The Supreme Court (SC) has reversed a 2009 trial court order that directed Pilipinas Shell Petroleum Corporation, Caltex Philippines, Inc., and Petron Corporation to open their books of accounts for examination on allegations of monopoly, predatory pricing and cartelization.
Directed by the Manila regional trial court (RTC) to examine the books of accounts of the three major oil companies were the Bureau of Customs (BoC), Bureau of Internal Revenue (BIR) and the Commission on Audit (COA).
In a full court decision written by Associate Justice Ramon Paul J. Hernando, the SC said “it is beyond the mandates of the COA, the BIR, and the BoC to open and examine the books of accounts” of the big three oil companies, known as “Big 3.”
In the case of COA, the SC said the three oil companies “are not public entities nor are they non-governmental entities receiving financial aid from the government.”
“With respect to the BIR, its commissioner is authorized to examine the 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 collecting such liability, or evaluating the person’s tax compliance,” it said.
“The BoC, on the other hand, 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,” it added.
With its ruling, the SC granted the petitions filed by the COA, BIR and BoC which challenged the order issued by Manila RTC Judge Silvino T. Pampilo Jr.
Case records showed that the complaints against the three oil companies were filed by the Social Justice Society (SJS) and Vladimir Alarique T. Cabigao in a petition for declaratory relief.
SJS and Cabigao claimed that the oil companies’ business practice of increasing the prices of petroleum products every time the prices of crude oil increases in the world market despite the fact that they purchased their inventories at a much lower price before the increases constitutes monopoly and combination in restraint of trade.
On Dec. 17, the trial court denied the plea of the oil companies to dismiss the petition as it ordered the referral of the complaint to the Joint Task Force of the Department of Energy (DoE) and the Department of Justice (DOJ) to determine possible violation of Republic Act No. 8479 or the Downstream Oil Industry Deregulation Act of 1998.
The DoE-DOJ task force, however, found no violation of RA 8479 committed by the three oil firms.
On April 27, 2009, Judge Pampilo issued the order which directed COA, BIR and BoC to open the three firms’ books of accounts.
In a separate order on May 5, 2009, Judge Pampilo directed the three government agencies to form a panel of examiners to undertake the opening of the books of accounts.
With their other pleadings denied by the trial court, the three oil companies and the Office of the Solicitor General (OSG) filed a petition with the SC challenging the RTC’s orders.
On Aug. 4, 2009, the SC issued a temporary restraining order (TRO) that stopped the RTC from implementing its orders.
In its decision made public last week, the SC ruled to make permanent the TRO it issued against the RTC.
The SC said the RTC “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 accounts of the Big 23….”
“Clearly, the RTC not only failed to uphold the law but worse, it contravened the law,” it stressed.
“The TRO dated Aug. 4, 2009 is hereby made permanent. Accordingly, the petition for declaratory relief is ordered dismissed,” it ruled.