B.

Sufficient standard test

People vs Rosenthal
G.R. Nos. L-46076 and L-46077
June 12, 1939

Facts:
 Osmena and Rosenthal are organizers of the ORO Oil Company which was
engaged in mining activities.
 They are alleged to have violated the ACT 2581: BLUE SKY LAW – by selling
speculative securities without first obtaining the written permit or license from the
Insular Treasurer.
 The shares are said to be speculative because their value materially depended
upon a promise of future promotion and development of the oil business, rather
than based on actual tangible assets.
 Regional Trial Court found them guilty.
 On appeal, they assail the constitutionality of the law, that it contravenes the
constitutional provisions of the JONES ACT because the law constitutes UNDUE
DELEGATION OF LEGISLATIVE POWERS to the INSULAR TREASURER.
 Under the Blue Sky Law, all persons who offer to sell securities to the public
must obtain license from the Insular Treasurer. The license to sell is issued only
whenever the Insular Treasurer is satisfied that the applicant has complied with
the provisions of the Blue Sky Law.
 Furthermore, the Blue Sky Law provides that the Insular Treasurer shall have
authority, whenever in his judgment it is in the public interest, to cancel said
license or permit.
 Osmena and Rosenthal argue however that the Blue Sky Law provides NO
STANDARD or RULE which can guide the Insular Treasurer in determining the
cases in which a certificate or permit ought to be issued or cancelled, thereby
making his opinion the sole criterion. Consequently, they argue, legislative
powers have been unduly delegated to the Insular Treasurer.
Issues:

1. Whether the Blue Sky Law provides a sufficient standard for the Insular Treasurer in
reaching a decision regarding the issuance or cancellation of a license or permit.
2. Whether there was undue delegation of legislative powers.

Ruling:

Supreme Court ruled that the law is valid, sufficient standard. In view of the intent and
purpose of the Blue Sky Law to protect the public against speculative schemes which
have no more basis than so many feet of Blue Sky Law, and against the Sale of
Stock by fly-by-night concerns, visionary oil wells, distant gold mines.

Public Interest in this case is a sufficient standard to guide the Insular Treasurer. There
is no undue delegation of authority since there is a stated criterion – public interest. It is
a mistaken assumption that this is a mere general reference to public welfare without
any standard to guide determinations.
1. The purpose of the Act.
2. The requirements imposed, and
3. The context of the provisions
All show that there is a stated criterion. Also, the decisions of the Insular Treasurer is
appealable to the Secretary of Finance, hence the Insular Treasurer does not act and
decide without any restraining influence.