01 Osmena v. Orbos

8/11/2019 01 Osmena v. Orbos

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G.R. No. 99886 March 31, 1993

JOHN H. OSMEA, petitioner,vs.OSCAR ORBOS, in his capacit as E!"c#ti$" S"cr"tar% JES&S ES'AN(S)AO, in hiscapacit as S"cr"tar o* +inanc"% ENCES)AO -E)A A/, in his capacit as H"a0 o*th" O**ic" o* En"r A**airs% RE2 . 'AN'(ONGCO, an0 th" ENERG4 REG&)A'OR4

BOAR-, respondents.Nachura & Sarmiento for petitioner.

The Solicitor General for public respondents.

NARASA, C.J.:

The petitioner seeks the corrective,1prohibitive and coercive remedies provided by Rule 65

of the Rules of Court,5upon the following posited grounds, viz.:3

! the invalidity of the "TR#$T %CC'T" in the books of account of the (inistry of )nergy

*now, the &ffice of )nergy %ffairs!, created pursuant to + , paragraph , of -.. 'o. /56, asamended, "said creation of a trust fund being contrary to $ection 0/ *1!, %rticle 23 of the . .

Constitution4

0! the unconstitutionality of + , paragraph *c! of -.. 'o. /56, as amended by )ecutive&rder 'o. 1, for "being an undue and invalid delegation of legislative power . . to the

)nergy Regulatory 7oard4"7

1! the illegality of the reimbursements to oil companies, paid out of the &il -rice $tabili8ation

9und, 6 because it contravenes + , paragraph 0 *0! of -. . /56, as amended4 and

! the conse;uent nullity of the &rder dated ecember


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"the )nergy Regulatory 7oard . . issued an &rder on ecember


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The foregoing arguments suggest the presence of misconceptions about the nature andfunctions of the &-$9. The &-$9 is a "Trust %ccount" which was established "for the purpose ofminimi8ing the fre;uent price changes brought about by echange rate ad>ustment andEor

changes in world market prices of crude oil and imported petroleum products." 17#nder -..'o. /56, as amended by )ecutive &rder 'o. 1 dated 0 9ebruary /, this Trust %ccountmay be funded from any of the following sources:

a! 'ny increase in the ta collection from ad valorem ta or customs duty

imposed on petroleum productssub>ect to ta under this ecree arising fromechange rate ad(ustment, as may be determined by the (inister of 9inance inconsultation with the 7oard of )nergy4

b!'ny increase in the ta collection as a result of the lifting of ta eemptions ofgovernment corporations, as may be determined by the (inister of 9inance inconsultation with the 7oard of )nergy:

c!'ny additional amount to be imposed on petroleum productsto augment theresources of the 9und through an appropriate &rder that may be issued by the7oard of )nergy re;uiring payment of persons or companies engaged in thebusiness of importing, manufacturing andEor marketing petroleum products4

d!'ny resulting peso cost differentialsin case the actual peso costs paid by oilcompanies in the importation of crude oil and petroleum products is less than the

peso costs computed using the reference foreign echange rate as fied by the7oard of )nergy.

The fact that the world market prices of oil, measured by the spot market in Rotterdam, vary fromday to day is of >udicial notice. 9reight rates for hauling crude oil and petroleum products fromsources of supply to the -hilippines may also vary from time to time. The echange rate of thepeso vis)a)visthe #.$. dollar and other convertible foreign currencies also changes from day today. These fluctuations in world market prices and in tanker rates and foreign echange rateswould in a completely free market translate into corresponding ad>ustments in domestic prices ofoil and petroleum products with sympathetic fre;uency. 7ut domestic prices which vary from dayto day or even only from week to week would result in a chaotic market with unpredictableeffects upon the countrys economy in general. The *+S was established precisely to protect

local consumers from the adverse consequences that such frequent oil price ad(ustments mayhave upon the economy. Thus, the *+S serves as a poc-et, as it were, into which a portion ofthe purchase price of oil and petroleum products paid by consumers as well as some tarevenues are inputted and from which amounts are drawn from time to time to reimburse oilcompanies, when appropriate situations arise, for increases in, as well as underrecovery of,costs of crude importation. The *+S is thus a buffer mechanism through which the domesticconsumer prices of oil and petroleum products are stabilized, instead of fluctuating every sooften, and oil companies are allowed to recover those portions of their costs which they wouldnot otherwise recover given the level of domestic prices eisting at any given time. To the etentthat some ta revenues are also put into it, the *+S is in effect a device through which thedomestic prices of petroleum products are subsidized in part. t appears to the /ourt that theestablishment and maintenance of the *+S is well within that pervasive and non)waivable

power and responsibility of the government to secure the physical and economic survival and

well)being of the community, that comprehensive sovereign authority we designate as the policepower of the State. The stabili8ation, and subsidy of domestic prices of petroleum products andfuel oil ? clearly critical in importance considering, among other things, the continuing high levelof dependence of the country on imported crude oil ? are appropriately regarded as publicpurposes.

