Beruflich Dokumente
Kultur Dokumente
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
*
G.R.No.159796.July17,2007.
ROMEOP.GEROCHI,KATULONGNGBAYAN(KB)and
ENVIRONMENTALIST CONSUMERS NETWORK, INC.
(ECN), petitioners, vs. DEPARTMENT OF ENERGY
(DOE), ENERGY REGULATORY COMMISSION (ERC),
NATIONAL POWER CORPORATION (NPC), POWER
SECTOR ASSETS AND LIABILITIES MANAGEMENT
GROUP (PSALM Corp.), STRATEGIC POWER
UTILITIES GROUP (SPUG), and PANAY ELECTRIC
COMPANYINC.(PECO),respondents.
Courts; Judicial Review; Hierarchy of Courts; Petitioners
violated the doctrine of hierarchy of courts when they filed this
Complaint directly with the Supreme Courtthe Courts
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo
warranto, and habeas corpus, while concurrent with that of the
regional trial courts and the Court of Appeals, does not give
litigants unrestrained freedom of choice of forum from which to seek
such relief.Petitioners filed before us an original action
particularly denominated as a Complaint assailing the
constitutionality of Sec. 34 of the EPIRA imposing the Universal
ChargeandRule18oftheEPIRAsIRR.Nodoubt,petitionershave
locus standi. They impugn the constitutionality of Sec. 34 of the
EPIRA because they sustained a direct injury as a result of the
impositionoftheUniversalChargeasreflectedintheirelectricbills.
However, petitioners violated the doctrine of hierarchy of courts
whentheyfiledthisComplaintdirectlywithus.Furthermore,the
Complaintisbereftofanyallegationofgraveabuseofdiscretionon
the part of the ERC or any of the public respondents, in order for
theCourttoconsideritasapetitionforcertiorariorprohibition.But
this Courts jurisdiction to issue writs of certiorari, prohibition,
mandamus, quo warranto, and habeas corpus, while concurrent
withthatoftheregionaltrialcourtsandtheCourtofAppeals,does
not give litigants unrestrained freedom of choice of forum from
which to seek such relief. It has long been established that this
Courtwillnotentertaindirectresorttoitunlesstheredressdesired
cannotbeobtainedintheappropriatecourts,orwhere
_______________
* ENBANC.
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SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
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SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
entirety,inrelationtoSec.34thereof,iscompleteinallitsessential
termsandconditions,andthatitcontainssufficientstandards.
Same; Same; Same; Provisions of the Electric Power Industry
Reform Act of 2001 (EPIRA) such as, among others, to ensure the
total electrification of the country and the quality, reliability,
security and affordability of the supply of electric power and
watershed rehabilitation and management meet the requirements
for valid delegation, as they provide the limitations on the Energy
Regulatory Commissions (ERCs) power to formulate the
Implementing Rules and Regulations (IRR).Astothesecondtest,
this Court had, in the past, accepted as sufficient standards the
following: interest of law and order; adequate and efficient
instruction; public interest; justice and equity; public
convenience and welfare; simplicity, economy and efficiency;
standardizationandregulationofmedicaleducation;andfairand
equitable employment practices. Provisions of the EPIRA such as,
amongothers,toensurethetotalelectrificationofthecountryand
the quality, reliability, security and affordability of the supply of
electric power and watershed rehabilitation and management
meet the requirements for valid delegation, as they provide the
limitations on the ERCs power to formulate the IRR. These are
sufficientstandards.
Police Power; Over the years, however, the range of police power
VOL.527,JULY17,2007
701
702
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
program.Asapenultimatestatement,itmaybewelltorecallwhat
thisCourtsaidofEPIRA:Oneofthelandmarkpiecesoflegislation
enactedbyCongressinrecentyearsistheEPIRA.Itestablisheda
newpolicy,legalstructureandregulatoryframeworkfortheelectric
power industry. The new thrust is to tap private capital for the
expansion and improvement of the industry as the large
government debt and the highly capitalintensive character of the
industry itself have long been acknowledged as the critical
constraints to the program. To attract private investment, largely
foreign, the jaded structure of the industry had to be addressed.
