Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 159149

June 26, 2006

The HONORABLE SECRETARY VINCENT S. PEREZ, in his capacity as the Secretary of the Department of Energy, petitioner,

vs.

LPG REFILLERS ASSOCIATION OF THE PHILIPPINES, INC., respondent

QUISUMBING, J.:

Before us is a petition for review on certiorari under Rule 45, assailing the Decision¹ and Order² of the Regional Trial Court of Pasig City, Branch 161, in SCA Case No. 2318, which nullified Circular No. 2000-06-010 of the Department of Energy (DOE).

The facts are undisputed.

Batas Pambansa Blg. 33, as amended, penalizes illegal trading, hoarding, overpricing, adulteration, underdelivery, and underfilling of petroleum products, as well as possession for trade of adulterated petroleum products and of underfilled liquefied petroleum gas (LPG) cylinders.³  The said law sets the monetary penalty for violators to a minimum of P20,000 and a maximum of P50,000.⁴

On June 9, 2000, Circular No. 2000-06-010 was issued by the DOE to implement B.P. Blg. 33, thus:

SECTION 4. NO PRICE DISPLAY BOARD –

            LPG Marketer/LPG Dealer/LPG Retail Outlet

            1^st Offense                 –          Reprimand/warning letter

  2^nd Offense                –            Recommend suspension of business operation to the proper local government unit

            3^rd Offense                 –          Recommend business closure to the proper local government unit and initiate criminal proceedings

SECTION 5. NO WEIGHING SCALE –

            A.  LPG Refiller/Marketer

                  1^st Offense                       –          Fine of P5,000

                  2^nd Offense                      –          Fine of P10,000

        3^rd Offense                       –          Recommend business closure to the proper local government unit

            B.  Dealer

                  1^st Offense                       –          Fine of P3,000

                  2^nd Offense                      –          Fine of P7,000                                 

        3^rd Offense                       –          Recommend business closure to the proper local government unit

            C.  LPG Retail Outlet

                              1^st Offense                       –          Reprimand

                   2^nd Offense                      –          Fine of P500.00

                   3^rd Offense                       –          Fine of P1,000.00

SECTION 6.  NO TARE WEIGHT OR INCORRECT TARE WEIGHT MARKINGS.  (REQUIREMENT ON ENGRAVED TARE WEIGHT SHALL TAKE EFFECT TWO (2) YEARS AFTER EFFECTIVITY OF THIS CIRCULAR)

A.  LPG Refiller/Marketer

      1^st Offense                       –          Fine of P3,000 for each cylinder

      2^nd Offense                      –          Fine of P5,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

            B.  Dealer

      1^st Offense                       –          Fine of P2,000 for each cylinder

      2^nd Offense                      –          Fine of P4,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

            C. LPG Retail Outlet

                        1^st Offense                       –          Fine of P1,000 for each cylinder

     2^nd Offense                      –          Fine of P2,000 for each cylinder

     3^rd Offense                       –          Recommend business closure to the proper local government unit

SECTION 7.  NO APPROPRIATE OR AUTHORIZED LPG SEAL

A.  LPG Refiller/Marketer

      1^st Offense                       –          Fine of P3,000 for each cylinder

      2^nd Offense                      –          Fine of P5,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

            B.  Dealer

      1^st Offense                       –          Fine of P2,000 for each cylinder

      2^nd Offense                      –          Fine of P4,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

            C. LPG Retail Outlet

                         1^st Offense                       –          Fine of P1,000 for each cylinder

      2^nd Offense                      –          Fine of P2,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

SECTION 8.  NO TRADE NAME, UNBRANDED LPG CYLINDERS, NO SERIAL NUMBER, NO DISTINGUISHING COLOR, NO EMBOSSED IDENTIFYING MARKINGS ON CYLINDER OR DISTINCTIVE COLLAR OR DESIGN (REQUIREMENT ON SERIAL NUMBER AND DISTINCTIVE COLLAR OR DESIGN SHALL TAKE EFFECT TWO (2) YEARS AFTER EFFECTIVITY OF THIS CIRCULAR)

A.  LPG Refiller/Marketer

      1^st Offense                       –          Fine of P4,000 for each cylinder

      2^nd Offense                      –          Fine of P5,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

            B.  Dealer

      1^st Offense                       –          Fine of P3,000 for each cylinder

      2^nd Offense                      –          Fine of P4,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

