SENATOR ERNESTO MACEDA, PETITIONER, VS. ENERGY REGULATORY BOARD (ERB); MARCELO N. FERNANDO, ALEJANDRO B. AFURONG; REX V. TANTIONGCO; AND OSCAR E. ALA, IN THEIR COLLECTIVE OFFICI…

The petitioners pray for injunctive relief, to stop the Energy
Regulatory Board (Board hereinafter) from implementing its Order, dated
September 21, 1990, mandating a provisional increase in the prices of petroleum
and petroleum products, as follows:

It appears that on September
10, 1990, Caltex (Philippines)
Inc., Pilipinas Shell Petroleum Corporation, and Petron Corporation proferred
separate applications with the Board for permission to increase the wholesale
posted prices of petroleum products, as follows:

and meanwhile,
for provisional authority to increase temporarily such wholesale posted prices
pending further proceedings.

On September 21, 1990,
the Board, in a joint (on three applications) Order granted provisional relief
as follows:

WHEREFORE, considering the foregoing, and pursuant to Section 8 of
Executive Order No. 172; this Board hereby grants herein applicants’ prayer for
provisional relief and, accordingly, authorizes said applicants a weighted
average provisional increase of ONE PESO AND FORTY-TWO CENTAVOS (P1.42) per
liter in the wholesale posted prices of their various petroleum products
enumerated below, refined and/or
marketed by them locally.^[3]

The petitioners submit that the above Order had been issued with
grave abuse of discretion, tantamount to lack of jurisdiction, and correctible
by certiorari.

The petitioner, Senator Ernesto Maceda,^[4]
also submits that the same was issued without proper notice and hearing, in
violation of Section 3, paragraph (e), of Executive Order No. 172; that the
Board, in decreeing an increase, had created a new source for the Oil Price
Stabilization Fund (OPSF), or otherwise that it had levied a tax, a power
vested in the legislature, and/or that it had “re-collected”, by an
act of taxation, ad valorem taxes on oil which
Republic Act No. 6965 had abolished.

The petitioner, Atty. Oliver Lozano,^[5]
likewise argues that the Board’s Order was issued without notice and hearing,
and hence, without due process of law.

The intervenor, the Trade Union of the
Philippines and Allied Services (TUPAS/FSM)-W.F.T.U.,^[6]
argues on the other hand, that the increase can not be allowed since the
respondents oil companies had not exhausted their existing oil stock which they
had bought at old prices and that they can not be allowed to charge new rates
for stock purchased at such lower rates.

The Court set the cases (in G.R. Nos. 95203-05) for hearing on October 25, 1990, in which Senator Maceda and his counsel, Atty. Alexander Padilla,
argued.  The Solicitor General, on behalf
of the Board, also presented his arguments, together with Board Commissioner
Rex Tantiangco. 
Attys. Federico Alikpala, Jr. and Joselia Poblador represented the
oil firms (Petron and Caltex,
respectively).

The parties were thereafter required to submit their memorandums
after which, the Court considered the cases submitted for resolution.

On November 20, 1990,
the Court ordered these cases consolidated.

On November 27, 1990,
we gave due course to both petitions.

The Court finds no merit in these petitions.

Senator Maceda and Atty. Lozano, in
questioning the lack of a hearing, have overlooked the provisions of Section 8
of Executive Order No. 172, which we quote:

SECTION 8. 
Authority to Grant Provisional Relief.  – The Board may, upon the filing of an
application, petition or complaint or at any stage thereafter and without prior
hearing, on the basis or supporting papers duly verified or authenticated,
grant provional relief on motion of a party in the case or
on its own initiative, without prejudice to a final decision after hearing,
should the Board find that the pleadings, together with such affidavits,
documents and other evidence which may be submitted in support of the motion,
substantially support the provisional order: 
Provided, That the Board shall immediately schedule and conduct a
hearing thereon within thirty (30) days thereafter, upon publication and notice
to all affected parties.

As the Order itself indicates, the authority for provisional
increase falls within the above provision.

