THE Supreme Court (SC) has permanently stopped a Manila trial court from compelling the country’s 3 major oil companies to open their book of accounts for examination amid allegations of monopoly, predatory pricing and cartelization.
In a 27-page decision penned by Associate Justice Ramon Paul Hernando, the SC en banc unanimously ruled to reverse the orders issued by the Regional Trial Court of Manila in 2009 directing the Bureau of Customs, Bureau of Internal Revenue (BIR) and the Commission on Audit (COA) to examine the books of accounts of Pilipinas Shell Petroleum Corporation, Caltex Philippines Inc., and Petron Corporation.
The SC also made permanent the temporary restraining order (TRO) it issued on August 4, 2009 enjoining the implementation of the orders of the Manila RTC and accordingly dismissed the petition for declaratory relief by the Social Justice Society (SJS).
The BOC, BIR, and COA sought the issuance of the TRO to stop Regional Trial Court of Manila City Branch 26 Presiding Judge Silvino Pampilo Jr. from enforcing its orders compelling them to form a panel of auditors to open and examine the books of the 3 oil firms.
The said agencies refused to heed the order of the lower court saying that it was beyond their mandates to conduct audit relative to anti-trust violations.
In reversing the lower court’s decision, the SC stressed that it is the Department of Energy-Department of Justice (DOE-DOJ) Joint Task Force that has the sole power and authority to monitor, investigate, and endorse the filing of complaint against oil companies.
The trial court initially resolved to refer the case to the DOE-DOJ Joint Task Force for investigation and determination of whether the “Big 3” was in violation of Section 11 (Anti-Trust Safeguards) of Republic Act (RA) 8479, or the Downstream Oil Industry Deregulation Act of 1998.
However, the joint task force held that oil firms did not violate the provisions of RA 8479.
“And considering that the remedy against cartelization is already provided by law, the public respondent trial court exceeded its jurisdiction and gravely abused its discretion when it ordered the COA, the BIR, and the BOC to open and examine the books of account of the Big 3 and allowed private respondent [lawyer Vladimir] Cabigao, a certified public accountant, to become part of the panel of examiners,” the SC said.
“Clearly, the RTC not only failed to uphold the law but worse, he contravened the law,” the SC declared.
The SC said it is beyond the mandates of COA, the BIR and the BOC to open and examine the books of accounts of the 3 oil firms.
It stressed that the oil firms are not public entities or considered as nongovernmental entities receiving financial aid from the government to allow scrutiny by COA.
With regard to the BIR, the SC noted that its commissioner is authorized to examine books, paper, record, or other data of taxpayers, but only to ascertain the correctness of any return, or in making a return when none was made, or in determining the liability of any person for any internal revenue tax, or in collection such liability, or evaluating the person’s tax compliance.
The BOC is authorized to audit or examine all books, records, and documents of importers necessary or relevant for the purpose of collecting the proper duties and taxes.
“Since there are no taxes or duties involved in this case, the BIR and the BOC likewise have no power and authority to open and examine the books of accounts of the Big 3,” the Court ruled.
The SJS through Cabigao earlier insisted that examination of the oil firms’ book of accounts by COA, BIR and BOC is justified under Article 24 of the New Civil Code.
The said provision states that “in all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.”
The SJS noted that the consuming public is at the losing end of the situation because they are left with no choice but to accept the prices being imposed by the oil companies.
“Private respondents respectfully submit that Article 24, New Civil Code may be invoked to promote the public welfare by restraining and regulating the use of liberty and property and that the welfare of the people is the supreme law,” it said.
The group said there is a need to fix the problem of the lack of transparency on the pricing of petroleum products. It insisted that the way to resolve it is by examining the accounts of the oil firms.