June 2004 - Philippine Supreme Court Decisions/Resolutions
Philippine Supreme Court Jurisprudence
Freedom From Debt Coalition v. MERALCO : 161113 : June 15, 2004 : J. Puno : En Banc : Concurring and Dissenting Opinion
EN BANC
[G.R. NO. 161113 : June 15, 2004]
FREEDOM FROM DEBT COALITION, ANA MARIA NEMENZO, as President of FREEDOM FROM DEBT COALITION, MA. TERESA I. DIOKNO-PASCUAL, REP. LORETTA ANN ROSALES (Party-List Akbayan), REP. JOSE VIRGILIO BAUTISTA (Party-List Sanlakas), REP. RENATO MAGTUBO (Party-List Partido Manggagawa), Petitioners, v. ENERGY REGULATORY COMMISSION, MANILA ELECTRIC COMPANY (MERALCO), Respondents.
CONCURRING AND DISSENTING OPINION
PUNO, J.:
The case at bar involves two purely legal issues, one substantive and the other procedural. The substantive issue is whether the Energy Regulatory Commission (ERC) has legal authority to grant provisional rate adjustments under the Electric Power Industry Reform Act of 2001 (EPIRA); the procedural issue is whether the grant by the ERC of the provisional rate adjustment to the Manila Electric Company (Meralco) was done in accord with section 4 (e), Rule 3 of the Implementing Rules and Regulations of the EPIRA law. The reasonability of the rate increase applied for by Meralco and provisionally granted by the ERC is not an issue before the Court and should not shade our decision. On the substantive issue, I join the majority without any hesitation. On the procedural issue, I beg to dissent.
First, the facts without the fat.
On October 10, 2003, Meralco applied for a rate hike with the ERC and sought the ex-parte grant of provisional authority to increase such rates in accordance with a schedule attached to its application.1 On the same date, Meralco published a notice of the filing of the application for a rate hike in the Manila Times.2 A day before filing its application with the ERC, Meralco furnished the Sangguniang Panglungsod of Pasig City with a copy of the application.3 cralawred
With the public given such notice, the National Association of Electricity Consumers for Reform (NASECORE), on October 14, 2003, manifested its intent with the ERC to file an opposition to Meralcos application.4 cralawred
Other oppositors followed suit. Mr. Genaro Lualhati filed a letter with the ERC on October 24, 2003 demanding for the dismissal of Meralcos application.5 cralawred
On October 29, 2003, no less than petitioner Freedom from Debt Coalition (FDC) filed a letter with the ERC expressing its intent to file an opposition to Meralcos application.6 The ERC then directed FDC, Mr. Lualhati and NASECORE to file their comments on the application.7 cralawred
On November 11, 2003, NASECORE moved for the production of material documents by Meralco.8 On November 13, 2003, ERC ordered Meralco to comment on NASECOREs motion.9 On November 19, 2003, it directed Meralco to submit certain documents.10 cralawred
On November 21, 2003, Mr. Lualhati filed his Opposition to Meralcos application.11 cralawred
On November 25, 2003, NASECORE, manifested that it still could not file its opposition until the documents it had requested from Meralco had been produced.12 On the same date, petitioner FDC filed a Motion for Production of Documents with the ERC to enable it to submit a comment on Meralcos application and reserved its right to oppose the same.13 cralawred
In an Order dated November 27, 2003 (the Questioned Order) issued ex-parte, the ERC granted Meralco provisional authority to increase its rates by 12 centavos/kWh effective January 2004,14 the dispositive portion of which states as follows:chanroblesvirtua1awlibrary
WHEREFORE, considering all the foregoing, this Commission, pursuant to Section 8 of Executive Order No. 172 and Section 4 (e) of the Implementing Rules and Regulations of the EPIRA (R.A. 9136), hereby provisionally authorizes applicant Manila Electric Company (MERALCO) to adopt and implement the attached rate schedules embodying a rate adjustment in the average amount of TWELVE (12) CENTAVOS per kWh, effective with respect to its billing cycles beginning January 2004. The impact of this approved rate adjustment will vary from one customer class to another depending on the load factors.cralawlibrary
The rate adjustment authorized herein shall be subject to refund in the event that this Commission finds, after completion of the hearings of this case, that the same is unjust and unreasonable.
