Republic of the Philippines

Court of Appeals
Manila

SEVENTH (7TH) DIVISION

WATSONS PERSONAL CARE CA-G.R. SP No. 179708

STORES (PHILIPPINES), INC.,
Petitioner, Members:

SORONGON, E.D., CHAIRPERSON,

ROXAS, R.R.G., AND
RAMOS, E.S., JR., JJ.
- versus -

Promulgated: FEB 13 2024

THE PHILIPPINE COMPETITION
COMMISSION,
_______________________
Respondent.

DECISION

SORONGON, E.D., J.:

This is a Rule 65 Petition for Certiorari with application for the

issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction1 (Petition) pursuant to Rule 65 of the Revised Rules of Civil
Procedure (Rules) assailing the Resolutions dated May 22, 2023 (First
Resolution)2 and July 5, 2023 (Second Resolution)3 issued by the public
respondent Philippine Competition Commission (PCC) in Case No.
MAO-MP-M-2022-001.

1 Rollo, pp. 3-47.

2 Id. at 36-56; 292-312.
3 Id. at 57-59; 313-316.
CA-G.R. SP No. 179708 Page 2 of 17
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The Antecedent Facts

Public respondent Philippine Competition Commission (PCC) was

created by Congress as an independent quasi-judicial body vested with
original and primary jurisdiction over the enforcement and implementation
of Republic Act No. 10667 or the Philippine Competition Act. The PCC was
granted the express power to conduct inquiry, investigate, and hear and
decide on cases involving any violation of the Act motu proprio or upon
complaint of an interested party or referral by a regulatory agency.4

On October 16, 2020, Robinsons Retail Holdings, Inc. (RRHI)

entered into5 a share purchase agreement (Subject Transaction) where it
acquired 100% of the shares of Rose Pharmacy, Inc. from Mulgrave
Corporation, B.V.6 The PCC, through its Mergers and Acquisitions Office
(MAO), thus initiated a motu proprio review of the Subject Transaction,
docketed as MAO-MP-M-2022-001.

In turn, the MAO sent a Request for Interview and Information dated
November 8, 20227 (Request) to petitioner Watsons Personal Care Stores
(Philippines), Inc. (Watsons Philippines), for an interview with its
representatives to discuss and better understand the retail pharmaceutical
industry and its current competitive conditions. In addition, the MAO sought
from Watsons Philippines several pieces of information, to ensure that the
PCC has sufficient information to make informed decisions to carry out its
functions effectively.

Eventually, in its Letter dated March 10, 2023,8 Watsons Philippines

declined MAO’s Request on the basis that the former is not privy to the
Subject Transaction.

The MAO, in turn, issued a Subpoena Duces Tecum et Ad

Testificandum9 (Subpoena) dated April 3, 2023 against Watsons Philippines
and its officers, directing them to appear before the MAO as well as to
provide documents which listed the following information:

4 Gios-Samar, Inc. v. Department of Transportation and Communications and Civil Aviation Authority of the
Philippines, G.R. No. 217158, March 12, 2019.
5 Through its subsidiary, South Star Drug, Inc.
6 Wholly-owned subsidiary of Dairy Farm International Holdings, Ltd.
7 Rollo, pp. 65-66.
8 Rollo, p. 72.
9 Id. at 73-80.
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DECISION
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1. All branches of Watsons Philippines in the National Capital Region,

