in November 5, 1997 for mainly three reasons. First, the provisions laid down were already advantageous to the major competitors; it will give more power to the oligopoly of the big three. Second, it will block the entry of effective competitors. Third, the law will sire an even more powerful oligopoly whose power to the market will take advantage of the consumers’ general welfare. 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. 8479 is cleared of any constitutional flaws. The petition seeks to know if the new oil deregulation law is indeed constitutional and will ensure equal competitive market and welfare of its consumers. He pointed out that the court’s power of judicial review should protect its people from laws that could harm their rights. The case focused on the changed provisions of R. A. 8479 particularly; the 4% tariff differential, minimum inventory level, and predatory pricing provisions. 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. The 4% tariff differential from R. A. 8180 was too much for the new competitors to compete with the established oil companies here in the country. With Sec. 6 of the R. A. No. 8479, they scrapped the former revision and imposed the tariff rates single and uniform for all players. The minimum inventory level requirement was also removed from the R. A. No. 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 last one was the issue on predatory pricing; Congressman Tinge suggested the Arena-Turner test and proposed to redefine predatory pricing. 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. 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. 8479. The law allows the free participation of the private sectors and cooperatives in developing more gasoline stations. Moreover, the law also requires that there should be initial public offering of shares equivalent to 10% of the capital investments by oil companies. 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. To further ensure that the rights of the consumers are protected, R. A. 8479 will form a task force with members of the DOJ and DOE to investigate anomalies in the deregulated oil industry. 22 The petitioner turned his attention to the phases that happened after the approval of the R. A. 8479 mainly, the transition phase and the full deregulation phase. In the transition phase, all non-pricing facets were lifted. 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. The automatic oil pricing mechanism was maintained in order to estimate the local prices of gasoline products in the global market. A market-oriented formula was also approved by the Energy Regulatory Board (ERB) to know the wholesale posted price of gasoline products to be determined by the adjustments of the Singapore Posting of refined petroleum products, the Singapore Import Parity or the crude landed cost. 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. 471 in March 14, 1998. 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. 00 to one US dollar. 23 Rep. Garcia pointed out four reasons for the unconstitutionality of R. A. 8479. In his petition, he said that the Sec. 19 of R. A. 8479 which grants for the five-month transition phase, shortened by Pres. Ramos, is pro-oligopoly, anti-competitive, and is against the economic welfare of the people. And therefore, the law was processed unconstitutionally for being foul and disparaging infringement of the constitutional policy and command embodied in Article XII, Section 19 of the 1987 constitution against monopolies and combinations in restraint of trade. It also violates the goal of the oil deregulation law, which is to make the oil market competitive under a system of fair prices. 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. Lastly, because of the hastened transition, he pointed out that Sec. 19 should be declared null and void for the transition and full deregulation should have price controls that should protect the public interest from the big three oligopoly’s price fixing and overpricing. 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. 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. 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. Because of this, he suggested that the transition phase should be prolonged while the big three are still dominating the market with price controls so that the public can be protected from a possible overpricing or fixed pricing from the big three. 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. 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. 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. 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. 27 Interposing economic arguments by the public respondents claim that price regulation is not beneficial to the public as well as to the economy. They added that the acceleration of full deregulation is based on existing conditions and sound economic theory. Shell Corp. filed a rejoinder and further added that if Sec. 19 were to be dismissed, there will never be full deregulation and would provide a new law that is different from what was already enacted. And, extending the transition period would bring back the automatic pricing mechanism which means that it will only replace the mode of price regulation by still another regulatory scheme. 