G.R. No. 210245

G.R. No. 210245/G.R. No. 210255/G.R. No. 210502, August 3, 2021,
♦ Decision, Lopez, J., [J]
♦ Dissenting Opinion, Leonen, [J]
♦ Dissenting Opinion, Lazaro-Javier, [J]

EN BANC

[ G.R. No. 210245. August 03, 2021 ]

BAYAN MUNA REPRESENTATIVES NERI JAVIER COLMENARES AND CARLOS ISAGANI ZARATE, GABRIELA WOMEN'S PARTY REPRESENTATIVES LUZ ILAGAN AND EMMI DE JESUS, ACT TEACHERS PARTY-LIST REPRESENTATIVE ANTONIO TINIO, AND KABATAAN PARTYLIST REPRESENTATIVE TERRY RIDON, PETITIONERS, VS. ENERGY REGULATORY COMMISSION (ERC) AND MANILA ELECTRIC COMPANY (MERALCO), RESPONDENTS.

[G.R. No. 210255]

NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS (NASECORE), REPRESENTED BY PETRONILO L. ILAGAN, FEDERATION OF VILLAGE ASSOCIATIONS (FOYA), REPRESENTED BY SIEGFRIEDO A. VELOSO, FEDERATION OF LAS PIÑAS HOMEOWNERS ASSOCIATION (FOLPHA), REPRESENTED BY BONIFACIO DAZO AND RODRIGO C. DOMINGO, JR., PETITIONERS, VS. MANILA ELECTRIC COMPANY (MERALCO), ENERGY REGULATORY COMMISSION (ERC) AND DEPARTMENT OF ENERGY (DOE), RESPONDENTS.

[G.R. No. 210502]

MANILA ELECTRIC COMPANY (MERALCO), PETITIONER, VS. PHILIPPINE ELECTRICITY MARKET CORPORATION, FIRST GAS POWER CORPORATION, SOUTH PREMIERE POWER CORPORATION, SAN MIGUEL ENERGY CORPORATION, MASINLOC POWER PARTNERS, CO., LTD., QUEZON POWER (PHILS.) LTD. CO., THERMA LUZON, INC., SEM-CALACA POWER CORPORATION, FGP CORPORATION AND NATIONAL GRID CORPORATION OF THE PHILIPPINES, AND THE FOLLOWING GENERATION COMPANIES THAT TRADE IN THE WESM NAMELY: 1590 ENERGY CORPORATION, AP RENEWABLES, INC., BAC-MAN ENERGY DEVELOPMENT CORPORATION/BAC-MAN GEOTHERMAL, INC., FIRST GEN HYDRO POWER CORPORATION, GNPOWER MARIVELES COAL PLANT LTD. CO., PANASIA ENERGY HOLDINGS, INC., POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION, SN ABOITIZ POWER, STRATEGIC POWER DEVELOPMENT CORPORATION, BULACAN POWER GENERATION CORPORATION AND VIVANT STA. CLARA NORTHERN RENEWABLES GENERATION CORPORATION, RESPONDENTS.

D E C I S I O N

LOPEZ, J., J.:

These are consolidated petitions filed before the Court assailing the Energy Regulatory Commission's (ERC) approval of Manila Electric Company's (MERALCO) request to stagger the collection of automatic rate adjustments arising from generation costs for November 2013.

Facts and Proceedings

In a December 5, 2013 letter,1 MERALCO wrote to the ERC stating that as early as October 10, 2013, it sought an audience with the said agency on the projected impact of the SPEX-Malampaya shutdown on its blended generation charge as the shutdown would coincide with the scheduled maintenance of other generation plants. During the October meeting, MERALCO informed the ERC that it had taken measures to mitigate the impact of the Malampaya shutdown but the projected generation cost for the month of November 2013 was still expected to go up to P7.86 per kilowatt hour (kWh).2

MERALCO further stated in its letter that it received the actual November 2013 bills of its suppliers. The total cost of generation to be passed on to its captive customers stood at P22.64 billion translating to a generation rate of P9.1070 per kWh, which is an increase of P3.44 per kWh from the P5.67 per kWh that was billed in the previous month, and higher by P1.25 per kWh from the P7.86 per kWh that was presented during the October 2013 meeting.3

Citing Section 2, Article III of the Guidelines for the Automatic Adjustment of Generation Rate and System Loss Rates by Distribution Utilities (AGRA Rules),4 MERALCO asserted that it was authorized to automatically reflect the full generation cost of P22.64 billion in its December 2013 billing to its customers. However, given the financial burden that such hike would place on the consumers, MERALCO offered the following options:

To mitigate the effects of the abrupt increase in generation cost, MERALCO proposes that instead of reflecting the actual generation charge of PhP9.1070 per kWh in its December 2013 billing, it be allowed to implement a lower generation charge of PhP7.90 per kwh, a mere four centavos higher than the P7.86 per kwh generation charge estimate presented to the Commission last October 10. This would mean, however, that of the total generation cost of P22.64 billion incurred in November 2013, P3 billion will have to be collected at a later period. With the expectation that the generation charge will normalize in February 2014, MERALCO proposes to include the deferred amount of P3 billion in the computation of the generation charge for February 2014 billing.

