ARTICLE VI - LEGISLATIVE DEPARTMENT

SECTION 29
OSMEÑA VS. ORBOS
G.R. No. 99886, March 31, 1993

FACTS: Senator John Osmeña assails the constitutionality of paragraph 1c of

PD 1956, as amended by EO 137, empowering the Energy Regulatory Board
(ERB) to approve the increase of fuel prices or impose additional amounts on
petroleum products which proceeds shall accrue to the Oil Price Stabilization
Fund (OPSF) established for the reimbursement to ailing oil companies in the
event of sudden price increases. The petitioner avers that the collection on oil
products establishments is an undue and invalid delegation of legislative power
to tax. Further, the petitioner 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. It thus appears that the challenge posed by the
petitioner is premised primarily on the view that the powers granted to the ERB
under P.D. 1956, as amended, partake of the nature of the taxation power of
the State.

RULING: THE RULE ON SECTION 29 (3) APPLIES ONLY TO MONIES

COLLECTED IN THE EXERCISE OF THE POWER OF TAXATION AND NOT
THOSE LEVIED FOR REGULATORY PURPOSES - Also of relevance is this
Court's ruling in relation to the sugar stabilization fund the nature of which is
not far different from the OPSF. In Gaston v. Republic Planters Bank, 16 this
Court upheld the legality of the sugar stabilization fees and explained their
nature and character, viz.:
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 (Lutz
v. Araneta, 98 Phil. 148). . . . The tax collected is 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 (Lutz v. Araneta, supra).
xxx xxx xxx
The stabilization fees in question are levied by the State upon sugar
millers, planters and producers for a special purpose — that of "financing the
growth and development of the sugar industry and all its components,
stabilization of the domestic market including the foreign market." The fact
that the State has taken possession of moneys pursuant to law is sufficient to
constitute them state funds, even though they are held for a special purpose
(Lawrence v. American Surety Co. 263 Mich. 586, 249 ALR 535, cited in 42 Am
Jur Sec. 2, p. 718). Having been levied for a special purpose, the revenues
collected are to be treated as a special fund, to be, in the language of the
statute, "administered in trust" for the purpose intended. Once the purpose
has been fulfilled or abandoned, the balance if any, is to be transferred to the
general funds of the Government. That is the essence of the trust intended
(SEE 1987 Constitution, Article VI, Sec. 29(3), lifted from the 1935
Constitution, Article VI, Sec. 23(1).