The petitioners contested the constitutionality of the universal charge imposed on all electricity end-users by the Electric Power Industry Reform Act of 2001, arguing it was a tax without representation. The court held that the universal charge was not a tax but a regulatory exaction in exercise of the state's police power, as its primary purpose was to ensure the viability of the electric power industry and promote public welfare, not generate revenue. While revenue is incidentally raised, regulation is the main goal, making it a valid use of police power even if it has the effect of taxation.
The petitioners contested the constitutionality of the universal charge imposed on all electricity end-users by the Electric Power Industry Reform Act of 2001, arguing it was a tax without representation. The court held that the universal charge was not a tax but a regulatory exaction in exercise of the state's police power, as its primary purpose was to ensure the viability of the electric power industry and promote public welfare, not generate revenue. While revenue is incidentally raised, regulation is the main goal, making it a valid use of police power even if it has the effect of taxation.
The petitioners contested the constitutionality of the universal charge imposed on all electricity end-users by the Electric Power Industry Reform Act of 2001, arguing it was a tax without representation. The court held that the universal charge was not a tax but a regulatory exaction in exercise of the state's police power, as its primary purpose was to ensure the viability of the electric power industry and promote public welfare, not generate revenue. While revenue is incidentally raised, regulation is the main goal, making it a valid use of police power even if it has the effect of taxation.
Facts: RA 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), which sought to impose a universal charge on all end-users of electricity for the purpose of funding NAPOCORs projects, was enacted and took effect in 2001. Petitioners contest the constitutionality of the EPIRA, stating that the imposition of the universal charge on all end-users is oppressive and confiscatory and amounts to taxation without representation for not giving the consumers a chance to be heard and be represented. Issue: Whether or not the universal charge is a tax. Held: NO. The assailed universal charge is not a tax, but an exaction in the exercise of the States police power. That public welfare is promoted may be gleaned from Sec. 2 of the EPIRA, which enumerates the policies of the State regarding electrification. Moreover, the Special Trust Fund feature of the universal charge reasonably serves and assures the attainment and perpetuity of the purposes for which the universal charge is imposed (e.g. to ensure the viability of the countrys electric power industry), further boosting the position that the same is an exaction primarily in pursuit of the States police objectives If generation of revenue is the primary purpose and regulation is merely incidental, the imposition is a tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make the imposition a tax. The taxing power may be used as an implement of police power. The theory behind the exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the people.