We note, however, that despite the foregoing proposed change in the recovery of the generation cost for the billing month of December 2013, MERALCO is required, under its power supply contracts, to pay its suppliers in full. To meet this obligation, MERALCO will incur carrying costs. Consequently, to address such issue and ensure MERALCO's revenue-neutral position with regard to the pass-through of generation costs, it proposes that it be allowed to recover the carrying cost attendant to the deferral.

Article VIII, Section 1 of the AGRA Rules provides that "ERC may allow an exception from any provisions of these Guidelines, if such exception is found to be in the public interest and is not contrary to law or any other related rules and regulations." Considering the pressing nature of the need to mitigate the impact of the power rate spike this December, MERALCO respectfully requests clearance from the Honorable Commission to: 1) collect a generation charge of P7.90 per kwh in its December 2013 billings to its customers; and 2) defer to February 2014 the recovery of PhP3 Billion, representing a portion of the generation costs for the supply month of November 2013 not passed on to customers in December 2013, subject to inclusion of the appropriate carrying charge.5

On December 9, 2013, the ERC approved MERALCO's proposal for the staggered collection of the generation charge by way of an exception to the AGRA Rules.6 The ERC, however, did not approve MERALCO's request to recover carrying costs but directed it to file a formal application for this. The ERC letter reads:

The ERC is well-aware of the huge impact that MERALCO's generation charge adjustment will have on the retail rates to its customers. Given that there are also reported increases in the prices of other commodities, MERALCO's proposal to stagger the implementation of its generation cost is timely, as it will cushion the impact on the electricity consumers.

The ERC therefore grants MERALCO the clearance it seeks to stagger implementation of its generation cost recovery by way of an exception to the AGRA Rules. Accordingly, MERALCO is authorized to implement a generation charge of PhP7.67/kWh in its December 2013 billing and add to its calculated generation charge for February 2014 billing the generation rate of PhP1.00/kWh. The balance on the deferred generation amount without any carrying costs shall be included in MERALCO's generation charge for March 2014. Should MERALCO seek to recover its carrying costs on the entire deferred amount, it shall file a formal application for this.

The foregoing should not in any way be construed as a confirmation of MERALCO's generation costs incurred in November 2013, which shall remain subject of the confirmation and post-verification proceedings in accordance with the applicable ERC resolution on the matter.7

The ERC's approval of the staggered imposition of the generation charge prompted the filing of these consolidated petitions.

In G.R. No. 210245, petitioners Bayan Muna, et al. filed a Petition for Certiorari and Prohibition With Prayer for a Temporary Restraining Order and/or Preliminary Injunction8 seeking to declare null and void the provisional grant by the ERC of the rate increase for lack of due process and to declare unconstitutional Sections 6 and 29 of Republic Act (R.A.) No. 91369 or the Electric Power Industry Reform Act of 2001 (EPIRA).10

In G.R. No. 210255, petitioners National Association of Electricity Consumers for Reforms (NASECORE), et al., claiming to be similarly situated individuals, filed a Petition for Certiorari and/or Prohibition11 seeking to enjoin the implementation of ERC Resolutions No. 10-01 and 10-04, both series of 2004, and the December 9, 2013 letter of the ERC because they claim that the ERC acted with grave abuse of discretion. Petitioners also sought to declare Section 4(e), Rule 3 of the EPIRA Implementing Rules and Regulations (IRR) and all resolutions, orders or any issuances of the ERC allowing, confirming, and implementing the automatic power rate adjustments or increases imposed by MERALCO as null and void.12

In a Resolution13 dated December 23, 2013, the Court consolidated both petitions, required respondents to file their comments, set the case for oral arguments, and issued a temporary restraining order (TRO) for 60 days enjoining the ERC from implementing its December 9, 2013 letter and MERALCO from increasing its charges to consumers as raised in its December 5, 2013 letter.14

On January 8, 2014, MERALCO filed its Consolidated Comment/Opposition with Counter-Petition,15 which the Court treated as in the nature of a third-party complaint and docketed as G.R. No. 210502.16

On January 9, 2014, Private Electric Power Operators Association (PEPOA) filed a motion for leave to intervene and admit its comment-in-intervention.17 On the same day, the Court issued a resolution directing petitioners to amend their petitions to implead as necessary parties the generation companies with power supply agreements with MERALCO as well as the Philippine Electricity Market Corporation (PEMC), which was the Wholesale Electricity Spot Market's (WESM) governance arm.18 In compliance with this resolution, petitioners filed their amended petitions to implead the additional respondents.

Oral arguments were held on January 21, 2014, February 4, 2014, and February 11, 2014.19 Two amici curiae were appointed: the National Engineering Center, through Professor Rowaldo Del Mundo, and the University of the Philippines School of Economics, through Dr. Maria Joy V. Abrenica.20

The Court extended the TRO for 60 more days on February 18, 2014, or until April 22, 2014, and also granted a TRO against the PEMC and the generation companies for the same period.21

The ERC subsequently filed a Manifestation and Motion dated March 6, 2014,22 praying that the manifestation be noted and that the attached Order23 dated March 3, 2014 of the ERC be considered in the resolution of the case.24 The Order dated March 3, 2014 attached to the manifestation states:

IN VIEW OF THE FOREGOING, given that prices in WESM during the November and December 2013 supply months could not qualify as reasonable, rational and competitive due to the confluence of factors as pointed out above, and without prejudice to the results of the investigations into the possible culpability of any or all of the market participants, the Commission, in the exercise of the police power delegated to it by the State and for the general welfare of society, hereby VOIDS these Luzon WESM prices and declares the imposition of regulated prices in lieu thereof.