Regions 4-13, and BARMM (Regions) operating within the last five
(5) years to the present, including the following:
a) The date the branch commenced operation (and seized operation, if
the branch has been closed);
b) Address;
c) Size area of the ranch (in square meters);
d) If the branch is a franchise, the name of the owner, e-mail address,
and contact number;
e) Perceived competitors; and
f) Address of the perceived competitors;
2. The top 100 pharmaceutical products, by (i) volume and (ii) revenue,
per month for the past five (5) years (2017 to 2021) for each branch of
Watsons Philippines in the Regions, including the following:
a) Whether branded or generics;
b) Whether prescription or over-the-counter (OTC);
c) Retail price; and
d) The number of units sold;
3. The top three (3) pharmaceutical products, by (i) volume and (ii)
revenue, per month for the past five (5) years (2017 to 2021), for each
Anatomical Therapeutic Chemical (ATC) Level 2 Classification, for
each branch of Watsons Philippines in the Regions, including the
following:
a) Whether branded or generics;
b) Whether prescription or OTC;
c) Retail price; and
d) The number of units sold;
4. The top 100 non-pharmaceutical products, by (i) volume and (ii)
revenue, per month for the past five (5) years (2017 to 2021) for each
branch of Watsons Philippines in the Regions, including the following:
a) Whether branded or generics;
b) Whether prescription or OTC;
c) Retail price; and
d) The number of units sold;
5. The number of stock keeping units offered by Watsons Philippines,
disaggregated by product type, for the past five (5) years (2017 to
2021).10

Watsons Philippines sought an extension of time to submit the

information required,11 as well as clarification from the MAO as to the

10 The data required to be submitted under the Subpoena are substantially similar to those asked for under the
Request, except for item number 5. See Supra note 7.
11 Rollo, pp. 81-82, First Letter dated April 11, 2023.
CA-G.R. SP No. 179708 Page 4 of 17
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purpose of the Subpoena,12 and later on requested access to the complete

case record to guide Watsons Philippines in determining which records and
documents as well as information or data may be material and/or relevant to
the interview.13

The MAO partially granted the request for an extension by giving

Watsons Philippines an additional twenty days to comply with the Subpoena.
Nevertheless, it denied the last request due to the confidential treatment
accorded to the submissions made by parties and third-parties which have
already complied with the MAO’s requests, that such confidential
information forms part of the case record, and that a claim for confidentiality
was not a ground for the non-submission of the information required by the
PCC.14

On April 18, 2023, the MAO held a conference with the

representatives of Watsons Philippines in attendance. Two days later, a
hearing was held, where according to the MAO, Watsons Philippines
answered selected questions and refused to answer and reserved its right to
respond to questions related to the information and data request of the
Subpoena.

Watsons Philippines next filed a Motion to Reconsider Subpoena,15

alleging that (1) the MAO does not have the authority to issue a Subpoena
against persons or entities not party or privy to a merger or acquisition under
motu proprio review; (2) the pieces of information required under the
Subpoena were not material or relevant to the review of the Subject
Transaction; and (3) other grounds, such as its right against unreasonable
searches and seizures under Section 2, Article III of the 1987 Constitution,
that Watsons Philippines has property rights over the information and
documents sought by the Subpoena, and the MAO has no power of
expropriation to take the same. In any event, Watsons Philippines submitted
to the MAO a list of its operational branches as of April 28, 2023 and store
closures for the past five (5) years, without prejudice to the said Motion.

The Ruling of the PCC

The PCC, through the MAO, issued its First Resolution16 on May 22,

12 Id. at 83-84, Second Letter dated April 11, 2023.

13 Id. at 86, Letter dated April 14, 2023.
14 Id. at 87-90, Letter Denying the Request for Access to Case Records dated April 17, 2023.
15 Id. at 165-167.
16 Supra note 2.
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DECISION
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2023 denying Watsons Philippines’ Motion to Reconsider Subpoena. It held

that contrary to Watsons Philippines’ assertions, the Rules of Procedure of
the PCC (Rules of Procedure) and the Rules on Merger Procedure of the
PCC (Merger Rules, collectively PCC Rules) do not limit the MAO’s
power to subpoena personal appearances and information only to the entity
which is a party to a merger or acquisition under motu proprio review.
Rather, the MAO is granted the power to obtain, whether through voluntary
or compulsory process, information which relate to any matter relevant to
the merger review or proceeding from anyone who may have access thereto.

Anent the question of relevancy of the information required under the

Subpoena, the PCC held that it is only the MAO who can make such
determination, and not Watsons Philippines. Nevertheless, the required
information are necessary to understand: (i) the relevant market, (ii) the
usual conduct of business within the market, (iii) the competitive landscape,
(iv) competitive constraints, and (v) the harms of potential effect of the
Transaction should there be no intervention.

