Republika ng Pilipinas

KAGAWARAN NG KATARUNGAN

Department of Justice

Manila

 

 

 

Opinion No. 77, Series of 2004

 

 

 

Secretary Vincent S. Perez

Department of Energy

Energy Center, Merritt Road

Fort Bonifacio, Taguig, Metro Manila

 

Sir:

 

This refers to your request for legal opinion on whether Caltex (Philippines), Inc. (Caltex, for brevity), having fully ceased its refining operations and totally shut down all its refinery processing units in the industry, is covered by Section 22 of the Downstream Oil Industry Deregulation Act of 1998 (R.A. No. 8479), as implemented by DOE Circular No. 98-03-004 dated March 11, 1998, as amended.

 

The request, it appears, arose from the position of Caltex that it is no longer covered by Section 22 of R.A. No. 8479 and DOE Circular No. 98-03-004, as amended, mainly because it had fully ceased its refining operations and shut down its processing units and, for that matter, the specific concerns which the law seeks to address no longer exist.

 

It is your Department’s position that Section 22 of R.A. No. 8479 no longer applies to Caltex because that entity is no longer engaged in the oil refinery business.  Moreover, it is argued that if the law intended all companies engaged in the oil refinery business at the time R.A. No. 8479 took effect to make the public offering regardless of the subsequent closure of their oil refining business, then the law should have stated.

 

Subject to the qualification that the statements in fact are true, correct and accurate, we are inclined to adopt your view.

 

Section 22 of R.A. No. 8479 reads:

 

SEC. 22.  Initial Public Offering.  – In compliance with the constitutional mandate to encourage private companies to broaden their base of ownership and in recognition of the vital role of oil in the national economy, any person or entity engaged in the oil refinery business shall make a public offering through the stock exchange of at least ten percent (10%) of its common stock within a period of three (3) years from the effectivity of this Act or the commencement of refinery operations:  Provided, That no single person or entity shall be allowed to own more than five percent (5%) of the stock offering:  Provided, further, That any crude oil refining company any stockholder thereof shall not acquire, directly or indirectly, any share of stock offered by any other crude oil refining company pursuant to this Section:  Provided, finally, That any such company which made the requisite public offering before the effectivity of this Act shall be exempted from the requirement.  (emphasis ours)

 

The above-quoted provision requires “any person engaged in the oil refinery business” to make a public offering through the stock exchange of at least ten percent (10%) of its common stock within a period of three (3) years from the effectivity of the Act or the commencement of its refinery operations.  There is no indication that the requirement extends to persons or entities that ceased to engage in the oil refinery business during the effectivity of the Act.  Thus, under the circumstances, Section 22 of R.A. No. 8479 no longer applies to Caltex.

 

Very truly yours,

 

 

 

MA. MERCEDITAS N. GUTIERREZ

Acting Secretary

 

 

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