            C.  LPG Retail Outlet

                         1^st Offense                       –          Fine of P1,000 for each cylinder

      2^nd Offense                      –          Fine of P2,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

SECTION 9. UNDERFILLED LPG CYLINDERS

A.  LPG REFILLER/MARKETER

      1^st Offense                       –          Fine of P4,000 for each cylinder

      2^nd Offense                      –          Fine of P6,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

            B.  DEALER

      1^st Offense                       –          Fine of P3,000 for each cylinder

      2^nd Offense                      –          Fine of P4,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

C.  LPG RETAIL OUTLET

                         1^st Offense                       –          Fine of P1,000 for each cylinder

      2^nd Offense                      –          Fine of P2,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

SECTION 10.  TAMPERING, ALTERING, OR MODIFYING OF LPG CYLINDER THRU ANY MEANS SUCH AS BUT NOT LIMITED TO CHANGING THE VALVE, REPAINTING, AND RELABELLING BY ANY PERSON OR ENTITY OTHER THAN THE LEGITIMATE AND REGISTERED OWNER OF THE SAME.  FOR THIS PURPOSE, LPG REFILLER, MARKETER, DEALER, OR RETAIL OUTLET, AS THE CASE MAY BE, WHO HAS POSSESSION OF SUCH ILLEGALLY TAMPERED, ALTERED, OR OTHERWISE MODIFIED LPG CYLINDER SHALL BE HELD LIABLE FOR THIS OFFENSE

A.  LPG Refiller/Marketer

                              1^st Offense                       –          Fine of P5,000 for each cylinder

                              2^nd Offense                      –          Fine of P10,000 for each cylinder

                              3^rd Offense                       –          Recommend business closure to the proper local government unit

B.  Dealer

                            1^st Offense                       –          Fine of P3,000 for each cylinder

         2^nd Offense                      –          Fine of P5,000 for each cylinder

         3^rd Offense                       –          Recommend business closure to the proper local government unit

C. LPG Retail Outlet

                         1^st Offense                       –          Fine of P1,500 for each cylinder

      2^nd Offense                      –          Fine of P3,000 for each cylinder

      3^rd Offense                       –          Recommend business closure to the proper local government unit

SECTION 11.  UNAUTHORIZED DECANTING OR REFILLING OF LPG CYLINDERS

1^st Offense                 –          Fine of P5,000 for each cylinder

2^nd Offense                –          Fine of P10,000 for each cylinder

3^rd Offense                 –          Recommend business closure to the proper local government unit

SECTION 12.  HOARDING OF PETROLEUM PRODUCTS INCLUDING LIQUEFIED PETROLEUM GAS

1^st Offense                 –          Fine of P10,000 per cylinder

2^nd Offense                –          Recommend business closure to the proper local government unit plus the filing of appropriate criminal                                                       action

SECTION 13.  REFUSAL TO ALLOW OR COOPERATE WITH DULY AUTHORIZED INSPECTORS OF THE ENERGY INDUSTRY ADMINISTRATION BUREAU (EIAB) OF THE DEPARTMENT OF ENERGY IN THE CONDUCT OF THEIR INSPECTION/INVESTIGATION, WHETHER REGULAR AND ROUTINARY OR COMPLAINT-INITIATED

1^st Offense                 –          Fine of P10,000

2^nd Offense                –          Recommend business closure to the proper local government unit

SECTION 14.  REFUSAL OR FAILURE TO PAY FINE – The Department of Energy shall recommend to the proper local government unit the closure of business of a respondent who refuses or fails to pay any administrative fine without prejudice to the filing of an appropriate criminal action if warranted.⁵

Respondent LPG Refillers Association of the Philippines, Inc. asked the DOE to set aside the Circular for being contrary to law.  The DOE, however, denied the request for lack of merit.

Respondent then filed a petition for prohibition and annulment with prayer for temporary restraining order and/or writ of preliminary injunction before the trial court.

            After trial on the merits, the trial court nullified the Circular on the ground that it introduced new offenses not included in the law.⁶  The court intimated that the Circular, in providing penalties on a per cylinder basis for each violation, might exceed the maximum penalty under the law.  The decretal part of its Decision reads:

            IN VIEW OF THE FOREGOING, this Court renders judgment declaring DOE Circular No. 2000-06-010 null and void and prohibits the respondent from implementing the same.