The PCC also held that a finding of anti-competitive effects is not a

condition sine qua non to the exercise of the power to issue the subpoena. It
is a means by which the PCC may be able to conclude if a violation of
Section 20 of the PCA has occurred or not, by utilizing the information it
obtained through a compulsory process.

Moreover, the PCC ruled that contrary to Watsons Philippines’

position, it is clear under Section 13, Book VII of the Revised
Administrative Code that the Subpoena may be issued upon the request by
any party, and not solely upon the request of the parties whose transaction is
being reviewed by the PCC.

Finally, Watsons Philippines’ invocation of its Constitutional rights

was a mere attempt to evade or refuse compliance with a lawful Subpoena, if
not a result of its wrong interpretation of the Constitution.

With the foregoing in mind, the PCC through the MAO gave Watsons
Philippines a final period of three (3) days or until May 25, 2023, within
which to fully comply with the Subpoena, with a warning that no further
extensions shall be entertained.

Watsons Philippines instead filed a Motion for Reconsideration dated

CA-G.R. SP No. 179708 Page 6 of 17
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June 5, 2023,17 arguing that the Subpoena issued by the PCC and the
compulsion to produce and submit lists, papers, information, and effects is
contrary to law. Watsons Philippines pointed out that the PCC has no
jurisdiction over it sufficient to compel the production of business
documents, papers, processes, and secrets, including the information
contained therein, under the Subpoena; the PCC’s act of compelling Watsons
Philippines to produce the business documents, papers, processes, and
secrets, including the information contained therein, under the Subpoena is a
search and seizure without warrant or probable cause and thus, is
unreasonable; a violation of Watsons Philippines’ right to privacy; is
unauthorized; and is prohibited because the PCC has no power to take
Watsons Philippines’ property without paying just compensation.

The PCC, again through the MAO, denied the Motion for
Reconsideration in the assailed Second Resolution18 dated July 5, 2023. The
PCC found that the Motion for Reconsideration is effectively a second
Motion to Reconsider Subpoena which finds no basis under the PCC Rules.

Hence, the instant Petition.

The Issues

Watsons Philippines as well as the PCC submit the following issues

for resolution:

I. Whether the instant petition is timely filed;19

II. Whether PCC is without statutory authority to issue the Subpoena
dated April 3, 2023 and, therefore, acted without or in excess of its
jurisdiction when it issued the assailed Resolutions; and
III. Whether PCC’s assailed Resolutions, insofar as it justified the
Subpoena dated April 3, 2023, violated Watsons Philippines’
constitutional rights.
1. The PCC’s act of compelling Watsons Philippines to produce
business documents, papers, processes, secrets, including the
information therein, under the Subpoena and the assailed
Resolutions is an unreasonable search and seizure;
2. The PCC’s act of compelling Watsons Philippines to produce
business documents, papers, processes, secrets, including the
17 Rollo, pp. 171-182; 301-312, Motion for Reconsideration dated 05 June 2023 (Re: Subpoena dated 03 April 2023
and Resolution dated 22 May 2023).
18 Supra note 3.
19 Rollo, pp. 209-224, Comment.
CA-G.R. SP No. 179708 Page 7 of 17
DECISION
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information therein, under the Subpoena and the assailed

Resolutions is violative of Watsons Philippines’ right to privacy;
and
3. The PCC is prohibited from taking Watsons Philippines’
business documents, papers, processes, and secrets, including
the information therein, not having the power of expropriation
and without paying just cause.20

Our Ruling

The Petition is meritorious.

The Petition was timely filed.

The PCC argues21 that the instant Petition was filed beyond the
reglementary period. It points out that on May 22, 2023 Watson Philippines
received a copy of the First Resolution denying the Motion to Reconsider
Subpoena. Under Section 4, Rule 65 of the Revised Rules of Court, Watsons
Philippines had 60 days from the date of receipt, or until July 21, 2023,
within which to file the instant Petition. However, the records show that the
Petition was filed four (4) days late, on July 25, 2023. While Watsons
Philippines filed a Motion for Reconsideration assailing the First Resolution,
this did not have any legal effect and did not toll the running of the 60-day
reglementary period because the PCC Rules does not contemplate the filing
of a second motion for reconsideration.