The regulated prices shall be calculated based on the load weighted average of the ex-post nodal energy prices and meter quantity of the same day same trading interval that have not been administered covering the period December 26, 2012 to September 25, 2013, subject to the payment to the oil-based plants of additional compensation to cover their full Fuel and Variable O&M Costs, if warranted, following the manner and procedure for computing additional compensation under the Administered Price Determination Methodology.

PEMC is hereby directed within seven (7) days from receipt hereof to calculate these regulated prices and implement the same in the revised WESM bills of the concerned distribution utilities in Luzon for the November and December 2013 supply months for their immediate settlement, except for MERALCO whose November 2013 WESM bill shall be maintained, unless otherwise ordered by the Commission, in compliance [with] the [TRO] issued by the Supreme Court in G.R. No. 210245 and G.R. No. 210255.

Within a period of no less than ninety (90) days from receipt of this Order, PEMC is further directed to conduct an investigation on the possible breach of Must-Offer Rule pursuant to Section 2.4 of the Protocol adopted in the Memorandum of Agreement between the Commission and PEMC dated January 31, 2008. Thereafter, the result of the investigation (Investigation Report) of the Enforcement and Compliance Office (ECO) shall be submitted directly to the Commission containing the recommended sanctions and penalties, as the case may be.

SO ORDERED.25

On March 18, 2014, the Court resolved to require all parties to comment on the ERC's manifestation and the Order dated March 3, 2014.26

Issues

The issues for the Court's resolution are as follows:

A. Whether or not the remedy which petitioners availed of in this case is proper;

B. Whether or not these cases and the issues they raise are justiciable;

C. Whether or not the ERC, in its approval contained in the letter dated December 9, 2013, of MERALCO's December 5, 2013 request committed grave abuse of discretion, in that:

a) It violates petitioners' rights to due process of law;

b) It violates its mandate under the Constitution and the EPIRA to protect the public from anti-competitive practices and market abuse;

D. Whether or not the amendment to Section 4(e), Rule 3 of the EPIRA IRR allowing automatic rate adjustments or increases to recover generation costs violates due process and the declared policy of the EPIRA; corollarily, whether or not ERC Resolutions No. 10-01 and 10-04, both series of 2004, and the December 9, 2013 letter of the ERC are valid;

E. Whether or not the automatic rate adjustments or increases to recover generation costs amount to a surrender by the ERC of its regulatory functions, in violation of Section 25 of the EPIRA;

F. Whether or not Sections 6 and 9 of the EPIRA are unconstitutional in declaring that (a) power generation and supply are not public utilities, and (b) their charges are beyond the regulation by the ERC;

G. Whether or not the TRO in these cases should be lifted; and

H. Whether or not petitioners are entitled to the reliefs prayed for.

The Court's Ruling

I.

The cases and the issues raised are justiciable

Jurisdiction of this Court should be distinguished from justiciability of the issues raised.

Jurisdiction refers to the constitutional or statutory competence for the court to hear, decide, and enforce specific cases. Absent this competence, any act of a court will be legal nullity, void and thus, unenforceable. The bases of a court's jurisdiction can be the subject matter,27 the type of action,28 the parties, or the procedure or remedy involved.29 Jurisdiction over the responding party needs to be acquired upon service of coercive process by the court.30

Justiciability, on the other hand, results from the exercise of jurisdiction.

For policy reasons, a court with jurisdiction may decline to hear and decide a case. These reasons may be derived from its reading of the role of courts in our constitutional order - such as the doctrine of justiciability of constitutional issues. Others may refer to judicial policies, such as the doctrine of exhaustion of administrative remedies or the doctrine of primary jurisdiction. Other matters of justiciability refer to procedural devices to make the administration of justice more efficient. This includes the doctrine of respect for the hierarchy of courts when several courts have original but concurrent jurisdiction.

While jurisdiction is imperative, justiciability is not. In the same manner that judicial policy has been established, precedents which sketch the exceptions exist.

To recall, these consolidated cases were commenced through petitions for certiorari and prohibition under Rule 65. These are not Rule 43 or Rule 45 actions. None of the parties seek this Court's competence to set the amount of generating costs to be paid by the consumers for the month of November 2013. Rather, all the petitions allege that respondents gravely abused their discretion in the manner they approved the rates with such abuse amounting to having ousted them of their jurisdiction.

As the petitions were for certiorari and prohibition, there is no doubt in the mind of the Court that it has jurisdiction to rule on the cases. Section 5, Article VIII of the Constitution provides the Court the power to:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus. (Italics in the original)

The grant of original jurisdiction cannot be removed by law31 or by any rule of procedure. Since these are petitions for certiorari and/or prohibition, this Court certainly has jurisdiction. Despite having jurisdiction over the cases, however, it is still necessary for the Court to answer whether the doctrines of exhaustion of administrative remedies and primary jurisdiction apply. To this, the Court answers in the negative.

