Case Digest (G.R. No. 173918) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Republic of the Philippines v. Pilipinas Shell Petroleum Corporation, the Republic, represented by the Department of Energy (DOE), filed a Petition for Review on Certiorari under Rule 45 seeking to overturn the Court of Appeals’ August 4, 2006 Decision in CA-G.R. SP No. 82183. Respondent Pilipinas Shell Petroleum Corporation, a domestic oil refining and marketing entity, was alleged to have underpaid its foreign exchange risk contributions to the Oil Price Stabilization Fund (“OPSF”) from December 1989 to October 1991. The OPSF was established by Presidential Decree No. 1956 and later amended by Executive Order No. 137 to stabilize domestic oil prices. Pursuant to Ministry of Finance (MOF) Circular No. 1-85, as amended by DOF Circular No. 2-94, surcharges totaling ₱18,535,531.40 were imposed on the delayed remittances. Respondent paid the principal shortfall of ₱24,554,387.31 on March 24, 1992, but refused to pay the surcharges. After DOE’s repeated demands were upheld by the Case Digest (G.R. No. 173918) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Regulatory Framework and Issuance of the OPSF and Related Circulars
- Presidential Decree No. 1956 (10 October 1984) created the Oil Price Stabilization Fund (OPSF) to stabilize domestic oil prices. Letter of Instruction No. 1431 (15 October 1984) and Letter of Instruction No. 1441 (20 November 1984) directed OPSF utilization and periodic price reviews. Executive Order No. 137 (27 February 1987) amended PD 1956, expanding OPSF sources and uses.
- MOF Order No. 11-85 (12 April 1985) imposed a foreign exchange risk charge and remittance deadlines. MOF Circular No. 1-85 (15 April 1985), as amended by DOF Circular No. 2-94, prescribed a 15% surcharge for late remittance within 30 days plus 2% per month thereafter.
- Underpayment Findings and Surcharge Demands
- On 4 December 1991, the Office of Energy Affairs (OEA) audit found Pilipinas Shell underpaid OPSF foreign exchange risk contributions of ₱14,414,860.75 for December 1989–March 1991, imposing a surcharge of ₱11,654,782.31. A subsequent OEA letter (9 December 1991) found further underpayment of ₱10,139,526.56 for April–October 1991 with surcharges of ₱2,806,656.65.
- Shell paid the total principal of ₱24,554,387.31 on 24 March 1992 but declined to pay the surcharges. OEA and later the DOE repeatedly demanded payment (15 March & 11 July 1996), threatening enforcement against Shell’s irrevocable standby letter of credit.
- Procedural History
- Shell appealed to the Office of the President (OP). On 19 August 2003, the OP affirmed the DOE’s surcharge imposition, presuming the validity of MOF Circular No. 1-85. A motion for reconsideration was denied (28 November 2003).
- Shell’s appeal to the Court of Appeals (CA) presented certifications (9 & 11 February 2004) from ONAR showing MOF Circular No. 1-85 and DOF Circular No. 2-94 were never filed. On 4 August 2006, the CA reversed the OP decision, ruling the circulars ineffective for failure to comply with Section 3, Chapter 2, Book VII of the Administrative Code of 1987. DOE’s subsequent Petition for Review on Certiorari under Rule 45 was filed before the Supreme Court.
Issues:
- Whether MOF Circular No. 1-85, having been affirmed by EO 137, may be invalidated by the later-enacted Administrative Code requirement for registration with ONAR.
- Whether Pilipinas Shell waived its right to object to non-registration of MOF Circular No. 1-85 by paying the principal underpayment.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)