THE Supreme Court (SC) has declared that the Department of Energy (DOE) has the authority to take control of the operations of the oil industry as directed by the President, particularly in times of emergencies.
In a decision penned by Senior Associate Justice Marvic Leonen, the SC upheld the constitutionality of Section 14 (e) of Republic Act 8479, or the Downstream Oil Industry Deregulation Act of 1998.
The said provision empowers the DOE to temporarily oversee the operations of the oil industry under specific circumstances, such as in times of emergencies.
The SC ruling was promulgated on February 21, 2023 but made public only last Mar. 4.
The SC decision arose from a petition for review filed by then former executive secretary Leandro Mendoza, the late DOE chief Angelo Reyes and the DOE-DOJ Joint Task Force assailing the 2013 ruling of the Court of Appeals that had deemed the provision unconstitutional.
The case stemmed from an executive order issued by then President Gloria Macapagal Arroyo on Oct. 2, 2009 directing oil industry players to maintain the prices of their petroleum products in the aftermath of typhoons Ondoy and Pepeng which wreaked havoc on Luzon, leaving almost 1, 000 fatalities, 700 injured and 84 missing.
Finding Arroyo’s order prejudicial to oil companies, Pilipinas Shell filed a petition before the Makati Regional Trial Court, arguing that the executive order was “unreasonable, oppressive, and invalid delegation of power to the Executive.”
The lower court granted Pilipinas Shell’s plea for the issuance of a temporary restraining order on Nov. 13, 2009.
Two days later, Malacanang issued another executive order, lifting its previous order and discontinuing the oil price freeze.
Malacanang then asked the RTC to reconsider its issuance of the restraining order, with Pilipinas Shell opposing the move.
On Jan. 5, 2010, the RTC dismissed Pilipinas Shell’s petition for being moot since the executive order was already lifted.
The oil giant then moved for a reconsideration of the RTC’s ruling, which the court granted on May 7, 2010.
The RTC also rejected a motion for reconsideration filed by the Office of the Executive Secretary, prompting the latter to elevate the case to the CA.
On June 25, 2013, the appellate court rejected the appeal and declared Section 14 (e) of RA 8479 unconstitutional, and therefore, null and void, for “unduly delegating the takeover power to the Department of Energy.”
It held that the said provision was “incomplete as it neither set forth the policy to be carried out by the Executive not set standards to which the delegate must conform.”
After their appeal was rejected by the CA, the case was brought to the attention of the SC.
In ruling against the Shell, the SC pointed out the President’s prerogative to determine national emergencies and the propriety of delegating authority to the DOE.
The SC cited Article XII, Section 17 of the 1987 Constitution, which allows for the takeover of privately owned businesses with public interest by the President in times of national emergencies.
“Thus, in time of national emergency, the Constitution gives the Legislature the authority to grant the President temporary emergency powers to address a threat the country is facing. To be a valid
delegation, the legislative enactment must authorize the president for a limited period, and subject to such restrictions as it may prescribe,” the SC stressed.
The high tribunal also cited Article VII, Section 17 of the Constitution which recognizes the multifarious responsibilities a president faces, which calls for the delegation of certain
responsibilities to members of the Cabinet.
“In other words, the president may carry out their functions through the heads of the executive departments. The secretaries of each department functions as the president’s alter egos, however, they are not given complete discretion over how to exercise the delegated authority,” the SC said.
Besides, the SC held that the temporary control over oil industry entities does not involve the suspension of constitutionally protected liberties, but the regulation of the operation of a public utility or private enterprise that affects public interest.
“As specified by the law, the takeover authority will be employed during national emergencies, it would be unreasonable to expect the president to exercise all the control powers simultaneously, and in
person, during such times,” the SC said.
“Consequently, the president would require the assistance of their alter egos in addressing the numerous issues at hand,” the SC added.
The SC stressed that Section 14 (e) of RA 8479 is a “proper delegation of the takeover power to the Department of Energy.”