Whilethegenerationandtransmissionsectorswerecentralizedand
monopolistic, the distribution side was fragmented with over 130
utilities, mostly small and uneconomic. The pervasive flaws have
caused a low utilization of existing generation capacity; extremely
high and uncompetitive power rates; poor quality of service to
consumers; dismal to forgettable performance of the government
powersector;highsystemlosses;andaninabilitytodevelopaclear
strategy for overcoming these shortcomings. Thus, the EPIRA
provides a framework for the restructuring of the industry,
including the privatization of the assets of the National Power
Corporation (NPC), the transition to a competitive structure, and
thedelineationoftherolesofvariousgovernmentagenciesandthe
private entities. The law ordains the division of the industry into
four (4) distinct sectors, namely: generation, transmission,
distribution and supply. Corollarily, the NPC generating plants
have to privatized and its transmission business spun off and
privatizedthereafter.
ORIGINALACTIONintheSupremeCourt.
ThefactsarestatedintheopinionoftheCourt.
Romeo P. Gerochi and Rene Alfonso R. Eano for
petitioners.
Salvador A. Altura, Jr.forPanayElectricCompany,
Inc.
The Government Corporate CounselforPowerSector
Assets&LiabilitiesManagementGroup.
703
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703
tothecharge,ifany,imposedfortherecoveryofthestrandedcostand
otherpurposespursuanttoSection34hereof.
2RulesandRegulationstoImplementRepublicActNo.9136,entitled
Rollo,pp.315.
4Sec.4[vv]oftheEPIRAprovidesthatStrandedDebtsofNPCrefer
704
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
5
referstotheprovisionofbasicelectricityserviceinUnviableAreaswith
the ultimate aim of bringing the operations in these areas to viability
levels.
705
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705
The Facts
CongressenactedtheEPIRAonJune8,2001;onJune26,
7
2001,ittookeffect.
On April 5, 2002, respondent National
Power
8
CorporationStrategic Power Utilities Group (NPCSPUG)
filed with respondent Energy Regulatory Commission
(ERC) a petition for the availment from the Universal
ChargeofitsshareforMissionaryElectrification,docketed
9
asERCCaseNo.2002165.
On May 7, 2002, NPC filed another petition with ERC,
docketed as ERC Case No. 2002194, praying that the
proposed share from the Universal Charge for the
EnvironmentalchargeofP0.0025perkilowatthour(/kWh),
or a total of P119,488,847.59, be approved for withdrawal
fromtheSpecialTrustFund(STF)managedbyrespondent
Power Sector
Assets and Liabilities Management Group
10
(PSALM) for 11
the rehabilitation and management of
watershedareas.
12
On December 20, 2002, the ERC issued an Order in
ERC Case No. 2002165 provisionally approving the
computedamountofP0.0168/kWhastheshareoftheNPC
SPUG from the Universal Charge for Missionary
Electrification and authorizing the National Transmission
Corporation(TRANSCO)
_______________
7 Manila
166818,December6,2006,510SCRA455.
8IRR,Rule4(bbbb)statesthatSmallPowerUtilitiesGrouporSPUG
under Sec. 49 of the EPIRA, which shall take ownership of all existing
NPC generation assets, liabilities, IPP contracts, real estate and all
other disposable assets. All outstanding obligations of the NPC arising
from loans, issuances of bonds, securities and other instruments of
indebtednessshallbetransferredtoandassumedbythePSALM.
11ERCRecordforERCCaseNo.2002194,pp.15.
12Supranote9,atpp.110122.
706
706
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
VOL.527,JULY17,2007
707
SOORDERED.
(2)toauthorizeittoreprioritizeitsCAPEXanditsOPEXtotheextent
possible, for CY 2003; and (3) to give it the flexibility to reallocate
availableUCMEfundsamongtherevisedpriorityactivities/projectsfor
CY2003,Id.,atpp.225236.
15Id.,atpp.237239.
16Supranote11,atpp.110122.
17Rollo,p.8.
708
708
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
Hence,thisoriginalaction.
Petitionerssubmitthattheassailedprovisionoflawand
its IRR which sought to implement the same are
unconstitutionalonthefollowinggrounds:
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 endusers
and selfgenerating 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
thattheUniversalChargeistobedetermined,fixed
and approved by the ERC, hence leaving to the
lattercompletediscretionarylegislativeauthority.
2) The ERC is also empowered to approve and
determinewherethefundscollectedshouldbeused.
3) TheimpositionoftheUniversalChargeonallend
usersisoppressiveandconfiscatoryandamountsto
taxation without representation as the consumers
were not given
a chance to be heard and
18
represented.
Petitioners contend that the Universal Charge has the
characteristics of a tax and is collected to 19fund the
operationsoftheNPC.Theyarguethatthecases invoked
by the respondents clearly show the regulatory purpose of
thechargesimposedtherein,whichisnotsointhecaseat
20
bench.Insaidcases,therespectivefunds werecreatedin
order to balance and stabilize the prices of oil and sugar,
and to act as buffer to counteract the changes and
adjustmentsinprices,pesodevaluation,andothervariables
whichcannotbeadequately
_______________
18Supranote3.
