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DISSENTING OPINION
CAGUIOA, J.:
I dissent: for the principal reason that the ponencia fails to appreciate
- and, in the process, unduly undermines - the singular role and duty of
the Energy Regulatory Commission (ERC) to act as the industry's
independent regulator that has, under the explicit language of the Electric
Power Industry Reform Act of 2001 1 (EPIRA), the exclusive mandate as to
the implementation, the specific requirements, and effectivity date, of the
Competitive Selection Process (CSP) requirement. The decision here
constitutes an unwarranted curtailment of the ERC's powers.
Republic Act No. 9136, entitled "AN ACT ORDAINING REFORMS IN THE ELECTRIC POWER INDUSTRY
AMENDING FOR THE PURPOSE CERTAIN LAWS AND FOR OTHER PURPOSES" (EPIRA).
Dissenting Opinion 2 G.R. No. 227670
With due respect, the Court oversteps its bounds when it, as here,
annuls acts of regulators acting within the bounds of law and their areas of
expertise. In ruling in the manner it did, the ponencia not only annulled the
acts of the ERC but in fact acted as the regulator itself supplanting its
wisdom for that of the agency tasked by law to regulate the energy industry
and to assure a steady supply of electricity to the country. The ponencia, in
essentially disapproving all the 90 Power Supply Agreements (PSAs) that
have been submitted to the ERC between June 30, 2015 and April 30, 2016,
has effectively imposed an impossible condition on the PSAs - that they
should comply with Department of Energy (DOE) Circular No. DC2018-02-
0003 (2018 DOE Circular) when all of them had already been negotiated
and executed prior to the effectivity of the 2018 DOE Circular. How this
unfortunate decision will impact on the country's electricity supply, only
time will tell.
A backgrounder
Subsequently, on October 20, 2015, the DOE and ERC jointly issued
Joint Resolution No. 1 (Joint Resolution), entitled "A Resolution Enjoining
All Distribution Utilities to Conduct Competitive Selection Process (CSP) in
the Procurement of Supply for their Captive Market. " Section 1 provides:
Yazaki Torres Manufacturing, Inc. v. Court ofAppeals, 526 Phil. 79, 88 (2006).
Bureau Veritas v. Office of the President, 282 Phil. 734, 747 (1992).
Yazaki Torres Manufacturing, Inc. v. Court ofAppeals, supra note 2, at 88.
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DOE Circular, Sec. 4.
Dissenting Opinion 3 G.R. No. 227670
On the same date, the ERC issued Resolution No. 13, s. 2015
(Resolution No. 13) which provided that, pending the issuance of a
prescribed CSP, any DU may adopt any accepted form of CSP subject only
to minimum standards to be included in the terms of reference. Resolution
No. 13 provided that for "PSAs already executed but are not yet filed or for
those that are still in the process of negotiation, the concerned DUs are
directed to comply with the CSP requirement before their PSA applications
will be accepted by the ERC." 6 It also provided that it shall be effective
immediately following its publication in a newspaper of general circulation
in the Philippines,7 which publication was done on November 6, 2015.
The Petition assails Resolution No. 1 for having allegedly been issued
with grave abuse of discretion.
The ponencia rules that the ERC committed grave abuse of discretion
when it issued Resolution No. 1, and goes even beyond the issues of the
petition, by declaring as void ab initio the first paragraph of Section 4 of
Resolution No. 13. The ponencia then directs that all PSAs submitted to the
ERC on or after June 30, 2015 should comply with the CSP requirement
following 2018 DOE Circular, particularly its Annex "A".
As stated at the outset, and for the reasons itemized below, I dissent.
At the outset, it should be pointed out that the present case contains
several factual matters that are not cognizable by the Court, and which should
be threshed out before the appropriate forum. Whether the moving of the
effective date of the CSP effectively puts the requirement into a "deep
freeze," as maintained by the ponencia, is a factual matter that cannot
intelligently be resolved by the Court. As to whether the restatement of the
effectivity date of the CSP affected, or will continue to affect, the supply of
electricity for the entire country is another matter that should be properly
ventilated before a court equipped to receive evidence. As well, the problems
6
ERC Resolution No. 13, Sec. 4.
Id.
Dissenting Opinion 4 G.R. No. 227670
that the DUs faced in the immediate effectivity of the requirement - which
led them to seek exemption from the CSP requirement, and which later on
prompted the ERC to issue Resolution No. 1 - are also better appreciated in
the context of actual evidence. In addition, whether the restatement of the
effectivity date of the CSP was reasonable, or effective in guaranteeing the
steady supply of electricity for the entire country is a factual matter that
demands the presentation of evidence. All these factual matters need to be
addressed before the Court can even begin to determine whether the ERC' s
act of issuing Resolution No. 1 can be considered to have been tainted with
grave abuse of discretion amounting to lack or excess of jurisdiction.
