CASE DIGEST : Romeo P. Gerochi, Katulong ng Bayan (KB), and Environmentalist Consumers Network, Inc. (ECN) v. Department of Energy, Energy Regulatory Commission, National Power Corporation, PSALM, SPUG, and Panay Electric Company, Inc. G.R. No. 158796 July 17, 2007

 

FACTS

Congress enacted Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA), to restructure and privatize the electric power industry. Under Section 34 of EPIRA, Congress authorized the imposition of a Universal Charge on all electricity end-users to fund specific public purposes, including missionary electrification, environmental protection, and the payment of the stranded debts and stranded contract costs of the National Power Corporation (NPC). The Energy Regulatory Commission (ERC) was tasked to determine, fix, and approve the amount of the Universal Charge pursuant to the law and its Implementing Rules and Regulations.

Petitioners filed a petition questioning the constitutionality of Section 34 of EPIRA and Rule 18 of its IRR. They argued that the Universal Charge was actually a tax, which only Congress may impose, and that allowing the ERC to determine its amount constituted an unconstitutional delegation of legislative power. They further claimed that the charge was oppressive and sought its declaration as unconstitutional, as well as the refund of all amounts collected from consumers.

ISSUE

Whether the Universal Charge imposed under Section 34 of Republic Act No. 9136 (EPIRA) is an unconstitutional tax and whether Congress unlawfully delegated its legislative power to the ERC by authorizing it to determine and fix the amount of the charge.

HELD

The Supreme Court dismissed the petition and upheld the constitutionality of Section 34 of EPIRA. The Court ruled that the Universal Charge is not a tax but a regulatory exaction imposed pursuant to the State's police power to ensure the viability, stability, and equitable development of the electric power industry. Unlike a tax, which is imposed primarily to raise general government revenue, the Universal Charge is collected only for the specific purposes expressly enumerated in EPIRA, such as missionary electrification, environmental protection, and the settlement of stranded debts and contract costs. Consequently, it is a valid regulatory measure rather than an exercise of the taxing power.

The Court likewise held that there was no undue delegation of legislative power. Congress itself established the policy, identified the objectives, specified the purposes for which the Universal Charge may be imposed, and provided sufficient standards in EPIRA. The ERC merely performs the administrative function of determining and approving the amount necessary to implement the law, which is a valid delegation of authority. Accordingly, Section 34 of EPIRA and its implementing rules were sustained as constitutional, and the prayer to declare the Universal Charge void and to refund the collections was denied