Watsons Philippines, on the other hand, makes it clear that it only filed
one Motion for Reconsideration, dated June 5, 2023, assailing the denial of
its Motion to Reconsider Subpoena. It argues that the PCC erroneously pegs
the timeliness of the Petition from the date of the denial of the Motion to
Reconsider Subpoena, which is entirely different from the Motion for
Reconsideration.

This Court finds that the Petition was timely filed.

Under the PCC Rules of Procedure, a motion to reconsider subpoena

may be filed on the ground that the subject of the subpoena duces tecum is
not related to a matter relevant to the investigation or proceeding, or when
the person subject of the subpoena ad testificandum cannot comply
20 Supra note 1, at 17-19.
21 Rollo, pp. 216-219, pages 8-11 of the Comment.
CA-G.R. SP No. 179708 Page 8 of 17
DECISION
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therewith on the ground that doing so would violate a law, issuance, or valid
order.22 On the other hand, the Merger Rules states that a motion for
reconsideration shall be based on any of the following grounds:
1. the evidence on record is insufficient to justify the decision, order, or
ruling; or
2. the decision, order, or ruling is contrary to law.23

Crucially, the Merger Rules prohibits a second or subsequent motion

for reconsideration.24

These rules, however, do not preclude Watsons Philippines from filing

its June 5, 2023 Motion for Reconsideration.

Certiorari under Rule 65 inherently requires the filing of a motion for

reconsideration, which is the tangible representation of the opportunity given
to the office to correct itself. 25 While a government office may prohibit
altogether the filing of a motion for reconsideration with respect to its
decisions or orders, the fact remains that certiorari inherently requires the
filing of a motion for reconsideration, which is the tangible representation of
the opportunity given to the office to correct itself. Unless it is filed, there
could be no occasion to rectify. Worse, the remedy of certiorari would be
unavailing. Simply put, regardless of the proscription against the filing of a
motion for reconsideration, the same may be filed on the assumption that
rectification of the decision or order must be obtained, and before a petition
for certiorari may be instituted.26

Therefore, it was necessary for Watsons Philippines to file its June 5,

2023 Motion for Reconsideration, to give the PCC an opportunity to correct
itself. Without such Motion, the instant Petition would have been readily
dismissed for non-compliance with the requisites of a Petition for Certiorari
under Rule 65. As a result, the instant Petition was not time barred. It was
filed within sixty (60) days from July 7, 2023, when Watsons Philippines
received the Second Resolution of the PCC dated July 5, 2023.

The termination of the motu proprio

22 Rules of Procedure of the PCC, Section 13.4.
23 Rules on Merger Procedure of the PCC, Section 17.1.
24 Id. Section 17.5.
25 Bureau of Customs v. Gallegos, G.R. No. 220832, February 28, 2018 (Resolution), citing Philtranco Service
Enterprises, Inc. v. Philtranco Workers Union – Association of Genuine Labor Organizations , G.R. No. 180962,
February 26, 2014,
26 Philtranco Service Enterprises, Inc. v. Philtranco Workers Union – Association of Genuine Labor Organizations,
G.R. No. 180962, February 26, 2014,
CA-G.R. SP No. 179708 Page 9 of 17
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review sans the information required

by the Subponea shows that the latter
was irrelevant.

For a subpoena to issue, it must first appear that the person or

documents sought to be presented are prima facie relevant to the issue
subject of the controversy27

Watsons Philippines argues that the information required by the

Subpoena does not appear to be relevant to the motu proprio review. The
MAO revealed that the said information was merely for the “completeness”
of the review, or to serve as “background,” or “for context.” The information
sought therefore are not determinative of whether there are anti-competitive
elements or effects as a result of the Subject Transaction.28 The irrelevancy
of the Subpoena was further illustrated when the PCC actually terminated
the the motu proprio review on October 5, 2023 as revealed by none other
than RRHI in a press release.29

This Court agrees. The said press release pertinently reads:

