Case Summary (Adm. Case. No. 1392)
Factual Background
• Creation of Oil Price Stabilization Fund (OPSF) under PD 1956 to buffer domestic oil prices against exchange-rate and world-market fluctuations.
• LOI No. 1431 (Oct. 1984) and LOI No. 1441 (Nov. 1984) directed use of OPSF and bimonthly price reviews.
• EO 137 (Feb. 1987) amended PD 1956, expanding OPSF sources and uses.
• DOE audit (Dec. 1991) found Shell underpaid foreign-exchange risk charges (Dec. 1989–Mar. 1991) by ₱14.4 million; MOF Circular 1-85 (as amended by DOF Circular 2-94) imposed a 15% surcharge plus 2% monthly penalty.
• Additional underpayment (Apr. 1991–Oct. 1991) of ₱10.1 million triggered further surcharges of ₱2.8 million.
• Shell paid principal undercharges (₱24.55 million) in Mar. 1992 but contested surcharges.
Procedural History
• DOE’s demand letters (Mar. 1996, Jul. 1996) threatened enforcement against Shell’s standby letter of credit.
• Shell appealed to OP; OP affirmed DOE’s imposition of surcharges (Aug. 2003). Reconsideration denied (Nov. 2003).
• Court of Appeals (CA) reversed (Aug. 2006), ruling MOF Circular 1-85, as amended, is ineffective for failure to comply with publication and ONAR-filing requirements under Section 3, Chapter 2, Book VII of the Administrative Code of 1987.
• This Petition for Review on Certiorari to the Supreme Court followed.
Applicable Law
1987 Constitution (due process and right to information)
Administrative Code of 1987, Sec. 3, Chapter 2, Book VII (mandatory publication and ONAR-filing of administrative rules)
PD 1956 (establishing OPSF)
EO 137 (amending PD 1956)
MOF Circular 1-85, as amended by DOF Circular 2-94 (imposing surcharges)
Legal Issue
Whether MOF Circular 1-85, as amended, is effective and may lawfully support imposition of surcharges on Shell, despite its non-publication and non-filing with ONAR.
Jurisprudential Principles
• Tanada v. Tuvera (1986): Statutes, executive orders, and administrative rules enforcing laws must be published to attain binding force.
• National Association of Electricity Consumers for Reforms v. ERC (2006): Publication and ONAR-filing are mandatory conditions for administrative issuances intended to implement existing law.
• Express Telecommunications Co. case: Filing alone is insufficient; publication is sine qua non of effectivity.
Court’s Analysis
• Under the 1987 Constitution’s due process guarantees, affected entities must have notice of administrative rules through official channels.
• Section 3, Chapter 2, Book VII of the Administrative Code requires agencies to file adopted rules with ONAR within three months of the Code's effectivity; failure bars sanctions based on such rules.
• Certifications from ONAR in Feb. 2004 c
Case Syllabus (Adm. Case. No. 1392)
Factual Background
- Respondent Pilipinas Shell Petroleum Corporation is a Philippine corporation engaged in refining, marketing, and related petroleum activities.
- The Department of Energy (DOE), under direct supervision of the Office of the President and mandated by R.A. No. 7638, oversees all government energy plans, programs, and activities.
- In October and November 1984, Presidential Decree No. 1956 created the Oil Price Stabilization Fund (OPSF) and Letters of Instruction No. 1431 and No. 1441 directed its utilization to stabilize domestic petroleum prices via foreign-exchange risk reimbursements and periodic price resets.
- Executive Order No. 137 (27 February 1987) amended P.D. 1956, expanding OPSF sources and uses to further ensure price stability.
Underpayment and Surcharge Claims
- On 4 December 1991, the Office of Energy Affairs (OEA) notified respondent of an underpayment of P14,414,860.75 (Dec. 1989–Mar. 1991) and imposed surcharges of P11,654,782.31 under Ministry of Finance (MOF) Circular No. 1-85 as amended by DOF Circular No. 2-94.
- A second OEA letter (9 December 1991) cited an additional underpayment of P10,139,526.56 (Apr. 1991–Oct. 1991) and surcharges of P2,806,656.65.
- Respondent contested calculations, citing MOF Order No. 11-85 (12 April 1985) and MOE Circular No. 85-05-82 (16 May 1985).
- On 24 March 1992, respondent paid P24,554,387.31 covering principal underpayments but withheld payment of surcharges.
Further Demands and Administrative Appeal
- In March and July 1996, the OEA/DOE dem