SC: Gov’t can take over private oil firms during emergency

The Supreme Court (SC) has affirmed the validity of a law enacted in 1998 allowing the government to take control of private entities engaged in the oil industry during emergencies, as directed by the President.

In its 37-page decision published online Tuesday, the SC reversed a 2013 Court of Appeals (CA) decision and said the Department of Energy (DOE) has this authority under Section 14 (e) of Republic Act 8479, also known as the Downstream Oil Industry Deregulation Act of 1998.

The provision empowers the DOE to temporarily oversee or direct the operations of private corporations within the oil industry under certain circumstances.

The SC pointed out the President’s prerogative to determine national emergencies and the propriety of delegating authority to the DOE.

Citing Article XII, Section 17 of the constitution, which allows for the takeover of privately owned businesses with public interest by the President, the court recognizes the legal foundation for such actions.

The dispute involved Pilipinas Shell and Petroleum Corporation (Shell), which contested the validity of Executive Order 839 issued by President Gloria Macapagal Arroyo in 2009.

The assailed EO mandated oil industry players to maintain petroleum product prices after tropical cyclones “Ondoy” and “Pepeng” wreaked havoc, resulting in damage to agriculture, properties and deaths.

The EO stated that Luzon was in a state of extreme emergency, “necessitating effective control and/or management of prices of basic goods and petroleum products by the Department of Trade and Industry and the Department of Energy, respectively, in accordance with the relevant laws of the land for the duration of this emergency.”

Shell questioned the constitutionality of Section 14 (e) of the Oil Deregulation Law, which formed the basis for EO 839.

The Makati Regional Trial Court sided with Shell, declaring Section 14 (e) void, but did not rule on the validity of EO 839 due to subsequent actions by the government.

The petitioners appealed to the CA, which upheld the decision regarding Section 14 (e) but still did not address the EO, rendered moot by the issuance of EO 845 which lifted its mandates and discontinued oil price controls. (PNA)