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Dissenting Opinion 5 G.R. No. 227670
immunities under the protection of the general rules which govern society.
Under the present Rules of Court, which governs our judicial proceedings,
warring factual allegations of parties are settled through presentation of
evidence. Evidence is the means of ascertaining, in a judicial proceeding,
the truth respecting a matter of fact. As earlier demonstrated, the Court
cannot accept evidence in the first instance. By directly filing a case
before the Court, litigants necessarily deprive themselves of the
opportunity to completely pursue or defend their causes of actions. Their
right to due process is effectively undermined by their own doing. 11
The foregoing viewpoint from the lens of due process squarely applies
in the present case considering that there are a number of cases,
administrative and criminal - some of which have pending incidents before
the Court - that are directly intertwined with the facts of the present case.
Therefore, a finding that the ERC, as a body, committed grave abuse of
discretion based on incomplete and contested facts, would be unfair and
would constitute a violation of due process for respondents and the several
accused in the said cases.
The process to get ERC approval for PSAs, based on the ERC Rules,
is as follows:
Even before an application is lodged with the ERC, the DUs and the
power producers (or GenCos) have already negotiated and executed material
documents that comprise their commercial agreements. In fact, the ERC
Rules enumerate the numerous documents and information that should be
submitted together with the application, 14 which include the following:
II ld.at37.
12
ERC RULES OF PRACTICE AND PROCEDURE (ERC RULES), Rule 20(8), Sec. 1.
13
EPIRA, Sec. 45.
14
ERC RULES, Rule 20(B), Sec. 2.
Dissenting Opinion 6 G.R. No. 227670
1. Executive Summary
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Dissenting Opinion 7 G.R. No. 227670
(q) Details regarding the load forecast projections in accordance with the
latest Distribution Development Plan of the Distribution Utility and
the variability of those projections over the proposed contract period,
including the estimation of the potential for a reduction in load
supplied by the Distribution Utility due to retail competition. Any
inconsistency shall be supported by relevant analysis.
(r) If the application is filed later than two years following the effectivity
of the Guidelines for the Recovery of Costs for the Generation
Component of the Distribution Utilities' Rates, the application must
include an alternative Demand Side Management (DSM) program
that could be implemented by the Distribution Utilities if approved by
the ERC. The Distribution Utility shall submit the projected costs and
benefits of the DSM program. 15 (Emphasis and underscoring
supplied)
is Id.
Dissenting Opinion 8 G.R. No. 227670
During the hearings, the applicant presents its witnesses, who will
be subject to cross-examination, re-direct examination, and re-cross
examination. 25
16
Id., Rule 20(B), Sec. 2(k).
17
Id., Rule 20(B), Sec. 1.
18
Id., Rule 6.
19
Id., Rule 13, Sec. I.
20
Id., Rule 13, Sec. 4.
21 Id.
22
Id., Rule 16, Sec. I.
23
Id., Rule 16, Sec. 5.
24
Id., Rule 18, Sec. 1.
25
Id., Rule 18.
26
Id., Rule 20(B).
27
Id., Rule 14, Sec. 3.
zs Id.
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Dissenting Opinion 9 G.R. No. 227670
From the foregoing, it is true that the CSP was devised to provide
electricity in the least-cost manner. However, contrary to the reasoning of
the ponencia, it is not the only manner to achieve a reasonable cost of
electricity.
29
Ponencia, p. 13.
3o EPIRA, Sec. 37(e)(ii).
31
Id., Sec. 23.
32
DOE Circular, Sec. 3.
33
Id., Sec. I.
34
EPIRA, Sec. 2(c).
35
Id., Sec. 23.
Dissenting Opinion 10 G.R. No. 227670
xx xx
To promote true market competition and prevent harmful
monopoly and market power abuse, the ERC shall enforce the following
safeguards:
(c) For the first five (5) years from the establishment of the
wholesale electricity spot market, no distribution utility shall source more
than ninety percent (90%) of its total demand from bilateral power supply
contracts.
xx xx
The ERC shall, motu proprio, monitor and penalize any market
power abuse or anti-competitive or discriminatory act or behavior by
any participant in the electric power industry. Upon finding that a
market participant has engaged in such act or behavior, the ERC
shall stop and redress the same. Such remedies shall, without
limitation, include the imposition of price controls, issuance of
injunctions, requirement of divestment or disgorgement of excess
profits and imposition of fines and penalties pursuant to this Act.
