Republic of the Philippines

COURT OF APPEALS

Manila

 

 

NINTH DIVISION

 

 

EXECUTIVE SECRETARY LEANDRO MENDOZA, DEPT. OF ENERGY-DEPT. OF JUSTICE JOINT TASK FORCE & DEPT. OF ENERGY SECRETARY ANGELO T. REYES,

 

Respondents-Appellants,

 

– versus –

 

PILIPINAS SHELL PETROLEUM CORPORATION,

 

Petitioner-Appellee.

CA-G.R. CV No. 96326

 

 

 

 

Members:

 

REYES, JR., J. C.

Chairperson,

LOPEZ, M. V., and

INTING S.B., JJ.

 

 

 

Promulgated:

 

June 25, 2013

 

 

DECISION

 

 

INTING, S. B., J.:

 

 

For consideration before this Court is an appeal which assails the Decision1 dated August 23, 2010 of the Regional Trial Court of Makati (Branch 59) which admitted the Amended Petition for Declaratory Relief of petitioner-appellee Pilipinas Shell Petroleum Corporation (Shell, for brevity) and declaring Section 14 (e) of Republic Act No. 8479 unconstitutional for being an invalid delegation of power by the Congress to the Department of Energy.

 

THE FACTS

 

One of the most devastating typhoons that hit the country was typhoon Ondoy which occurred on September 26, 2009 and followed by typhoon Pepeng which was almost equally strong.  Due to the piteous or deplorable destruction which the two super typhoons brought to the country, more specifically in Metro Manila and Northern Luzon, then President Gloria Macapagal-Arroyo (Pres. GMA, for brevity) issued Proclamation No. 18982 declaring a state of national calamity, after which she issued Executive Order No. 8393 mandating that oil prices being sold by the oil companies in the country shall be retained at the level retail of the retail price of petroleum products prevailing on October 15, 2009.  Said executive order was issued pursuant to Section 14 (e) of R.A. No. 84794 which reads:

 

(e)     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.

 

Pursuant to the above, Section 1 of E.O. No. 839 provides:

 

SECTION 1.  Directive to Oil Industry Players. – Pursuant to Section 14 (e) of R.A. No. 8479, and for the duration of the state of emergency in the entire Luzon, oil industry players are hereby directed to retain the level of the retail price of petroleum products prevailing on October 15, 2009, which was one (1) week after the last landfall of typhoon ‘Pepeng’ [Parma].

 

And to further implement E.O. No. 839, Department Circular No. DC 2009-10-0013 was issued on November 1, 2009.

 

Claiming that it is gravely prejudiced by the aforesaid law and issuances, Shell filed with the trial court a Petition for Prohibition, Mandamus and Injunction (With Prayer for the Issuance of a Temporary Restraining Order And/Or Writ of Preliminary Injunction)5, assailing the validity of EO 839 and ultimately praying, among others, that Section 14 (e) of R.A. No. 8479 be declared void and unconstitutional for being oppressive, unreasonable and constitutes an invalid delegation to the Executive Department of the exercise of emergency powers, in direct contravention of Par. 2, Section 23 of Article VI of the Constitution.

 

After hearing Shell’s application for TRO, the trial court issued an Order6 dated November 13, 2009 granting the TRO.  On even date, Pres. GMA issued E.O.No. 845 lifting EO 839 and in effect discontinued the prevailing oil price freeze and which directive was made to take effect on November 16, 2009.

 

On December 1, 2009, public respondents-appellants Executive Secretary Leandro Mendoza, Dept. of Energy-Dept. of Justice Joint Task Force & Dept. of Energy Secretary Angelo T. Reyes, represented by the Office of the Solicitor General, (The Government, for brevity), moved for the reconsideration of the Order granting the TRO.  Shell filed its Comment to the motion for reconsideration and at the same time moved that the public respondents be declared in default in accordance with Section 3, Rule 9 of the Rules of Court.

 

On January 5, 2010, the trial court dismissed Shell’s petition for being moot and academic considering that E.O. 839 has already been lifted by E.O. 845.

