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Executive Order No. 839, or EO 839, was an executive order signed by President

Gloria Macapagal-Arroyo on October 23, 2009 which directs all oil industry firms to

freeze the prices of petroleum products throughout Luzon prevailing on the last

landfall of Typhoon Pepeng. EO 839 prevented oil companies from increasing their

gas pump prices in Luzon and instead, maintained these at October 15 levels. This

move is supposedly an affirmation of the companies corporate social responsibility.

Since it is an Executive Order, oil companies had no other choice but to follow even

if the government had earlier said that compliance to EO 839 will be voluntary.

EO 839 was necessary to help the public, especially those affected by the damages

caused by super typhoons Ondoy and Pepeng in Luzon. Prior to the issuance,

President Arroyo declared a "state of calamity" throughout Luzon after thousands of

people was left devastated by the two typhoons.

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The government justified the implementation of EO 839, stating that it is in accord

with Republic Act 8479, otherwise known as the Downstream Oil Industry

Deregulation Act of 1998.

According to Justice Secretary Agnes Devanadera, this
 

 


               

 

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The declaration of EO 839 alarmed the Philippine business community as the EO

itself did not specify any prescription period. Why was it a cause for alarm?

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. Companies were caught

off-guard with the announcement. It should be noted that oil companies are

corporate persons who are directly accountable to their shareholders and thus, they

report to these entities whatever profit or loss they get from operating the same.

Again, these companies do not operate for charitys sake and, if operational losses

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www.sunstar.com.ph/
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come their way, they can tolerate only so much and not to the point that they

continue to operate even if they do not get to recover substantial gains from what

they have invested in. Thus, when a point will come that operational losses become

unsustainable to them, they will be forced to either stop importing and or stop selling.


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?  ?  ? Since there was no specified prescription period for the order,

companies expect to incur some losses for every day of operations. Because of this,

consumers [businesses and the public] fear that once the order will be lifted, these

oil companies will be forced to recover their losses by increasing the prices of

petroleum products in the market. When this happens, consumers will again suffer

the consequence.


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?  This means since that while oil prices in Luzon are relatively

lower, oil companoes can readily increase the prices of oil products in the Visayas

and Mindanao areas. This means further that oil companies will be forced to divert

the supply to the Visayas and Mindanao areas where gasoline and oil prices will be

relatively higher. In effect, consumers will be faced with increasing prices of

commodities and other products.

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Although the government insists that its purpose was to help ease the burden of the

public on the adverse effects of super typhoons Ondoy and Pepeng, its issuance

was done many days after these typhoons hit Luzon. On the other hand, the

absence of the prescription period in the Executive Order further makes it

susceptible to whatever changes the government will institute. In effect, oil

companies would be faced with difficulty in planning out procurement and managing

inventory supply.


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After the issuance of Executive Order 839, I immediately entertained the idea of

gasoline stations hoarding fuel, but hoarding according to my own definition was to

be limited only to Luzon and I was not expecting it to go down to the level of a

province like Bohol, which was not affected by the two typhoons. In fact, when gas

stations here ran short of gasoline sometime in November, I almost forgot about EO

839. I only got to remember about it when I tried to refuel at one of Tagbilarans

gasoline stations, and only to find out that they too, ran out of gasoline. I really had

to go to the next station and discovered the long line of vehicles waiting for their turn

to refuel. So, a province like Bohol, far from Luzon and never hit by typhoons Ondoy

and Pepeng could suffer their consequence, after all.

Thus, the issuance of EO 839 was after all, never futile. Why?

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First, it was able to mitigate the perceived sudden increase in prices of basic and

prime commodities. If not for EO 839, every Juan de la Cruz would blame the

calamities as the culprits for increases in the prices of gasoline and fuel. This is

practically true because in most instances of oil price hike in the country, prices of

basic and prime commodities usually go at a similar pace. %     

         &so goes the famous statement.

Second, government was just doing its role of not failing the people. If there was

inaction on the part of the government, chances are throngs of people would march

out onto the streets and/or lambast the government as being inutile and not doing

anything to abate the problem. In addition, although the issuance of EO 839 was

only temporary, it was not meant to jeopardize the operations of oil companies and

other industry players. It only asked these companies to take on their corporate

social responsibility by helping the poor fare through the crisis that the country had.

In a more frank manner, it asked oil companies to take a loss* even for just a few

days or weeks and then share this loss to the public if only to help the typhoon

victims go through all their tribulations.

On the other hand, the issuance of the same Executive Order posted threats to the

entire Philippine business community. The reasons here are quite obvious:

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Due to foreseen losses of oil companies, majority of oil companies will be forced

to cut on importations. Another scenario would be that these companies will

temporarily close business, or do some rationing of supply in some areas, since

they would not want to sell at a loss.

While EO 839 was still in force, there was, in my opinion an artificial shortage of

gasoline in the Philippine market and Luzon was most affected by this. From my

standpoint, I expected that there will be a surge in supply of gasoline locally, but

contrary to my perception then, even Bohol suffered this shortage.

On the part of oil companies, directing oil inventories to Visayas and Mindanao

seemed to be part of the solution to their problem of recovering losses from

operations. The redirection enabled oil companies to recover their losses in

Luzon.

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Albay Governor Joey Salceda expressed his concern that EO 839 will result to

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Again, the issuance of EO 839 forced me to think that it would result to forced

losses in oil sales and thus, pose a discouragement to any investment in the oil

sector. I further thought that the rationing of supply will ultimately result to a

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Statement of Albay Gov. Joey Salceda, Economic Adviser to PGMA
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sudden increase in oil prices such that this would send a negative message to

investors. Any investments in the country, whether existing or potential, that

are dependent on petroleum will be adversely affected- production and

marketing costs will be lessened and thus losses will be incurred. Down the

chain, even the modest Juan de la Cruz* will suffer its aftermath in the long

run.

However, while the issuance of EO 839 was only temporary, many have commented

on the order as illegal because it was not allowed under the oil deregulation law.

In my opinion, the legality of the Executive Order is not to be questioned because

under the Philippine Constitution, the *   

       
 


       
            
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Although its issuance was only temporary in nature, the many issues confronting the

government regarding this Executive Order has prompted both public and private

sectors to call on Her Excellency President Gloria Macapagal-Arroyo for the

immediate lifting of the said Executive Order.

Thus, taking ground on the study taken by the National Disaster Coordinating

Council and the Department of Trade and Industry, Pres. Gloria Macapagal-Arroyo
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signed Executive Order 845, lifting EO 839. The issuance of EO 845 was made on

the basis of the following:

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physical evidences of the damage caused by super typhoons Ondoy and

Pepeng in Luzon, but the lifting of the Executive Order did not mean to forego

any activities to rehabilitate the affected areas. Rehabilitation efforts will still

and can still continue to ensure that the victims are given appropriate

assistance.?

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increase in prices of basic and prime commodities can not just be accounted

for by super typhoons Ondoy and Pepeng. Long before the calamity struck

Luzon, prices of petroleum products and prime commodities were expected to

increase due to increasing prices in the global market4. ?

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Students reaction 1
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Students reaction 2
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? ?  ?The meetings clearly show that key

industry players have taken on their corporate social responsibility to ensure

that the community will largely benefit from their businesses. Accordingly, oil

companies have been demonstrating their full support to the victims of the

calamity in Luzon. Thus, the sudden imposition of EO 839 has seriously

weakened the positive outcomes of these meetings5. ?

The above recommendations were strongly supported by the oil companies,

transport sector, the DOJ Taskforce, DTI and other public and private sector

stakeholders.

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Students reaction 3
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