The government’s efforts to ensure a fair determination of pump prices of petroleum products received a boost from a Supreme Court decision that 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 upheld 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 8479, the law deregulating the downstream oil industry, granted the DOE the power to monitor and publish daily international crude oil prices, and to follow the movement of domestic oil prices.
To implement 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. Oil companies are required 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.
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.
The Supreme Court ruled that the oil industry petitioners “failed to establish a substantial or material invasion of a clear and unmistakable right against the implementation of DC2019-05-0008.” It declared: “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.”
In light of the Supreme Court’s decision, former Representative Carlos Isagani Zarate, who is presently Bayan Muna executive vice president, has prodded Congress to pass a fuel cost unbundling law that would institutionalize the DOE’s exercise of its regulatory powers. Indeed, this move would reinforce the government’s efforts to ensure a higher level of transparency and accountability from the oil companies who have anchored their plea for judicial relief on their need for wider latitude in price-setting in consonance with deregulation.
Recall that prior to the enactment of Republic Act 9136 on reforms in the structure of the electric power industry, the Energy Regulatory Board, precursor of the Energy Regulatory Commission, determined pump prices that, in turn, were linked to the level of fares for public transportation. Invariably, oil price increases generated spirited protests from jeepney drivers and other public transport operators. The general public was, of course, affected significantly by increases in jeepney and bus fares, as well as similar upward adjustments upholding the government’s efforts to ensure a higher level of transparency and accountability in fares charged by airlines and inter-island vessels.
Following the Supreme Court’s decision, the citizenry expects Congress to promptly enact a law that strengthens the hand of government in regulating an industry imbued with high public interest.