The Court of Appeals (CA) has reversed a lower court decision that ordered the opening of the books of the so-called “Big 3” oil companies so the government can scrutinize their transactions to establish if they are involved in monopoly, predatory pricing, or cartelization.

In a 39-page decision, the appellate court held that the Manila Regional Trial Court committed grave abuse of discretion when it allowed the Bureau of Customs (BoC) and the Bureau of Internal Revenue (BIR) to open the books of Petron Corp., Pilipinas Shell, and Chevron Philippines.

The decision was written by Presiding Justice Andres Reyes Jr. and concurred in by Associate Justices Vicente Veloso and Jane Aurora Lantion of the CA’s Special First Division.

The court granted the petition for certiorari filed by Shell seeking a reversal of the April 27, 2009 ruling of Judge Silvino Pampilo Jr. allowing the government to scrutinize and audit the account books of the three major oil players.

Judge Pampilo, acting on the petition of the advocate group Social Justice Society (SJS), directed the BIR, BOC and the Commission on Audit (CoA) to examine the receipts, case disbursement books, the purchase order on the petroleum products, delivery receipts, sales invoices and other related documents on the purchase of petroleum products covering the period January 2003 to December 2003.

SJS had accused the Big 3 of engaging in monopoly, predatory pricing, or cartelization.

But the CA said the SJS petition should have been dismissed outright by the lower court for it “lacks all the requisites of a special civil action for declaratory relief and consequently, must fail for lack of sufficient cause of action.”

The appellate court said that under the 1997 Rules of Civil Procedure, the conditions for the filing of a petition for declaratory relief are: (a) there must be a justiciable controversy; (b) the controversy must be between persons whose interests are adverse; (c) the party seeking the relief has a legal interest in the controversy; (d) the issue is ripe for judicial determination.

The CA sustained the argument of Pilipinas Shell that the SJS petition mainly accuses the Big 3 of violating Article 186 of the Revised Penal Code (RPC) and Section 11 of Republic Act (RA) 8479 or the Downstream Oil Industry Deregulation Act of 1998, which are both outside the jurisdiction of the trial court.

It also pointed out that the a joint task force composed of the Department of Energy and the Department of Justice has already absolved the Big 3 when it held that there was no evidence the major oil players were engaged in monopoly, predatory pricing and cartelization.

The CA also refused to address the inquiry of SJS on whether the Big 3 Article 186 of the RPC and Section 11 of RA 8479 as this would entail the rendering of the court of an option on the possible criminal culpabilities of the oil firms, “to which the remedy of declaratory relief is proscribed.”