28 As Garcia listen to these counter arguments, he said that he was just asking for the constitutionality of Sec. 19, not the essence of it. For he claims that Sec. 19 is anti-competitive, thus it is contrary to what the constitution says. He added that conviction against monopolies and combination in restraint of trade should be given legal consequence by the court. Garcia insists that the court should consider his petition that the downstream oil industry should go back to partial deregulation, in which the main features of deregulation would be allowed but the retail prices of petroleum products would still be regulated through an automatic pricing mechanism. 29 The Supreme Court Justice at that time, Corona, thought that his petition lacked legal basis even though it seem beneficial to the public. He added that the job of the Supreme Court was just to interpret and apply the law as conceived and approved by other departments of the government in accordance with the prescribed procedure. The knowledge and to rescind or alter laws were the job of the legislation. Furthermore, he stated that if they allowed an open ended transition period with pricing regulation by the government, the liberalization of the downstream oil industry would have been suspended. Then, it would bring about a free interaction of market forces that would eventually lead to hindrance of fair competition in the market. He also pointed out that to execute full deregulation depending on the number of new players would be to legislate a floating provision reliant on the happening of a conditional event. In that way, the goal of R. A. 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. 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. Policy issues are within the domain of the political branches of government and of the people themselves as the repository of all state powers. 30 The case gave important information that will be needed in the study. It supplied a background on the changes covering the debunked R. A. 8180 to the R. A. 8479. The issues on the 4% percent tariff differential, minimum inventory level, and predatory pricing. All of these were changed or even removed from the first one. These three were the reasons for the declaration of the supreme court of the first oil deregulation‘s unconstitutionality. With these three gone, the R. A. 8479 should be cleared of any constitutional flaws. Petitioner Rep. Garcia thought otherwise. He insisted that the rushed transition period was unconstitutional for it is pro-oligopoly and it did not bring in fair competition in the market. With the rushed deregulation, it could have provided more power to the oligopoly to take control of prices and also the market. The court, respondents, and the petitioner acted upon the petition and in the end the court dismissed the petition for the reason that the petitioner failed to show that the law is violating the Sec. 19, Article XII of the constitution. Though Garcia pointed out interesting issues about the transition phase, he did not discuss the other cause of the acceleration of the deregulation which is the International Monetary Fund (IMF). The hasty transition together with the IMF’s role will be discussed on the thesis proper, for we believe that there other reasons that could have brought the transition to be accelerated. He was correct by saying that the accelerated deregulation was pro-oligopoly for the SC Chief Justice said that what was Garcia insists could be advantageous to the public. And, what is advantageous to the public is what the constitution wants for it is the protector of the people. The question on whether who will decide to repeal or even review oil deregulation law needs to be addressed. The Supreme Court said here that they do not have that power, and this issue will be talked about on the thesis part. C. What People, Groups Say About the Oil Deregulation Law Many are those who demand the amendment or the repeal of the ODL. The most relevant reason for those demands is that it does not comply with the Constitutional provision that says to prohibit monopolies. 31 But the researchers found more reasons for the laws amendment or repeal. Mostly politicians, they cited various inconsistencies and irregularities found on the ODL. Some proposing to amend the law simply because the goal of the law never came to fruition. This section will shed some light on the various reason found during research. Everything found in this section is relevant to the thesis, as these can be used as bases on the recommendations part of this study. In a 2008 article, the militant group Kilusang Mayo Uno (KMU) calls for the ODLs repeal and the removal of VAT on oil-related products. According to the KMU, pump prices at the time were P11 higher than what it should be. To support the claim, KMU presented a data. Dubai crude prices are pegged at $97/liter on two different dates: November 2007 and September 2008. The diesel prices here on the Philippines were P37. 95/liter and P49/liter respectively, showing the P11. 05 difference. This is because, according to the group, of the improper pricing imposed by the dominant oil companies, meaning monopoly is still present. The same is the reason why they want to repeal the law, because obviously the monopoly is still present. 32 Art. XII, Sec. 19 of the Constitution states the State shall regulate or prohibit monopolies when the public interest so requires. Supported by different transport groups, Bataan Rep. Enrique Garcia claims that the above-mentioned provision of the constitution is violated by the ODL. Citing the Supreme Court,33 he said that the control on the local oil industry is by foreign oligopolies. Also, he states the big three are the only relevant companies in the industry. The scrapping of the law, as he suggests, will ultimately free the people from their suffering from the prices set by oligopolies. 