(042) Geroche vs.

Department of Energy
G.R. No. 159796, July 17, 2007

FACTS:
On June 8, 2001 Congress enacted RA 9136 or the Electric Power Industry Act (EPIRA) of 2001. Section 34 provides for the
imposition of a “Universal Charge” to all electricity end users after a period of (1) one year after the effectively of the EPIRA Law. The
universal charge to be collected would serve as payment for government debts, missionary electrification, equalization of taxes and
royalties applied to renewable energy and imported energy, environmental charge and for a charge to account for all forms of cross
subsidies for a period not exceeding three years. The universal charge shall be collected by the ERC on a monthly basis from all end
users and will then be managed by the PSALM Corp. through the creation of a special trust fund. Petitioners contend that the
Universal Charge has the characteristics of a tax and is collected to fund the operations of the NPC. Petitioner posits that the
universal charge is not for a regulatory purpose.

ISSUE:
Whether or not, the Universal Charge imposed under Sec. 34 of the EPIRA is a tax.

HELD:
No. It can be gleaned from the mentioned purposes under the EPIRA Law that the assailed Universal Charge is not a tax, but
an exaction in the exercise of the State's police power. Public welfare is surely promoted.

The conservative and pivotal distinction between the power to tax and police power rest in the purpose for which the
charge is made. 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.

Evidently, the establishment and maintenance of the Special Trust Fund, under the last paragraph of Section 34, R.A. No.
9136, is well within the pervasive and non-waivable power and responsibility of the government to secure the physical and
economic survival and well-being of the community, that comprehensive sovereign authority we designate as the police power of
the State.

This feature of the Universal Charge further boosts the position that the same is an exaction imposed primarily in pursuit of
the State's police objectives. The STF reasonably serves and assures the attainment and perpetuity of the purposes for which the
Universal Charge is imposed, i.e., to ensure the viability of the country's electric power industry.