There is no merit in the Senator’s contention that the
“applicable” provision is Section 3, paragraph (e) of the Executive
Order, which we quote:

(e) Whenever the Board has determined that there is a shortage of any
petroleum product, or when public interest so requires, it may take such steps
as it may consider necessary, including
the temporary adjustment of the levels of prices of petroleum products and the
payment to the Oil Price Stabilization Fund created under Presidential Decree
No. 1956 by persons or entities engaged in the petroleum industry of such
amounts as may be determined by the Board, which will enable the importer to
recover its cost of importation.

What must be stressed is that while under Executive Order No.
172, a hearing is indispensable, it does not preclude the Board from ordering, ex
parte, a provisional increase, as it did here,
subject to its final disposition of whether or not:  (1) to make it permanent; (2) to reduce or
increase it further; or (3) to deny the application.  Section 3, paragraph (e) is akin to a
temporary restraining order or a writ of preliminary attachment issued by the
courts, which are given ex parte, and
which are subject to the resolution of the main case.

Section 3, paragraph (e) and Section 8 do not negate each other,
or otherwise, operate exclusively of the other, in that the Board may resort to
one but not to both at the same time. 
Section 3(e) outlines the jurisdiction of the Board and the grounds for
which it may decree a price adjustment, subject to the requirements of notice
and hearing.  Pending that,
however, it may order, under Section 8, an authority to increase provisionally,
without need of a hearing, subject to the final outcome of the proceeding.  The Board, of course, is not prevented from
conducting a hearing on the grant of provisional authority–which is of course,
the better procedure–however, it can not be stigmatized later if it failed to
conduct one.  As we
held in Citizens’ Alliance for Consumer Protection v. Energy Regulatory
Board.^[7]

In the light of Section 8 quoted above, public respondent Board
need not even have conducted formal hearings in these cases prior to issuance
of its Order of 14 August 1987
granting a provisional increase of prices. 
The Board, upon its own discretion and on the basis of documents and
evidence submitted by private respondents, could have issued an order granting
provisional relief immediately upon filing by private respondents of their
respective applications.  In this
respect, the court considers the evidence presented by private respondents in
support of their applications–i.e., evidence showing that importation costs of
petroleum products had gone up; that the peso had depreciated in value; and
that the Oil Price Stabilization Fund (OPSF) had by then been depleted–as
substantial and hence constitutive of at least prima facie basis for issuance
by the Board of a provisional relief
order granting an increase in the prices of petroleum products.^[8]

We do not therefore find the challenged action of the Board to
have been done in violation of the due process clause.  The petitioners may contest however, the
applications at the hearings proper.

Senator Maceda’s attack on the Order in
question on premises that it constitutes an act of taxation or that it negates
the effects of Republic Act No. 6965, can not prosper.  Republic Act No. 6965 operated to lower taxes
on petroleum and petroleum products by imposing specific taxes rather than ad valorem taxes thereon; it is, not, however, an insurance
against an “oil hike”, whenever warranted, or is it a price control mechanism
on petroleum and petroleum products.  The
statute had possibly forestalled a larger hike, but it operated no more.

The Board Order authorizing the proceeds generated by the
increase to be deposited to the OPSF is not an act of taxation.  It is authorized by Presidential Decree No.
1956, as amended by Executive Order No. 137, as follows:

SECTION 8. 
There is hereby created a Trust Account in the books of accounts of the
Ministry of Energy to be designated as Oil Price Stabilization Fund (OPSF) for
the purpose of minimizing frequent price changes brought about by exchange rate
adjustments and/or changes in world
market prices of crude oil and imported petroleum products.  The Oil Price Stabilization Fund (OPSF) may
be sourced from any of the following:

a) Any increase in the tax collection from ad valorem
tax or customs duty imposed on petroleum products subject to tax under this
Decree arising form exchange rate adjustment, as may be determined by the
Minister of Finance in consultation with the Board of Energy;

b) Any increase in the tax collection as a result of the lifting of
tax exemptions of government corporations, as may be determined by the Minister
of Finance in consultation with the Board of Energy;

c) Any additional amount to be imposed on petroleum products to
augment the resources of the Fund through an appropriate Order that may be
issued by the Board of Energy requiring
payment by persons or companies engaged in the business of importing,
manufacturing and/or marketing petroleum products;

d) Any resulting peso cost differentials in case the actual peso
costs paid by oil companies in the importation of crude oil and petroleum
products is less than the peso costs
computed using the reference foreign exchange rates as fixed by the Board of
Energy.