34 The Court of Appeals (CA) declares the ODL as unconstitutional. In the CAs ruling, Sec. 14 (e) of the ODL which gives Dept. of Energy (DOE) total control over the industry during national emergencies,35 violates the Art. VI, Sec. 23 of the Constitution. The Constitutional provision mandates the Congress to determine if theres a national emergency and a need to warrant the exercise of the Presidents emergency powers. 36, 37 1-Utak party list, led by Rep. Vigor Mendoza, says the ODL is vague, therefore unconstitutional. In Sec. 11 of the law, it defines two prohibited acts: cartelization and predatory pricing or unreasonable pricing. 38 Mendoza says that, first, in order to determine whether unreasonable pricing exists, there should be a crystal-clear definition of what fair price really meant which is not present in the ODL. The second act described in Sec. 11 is penal in nature and its enforcement will fail when theres a lack of guidelines in the law, making ODL unconstitutional. 39 Representatives Rufus Rodriguez and Maximo Rodriguez filed a bill repealing RA 8479 and reestablishing the OPSF. According to them, the ODL did not fulfill the goal it was written for. Instead of creating a truly competitive market, the law did the contrary. The promise that entrance of new entrants to the industry will create a competitive environment was broken as these new players get their sources from the big three, which will dictate the prices, ultimately violating the anti-monopoly provision of the Constitution. 40 The bill, to solve the problem with prices, wants to regulate the oil industry and to reintroduce the OPSF. With the fund present, it will lessen oil prices by balancing the price levels caused by fluctuations in the foreign exchange and additional costs from importation. The bill listed sources of the fund and the promulgation of the bills rules will be by the Secretary of Finance with the DOE Secretary as consultant. 41 Similar to the previous bill, HB 347 aims to regulate the downstream oil industry because of the same reasons. Unlike the previous one, this bill has a provision on how the industry will be regulated. The rules and its implementations will be formulated and issued by the DOE, with assistance from various government agencies, 60 days after this bills effectivity. Companies if found guilty of cartelization or monopolization, will be fined by at least P100,000 but not more than P1,000,000 plus possible business suspension or termination as determined by the DOE. The bill also includes a public information campaign to explain how the regulation works. 42 To summarize, the following are the grounds for the Oil Deregulation Law’s unconstitutionality: 1. That cartelization by the dominant companies is still present in the country, causing consistent price hikes, which is contrary to what the Oil Deregulation Law aims,43 ultimately violating the anti-monopoly provision of the Constitution44 2. That, during national emergencies, the DOE is vested with total control over the oil industry,45 which is contradictory with what the Constitution provides. The Constitution gives the Congress the responsibility (1) to determine whether the country is in a national emergency and when the country is, (2) to warrant the President to take control over any industry. 46 3. That the Oil Deregulation is vague, not defining what a â€Å"fair price† is, therefore the enforcement of the law will fail since there are no guidelines to determine whether an oil company is committing a crime, the unreasonable pricing,47 or not. The lack thereof now promotes monopolization as these big companies can increase their prices without thinking of any consequences. D. State of the Oil Industry Today The oil industry has changed over the years since the enactment of the Oil Deregulation Law. To review whether the said law is indeed free from constitutional flaws, we would have to take a look at the oil industry as of today. The effects of the R. A. 8479 should have been felt for its been a decade of progressively implementing the law. To know the state of the oil industry today, a review of a policy issue paper regarding the oil industry of today is needed. Marlou B. Mumar’s Philippine Oil Deregulation and the Oil Crisis: A Policy Issue Paper made in February 20, 2010 will be used to have a better background on what is the state of the oil market of today. The paper produced a brief a background about what went wrong with the oil market before the law was implemented. The deficit of the OPSF (Oil Price Stabilization Fund) that was used to cover up increases in gas prices was threatening to undermine the economy in 1995. Because of that, it triggered former Pres. Fidel V. Ramos to bring back the plan of creating the Oil Deregulation Law. An effort to avoid such fiscal deficit, the R. A. 8180 was enacted in 1996 which was later declared unconstitutional. The whole saga was discussed a while ago. Afterwards, a new oil deregulation law was implemented, which is now the R. A. 8479. Fifteen years have passed, six out of 10 Filipinos are in favor to scrap the law. 48 IBON foundation, an organization opposed to the oil deregulation law said that it just fortified the oligopoly of the big three for they are permitted to increase gas prices anytime. Due to this, other oil companies follow the trend and also pump the prices up resulting for a 535% increase in oil prices from 1996 to now. The effects of the law have not been felt by the consumers because of these high prices. 