By Atty. Julius Gregory B. Delgado

EXECUTIVE SECRETARY, ET AL. VS. PILIPINAS SHELL PETROLEUM CORPORATION,

G.R. NO. 209216 (February 21, 2023): Restatement of the Doctrine of Qualified Political Agency

At the crux of the controversy is Section 14 (e) of Republic Act No. 8479, or the Downstream Oil Industry Deregulation Act of 1998, which authorizes the Department of Energy to take over operations of private entities in the oil industry given certain conditions, to wit: “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.”

In September and October 2009, typhoons Ondoy and Pepeng successively ravaged Luzon, severely affecting over 9 million people and leaving almost 1,000 casualties, 700 injured, and 84 missing. On October 2, 2009, then President Gloria Macapagal-Arroyo (“FPGMA”) declared a State of Calamity through Proclamation No. 1898 and issued Executive Order No. 839 directing oil industry players to maintain the oil process of their petroleum products during emergency.

Pilipinas Shell Petroleum Corporation (“Pilipinas Shell”) filed a Petition for Prohibition, Mandamus, and Injunction (with prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction) against then Executive Secretary Eduardo R. Ermita, the Joint Task Force, and then Energy Secretary Angelo Reyes. It assailed Executive Order No. 839 and Section 14 (e) of Republic Act No. 8479 as unreasonable, oppressive, and invalid delegation of emergency powers to the Executive.

The Regional Trial Court issued a TRO. Two (2) days later, however, Executive Order No. 845 was issued lifting Executive Order No. 839 and discontinued the Oil Price Freeze. The RTC eventually issued a Decision granting Pilipinas Shell’s Amended Petition declaring Section 14 (e) of Republic Act No. 8479 as void. Executive Secretary, et al. appealed but their appeal was denied. Hence, a Petition for Review on Certiorari was filed before the Supreme Court to determine if an executive agency, other than the President, may properly exercise such takeover power under Section 14 (e) of Republic Act No. 8479.

There are other procedural and substantive issues which will not be discussed in this column, namely: 1) whether the Court of Appeals correctly dismissed the appeal outright for wrong remedy of filing an ordinary appeal instead of filing a Petition for Review under Rule 45 directly to the Supreme Court on pure questions of law; 2) whether the Regional Trial Court erred when it allowed/admitted Pilipinas Shell’s Amended Petition without leave of court or comment from the Executive Secretary, et al.; 3) whether the case is barred by res judicata by virtue of the ruling in Garcia vs. Corona, G.R. No. 132451 (December 17, 1999); 4) whether the case has been rendered moot and academic by the subsequent lifting of the Oil Freeze Order; and 5) whether there is actual or justiciable controversy as would render a Petition for Declaratory relief proper which the Supreme Court held in the affirmative since so-called “as -applied” challenges are based on: (a) existence of facts showing actual breach; or (b) a demonstrable contrariety of legal rights (Executive Secretary, et al. asserting that Section 14 (e) of Republic Act No. 8479 is valid while Pilipinas Shell arguing that the said provision is an improper delegation of legislative authority to an entity other than the president).

On the main issue, the Supreme Court held that the Petition is impressed with merit. Section 17, Article XII of the 1987 Philippine Constitution allows for the takeover of operations of privately owned public utilities or businesses affected with public interest with limitations set in Section 23, Article VI of the 1987 Philippine Constitution which authorizes the President, for a limited period and subject to such restrictions as it may prescribe, to exercise such powers necessary and proper to carry out a declared national policy in times of war or other national emergency and with proviso that such power automatically ceases upon the next adjournment of Congress unless sooner withdrawn by a Resolution of Congress.

The Court held that the Legislature’s delegation of authority to any entity other than the President seemingly contravenes with the constitutional provision in Section 17, Article XII of the 1987 Philippine Constitution which gives the President the power to take over public utilities or businesses impressed with public interest only with congressional authority. However, Section 17, Article VII of the 1987 Philippine Constitution states that “The president shall have control of all the executive departments, bureaus and offices. He shall ensure that the laws be faithfully executed.”

The Court restated the well-established doctrine of Qualified Political Agency which recognizes the multifarious responsibilities a President faces, which calls for the delegation of certain responsibilities to the Cabinet Members. It posits that the heads of the various executive departments stand as President’s alter egos permitted to act on behalf of the President. The Court further held that in other words, the President may carry out their functions through the heads of the executive departments. 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. The doctrine dictates that the president retains control, having the authority to “confirm, modify or reverse the action taken by his department secretaries.”

Citing the case of Villena vs. Secretary of Interior, G.R. No. L-46570 (April 21, 1939), the Supreme Court held that there are instances wherein it must be the President alone who should exercise a power vested under the 1987 Philippine Constitution. However, takeover of businesses in times of emergency is not one of them.

“Thus, while some powers require, for practicality’s sake, delegation to the alter egos, a number of constitutional provisions specifically require a positive action from the president themself. As stated in Villena, these include the president’s power to pardon, declare martial law, and suspend the privilege of the writ of habeas corpus. These are exceptional presidential powers that, if exercised, would require the suspension of fundamental liberties. Moreover, these instances require the chief executive to act personally because the exigencies of the situation demand it. Thus, for a power to be placed in this special category, it must be shown to hold the same weight or exceptional significance as those enumerated above.

Notably, and as observed by Justice Caguioa, the temporary takeover power does not belong to the ‘special class of constitutionally[ ]vested powers’ exclusive to the president. Certainly, the temporary control over oil industry entities does not involve the suspension of constitutionally protected liberties, but the regulation of the operation of a public utility or a private enterprise that affects public interest. This does not entail that the president personally handle the takeover. As specified by the law, the takeover authority will be employed during national emergencies; it would be unreasonable to expect the president to exercise all of the control powers simultaneously and in person during such times. Consequently, the president would require the assistance of their alter egos in addressing the numerous issues at hand.”

The Supreme Court also held that while the language of Section 14 (e) of Republic Act No. 8479 appears to allow an interpretation that permits the Energy Secretary to act independently or without instructions from the President, the doctrine of qualified political agency entails that a cabinet secretary may only exercise the authority acting as the President’s alter ego. As such, their actions related to their official duties and responsibilities are presumed to be the President’s and are valid and binding unless the President disapproves or repudiates the same. Finally, their acts are subject to ratification or rejection of the President; any exercise contrary to the President’s intent or instructions shall be deemed ultra vires and an unconstitutional usurpation of executive power. The Court found no evidence that the Energy Secretary acted in contrast to the President’s intent or instructions.

“Thus, Section 14( e ), as it currently stands, is constitutional. Nonetheless, if, in the exercise of its delegated authority, the energy secretary acts in contrast with the president’s intent or instructions, the act will be deemed ultra vires 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 . Here, if there is no clear showing that the energy secretary acted without the imprimatur of the president, the presumption of constitutionality must prevail.”

The Supreme Court reversed and set aside the Decision and Resolution of the Court of Appeals and Section 14 (e) of Republic Act No. 8479 is declared constitutional.