SC declares constitutional 10 centavos/liter levy on delivery of petroleum products

Published September 12, 2018, 5:54 PM

by AJ Siytangco

By Rey Panaligan

The Supreme Court (SC) has declared constitutional the 10-centavo per liter levy on petroleum products, like gasoline and diesel, delivered by operators of petroleum tankers and barges from the storage facilities to points of destination.


In a unanimous full court decision written by the now retired Justice Presbitero J. Velasco Jr., the SC reversed the 2017 ruling of the Quezon City regional trial court (RTC) which declared unconstitutional Section 22 of Republic Act No. 9483, as well as Section 1, Rule X of its Implementing Rules and Regulations (IRR).

Section 22 of RA 9483 imposes a levy of 10-centavos per liter for every delivery and transshipment of petroleum products. The collected fund will go to the Oil Pollution Management Fund (OPMF) which will be used by the Philippine Coast Guard (PCG) for the Immediate containment, removal and clean-up operations, particularly in case of oil spill.

The law also allots the levy for research, enforcement and monitoring activities of relevant agencies such as the PCG, Maritime Industry Authority (MARINA) and Philippine Ports Authority (PPA) and other agencies like the Department of Transportation (DOTr), Environmental Management Bureau of the Department of Environment and Natural Resources (DENR) and the Department of Energy (DOE).

Case records showed that the imposition of the levy was challenged before the RTC by petroleum marine transport companies — the Philippine Petroleum Sea Transport Association, Herma Shipping and Transport Corporation, Islas Tankers Sea Transport Corporation, MIS Maritime Corporation, Petrolift, Inc., Golden Albatross Shipping Corporation, Via Marine Corporation, and Cargomarine Corporation.

The firms claimed that the levy imposed on them as owners and operators of petroleum tankers and barges violates their right to equal protection and due process as the levy is confiscatory.

When the trial court granted their petition, the government elevated the issue before the SC.

In its decision, the SC traced some of the incidents that led to the passage of RA 9843. It cited the 2005 incident in Antique where a power barge ran aground and dumped 364,000 liters of bunker oil. The disaster polluted 40 kilometers of Antique’s coastline and decimated more than 230 hectares of mangrove forest.

Another incident cited in the SC decision was the 2006 incident in Guimaras Island where a single hull vessel loaded with 2.1 million liters of oil sank in the Guimaras Strait. The incident was described as the worst oil spill in the Philippines.

In reversing the trial court, the SC stressed the need to protect the marine wealth of the country. “The value of the Philippine marine ecosystem cannot be overemphasized…. Philippine waters indeed contain some of the world’s most diverse ecosystems.”

It agreed with the government’s position that public interest in protecting the marine wealth of the country warrants the imposition of the 10-centavo per liter levy.

“Indeed, by employing preventive and/or immediate containment measures or response techniques, the State is but affording protection to persons or all stakeholders who stand to suffer from oil pollution incidents-the main thrust of the conventions that is now effectively translated and implemented in Section 22 (a) of RA 9483 and its IRR,” it said.

“In other words, by creating the OPMF, Congress sought to ensure that our enforcement agencies are capable of protecting our marine wealth and preventing harm from being caused to the people and their livelihood by reason of these unfortunate· events. Time is of the essence when it comes to oil spill response,” it stressed.

The SC pointed out: “The creation of the OPMF is, thus, not a burdensome cross that the respondents have to bear. Rather, it is an opportunity for them to have an important role in the protection of the environment which they navigate and directly utilize in the conduct of their business. It is but proper and timely to remind respondents that the conduct of a business is a mere privilege which is subject to the regulatory authority of the State. Property rights may be interfered with, especially if it is for the furtherance of the common good. A few business adjustments and sacrifices, weighed against the prevention of the possibly irreparable destruction of the country’s natural resources, must necessarily take a back seat.”

“We have the duty to protect our environment for the future generations, and all must share in this responsibility, including legal entities,” it added.

“WHEREFORE, premises considered, the instant petition is GRANTED. The February 22, 2017 Decision of the Regional Trial Court, Branch 216, Quezon City is hereby REVERSED and SET ASIDE. The constitutionality and validity of sub-paragraph a, Section 22 of Republic Act No. 9483, as well as Section 1, Rule X of the Implementing Rules and Regulations of said law are hereby UPHELD. SO ORDERED,” the SC ruled.