NONITO J. BERNARDO, PETITIONER, VS. CALTEX (PHILIPPINES), INC., RESPONDENT.

The appeal on certiorari
at bar^[1]
treats of the jurisdiction of the Regional Trial Court over the controversy
between petitioner and respondent in light of Sections 3 (par. 2 [a]) and 7 of
Executive Order No. 172 and “Section 2, Rule VIII of the Rules and
Regulations Governing the Establishment, Construction, Operation, Remodelling,
and/or Refurbishing of Petroleum Products Retail Outlets,” promulgated by
the Oil Industry Commission on 1 September 1972 (68 O.G. 7347^[2]),
adopted by the BEU^[3]
in its Memorandum Circular No. 78-04-06, Series of 1978 **.”^[4]
The provision reads as follows:

“Section 2. All
disputes between any operator/dealer and an oil company regarding dealership
agreement except those arising out of their relationship as debtor and
creditor shall be under the jurisdiction of the Oil Industry Commission.

A party seeking relief from or enforcement of any provision of a
dealer agreement, except those as hereinabove provided, may do so by filing
with the Commission a petition defined in the Rules of practice and Procedure
governing hearings before the Commission. The hearing shall be conducted as provided in said Rules.”

The “operator/dealer” involved is the petitioner,
Nonito J. Bernardo, and the “oil company,” the respondent Caltex
(Philippines), Inc. (hereafter referred to simply as Caltex). Bernardo operates two (2) Caltex gasoline
stations.

On December 3, 1990, Bernardo placed with the Caltex Pandacan
Terminal an order for 10,000 liters of diesel fuel. He made full payment therefor in the sum of P57,937.50 on the
same day, the payment being evidenced by an official receipt. On December 4, 1990,^[5] he
placed with the same terminal another order, this time for 10,000 liters of
premium gasoline — for which he also made full payment in the amount of
P84,193.50 on December 5, 1990, the payment being evidenced by an official
receipt issued on said day.^[6]

Bernardo sent his tanker to the Pandacan Terminal as early as
11:20 o’clock in the morning of December 5, 1990, to take delivery of the
petroleum products thus purchased.^[7] But
despite waiting until 6 P.M. on that day, the tanker’s driver failed to take
delivery, because Caltex’s computer system had allegedly malfunctioned and
broken down as early as 3:45 A.M. and remained out of order up to 12:10 P.M. on
that day, December 5.^[8]

It appears that on that same day, December 5, 1990, the Energy
Regulatory Board announced an increase in the prices of petroleum products
effective at 6 o’clock in the evening of that day. According to Caltex, “(a)t exactly 6:00 in the evening of
December 5, 1990, ** (it) had to cut-off the delivery or hauling by dealers of
products in order to make the necessary adjustments in its computers as a
result of the price increase ** (and after that time) all orders, even for
those pre-paid and delivered ex-plant, were invoiced at the new rates ** in
accordance with the Purchase and Sale Agreement ** .”^[9]

Demands subsequently made by Bernardo for delivery of the
petroleum products paid for by him,^[10] were
refused by Caltex unless Bernardo paid the difference between the old and new
prices. Caltex claimed, in
justification of its refusal,^[11] that
when Bernardo demanded “delivery of his orders, the prices had already
increased due to the ERB order on December 5, 1990,” and Bernardo was
bound to pay the increased price in accordance with Section 3 of his
“Purchase and Sale Agreement” with Caltex providing as follows:

“(3) PRICES: Prices to be paid by BUYER ex SELLER’s
storage point shall be at SELLER’s official wholesale selling price ex storage
point at Pandacan Terminal in effect on date of delivery.

On January 8, 1991, Bernardo filed a complaint in the Regional
Trial Court at Quezon City praying that Caltex be ordered to deliver the
petroleum products in question and to pay compensatory, exemplary and nominal
damages, loss of earnings and profits expected “from the sale of the
undelivered petroleum products,” and attorney’s fees.^[12]

Caltex moved to dismiss under date of January 23, 1991,^[13]
on the ground that (a) venue was
improperly laid — it being provided in the parties’ Purchase and Sale
Agreement that in case “of any judicial proceedings to enforce any or all
of the terms or conditions of ** (said) Agreement, BUYER shall submit itself to
the jurisdiction of the Court of the City of Manila or to SELLER’s places of
transactions at SELLER’s option;”^[14] and
(b) the plaintiff had no cause of action against it — Caltex having
“cut-off the delivery or hauling by dealers of products in order to make
the necessary adjustments in its computers as a result of the price
increase” (set by ERB on December 5, 1990), and accordingly invoiced
“all orders, even for those pre-paid and delivered ex-plant, ** at the new
rates,” as was allegedly its right under Paragraph (3) of the Purchase and
Sale Agreement, supra, reiterated in a Circular dated August 1, 1990
sent to all its dealers and customers pertinently reading as follows:

“1. All orders that have (been) invoiced and
paid for before the effectivity of a wholesale Selling Price increase but are
not yet delivered to or picked-up by the customers as of the effectivity of the
price increase shall be cancelled and a new invoice shall be prepared using the
new price/s.”

