G.R. No. 129069 - People vs. Recto y Robea

Case Summary (G.R. No. 129069)

Key Dates

– Enactment of EPIRA: June 8, 2001 (effectivity June 26, 2001)
– ERC petitions filed by SPUG and NPC: April–May 2002
– ERC provisional and final orders authorizing Universal Charge withdrawals: December 2002 to October 2003
– PECO began charging Universal Charge: July 2003
– Supreme Court decision: July 17, 2007

Applicable Law

– 1987 Philippine Constitution (jurisdiction over constitutionality)
– Republic Act No. 9136, Section 34 (Universal Charge)
– IRR of RA 9136, Rule 18 (implementation procedures)

Background Facts

Congress restructured the power industry under EPIRA, creating a Universal Charge on all electricity end-users to cover stranded debts and contract costs, missionary electrification, tax equalization for indigenous energy, an environmental fund, and cross-subsidies. SPUG and NPC sought ERC approval to withdraw specific components from the Universal Charge trust fund. By mid-2003 PECO began collecting the charge from consumers, prompting the present original action.

Petitioners’ Arguments

The Universal Charge is a tax; its imposition by ERC constitutes an unconstitutional delegation of legislative taxing power.
ERC exercises unfettered discretion in fixing rates and allocating collected funds.
The charge is oppressive, confiscatory, and amounts to taxation without representation.

Respondents’ Arguments

– DOE, ERC, NPC, and PSALM (with OGCC/OSG) maintain that the Universal Charge is an exaction under the State’s police power, serving regulatory purposes to ensure industry viability, not a revenue-raising tax.
– ERC’s standards for rate determination are sufficiently defined by EPIRA’s policy declarations and specific statutory criteria.
– PECO must collect the charge or face administrative penalties under Section 46 of EPIRA.

Issues Presented

Is the Universal Charge a tax or a police-power exaction?
Does Section 34 of EPIRA unconstitutionally delegate legislative taxing power to the ERC?

Procedural Issue

Petitioners filed a direct “Complaint” with the Supreme Court without alleging grave abuse of discretion by ERC and bypassed lower courts, violating the doctrine of hierarchy of courts. Despite this procedural lapse, the Court proceeded to address the constitutional questions to prevent repetitive litigation.

First Issue—Tax Versus Police Power

– Taxing power is for revenue generation; police power aims to regulate for public welfare.
– Primary purpose test: if regulation is the primary aim, incidental revenue does not convert an exaction into a tax.
– Section 34 explicitly lists regulatory objectives (stranded cost recovery, missionary electrification, environmental management, etc.) grounded in EPIRA’s declared policies to ensure electrification, reliability, affordability, and competitiveness.
– Special Trust Fund administration parallels prior stabilization funds held constitutional as police-power measures (Oil and Sugar Stabilization Funds).

Conclusion: The Universal Charge is an exercise of the State’s police power, not a tax.

Second Issue—Delegation of Legislative Power

– Separation of powers requires legislative clarity; delegation to administrative agencies is permissible if the statute is complete and supplies sufficient standards.
– Completeness Test: EPIRA specifies purposes, beneficiaries, and roles of PSALM and ERC in calculating stranded costs and setting charges.
– Sufficient Standards Test: EPIRA’s policy declarations (public interest, electrification, environmental management) and deta