On [November 7, 2022], the [MAO] of the [PCC] commenced

a motu proprio review of the completed acquisition. After
approximately 11 months of review, on [October 5, 2023], the
[PCC] en banc resolved to terminate the motu proprio review and
take no further action on the completed acquisition, there being no
sufficient basis to prohibit the same. The [PCC] issued the formal
certification to this effect on [November 6, 2023], which was
received by RRHI on the same day. (emphasis added)

In fact, the completion of the motu proprio review was disclosed by

RRHI to the Securities and Exchange Commission30 as well as the Philippine
Stock Exchange in November 2023.31 Clearly, the motu proprio review came
to an end sans the information being required by the Subpoena from
Watsons Philippines. It is thus reasonable to conclude that the information
sought under the Subpoena bore no relevance to the motu proprio review.
Concomitantly, Watsons Philippines may not be compelled to comply with
27 Lozada, Jr., et al., v. President Arroyo, et al., G.R. No. 184379-80, April 24, 2012.
28 Rollo, pp. 32-34, pages 30-32 of the Petition.
29 Id. at 392-393, pages 35-36 of Watsons Philippines’ Reply.
30 SEC Form 17-C on PCC Completes Motu Proprio Review on the Acquisition of Rose Pharmacy.
https://edge.pse.com.ph/openDiscViewer.do?edge_no=0a2d1389161088b59e4dc6f6c9b65995. Accessed February
5, 2024.
31 PSE Edge Company Disclosures for Robinsons Retail Holdings, Inc. https://edge.pse.com.ph/openDiscViewer.do?
edge_no=0a2d1389161088b59e4dc6f6c9b65995. Accessed February 5, 2024.
CA-G.R. SP No. 179708 Page 10 of 17
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the Subponea, which has for all intents and purposes, outlived its usefulness.

This conclusion by itself should be sufficient to grant Watsons

Philippines’ petition. Nevertheless, assuming arguendo that the motu
proprio review is still pending which renders the Subponea relevant, the
Subpoena should still be nullified as explained below.

The PCC is authorized to issue

Subpoena, not just for investigations
for any violation of competition laws,
but also for review of mergers and/or
acquisitions.

Watsons Philippines argues that the PCA does not grant the PCC or
the MAO jurisdiction over a stranger to a merger or acquisition under review
to produce business documents, papers, processes, secrets, and the
information represented by and contained therein. The power of inquiry of
investigation of possible violations of the law, under Section 12 (a) of the
PCA is separate and distinct from the power of review of a merger or
acquisition under Section 12 (b). Watsons Philippines finds this distinction
significant, as the subpoena power under Section 12 (f) is limited to
instances where the PCC is conducting an investigation, meaning an inquiry
regarding a violation or possible violation of the law.

Section 12 of the PCA reads in part:

Section 12. Powers and Functions. — The Commission shall

have original and primary jurisdiction over the enforcement and
implementation of the provisions of this Act, and its implementing
rules and regulations. The Commission shall exercise the following
powers and functions:
(a) Conduct inquiry, investigate, and hear and decide on
cases involving any violation of this Act and other existing
competition laws motu proprio or upon receipt of a verified
complaint from an interested party or upon referral by the
concerned regulatory agency, and institute the appropriate civil
or criminal proceedings;
(b) Review proposed mergers and acquisitions,
determine thresholds for notification, determine the
requirements and procedures for notification, and upon
exercise of its powers to review, prohibit mergers and
CA-G.R. SP No. 179708 Page 11 of 17
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acquisitions that will substantially prevent, restrict, or lessen

competition in the relevant market;
xxx xxx xxx
(f) Issue subpoena duces tecum and subpoena ad
testificandum to require the production of books, records, or
other documents or data which relate to any matter relevant to
the investigation and personal appearance before the
Commission, summon witnesses, administer oaths, and issue
interim orders such as show cause orders and cease and desist
orders after due notice and hearing in accordance with the
rules and regulations implementing this Act;
(g) Upon order of the court, undertake inspections of
business premises and other offices, land and vehicles, as used
by the entity, where it reasonably suspects that relevant books,
tax records, or other documents which relate to any matter
relevant to the investigation are kept, in order to prevent the
removal, concealment, tampering with, or destruction of the
books, records, or other documents;
xxx xxx xxx