36
Id., Sec. 45.
Dissenting Opinion 11 G.R. No. 227670
The ERC shall, within one (1) year from the effectivity of this Act,
promulgate rules and regulations providing for a complaint procedure that,
without limitation, provides the accused party with notice and an
opportunity to be heard. (Emphasis and underscoring supplied)
That the ERC possesses inherent and sufficient powers to control the
price of electricity is supported not just by the foregoing letter of the EPIRA,
but also by the following deliberations of the Senate on the said law:
Those are the remedies that the law allows the regulator to impose
in the event that it has a finding of an abuse of market power,
anticompetitive behavior or discriminatory action.
Senator Osmena (J). Mr. President, there are a number of, shall
we say, conditions or circumstances that the gentleman is talking about all
in one situation. But the fact is that, the price at which a distribution
utility sells to its customers is regulated by the regulatory body. If that
distribution utility buys power at a higher rate than the full price, the
ERB will not allow it to charge the difference. So, there is a control of
how much it can sell this power because that control is coming (rom the
regulatory authority.
From the foregoing, it is crystal clear that the ERC holds sufficient
power, as the independent regulator of the industry, to ensure that the
prices of electricity passed on to the consumers are at a reasonable cost,
even without the conduct of the CSP.
Indeed, the EPIRA was passed as far back as 2001, or 18 years ago,
and the DOE and ERC only conceptualized the CSP in recent years.
Throughout the years that the EPIRA was already in effect, and while
there was still no CSP requirement in place, the ERC had been
continuously doing its mandate of regulating the industry -
particularly the DUs - to ensure that the prices passed on to the
consumers are at a reasonable cost. Again, this is supported by the EPIRA
itself, as it provides:
xx xx
37
Deliberations of EPIRA, May 30, 2000 Session, pp. 8-10.
38
EPIRA, Sec. 43(t).
Dissenting Opinion 13 G.R. No. 227670
xx xx
(d) ERC shall, motu proprio, monitor and penalize any market power
abuse or anti-competitive or unduly discriminatory act or behavior, or
any unfair trade practice that distorts competition or harms
consumers, by any Electric Power Industry Participant. Upon a
finding of a prima facie case that an Electric Power Industry
Participant has engaged in such act or behavior, the ERC shall after
due notice and hearing, stop and redress the same. Such remedies
shall, without limitation, include the separation of the business
activities of an Electric Power Industry Participant into different
juridical entities, the imposition of bid or price controls, issuance of
injunctions in accordance with the Rules of Court, divestment or
disgorgement of excess profits, and imposition of fines and penalties
pursuant to Section 46 of the Act. 39
The ponencia further rules that (a) postponing the effectivity of the
CSP from June 30, 2015 to November 7, 2015 and again postponing the
effectivity to April 30, 2016, or by 305 days, allows DUs to avoid the CSP,
which took effect on June 30, 2015; and (b) the extension effectively freezes
39
IRR of EPIRA, Rule 11.
40
Id., Rule 1 I, Sec. 8(e).
41
Ponencia, p. 35.
Dissenting Opinion 14 G.R. No. 227670
for 20 years the DOE-mandated CSP to the great prejudice of the public.
The purpose of the CSP is to compel DUs to purchase their electric power at
a transparent, fair, reasonable, and competitive cost, since this cost is passed
on to consumers. The ERC's extension unconscionably placed this purpose
in deep freeze for 20 years. 42
I again disagree.
Here, the ERC has yet to approve the PSAs. In fact, as of the filing of
ERC's Comment, none of them had yet been approved. 45 The mere
submission of the application for the approvals of the PSAs does not
necessarily mean that the PSAs have been approved or will be approved.
Also, even though the PSAs did not undergo the CSP, this will not
mean that the public will be prejudiced. The applicant still has to show
that the PSA it has entered into will still result in the least cost to its captive
market. The ERC will still have to look into the many factors enumerated
above, including the procurement process of the distribution utility, in order
to see how the proposal from the GenCo will be the least costly to its captive
market. In fact, one of the first things that the applicant will submit to the
ERC is the effect of the contract on the overall rates of the DU.
mandate under the EPIRA, has the power - nay, the duty - to ensure that
any bilateral power supply contracts entered into by the DUs will be
consistent with their mandate that they supply electricity to their captive
market in the least cost manner.
Although the CSP is one manner by which this is attained, its non-
application to the PSAs in this case - which, again, have yet to be approved
- does not mean that the PSAs would prejudice the public. Once more, the
EPIRA and its IRR are clear that acts that harm customers and those that
prohibit participation of GenCos to increase market prices are prohibited.