 

On January 20, 2010, Shell moved for the reconsideration of the Order dismissing its petition to which the Government filed a Comment and in turn Shell countered with a Reply.  On April 23, 2010, while the motion for reconsideration was pending, Shell filed a Manifestation and an Amended Petition for Declaratory Relief7 likewise seeking for the declaration of nullity and unconstitutionality of Section 14 (e) of RA 8479.

 

The Government filed its Manifestation and Motion questioning the propriety of the trial court’s admission of Shell’s Amended Petition for Declaratory Relief arguing that said amended petition lacked factual and legal basis because the issues in the original petition were already joined and that the trial court has taken cognizance of the pleadings previously filed.

 

On May 7, 2010, the trial court issued an Order8 granting Shell’s motion for reconsideration and in effect vacating its earlier Order dismissing the original petition.  The motion for reconsideration subsequently filed by the Government was denied.  Thereafter, the Government filed a motion setting the case for hearing on its special and affirmative defenses, to which Shell filed its Comment/Opposition.

 

After hearing and due proceedings, the trial court came out with its assailed Decision granting Shell’s amended petition for declaratory relief and declaring Section 14 (e) of RA 8479 void and unconstitutional.

 

Pertinent portions of the assailed Decision read:

 

“Finally, a search in R.A. No. 8479 for a national policy declared by Congress to be pursued under Section 14 (e) of R.A. No. 8479 proved empty.  No other mention or reference of the exercise of emergency powers and government temporarily taking over the petroleum industry is made in the entire R.A. No. 8479, except for Section 14 (e).

 

“Ironically, the law is entirely devoted to justifying and implementing a policy of non-interference by the government in the business of petroleum.  Since the requirements of law delegating to the President is constitutionally set forth in Paragraph 2, Section 23, Article VI of the Constitution, and since Section 14 (e) of R.A. No. 8479 does not comply with any of these constitutional requirements, this Court is constrained to declare Section 14 (e) of R.A. No. 8479 unconstitutional.”

 

Hence, the filing of the present recourse.

 

ASSIGNMENT OF ERRORS

 

In this appeal, the Government submits the following:

 

THE TRIAL COURT ERRED IN HOLDING THAT SECTION 14 (e) OF REPUBLIC ACT NO. 8479 IS UNCONSTITUTIONAL FOR BEING AN INVALID DELEGATION OF EMERGENCY POWER TO THE PRESIDENT;

 

THE PETITION IS MOOT AND ACADEMIC;

 

THE TRIAL COURT ERRED IN ADMITTING THE AMENDED PETITION WITHOUT AFFORDING THE RESPONDENTS THE OPPORTUNITY TO FILE ITS OPPOSITION THERETO CONSIDERING THAT THE ISSUES IN THE ORIGINAL PETITION HAD ALREADY BEEN JOINED;

 

RES JUDICATA BARS ANOTHER CHALLENGE TO THE OIL DEREGULATION LAW; and

 

THE REQUISITES FOR A PETITION FOR DECLARATORY RELIEF HAVE NOT BEEN MET.

 

THIS COURT’S RULING

 

The appeal is denied.

 

Involved in this case is a constitutional issue which is a pure question of law.  As such, it should be properly raised in a Petition for Review on Certiorari filed with the Supreme Court pursuant to Section 2 (c) of Rule 41 in accordance with Rule 45 of the Rules of Court, not by an ordinary appeal via Section 2 (a) of Rule 41, just as what the Government did here.  Thus, for being a wrong mode of appeal, which is a ground for dismissal, this case deserves outright dismissal.

 

Be that as it may, We shall discuss the substantive aspect of the case and go into the merits if only to further enlighten the parties on the intricacies of the case.  We shall do so also pursuant to the mandate of the law, that is, to resolve cases on the merits.

 

Every law enjoys in its favor the presumption of constitutionality.  But of course, where the law clearly and palpably transgresses the hallowed domain of the organic law, it must be struck down on sight lest the positive commands of the fundamental law be unduly eroded.9

 

In the present case, while there may be several errors raised by the Government, it is apparent that what actually lies in the hot seat is the constitutionality of Section 14 (e) of R.A. No. 8479 insofar as it delegated to the Department of Energy, not even to the President, the power to temporarily take over or direct the operation of any person or entity engaged in the oil industry, in times of national emergency and when the public interest so requires.  And, the main challenge to said provision is anchored on Section 23, Article VI of the Constitution.