By Order dated January 30, 1991, the Trial Court denied Caltex’s
motion to dismiss and issued a preliminary mandatory injunction requiring
immediate delivery by Caltex of the petroleum products in question upon
Bernardo’s posting of a bond in the sum of P50,000.00.^[15]
To invalidate that order, Caltex forthwith instituted in this Court a special
civil action of certiorari; but by this Court’s Resolution of February
6, 1991, the case was referred to the Court of Appeals where it was docketed as
CA-G.R. SP N. 24091. The action
resulted in a judgment rendered by said Court of Appeals on March 16, 1991,^[16]
disposing as follows:

“WHEREFORE, the petition is hereby given due course, the order
of respondent judge dated January 30, 1991, is hereby set aside insofar as it
granted the application for a writ of preliminary injunction. However, the order is upheld insofar as it
denied petitioner’s motion to dismiss. The temporary restraining order issued by this Court is hereby made
permanent.”

This judgment became final and executory. Caltex thereafter filed its answer to the
complaint.^[17]
The answer re-stated the position it had already expressed at one time or
another, and set up a compulsory counterclaim. It also asserted the “special and affirmative defense” that it
was the Energy Regulatory Board, not the Trial Court which had jurisdiction of
the subject matter of the case since it involved “a dispute between an oil
company and its dealer, particularly as to the price by which petroleum
products are to be sold.” Caltex then moved “to set its Affirmative
Defenses for Preliminary Hearing.” Bernardo opposed the motion. He also filed a motion for summary judgment. Both motions were denied by the Trial Court,
in an order dated July 1, 1991.

Caltex moved for reconsideration. The Court required the parties to submit memoranda. On August 14, 1991, the Trial Court
promulgated an Order dismissing Bernardo’s suit for lack of jurisdiction. The Court cited the judgment of the Court of
Appeals in CA-G.R. SP No. 24091, supra, holding inter alia that
“there is still an unsettled dispute as regards the pricing of the **
(petroleum) products” in question, as well as this Court’s own holding
G.R. Nos. 95203-05 (Maceda v. ERB and companion cases, prom. Dec. 18, 1990) to
the effect that it “is not the suitable forum for debate” regarding
the wisdom of policy or the logic behind increases in oil prices, in relation
to the powers of the Energy Regulatory Board (a) “to fix and regulate the
prices of petroleum products,”^[18] and
of (b) supervision and jurisdiction^[19] –

” * * over all persons, corporations, firms or entities
engaged in the business of importing, exporting, re-exporting, shipping,
transporting, processing or refining of indigenous and imported crude oil or
other petroleum products, storing, marketing, distributing, or selling, both at
wholesale and retail, and other crude or refined petroleum products, and shall
regulate and supervise the operations and activities of said persons and
entities. * *.”

Upon these undisputed facts, Bernardo submits for resolution the
question, “which body has the original jurisdiction over the instant case,
the Energy Regulatory Board or ** (the) Court a quo.”

The situation in this case is similar to that in Mobil Oil
Philippines, Inc. v. Court of Appeals, which this Court decided on December
29, 1989.^[20]
In said case, the facts were as follows:

“On February 15, 1974 — a Friday — while there was still
this oil crisis, plaintiff (Fernando A. Pedrosa) placed with defendant (Mobil
Oil) a pre-paid order for 8,000 liters of premium gasoline and 2,000 liters of
regular gasoline paying therefor a PBTC Cashier’s Check in the amount of
P4,610.00 ** on the basis of the following computations:

8,000 liters MP at P0.85
………………………. P 3,510.00

2,000 liters MR at P0.53
………………………. 1,060.00

Delivery Freight Cargo ………………………… 40.00

Total
………………………… P 4,610.00

The above computation is contained in a product order form, Exh. 3,
which was prepared and filled up by defendant’s order clerk when plaintiff
placed his order on Feb. 15, 1974, as in fact the handwritings thereon are
those of the said order clerk. It is stated
in Exh. 6 that the order was taken at ‘2:20’ (Exh. 3-A) and ’12/15′ and the
delivery due date is Today.”‘ (p. 654)

” * * (I)t appears from the record that there was an increase
in the price of gasoline on February 18, 1974. Plaintiff was charged the cost of the gasoline under the
increased rates, or in the total sum of P7,490.00 including delivery and
freight charges. It was defendant’s
contention that since the gasoline was actually delivered on March 5, 1974, the
then prevailing increased rates should be made to apply and not the price
prevailing on February 14, 1974, the date when the order was made and paid by
plaintiff with a cashier’s check.” (p. 655)