            SO ORDERED.⁷

            The trial court denied for lack of merit petitioner’s motion for reconsideration.  Hence this petition, raising the following issues:

I

WHETHER OR NOT THE COURT A QUO GRAVELY ERRED IN HOLDING THAT “A CLOSE SCRUTINY OF BP 33, PD 1865 AND R.A. NO. 8479 SHOWS THAT OFFENSES LIKE NO PRICE DISPLAY [BOARD], NO WEIGHING SCALE, ETC. SET FORTH IN THE CIRCULAR ARE NOT PROVIDED FOR IN ANY OF THE THREE (3) LAWS”.

II

WHETHER OR NOT THE COURT A QUO GRAVELY ERRED IN HOLDING THAT “A SCRUTINY OF THE NEW SET OF PENALTIES PROVIDED BY THE CIRCULAR SHOWS THAT THE PENALTIES THIS TIME ARE BASED ON PER CYLINDER BASIS”; THAT “BEING SUCH, NO CEILING WAS PROVIDED FOR AS TO THE ADMINISTRATIVE FINES”; THAT “AS ILLUSTRATED BY THE PETITIONER, FOR JUST ONE LPG CYLINDER FOUND VIOLATING AT LEAST SEC[TIONS] 6, 7, 8, 9, 10 AND 11 OF THE [CIRCULAR], A FINE OF P24,000.00 IS IMPOSED;” AND THAT “THIS WILL CLEARLY BE BEYOND THE P10,000.00 PROVIDED BY THE LAWS.”

III

WHETHER OR NOT THE COURT A QUO GRAVELY ERRED IN HOLDING THAT SECTION 16 OF PETITIONER’S CIRCULAR WHICH AUTHORIZES THE IMPOSITION OF PECUNIARY PENALTIES WITH THE TOTAL FINE NOT EXCEEDING P20,000.00 FOR RETAIL OUTLETS VIOLATES THE PENALTY CEILING OF P10,000.00 SET UNDER BP BLG. 33, AS AMENDED.

IV

WHETHER OR NOT THE COURT A QUO GRAVELY ERRED IN HOLDING THAT SINCE SECTION 5(g) OF R.A. 7638 FINDS NO REFERENCE IN DOE CIRCULAR NO. 2000-06-010, THE SAME SHOULD BE DISREGARDED.

V

WHETHER OR NOT THE COURT A QUO GRAVELY ERRED IN HOLDING THAT “ON THE NEW OFFENSES INTRODUCED IN THE CIRCULAR SUCH AS SECTIONS 4, 5, 10, 13 AND 14 AND THE IMPOSITION OF THE GRADUATED PENALTIES ON ‘A PER CYLINDER BASIS’, THIS COURT FINDS [NO] REASON TO DISTURB ITS FINDINGS THAT RESPONDENT-MOVANT EXCEEDED ITS AUTHORITY. X X X IT SHOULD BE REMEMBERED THAT BP BLG. 33 AS AMENDED AND P.D. 1865 ARE CRIMINAL STATUTES AND MUST BE CONSTRUED WITH SUCH STRICTNESS AS TO CAREFULLY SAFEGUARD THE RIGHTS OF THE DEFENDANT.”

VI

WHETHER OR NOT THE COURT A QUO ERRED IN HOLDING THAT “THE ASSAILED CIRCULAR SETS NO MAXIMUM LIMIT AS TO THE FINE THAT MAY BE IMPOSED ON AN ERRING PERSON OR ENTITY TO WHICH FACT MOVANT CONCEDES.  FOR ONE (1) CYLINDER ALONE, NOT ONLY DOES THE CIRCULAR MAKE THE FINE EXCESSIVE TO THE EXTENT OF BEING CONFISCATORY, BUT IT EVEN IMPOSES A PENALTY WHICH MAY EVEN GO BEYOND THAT MAXIMUM IMPOSABLE FINE OF P50,000.00 SET BY P.D. 1865 IN ITS SEC. 4 AFTER A CRIMINAL PROCEEDING.”⁸

         To our mind, the issue raised by petitioner may be reduced to the sole issue of whether the Regional Trial Court of Pasig erred in declaring the provisions of the Circular null and void, and prohibiting the Circular’s implementation.