The doctrine of primary jurisdiction provides that courts "cannot or will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to resolving the same, where the question demands the exercise of sound administrative discretion requiring special knowledge, experience and services in determining technical and intricate matters of fact."32 In Industrial Enterprises, Inc. v. Court of Appeals,33 the Court explained:

x x x It may occur that the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in character. However, if the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical matters or intricate questions of facts are involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such case the judicial process is suspended pending referral of such issues to the administrative body for its view" x x x.34

The doctrine of primary jurisdiction thus applies when both the court and the regulatory agency have the jurisdiction to take cognizance of the case. When there are pending issues that require the special knowledge or technical expertise of the regulatory body, the doctrine works in such a manner that court action is deferred pending the action of the administrative tribunal despite the fact that the court has jurisdiction to act on the case.

In this case, the technical expertise of the administrative agency is not required to settle the controversy. In other words, there is no pending issue that requires the special knowledge of the ERC which, in turn, would require the Court to desist from resolving the case pending any action by the ERC. While it is true that Section 43(u)35 of the EPIRA gives the ERC original and exclusive jurisdiction over rate contests, it applies when a consumer questions errors in the computation of transmission charges,36 distribution wheeling charges,37 and retail rates.38 This is implied in Section 43(f) of the EPIRA:

(f) In the public interest, establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of the regulated entities. x x x (Italics supplied)

The availability of the remedies provided for in Section 43(u) in the EPIRA applies when there are errors in computation based on the established methodologies of the ERC as stated in Section 43(f). The ERC even provides for clear rules of procedure for application of general change in rates under Section 1,39 Rule 20(A) of its Rules of Practice and Procedure. The procedure allows for contestability from the consumers.40 Individual consumer complaints are covered by Section 4,41 Rule 5 and Rule 20(E) of ERC's Rules of Practice and Procedure.

In contrast, the question in this case is whether the ERC committed grave abuse of discretion in the issuance of its December 9, 2013 letter. To reiterate, the parties are not asking the Court to set the amount of generating costs to be paid by the consumers for the month of November 2013. Instead, petitioners pray that the Court exercise its constitutional power to "determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government."42 Verily, individual consumer complaints are not the same with a petition claiming that the ERC committed grave abuse of discretion in the exercise of its regulatory powers. Thus, the doctrine of primary jurisdiction is not applicable here.

Similarly, the doctrine of exhaustion of administrative remedies does not apply in this case. Unlike the doctrine of primary jurisdiction, the doctrine of exhaustion of administrative remedies applies "where a claim is cognizable in the first instance by an administrative agency alone; [in which case] judicial interference is withheld until the administrative process has run its course."43 It concerns itself with judicial review of administrative cases. The rule provided by the doctrine could be simply stated as follows: "recourse through court action, as a general rule, cannot prosper until all the remedies have been exhausted at the administrative level."44 To state at length:

"When an adequate remedy may be had within the Executive Department of the government, but nevertheless, a litigant fails or refuses to avail himself of the same, the judiciary shall decline to interfere. This traditional attitude of the courts is based not only on convenience but likewise on respect: convenience of the party litigants and respect for a coequal office in the government. If a remedy is available within the administrative machinery, this should be resorted to before resort can be made to (the) courts." x x x45

The doctrine does not apply, however, even if the present cases involve the judicial review of an administrative action because there is no administrative action recourse which remains available. There is no other available administrative remedy petitioners could have availed of prior to their resort to the courts and there is no longer any administrative review process that is readily available to question the letter-approval of the ERC. To put it simply, all administrative remedies have been exhausted.

In any event, even assuming that either of the doctrines of primary jurisdiction or exhaustion of administrative remedies applies, these doctrines have settled exceptions, namely:

x x x (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively small so as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) when its application may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) when the issue of non-exhaustion of administrative remedies has been rendered moot; (j) when there is no other plain, speedy and adequate remedy; (k) when strong public interest is involved; and, (l) in quo warranto proceedings. x x x46 (Emphasis supplied; emphasis in the original omitted)

The present cases clearly fall under exceptions (f), (h), (j) and (k).

First, judicial intervention is urgent. To recall, petitioners sought a TRO.47 While the general rule is that it is prohibited to enjoin the implementation of the EPIRA, the exception to the said rule is when it is ordered by the Court (through injunction or restraining order).48 Under the law, petitioners could solely seek injunctive relief from the Court, hence, judicial intervention is necessary and indispensable.

In Aquino v. Luntok,49 the Court ruled that the doctrine on exhaustion of administrative remedies does not apply because a TRO and an injunction were involved. The Court ruled that "[w]hatever circumstances warranted the grant of injunction in the court below would be no different than the circumstances which created the urgency, and there can ordinarily be no better judge to determine the existence thereof than the x x x court itself."50

Second, the controverted acts allegedly violated due process. When the ERC immediately granted MERALCO's letter, it is claimed that they deprived the consumers from participating in the concerns raised in MERALCO's letter dated December 5, 2013, which thereby violated due process under the EPIRA. Petitioners argued that the violation of their due process rights was part of the grave abuse of discretion committed by respondents.

