G.R. No. L-41315 November 13, 1986
PILIPINAS SHELL PETROLEUM CORPORATION, petitioner, vs. THE OIL INDUSTRY COMMISSION and MANUEL B. YAP, respondents.

FACTS

Petitioner Pilipinas Shell Petroleum Corporation (Shell) and respondent Manuel B. Yap were bound by a “Sublease and Dealer Agreement,” which included a clause allowing termination by either party upon giving 90 days’ written notice. Yap defaulted on payments for petroleum products. Shell sent demand letters and, pursuant to the contract, a 90-day termination notice. Yap filed a complaint for damages with the Court of First Instance (CFI) of Iloilo, questioning the validity of the termination. Less than a month later, Yap filed a second complaint raising the same issue before the respondent Oil Industry Commission (OIC).
The OIC issued an ex-parte preliminary mandatory injunction ordering Shell to continue supplying Yap and to maintain the status quo. Shell, meanwhile, secured a favorable judgment from the CFI of Cebu (Civil Case No. 13675) ordering Yap to pay his overdue liabilities. Despite this civil court judgment, the OIC persisted, asserting jurisdiction and rendering a decision that the 90-day termination clause was an “unfair and onerous trade practice,” thereby negating Shell’s contractual right to terminate.

ISSUE

The primary issue is whether the Oil Industry Commission had jurisdiction to hear and adjudicate the contractual dispute between Shell and its dealer, Yap.

RULING

The Supreme Court ruled that the OIC had no jurisdiction. The legal logic is anchored on statutory construction and principles of administrative law. Republic Act No. 6173, which created the OIC, contains no express provision conferring quasi-judicial power to hear and decide contractual disputes between dealers and oil companies. The Court, citing Miner vs. Mardo, emphasized that for an administrative body to exercise such powers, the legislative intent must be stated in express terms. The enumerated powers under Section 6 of R.A. 6173 (sub-paragraphs “a” to “f”) are limited to regulatory and supervisory functions, such as prescribing rules of conduct and regulating trade practices. The phrase “to set the conditions” pertains to rule-making, not adjudicatory, functions.
A contrary interpretation would violate principles of statutory construction, as a detailed enumeration indicates intent to limit, not expand, powers. The OIC’s assertion of jurisdiction also created an impermissible conflict, as Yap had first invoked the jurisdiction of the regular courts (CFI Iloilo), and a separate CFI (Cebu) had already rendered a money judgment on the related debt. Allowing the OIC to rule on the validity of the same contract’s termination clause would sanction the submission of a single controversy to two different entities, undermining judicial order. Consequently, the OIC’s orders were declared null and void for lack of jurisdiction.