49 The consumers don’t know much about the effects of the oil deregulation law because they tend to judge it by looking at the price hike that has happened. Even though the downstream oil industry has maintained a meek growth,50 with the new competitors have invested worth 30 billion pesos in the market, the people doubt that the entry of these new oil companies guarantee fair prices for them. Because of this, the people does not buy that the oil deregulation law attained its social objectives of just prices, sufficient, and constant delivery of clean and high quality gas products. 51 What the consumers do not know is that the cause of such high prices were not caused by the R. A. 8479. According to the Independent Review Committee in 2005, â€Å"The main cause of oil price increases was the effect of major peso devaluation and increases in the international price of oil especially since we import practically all our oil product requirements. To summarize it, the increase in oil prices was a result of the government suggesting the players to increase the prices over a long period of time rather than rising it one time big time. Without a doubt, there is an oil crisis ongoing today. 52 With the United States experiencing its worst economic state, the boom of high oil prices and as well as other economic things is inevitable. Former Pres. Gloria Macapagal-Arroyo describes this as an â€Å"oil crisis of global proportions. † Today, two futures markets namely, London-based International Petroleum Exchange (IPE) and the New York Mercantile Exchange (NYMEX) set the prices of petroleum. Here, many traders sell oil products in paper or also called as â€Å"paper oil† on which they sell at a higher price. This scenario has become abundant, and eventually become the reason for the price hikes that the country experiences for the Philippines, heavily depending on foreign oil production, buy petroleum when the cost is at its peak. This has become a huge investment for international oil players. It is said for every 570 â€Å"paper barrels of oil† there was only one underlying physical barrel of oil. The paper oil barrels pull the cost of the underlying barrel of oil, dictating the cost of oil. 53 This only refute what most people think about the price hikes that are going on, it has to be something about the supply and demand of it. It is said that 60% of today’s crude oil cost is pure assumption driven by large banks and circumvent funds. 54, 55 Also in the paper, the different alternatives on solving the oil crisis here in the Philippines. Through the simplified stakeholders analysis, where the author simplified proposed solutions by various stakeholders, the author explained how each of the solutions effects if its the alternative used. There are six proposals included in the paper to solve the crisis: (1) Better implementation of Oil Deregulation Law (ODL); (2) Amendment of the ODL; (3) Scrapping of the ODL; (4) Removal of the 12% VAT on oil; (5) Finding of alternative sources of energy; and (6) Country-to-country oil agreements. 56 The first alternative was based from an Independent Review Committee report on the ODL with Carlos Alindada as chair which tells that the law is actually needed, the oil prices are actually justified which is why oil companies are actually experiencing losses. The report has four recommendations: (a) more effective and regular monitoring oil prices; (b) better initiatives against illegal, unsafe, unfair practices in oil service stations; (c) DOE should be in an anti-subsidizing stand; and (d) to make Petron, partly government-owned, as a price moderator for price-basing since, the report pointed out, Petron is a refiner and a market leader. 57 The second alternative is for the laws amendment. With this, deregulation is still necessary, an improvement is just needed to achieve its actual goal a truly competitive market. One congressman is mentioned, namely Rep. Singson of Ilocos Sur, which made bills to amend the law for better information-dissemination and competition-promotion. The specific sections referenced are 14 (Monitoring) and 15 (Additional Powers of the DOE Secretary). 58 The third calls for its repeal. Consumer and Oil Price Watch (COPW) chairman Raul T. Concepcion calls for regulation since, under a deregulated arena, refineries opt to not use Dubai prices as their basis instead they use the Mean of Platts Singapore which is usually higher, and another factor for the prices is competition. Another point raised by Rep. Rufus Rodriguez of Cagayan de Oro in his House Bill 4262 is that the ODL does not actually foster competitive market and instead strengthened the power of the dominant companies, stressing out that the supply of the new entrants come from them hence prices are still controlled by the dominant companies. The bill also calls for the comeback of the OPSF. Much the same, Kilusang Mayo Uno (KMU) says oil cartel is still existent in spite of the deregulation. To support the claim, KMU presented a data. Dubai crude prices are pegged at $97/liter on two different dates: November 2007 and September 2008. The diesel prices here on the Philippines were P37. 95/liter and P49/liter respectively, showing an P11. 05 difference. 59