The hearing of this case is hereby set on December 22, 2003 at nine o clock in the morning (9:00 A.M.) at the ERC Hearing Room, 15th Floor, Pacific Center Building, San Miguel Avenue, Ortigas Center, Pasig City. In this connection, MERALCO is hereby directed to publish, at its own expense, the attached Notice of Public Hearing at least twice (2) (sic) for two (2) successive weeks in two (2) newspapers of nationwide circulation in the country, the last date of publication to be made not later than two (2) weeks before the scheduled date of initial hearing.cralawlibrary
Let copies of this Order and the attached Notice of Public Hearing be furnished all the Municipal/City Mayors within the MERALCOs franchise area for the appropriate posting thereof on their respective bulletin boards.
Likewise, let copies of this Order and the attached Notice of Public Hearing be furnished the Office of the Solicitor General (OSG), the Commission on Audit (COA) and the Committees on Energy of both Houses of Congress who are hereby requested to have their respective duly authorized representatives present at the aforesaid initial hearing15 (emphasis supplied)
On December 2, 2003, Meralco filed a Motion for Extension of Time to submit the documents indicated in the ERCs Order of November 19, 2003.16 cralawred
On December 3, 2003, Mr. Zosimo Yeban, filed a letter with the ERC objecting to the rate increase granted to Meralco.17 cralawred
On December 8, 2003, NASECORE filed with the ERC an Urgent Motion to Resolve Motion for Production of Documents and Opposition to the Provisional Authority, while the National Consumer Affairs Council filed a letter seeking reconsideration of the ERCs Questioned Order. 18 cralawred
On December 9, 2003, the Federation of Philippine Industries, Inc. likewise filed a letter with the ERC seeking reconsideration of the Questioned Order.19 cralawred
On December 11, 2003, Mr. Lualhati and the Philippine Consumers Watch (Bantay Mamamayan) Foundation filed with the ERC a Motion to Resolve Opposition and Manifestation Joining NASECORE in its Opposition and Motion for Production of Documents, respectively.20 A day later, Napocor Industrial Consumers Association, Inc. (NICAI) filed an Urgent Motion to Suspend Implementation and Motion for Reconsideration.21 cralawred
On December 15, 2003, the Philippine Consumers Welfare Union, Atty. Ruperto Estrada, Martsa ng Bayan Contra Meralco, Corazon Villa and Daday Tupay filed oppositions asking ERC to reconsider the Questioned Order while Atty. Estrada filed a motion for production of documents.22 cralawred
On December 19, 2003, Meralco opposed the motion for production of material documents on the ground that the documents sought by the petitioners were immaterial and irrelevant to its application.23 cralawred
On December 21, 2003, Mr. Arnulfo Paca also raised his objections and comments on the provisional increase via e-mail sent to the ERC. 24 cralawred
On December 22, 2003, Mr. Lualhati filed a Motion for Reconsideration of the Questioned Order.25 On the same date, Bagong Alyansang Makabayan (BAYAN), Kilusang Mayo Uno (KMU), Gabriela Womens Partylist (GABRIELA), Anakpawis Partylist, Kalipunan ng Damayang Mahihirap (KADAMAY), and Samahan ng Nagtataguyod ng Agham at Teknolohiya Para sa Sambayanan (AGHAM) filed an Opposition with Motion for Reconsideration.26 cralawred
In the public hearing held on December 22, 2003, several oppositors, asked the ERC to reconsider its Questioned Order. The ERC refused insisting it has the power to issue provisional orders.27 Instead of seeking reconsideration, FDC filed with this Court on December 23, 2003, a petition for certiorari , prohibition and injunction with prayer for the issuance of a temporary restraining order or a status quo order. Six days later, FDC reiterated its prayer for a temporary restraining or status quo order.28 cralawred
On December 30, 2003, Meralco filed a Consolidated Comment to the various oppositions with the ERC.29 cralawred
On January 13, 2004, this Court ordered the ERC and Meralco to comment on FDCs petition and enjoined them to observe the status quo prevailing before the filing of the petition. The case was set for oral arguments on January 27, 2004.30 cralawred
Prior to and shortly after the January 13, 2004 status quo order of this Court, several parties had, in the meantime, filed other pleadings with the ERC. The Philippine Chamber of Commerce and Industry filed a letter on January 5, 2004 requesting for a public hearing before the grant of the provisional increase.31 On January 6, 2004, Mr. Lualhati filed a Rejoinder with Motion for Reconsideration, while Mr. Juan Paqueo III filed a Petition to Suspend the Granting of Electric Power Increase Against Meralco Company.32 BAYAN, Bayan Muna Partylist, KMU, GABRIELA, Anakpawis Partylist, KADAMAY, and AGHAM filed a Manifestation with Motion to Immediately Resolve Motion for Reconsideration and to Suspend Provisional Authority on January 9, 2004.33 They also filed their Rejoinder to Meralcos Consolidated Comment on January 13, 2004.34 In the meantime, NICAI and Mr. Yeban filed their respective Rejoinders to Meralcos Consolidated Comment on January 12, 2004.35 On January 15, 2004, NASECORE filed its Rejoinder.36 The OSG filed an Urgent Motion to Resolve Pending Motions filed by the Oppositors on January 29, 2004.37 It sent a letter to the Commission on Audit (COA) requesting assistance with regard to Meralcos application on February 4, 200438 and filed a motion with the ERC on February 16, 2004 seeking to direct the COA to conduct a rate audit.39 cralawred
Meralco, ERC and the OSG filed their respective comments with this Court on January 26, 2004.