Third, there is no other plain, speedy, and adequate remedy. There is no other tribunal where petitioners could raise grave abuse of discretion and likewise seek an injunction against the ERC.

In a similar case,51 an administrative officer's "utter disregard of the principle of due process" made this Court conclude that there was no longer a plain, speedy or adequate remedy available despite the availability of an appeal.52 Thus, even if the Court presumes that there are other remedies available with the ERC, such will not be plain, speedy, or adequate considering that the ERC acted in disregard of the consumers' right to due process under the EPIRA.

Finally, the doctrines can be relaxed because strong public interest is involved in this case.

It is well-known that MERALCO's franchise area covers Caloocan, Las Piñas, Makati, Malabon, Mandaluyong, Manila, Marikina, Muntinlupa, Navotas, Parañaque, Pasay, Pasig, Pateros, Quezon City, San Juan, Taguig, and Valenzuela of Metro Manila, as well as several cities and municipalities in the provinces of Bulacan, Cavite, Rizal, Batangas, Laguna, Quezon and Pampanga.53 MERALCO's franchise area is so vast that it is often referred to as a "mega franchise."

Clearly, the magnitude of MERALCO's franchise area approximates the strength of the public interest involved. Consumers and business entities are always interested in the fluctuations of the price of electricity. It affects a big swathe of the public. The Court must address the issues of this case to serve this strong public interest.

Still on justiciability, respondents argued against petitioners' constitutional attack on Sections 6 and 29 of the EPIRA.

Petitioners Bayan Muna, et al. question the constitutionality of Sections 6 and 29 of the EPIRA in declaring that the generation and supply sectors are not public utilities, and that their charges are beyond ERC regulation.54

As correctly pointed out by respondent-in-intervention PEPOA55 and some generation companies,56 Section 29 of the EPIRA only applies to electricity suppliers of the contestable market57 under an open access and retail competition regime:58

SEC. 29. Supply Sector. - The supply sector is a business affected with public interest. Except for distribution utilities and electric cooperatives with respect to their existing franchise areas, all suppliers of electricity to the contestable market shall require a license from the ERC.

For this purpose, the ERC shall promulgate rules and regulations prescribing the qualifications of electricity suppliers which shall include, among other requirements, a demonstration of their technical capability, financial capability, and creditworthiness: Provided, That the ERC shall have authority to require electricity suppliers to furnish a bond or other evidence of the ability of a supplier to withstand market disturbances or other events that may increase the cost of providing service.

Any law to the contrary notwithstanding, supply of electricity to the contestable market shall not be considered a public utility operation. For this purpose, any person or entity which shall engage in the supply of electricity to the contestable market shall not be required to secure a national franchise.

The prices to be charged by suppliers for the supply of electricity to the contestable market shall not be subject to regulation by the ERC.

Electricity suppliers shall be subject to the rules and regulations concerning abuse of market power, cartelization, and other anti-competitive or discriminatory behavior to be promulgated by the ERC.

In its billings to end-users, every supplier shall identify and segregate the components of its supplier's charge, as defined herein. (Italics in the original)

Since Bayan Muna party-list representatives "are supposed to represent the marginalized sectors of the society, it is obvious that they do not represent the contestable market."59 They have no legal standing to assail the constitutionality of Section 29 in this case which involves MERALCO's generation charges to its captive market. In fact, the supply sector was not even impleaded as a party respondent.60

Significantly, petitioners even conceded during the oral arguments the lack of an actual case to assail the constitutionality of Section 29 of the EPIRA.61

Petitioners Bayan Muna, et al. also assail the constitutionality of Section 6 of the EPIRA for declaring that the generation sector is not a public utility and is not subject to regulation by the ERC.

Respondents counter that the constitutionality of Sections 6 and 29 involve a political question beyond judicial review. It was not raised at the earliest opportunity and it is not the lis mota of this case.62 Public respondents add that addressing the issue on the constitutionality of these EPIRA provisions is not necessary to dispose this case on the merits, and it will not provide petitioners the primary reliefs they sought.63

The Court agrees with respondents.

It is not the entire Section 6 of the EPIRA under challenge but only the portion declaring the generation sector as not public utilities. Petitioners' fear that this declaration removed the generation sector outside the ambit of state regulation is without basis. Again, during the oral arguments, petitioners conceded that several standards are found in Section 6, and in ERC approved rules and regulations, governing the generation sector for being a business affected with public interest:

JUSTICE LEONEN:

Have you studied the approvals of ERC of the bilateral contracts of MERALCO?

CONGRESSMAN COLMENARES:

I have not read a bilateral contract, Your Honor.

JUSTICE LEONEN:

Not one?

CONGRESSMAN COLMENARES:

Not one, Your Honor. In fact, I thought for a while that [it] is a very difficult document to come around.64

As regards Section 6:

JUSTICE LEONEN:

Let's look at Section 6 of the EPIRA law.

CONGRESSMAN COLMENARES:

Yes, Your Honor.

JUSTICE LEONEN:

Because you did flash it but I think you missed out on some of the other paragraphs of Section 6.

