MANILA, Philippines – The oil industry is taking its fight against the oil price freeze to the courts.

Pilipinas Shell Petroleum Corp. has filed an urgent petition with the Makati Regional Trial Court to order Malacañang to lift Executive Order No. 839 freezing the prices of petroleum products in Luzon.

In a petition for prohibition, mandamus and injunction, Shell asked the court to issue a temporary restraining order against the continued implementation of the EO on grounds that it is unconstitutional.

It named as respondents Executive Secretary Eduardo Ermita and Energy Secretary Angelo Reyes, representing the Department of Energy-Department of Justice (DOE-DOJ) joint task force implementing the order.

On Oct. 24, Malacañang issued EO 839 freezing oil prices at Oct. 15 levels, as a means of mitigating the effects of a succession of typhoons that last month devastated parts of Luzon which remain under a state of calamity.

The oil industry, supported by big business groups, has strongly opposed the EO and called for its lifting, arguing that oil companies have been incurring losses because of the huge gap “between the cost and the pump price.”

Roberto S. Kanapi, Shell vice president for communications, claimed the EO did not meet the conditions prescribed in the Constitution for determining the exceptional circumstances that would warrant the Chief Executive’s exercise of emergency powers.

Unconstitutional

According to the Shell petition, President Macapagal-Arroyo, through the EO, “unilaterally determined the existence of exceptional circumstances warranting the direction of the oil firms, including Shell,” in direct contravention of the Constitution.

It also disputed the EO’s premise that the President’s exercise of emergency powers was based on the Oil Deregulation Law.

It said the Oil Deregulation Law was not the operative legislation in this case as “it does not contain reasonable terms and restrictions set by the Constitution.”

Shell similarly raised serious concerns about the “grave and irreparable injury” that EO 839 could inflict not just on the oil industry but also on business and the larger economy as well as the Philippines’ international reputation, which it said far outweighed whatever the intended benefits it would bring to the people.

A grave consequence of the EO, it said, was that it may “logically result in supply shortages, rationing of petroleum products, and the development and growth of illegitimate market for oil products in the country.”

Threats and blackmail

Responding to industry warnings that prices of petroleum products could spike once the EO is lifted, presidential economic spokesperson Gary Olivar yesterday said that while the government cannot stop the oil companies from “doing what they want to do,” the joint task force would continue to keep tabs on prices and take action, if needed.

Ramon Villavicencio, chair of the Flying V oil firm, has alerted the public to brace for an increase in the prices of gasoline and diesel by P4.50 a liter once Malacañang decides to lift the price cap.

Villavicencio said he would propose that the increase be staggered over a three-week period, of around P1.50 a liter per week.

Palace warning

Press Secretary Cerge Remonde shrugged off Villavicencio’s warnings about future increases.

“We will allow the spokesmen and executives of oil companies to let off steam,” he said.

“We should not be fooled by those statements ... If they will divert or resort to hoarding, we will throw the book at them,” Remonde said.

Remonde also warned the industry against painting grim scenarios.

“In the meantime, we continue to appeal to the oil companies and their executives to stop raving and ranting because they are not helping the situation, and definitely they cannot blackmail this government,” he said.

The President has refused a request from the oil industry for a dialogue, saying any consultations should be done with the DOJ-DOE joint task force.

Behave responsibly

Olivar said the government could also appeal to the oil companies to behave responsibly by being transparent in their operations.

“They produce a commodity that is essential, with very few substitutes, and commands a big slice of people’s budgets. The nature of their business demands that they behave more responsibly than other regular businessmen,” he said.

For starters, they should justify future price increases, “if they care at all how the public feels,” Olivar said.

The oil companies should also “shed light” on their inventory accounting methods, forward supply contracts, and the manner and cost of transporting oil from the source to its destination, he said.

“If they want sympathy and understanding from the public, they have to be more transparent about their finance operations, and not just about their financial statements,” he said.

No such order

Remonde also clarified that Justice Secretary Agnes Devanadera never recommended the possible lifting of the order in some areas.

Devanadera was quoted in the newspapers as saying that there “may be a lifting of the freeze order in certain areas such that only specific local government units are covered.”

Opposition Sen. Francis Escudero, who is aspiring to run for President, yesterday denounced what he called the “scare tactic of oil industry proxies” demanding the lifting of the oil price freeze.

Escudero said the government must remain steadfast and remove controls in the affected areas only when it sees that the afflicted communities have recovered well enough from the devastation.

“We all know that a surge in fuel prices will be likely when controls are lifted. This will impact on prices of basic commodities and likely lead to higher transport costs. This will mean more Filipinos going hungry,” he said.

Unresponsive law

Escudero urged Congress to act on proposals to amend or the repeal the Oil Deregulation Law when it resumes sessions on Monday.

“The law has become unresponsive to our needs. It has failed to spur competition and establish a regime of fair prices,” he said. With Michael Lim Ubac