The Supreme Court has reversed a 2009 ruling of the Manila Regional Trial Court (RTC) directing the so-called “Big 3” oil firms — Pilipinas Shell, Caltex Philippines and Petron Corp. — to open their books of accounts for examination on claims of engaging in monopoly, predatory pricing and cartel practices.
In the 27-page decision dated June 30 but released only this week by the SC, the court en banc unanimously agreed to reverse the ruling of Manila RTC Branch 26 Judge Silvino Pampilo Jr. that directed the Bureau of Customs, Bureau of Internal Revenue and the Commission on Audit to examine the books of accounts of the said oil firms.
The SC also made permanent the temporary restraining order it issued on August 2009 on Pampilo’s order and dismissed the petition for declatatory relief filed by the Social Justice Society (SJS).
The TRO was sought by the BOC, BIR and COA which argued it was beyond their mandate to conduct an audit relative to anti-trust violations.
In its order, the SC said the Department of Energy and the Department of Justice Joint Task Force have the sole power to monitor, investigate and endorse the filing of complaint against oil firms.
It added it is beyond the mandates of the BOC, BIR and COA to open and examine the books of accounts of the oil firms as ordered by Pampilo.
“They (oil firms) are not public entities nor are they non-governmental entities receiving financial aid from the government,” the SC decision penned by Associate Justice Ramon Paul Hernando.
The order explained that the BIR, while empowered to examine the books and other data of taxpayers, is limited to “ascertaining the correctness of any return” 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.
Likewise, the SC said the BOC is authorized to audit or examine all books, records and documents of importers necessary for the collection of 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 said oil firms,” the SC added.
The SC said Pampilo exceeded his jurisdiction and gravely abused his discretion when he made the assailed ruling.
“Clearly, the RTC not only failed to uphold the law, but worse, he contravened the law,” the SC further said.
The SJS earlier told the SC that the examination of the books of accounts of the Big 3 oil firms by the BIR, BOC and COA is justified under Article 24 of the New Civil Code, noting the consuming public is at the losing end of the situation since they have no other way but to accept the high prices imposed by said oil firms on their products.
The SJS added an examination of the books of accounts of the oil firms would address the problem of the lack of transparency when it comes to the pricing of petroleum products.