Case Summary (G.R. No. 92585)
Procedural and Remedial Posture
CPI filed a petition under Rule 44 of the Rules of Court, which this Court treated as a special civil action for certiorari under Rule 65. The misdesignation of remedy was excused due to the grave issues presented. This Court’s jurisdiction is grounded on Sec. 2, Article IX of the 1987 Constitution.
Relevant Statutory Framework (OPSF Creation and Purpose)
Section 8 of P.D. No. 1956, as amended by Executive Order No. 137, created the OPSF to stabilize domestic petroleum prices. Its sources include ad valorem tax increments and other imposts, and its uses cover reimbursement for cost increases and underrecoveries resulting from mandated price reductions, as determined by the Department of Finance (DOF).
Factual Background and COA Actions
Between February and March 1989, COA letters directed CPI to remit over P1.28 billion in unremitted OPSF imposts and held all reimbursement claims in abeyance. CPI requested early issuance of reimbursement certificates, which COA denied, insisting on full remittance before audit.
Legal Issuances and Proposals by Caltex
CPI proposed simultaneous remittance and reimbursement arrangements, accepted in part by COA Decision No. 921 (June 7, 1989), subject to retention of 15% for audit adjustments and a ban on future off-setting. COA later computed P1.505 billion due and P1.959 billion payable after disallowances.
COA Decisions No. 921 and No. 1171 and Grounds for Disallowance
In Decision No. 1171 (Feb. 16, 1990), COA affirmed disallowance of financing charges, inventory losses, and sales to Atlas/Marcopper, but allowed export-related product sales. Disallowances were based on a narrow reading of P.D. No. 1956 and on COA’s independent audit findings.
Issues Presented for Review
CPI assigned five errors: (1) disallowance of financing charges; (2) disallowance of underrecovery on sales to the National Power Corporation (NPC); (3) disallowance of claims on sales to ATLAS/Marcopper; (4) prohibition on offsetting remittances; and (5) disallowance of claims still pending before the OEA and DOF.
Constitutional Authority of the Commission on Audit
Under Sec. 2(1) and (2), Article IX of the 1987 Constitution, COA has exclusive authority to examine, audit, and settle all government accounts and to promulgate regulations to prevent and disallow irregular, unnecessary, or excessive expenditures. Its power to enforce accounting rules is broader than under prior constitutions.
Recovery of Financing Charges from the OPSF
The Court held that “other factors” in cost underrecovery (Sec. 8, P.D. 1956, as amended) must be analogous to mandated price reductions under ejusdem generis. Financing charges stem from extended trade credit, not price cuts, and thus fall outside the Fund’s purposes. Inclusion of financing charges requires legislative amendment.
Reimbursement for Underrecovery on NPC Sales
CPI’s underrecovery claims on sales to NPC were allowed. NPC enjoyed full tax and impost exemptions by law and regulatory board resolutions, and Republic Act No. 6952 explicitly authorizes OPSF reimbursement for fuel underrecoveries to NPC.
Claims Related to Atlas and Marcopper Sales
LOI 1416 (July 17, 1984) suspending certain mining taxes was never published in the Official Gazette or in a newspaper of general circulation and cannot exempt CPI from OPSF imposts. Tax exemptions
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Facts
- Caltex Philippines, Inc. (petitioner) sought reversal of Commission on Audit (COA) decisions disallowing its claims for reimbursement from the Oil Price Stabilization Fund (OPSF), recovery of financing charges, and underrecovery on sales to National Power Corporation (NPC), Atlas Consolidated Mining and Development Corporation (ATLAS) and Marcopper Mining Corporation (MARCOPPER).
- Petitioner initially filed under Rule 44; Supreme Court treated it as a Rule 65 certiorari petition due to allegations of COA’s lack of jurisdiction and grave abuse of discretion.
- Key COA directives:
• 2 Feb 1989 letter demanding remittance of PHP 335 million and holding reimbursements in abeyance.
• 9 Mar 1989 letter revising unremitted collections to PHP 1.287 billion, ordering remittance with interest and surcharges, instructing petitioner to cease offsetting, and again suspending audit of reimbursement claims. - Petitioner corresponded:
• 3 May 1989 request for early release of reimbursement certificates under COA Circular No. 89-299.
• 8 May 1989 COA denial of request and reiteration of remittance directive.
• 31 May 1989 proposal for simultaneous remittance and reimbursement, expeditious audit, and current-year claims review.
Jurisdiction and Proper Remedy
- Under the 1987 Constitution any decision of a Constitutional Commission is subject to special civil action for certiorari under Rule 65, within 30 days of receipt.
- Allegations of total lack of jurisdiction and grave abuse of discretion render the petition proper despite initial misdesignation under Rule 44.
The Oil Price Stabilization Fund (OPSF)
- Created by Section 8, P.D. No. 1956, as amended by E.O. No. 137, to cushion frequent price fluctuations of petroleum products.
- Fund sources include:
• Additional ad valorem or customs duties arising from exchange-rate adjustments.
• Increased tax collections from lifting government exemptions.
• Special imposts imposed by Board of Energy.
• Peso cost differentials when actual import costs fall below reference rates. - Fund uses:
• Reimbursement for cost increases due to exchange-rate or world price fluctuations.
• Reimbursement for cost underrecovery from mandated price reductions; “cost underrecovery” expressly includes Board-directed take reductions, ad valorem tax reductions, and “other factors” as determined by the Ministry of Finance.
COA Decisions and Their Implementation
- Decision No. 921 (7 June 1989):
• Approved petitioner’s simultaneous remittance-reimbursement proposal.
• Required 15% retention by OEA for audit suspensions/disallowances.
• Prohibited offsetting for current and future years. - COA letter of 18 August 1989 to