Petitioner argues that the penalties for the acts and omissions enumerated in the Circular are sanctioned by Sections 1⁹ and 3-A¹⁰ of B.P. Blg. 33 and Section 23¹¹ of Republic Act No. 8479.¹²  Petitioner adds that Sections 5(g)¹³ and 21¹⁴ of Republic Act No. 7638 ¹⁵ also authorize the DOE to impose the penalties provided in the Circular.

            Respondent counters that the enabling laws, B.P. Blg. 33 and R.A. No. 8479, do not expressly penalize the acts and omissions enumerated in the Circular.  Neither is the Circular supported by R.A. No. 7638, respondent claims, since the said law does not pertain to LPG traders.  Respondent maintains that the Circular is not in conformity with the law it seeks to implement.

            We resolve to grant the petition.

            For an administrative regulation, such as the Circular in this case, to have the force of penal law, (1) the violation of the administrative regulation must be made a crime by the delegating statute itself; and (2) the penalty for such violation must be provided by the statute itself.¹⁶

            The Circular satisfies the first requirement.  B.P. Blg. 33, as amended, criminalizes illegal trading, adulteration, underfilling, hoarding, and overpricing of petroleum products.  Under this general description of what constitutes criminal acts involving petroleum products, the Circular merely lists the various modes by which the said criminal acts may be perpetrated, namely:  no price display board, no weighing scale, no tare weight or incorrect tare weight markings, no authorized LPG seal, no trade name, unbranded LPG cylinders, no serial number, no distinguishing color, no embossed identifying markings on cylinder, underfilling LPG cylinders, tampering LPG cylinders, and unauthorized decanting of LPG cylinders.  These specific acts and omissions are obviously within the contemplation of the law, which seeks to curb the pernicious practices of some petroleum merchants.

            As for the second requirement, we find that the Circular is in accord with the law.  Under B.P. Blg. 33, as amended, the monetary penalty for any person who commits any of the acts aforestated is limited to a minimum of P20,000 and a maximum of P50,000.  Under the Circular, the maximum pecuniary penalty for retail outlets is P20,000,¹⁷ an amount within the range allowed by law.  However, for the refillers, marketers, and dealers, the Circular is silent as to any maximum moneetary penalty.  This mere silence, nonetheless, does not amount to violation of the aforesaid statutory maximum limit.  Further, the mere fact that the Circular provides penalties on a per cylinder basis does not in itself run counter to the law since all that B.P. Blg. 33 prescribes are the minimum and the maximum limits of penalties.

            Clearly, it is B.P. Blg. 33, as amended, which defines what constitute punishable acts involving petroleum products and which set the minimum and maximum limits for the corresponding penalties.  The Circular merely implements the said law, albeit it is silent on the maximum pecuniary penalty for refillers, marketers, and dealers.  Nothing in the Circular contravenes the law.

            Noteworthy, the enabling laws on which the Circular is based were specifically intended to provide the DOE with increased administrative and penal measures with which to effectively curtail rampant adulteration and shortselling, as well as other acts involving petroleum products, which are inimical to public interest.  To nullify the Circular in this case would be to render inutile government efforts to protect the general consuming public against the nefarious practices of some unscrupulous LPG traders.

            WHEREFORE, the petition is GRANTED.  The assailed Circular No. 2000-06-010 of DOE is declared valid.  The Decision and Order of the Regional Trial Court of Pasig City, Branch 161, in SCA Case No. 2318, nullifying said Circular  and prohibiting its implementation are hereby REVERSED and SET ASIDE.

            No pronouncement as to costs.

            SO ORDERED.

WE CONCUR:

A T T E S T A T I O N

            I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

C E R T I F I C A T I O N

            Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

¹Rollo, pp. 64-72.  Penned by Judge Alicia P. Mariño-Co.

2Id. at 73-77.

3SEC.  2.  Prohibited Acts. – The following acts are prohibited and penalized:

           (a) Illegal trading in petroleum and/or petroleum products;

           (b) Adulteration of finished petroleum products, or possession of adulterated finished petroleum products for the purpose of sale, distribution, transportation, exchange or barter;

          (c) Underdelivery or underfilling beyond authorized limits in the sale of petroleum products or possession of underfilled liquefied petroleum gas cylinder for the purpose of sale, distribution, transportation, exchange or barter;

            x x x x

            [(b)] (D) Hoarding of petroleum and/or petroleum products;

            [(c)] (E) Overpricing in the sale of petroleum products;

            [(d)] (F) Misuse of petroleum allocations;

            [(e)] (G) Speed contests and rallies involving mainly the use of motor vehicles, motor-driven watercraft or aircraft utilizing petroleum-derived fuels, including car and motorcycle rallies and drag racing, without the permit from the Bureau of Energy Utilization; and

            [(f)] (H) Sky-diving, and water-skiing except when methanol is used for the power-boat operation.