The petitioners-in-intervention40 filed a motion to intervene attaching thereto their petition-in-intervention which this Court admitted in a Resolution dated January 27, 2004.41 cralawred
During the oral arguments on January 27, 2004, the parties were required to file their respective memoranda within a non-extendible period of twenty days. Counsel for ERC was ordered in open court to produce certain documents.cralawlibrary
The parties (except for petitioner FDC) submitted their respective Memoranda dated February 16, 2004.42 cralawred
It will be noted that several motions assailing the Questioned Order remain pending before the ERC for resolution as shown by the OSGs Urgent Motion to Resolve Pending Motions Filed by the Oppositors filed with the ERC on January 29, 2004.43 These pending motions are the following: a letter-complaint of Zosimo Yeban, Jr. filed on December 3, 2003 objecting to the rate increase granted to Meralco;44 an Urgent Motion to Resolve Motion for Production of Documents and Opposition to the Provisional Authority of the NASECORE approved by its President, Pete L. Ilagan, filed on December 8, 2003;45 a letter of the National Consumers Affairs Council filed on December 8, 2003 seeking reconsideration of the provisional authority;46 a letter of the Federation of Philippine Industries, Inc. filed on December 9, 2003 asking reconsideration of the ERC Order granting the provisional increase;47 a Manifestation of the Philippine Consumers Watch (Bantay Mamamayan) Foundation, represented by its Chairman, Juan Ponce Enrile, filed on December 11, 2003, joining the NASECORE in its opposition to the provisional authority and Motion for Production of Documents;48 an Urgent Motion to Suspend Implementation and Motion for Reconsideration of the Napocor Industrial Consumers Association, Inc. (NICAI) filed on December 12, 2003;49 an Opposition of the Philippine Consumers Welfare Union (PCWU), Martsa ng Bayan Kontra Meralco, Corazon Villa and Daday Tupas filed on December 15, 2003 asking the ERC to reconsider its order granting the provisional increase;50 an electronic mail message of Michael Paca dated December 21, 2003 (and stamped received by the ERC on January 8, 2004) with an attached write-up containing comments on the rate increase;51 a Motion for Reconsideration of Mr. Genaro C. Lualhati filed on December 22, 2003;52 a letter of the Philippine Chamber of Commerce and Industry filed on January 5, 2004 asking the ERC to conduct public hearings prior to the grant of provisional increase;53 a Petition of Juan B. Paqueo III filed on January 6, 2004 to suspend the grant of rate increase to Meralco;54 and a Manifestation (with motions to immediately resolve motion for reconsideration and to suspend provisional authority) of BAYAN, KMU, GABRIELA, KADAMAY and AGHAM filed on January 9, 2004.55
The issues are strictly legal.
First, whether the ERC has legal authority to grant provisional rate adjustments under the new EPIRA law.
Second, whether the grant by the ERC of the provisional rate adjustment to Meralco violates the Implementing Rules and Regulations of the EPIRA law and hence constitutes grave abuse of discretion amounting to lack or excess of jurisdiction.cralawlibrary
Let me start with an overview of the. ..
