SC: DOE may take over oil industry in emergencies

MANILA, Philippines — The Supreme Court (SC) has ruled that the Department of Energy (DOE) may take over oil industry operations in times of emergency upon the directive of the country’s president.

In a 37-page decision, the SC upheld the constitutionality of Section 14(e) of Republic Act 8479 or the Downstream Oil Industry Deregulation Act of 1998, reversing the 2013 decision issued by the Court of Appeals (CA), which declared the provision unconstitutional.

The provision states that “in times of national emergency, when the public interest so requires, the DOE may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any person or entity engaged in the industry.”

“All told, Section 14(e) of Republic Act 8479 is a proper delegation of takeover power to the Department of Energy. Absent any actual proof from respondents (Pilipinas Shell) that the exercise of this provision has caused it harm or injury, we hold that the challenge claiming the provision unconstitutional must fail,” the SC decision read.

“The Court of Appeals, therefore, incorrectly declared Section 14(e) of Republic Act 8479 unconstitutional,” it added.

The case stemmed from a petition filed by Pilipinas Shell Petroleum Corp. assailing the validity of Executive Order 839 issued by then president Gloria Macapagal-Arroyo that directed oil industry firms to maintain oil prices following the onslaught of Tropical Storm Ondoy and Typhoon Pepeng in 2009.

Arroyo declared a state of calamity under Proclamation No. 1898 on Oct. 2, 2009 after the typhoons affected nine million people and left almost 1,000 casualties, 700 injured and 84 missing.

The oil firm also questioned the constitutionality of Section 14(e) of the Oil Deregulation Law, which was used as basis for issuing the assailed EO, claiming that the policies were unreasonable, oppressive and an invalid delegation of emergency powers to the executive.

In its decision, the SC cited Section 17 of Article XII of the Constitution, which provides for the takeover of operations of privately owned public utilities or businesses affected with public interest.

The high court also noted that Section 23 of Article VI of the Charter provides for limitations on the takeover power by giving the legislature the authority to grant the president emergency powers for a limited period and subject to restrictions.

Citing Article VII, Section 17 of the Constitution, the SC pointed out that the president has “control of all executive departments, bureaus and offices.”

The court also cited the “well-established doctrine of qualified political agency,” which recognizes the various responsibilities that a president faces, “which calls for the delegation of certain responsibilities to Cabinet members.”

The doctrine likewise posits that the heads of various executive departments stand as the president’s “alter egos permitted to act on behalf of the president.”

“In other words, the president may carry out their functions through the heads of the executive departments,” SC said.

“The secretaries of each department function as the president’s alter egos; however, they are not given complete discretion over how to exercise the delegated authority,” it added.

If the energy secretary acts in contrast to the president’s intent or instruction, the act will be deemed ultra vires – acting or done beyond one’s legal power or authority – and an unconstitutional usurpation of executive power.

“Moreover, it must first be demonstrated that the president withheld approval or repudiated the delegation or the actions of the delegated authority,” the SC said.