Political Law, Taxation

BETOY, vs.THE BOARD OF DIRECTORS, NATIONAL POWER CORPORATION G.R. Nos. 156556-57 October 4, 2011 EPIRA LAW, RA 9136 (EPIRA), tax

FACTS: 

On June 8, 2001, RA 9136 (EPIRA) was enacted by Congress with the goal of restructuring the electric power industry and privatization of the assets of the National Power Corporation. On February 27, 2002, pursuant to Section 77 of the EPIRA, the Secretary of the Department of Energy promulgated the IRR.

Section 63 of the EPIRA provides for separation benefits to officials and employees who would be affected by the restructuring of the electric power industry and the privatization of the assets of the NPC. Rule 33 of the IRR provided for the coverage and the guidelines for the separation benefits to be given to the employees affected.

Petitioner Enrique U. Betoy, together with thousands of his co-employees from the NPC were then terminated. He then filed a petition questioning his termination, and together with it the validity of the EPIRA, in particular Section 34 of  EPIRA for being exorbitant display of State Power and was not premised on the welfare of the people.

ISSUE: Is the universal charge under Section 34 of the EPIRA, a tax or an exaction in the exercise of the State’s police power?

RULING: 

In Gerochi vs. Department of Energy, the Court ruled that the Universal Charge is not a tax but an exaction in the exercise of the State’s police power. The Universal Charge is imposed to ensure the viability of the country’s electric power industry.

Petitioner argues that the imposition of a universal charge to address the stranded debts and contract made by the government through the NCC-IPP contracts or Power Utility-IPP contracts or simply the bilateral agreements or contracts is an added burden to the electricity-consuming public on their monthly power bills. It would mean that the electricity-consuming public will suffer in carrying this burden for the errors committed by those in power who runs the affairs of the State. This is an exorbitant display of State Power at the expense of its people.

It is basic that the determination of whether or not a tax is excessive oppressive or confiscatory is an issue which essentially involves a question of fact and, thus, this Court is precluded from reviewing the same.

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