3. Gerochi v. DOE, G.R. No.

159796, July 17, 2007

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Created @July 8, 2021 7:30 PM

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Property

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URL https://lawphil.net/judjuris/juri2007/jul2007/gr_159796_2007.html

Updated @July 12, 2021 8:14 PM

Gerochi v. DOE, G.R. No. 159796, July 17,

2007
Original Action of Petitioners

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.

Main Points

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 The universal charge shall be a non-bypassable charge which shall be passed on and
collected from all end-users on a monthly basis by the distribution utilities.

Collections by the distribution utilities and the TRANSCO in any given month shall
be remitted to the PSALM Corp.

Any end-user or self-generating entity not connected to a distribution utility shall

remit its corresponding universal charge directly to the TRANSCO

The PSALM Corp., as administrator of the fund, shall create a Special Trust Fund
which shall be disbursed only for the purposes specified herein in an open and
transparent manner. All amount collected for the universal charge shall be
distributed to the respective beneficiaries within a reasonable period to be provided
by the ERC.

Facts
April 5, 2002 - National Power Corporation-Strategic Power Utilities Group8 (NPC-
SPUG) filed with respondent Energy Regulatory Commission (ERC) a petition for the
availment from the Universal Charge of its share for Missionary Electrification
May 7, 2002 - NPC filed another petition with ERC praying that the proposed share
from the Universal Charge for the Environmental charge be approved for withdrawal
from the Special Trust Fund (STF) managed by Power Sector Assets and Liabilities
Management Group (PSALM) for the rehabilitation and management of watershed
areas.

December 20, 2002 - ERC issued an Order provisionally approving the share of the
NPC-SPUG from the Universal Charge for Missionary Electrification and authorizing the
National Transmission Corporation (TRANSCO) and Distribution Utilities to collect the
same from its end-users on a monthly basis.

April 2, 2003 - 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.

June 26, 2003 - ERC rendered its Decision which modifies its Order on Dec. 20, 2002;
an additional amount per kilowatt-hour is added from the amount provisionally
authorized by the Commission in the said Order.

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 August 13, 2003 - NPC-SPUG filed a Motion for Reconsideration asking the ERC,
among others, to set aside the above-mentioned Decision which the ERC granted in its
Order dated Oct. 7, 2003

Petitioner Arguments

1. 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.

2. 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.

3. The ERC is also empowered to approve and determine where the funds collected
should be used.

4. 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.

Additional infos:

Petitioners filed a complaint because they sustained a direct injury as a result of the
imposition of the Universal Charge as reflected in their electric bills.

Petitioners violated the doctrine of hierarchy of courts when they filed this
"Complaint" directly to the Supreme Court

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.

It has long been established that this Court will not entertain direct resort to it
unless the redress desired cannot be obtained in the appropriate courts, or where
exceptional and compelling circumstances justify availment of a remedy within and

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 call for the exercise of our primary jurisdiction (means outright dismissal of the
Complaint)

Respondent Arguments

Respondent PSALM 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 share the same view that
the Universal Charge is not a tax because it is levied for a specific regulatory
purpose, an exaction in the exercise of the State's police power.

Respondents further contend that said Universal Charge does not possess the
essential characteristics of a tax, that its imposition would redound to the benefit
of the electric power industry and not to the public, and that its rate is uniformly
levied on electricity end-users, unlike a tax which is imposed based on the
individual taxpayer's ability to pay.

Respondents deny that there is undue delegation of legislative power to the ERC
since the EPIRA sets forth sufficient determinable standards which would guide the
ERC in the exercise of the powers granted to it.

Respondents argue that the imposition of the Universal Charge is not oppressive
and confiscatory since it is an exercise of the police power of the State and it
complies with the requirements of due process.

Issues

1. Whether or not, the Universal Charge imposed under Sec. 34 of the EPIRA is a tax;
and

2. Whether or not there is undue delegation of legislative power to tax on the part of
the ERC.

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 Ruling

In exacting the assailed Universal Charge through Sec. 34 of the EPIRA, the State's
police power, particularly its regulatory dimension, is invoked.

It can be gleaned that 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.

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.

The law is complete and passes the first test for valid delegation of legislative
power.

We therefore hold that there is no undue delegation of legislative power to the ERC.

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

Principles

The power to tax is an incident of sovereignty and is unlimited in its range,

acknowledging in its very nature no limits, so that security against its abuse is to be
found only in the responsibility of the legislature which imposes the tax on the
constituency that is to pay it.

Police power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property.

Police power grants a wide panoply of instruments through which the State, as
parens patriae, gives effect to a host of its regulatory powers.

The conservative and pivotal distinction between these two powers rests in the
purpose for which the charge is made.

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.

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 It is a well-established doctrine that the taxing power may be used as an implement
of police power.

References:

https://lawphil.net/judjuris/juri2007/jul2007/gr_159796_2007.html
https://lawyerly.ph/digest/cac17?user=424

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