These preceded the institution of the CSP and remain to be in force
even if the CSP is implemented. Thus, with or without the CSP, the
public is protected from practices that harm them or that would result
in market increases arising from non-competitive practices. As stated
above, the ERC, among other powers, may direct the disgorgement of excess
profits and impose price control mechanisms, all with the objective of
ensuring the reasonableness of the price of electricity.
The ponencia rules that the ERC does not have the power to supplant
the policies of the DOE 46 and that ERC's powers are limited to the
enforcement of rules and regulations of the EPIRA. 47 However, it should be
noted that in issuing Resolutions Nos. 13 and 1, the ERC did not supplant
any policy of the DOE.
First of all, it should be emphasized that the ERC, under the EPIRA, is
a purely independent regulatory body performing the combined quasi-
judicial, quasi-legislative and administrative functions in the electric
industry.
xx xx
46
Ponencia, p. 16.
47
Id. at 2 I.
Dissenting Opinion 16 G.R. No. 227670
The deliberations of the Senate on the EPIRA also reveal that it was
the intention of the legislature to create a regulatory body that is
independent and separate from the DOE:
48
Deliberations of EPIRA, May 29, 2000 Session, pp. 31-32.
49
476 Phil. 134 (2004).
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Dissenting Opinion 17 G.R. No. 227670
(b) Within six (6) months from the effectivity of this Act,
promulgate and enforce, in accordance with law, a National Grid Code
and a Distribution Code which shall include, but not limited to, the
following:
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50
Id. at 184-185.
Dissenting Opinion 18 G.R. No. 227670
and other participants in the spot market, for the purpose of ensuring a
greater supply and rational pricing of electricity;
(e) Amend or revoke, after due notice and hearing, the authority
to operate of any person or entity which fails to comply with the
provisions hereof, the IRR or any order or resolution of the ERC. In the
event a divestment is required, the ERC shall allow the affected party
sufficient time to remedy the infraction or for an orderly disposal, but shall
in no case exceed twelve ( 12) months from the issuance of the order;
(g) Three (3) years after the imposition of the universal charge,
ensure that the charges of the TRANSCO or any distribution utility shall
bear no cross subsidies between grids, within grids, or between classes of
customers, except as provided herein;
(h) Review and approve any changes on the terms and conditions
of service of the TRANSCO or any distribution utility;
(i) Allow the TRANSCO to charge user fees for ancillary services
to all electric power industry participants or self-generating entities
connected to the grid. Such fees shall be fixed by the ERC after due notice
and public hearing;
(n) Before the end of April of each year, submit to the Office of
the President of the Philippines and Congress, copy furnished the DOE, an
annual report containing such matters or cases which have been filed
before or referred to it during the preceding year, the actions and
proceedings undertaken and its decision or resolution in each case. The
ERC shall make copies of such reports available to any interested party
upon payment of a charge which reflects the printing costs. The ERC shall
publish all its decisions involving rates and anti-competitive cases in at
least one (1) newspaper of general circulation, and/or post electronically
and circulate to all interested electric power industry participants copies of
its resolutions to ensure fair and impartial treatment;
(u) The ERC shall have the original and exclusive jurisdiction
over all cases contesting rates, fees, fines and penalties imposed by the
ERC in the exercise of the abovementioned powers, functions and
responsibilities and over all cases involving disputes between and among
participants or players in the energy sector. (Emphasis and underscoring
supplied)
51
SECTION 37. Powers and Functions of the DOE. - In addition to its existing powers and functions,
the DOE is hereby mandated to supervise the restructuring of the electricity industry. In pursuance
thereof, Section 5 of RA 7638 otherwise known as "The Department of Energy Act of 1992" is hereby
amended to read as follows:
Dissenting Opinion 21 G.R. No. 227670
and direction-setting. That the ERC is the regulator, on the one hand, and
that the DOE is the policy-maker, on the other, is evident from the following
exchange between Senators John Osmena and Juan Ponce Enrile:
"(a) Formulate policies for the planning and implementation of a comprehensive program for
the efficient supply and economical use of energy consistent with the approved national economic plan
and with the policies on environmental protection and conservation and maintenance of ecological
balance, and provide a mechanism for the integration, rationalization, and coordination of the various
energy programs of the Government;
(b) Develop and update annually the existing Philippine Energy Plan, hereinafter referred to
as 'The Plan', which shall provide for an integrated and comprehensive exploration, development,
utilization, distribution, and conservation of energy resources, with preferential bias for environment-
friendly, indigenous, and low-cost sources of energy. The plan shall include a policy direction towards
the privatization of government agencies related to energy, deregulation of the power and
energy industry, and reduction of dependency on oil-fired plants. Said Plan shall be submitted to
Congress not later than the fifteenth day of September and every year thereafter;
(c) Prepare and update annually a Power Development Program (PDP) and integrate the same
