GR 173918; (April, 2008) (Digest)
G.R. No. 173918 ; April 8, 2008
Republic of the Philippines, represented by the Department of Energy (DOE), petitioner, vs. Pilipinas Shell Petroleum Corporation, respondent.
FACTS
The Department of Energy (DOE) demanded that Pilipinas Shell pay surcharges for its alleged late remittances to the Oil Price Stabilization Fund (OPSF) for the periods December 1989 to October 1991. The surcharges were imposed pursuant to Ministry of Finance (MOF) Circular No. 1-85, as amended. Shell paid the principal underpayments but refused to pay the surcharges, contesting their validity. The Office of the President upheld the DOE’s demand, ruling that Shell failed to prove the circular’s invalidity.
Shell appealed to the Court of Appeals, where it subsequently presented certifications from the Office of the National Administrative Register (ONAR) stating that MOF Circular No. 1-85 and its amending circular had not been filed with that office as required by law.
ISSUE
Whether MOF Circular No. 1-85, which imposes the surcharge for late OPSF payments, is effective and enforceable against Pilipinas Shell.
RULING
No. The Supreme Court affirmed the Court of Appeals and ruled that MOF Circular No. 1-85 is ineffective and cannot impose a valid obligation. The legal logic rests on the mandatory nature of publication and filing requirements for administrative issuances that impose a penalty. Section 3, Chapter 2, Book VII of the Administrative Code of 1987 requires that such rules must be both published in a newspaper of general circulation and filed with the ONAR. Non-compliance with either requirement renders the rule ineffective.
While the circular was issued prior to the 1987 Administrative Code, the law explicitly applies to existing rules, requiring them to be filed with the ONAR within three months of the Code’s effectivity to remain operative. The ONAR certifications presented by Shell constitute conclusive proof that this filing was never accomplished. Consequently, the circular never acquired legal force. The government’s presumption of regularity in the issuance of its rules cannot prevail over positive evidence of non-compliance with a mandatory statutory condition for effectivity. Since the circular is ineffective, the surcharges derived from it have no legal basis and cannot be collected from Shell.