Upon these facts, the Court ruled that since plaintiff Pedrosa’s
“prepaid order was prepared on the same date by ** (Mobil Oil’s) credit
man and after being thus approved by ** (Mobil Oil’s) credit man, ** (Pedrosa)
paid for the price therein indicated by tendering a Prudential Bank Cashier’s
Check #19972. Because of this, ** Mobil
became duty bound to deliver the gasoline to private respondent on February 15,
1974 and the price paid for by ** (Pedrosa) was that price then prevailing
which was the amount indicated in ** (Pedrosa’s) cashier’s check **. By actually delivering the gasoline on March
6, 1974, petitioner committed a contractual breach and incurred in delay that
should make it liable for damages.”^[21] The
Court further held that the “prepaid order form was a perfected contract
of sale the moment it was approved and accepted by Mobil through its proper
representative on the same day and paid for by ** Pedrosa likewise on the same
day **. On the part of Pedrosa it can
even be said that the contract was consummated as far as he was concerned since
he executed his part of the contract by his prepayment of the order.”^[22]

It thus appears to the Court that as in that case, a contract of
sale of petroleum products was here perfected between Caltex and its
“operator/dealer,” Bernardo; that in virtue of the payment admittedly
made by Bernardo, Caltex became a “debtor” to him in the sense that
it was obligated to make delivery to Bernardo of the petroleum products ordered
by him; and that the only issue is the manner by which Caltex shall perform its
commitment in Bernardo’s favor, or more precisely, what quantity of petroleum
products it is bound to deliver to Bernardo: that corresponding to (or at the rate of) the price at the time of the
payment effected by Bernardo or the higher price fixed by the Energy Regulatory
Board on December 5, 1990; and that the controversy between them cannot be
characterized as a dispute within the original jurisdiction of the Energy
Regulatory Board, which as already stated, extends to “(a)ll disputes
between any operator/dealer and an oil company regarding dealership agreement
except those arising out of their relationship as debtor and creditor **.”
It is rather one cognizable by the Regional Trial Court, as a dispute indeed
“arising out of their relationship as debtor and creditor.”

As the facts make clearly apparent, there is no “unsettled
dispute as regards the pricing of the ** (petroleum) products,” as the
Regional Trial Court opines in its challenged Order of August 14, 1991. On the contrary, the parties are in agreement
about the prices of the petroleum products in question which became effective
on December 5, 1990 at 6 o’clock P.M., and those prevailing prior thereto. Their disagreement is as regards which of
the two sets of prices shall apply to the transactions subject of Bernardo’s
complaint.

Neither do the parties impugn the validity or the propriety or
wisdom of the specific exercise by the Energy Regulatory Board of its power
“to fix and regulate the prices of petroleum products,” or its power
of supervision over the operations and activities, generally, of persons and
entities dealing in oil and petroleum products, as said Regional Trial Court
posits in its order of August 14, 1991.

What the controversy is all about, to repeat, is simply the
prices at which the petroleum products shall be deemed to have been purchased from Caltex by
Bernabe in December, 1990. This is
obviously a civil law question, one determinable according to the provisions of
the Civil Code and hence, beyond the cognizance of the Energy Regulatory Board
of the Oil Industry Commission.

WHEREFORE, the petition is GRANTED, the Order of the Regional Trial Court rendered on August
14, 1991 in Civil Case No. Q-91-7630 is ANNULLED AND SET ASIDE, and said Court
is DIRECTED to forthwith resume the proceedings in the case in accordance with
the Rules of Court and to dispose of the case in due course. Costs against respondent.

SO ORDERED.

Feliciano,
Regalado, Nocon, and Campos, Jr., JJ., concur.

^[1]
Perfected pursuant to Rule 45, Rules of Court, taken directly to this Court
from the Regional Trial Court on petitioner’s claim that it involves only a
question of law

^[2]
At page 7352

^[3]
Bureau of Energy Utilization, now the Energy Regulatory Board (ERB)

^[4]
Rollo, p. 120 (p. 3, respondent’s Comment dated Nov. 13, 1991), and pp.
34-135 (pp. 2­-3, petitioner’s reply dated Dec. 26, 1991)

^[5]
Caltex avers that the order was placed on December 5, 1990.

^[6]
Rollo, pp. 8, 27-30; 40-48; 73 (p. 5 of respondent’s “Answer”
in the RTC, dated April 30, 1991); p. 21 (p. 4, respondent’s comment of Nov.
13, 1991).

^[7]
Id., pp. 9, 49

^[8]
Id., pp. 8-9, 34

^[9]
Id., p. 35

^[10]
Id., pp. 23, 70, 85

^[11]
Id., pp. 121-122

^[12]
Id., pp. 22-30. The action was
docketed as Civil Case No. Q-91-7630.

^[13]
Id., pp. 31-37

^[14]
Bernardo argues that the agreement expired, by express provision, on November
17, 1989.

^[15]
Rollo, pp. 5, 65-66

^[16]
Id., pp. 6, 68

^[17]
Id., pp. 69-76

^[18]
Sec. par. 2(a), Executive Order No. 172

^[19]
Under Sec. 7, R.A. 6173, as amended by P.D. 1128

^[20]
180 SCRA 651-667

^[21]
Page 657

^[22]
Page 658