G.R. No. 188760 , G.R. No. 189060, G.R. No. 189333, June 30, 2020
The Commission on Audit, represented by its Chairman, the Bureau of Internal Revenue, represented by its Commissioner, and the Bureau of Customs, represented by its Commissioner, Petitioners, vs. Hon. Silvino T. Pampilo, Jr., in his capacity as Presiding Judge of the Regional Trial Court, Manila, Branch 26, Social Justice Society and Vladimir Alarique T. Cabigao, Respondents; Pangkalahatang Sanggunian Manila and Suburbs Driver’s Association Nationwide (PASANG MASDA), Incorporated, Respondent-Intervenor; Pilipinas Shell Petroleum Corporation, Caltex Philippines, Inc., and Petron Corporation, Necessary Parties. [Consolidated with G.R. No. 189060 (Chevron Philippines, Inc. vs. Hon. Silvino T. Pampilo, Jr., et al.) and G.R. No. 189333 (Petron Corporation vs. Hon. Silvino T. Pampilo, Jr., et al.)]

FACTS

On March 21, 2003, respondent Social Justice Society (SJS) filed a Petition for Declaratory Relief before the Regional Trial Court (RTC) of Manila, Branch 26, against Pilipinas Shell Petroleum Corporation, Caltex Philippines, Inc., and Petron Corporation (collectively, the “Big 3”). The petition challenged the Big 3’s practice of increasing petroleum product prices following world crude oil price hikes, despite having purchased inventories at lower prices, alleging this constituted monopoly and combination in restraint of trade under Article 186 of the Revised Penal Code and “combination or concerted action” under Section 11(a) of Republic Act No. 8479 (The Downstream Oil Industry Deregulation Act of 1998). The petition was later amended to include respondent Vladimir Alarique T. Cabigao. The Big 3 moved to dismiss the case. The RTC denied the motions and, pursuant to RA 8479, directed the parties to refer the matter to the DOE-DOJ Joint Task Force and suspended proceedings. The Task Force found no clear evidence of violations. Subsequently, the Big 3 moved for dismissal based on this report, while respondents moved to open and examine the Big 3’s books of account.
On April 27, 2009, the RTC issued an Order: (1) denying the motions to dismiss; (2) granting the motion to open and examine the books of account; and (3) ordering the Commission on Audit (COA), Bureau of Internal Revenue (BIR), and Bureau of Customs (BOC) to conduct the examination. A May 5, 2009 Order directed the heads of these agencies to form a panel of examiners. The COA, BIR, and BOC, through the Office of the Solicitor General (OSG), filed a motion for reconsideration, arguing the order was beyond their jurisdictions. The RTC also granted the Motion for Intervention filed by Pangkalahatang Sanggunian Manila and Suburbs Drivers’ Association Nationwide (PASANG MASDA), Inc. On July 7, 2009, the RTC denied all motions for reconsideration and granted respondents’ motion to include Cabigao as part of the examination panel, invoking the doctrine of parens patriae. The RTC later threatened the agency heads with contempt for non-compliance.
The COA, BIR, and BOC ( G.R. No. 188760 ), Chevron Philippines, Inc. (G.R. No. 189060), and Petron Corporation (G.R. No. 189333) filed separate Petitions for Certiorari before the Supreme Court assailing the RTC Orders. The Court issued a Temporary Restraining Order. The Court of Appeals, in a related case filed by Shell, reversed the RTC Orders and dismissed the case for lack of cause of action.

ISSUE

1. Whether the RTC gravely abused its discretion in ordering the COA, BIR, and BOC to open and examine the books of account of the Big 3.
2. Whether the Petition for Declaratory Relief filed by respondents presented a justiciable controversy ripe for judicial determination.
3. Whether the RTC gravely abused its discretion in allowing the intervention of PASANG MASDA.

RULING

1. Yes, the RTC gravely abused its discretion in ordering the COA, BIR, and BOC to examine the books. The Supreme Court held that the RTC’s orders compelling these agencies to audit the Big 3 were issued without jurisdiction and with grave abuse of discretion.
* As to COA: The Constitution and applicable laws limit COA’s audit jurisdiction to government agencies and entities, including government-owned or controlled corporations, and those subsidized by the government or required to pay levies or government share. The Big 3 are private corporations not falling under any of these categories. Therefore, the RTC order for COA to audit them was ultra vires and void.
* As to BIR: The BIR’s audit and examination powers under the National Internal Revenue Code are for the purpose of assessing tax liabilities and are exercised within the context of its revenue functions. The RTC order, aimed at determining violations of the Revised Penal Code or the Oil Deregulation Law, was unrelated to tax assessment and thus beyond the BIR’s statutory authority.
* As to BOC: The audit powers of the BOC under the Tariff and Customs Code are specifically limited to importers and brokers for customs purposes, such as determining the accuracy of goods declaration and customs valuation. The RTC order for a general examination of the Big 3’s books for anti-trust purposes fell outside this statutory scope.
The Court also found the RTC’s invocation of the parens patriae doctrine and Rule 27 (Production and Inspection of Documents) of the Rules of Court to justify its orders was misplaced. The parens patriae doctrine does not grant courts unbridled authority to assume the functions of other government branches or agencies. Furthermore, Rule 27 applies to parties in a case, not to non-parties like the COA, BIR, and BOC. The proper mechanism would have been to issue a subpoena duces tecum to the Big 3 themselves.
2. No, the Petition for Declaratory Relief did not present a justiciable controversy. The Supreme Court affirmed the CA’s ruling that the action for declaratory relief was improper. An action for declaratory relief requires: (a) a justiciable controversy; (b) between persons with adverse legal interests; (c) that is ripe for judicial determination; and (d) that the issue involves the construction or validity of a statute, contract, or other written instrument. The Court found that respondents’ petition failed on the first and third requisites. The allegations of “combination or concerted action” under RA 8479 and violations of the Revised Penal Code were based on mere newspaper reports and general claims, not on specific, concrete facts demonstrating an actual breach of law. The issues raised were hypothetical and speculative, not ripe for judicial resolution. The proper remedy for alleged violations of the Oil Deregulation Law or penal laws would be the filing of a criminal or administrative complaint with the appropriate agencies (DOE-DOJ Task Force) or courts, not a declaratory relief action.
3. Yes, the RTC gravely abused its discretion in allowing PASANG MASDA’s intervention. Intervention under Rule 19 of the Rules of Court requires that the intervenor has a “legal interest in the matter in litigation.” The Court held that PASANG MASDA, as an association of drivers and operators, only had a general interest in the outcome of the case as consumers or members of the public. This is insufficient to constitute the required “legal interest” that would entitle it to intervene. Its interest was no different from that of the general public and was adequately represented by the original respondents. Therefore, the RTC’s admission of the intervention was improper.
DISPOSITIVE: The Petitions were GRANTED. The assailed Orders of the RTC (April 27, 2009, May 5, 2009, June 23, 2009, and July 7, 2009) were declared NULL AND VOID for having been issued with grave abuse of discretion. The Petition for Declaratory Relief in Civil Case No. 03-106101 was DISMISSED. The Temporary Restraining Order was made PERMANENT.