Case Summary (G.R. No. 99886)
Constitutional Challenge to the Trust Account
Article VI, Section 29(3) mandates that taxes levied for a special purpose form a special fund within the General Fund, disbursed only for that purpose, with balances reverting when purpose is fulfilled or abandoned. Osmeña contends that OPSF contributions derive from tax measures (ad valorem duties and increases) and thus must be treated as a special fund, not a trust account. The Solicitor General counters that the OPSF is not solely funded by taxes but by a mix of levies and cost differentials under police power aimed at economic stability.
Nature and Purpose of the OPSF under Police Power
The Court affirmed in Valmonte that the OPSF is a trust account established under police power to stabilize domestic petroleum prices and shield consumers from volatile world prices and exchange rates. It functions as a “buffer mechanism” into which consumers and some tax revenues contribute, and from which oil companies are reimbursed for genuine cost underrecoveries. This stabilization and partial subsidy serve the State’s non‐waivable duty to protect economic welfare; such public purposes justify the trust structure outside the strict tax-fund regime.
Precedent on Special Funds and Police Power
In Gaston, stabilization fees on sugar were upheld as a special fund levied under police power, with proceeds “administered in trust” for industry support. Although categorized as taxes, they were imposed primarily for regulatory and stabilizing purposes. The OPSF likewise segregates resources (via EO 137) and remains under Commission on Audit scrutiny. Thus, it satisfies the Constitution’s special-fund attributes while operating under police power rather than pure taxation.
Delegation of Authority to the ERB and Non-Delegation Doctrine
Article VI, Section 28(2) permits congressional delegation to the President within specified limits on tax and impost rates. Osmeña argues that empowering the ERB to impose additional amounts lacks quantitative limits. The Court held that EO 137 sets forth sufficient policy objectives—price stabilization and subsidy—thus constituting an adequate standard for the delegate. Given the fluidity of exchange rates and world prices, fixed numerical limits would hamper timely action. The statute is complete in expressing legislative policy and supplies determinable boundaries (public protection from price volatility), meeting non-delegation requirements.
Reimbursements Out of the OPSF: Statutory Analysis
Under PD 1956, as amended, reimbursements are permitted only for underrecoveries resulting from (i) Board-mandated price reductions, (ii) ad valorem tax lifts, and (iii) “other factors” causing price reduction. Applying the ejusdem
Case Syllabus (G.R. No. 99886)
Facts of the Case
- Petitioner: John H. Osmena seeks corrective, prohibitive, and coercive relief under Rule 65 of the Rules of Court.
- Respondents: Oscar Orbos (Executive Secretary), Jesus Estanislao (Secretary of Finance), Wenceslao dela Paz (Head, Office of Energy Affairs), Rex V. Tantiongco and the Energy Regulatory Board (ERB).
- Subject matter: Validity and proper administration of the Oil Price Stabilization Fund (OPSF), a “trust account” established by P.D. No. 1956 and amended by E.O. Nos. 1024 and 137.
- Key developments:
- P.D. No. 1956 (October 10, 1984) created the OPSF to reimburse oil companies for cost increases due to exchange‐rate adjustments and world market price changes.
- E.O. No. 1024 (May 9, 1985) reclassified the OPSF as a “trust liability account,” authorized its release to the Ministry of Energy, and permitted investment in government securities.
- E.O. No. 137 (February 27, 1987) expanded reimbursement grounds to include cost underrecovery from domestic price reductions, with amounts to be determined by the Ministry of Finance.
- Financial status: As of March 31, 1991, the OPSF showed a deficit of approximately ₱12.877 billion.
- ERB action: On December 10, 1990, the ERB approved an increase in pump prices to address the growing deficit.
Issues Presented
- Whether the OPSF’s classification as a “trust account” violates Article VI, Section 29(3) of the Constitution governing special funds.
- Whether Section 8(1)(c) of P.D. No. 1956, as amended by E.O. 137, constitutes an unlawful delegation of legislative (taxation) power to the ERB.
- Whether various reimbursements from the OPSF—inventory losses, financing charges, fuel‐oil sales to the National Power Corporation, and overpayment refunds—exceed the fund’s statutory scope under Section 8, paragraph 2(2) of P.D. No. 1956.
- Whether the December 10, 1990 ERB order raising pump prices is void and whether pump prices should be rolled back to pre‐order levels.
Petitioner’s Contentions
- The OPSF monies are special taxes and must be held in a “special fund” within the General Fund, not in a separate trust account.
- The creation of a trust liability account contravenes Article VI, Section 29(3) of the Constitution, which requires that tax collections for special purposes be treated as special funds and, if the purpose is fulfilled or abandoned, remitted to the General Fund.
- Section 8(1)(c), P.D. No. 1956, as amended, unlawfully delegates legislative (taxation) power to the ERB without quantitative limits, violating Article VI, Section 28(2) of the Constitution.
- Certain reimbursements paid out of the