into the Philippine Energy Plan. The PDP shall consider and integrate the individual or joint
development plans of the transmission, generation, and distribution sectors of the electric power
industry, which are submitted to the Depaitment: Provided, however, That the ERC shall have
exclusive authority covering the Grid Code and the pertinent rules and regulations it may issue;
(d) Ensure the reliability, quality and security of supply of electric power;
(e) Following the restructuring of the electricity sector, the DOE shall, among others:
(i) Encourage private sector investments in the electricity sector and promote
development of indigenous and renewable energy sources;
(ii) Facilitate and encourage reforms in the structure and operations of distribution
utilities for greater efficiency and lower costs;
(iii) In consultation with other government agencies, promote a system of incentives
to encourage industry participants, including new generating companies and end-users to
provide adequate and reliable electric supply; and
(iv) Undertake, in coordination with the ERC, NPC, NEA and the Philippine
Information Agency (PIA), information campaign to educate the public on the restructuring of
the electricity sector and privatization ofNPC assets;
(f) Jointly with the electric power industry participants, establish the wholesale electricity spot
market and formulate the detailed rules governing the operations thereof;
(g) Establish and administer programs for the exploration, transportation, marketing,
distribution, utilization, conservation, stockpiling, and storage of energy resources of all forms,
whether conventional or non-conventional;
(h) Exercise supervision and control over all government activities relative to energy projects
in order to attain the goals embodied in Section 2 of RA 7638;
(i) Develop policies and procedures and, as appropriate, promote a system of energy
development incentives to enable and encourage electric power industry participants to provide
adequate capacity to meet demand including, among others, reserve requirements;
(j) Monitor private sector activities relative to energy projects in order to attain the goals of
the restructuring, privatization, and modernization of the electric power sector as provided for under
existing laws: Provided, That the Department shall endeavor to provide for an environment conducive
to free and active private sector participation and investment in all energy activities;
(k) Assess the requirements of, determine priorities for, provide direction to, and disseminate
information resulting from energy research and development programs for the optimal development of
various forms of energy production and utilization technologies;
(I) Formulate and implement programs, including a system of providing incentives and
penalties, for the judicious and efficient use of energy in all energy-consuming sectors of the economy;
(m) Formulate and implement a program for the accelerated development of non-conventional
energy systems and the promotion and commercialization of its applications;
(n) Devise ways and means of giving direct benefit to the province, city, or municipality,
especially the community and people affected, and equitable preferential benefit to the region that
hosts the energy resource and/or the energy-generating facility: Provided, however, That the other
provinces, cities, municipalities, or regions shall not be deprived of their energy requirements;
(o) Encourage private enterprises engaged in energy projects, including corporations,
cooperatives, and similar collective organizations, to broaden the base of their ownership and thereby
encourage the widest public ownership of energy-oriented corporations;
(p) Formulate such rules and regulations as may be necessary to implement the objectives of
this Act; and
(q) Exercise such other powers as may be necessary or incidental to attain the objectives of
this Act."
Dissenting Opinion 22 G.R. No. 227670
I am sorry but this matter has been a settled issue. I hope Senator
Enrile will understand.
If that is the position of the sponsor, Mr. President, I will not insist
on my proposed amendment.
52
Deliberations of EPIRA, June 5, 2000 Session, pp. 56-57.
Dissenting Opinion 23 G.R. No. 227670
53
Deliberations ofEPIRA, June 5, 2000 Session, pp. 57-59.
54
Supra note 49, at 196.
55 Id.
Dissenting Opinion 25 G.R. No. 227670
In this regard, the ponencia, however, rules that as soon as the DOE's
Circular became effective on June 30, 2015, the CSP already became
effective, so that all PSAs submitted on or after June 30, 2015 are required
to undergo the CSP. 56 The ponencia further rules that the ERC therefore
unilaterally moved the effectivity of the CSP twice - first, when it issued
Resolution No. 13 and stated that it would be effective after its publication
(it became effective on November 7, 2015) and second, when it issued
Resolution No. 1 which moved the effectivity from November 7, 2015 to
April 30, 2016. 57 Further, the ponencia rules that even if the ERC is
empowered to issue the appropriate regulations to implement the CSP, 58 this
is limited by the fact that such regulation should be issued in coordination
with the DOE. 59
I agree with Justice Bernabe that the CSP could not have been
effective by June 30, 2015 because by June 30, 2015, all that was set was
only the policy that the CSP would be the mode of procuring PSAs. There
were no guidelines yet on how the CSP was to be implemented. Indeed,
Resolution No. 13 is not even questioned in this petition and the DOE
Circular and the Joint Resolution are both clear in that the ERC still needed
to issue the guidelines to implement the CSP, which it did in Resolution No.
