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John Osmena vs. Oscar Orbos, 220 SCRA 703

The Oil Price Stabilization Fund (OPSF) was created by President Marcos through a presidential decree to reimburse oil companies for increases in crude oil and petroleum product costs due to exchange rate adjustments or increases in world market prices (1). President Aquino later expanded the grounds for reimbursement from the fund (2). The case questioned whether claims for reimbursement not authorized in the original decree could be paid out of the fund's "Terminal Balance Deficit" of over 12 billion pesos (3). The Supreme Court ruled that the OPSF is a "Trust Account" established to minimize frequent price changes in petroleum products and that reimbursements from the fund are made in exercise of the state's police power,

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57 views1 page

John Osmena vs. Oscar Orbos, 220 SCRA 703

The Oil Price Stabilization Fund (OPSF) was created by President Marcos through a presidential decree to reimburse oil companies for increases in crude oil and petroleum product costs due to exchange rate adjustments or increases in world market prices (1). President Aquino later expanded the grounds for reimbursement from the fund (2). The case questioned whether claims for reimbursement not authorized in the original decree could be paid out of the fund's "Terminal Balance Deficit" of over 12 billion pesos (3). The Supreme Court ruled that the OPSF is a "Trust Account" established to minimize frequent price changes in petroleum products and that reimbursements from the fund are made in exercise of the state's police power,

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piptipayb
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© Attribution Non-Commercial (BY-NC)
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John Osmena vs. Oscar Orbos, 220 SCRA 703 G.R.

No: 99886, March 31, 1993 Facts: Pres. Marcos created Special Account in the General Fund (P.D. 1956), 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.. Pres. Aquino, amended and promulgated E.O. No. 137, 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 claimed that the status of the OPSF as of March 31, 1991 showed a Terminal Balance Deficit of some P12.877 billion and to abate such, the Energy Regulatory Board issued an Order approving the increase in pump prices of petroleum products. The OPSF deficit should have been fully covered in a span of 6 months but Oscar Orbos, in his capacity as Executive Secretary;Jesus Estanislao, in his capacity as Secretary of Finance; Wenceslao de la Paz, in his capacity as Head of the Office of Energy Affairs; Chairman Rex V. Tantiongco and the Energy Regulatory Board are poised to accept, process and pay claims not authorized under P.D. 1956. Issue: What is the purpose of the Oil Price Stabilization Fund? RULING: 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. It is 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." The Court cited Valmonte v. ERB and Gaston v. Republic Planters Bank, 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 (petroleum products) industry. The levy is primarily in the exercise of the police power of the State.

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