CA: Gov't can't take over oil industry in nat'l emergencies

MANILA, Philippines - The Department of Energy (DOE) cannot temporarily take over oil industry operations during times of emergency, a recent ruling of the Court of Appeals (CA) said.

In an 11-page ruling promulgated on June 23 by its 9th Division, the CA upheld that Section 14 (e) of Republic Act 8479 or the Downstream Oil Industry Deregulation Act of 1998 is unconstitutional.

The said 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."

The case stemmed when Pilipinas Shell and Petroleum Corporation questioned before the Makati City Regional Trial Court the Executive Order 839 issued by then President Gloria Macapagal-Arroyo.

The said order mandated an oil price freeze after the onslaught of Typhoons "Ondoy" and "Pepeng" in 2009. It was issued pursuant to Section 14 (e) of the Oil Deregulation Law.

The Makati City RTC ruled in favor of Shell declaring Section 14 (e) as void and unconstitutional, prompting the DOE-Department of Justice Joint Task Force, through the Office of the Solicitor General (OSG), to appeal to the CA.

But with the recent ruling, the appellate court denied the appeal, declaring the said provision as unconstitutional.

"To synthesize, what makes Section 14(e) of RA 8479 particularly repulsive and thus unconstitutional is that it grants unbridled power to the DOE, not even the President, to perform essential acts which only the Congress is constitutionally mandated to perform," the CA ruling said.

The CA noted that in the case of David et. al. v. Arroyo, no less than the Supreme Court (SC) ruled that emergency powers requires first the approval of Congress, including those involving public utilities and businesses that affect public interest.

But in this case, the CA said Section 14(e) of the Oil Deregulation Law as well as the order issued by Arroyo showed that it was the President who determined the existence of emergency instead of Congress as required under the Constitution.

"As required by Section 23, Article VI of the Constitution, the determination of the existence of war or other national emergency to warrant the President's exercise of emergency powers is reposed upon Congress, thus, making it a legislative act. Strangely however, in EO 839, it was Pres. GMA who determined the existence of national emergency to warrant her exercise of emergency powers," the CA ruling said.

The appellate court also told the OSG that it used the wrong mode of appeal when it questioned the ruling of the Makati City RTC. The government lawyers should have taken the case straight to the high court since what is involved is a pure question of law, the CA added.