This Court is not prepared to declare and delimit the subpoena power
of the PCC under Section 12 (f) as confined only to investigations in cases
involving violation of the PCA and competition laws under Section 12 (a), to
the exclusion of the review power under Section 12 (b). If the legislative
intent was to impose such a limit, Congress could have simply and explicitly
so provided. But it did not. Instead, the provision merely used the word
“investigation.” Black’s Law Dictionary defines “investigate” as “to inquire
into (a matter) systematically; to make (a suspect) the subject of a criminal
inquiry; to make an official inquiry.32

Most importantly, Section 33 of the PCA itself did not limit the
subpoena power to investigations under Section 12 (a), instead granting such
power to the PCC when conducting “inquiries” in general:

Section 33. Power to Investigate and Enforce Orders and

Resolutions. – The Commission shall conduct inquiries by
administering oaths, issuing subpoena duces tecum and
summoning witnesses, and commissioning consultants or experts.
It shall determine if any provision of this Act has been violated,
enforce its orders and carry out its resolutions by making use of any
available means, provisional or otherwise, under existing laws and

32 Black’s Law Dictionary (Eighth Edition), page 844.

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procedures including the power to punish for contempt and to impose

fines. (emphasis added)

As such, it is far more reasonable to conclude that the term

“investigation” as used in Section 12 (f) conferring the PCC the power to
issue subpoenas to include the review of mergers and acquisitions.

The PCC is nonetheless not

empowered to issue a subpoena against
a third person who is not a party to the
merger under review, such as Watsons
Philippines.

Watsons Philippines further posits33 that the MAO, through which the
PCC was acting, does not have the authority to subpoena a third-party to a
merger or acquisition transaction under a motu proprio review. MAO’s own
Merger Rules provides that the MAO may only compel or subpoena persons
or entities that are party or privy to the merger or acquisition being
reviewed. Instead, Section 6.12 of the Merger Rules shows that third parties
may be consulted through a voluntary process, either through a market call
or inquiry letter.

The PCC, on the other hand, counters34 that it has the authority to
issue a subpoena even against a third party to a transaction under review. As
stated earlier, Section 12 (f) of the PCA vests the PCC the power to issue
subpoena relative to an investigation. In addition, the PCC has enacted the
Merger Rules under its rule-making power. Section 7.12 of the Merger
Rules, in turn, authorizes the PCC, or the MAO, to issue a subpoena to
anyone relative to the merger review process. Non-compliance with the
subpoena will subject the individual or entity to contempt.

This Court agrees with Watsons Philippines. Indeed, the PCC is

empowered to issue a subpoena during reviews of mergers and/or
acquisitions. This Court, however, believes that such power is limited only
to the merger parties, and not third parties. An examination of the Merger
Rules becomes imperative.

Section 13 of the Merger Rules provide that the PCC may conduct a
motu proprio merger review, an investigation of any merger that the PCC
33 Rollo, pp. 20-32, pages 18-30 of the Petition; pp. 394-
34 Rollo, pp.
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has reasonable grounds to believe is likely to substantially prevent, restrict

or lessen competition in the market, pursuant to its market surveillance
function.35 Here, the PCC will endeavor to follow the same process for
notified mergers,36 save for longer review periods, and subject to the
procedure under Section 13.37

As such, both notified and motu proprio merger reviews are divided
into two (2) phases, Phase 1 and Phase 2. The Phase 1 review involves an
assessment to determine if the merger raises any competition concerns under
the Act that would warrant a more detailed review. If no competition
concerns are raised, the merger may be cleared within the period for Phase 1
review.38

The Phase 1 Review Process is covered by Section 6 of the Merger

Rules, including the process for obtaining information from third
parties.39 Section 6.12 provides that they may be contacted through market
calls or inquiry letters, which are voluntary:

Third parties
6.12. The PCC may contact third parties, such as customers,
suppliers or competitors, by means of market calls or inquiry
letters in order to obtain relevant information regarding the market,
their views on the merger, any competition issues it may raise and
how they will be affected. Third parties may also include other
governmental entities, sectoral regulators, industry associations,
consumer bodies, think-tanks, market research firms or centers for
information, among others. Information provided by third parties may
be given confidential treatment in accordance with Section 9 of these
Rules and Rule 4, Sections 5 (o) and 13 of the IRR. (emphasis added)

This is in contrast to the treatment given to merger parties, who are

35 Rules on Merger Procedure of the PCC, Section 13.1. Notably, the Merger Rules calls this kind of review as
“Section 20 merger review.” This logically refers to Section 20 of the PCA, which provides that “merger or
acquisition agreements that substantially prevent, restrict or lessen competition in the relevant market or in the
market for goods or services as may be determined by the Commission shall be prohibited.”
36 Section 17 of the PCA provides, among others, for thresholds of mergers and acquisitions whereby the merger or
acquisition parties are prohibited from consummating their agreement until thirty (30) days after providing
notification to the PCC. It also empowers the PCC to promulgate other criteria in determining whether merger or
acquisition parties shall notify it.
37 Rules on Merger Procedure of the PCC, Section 13.3. For a motu proprio Section 20 merger review, PCC will
endeavor to follow the same process for notified mergers, except for the review periods which are seventy-five (75)
days for Phase 1 and one hundred twenty (120) days for Phase 2, and subject to the procedure provided in this
Section.
38 Id., Sections 2.7-2.8.
39 Id., Section 6.1.
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subject to compulsory processes when it comes to the submission of

information for the merger review. The relevant portions of Section 6 read:

6.3 At any time during the review period, the PCC may
require parties to provide such additional data, information, or
documents as it deems necessary for its review. Parties shall
provide the required data, information, or documents promptly
within the period specified by PCC.
6.4. However, a merger party may submit the requested
information beyond the period specified by PCC, provided that the
party waives the thirty (30) and ninety (90)-day periods of review. In
such event, the parties may file a request for extension of time prior
to expiration of the specified period using the Model Request for
Extension and Waiver (“Model Request and Waiver”) available at the
PCC Website.
xxx xxx xxx
6.7. If the PCC deems it necessary, it may conduct site visits
or inspections of the business premises of the parties, their
customers and/or their competitors, in order to better understand
how products are manufactured, distributed or sold, how services are
rendered, or the nature of competition in the market, among others.
6.8. Additionally, the PCC may conduct interviews, require a
person to provide information or documents, or to provide testimony
in accordance with Section 7.12 of these Rules. (emphasis added)

The contrast is further highlighted by Section 7 of the Merger Rules,

which deal with the Phase 2 review. If, after the conduct of a Phase 1 review,
the PCC is unable to conclude that the merger does not raise competition
concerns, it will provide the merger parties a notice and request for
additional information for the purpose of commencing a Phase 2 review.40
More importantly, this is where the PCC or the MAO may issue a subpoena
under the following circumstances:

7. PHASE 2 REVIEW PROCESS

7.1. The Phase 2 review shall commence on the day after
service of the Phase 2 Notice. The PCC shall have a period of sixty
(60) days within which to conduct the Phase 2 review. During the said
period, the merger parties are prohibited from consummating their
transaction.

40 Rules on Merger Procedure of the PCC, Sections 2.7-2.8.

CA-G.R. SP No. 179708 Page 15 of 17
DECISION
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xxx xxx xxx