19Osmea
StabilizationFund(SSF).
709
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709
pp. 123
138.
22 PSALMs Memorandum dated December 8, 2004; Id., at pp. 154
167.
710
710
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
theexerciseofthepowersgrantedtoit.Lastly,respondents
argue that the imposition of the Universal Charge is not
oppressive and confiscatory since it is an exercise of the
shallbeimposedbytheERCforanyviolationofornoncompliancewith
thisActortheIRRshallrangefromaminimumofFiftythousandpesos
(P50,000.00)toamaximumofFiftymillionpesos(P50,000,000.00).
Anypersonwhoisfoundguiltyofanyoftheprohibitedactspursuant
toSection45hereofshallsufferthepenaltyofprision mayor and a fine
ranging from Ten thousand pesos (P10,000.00) to Ten million pesos
(P10,000.000.00),orboth,atthediscretionofthecourt.
The members of the Board of Directors of the juridical companies
participatinginorcoveredinthegenerationcompanies,thedistribution
utilities,theTRANSCOoritsconcessionaireorsupplierwhoviolatethe
provisions of this Act may be fined by an amount not exceeding double
the amount of damages caused by the offender or by imprisonment of
one(1)yearortwo(2)yearsorbothatthediscretionofthecourt.This
rule shall apply to the members of the Board who knowingly or by
neglectallowsthecommissionoromissionunderthelaw.
If the offender is a government official or employee, he shall, in
addition, be dismissed from the government service with prejudice to
reinstatement and with perpetual or temporary disqualification from
holdinganyelectiveorappointiveoffice.
711
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712
712
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
1) Whether or not, the Universal Charge imposed
underSec.34oftheEPIRAisatax;and
2) Whether or not there is undue delegation
of
26
legislativepowertotaxonthepartoftheERC.
Beforewediscusstheissues,theCourtshallfirstdealwith
anobviousprocedurallapse.
Petitionersfiledbeforeusanoriginalactionparticularly
denominatedasaComplaintassailingtheconstitutionality
ofSec.34oftheEPIRAimposingtheUniversalChargeand
Rule 18 of the EPIRAs IRR. No doubt, petitioners have
locus standi.TheyimpugntheconstitutionalityofSec.34of
the EPIRA because they sustained a direct injury as a
resultoftheimpositionoftheUniversalChargeasreflected
intheirelectricbills.
However,petitionersviolatedthedoctrineofhierarchyof
courts when they filed this Complaint directly with us.
Furthermore, the Complaint is bereft of any allegation of
graveabuseofdiscretiononthepartoftheERCoranyof
thepublicrespondents,inorderfortheCourttoconsiderit
asapetitionforcertiorariorprohibition.
Article VIII,
Section 5(1) and (2) of the 1987
27
Constitution categoricallyprovidesthat:
SECTION5.TheSupremeCourtshallhavethefollowingpowers:
1. Exercise original jurisdiction over cases affecting
ambassadors, other public ministers and consuls, and over
petitions for certiorari, prohibition, mandamus, quo
warranto, and habeas corpus.
2.
713
VOL.527,JULY17,2007
713
507SCRA173citingPeople v. Cuaresma,172SCRA415,423424(1989).
29Lacson
June 29, 2005, 462 SCRA 290, 294 and Santiago v. Vasquez, G.R. Nos.
9928990,January27,1993,217SCRA633,652.
714
714
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
sothatsecurityagainstitsabuseistobefoundonlyinthe
responsibility of the legislature which
imposes the tax on
30
the constituency that is to pay it. It is based on the
principlethattaxesarethelifebloodofthegovernment,and
31
theirpromptandcertainavailabilityisanimperiousneed.
Thus, the theory behind the exercise of the power to tax
emanatesfromnecessity;withouttaxes,governmentcannot
fulfill its mandate of promoting
the general welfare and
32
wellbeingofthepeople. Ontheotherhand,policepoweris
thepowerofthestateto
promotepublicwelfarebyrestrainingandregulatingthe
33
use of liberty and property. It is the most pervasive, the
least limitable, and the most demanding of the three
fundamentalpowersoftheState.Thejustificationisfound
in the Latin maxims salus populi est suprema lex (the
welfareofthepeopleisthesupremelaw)andsic utere tuo ut
alienum non laedas (so use your property as not to injure
the property of others). As an inherent attribute of
sovereignty which virtually extends to all public needs,
policepowergrantsawidepanoplyofinstrumentsthrough
whichtheState,asparens
patriae,giveseffecttoahostofits
34
regulatory powers. We have held that the power to
regulate means the power to protect, foster, promote,
preserve,andcontrol,withdueregardforthe
_______________
30 Mactan
392,404;261SCRA667(1996).