 

In its Brief, the Government maintains that said provision is constitutional as it is complete in terms of setting out the duration of the emergency with the phrase “during the emergency” and under reasonable terms.10  For its part, Shell insists that it is unconstitutional on three grounds.  First, it is an invalid delegation to the Executive Department of functions which are eminently legislative in character.  Second, it is incomplete, that is, it does not set forth the policy to be executed, carried out or implemented by the Executive Department.  Third, for failure to fix a standard to which the delegate must conform in the performance of his/her functions.11

 

The exercise of emergency powers is controlled by Section 23, Article VI of the Constitution which provides:

 

SEC. 23.  (1) The Congress, by a vote of two-thirds of both Houses in joint session assembled, voting separately, shall have the sole power to declare the existence of a state of war.

 

“(2) In times of war or other national emergency, the Congress may, by law, authorize the President, for a limited period and subject to such restrictions as it may prescribe, to exercise powers necessary and proper to carry out a declared national policy.  Unless sooner withdrawn by resolution of the Congress, such powers shall cease upon the next adjournment thereof.”

 

Pertinent to the above is Section 17, Article XII of the Constitution which provides as follows:

 

“The State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with public interest.”

 

Up until the present, when emergency powers of the President is put into question, the landmark case of David, et. al. v. Arroyo, et. al.12 is highly instructive.  In said case, the Supreme Court meticulously discussed the parameters upon which said power must be exercised, pertinent portions of the decision read:

 

“But the exercise of emergency powers, such as the taking over of privately owned public utility or business affected with public interest, is a different matter.  This requires a delegation from Congress.

 

“Courts have often said that constitutional provisions in pari materia are to be construed together.  Otherwise stated, different clauses, sections, and provisions of a constitution which relate to the same subject matter will be construed together and considered in the light of each other.  Considering that Section 17 of Article XII and Section 23 of Article VI, previously quoted, relate to national emergencies, they must be read together to determine the limitation of the exercise of emergency powers.

 

“Generally, Congress is the repository of emergency powers.  This is evident in the tenor of Section 23 (2), Article VI authorizing it to delegate such powers to the President.  Certainly, a body cannot delegate a power not reposed upon it.  However, knowing that during grave emergencies, it may not be possible or practicable for Congress to meet and exercise its powers, the Framers of our Constitution deemed it wise to allow Congress to grant emergency powers to the President, subject to certain conditions, thus:

 

“(1) There must be a war or other emergency.

 

“(2) The delegation must be for a limited period only.

 

“(3) The delegation must be subject to such restrictions as the Congress may prescribe.

 

“(4) The emergency powers must be exercised to carry out a national policy declared by Congress.”

 

Given the foregoing, can it be said that Section 14 (e) of RA 8479 has satisfied the conditions and limitations set forth in Section 23, Article VI of the Constitution for the valid exercise of emergency powers?

 

Let us examine Section 14 (e) of RA 8479. It reads:

 

“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.”

 

Certainly, a plain reading of Section 14 (e) of RA 8479 readily tells us that it failed to comply with the parameters prescribed by Section 23, Article VI of the Constitution, thus, rendering it unconstitutional.

 

First, it is clear from the words of the provision that it does not declare any existence of war or other national emergency to warrant the President’s exercise of emergency powers.  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.

 

To be clear on this point, the same case of David, et. al. v. Arroyo, et. al., is illuminating, to wit:

 

“Section 17, Article XII must be understood as an aspect of the emergency powers clause.  The taking over of private business affected with public interest is just another facet of the emergency powers generally reposed upon Congress.  Thus, when Section 17 states that the “the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with public interest,” it refers to Congress, not the President.  Now, whether or not the President may exercise such power is dependent on whether Congress may delegate it to him pursuant to a law prescribing the reasonable terms thereof.”

 

Clearly, the power to determine whether exceptional circumstances exist to warrant the power to take-over or direct the operation of businesses affected with public interest such as the oil industry is reposed upon Congress.  As such, the President may not be delegated the power to determine whether it may be authorized to exercise emergency powers since such determination is one which is eminently and essentially legislative in character.