13.
I, however, disagree that the ERC was required to coordinate with the
DOE in setting the effective date of the implementation of the CSP.
56
Ponencia, p. 24.
57
Id. at 26.
58
Id. at 27.
59 Id.
60
J. Perlas-Bernabe, Separate Concurring Opinion, p. 5.
61
Id. at 4.
62
Id. at 5.
Dissenting Opinion 26 G.R. No. 227670
When it issued Resolution No. 13, the ERC had yet to realize the
effects of an immediate imposition of the CSP requirement. When the ERC
subsequently decided to suspend the implementation of the CSP requirement
by a few months, through the issuance of Resolution No. 1, in response to
various issues raised by the players in the energy industry, it was, therefore,
still acting within its powers as granted by the EPIRA, the exercise of
which was not limited or contracted by the issuance of the Joint
Resolution.
That the ERC was not required to coordinate with the DOE with
regard to the date of effectivity of the CSP is fundamentally anchored on the
EPIRA which created the ERC as a body separate and distinct from the
DOE. Again, at the risk of belaboring the point, even Joint Resolution No. 1
recognized the power of ERC to state and restate the effective date of the
CSP through Resolution No. 13, and later on Resolution No. 1.
(1) The resolutions affect, and deal with, how DUs conduct their
business, which is a domain that is within the sole and
exclusive jurisdiction of the ERC; and
(2) The ERC's power to issue them on its own was recognized by
the Joint Resolution itself.
Dissenting Opinion 27 G.R. No. 227670
As earlier established, the ERC has the power to issue rules and
regulations as regards the implementation of the CSP. Accordingly,
following the doctrine of necessary implication, this grant of express power
to formulate implementing rules and regulations must necessarily include the
power to amend, revise, alter, or repeal the same. 71 This is to allow
administrative agencies the needed flexibility in formulating and
adjusting the details and manner by which they are to implement the
provisions of a law, in order to make them more responsive to the
times. 72
63
Yazaki Torres Manufacturing, Inc. v. Court ofAppeals, supra note 2, at 89.
64 ld.
65 Id.
66 ld.
67
ld. at 89-90.
68
Id. at 90.
69 Id.
7
°
71
Kidav. SenateofthePhilippines, 683 Phil. 198,221 (2012).
Yazaki Torres Manufacturing, Inc. v. Court ofAppeals, supra note 2, at 90.
72
Pharmaceutical and Health Care Association of the Philippines v. Duque Ill, 561 Phil. 386, 444
(2007).
Dissenting Opinion 28 G.R. No. 227670
Therefore, the ERC, being vested with the power to promulgate rules
and regulations concerning its mandate, is also necessarily vested with the
power to amend, revise, alter or repeal the same. Thus, the creation of a
transition period is within the powers of the ERC.
Given the foregoing discussion - that ERC had the power to issue
Resolutions Nos. 13 and 1, and that this power is anchored on the EPIRA
itself - then it cannot be said that the body acted with grave abuse of
discretion amounting to lack or excess of jurisdiction. The ERC, as a body
made up of its commissioners, thus issued the resolutions in good faith, or
on the basis of its interpretation of the powers granted to it by the EPIRA.
The OSG asserts that the issuance of Resolution No. 1 was in the
exercise ofERC's sound judgment as a regulator and pursuant to its mandate
under the EPIRA to "protect the public interest as it is affected by the rates
and services of electric utilities and other providers of electric power." 73 I
agree.
73
EPIRA, Sec. 2(f).
74
Rollo (Vol. Ill), pp. 1237-1238.
Dissenting Opinion 29 G.R. No. 227670
Relating this provision to Reso 13, we are of the impression that Reso 13
may not be strictly applied to ESA extensions, especially considering that
the Honorable Commission has already meticulously scrutinized and
approved TMI's Fixed O&M, Energy and Fuel Fees, as well as its asset
base in determining the Capital Recovery Fee.
xx xx
Since Section 4 of the Resolution states that the CSP requirement shall not
apply to PSAs (or ESAs) already filed with the ERC, we are of the
understanding that an extension of an existing ESA, which is part of the
provisions submitted to and has been approved by the ERC, albeit
provisionally, is outside the coverage of the present Resolution. Hence, we
intend to enter into an extension of our existing ESA with TMI, applying
75
Id. at 1238.