31 Proton
No.165027,October16,2006,504SCRA528citingProvince of Tarlac v.
Alcantara,216SCRA790,798(1992).
32 National
248;401SCRA259,270(2003).
33Didipio
Gozun, G.R. No. 157882, March 30, 2006, 485 SCRA 586, 604, citing
U.S. v. Torribio,15Phil.85,93(1910)andRubi v. The Provincial Board
of Mindoro,39Phil.660,708(1919).
34 JMM
No.120095,August5,1996,260SCRA319,324.
715
VOL.527,JULY17,2007
715
Torres, G.R. No. 101279, August 6, 1992, 212 SCRA 298, 304, citing
Philippine Communications Satellite Corporation v. Alcuaz, 180 SCRA
218(1989).
36 Progressive
36081, April 24, 1989, 172 SCRA 629, 635, citing Manila Electric
Company v. El Auditor General y La Comision de Servicios Publicos, 73
Phil.133(1941);Republic v. Philippine Rabbit Lines,143 Phil. 158, 163;
32SCRA211,215(1970).
37Thepurposesare:
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SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
VOL.527,JULY17,2007
717
Alliance for
41Id.,atpp.710711.
42 Last paragraph, Sec. 34, EPIRA provides: The PSALM Corp., as
administratorofthefund,shallcreateaSpecialTrustFundwhichshall
be disbursed only for the purposes specified herein in an open and
transparentmanner.Allamountcollectedfortheuniversalchargeshall
bedistributedtotherespectivebeneficiarieswithinareasonableperiod
tobeprovidedbytheERC.
IRRoftheEPIRA,Rule18,SECTION6,alsoprovides:
(a) Pursuant to the last paragraph of Section 34 of the Act, PSALM
shallactastheadministratorofthefundsgeneratedfromtheUniversal
Charge.Forthispurpose,thePSALMshallcreatea
718
718
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
43EPIRA,Sec.33,lastparagraphandIRR,Sec.5(f),Rule17.
44IRR,Sec.6(f),Rule18.
45IRR,Sec.4,Rule21.
719
VOL.527,JULY17,2007
719
19.
47 Abakada
168461,168463and168730,September1,2005,469SCRA10,115116.
48Therecognizedexceptionstothegeneralprincipleareasfollows:
720
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
society,itisdoubtfulifthelegislaturecanpromulgatelaws
thatwilldealadequatelywithandrespondpromptlytothe
minutiae of everyday life. Hence, the need to delegate to
administrative bodiesthe principal agencies tasked to
execute laws in their specialized fieldsthe authority to
promulgate rules and regulations to implement a given
statuteandeffectuateitspolicies.Allthatisrequiredforthe
validexerciseofthispowerofsubordinatelegislationisthat
theregulationbegermanetotheobjectsandpurposesofthe
lawandthattheregulationbenotincontradictionto,butin
conformitywith,thestandardsprescribedbythelaw.These
requirementsaredenominatedasthecompletenesstestand
thesufficientstandardtest.
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
theboundariesofthedelegatesauthorityandpreventthe
49
delegationfromrunningriot.
TheCourtfindsthattheEPIRA,readandappreciatedin
itsentirety,inrelationtoSec.34thereof,iscompleteinall
its
_______________
(3) Delegationtothepeopleatlarge;
(4) Delegationtolocalgovernments;and
(5) Delegationtoadministrativebodies.Abakada Guro Party List v.
Ermita, supranote47,atp.117andSantiago v. Commission on
Elections, 336 Phil. 848, 897898; 270 SCRA 106, 154 (1997),
citingPeople v. Vera,65Phil.56(1937).
49 EquiAsia
No. 152214, September 19, 2006, 502 SCRA 295 citing Beltran v.
Secretary of Health, 476 SCRA 168, 191 (2005); The Conference of
Maritime Manning Agencies v. Philippine Overseas Employment Agency,
313 Phil. 592, 606; 243 SCRA 666 (1995); and Eastern Shipping Lines,
Inc. v. Philippine Overseas Employment Agency, G.R. No. L76633,
October18,1998,166SCRA533,543.
