Guerzon vs. Court of Appeals

An administrative agency possesses only those powers expressly conferred by law and those necessarily implied in their exercise; the Bureau of Energy Utilization has no jurisdiction to order a lessee to vacate leased premises and surrender possession to the lessor in connection with a contractual dispute or the expiration of a dealership agreement, its enforcement authority being limited under P.D. No. 1206 to imposing fines and ordering suspension, closure, or stoppage of operations for regulatory violations.

Petitioner Pedro W. Guerzon operated a gasoline service station in Cagayan de Oro City under a Service Station Lease and a Dealer’s Sales Contract executed with Basic Landoil Energy Corporation (later acquired by Pilipinas Shell Petroleum Corporation). The lease and dealership agreements were for fixed terms and were approved by the Bureau of Energy Utilization, which issued a corresponding Certificate of Authority. Prior to the expiration of the contracts, Shell informed petitioner that it would not renew, and demanded the surrender of the premises.

• The Contracts: On January 9, 1981, petitioner executed a “Service Station Lease” with Basic Landoil Energy Corporation (subsequently acquired by Pilipinas Shell Petroleum Corporation) covering the use and operation of Shell’s properties, facilities, and equipment at a gasoline station in Cagayan de Oro City, for a period of five years from January 15, 1981 to January 14, 1986. On January 7, 1981, petitioner also executed a “Dealer’s Sales Contract” with the same corporation for the sale of Shell’s petroleum products at the service station, expiring on April 12, 1986. On April 13, 1981, the BEU approved the Dealer’s Sales Contract and issued petitioner a Certificate of Authority, valid for five years in line with the contract’s terms. Paragraph 9 of the Service Station Lease stipulated that cancellation or termination of the Dealer’s Sales Contract would automatically cancel the lease.

• Non-Renewal and Demand: As early as January 2, 1986, Shell, through its District Manager–Reseller Mindanao, informed petitioner that the company would not renew the Dealer’s Sales Contract, which would expire on April 12, 1986, together with the service station lease, and reminded him to take steps to wind up his business and to hand over the station with all facilities and equipment upon expiration. A copy of this letter was furnished to the BEU’s Mindanao Division Office. On April 12, 1986, Shell again wrote petitioner reiterating the non-renewal and demanding the surrender of the premises and all company-owned equipment.

• BEU Order and Enforcement: On April 15, 1986, respondent F.C. Caasi Jr., Officer-in-Charge of the BEU Mindanao Division Office, issued the assailed order. The order cited petitioner’s refusal to vacate despite Shell’s notification of non-renewal and stated that his continued occupancy constituted “a violation of BEU laws, rules and regulations” detrimental to the interests of the parties and the public. It directed petitioner to: (1) immediately vacate the service station and turn it over to Shell; and (2) show cause within ten days why no administrative or criminal proceedings should be instituted for the violation. The order further requested the PC-INP Commander of Cagayan de Oro City to enforce it promptly and to report the results. The order did not identify any specific provision of law or regulation violated. On April 22, 1986, Shell, accompanied by law enforcement officers, enforced the order and took possession of the station, its equipment, and accessories, turning them over to Shell’s personnel.

• Petitioner’s Admission: Petitioner admitted the expiration of his dealership and lease agreements with Shell, acknowledged the validity of their termination, and had requested renewal, which was denied.

• Jurisdiction: Petitioner argued that the BEU had no jurisdiction to eject him from the service station, as the power to order eviction belongs to the civil courts in an appropriate action for unlawful detainer or accion publiciana.
• Due Process: Petitioner maintained that the order to vacate was issued without the notice and hearing required by law before any administrative penalty may be imposed.

• Regulatory Enforcement Power: The Solicitor General contended that upon expiration of the dealership and lease contracts and the expiry of petitioner’s license to sell petroleum products on April 12, 1986, petitioner’s continued occupancy and operation constituted illegal trading in petroleum products under Batas Pambansa Blg. 33. Under Section 7(e) of Presidential Decree No. 1206, as amended, the BEU was empowered to order the closure or stoppage of operations of an establishment for violation of its regulations, and the order to vacate was a valid exercise of this power to stop illegal trading.

• Jurisdiction to Eject: Whether the Bureau of Energy Utilization had the power to issue an order directing a service station operator-lessee to vacate the leased premises and turn over possession to the oil company upon expiration of the dealership and lease agreements.
• Due Process: Whether the order dated April 15, 1986 was issued in violation of the notice and hearing requirement under Presidential Decree No. 1206, as amended.

• Jurisdiction to Eject: The BEU lacked jurisdiction to issue the order to vacate. The order was explicitly premised on petitioner’s refusal to vacate after the expiration and non-renewal of his contracts, not on any specific violation of B.P. Blg. 33 or any other identified provision of law. Even assuming that petitioner’s continued operation constituted illegal trading, B.P. Blg. 33 does not authorize an order to vacate or turn over possession to a private oil company; the State is the injured party in illegal trading. Under Section 7(e) of P.D. No. 1206, as amended, the BEU’s enforcement powers are limited to two options: imposing a fine not exceeding P1,000.00, and, upon failure to pay the fine or cease the violation, ordering the suspension, closure, or stoppage of operations of the establishment. There is nothing in the law empowering the BEU to order a lessee to vacate the premises and deliver possession to the lessor. Jurisdiction to order a lessee to vacate is vested exclusively in the civil courts through appropriate actions for unlawful detainer or accion publiciana under B.P. Blg. 129. The BEU had no express or implied authority to adjudicate contractual disputes between gasoline dealers and oil companies. The order was therefore null and void for having been issued beyond the agency’s statutory powers.