CONGRESSMAN COLMENARES:

Yes, I'm not familiar, we are studying EPIRA like many of us but yes, Section 6 thus in fact mentioned that it shall not be regulated, Your Honor.

x x x x

JUSTICE LEONEN:

Yes. It's a business affected with public interest therefore the kind of regulation that applies to it is different from any ordinary business, like the fish ball vendor. But for a generation company therefore, let's go to second paragraph. It states that before it operates it must secure from the Energy Regulatory Commission a certificate of compliance pursuant to the standards set forth in this Act. Would you know that this standard also include many other rules and regulations that have been approved by the ERC? Is this not correct?

CONGRESSMAN COLMENARES:

It's probably true, Your Honor.65

II

Petitioners availed themselves of the proper remedy

The petitions docketed as G.R. Nos. 210245 and 210255 were filed as special civil actions for certiorari and prohibition under Rule 65. Petitioners alleged grave abuse of discretion on the part of the ERC in issuing its letter approving MERALCO's proposal for staggered collection of generation rate increase to cover its November 2013 generation costs.

In MERALCO's December 5, 2013 letter-request, it discussed that Section 2, Article III of the AGRA Rules allows it to automatically reflect in its customers' December 2013 billings, the full generation costs for the November 2013 supply month calculated using the adjustment formula in the AGRA Rules. MERALCO proposed to stagger its collection of the rate increase to mitigate its effects on the consumers, but concurrently requested that it be allowed to recover carrying costs which will result from its deferral of collecting the full amount. MERALCO then invoked the exception clause of the AGRA Rules which reads: "Where good cause appears, the ERC may allow an exception from any provisions of these Guidelines, if such exception is found to be in the public interest and is not contrary to law or any other related rules and regulations."66

A petition for certiorari is proper when "any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law."67

The special civil action of prohibition may be availed of when "the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law."68

Common for both remedies are the following requisites: (1) the board was exercising quasi-judicial functions; (2) its action or proceeding was done with grave abuse of discretion; and (3) there was no other plain, speedy, and adequate remedy.

Many administrative agencies are granted quasi-judicial power under their charters or statute. This refers to "the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law."69

In this case, the December 5, 2013 letter of MERALCO proposed the staggering of the collection of the generation rate with carrying costs. This letter triggered the ERC's quasi-judicial function to decide, with the governing laws as its guide, on whether these factual questions on staggered collection and carrying costs should be allowed.

As discussed above, there is no other plain, speedy, and adequate remedy.

This brings us to the last requisite, which is grave abuse of discretion. The Court has ruled that there is grave abuse of discretion warranting the issuance of a writ when "respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in contemplation of law."70 There is grave abuse of discretion when acts are done "contrary to the Constitution, the law or jurisprudence," or when they are executed in a capricious manner which amounts to lack of jurisdiction.71

In relation to administrative agencies, this Court has applied a deferential policy such that findings of administrative agencies are generally respected unless there was arbitrariness that amounted to a grave abuse of discretion:

Time and again this Court has ruled that in reviewing administrative decisions, the findings of fact made therein must be respected as long as they are supported by substantial evidence, even if not overwhelming or preponderant; that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of evidence; that the administrative decision in matters within the executive jurisdiction can only be set aside on proof of grave abuse of discretion, fraud or error of law. Petitioner ERB is in a better position to resolve petitioner Shell's application, being primarily the agency possessing the necessary expertise on the matter. The power to determine whether the building of a gasoline retail outlet in a trading area would benefit public interest and the oil industry lies with the ERB not the appellate courts.72

Clearly, the requisites for a special civil action for certiorari are all satisfied here.

III

There is no basis in declaring that the ERC committed grave abuse of discretion

The determination of any grave abuse of discretion by a government instrumentality falls within the Court's expanded power of judicial review. This is clear in the Constitution:

SECTION 1. x x x

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.73

Here, the Court finds that the ERC did not commit grave abuse of discretion in approving the staggered collection of the generation rates as stated in MERALCO's December 5, 2013 letter.

As will be further explained, the existing rules already allow the automatic adjustment of generation rates which, under the same rules, can be charged to consumers in one single bill, subject only to post-verification by the ERC. Thus, when ERC allowed the staggered recovery of the adjustment charges and, at the same time, denied the request for carrying costs-the ERC did so precisely to protect the interests of the consumers. Stated otherwise, the actions of the ERC were in accordance with the law and the rules, and results in a protection of the consumers who did not have to pay the adjustment rates in one bill.

As clearly indicated in the ERC December 9, 2013 letter-approval, the approval of the adjustment was made-as it legally is-subject to the ERC's post-verification procedures. Accordingly, there can be no basis to ascribe grave abuse of discretion to the act of the ERC in issuing the December 9, 2013 letter-approval since all it did was to follow existing guidelines on the imposition of the generation rate.

Under the EPIRA IRR, any application for rate adjustment, or for any relief affecting the consumers, must conform to certain requirements and must be subjected to a formal hearing conducted by the ERC. By way of exception, Section 4 (e), Rule 3 of the EPIRA IRR, as amended, exempts certain adjustments from this requirement, but still subject to the ERC's power to conduct post-verification of the adjusted rates to avoid over-recovery or under-recovery. The said section is hereby quoted in its entirety:

SECTION 4. Responsibilities of the ERC.

x x x x

(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.

