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G.R. No. 46076 & 46077
DIGEST BY: Belle Cabal
Submitted: 24 September 2016
Petitioners, Jacob Rosenthal and Nicasio Osmea, are 2 of the 10 founders of O.R.O
Oil Co. Inc., a mining and oil refinery company registered in the Philippines. They
were charged of violating Act No. 2581 also known as the Blue Sky Law. The
accused Nicasio Osmea sold 163 shares to nine different parties, and the accused
Jacob Rosenthal sold 21 shares to seven others, without first obtaining the
corresponding written permit or license from the Insular Treasurer of the
Commonwealth of the Philippines, as by law required. In their petition for
reconsideration, it is contended by the appellants that Act No. 2581 is
unconstitutional on three grounds. (1) That it constitutes an undue delegation of
legislative authority to the Insular Treasurer: (2) that it does not afford equal
protection before the law; and (3) that it is vague and ambiguous.
W/N the Blue Sky Law is constitutional
YES. It is Constitutional on all grounds. The Act does not give undue
delegation to the Insular Treasurer for there are sufficient standards imposed
by the law itself on the issuance and cancellation of certificates and permits.
It may cancel said permit due to public interest which doesnt lend too
much on vagueness since the Insular Treasurers purpose and intention are
focused on the protection of the public against speculative schemes which
have no more basis than so many feet of blue sky and against the sale of
stock in fly-by-night concerns, visionary oil wells, distant gold mines, and
other like fraudulent exploitations.

(Extracted from the case)
Sec. 2 Act No. 2581
Every person, partnership, association, or corporation attempting to
offer to sell in the Philippines speculative securities of any kind or character
whatsoever, is under obligation to file previously with the Insular Treasurer
the various documents and papers enumerated therein and to pay the
required tax of twenty-pesos.
Certain securities listed in section 3 are exempted from the operation of the

Section 5 Act No. 2581

Imposes upon the Insular Treasurer the mandatory duty to examine
the statements and documents thus filed and the additional duty to make or
cause to be made, if deemed advisable by him, a detailed examination of the
affairs of the applicant.

It also provides that "whenever the said Treasurer of the Philippine

Islands is satisfied, either with or without the examination herein provided,
that any person, partnership, association or corporation is entitled to the right
to offer its securities as above defined and provided for sale in the Philippine
Islands, he shall issue to such person, partnership, association or corporation
a certificate or permit reciting that such person, partnership, association or
corporation has complied with the provisions of this act, and that such
person, partnership, association or corporation, its brokers or agents are
entitled to order the securities named in said certificate or permit for sale";
that "said Treasurer shall furthermore have authority, when ever in his
judgment it is in the public interest, to cancel said certificate or permit", and
that "an appeal from the decision of the Insular Treasurer may be had within
the period of thirty days to the Secretary of Finance."


The legislative power shall be vested in the Congress of the Philippines which
shall consist of a Senate and a House of Representatives, except to the
extent reserved to the people by the provision on initiative and referendum.
(delegation of powers)