Gerochi Vs DOE

I.4.
Gerochi vs DOE
Facts: Petitioners Romeo P. Gerochi, Katulong Ng Bayan (KB), and Environmentalist
Consumers Network, Inc. (ECN) (petitioners), is praying that Section 34 of Republic Act (RA)
9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA),
imposing the Universal Charge, and Rule 18 of the Rules and Regulations (IRR) which seeks
to implement the said imposition, be declared unconstitutional. Petitioners also pray that the
Universal Charge imposed upon the consumers be refunded and that a preliminary
injunction and/or temporary restraining order (TRO) be issued directing the respondents to
refrain from implementing, charging, and collecting the said charge.
SECTION 34. Universal Charge. Within one (1) year from the
effectivity of this Act, a universal charge to be determined, fixed and approved
by the ERC, shall be imposed on all electricity end-users for the following
purposes:
(a) Payment for the stranded debts in excess of the amount assumed by the
National Government and stranded contract costs of NPC and as well as
qualified stranded contract costs of distribution utilities resulting from the
restructuring of the industry;
(b) Missionary electrification;
(c) The equalization of the taxes and royalties applied to indigenous or
renewable sources of energy vis--vis imported energy fuels;
(d) An environmental charge equivalent to one-fourth of one centavo
per kilowatt-hour (P0.0025/kWh), which shall accrue to an
environmental fund to be used solely for watershed rehabilitation and
management. Said fund shall be managed by NPC under existing
arrangements; and
(e) A charge to account for all forms of cross-subsidies for a period not
exceeding three (3) years.
Respondent National Power Corporation-Strategic Power Utilities Group (NPC-SPUG) filed
with respondent Energy Regulatory Commission (ERC) a petition for the availment from the
Universal Charge of its share for Missionary Electrification. NPC filed another petition with
ERC praying that the proposed share from the Universal Charge for the Environmental
charge of P0.0025 per kilowatt-hour (/kWh), or a total ofP119,488,847.59, be approved for
withdrawal
from
the
Special
Trust Fund (STF) managed by respondent Power Sector Assets and
Liabilities
Management Group (PSALM) for the rehabilitation and management of watershed areas.
ERC authorized the NPC to draw up toP70,000,000.00 from PSALM for its 2003 Watershed
Rehabilitation Budget subject to the availability of funds for the Environmental Fund
component of the Universal Charge. On the basis of the said ERC decisions, respondent
Panay Electric Company, Inc. (PECO) charged petitioner Romeo P. Gerochi and all other
end-users with the Universal Charge as reflected in their respective electric bills starting
from the month of July 2003.
Petitioners submit that the assailed provision of law and its IRR which sought to implement
the same are unconstitutional on the following grounds:
1)
The universal charge provided for under Sec. 34 of the EPIRA and sought to be
implemented under Sec. 2, Rule 18 of the IRR of the said law is a tax which is to be
collected from all electric end-users and self-generating entities. The power to tax is
strictly a legislative function and as such, the delegation of said power to any
executive or administrative agency like the ERC is unconstitutional, giving the same
unlimited authority. The assailed provision clearly provides that the Universal Charge
is to be determined, fixed and approved by the ERC, hence leaving to the latter
complete discretionary legislative authority.
2)
The ERC is also empowered to approve and determine where the funds
gcollected should be used.
3) The imposition of the Universal Charge on all end-users is oppressive and
confiscatory and amounts to taxation without representation as the
consumers were not given a chance to be heard and represented.
Petitioners contend that the Universal Charge has the characteristics of a tax and is
collected to fund the operations of the NPC. On the other hand, respondent PSALM
through the Office of the Government Corporate Counsel (OGCC) contends that unlike
a tax which is imposed to provide income for public purposes, the assailed Universal
Charge is levied for a specific regulatory purpose, which is to ensure the viability of
the country's electric power industry. Thus, it is exacted by the State in the exercise
of its inherent police power. On this premise, PSALM submits that there is no undue
delegation of legislative power to the ERC since the latter merely exercises a limited
authority or discretion as to the execution and implementation of the provisions of
the EPIRA. Respondents Department of Energy (DOE), ERC, and NPC, through the
Office of the Solicitor General (OSG), share the same view that the Universal Charge
is not a tax because it is levied for a specific regulatory purpose, which is to ensure
the viability of the country's electric power industry, and is, therefore, an exaction in
the exercise of the State's police power.
Issues:
1)
Whether or not, the Universal Charge imposed under Sec. 34 of the
EPIRA is a tax?
The power to tax is an incident of sovereignty, it is based on the principle that taxes
are the lifeblood of the government, thus, the theory behind the exercise of the
power to tax emanates from necessity; without taxes, government cannot fulfill its
mandate of promoting the general welfare and well-being of the people.
On the other hand, police power is the power of the state to promote public
welfare by restraining and regulating the use of liberty and property. The justification
is found in the Latin maxims salus populi est suprema lex (the welfare of the people
is the supreme law) and sic utere tuo ut alienum non laedas (so use your property as
not to injure the property of others). If generation of revenue is the primary purpose
and regulation is merely incidental, the imposition is a tax; but if regulation is the
primary purpose, the fact that revenue is incidentally raised does not make the
imposition a tax.
The assailed Universal Charge is not a tax, but an exaction in the exercise of
the State's police power. Public welfare is surely promoted. It is a well-established
doctrine that the taxing power may be used as an implement of police power.
2)
Whether or not there is undue delegation of legislative power to tax
on the part of the ERC?
The principle of non-delegation of powers, as expressed in the Latin maxim potestas
delegata non delegari potest (what has been delegated cannot be delegated) is
based on the ethical principle that such delegated power constitutes not only a right
but a duty to be performed by the delegate through the instrumentality of his own
judgment and not through the intervening mind of another. In the face of the
increasing complexity of modern life, delegation of legislative power to various
specialized administrative agencies is allowed as an exception to this principle.
All that is required for the valid exercise of this power of subordinate
legislation is that the regulation be germane to the objects and purposes of the law
and that the regulation be not in contradiction to, but in conformity with, the
standards prescribed by the law. These requirements are denominated as the
completeness test and the sufficient standard test. Under the first test, the law must
be complete in all its terms and conditions when it leaves the legislature such that
when it reaches the delegate, the only thing he will have to do is to enforce it. The
second test mandates adequate guidelines or limitations in the law to determine the
boundaries of the delegate's authority and prevent the delegation from running riot.
The Court finds that the EPIRA, read and appreciated in its entirety, in relation
to Sec. 34 thereof, is complete in all its essential terms and conditions, and that it
contains sufficient standards, and that there is no undue delegation of legislative
power to the ERC. Finally, every law has in its favor the presumption of
constitutionality, and to justify its nullification, there must be a clear and unequivocal
breach of the Constitution and not one that is doubtful, speculative, or
argumentative. Indubitably, petitioners failed to overcome this presumption in favor
of the EPIRA. We find no clear violation of the Constitution which would warrant a
pronouncement that Sec. 34 of the EPIRA and Rule 18 of its IRR are unconstitutional
and void.
However, petitioners violated the doctrine of hierarchy of courts when they filed this
Complaint directly with us. Furthermore, the Complaint is bereft of any allegation of grave
abuse of discretion on the part of the ERC or any of the public respondents, in order for the
Court to consider it as a petition for certiorari or prohibition.

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I.4.

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