4SEC. 4.  Penalties.  – Any person who commits any act herein prohibited shall, upon conviction, be punished with a   fine of not less than [two] TWENTY thousand pesos [(P 2,000)] (P 20,000) but not more than [Ten] FIFTY  thousand pesos [(P 10,000)] (P 50,000)….

5Rollo, pp. 274-280.

6Batas Pambansa Blg. 33 (1979), Presidential Decree No. 1865 (1983), or Republic Act No. 8479 (1998).

7Rollo, p. 72.

8Id. at 500-502.

9SECTION 1.  Declaration of Policy.  – It is the declared policy of the State to institutionalize as a national way of life energy conservation geared towards the judicious and efficient use of energy in order to enhance availability of energy supplies required to support economic, social and developmental goals.  In view of the continuing uncertainty of the international oil supply, it is imperative that measures to conserve energy be strengthened and that acts and activities involving petroleum and/or petroleum products contrary to the intent and spirit of judicious usage and conservation of energy, which are inimical to the public interest and national security, be prohibited and appropriate sanction therefor be imposed.

¹⁰Section 3-A (inserted by Section 3 of PD No. 1865) reads:

            “SEC. 3-A. Rules and Regulations; Administrative sanctions for violation thereof.  – The Bureau of Energy Utilization shall issue such rules and regulations as are necessary to carry into effect the provisions of this Act, subject to the approval of the Minister of Energy, after consultation with the affected industry sectors.  Said rules and regulations shall take effect fifteen (15) days from the date of its publication in two (2) newspapers of general circulation.

      “The Bureau of Energy Utilization is empowered to impose in an administrative proceeding, after due notice and hearing, upon any person who violates any provision of such rules and regulations, a fine of not more than ten thousand pesos (P10,000.00) or to suspend or remove the license or permit of a hauler, marketer, refiller, dealer, sub-dealer or retail outlet: Provided, That hearing in any administrative proceedings may be waived by respondent.  Provided, Further, That during the pendency of such administrative proceeding, the Bureau may suspend the business operations of such hauler, marketer, refiller, dealer, sub-dealer or retailer or retail outlet operator when the suspension is consistent with public interest.…

            x x x x

      “The administrative sanction that may be imposed shall be without prejudice to the filing of a criminal action as the case may warrant.”

¹¹SEC. 23.  Implementing Rules and Regulations.  – The DOE, in coordination with the Board, the DENR, DFA, Department of Labor and Employment (DOLE), Department of Health (DOH), DOF, DTI, National Economic and Development Authority (NEDA) and TLRC, shall formulate and issue the necessary implementing rules and regulations within sixty (60) days after the effectivity of this Act.

¹²An Act Deregulating the Downstream Oil Industry, and For Other Purposes.

¹³SEC. 5.  Powers and Functions.  – The Department shall have the following powers and functions:

            x x x x

            (g) Formulate and implement programs, including a system of providing incentives and penalties, for the judicious and efficient use of energy in all energy-consuming sectors of the economy;

¹⁴SEC.  21.   Appropriations.  – x x x

            Subject to existing rules and regulations, the funds and monies collected or which otherwise come into the possession of the Department and its bureaus from fees, surcharges, fines and penalties which the Department and its bureaus may impose and collect under this Act, x x x shall be disbursed for expenses necessary for the effective discharge of the powers and functions of the Department under this Act.

¹⁵An Act Creating the Department of Energy, Rationalizing The Organization and Functions of Government Agencies Related to Energy, and For Other Purposes.

¹⁶See United States v. Panlilio, 28 Phil. 608, 613-614 (1914).

¹⁷DOE Circular No. 2000-06-010.

SEC. 16.  Maximum Total Penalty.  In the imposition of pecuniary penalties the total fine shall not exceed Twenty Thousand Pesos (P 20,000.00) for retail outlets.

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