The Supreme Court (SC) has affirmed the validity of the circular issued by the Department of Energy (DOE) which required oil companies to “unbundle” or disclose the details of price adjustments with explanation and supporting documents.
In a decision written by Associate Justice Ramon Paul L. Hernando in GR No. 266310 promulgated last July 31 but made public last Sept. 10, the SC affirmed the 2022 and 2023 rulings of the Court of Appeals (CA) which reversed that issued in 2019 by the regional trial court (RTC).
Republic Act No. 8479, the Downstream Oil Industry Deregulation Act of 1998, was enacted to "liberalize and deregulate the downstream oil industry in order to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply of environmentally clean and high-quality petroleum products."
Among other mandates, RA 8479 granted the DOE the power to monitor and publish daily international crude oil prices, and to follow the movement of domestic oil prices.
In line with the law, the DOE issued Department Circular No. DC2019-05-0008, the Revised Guidelines for the Monitoring of Prices in the Sale of Petroleum Products by the Downstream Oil Industry in the Philippines.
The circular requires oil companies, among other things, to submit to the Oil Industry Management Bureau (OIMB) a report containing the detailed computation with corresponding explanation and supporting documents on unbundled items comprising the Oil Company Price, as provided in the prescribed format.
In 2019, the DOE’s circular was challenged before the Makati City RTC by the Philippine Institute of Petroleum, Inc. (PIP), Isla LPG Corporation, PTT Philippines Corporation, and Total Philippines.
They claimed that the DOE circular violated their rights and is contrary to RA 8479 because Articles II, IV, and V are forms of price control, and contrary to the policy of full deregulation of the downstream oil industry; impose impossible requirements on oil companies and other related parties; and do not find support in RA 8479 with respect to the law’s anti-trust provisions.
They also said that the circular is an ultra vires (beyond the powers) act of the DOE. They asked the RTC to issue a temporary restraining order (TRO) and a writ of preliminary injunction.
On Aug. 14, 2019, the RTC issued a writ of preliminary injunction that stopped the DOE from implementing it circular.
When its motion for reconsideration was denied by the RTC, the DOE elevated the issue before the CA. On Oct. 2, 2022, the CA partly granted the DOE’s petition.
The CA, however, ruled there was no basis for the issuance of a preliminary injunction. It sustained the position of DOE that there is no clear right to be violated by the implementation of DC2019-05-0008 as the same does not impose any price control nor dictate market prices to influence and regulate the oil industry.
Also, the CA ruled that the alleged damage that would be suffered by the oil companies is "more imagined than real since these are bare allegations founded on an unclear source of right, and in the absence of proof of a legal right and the injury sustained by one who seeks an injunctive writ, an order for the issuance of a writ of preliminary injunction will be nullified”
The issue was elevated to the SC by the firms which filed the RTC case.
The SC ruled:
“It is settled that a writ of preliminary injunction should be issued only to prevent grave and irreparable injury, that is, injury that is actual, substantial, and demonstrable.
“Injury is deemed irreparable when there is no standard by which their amount can be measured with reasonable accuracy.
“In this case, PIP et al. (petitioners) assert that there is an urgent and paramount necessity for the issuance of a writ of preliminary injunction because of the irreparable damage that they and numerous other entities in the oil industry will incur as a result of DC2019-05-0008's violation of their right to a fully deregulated industry and right to their trade secrets.63
“However, as extensively discussed above, PIP et al. failed to establish a substantial or material invasion of a cleat and unmistakable right against the implementation of DC2019-05-0008. Since there is no legal right in the first place, there can be no irreparable injury to speak of.
“All told, the Court finds that the CA did not commit any grave error when it reversed and set aside the trial court's Resolution and Order which granted PIP et al.'s prayer for the issuance of a writ of preliminary injunction, considering that the requisites thereof were not met.
“Accordingly, the instant Petition for Review on Certiorari is denied. The decision dated Oct. 3, 2022, and the Resolution dated March 3, 2023 of the Court of Appeals in CA-G.R. SP No. 164764 are affirmed. So ordered.”