Anent claims that oil companies can not charge new prices for oil
purchased at old rates, suffice it to say that the increase in question was not
prompted alone by the increase in world oil prices arising from tension in the Persian
Gulf.  What the Court
gathers from the pleadings as well as events of which it takes judicial notice,
is that:  (1) as of June 30, 1990, the
OPSF has incurred a deficit of P6.1 Billion; (2) the exchange rate has fallen
to P28.00 to $1.00; (3) the country’s balance of payments is expected to reach
$1 Billion; (4) our trade deficit is at $2.855 Billion as of the first nine
months of the year.

Evidently, authorities have been unable to collect enough taxes
necessary to replenish the OPSF as provided by Presidential Decree No. 1956,
and hence, there was no available alternative but to hike existing prices.

The OPSF, as the Court held in the aforecited
CACP cases, must not be understood to be a funding designed to guarantee oil
firms profits although as a subsidy, or a trust account, the Court has no doubt
that oil firms make money from it.  As we
held there, however, the OPSF was established precisely to protect the
consuming public from the erratic movement of oil prices and to preclude oil
companies from taking advantage of fluctuations occurring every so often.  As a buffer mechanism, it stabilizes domestic
prices by bringing about a uniform rate rather than leaving pricing to the
caprices of the market.

In all likelihood, therefore, an oil hike would have probably
been imminent, with or without trouble in the Gulf, although trouble would have
probably aggravated it.

The Court is not to be understood as having prejudged the
justness of an oil price increase amid the above premises.  What the Court is saying is that it thinks
that based thereon, the Government has made out a prima facie
case to justify the provisional increase in question.  Let the Court therefore make clear that these
findings are not final; the burden, however, is on the petitioners’ shoulders
to demonstrate the fact that the present economic picture does not warrant a
permanent increase.

There is no doubt that the increase in oil prices in question
(not to mention another one impending, which the Court undertands
has been under consideration by policy-makers) spells hard(er)
times for the Filipino people.  The Court
can not, however, debate the wisdom of policy or the logic behind it (unless it
is otherwise arbitrary), not because the Court agrees with policy, but because
the Court is not the suitable forum for debate. 
It is a question best judged by the political leadership which after
all, determines policy, and ultimately, by the electorate, that stands to be
better for it or worse off, either in the short or long run.

At this point, the Court shares the indignation of the people
over the conspiracy of events and regrets its own powerlessness, if by this
Decision it has been powerless.  The
constitutional scheme of things has simply left it with no choice.

In fine, we find no grave abuse of discretion committed by the
respondent Board in issuing its questioned Order.

WHEREFORE, these petitions are DISMISSED.  No costs.

SO ORDERED.

Narvasa, Gutirrez,
Jr., Cruz, Gancayco, Bidin,
Griño-Aquino, Medialdea, and Regalado, JJ., concur.

Fernan, C.J., no parrt, formerly counsel for Cebu Shell Corp.

Melencio-Herrera, no part; related by
affinity to the Chairman, ERB.

Padilla, JJ., no part.

Paras, J., I dissent (separate op.)

Feliciano, J., on leave.

.

^[1] Rollo,
45.

^[2] Id., 32.

^[3] Id.,
44-45.

^[4]
He is the petitioner in G.R. Nos. 95203-05.

^[5] He
is the other petitioner in G.R. Nos. 95119-21.

^[6]
It is the intervenor in G.R. Nos. 95203-05.

^[7] Nos. 78888-90, 79501-03, 79590-92, June 23, 1988, 162 SCRA 521.

^[8] Supra, at 535.

Clean

6 pt
6 pt
0
3

MicrosoftInternetExplorer4

st1:*{behavior:url(#ieooui) }

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:”Times New Roman”;}