%lso of relevance is this Courts ruling in relation to the sugar stabili8ation fund the nature of

which is not far different from the &-$9. 3n Gaston v. %epublic +lanters an-, 16 this Courtupheld the legality of the sugar stabili8ation fees and eplained their nature and character,viz.:


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The stabili8ation fees collected are in the nature of a ta, which is within the power of the $tateto impose for the promotion of the sugar industry *Dut8 v. %raneta, / -hil. !. . . . The tacollected is not in a pure eercise of the taing power. t is levied with a regulatory purpose, to

provide a means for the stabilization of the sugar industry. The levy is primarily in the eercise ofthe police power of the State !Dut8 v. %raneta, supra".

The stabili8ation fees in ;uestion are levied by the $tate upon sugar millers, planters and

producers for a special purpose ? that of "financing the growth and development of the sugarindustry and all its components, stabili8ation of the domestic market including the foreignmarket." The fact that the $tate has taken possession of moneys pursuant to law is sufficient toconstitute them state funds, even though they are held for a special purpose *Dawrence v.

%merican $urety Co. 061 (ich. 56, 0/ %DR 515, cited in 0 %m @ur $ec. 0, p. !. Bavingbeen levied for a special purpose, the revenues collected are to be treated as a special fund, tobe, in the language of the statute, "administered in trust" for the purpose intended. &nce thepurpose has been fulfilled or abandoned, the balance if any, is to be transferred to the generalfunds of the =overnment. That is the essence of the trust intended *$)) / Constitution,

%rticle 23, $ec. 0/*1!, lifted from the /15 Constitution, %rticle 23, $ec. 01*!. 1

The character of the Stabilization und as a special -ind of fund is emphasized by the fact thatthe funds are deposited in the +hilippine National an- and not in the +hilippine Treasury,

moneys from which may be paid out only in pursuance of an appropriation made by law */!Constitution, %rticle 23, $ec. 0/ *1!, lifted from the /15 Constitution, %rticle 23, $ec. 01*!.*)mphasis supplied!.

Bence, it seems clear that while the funds collected may be referred to as taes, they areeacted in the eercise of the police power of the $tate. (oreover, that the &-$9 is a specialfund is plain from the special treatment given it by ).&. 1. 3t is segregated from the generalfund4 and while it is placed in what the law refers to as a "trust liability account," the fundnonetheless remains sub>ect to the scrutiny and review of the C&%. The Court is satisfied thatthese measures comply with the constitutional description of a "special fund." 3ndeed, thepractice is not without precedent.

Aith regard to the alleged undue delegation of legislative power, the Court finds that the

provision conferring the authority upon the )R7 to impose additional amounts on petroleumproducts provides a sufficient standard by which the authority must be eercised. 3n additionto the general policy of the law to protect the local consumer by stabili8ing and subsidi8ing

domestic pump rates, + *c! of -.. /56 18 epressly authori8es the )R7 to imposeadditional amounts to augment the resources of the und.

Ahat petitioner would wish is the fiing of some definite, ;uantitative restriction, or "a specific

limit on how much to ta." 19The Court is cited to this re;uirement by the petitioner on thepremise that what is involved here is the power of taation4 but as already discussed, this isnot the case. Ahat is here involved is not so much the power of taation as police power.

%lthough the provision authori8ing the )R7 to impose additional amounts could be construed

to refer to the power of taation, it cannot be overlooked that the overriding consideration is toenable the delegate to act with epediency in carrying out the ob>ectives of the law which areembraced by the police power of the $tate.

The interplay and constant fluctuation of the various factors involved in the determination ofthe price of oil and petroleum products, and the fre;uently shifting need to either augment orehaust the 9und, do not conveniently permit the setting of fied or rigid parameters in the lawas proposed by the petitioner. To do so would render the )R7 unable to respond effectively soas to mitigate or avoid the undesirable conse;uences of such fluidity. %s such, the standardas it is epressed, suffices to guide the delegate in the eercise of the delegated power,


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taking account of the circumstances under which it is to be eercised.

9or a valid delegation of power, it is essential that the law delegating the power must be *!complete in itself, that is it must set forth the policy to be eecuted by the delegate and *0! itmust fi a standard ? limits of which

are sufficiently determinate or determinable ? to which the delegate must conform. 5

. . . %s pointed out in )du v. )ricta: "To avoid the taint of unlawful delegation, there must be astandard, which implies at the very least that the legislature itself determines matters of principleand lays down fundamental policy. &therwise, the charge of complete abdication may be hard torepel. % standard thus defines legislative policy, marks its limits, maps out its boundaries andspecifies the public agency to apply it. 3t indicates the circumstances under which the legislativecommand is to be effected. 3t is the criterion by which the legislative purpose may be carried out.Thereafter, the eecutive or administrative office designated may in pursuance of the aboveguidelines promulgate supplemental rules and regulations. The standard may either be epressor implied. 3f the former, the nonFdelegation ob>ection is easily met. The standard though doesnot have to be spelled out specifically. 3t could be implied from the policy and purpose of the act

considered as a whole. 51

3t would seem that from the aboveF;uoted ruling, the petition for prohibition should fail.

