G.R. No. 209216, February 21, 2023
EXECUTIVE SECRETARY LEANDRO MENDOZA, DEPARTMENT OF ENERGY-DEPARTMENT OF JUSTICE JOINT TASK FORCE, AND DEPARTMENT OF ENERGY SECRETARY ANGELO T. REYES, PETITIONERS, VS. PILIPINAS SHELL PETROLEUM CORPORATION, RESPONDENT.

FACTS

In September and October 2009, typhoons Ondoy and Pepeng ravaged Luzon. President Gloria Macapagal-Arroyo declared a state of calamity through Proclamation No. 1898 and subsequently issued Executive Order No. 839, directing oil industry players to maintain the prices of their petroleum products during the emergency. The EO cited Section 14(e) of Republic Act No. 8479 (the Downstream Oil Industry Deregulation Act of 1998), which authorizes the Department of Energy (DOE) to temporarily take over or direct the operation of any entity in the oil industry “[i]n times of national emergency, when the public interest so requires.”
Pilipinas Shell Petroleum Corporation filed a Petition for Prohibition, Mandamus, and Injunction before the Regional Trial Court (RTC), assailing the validity of EO No. 839 and Section 14(e) of RA 8479 as an unreasonable and invalid delegation of emergency powers. While the RTC initially granted a Temporary Restraining Order, it later dismissed the petition as moot after President Arroyo issued EO No. 845, lifting EO No. 839. Pilipinas Shell moved for reconsideration and filed an Amended Petition for Declaratory Relief seeking to declare Section 14(e) unconstitutional. The RTC granted the motion, vacated the dismissal, and eventually declared Section 14(e) void and unconstitutional for failing to comply with the constitutional requirements for delegating emergency powers.
Petitioners (the Executive Secretary, the DOE-DOJ Joint Task Force, and the Energy Secretary) appealed to the Court of Appeals (CA). The CA affirmed the RTC’s decision, declaring Section 14(e) unconstitutional for unduly delegating the takeover power to the DOE without setting forth the necessary policy or standards. Petitioners’ motion for reconsideration was denied, prompting them to file a Petition for Review on Certiorari before the Supreme Court.

ISSUE

Whether Section 14(e) of Republic Act No. 8479 is unconstitutional for being an invalid delegation of emergency powers.

RULING

Yes, Section 14(e) of Republic Act No. 8479 is unconstitutional.
The Supreme Court affirmed the decisions of the lower courts. The Constitution requires a legislative imprimatur for a valid takeover of operations of public utilities or businesses affected with public interest. Article VI, Section 23(2) of the 1987 Constitution provides that in times of war or other national emergency, Congress may grant the President emergency powers for a limited period and subject to restrictions, which must be exercised only within the limits set by Congress.
Section 14(e) of RA 8479 authorizes the DOE, an executive agency other than the President, to temporarily take over or direct the operations of any entity in the oil industry “[i]n times of national emergency, when the public interest so requires.” The Court held that this provision constitutes an invalid delegation of legislative power. It fails to comply with the constitutional requirements under Article VI, Section 23(2) because: (1) it does not specify the purpose for which the emergency powers are granted; (2) it does not define the national emergency that would trigger the takeover power; (3) it does not set a limited period for the exercise of the power; and (4) it delegates the power to the DOE, not to the President as required by the Constitution. Furthermore, the law itself contains no declared national policy to guide or limit the DOE’s exercise of this delegated authority, making it an impermissible delegation of legislative power.