OSMENA V.

ORBOS
G.R. No. 99886; March 31, 1993
Narvasa, C.J.:

DOCTRINE:
Stabilization fees collected are in the nature of a tax, which is within the
power of the State to impose. The tax is collected not in a pure exercise of the
taxing power. It is levied with a regulatory purpose.

FACTS:

President Ferdinand Marcos issued P.D. 1956 creating a Special Account

in the General Fund, designated as the Oil Price Stabilization Fund (OPSF). It
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 by E.O. 1024 into a “trust

liability account,” and ordered released from the National Treasury to the Ministry
of Energy. E.O. 1024 likewise authorized the investment of the fund in
government securities, with the earnings from such placements accruing to the
fund.

President Cory Aquino, amended P.D. 1956. She promulgated E. O. No.

137 expanding the grounds for reimbursement to oil companies, the amount of
the underrecovery being left for determination by the Ministry of Finance.

The petitioner avers that the creation of the trust fund violates section
29(3), Article VI of the Constitution which provides:

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.

He further argued that monies collected pursuant to P.D. 1956 must be

treated as ‘SPECIAL FUND’, not as 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. He points out that since a special
fund consists of monies collected through the taxing power of a State, such
amounts belong to the State.

ISSUE:
Should the monies collected as part of the OPSF be considered taxes levied for
a special purpose?

HELD:
NO. In Valmonte v. ERB, the Court held that the OPSF was established
precisely to protect local consumers form the adverse consequences that such
frequent oil price adjustments may have upon the economy. Thus, the OPSF
serves as a pocket, as it were, into which a portion of the purchase price of oil
and petroleum products paid by consumers as well as some tax revenues are
inputted and from which amounts are drawn from time to time to reimburse oil
companies, when appropriate situation arise, for increases in and underrecovery
of costs of crude importation. The OPSF is thus a buffer mechanism through
which the domestic consumer prices of oil and petroleum products are stabilized
instead of fluctuating every so often, and oil companies are allowed to recover
those portions of their costs which they would not otherwise recover given the
level of domestic prices existing at any given time. To the extent that some tax
revenues are also put into it, the OPSF is in effect a device through which the
domestic prices of petroleum products are subsidized in part.

It appears to the Court that the establishment and maintenance of the

OPSF is well within that pervasive and non-waivable power and responsibility of
the government to secure physical and economic survival and well-being of the
community, that comprehensive sovereign authority we designate as the police
power of the State. The stabilization, and subsidy of domestic prices of
petroleum products and fuel oil “-clearly critical in importance considering, among
other things, the continuing high level of dependence of the country on imported
crude oil- are appropriately regarded as public purposes.

In Gaston v. Republic Planters Bank, the Court also held that the
stabilization fees collected are in the nature of a tax, which is within the power of
the State to impose for the promotion of the sugar industry. The tax is collected
not in a pure exercise of the taxing power. It is levied with a regulatory purpose,
to provide a means for the stabilization of the sugar industry. The levy is
primarily in the exercise of the police power of the State. The character of the
Stabilization Fund as a special kind of fund is emphasized by the fact that the
funds are deposited in the Philippine National Bank and not in the Philippine
Treasury, moneys from which may be paid out only in pursuance of an
appropriation paid by law.

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 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 laws
refers to as a “trust liability account,” the fund nonetheless remains subject to the
scrutiny and review of the COA.