ADMIN LAW | B2015
CASES
Republic v. Pilipinas Shell
Petroleum Corp.
2008
Chico-Nazario
alycat
SUMMARY: The OEA informed Pilipinas Shell that the latters
contributions to the OPSF were insufficient. As a consequence, a surcharge
was imposed upon Pilipinas Shell. The surcharge was imposed pursuant to
a Department of Finance Circular. Pilipinas Shell challenged this and
refused to pay the surcharges, claiming the payments it made were based
on a valid interpretation of a Department of Finance Order and
Department of Energy Circular. However, the DOE only reiterated its
demand for Pilipinas Shell to settle the surcharges due. The Office of the
President affirmed the DOE. CA reversed, ruling that the Department of
Finance Circular was ineffective for failure to comply with the requirement
to file with ONAR. SC affirmed CA.
DOCTRINE: The requirements of publication and filing were put in place
as safeguards against abuses on the part of lawmakers, and as guarantees
to the constitutional right to due process and information on matters of
public concerns, and therefore, require strict compliance. Strict compliance
with the requirements of publication cannot be annulled by a mere
allegation that parties were notified of the existence of the implementing
rules.
NOTE: Values are not exact. Also, the case used Ministry and Department
interchangeably in the case. I stuck with Department to avoid confusion.
FACTS:
Pilipinas Shell corporation engaged in the business of refining oil,
marketing petroleum, and other related activities
Department of Energy government agency under the direct
control and supervision of the Office of the President mandated to
prepare, integrate, coordinate, supervise, and control all plans,
programs, projects, and activities of the Government relative to
energy exploration, development, utilization, distribution, and
conservation
Oil Price Stabilization Fund (OPSF) created under PD 1596 for the
purpose of minimizing frequent price changes of crude oil and
petroleum
LOI No. 1431 directed the utilization of the OPSF to reimburse oil
companies the additional costs of importation of crude oil and
petroleum
LOI No. 1441 mandated the Board of Energy to review and reset
prices of domestic products every two months to reflect the
prevailing prices of crude oil and petroleum
EO No. 137 amended PD 1965, expanding the sources and
utilization of the OPSF
The Office of Energy Affairs (now DOE) informed Pilipinas Shell that
the latters contributions to the OPSF were insufficient. The OEA
Audit Taskforce noted an underpayment of 14M. As a consequence,
a surcharge of 11M was imposed upon Pilipinas Shell. The
surcharge was imposed pursuant to a Department of Finance
Circular. The Circular is the contested issuance in the case.
The OEA wrote another letter to Pilipinas Shell, advising the latter of
its additional underpayment of the foreign exchange risk fee in the
amount of 10M. Additionally, a surcharge of 2M was imposed.
Pilipinas Shell wrote a letter to the OEA, justifying that its
calculations for the transactions (for which DOE claimed
underpayment) were based on a valid interpretation of a
Department of Finance Order and a Department of Energy Circular.
Pilipinas Shell paid the OE the full principal amount, but not the
surcharges.
The OEA wrote a letter to Pilipinas Shell, notifying it that it is
required to pay the OPSF a total of P18M for surcharges on the late
payment of foreign exchange risk charges.
The DOE reiterated its demand for Pilipinas Shell to settle the
surcharges due, else, the DOE would proceed against Pilipinas
Shells Irrevocable Standby Letter of Credit to recover its unpaid
surcharges.
Pilipinas Shell filed a Notice of Appeal before the Office of the
President. The Office of the President affirmed the conclusion of the
of the DOE. While it admitted that the implementation of the
Department of Finance Circular was contingent upon its publication
and filing with the ONAR, Pilipinas Shell failed to adduce evidence of
lack of compliance with such requirements.
Pilipinas Shells Motion for Reconsideration was denied.
CA reversed and ruled that the Department of Finance Circular was
ineffective for failure to comply with the requirement to file with
ONAR. Even if the Circular was issued by then Acting Secretary of
Finance long before the Administrative Code of 1987, Sec. 3 of
Chapter 2, Book 7 thereof specifies that rules already in force on the
 ADMIN LAW | B2015
CASES

date of the effectivity of the Administrative Code must be filed strict compliance with the requirements of publication cannot be annulled
within three months from the date of the effectivity of the Code, by a mere allegation that parties were notified of the existence of the
otherwise, such rules cannot be the basis of any sanction. implementing rules. In National Association of Electricity Consumers for
Reforms, the Court ruled that the fact that the parties participated in the
ISSUE: Did the Department of Finance Circular comply with the public consultation and submitted their respective comments is not
requirements for publication and filing? NO compliance with the rule.
The Department of Energy avers that the Department of Finance
RATIO: Circular gains its vitality from the subsequent enactment of an Executive
Taada v. Tuvera All statutes shall be published as a condition for Order which reiterates the power of the Secretary of Finance to promulgate
their effectivity. Covered by this rule are presidential decrees and executive the necessary rules and regulations to implement the Executive Order.
orders promulgated by the President in the exercise of legislative powers However, the power of the Secretary of Finance to promulgate rules and
whenever delegated by the legislature/ Constitution. Administrative regulations is not under dispute. The issue is the ineffectivity of his
regulations must also be published if their purpose is to enforce or administrative issuance for non-compliance with the requisite publication
implement existing law pursuant also to a valid delegation. and filing.
Sec. 3, Chapter 2, Book 7, Administrative Code of 1987 Rules in
force on the date of effectivity of this Code which are not filed within three RULING: CA affirmed. The Department of Finance Circular is ineffective.
months from the date shall not thereafter be the basis of any sanction
against any party or persons.
As per the Taada ruling, the Department of Finance Circular is one
of those issuances which should have been published before becoming
effective since it is intended to enforce PD 1956. The circular should also
comply with the requirement under Sec. 3, Chapter 2, Book 7 of the
Administrative Code filing with the ONAR in the University of the
Philippines Law Center for rules that are already in force at the time the
Administrative Code became effective. These requirements of publication
and filing were put in place as safeguards against abuses on the part of
lawmakers, and as guarantees to the constitutional right to due process and
information on matters of public concerns, and therefore, require strict
compliance.
Here, the Certifications prove that the Department of Finance
Circular and its amendatory rule have not been filed before said office.
Moreover, the Department of Energy was unable to controvert Pilipinas
Shells allegation that neither of the circulars were published in the Official
Gazette or in any newspaper of general circulation. Thus, failure to comply
with the requirements of publication and filing render the Department of
Finance Circular ineffective.
National Association of Electricity Consumers for Reforms v. Energy
Regulatory Board Both the requirements of publication and filing of
administrative issuances intended to enforce existing laws are mandatory
for the effectivity of said issuances.
The Department of Energy insists that the registration of the
Department of Finance Circular with the ONAR is no longer necessary since
Pilipinas Shell knew of its existence, despite its non-registration. However,