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ROMEO P. GERICHI v. DEPARTMENT OF ENERGY (DOE)

FACTS:

The petitioners, Romeo P. Gerochi, Katulong Ng Bayan (KB), and Environmentalist Consumers Network, Inc. (ECN), filed a petition challenging the constitutionality of Section 34 of the Electric Power Industry Reform Act (EPIRA) and Rule 18 of its Implementing Rules and Regulations (IRR). The challenged provisions impose a Universal Charge on electricity end-users, which is determined and approved by the Energy Regulatory Commission (ERC). The Universal Charge serves various purposes, including payment for stranded debts, missionary electrification, equalization of taxes for renewable energy, environmental charge for watershed rehabilitation, and charge for cross-subsidies.

The petitioners argue that the Universal Charge is a delegation of legislative power and is oppressive and confiscatory. The respondents, including the National Power Corporation (NPC), Department of Energy (DOE), ERC, and Power Sector Assets and Liabilities Management (PSALM), argue that the Universal Charge is not a tax but an exaction in the exercise of the state's police power.

The case also involves a petition challenging the constitutionality of Section 34 of the EPIRA on the grounds that it violates the constitutional prohibition on foreign corporations operating public utilities in the Philippines. The petitioner alleges that the issuance of a Certificate of Compliance (COC) by the ERC to foreign-owned corporations violates the constitutional prohibition.

The Court acknowledges that the petitioners violated the doctrine of hierarchy of courts by directly filing the complaint with the Supreme Court. However, due to the likelihood of the constitutional issue resurfacing in the future and to prevent further delay, the Court decides to resolve the issue.

The Court distinguishes between the state's power of taxation and police power. The power to tax is essential for the government to fulfill its duty of promoting the general welfare, while police power is the power of the state to promote public welfare by regulating the use of property.

ISSUES:

  1. Whether the imposition of the Universal Charge under Section 34 of the EPIRA is a tax or an exaction in the exercise of the State's police power.

  2. Whether the creation and maintenance of the Special Trust Fund (STF) under Republic Act No. 9136 (Electric Power Industry Reform Act or EPIRA) is within the government's power to secure the physical and economic survival and well-being of the community.

  3. Whether the delegation of authority to determine and fix the Universal Charge to the Energy Regulatory Commission (ERC) violates the principle of separation of powers and the non-delegation of powers.

  4. Whether there is an undue delegation of legislative power to the Energy Regulatory Commission (ERC).

  5. Whether the imposition of Universal Charge on all end-users is oppressive and confiscatory.

  6. Whether or not Section 34 of the Electric Power Industry Reform Act (EPIRA) and Rule 18 of its Implementing Rules and Regulations (IRR) are unconstitutional.

RULING:

  1. The Universal Charge imposed under Section 34 of the EPIRA is an exaction in the exercise of the State's police power. The purposes enumerated in the EPIRA, which includes ensuring transparent and reasonable prices of electricity, protecting the public interest, and promoting environmentally compatible energy sources, demonstrate the regulatory character of the Universal Charge. The Supreme Court has held that the taxing power may be used as an implement of police power. Therefore, the Universal Charge is not a tax but an exaction made in the exercise of police power.

  2. The establishment and maintenance of the STF is within the government's power to secure the physical and economic survival and well-being of the community. The STF serves and assures the attainment and perpetuity of the purposes for which the Universal Charge is imposed, which is to ensure the viability of the country's electric power industry.

  3. The delegation of authority to determine and fix the Universal Charge to the ERC does not violate the principle of separation of powers and the non-delegation of powers. The EPIRA, when read and appreciated in its entirety, is complete in all its essential terms and conditions, and it contains sufficient standards. While the specific amount to be paid as the Universal Charge is not stated in the law, it is made certain by the legislative parameters provided in the law itself. The ERC also does not enjoy a wide latitude of discretion in determining the Universal Charge. The EPIRA provides guidelines and limitations for the ERC to ensure that the Universal Charge is imposed in accordance with the law and to protect the public interest.

  4. There is no undue delegation of legislative power to the ERC. The Court held that the Electric Power Industry Reform Act (EPIRA) provides sufficient standards and limitations on the ERC's power to formulate the Implementing Rules and Regulations (IRR). The provisions of the EPIRA, such as ensuring the total electrification of the country and the quality, reliability, security, and affordability of the supply of electric power, meet the requirements for a valid delegation of legislative power.

  5. The contention that the imposition of Universal Charge on all end-users is oppressive and confiscatory was deemed waived or abandoned because it was not pursued in the petitioners' Memorandum. Moreover, the determination of whether a tax is excessive, oppressive, or confiscatory involves questions of fact, and the Court is precluded from reviewing it.

  6. The Supreme Court dismissed the case for lack of merit, finding no clear violation of the Constitution which would warrant a pronouncement that Section 34 of the EPIRA and Rule 18 of its IRR are unconstitutional and void.

PRINCIPLES:

  • The government has the power to establish and maintain a Special Trust Fund in pursuit of securing the physical and economic survival and well-being of the community.

  • Delegation of legislative power to specialized administrative agencies is allowed as an exception to the principle of non-delegation of powers.

  • For a valid exercise of the power of subordinate legislation, the regulation must be germane to the objects and purposes of the law and must conform to the standards prescribed by the law, as determined by the completeness test and the sufficient standard test.

  • The law must be complete in all its terms and conditions when it leaves the legislature, and there must be adequate guidelines or limitations in the law to determine the boundaries of the delegate's authority.

  • A statute must be read in its entirety and its meaning should be extracted from a general consideration of the statute as a whole.

  • The immensity of police power in relation to the delegation of powers to administrative bodies should be given a wide latitude, especially in the field of rate-regulation of public utilities.

  • The ERC, as regulator, should have sufficient power to respond in real time to changes affecting public utilities.

  • The determination of whether a tax is excessive, oppressive, or confiscatory involves questions of fact and is not reviewable by the Court.

  • Presumption of constitutionality - 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.