Osmena vs. Orbos

Osmena vs.
Orbos
220 SCRA 703
Facts:
On October 10, 1984, President Ferdinand Marcos issued P.D. 1956 creating a Special Account
in the General Fund, designated as the Oil Price Stabilization Fund (OPSF). OPSF was
designed to reimburse oil companies for cost increases in crude oil and imported petroleum
products resulting from exchange rate adjustments and from increases in the world market
prices of crude oil.
Subsequently, the OPSF was reclassified into a "trust liability account," in virtue of E.O. 1024, \
and ordered released from the National Treasury to the Ministry of Energy. The same Executive
Order also authorized the investment of the fund in government securities, with the earnings
from such placements accruing to the fund.
President Corazon C. Aquino, amended P.D. 1956. She promulgated Executive Order No. 137
on February 27, 1987, expanding the grounds for reimbursement to oil companies for possible
cost underrecovery incurred as a result of the reduction of domestic prices of petroleum
products, the amount of the underrecovery being left for determination by the Ministry of
Finance.
The petition avers that the creation of the trust fund violates 29(3), Article VI of the Constitution,
which provide that: All money collected on any tax levied for a special purpose shall be treated
as a special fund and paid out for such purposes only. If the purpose for which a special fund
was created has been fulfilled or abandoned, the balance, if any, shall be transferred to the
general funds of the Government.
The petitioner argues that "the monies collected pursuant to P.D. 1956 must be treated as a
'SPECIAL FUND,' not as a 'trust account' or a 'trust fund,' and that "if a special tax is collected
for a specific purpose, the revenue generated there from shall 'be treated as a special fund' to
be used only for the purpose indicated, and not channeled to another government objective."
Petitioner further points out that since "a 'special fund' consists of monies collected through the
taxing power of a State, such amounts belong to the State, although the use thereof is limited to
the special purpose/objective for which it was created."
He also contends that the "delegation of legislative authority" to the ERB violates 28 (2). Article
VI of the Constitution, which provides: The Congress may, by law, authorize the President to
fix, within specified limits, and subject to such limitations and restrictions as it may impose, tariff
rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within
the framework of the national development program of the Government;
And, inasmuch as the delegation relates to the exercise of the power of taxation, "the limits,
limitations and restrictions must be quantitative, that is, the law must not only specify how to tax,
who (shall) be taxed (and) what the tax is for, but also impose a specific limit on how much to
tax."
Issue:
Whether or not there is an undue delegation of the legislative power of taxation?

Ruling:
While the funds collected may be referred to as taxes, they are exacted in the exercise of the
police power of the State. Moreover, that the OPSF as a special fund is plain from the special
treatment given it by E.O. 137. It is segregated from the general fund; and while it is placed in
what the law refers to as a "trust liability account," the fund nonetheless remains subject to the
scrutiny and review of the COA. The Court is satisfied that these measures comply with the
constitutional description of a "special fund."
With regard to the alleged undue delegation of legislative power, the Court finds that the
provision conferring the authority upon the ERB to impose additional amounts on petroleum
products provides a sufficient standard by which the authority must be exercised. In addition to
the general policy of the law to protect the local consumer by stabilizing and subsidizing
domestic pump rates, P.D. 1956 expressly authorizes the ERB to impose additional amounts to
augment the resources of the Fund.

Osmena vs. Orbos

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Osmena vs.

Whether or not there is an undue delegation of the legislative power of taxation?

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