III. Statutory History of Electric Power
Regulation in the Philippines
Commonwealth Act No. 146 or the Public Service Act was passed into law on November 7, 1936 creating the Public Service Commission (PSC) with jurisdiction, supervision and control over public services such as those for electric light, heat and power.56 Under the Act, the PSC had authority to fix rates charged by a public service. By express provision of law, the PSC could approve provisional rates ex-parte.57 cralawred
Under the reorganization plan effected by Presidential Decree No. 1, as amended by Presidential Decree No. 458 issued on May 16, 1974, jurisdiction, supervision and control over public services related to electric light, power and waterworks vested in the PSC were transferred to the Board of Power and Waterworks.cra
The Board of Power and Waterworks was abolished under Presidential Decree No. 1206 enacted on October 6, 1977. Its powers and functions relative to power utilities, including its authority to grant provisional relief,58 were transferred to the Board of Energy.59 cralawred
On May 8, 1972, institutional reforms were made in the energy sector under Executive Order No. 172 which created the Energy Regulatory Board (ERB) . Under the law, the Board of Energy (BOE) was reconstituted into the ERB and the powers and functions of the BOE under Republic Act No. 6173, as amended by Presidential Decree No. 1206, were transferred to the ERB.60 The law expressly authorizes the ERB to grant provisional relief.61 cralawred
Most recently, Republic Act No. 9136, known as the Electric Power Industry Reform Act of 2001 (EPIRA), was enacted on June 8, 2001 to provide a framework for restructuring the electric power industry.62 One of the purposes of the EPIRA is to establish a strong and purely independent regulatory body.63 The ERB was abolished64 and its powers and functions not inconsistent with the provisions of the EPIRA were expressly transferred to the Energy Regulatory Commission (ERC). 65 cralawred
With due respect to the majority, I submit that. ..
IV. ERC complied with the rules and did not act
with grave abuse of discretion in issuing the
Questioned Order.
This is the spearhead of my disagreement with the majority and I wish to address it first. I respectfully make the following submissions: (a) there is no violation of the procedure set forth in the EPIRAs Implementing Rules and Regulations when ERC issued its Questioned Order; indeed, the oppositors had full opportunity to assail its legality and propriety in a public hearing before its effectivity; (b) ex-parte orders issued to protect the interest of the public are universally recognized as legitimate exercise of the police power of the State; and (c) it is premature for the Court to strike down the Questioned Order at this time since it is merely provisional and is pending reconsideration before the ERC; in fine, there is an effective and available administrative remedy before the ERC which no party should shortcircuit and which this Court should allow to flow unimpeded.
The Questioned Order did not violate
the Implementing Rules and
Regulations of the EPIRA; there is
no denial of procedural due process.
The majority based its holding that the ERC committed grave abuse of discretion in issuing the Questioned Order on the following ratiocination:chanroblesvirtua1awlibrary
1. Meralco failed to comply with the publication requirement provided in Section 4 (e), Rule 3 of the Implementing Rules and Regulations. It notes that the Notice of Application, quoted in full below, which was published on October 10, 2003 in the Manila Times does not contain the text of Meralcos application, or at least a summary thereof:
MANILA ELECTRIC COMPANY
PasigCity
NOTICE OF APPLICATION
Pursuant to paragraph (e), Section 4, Rule 3 of the Implementing Rules and Regulations of R.A. 9136, notice is hereby given that an Application dated October 8, 2003, for the approval of revised rate schedules and provisional authority, will be filed by the MANILA ELECTRIC COMPANY with address at Meralco Center, Ortigas Avenue, Pasig City, before the Energy Regulatory Commission.
Issued this 9th day of October 2003.
(Sgd.) GIL S. SAN DIEGO
Vice-President and Head
Legal Services66 cralawred
2. The Questioned Order failed to consider the pleadings filed by parties who opposed Meralcos application, as required by Section 4 (e), Rule 3 of the Implementing Rules and Regulations, and was based solely on Meralcos application and its supporting documents.
3. The ERC issued the Questioned Order despite the pendency of several Motions for Production of Documents filed by various oppositors and despite their manifestation that they would oppose Meralcos application.
These grounds relied upon by the majority cannot stand close scrutiny. Sections 4 (e) and (r), Rule 3 of the EPIRAs Implementing Rules and Regulations set forth the procedure in rate adjustment cases, viz:
(e) Any application or petition for rate adjustment or for any relief affecting the consumers must be verified; and accompanied with an acknowledgment of receipt of a copy thereof by the LGU Legislative Body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.
The ERC may grant provisionally or deny the relief prayed for not later than seventy five (75) calendar days from the filing of the application or petition, based on the same and the supporting documents attached thereto and such comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.
Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide the matter on the merits not later than twelve (12) months from the issuance of the aforementioned provisional order.
This Section 4(e) shall not apply to those applications or petitions already filed as of 26 December 2001 in compliance with Section 36 of the Act.
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