This section 4 (e) shall not apply to Generation Rate Adjustment Mechanism (GRAM), Incremental Currency Exchange Recovery Adjustment (ICERA), Transmission Rate Adjustment Mechanism, Transmission True-up Mechanism, System Loss Rate Adjustment Mechanism, Lifeline, Rate Recovery Mechanism, Cross-Subsidy Mechanism, Local Franchise Tax Recovery Mechanism, Business Tax Recovery Mechanism, Automatic Generation Rate Adjustment Mechanism, VAT Recovery Mechanism, Incremental Generation Cost Adjustment Mechanism, and Recovery of Deferred Accounting Adjustment for Fuel Cost and Power Producers by NPC and NPC-SPUG, Provided that, such adjustments shall be subject to subsequent verification by the ERC to avoid over/under recovery of charges. (Emphasis supplied)

It must be noted that the last paragraph above listing the exempted applications was added when Section 4(e), Rule 3 of the EPIRA IRR was amended by the Department of Energy (DOE) in 2007 - an amendment that was in response to the Court's ruling in the case of National Association of Electricity Consumers for Reforms v. Energy Regulatory Commission74 (NASECORE), where the Court held that an application to impose the generation rate computed following the Generation Rate Adjustment Mechanism (GRAM) needed to comply with the publication, notice, and hearing requirements under the original Section 4(e), Rule 3. After the Court issued its Decision in NASECORE, the DOE subsequently introduced the amendment to Section 4(e), Rule 3 of the EPIRA IRR to exempt adjustments under the GRAM and the Automatic Generation Rate Adjustment Mechanism (AGRA Mechanism, which is embodied in the AGRA Rules) from the stated requirements.

The rationale behind exempting certain rate adjustments from prior notice and hearing requirements was explained by the ERC in the Court's Resolution on the motion for reconsideration in the NASECORE case:

The ERC, for its part, has raised the matter of logistical constraints vis-a-vis the requirement in Section 4(e), Rule 3 of the EPIRA IRR of conducting hearings with respect to the distribution utilities' applications to recover purchased power or fuel costs. Among others, it envisioned a scenario where, in a given year, it would allegedly be required to travel to and conduct 1,680 hearings in various localities all over the country for cost recovery filings alone. It would allegedly take the ERC 4 1/2 years to decide the 1,680 cost recovery filings made in just a year even if it would render decisions on Saturdays and Sundays. By the Court's declaration that applications of distribution utilities for adjustments to recover their purchased power or fuel adjustment costs are covered by Section 4(e), Rule 3 of the EPIRA IRR, according to the ERC, "it is being required to enforce something that cannot be accomplished, given the insurmountable time, budgetary and other logistical constraints it faces." In such a case, it would allegedly be impossible for the ERC to attend to its other equally important responsibilities and functions under the EPIRA, i.e., to ensure the successful restructuring of the electric power industry.75

Since the Court held the foregoing argument to be untenable in NASECORE, and insisted that the increases involved in the case needed to follow the notice and hearing requirement under Section 4(e), the DOE decided to amend the EPIRA IRR to explicitly exempt certain rate adjustments from the notice and hearing requirements of Section 4(e). To stress, however, these rate adjustments are nevertheless still subject to post-verification procedures to prevent over-recovery or under-recovery of the costs in question.

The said amendment introduced by the DOE - the last paragraph of the present Section 4(e), Rule 3 of the EPIRA IRR - clearly provides that the requirements of verification, public hearing, and publication, among others, are not applicable to the AGRA Mechanism and to the GRAM.

In fact, the amendment of Section 4(e), Rule 3 of the EPIRA IRR was a policy of the DOE and that its validity and constitutionality cannot be collaterally attacked in this case.76 A direct proceeding must be filed questioning the validity of the amendment, and without such, the presumption on validity of laws stands.77

Thus, as currently worded, the first three paragraphs of Section 4(e), Rule 3 on the requirements of verification, public hearing, and publication do not apply to rate adjustments in the Generation Rate as imposed through the AGRA Mechanism.

Thus, there is no basis to hold that publication and hearing should have been done in this case. To be sure, the EPIRA IRR clearly and explicitly states that these requirements do not apply to rate adjustments in the Generation Rate as imposed through the AGRA Mechanism. The ERC's December 9, 2013 letter-approval merely pertained to the staggered recovery of the rate adjustments in the Generation Rate. Consequently, it is erroneous to ascribe grave abuse of discretion on the part of the ERC on the ground of lack of publication and hearing when the ERC was simply following the last paragraph of Section 4(e), Rule 3 of the EPIRA IRR.

The dissenting opinions, however, insist on declaring the December 9, 2013 letter-approval null and void for lack of publication and hearing on the reasoning that the adjustment requested by MERALCO did not fall under the AGRA Mechanism because, in the process of proposing for a staggered payment scheme, MERALCO sought clearance to impose carrying costs.

This is error. As carrying costs are not contemplated by the AGRA Mechanism is precisely the reason why the ERC denied the request of MERALCO, in the same December 9, 2013 letter-approval, to impose the carrying costs. In other words, it is precisely because the AGRA Mechanism applies - and carrying costs are not allowed under the AGRA Rules - that the ERC denied the imposition of carrying costs.