76
Id. at 1239.
77
Id.
78
Id. at 1242-1243.
Dissenting Opinion 30 G.R. No. 227670
Further to our letter dated November 25, 2015, we would like to reiterate
our request to the Honorable Commission En Banc to accept and allow the
filing of Power Supply Contracts (PSC) already signed prior to its
issuance Resolution No. 13, Series of 2015 "A Resolution Directing All
Distribution Utilities (DUs) to Conduct Competitive Selection Process
(CSP) in the Procurement of Their Supply to the Captive Market."
We wish to stress that in the event the subject PSCs cannot be filed, the
Honorable Commission would effectively invalidate the same to the
detriment of the contracting parties and the industry. It is significant to
note that the Distribution Utilities (DU) and Electric Cooperatives (EC)
have carefully evaluated and considered the most advantageous terms and
conditions for its consumers prior to signing the subject PSCs.
xx xx
Meanwhile, another round of CSP may likely alter the terms of the
contract that could prove to be disadvantageous to the DU or EC.
Considering the execution of the PSCs and the stage of their application
process prior to the issuance of the CSP requirement, we beg the
indulgence of the Honorable Commission En Banc to accept the subject
PS Cs and allow the filing thereof to proceed. 81
xx xx
79 Id.
8o Id. at 1244-1245.
81 Id.
82 Id. at 1246-1249.
Dissenting Opinion 31 G.R. No. 227670
In the case of AKELCO where in previous years, two (2) Power Supply
Contracts for base load requirements were already signed by both parties
but were not filed with the ERC before the effectivity of the CSP. The
queries are as follows:
1. If the Power Supply Contracts that were not filed due to non-
compliance to CSP still binding?
xx xx
83
Id. at 1246-1247.
84
Id. at 1250.
85 Id.
86
Id. at 1251-1252.
Dissenting Opinion 32 G.R. No. 227670
Section 4 of the Resolution requires the DUs to conduct a CSP for PSAs
that have not yet submitted its PSA with the ERC. We believe the result is
a retroactive application of the Resolution that impairs our contracts that
were entered into in good faith. This creates uncertainties, including the
possible revision and rescission of existing binding agreements, which our
group of companies, and their shareholders and creditors, are greatly
concerned about. There are also specific considerations with each DU: for
each PSA we have executed since the application of the Resolution would
potentially lead to losses and additional project delay. Any further delay
(such as revisiting CSP) would result in a breach of contract for not
meeting deadlines. 87
The ponencia views this letter as a confirmation that the DOE directed
the ERC to take action on the matter and that it did not foreclose the ERC
from directing ABRECO to undertake a Swiss challenge, a form of public
bidding where an original proponent's offer is opened to competitive bids
but the original proponent may counter match any superior offer. 90
To my mind, this letter from the DOE is not, as the ponencia says, an
admission of the need to coordinate with the DOE. Rather, this letter is in
fact a recognition by the DOE that the power of whether to exempt an entity
from the CSP is lodged solely with the ERC. That the DOE was clearly
requesting the ERC and not directing it is seen from a plain reading of the
letter where the DOE stated: "x x x thus, we are endorsing for ERC's
consideration x x x." 91 This is a clear admission by the DOE that it is only
the ERC which has the power to determine whether a certain energy sector
player, such as ABRECO, may be exempted from the requirement of the
CSP.
Confronted with these concerns, the ERC deemed it wise to restate the
effectivity of the CSP implementation. Thus, the restatement of the
effectivity date of the CSP implementation from November 7, 2015 to April
30, 2016, virtually creating a transition period of five (5) months, was
87 Id.
88
Rollo (Vol. IV), p. 1516.
89 Id.
90
Ponencia, p. 28.
91
Rollo (Vol. IV), p. 1516.
Dissenting Opinion 33 G.R. No. 227670
deemed by the ERC a long enough period to allow fruition of the PSAs at
the throes of perfection or those already executed but not yet filed, and short
enough to block those PSAs which were still too early in the negotiation or
so far from execution. 92 The ERC found that granting a period of transition
would avoid the risk of inconsistency in resolving the individual requests for
exemptions sought by DUs, GenCos and electric cooperatives - while, at
the same, ensuring a steady electric supply {or the period covered by the
different calls {or the CSP exemption. 93
And, as the regulator, ERC had full knowledge and complete sense of
the difficulty of adding a new requirement to an application for the approval
of a PSA when the DUs and the GenCos had already executed their PSAs.