The standard, as the Court has already stated, may even be implied. 3n that light, there canbe no ground upon which to sustain the petition, inasmuch as the challenged law sets forth adeterminable standard which guides the eercise of the power granted to the )R7. 7y thesame token, the proper eercise of the delegated power may be tested with ease. 3t seemsobvious that what the law intended was to permit the additional imposts for as long as thereeists a need to protect the general public and the petroleum industry from the adverseconse;uences of pump rate fluctuations. "Ahere the standards set up for the guidance of anadministrative officer and the action taken are in fact recorded in the orders of such officer, sothat Congress, the courts and the public are assured that the orders in the >udgment of suchofficer conform to the legislative standard, there is no failure in the performance of the

legislative functions." 55

This Court thus finds no serious impediment to sustaining the validity of the legislation4 theepress purpose for which the imposts are permitted and the general ob>ectives and purposesof the fund are readily discernible, and they constitute a sufficient standard upon which thedelegation of power may be >ustified.

3n relation to the third ;uestion ? respecting the illegality of the reimbursements to oilcompanies, paid out of the &il -rice $tabili8ation 9und, because allegedly in contravention of

+ , paragraph 0 *0! of -.. /56, amended 53 the Court finds for the petitioner.

The petition assails the payment of certain items or accounts in favor of the petroleumcompanies *i.e., inventory losses, financing charges, fuel oil sales to the 'ational -owerCorporation, etc.! because not authori8ed by law. -etitioner contends that "these claims are

not embraced in the enumeration in + of -.. /56 . . since none of them was incurred 0as aresult of the reduction of domestic prices of petroleum products," 5and since these itemsare reimbursements for which the &-$9 should not have responded, the amount of the

-0. billion deficit "should be reduced by -5,0.0 million." 573t is argued "that under theprinciple of e(usdem generis. . . the term other factors *as used in + of -.. /56! . . canonly include such other factors which necessarily result in the reduction of domestic prices of

petroleum products." 56

The $olicitor =eneral, for his part, contends that "*t!o place said *term! within the restrictive


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confines of the rule of e(usdem generis would reduce *).&. 1! to a meaningless provision."

This Court, in /alte +hilippines, nc. v. The 1onorable /ommissioner on 'udit, et al. , 5

passed upon the application of e(usdem generis to paragraph 0 of + of -.. /56, viz.:

The rule of e(usdem generisstates that "GwHhere words follow an enumeration of persons orthings, by words of a particular and specific meaning, such general words are not to beconstrued in their widest etent, but are held to be as applying only to persons or things of the

same kind or class as those specifically mentioned." 58% reading of subparagraphs *i! and *ii!easily discloses that they do not have a common characteristic. The first relates to pricereduction as directed by the 7oard of )nergy while the second refers to reduction in internal advalorem taes. Therefore, subparagraph *iii! cannot be limited by the enumeration in thesesubparagraphs. Ahat should be considered for purposes of determining the "other factors" insubparagraph *iii! is the first sentence of paragraph *0! of the $ection which eplicitly allows thecost underrecovery only if such were incurred as a result of the reduction of domestic prices of

petroleum products.

The Court thus holds, that the reimbursement of financing charges is not authori8ed byparagraph 0 of + of -.. /56, for the reason that they were not incurred as a result of thereduction of domestic prices of petroleum products. #nder the same provision, however, thepayment of inventory losses is upheld as valid, being clearly a result of domestic pricereduction, when oil companies incur a cost underrecovery for yet unsold stocks of oil ininventory ac;uired at a higher price.

Reimbursement for cost underrecovery from the sales of oil to the 'ational -owerCorporation is e;ually permissible, not as coming within the provisions of -.. /56, but in

virtue of other laws and regulations as held in /alte 59and which have been pointed to bythe $olicitor =eneral. %t any rate, doubts about the propriety of such reimbursements havebeen dispelled by the enactment of R.%. 6/50, establishing the -etroleum -rice $tandby9und, + 0 of which specifically authori8es the reimbursement of "cost underrecovery incurredas a result of fuel oil sales to the 'ational -ower Corporation."

%nent the overpayment refunds mentioned by the petitioner, no substantive discussion has

been presented to show how this is prohibited by -.. /56. 'or has the $olicitor =eneraltaken any effort to defend the propriety of this refund. 3n fine, neither of the parties, beyondthe mere mention of overpayment refunds, has at all bothered to discuss the arguments for oragainst the legality of the soFcalled overpayment refunds. To be sure, the absence of anyargument for or against the validity of the refund cannot result in its disallowance by theCourt. #nless the impropriety or illegality of the overpayment refund has been clearly andspecifically shown, there can be no basis upon which to nullify the same.

9inally, the Court finds no necessity to rule on the remaining issue, the same having beenrendered moot and academic. %s of date hereof, the pump rates of gasoline have beenreduced to levels below even those prayed for in the petition.

AB)R)9&R), the petition is =R%'T) insofar as it prays for the nullification of thereimbursement of financing charges, paid pursuant to ).&. 1, and 3$(3$$) in all otherrespects.

$& &R)R).

Documents

01 Osmena v. Orbos