7.3. Upon receipt of an order of payment from the PCC, the
parties shall pay the Phase 2 review fee pursuant to Memorandum
Circular No. 17-002. In case of non-payment of said fee, PCC shall
return the Forms to the merger parties.
7.4. The parties shall respond to the Phase 2 Request within
fifteen (15) days from receipt thereof. Failure to submit a complete
response within such period shall result in the expiration of their
notification and the parties must refile their notification in accordance
with Section 5 of these Rules (see Rule 4, Section 5 (i) of the IRR).
The refiled notification should include the information required under
the Phase 2 Request. Otherwise, the notification shall be considered
deficient.
xxx xxx xxx
Voluntary information gathering
7.9. Parties can provide additional information at any time
during the Phase 2 review, even if not requested by MAO. Preparing
and gathering documents and information in anticipation of a request
for information may expedite the merger review process.
7.10. During the Phase 2 review, the MAO may exercise any
of its powers stated hereunder for the purpose of collecting
information relating to the subject matter of the review.
7.11. Information provided by third parties may be given
confidential treatment in accordance with Section 9 of these Rules
and Rule 4, Section 5 (o) and 13 of the IRR.
Compulsory information gathering
7.12. The Commission or the MAO may issue subpoena duces
tecum to direct anyone who may have access to, possession, custody,
or control of documents, Electronically Stored Information, other
things, or information which relate to any matter relevant to the
review or proceeding, to submit or make available to the PCC such
documents, Electronically Stored Information, or other things for
inspection, copying, or reproduction, file written reports or answers to
questions, or submit the required information in a specified format
such as lists, summaries, or tables, or subpoena ad testificandum to a
person to give testimony before the PCC, which relate to any matter
relevant to the merger review process.
7.13. The procedure set forth in Rule XIII on Subpoena of the
PCC Rules of Procedure shall apply to these Rules. Failure to comply
CA-G.R. SP No. 179708 Page 16 of 17
DECISION
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with a subpoena will subject the individual or entity to contempt and

imposition of a fine (see Section 16 of these Rules). Failure to
comply with a subpoena by the parties will likewise render their
notification expired and the parties must re-file their notification,
subject to the application of Section 7.5 of these Rules. (emphasis
added)

To the mind of this Court, the more stringent and compulsory

processes under Section 7 is limited only to the merger parties. Third parties
are covered only by Section 7.11 on the subsection pertaining to “Voluntary
information gathering” whereby information they provided may be given
confidential treatment. On the other hand, while Section 7.12 uses the
general words “anyone” and “to a person” to refer to the subjects of the
subpoena, the effects for non-compliance will not only subject the individual
or entity to contempt and the payment of fine, the notification submitted by
the parties are rendered expired. This limited effects upon merger parties
only are similar to those embodied in Sections 7.3 and 7.4. As such, there is
intent to limit the compulsory processes, including the subpoena, to
merger parties only, and that the use of the words “anyone” and “to a
person” indicates that the subpoena may be implemented against any person
related or affiliated, directly or indirectly, to the merger parties who
have in their custody the documents, information, or things required by the
MAO for its review.

Here, there is no dispute that Watsons Philippines is a third party, not

related or affiliated, directly or indirectly, to the merger parties RRHI and
Rose Pharmacy. As such, Watsons Philippines may not be compelled
through the Subpoena to submit information for the motu proprio review of
the Subject Transaction; instead the MAO should have communicated with
the former through a market call or inquiry letter.

In sum, this Court finds that indeed the PCC, through the MAO, may
issue subpoena not just for investigations for possible violations of
competition laws but also for investigations in general, including reviews of
mergers and acquisitions. But then, the subponea is limited only to the
merger parties and any persons directly or indirectly related and/or affiliated
with them, and not as against third parties like Watsons Philippines in this
case.

WHEREFORE, the Petition is GRANTED. The Resolutions dated

May 22, 2023 and July 5, 2023 issued by the public respondent Philippine
CA-G.R. SP No. 179708 Page 17 of 17
DECISION
x---------------------------------x

Competition Commission, in Case No. MAO-MP-M-2022-001 are

ANNULLED AND SET ASIDE. Accordingly, the Subpoena Duces Tecum
et Ad Testificandum dated April 3, 2023 issued against Watsons Personal
Care Stores (Philippines), Inc., its officers, and counsel in Case No. MAO-
MP-M-2022-001 is QUASHED.

SO ORDERED.

ORIGINAL SIGNED
EDWIN D. SORONGON
Associate Justice

WE CONCUR:

ORIGINAL SIGNED ORIGINAL SIGNED

RUBEN REYNALDO G. ROXAS EDUARDO S. RAMOS, JR.
Associate Justice Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby

certified that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court.

ORIGINAL SIGNED
EDWIN D. SORONGON
Associate Justice
CHAIRPERSON, SEVENTH DIVISION