In fact, requiring a CSP would most likely have resulted in the undoing of
heavily and lengthily negotiated and executed agreements over which
many computations and projections had already been done.
Further, Resolution No. 1 did not only restate the effectivity date of
the CSP implementation, it likewise already addressed certain concerns
raised by these stakeholders. The ERC, in said resolution, clarified certain
compliance requirements on the other forms of CSP as provided in
Resolution No. 13. It further resolved that the PSAs with provisions
allowing automatic renewal or extension of their term, whether or not such
92
Rollo (Vol. lll), pp. 1208-1209.
93
Id. at 1206.
Dissenting Opinion 34 G.R. No. 227670
renewal or extension requires the intervention of the parties, may have one
( 1) automatic renewal or extension for a period not exceeding one ( 1) year
from the end of their respective tenns, provided that these PSAs were
approved by the ERC before the effectivity of Resolution No. 1; if not, then
automatic renewal clauses or extension of the PSAs shall no longer be
permitted.
The ponencia, however, reasons that the extension was not necessary
because "the issuance of the 2015 DOE Circular and of the CSP Resolution
was not conjured on a whim" 94 and that "the DOE has conducted a series of
nationwide public consultations on the proposed policy on competitive
procurement of electric supply for all electricity end-users." 95
The Court can take judicial notice 98 of the fact that up to the present,
the said PSA Rules are still in draft form. In fact, comments on the draft
PSA Rules are still being received by the ERC, 99 and a public consultation
on the draft was just concluded by the ERC on October 15, 2018. 100
94
Ponencia, p. 30.
95
Id. at 31.
96
Id. at 32.
97
Resolution No. 13, 9th Whereas Clause.
98
RULES OF Cou1n, Rule 129, Section I provides:
SECTION I. Judicial notice, when mandatory. - A court shall take judicial
notice, without the introduction of evidence, of the existence and territorial extent of
states, their political history, forms of government and symbols of nationality, the
Jaw of nations, the admiralty and maritime courts of the world and their seals, the
political constitution and history of the Philippines, the official acts of the legislative,
executive and judicial departments of the Philippines, the laws of nature, the
measure of time, and the geographical divisions. (Emphasis and underscoring supplied)
99
See Comments Received on the Draft PSA Rules, ERC Case No. 2018-0002-RM, available at
http://www.erc.gov.ph/ContentPage/51512 (last accessed November 9, 2018).
100
See 15 October 2018 PubCon on PSA Rules, available at http://erc.gov.ph/ContentPage/5 l 5 I 4 (last
accessed November 9, 2018).
Dissenting Opinion 35 G.R. No. 227670
Therefore, while it is true that the CSP requirement was not totally
unexpected, the DUs cannot, however, be expected to comply with the said
requirement that was made effective immediately. While consultations were
indeed made regarding the CSP requirement, these consultations were in the
context of the draft PSA rules that have not been made effective yet; hence,
it is understandable that the DUs were still negotiating their PSAs under the
old framework where the CSP was not yet required.
To stress, the DUs cannot be expected to follow a rule that was not
yet in place. In other words, it was but natural for the DUs to have pending
PSA negotiations that did not go through the CSP when the CSP
requirement was made effective all of a sudden.
The rationale for this rule relates not only to the emergence of the
multifarious needs of a modern or modernizing society and the
establishment of diverse administrative agencies for addressing and
satisfying those needs; it also relates to accumulation of experience and
growth of specialized capabilities by the administrative agency charged
with implementing a particular statute. In Asturias Sugar Central, Inc. v.
Commissioner of Customs 106 the Court stressed that executive officials
are presumed to have familiarized themselves with all the
101
Yazaki Torres Manufacturing, Inc. v. Court ofAppeals, supra note 2, at 88.
102
Bureau Veritas v. Office of the President, supra note 3, at 747.
103
Yazaki Torres Manufacturing, Inc. v. Court ofAppeals, supra note 2, at 88.
104
Melendres, Jr. v. Commission on Elections, 377 Phil. 275, 291 ( 1999).
105
280 Phil. 548 (1991 ).
106
140 Phil. 20, 26 (1969).
Dissenting Opinion 36 G.R. No. 227670
Thus, I submit anew that the Court stepped out of bounds in annulling
the acts of a regulator acting within the bounds of law and its area of
expertise. Indeed, this sends a chilling effect on all regulators. This is true in
this case because the acts of the ERC have been made the basis of
administrative and criminal complaints.