721
VOL.527,JULY17,2007
721
competition,encouragemarketdevelopment,ensurecustomerchoice
and penalize abuse of market power in the restructured electricity
industry.Inappropriatecases,theERCisauthorizedtoissuecease
anddesistorderafterduenoticeandhearing.Towardsthisend,it
shall be responsible for the following key functions in the
restructuredindustry:
xxxx
(b) Within six (6) months from the effectivity of this Act,
promulgate and enforce, in accordance with law, a National Grid
CodeandaDistributionCodewhichshallinclude,butnotlimitedto
thefollowing:
xxxx
(ii) Financial capability standards for the generating companies, the
TRANSCO, distribution utilities and suppliers: Provided, That in the
formulation of the financial capability standards, the nature and
function of the entity shall be considered: Provided, further, That such
standardsaresettoensurethattheelectricpowerindustryparticipants
meet the minimum financial standards to protect the public interest.
Determine, fix, and approve, after due notice and public hearings the
universal charge, to be imposed on all electricity endusers pursuant to
Section34hereof;
722
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
Thus,thelawiscompleteandpassesthefirsttestforvalid
delegationoflegislativepower.
Astothesecondtest,thisCourthad,inthepast,accepted
as sufficient
standards the following: interest of
law and
51
52
order; 53adequate and efficient
instruction; public
54
interest; justice
and equity; public convenience and
55
56
welfare;
simplicity, economy and efficiency;
57
standardizationandregulationofmedicaleducation;
and
58
fair and equitable employment practices. Provisions of
the EPIRA such as, among others, to ensure the total
electrificationofthecoun
________________
50Emphasissupplied.
51Rubi
52 Philippine
Education,97Phil.806,814(1955).
53People
v. Rosenthal,68Phil.328,342(1939).
54Antamok
55Calalang
v. Williams,70Phil.726,733(1940).
56Cervantes
57Tablarin
58 The
v. Auditor General,91Phil.359,364(1952).
v. Gutierrez,No.L78164,July31,1987,152SCRA731.
VOL.527,JULY17,2007
723
724
724
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
Overtheyears,however,therangeofpolicepowerwasnolonger
limited to the preservation of public health, safety and morals,
whichusedtobetheprimarysocialinterestsinearliertimes.Police
power now requires the State to assume an affirmative duty to
eliminate the excesses and injustices that are the concomitants of an
unrestrained industrial economy. Police power is now exerted to
further the public welfarea concept as vast as the good of society
itself. Hence, police power is but another name for the
governmental authority to further the welfare of society that is the
basic end of all government. When police power is delegated to
administrative bodies with regulatory functions, its exercise should
be given a wide latitude. Police power takes on an even broader
dimension in developing countries such as ours, where the State
must take a more active role in balancing the many conflicting
interests in society. The Questioned Order was issued by the ERC,
acting as an agent of the State in the exercise of police power. We
shouldhaveexceptionallygoodgroundstocurtailitsexercise.This
approachismorecompellinginthefieldofrateregulationofelectric
power rates. Electric power generation and distribution is a
traditional instrument of economic growth that affects not only a
few but the entire nation. It is an important factor in encouraging
investment and promoting business. The engines of progress may
come to a screeching halt if the delivery of electric power is
impaired. Billions of pesos would be lost as a result of power
outages or unreliable electric power services. The State thru the
ERCshouldbeabletoexerciseitspolicepowerwithgreatflexibility,
whentheneedarises.
VOL.527,JULY17,2007
725
406.
66 Lopez
SCRA448,460,citingTy v. Trampe,250SCRA500(1995).
726
726
SUPREMECOURTREPORTSANNOTATED
Gerochi vs. Department of Energy
SOORDERED.
Puno (C.J.), Quisumbing, YnaresSantiago,
SandovalGutierrez, Carpio, AustriaMartinez, Corona,
CarpioMorales,Azcuna, Tinga, ChicoNazario, Garcia and
Velasco, Jr., JJ.,concur.
Petition dismissed.
Notes.Themotivationbehindmanytaxationmeasures
istheimplementationofpolicepowergoals.(Southern Cross
Cement Corporation vs. Cement Manufacturers Association
of the Philippines,465SCRA532[2005])
The promotion of public health is a fundamental
obligation of the Statethe health of the people is a
primordial governmental concern. (Beltran vs. Secretary of
Health,476SCRA168[2005])
_______________
67 Freedom
supranote61,atpp.171172.
68Arceta
432 SCRA 136, 142, citing Lacson v. The Executive Secretary, 361 Phil.
251,263;301SCRA298,311(1999).
727
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727