PHILIPPINE RURAL ELECTRIC COOPERATIVES ASSOCIATION, INC. (PHILRECA) vs. DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT G.R. No. 14307. !"#$ 10, %003. PUNO, !. FACTS&
Under Under Presi Presiden dentia tiall Decr Decree (PD) (PD) 269, 269, as amende amended, d, or the Nation National al Electrifcation Administration Decree, it is the declared policy o the State to proide !the total electrifcation o the Philippines on an area coera"e #asis$ the the same same !# !#ei ein" n" ita itall to the the peop people le and and the the so%n so%nd d dee deelo lopm pmen entt o the the nation&$ P%rs%ant to this policy, PD 269 aims to !promote, enco%ra"e and assist all p%#lic p%#lic seri serice ce entiti entities es en"a"e en"a"ed d in s%pply s%pplyin" in" electr electric ic seric serice, e, partic partic%lar %larly ly electric cooperaties$ #y !"iin" eery tena#le s%pport and assistance$ to the electric cooperaties comin" 'ithin the p%rie' o the la'& rom rom 9 9* * to 9 9*+, *+, in order order to fnance fnance the electr electrif ifcat cation ion proe proects cts enisi enisione oned d #y PD 26 269, 9, as amende amended, d, the Phi Philip lippin pine e -oer -oernme nment, nt, actin" actin" thro hro%"h the Nati ational Economic .o%ncil (no' Nati ational Economic Deelopment A%thority) a nd the NEA (National Electrifcation Administration), Administration), entered into si/ (6) loan a"reements 'ith the "oernment o the the Unit United ed Stat States es o Amer Americ ica a thr thro%"h o%"h the the Unit United ed Stat States es A" A"en ency cy or or 0nter 0nternat nation ional al Deelo Deelopme pment nt (USA0D) (USA0D) 'ith 'ith electr electric ic cooper cooperati aties es,, incl%d incl%din" in" A"%sa A" %san n Del Del Nort Norte e Elec Electr tric ic .oop .ooper erat ati ie, e, 0nc& 0nc& (A (ANE NE.1 .1) ) 0loi 0loilo lo 0 Elec Electr tric ic .ooperatie, 0nc& (03E.1 0) and 0sa#ela 0 Electric .ooperatie, 0nc& (0SE3.1 0), as #enefciaries& 4he 6 loan a"reements a"reements inoled a total amo%nt o appro/imately appro/imately US5+6,,&& 4hese loan a"reements are e/istin" %ntil today& 4he loan a"reements a"reements contain similarly 'orded proisions on the ta/ application o the loan and any property or commodity ac7%ired thro%"h the proceeds o the loan& 1n 28 ay 2, a class s%it 'as fled #y the Philippine :%ral Electric .ooperaties Association, 0nc& (P;03:E.A) ANE.1, 03E.1 0 and 0SE3.1 0 in their o'n #ehal and in #ehal o other electric cooperaties or"ani
they are e/empt rom payment o local ta/es, incl%din" payment o real property ta/& =ith the passa"e o the 3ocal -oernment .ode, ho'eer, they alle"e that their ta/ e/emptions hae #een inalidly 'ithdra'n, in iolation o the e7%al protection cla%se and impairin" the o#li"ation o contracts #et'een the Philippine -oernment and the United States -oernment& ISSUE&
=hether or not there 'as a iolation o the E>UA3 P:14E.401N .3AUSE AND :U3E 1N UN01:04? 1 4A@A401N HELD&
4he e7%al protection cla%se %nder the .onstit%tion means that !no person or class o persons shall #e depried o the same protection o la's 'hich is enoyed #y other persons or other classes in the same place and in lie circ%mstances&$ 4h%s, the "%aranty o the e7%al protection o the la's is not iolated #y a la' #ased on reasona#le classifcation& .lassifcation, to #e reasona#le, m%st () rest on s%#stantial distinctions (2) #e "ermane to the p%rposes o the la' (8) not #e limited to e/istin" conditions only and (B) apply e7%ally to all mem#ers o the same class& 4here is a reasona#le classifcation %nder the 3ocal -oernment .ode to %stiy the diCerent ta/ treatment #et'een electric cooperaties coered #y PD 269, as amended, and electric cooperaties %nder :A 698+ (.ooperatie .ode o the Philippines)& irst, no'here in PD 269, as amended, does it re7%ire cooperaties to mae e7%ita#le contri#%tions to capital& Under the .ooperatie .ode, the articles o cooperation o a cooperatie applyin" or re"istration m%st #e accompanied 'ith the #onds o the acco%nta#le ocers and a s'orn statement o the treas%rer elected #y the s%#scri#ers sho'in" that at least 2F o the a%thori
capa#ility nor the reso%rces to do so and only %pon the re7%est o s%ch cooperaties& 0n contrast, PD 269, as amended #y PD 6B, is s%pplied 'ith proisions 'hich "rant the NEA, %pon the happenin" o certain eents, the po'er to control and tae oer the mana"ement and operations o cooperaties re"istered %nder it& 4he e/tent o "oernment control oer electric cooperaties coered #y PD 269, as amended, is lar"ely a %nction o the role o the NEA as a primary so%rce o %nds o these electric cooperaties& 0t is crystal clear that NEA inc%rred loans rom ario%s so%rces to fnance the deelopment and operations o the electric cooperaties& .onse7%ently, amendments to PD 269 'ere primarily "eared to e/pand the po'ers o the NEA oer the electric cooperaties to ens%re that loans "ranted to them 'o%ld #e repaid to the "oernment& 0n contrast, cooperaties %nder :A 698+ are enisioned to #e selGs%cient and independent or"ani