• Due Process: The order was also void for failure to comply with the notice and hearing requirement. Section 7(e) of P.D. No. 1206 expressly requires due notice and hearing before any administrative penalty may be imposed. Even the least severe penalty—a fine—requires prior notice and hearing. The order to vacate effectively imposed a punitive measure without affording petitioner these procedural safeguards. The absence of prior notice and hearing rendered the order invalid on due process grounds as well.

• Prayer for Mandatory Injunction: Although the order was annulled, the prayer for the issuance of a writ of mandatory injunction to restore possession of the service station and equipment to petitioner was denied. Petitioner admitted the expiration and non-renewal of his contracts, and any right to possess the premises and equipment had been extinguished. No legal basis for an affirmative relief of restoration existed.

• Doctrine of Limited Powers of Administrative Agencies — Administrative agencies have only such powers as are expressly granted to them by law and those that are necessarily implied in the exercise thereof. They cannot expand their jurisdiction or exercise powers beyond the clear terms of their enabling statutes. The BEU’s statutory grant of enforcement powers under P.D. No. 1206 did not include the authority to order eviction in favor of a private lessor; the order to vacate therefore constituted an ultra vires act.

• Exclusive Civil Jurisdiction over Ejectment — Jurisdiction to order a lessee to vacate leased premises lies exclusively with the civil courts in an appropriate action for unlawful detainer or accion publiciana, pursuant to B.P. Blg. 129. An administrative agency such as the BEU is not vested with concurrent jurisdiction over such contractual possession disputes absent an express statutory grant.

• Due Process in Administrative Penal Proceedings — Before an administrative agency may impose a penalty, the law requires that the party be given notice and an opportunity to be heard. An order imposing an administrative sanction issued without prior notice and hearing is null and void. The requirement applies to the entire gradation of penalties under Section 7(e) of P.D. No. 1206, including the mildest fine.

• Absence of Quasi-Judicial Power over Contractual Disputes — The BEU, like its predecessor the Oil Industry Commission, has no quasi-judicial power to decide contractual disputes between gasoline dealers and oil companies, in the absence of an express statutory grant. Its jurisdiction in the exercise of quasi-judicial functions is limited to cases involving violations of the terms and conditions of certificates, licenses, or permits it issues, or of its own orders, decisions, rules, and regulations.

• “It is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law and those that are necessarily implied in the exercise thereof. … That issuing the order to vacate was the most effective way of stopping any illegal trading in petroleum products is no excuse for a deviation from this rule. Otherwise, adherence to the rule of law would be rendered meaningless.” — This passage encapsulates the ratio decidendi on the limits of administrative power.
• “The Bureau of Energy Utilization, like its predecessor, the defunct Oil Industry Commission, has no power to decide contractual disputes between gasoline dealers and oil companies, in the absence of an express provision of law granting to it such power.” — Affirms the exclusive jurisdiction of courts over contractual disputes and the BEU’s limited quasi-judicial scope.
• “While the order dated April 15, 1986 is null and void, the Court, however, finds itself unable to issue the writ of mandatory injunction prayed for … any right petitioner had to possess the service station and the equipment and facilities therein had been extinguished.” — Demonstrates that the nullity of the BEU order did not resurrect an expired possessory right.

• Makati Stock Exchange, Inc. v. Securities and Exchange Commission, G.R. No. L-23004, June 30, 1965, 14 SCRA 620 — Cited as controlling authority for the fundamental rule that administrative agencies possess only expressly granted and necessarily implied powers.
• Sy v. Central Bank, G.R. No. L-41480, April 30, 1976, 70 SCRA 570 — Reinforced the doctrine of limited administrative agency powers.
• Pilipinas Shell Petroleum Corp. v. Oil Industry Commission, G.R. No. L-41315, November 13, 1986, 145 SCRA 433 — Followed as precedent establishing that the BEU and its predecessor have no power to decide contractual disputes between oil companies and dealers without express statutory authority.

• Presidential Decree No. 1206, as amended, Section 7(e) — Enumerates the BEU’s enforcement powers: after due notice and hearing, impose a fine not exceeding P1,000; upon failure to pay or cease the violation, order suspension, closure, or stoppage of operations; issue writs of execution to enforce fines or closure orders. The Court interpreted this provision as an exhaustive grant that does not encompass the power to order eviction or resolve contractual possession disputes.
• Batas Pambansa Blg. 33, Sections 2, 3, 7 — Defines and penalizes illegal trading in petroleum products. The Court noted that the BEU order did not charge a specific violation of this law, and that even if it had, the law provides for criminal penalties and forfeiture to the State, not private possessory relief to an oil company.
• Batas Pambansa Blg. 129, Sections 19(2) and 33(2) — Allocates exclusive original jurisdiction over unlawful detainer and accion publiciana to first-level and second-level courts, underscoring that the BEU’s order encroached upon the exclusive jurisdiction of civil courts over ejectment cases.

Gutierrez, Jr., Feliciano, and Bidin, JJ., concurred. Fernan, C.J., took no part.