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Friday, April 19, 2013

Osmeña v. Orbos


Osmeña v. Orbos
G.R. No. 99886 March 31, 1993
Narvasa, C.J.

Facts:

                On October 10, 1984, Pres. Marcos issued P.D. 1956 creating a Special Account in the General Fund, designated as the Oil Price Stabilization Fund (OPSF). The 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.

                Pres. 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, reading as follows:

(3) 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, as amended, 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 therefrom 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, viz.:

(2) 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 the invalidity of the “TRUST ACCOUNT” in the books of account of the Ministry of Energy (now, the Office of Energy Affairs), created pursuant to § 8, paragraph 1, of P.D. No. 1956, as amended, “said creation of a trust fund being contrary to Section 29 (3), Article VI of the Constitution

Held:

                The OPSF is a “Trust Account” which was established “for the purpose of minimizing the frequent price changes brought about by exchange rate adjustment and/or changes in world market prices of crude oil and imported petroleum products.” Under P.D. No. 1956, as amended by Executive Order No. 137 dated 27 February 1987, this Trust Account may be funded from any of the following sources:

a)       Any increase in the tax collection from ad valorem tax or customs duty imposed on petroleum products subject to tax under this Decree arising from exchange rate adjustment, as may be determined by the Minister of Finance in consultation with the Board of Energy;

b)      Any increase in the tax collection as a result of the lifting of tax exemptions of government corporations, as may be determined by the Minister of Finance in consultation with the Board of Energy;

c)       Any additional amount to be imposed on petroleum products to augment the resources of the Fund through an appropriate Order that may be issued by the Board of Energy requiring payment of persons or companies engaged in the business of importing, manufacturing and/or marketing petroleum products;

d)      Any resulting peso cost differentials in case the actual peso costs paid by oil companies in the importation of crude oil and petroleum products is less than the peso costs computed using the reference foreign exchange rate as fixed by the Board of Energy.

                Hence, it seems clear that 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 is 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.” Indeed, the practice is not without precedent.

Issue:

                whether or Not the unconstitutionality of 8, paragraph 1 (c) of P.D. No. 1956, as amended by Executive Order No. 137, for “being an undue and invalid delegation of legislative power to the Energy Regulatory Board

Held:

                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, § 8(c) of P.D. 1956 expressly authorizes the ERB to impose additional amounts to augment the resources of the Fund.

                What petitioner would wish is the fixing of some definite, quantitative restriction, or “a specific limit on how much to tax.” The Court is cited to this requirement by the petitioner on the premise that what is involved here is the power of taxation; but as already discussed, this is not the case. What is here involved is not so much the power of taxation as police power. Although the provision authorizing the ERB to impose additional amounts could be construed to refer to the power of taxation, it cannot be overlooked that the overriding consideration is to enable the delegate to act with expediency in carrying out the objectives of the law which are embraced by the police power of the State.

                The interplay and constant fluctuation of the various factors involved in the determination of the price of oil and petroleum products, and the frequently shifting need to either augment or exhaust the Fund, do not conveniently permit the setting of fixed or rigid parameters in the law as proposed by the petitioner. To do so would render the ERB unable to respond effectively so as to mitigate or avoid the undesirable consequences of such fluidity. As such, the standard as it is expressed suffices to guide the delegate in the exercise of the delegated power, taking account of the circumstances under which it is to be exercised.


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