 

The High Court continues:

 

“Let it be emphasized that while the President alone can declare a state of national emergency, however, without legislation, he has no power to take over privately-owned public utility or business affected with public interest.  The President cannot decide whether exceptional circumstances exist warranting the takeover of privately-owned public utility or business affected with public interest.  Nor can he determine when such exceptional circumstances have ceased.  Likewise, without legislation, the President has no power to point out the types of businesses affected with public interest that should be taken over.  In short, the President has no absolute authority to exercise all the powers of the State under Section 17, Article VII in the absence of an emergency powers act passed by Congress.”

 

Hence, with more reason, the DOE lacks power to exercise emergency powers.

 

Secondly, Section 14 (e) of RA 8479 does not prescribe a specific duration or period within which the power is to be exercised.  It is apparent from the provision that it is within the sole discretion of the DOE to determine not only the existence of the emergency but likewise the extent thereof, contrary to the “limited period” requirement provided for by Section 23, Article VI of the Constitution.  Otherwise stated, the determination of the duration or period of when the take-over powers must be exercised is left with the DOE Secretary, a significant act which only the Congress has the power to perform.  Again, on this ground alone, the assailed provision falls short of the limitations laid down under Section 23, Article VI of the Constitution.

 

Thirdly, the questioned provision neither provides for certain or specific restrictions nor reasonable terms and conditions prescribed by Congress upon which the power to temporarily take over or direct the operation of the public utility or business should be performed.  Instead, it provides that it will be the DOE which has the power to prescribe certain or specific restrictions and reasonable terms and conditions upon which the power to temporarily take over or direct the operation of the public utility or business be performed, thus, running counter to the third limitation provided for by Section 23, Article VI of the Constitution.  As such, the argument of the appellants that the provision is complete since it provides for reasonable terms is futile.  After all, such power does not belong to the DOE but to Congress.

 

Lastly, no national policy declared by Congress was found therein regarding the take-over or direction of operations of persons or entities engaged in the oil industry. After all, the declared national policy of Congress in enacting RA 8479 is only with respect to the liberalization and deregulation of the oil industry for the purpose of encouraging fair and competitive pricing.  For that matter, Section 14 (e) is obviously a misplaced provision in RA 8479.

 

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.

 

For all the above reasons therefore, Section 14 (e) of RA 8479 must be struck down for being unconstitutional.

 

As regards the other errors assigned by the appellants, this Court observes that the same have been properly addressed by the trial court, hence, requiring no further resolution.

 

WHEREFORE, the appeal is DENIED. Section 14 (e) of Republic Act No. 8479 is declared unconstitutional and therefore NULL and VOID.  Accordingly, the Decision dated August 23, 2010 of the Regional Trial Court of Makati City (Branch 59) is hereby AFFIRMED.

 

SO ORDERED.

 

 

 

 

SOCORRO B. INTING

    Associate Justice

 

 

WE CONCUR:

 

 

 

 

JOSE C. REYES, JR.

Associate Justice

 

 

 

 

MARIO V. LOPEZ

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.

 

 

 

 

JOSE C. REYES, JR.

Associate Justice

Chairperson, Ninth Division


___________________________

 

1Rollo, pp. 12-20

 

2Dated October 2, 2009

 

3Directing Oil Industry Players to Maintain Prices of Petroleum Products Prevailing on the Last Landfall of Typhoon “Pepeng” (PARMA) During the Period of Emergency in the Entire Island of Luzon.”

 

4Oil Deregulation Law of 1998

 

5Records, Vol. I, pp. 1-78, filed November 5, 2009

 

6Records, Vol. I, pp. 265-268

 

7Records, Vol. I, pp. 461-536, dated April 21, 2010

 

8Records, Vol. I, pp. 461-536, dated April 21, 2010

 

9See Estrada v. Sandiganbayan, et. al., G.R. No. 148560, November 19, 2001.

 

10Rollo, Appellee’s Brief, pp. 89-175, filed September 8, 2011

 

11Rollo, Brief for the Appellants, pp. 41-72, filed June 8, 2011

 

12G.R. No. 171396, May 03, 2006

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