The exempted nature of MERALCO's rate adjustment did not change simply because the proposal for staggered recovery carried with it the proposal to impose carrying costs (i.e., what MERALCO must pay its suppliers arising from a deferment or staggering of the rate adjustment). The computation of the rate adjustment had not changed, and it would have been automatically added to the bill of the consumers because this is what the law allows.

It is important to note that in the December 9, 2013 letter-approval, the ERC was clear in its directive that MERALCO should apply separately for its recovery of carrying costs. Again, this was a correct response as the computation of the Generation Rate under the AGRA Mechanism does not include carrying costs.

Considering the foregoing, the ERC cannot be said to have acted with grave abuse of discretion when it validly exercised its regulatory powers by refusing MERALCO's request to recover carrying costs. To require notice, publication, and hearing on MERALCO's December 5, 2013 letter even as the ERC had denied its application for the recovery of carrying costs is clearly unwarranted if not preposterous.

The ERC did not act with grave abuse of discretion, as it acted within the ambit of the AGRA Rules and the EPIRA in allowing MERALCO's staggered recovery

Section 1, Article I of the AGRA Rules specifies its objectives as follows:

Section 1. Objectives

These Rules have the following objectives:

1.1 To ensure appropriate recovery of various pass through costs in an efficient manner;

1.2 To put in place a fair and transparent process for the confirmation of the automatic cost adjustments implemented by the Distribution Utilities (DUs) and the true-up of other pass-through charges as approved by the ERC;

1.3 To ensure and maintain the quality, reliability, security and affordability of the supply of electric power; and

1.4 To protect the public interest as it is affected by the rates and services of the DUs.78

Under the AGRA Rules, Generation Rate is defined as "the rate associated with the purchase of power from power supplier/s and distribution utility-owned generation facility as incorporated in the approved unbundled rates or as subsequently authorized by the [ERC]."79 For distribution utilities (DUs) like MERALCO, its computation is simply the Adjusted Generation Rate (AGR) plus the Other Generation Rate Adjustments (OGA).80

In implementing the foregoing objectives as regards the Generation Rate, the AGRA Rules provide the following manner of computation and verification: the AGR takes into consideration generation costs net of deductions from Generation Companies (GenCos) from the previous month, prompt payment discounts (PPD) availed of by the DU from GenCos for the previous month, and pilferage cost recoveries from the previous month. The total of the foregoing are then divided by the total kWh purchased and generated for the previous month.81 On the other hand, the OGA are adjustments deemed necessary by the ERC after prior verification and confirmation and includes the Generation Rate Over/Under Recovery (GOUR), which the DU shall compute. Unlike the components of the AGR, however, the OGA may only be added after they are verified and confirmed by the ERC.82

This Generation Rate as computed through the formula above is mandated to be calculated and billed each calendar month by the DU.83

In compliance with Section 4(e), Rule 3 of the EPIRA IRR, the verification process for the computed Generation Rate is as follows: starting on the month following the inclusion in the customers' bills, the DU shall provide the ERC with all the calculations and information related to the AGRA Mechanism including, but not limited to, the following documents:

1. Invoices, debit/credit memos, and official receipts from power suppliers, National Transmission Corporation (TRANSCO)/National Grid Corporation of the Philippines (NGCP);

2. Actual consumer bills per class;

3. Sworn statement if it has its own generation facility;

4. A monthly generation report for the DU-owned generation facility, if applicable; and

5. A sworn and notarized statement on PPD availed from power supplier/s, PPD extended to end-users and pilferage recoveries enjoyed by the DU.84

The ERC shall then verify the recovery of generation cost at least every six months and it is during this semi-annual verification process that the ERC establishes the adjustments to be included in the OGA which shall be implemented in the succeeding six-month period to reflect any over or under recovery.85

As illustrated above, the Generation Rate as computed through the formula above is mandated to be calculated and billed each calendar month by the DU - which in this case is MERALCO. It is against this backdrop that the ERC's approval of the staggered recovery of the Generation Rate of MERALCO was well within the ambit of the AGRA Rules.

Section 1, Article VIII of the AGRA Rules provides the exception clause, thus:

ARTICLE VIII
Final Provisions

Section 1. Exception Clause. - Where good cause appears, the ERC may allow an exception from any provisions of these Guidelines, if such exception is found to be in the public interest and is not contrary to law or any other related rules and regulations.

This provision under the AGRA Rules specifically gives the ERC the power and discretion to allow an exemption from the AGRA Mechanism - specifically, on the requirement that the DU should bill the Generation Rate as computed each calendar month - where good cause appears and if such is found to be in the public interest and is not contrary to law or any other related rules and regulations.86

Here, the act of the ERC in exempting MERALCO from the requirement to bill everything in the next calendar month and granting its proposal to stagger its recovery, falls squarely within the exception clause under the AGRA Rules, especially because the impetus for staggering its collection was "[t]o mitigate the effects of the abrupt [rate] increase."87

If the ERC did not approve the staggered recovery, MERALCO, consistent with the AGRA Mechanism, could have imposed the Generation Rate as a whole in the applicable billing period.

In other words, applying the Generation Rate of MERALCO as computed through the AGRA Mechanism, i.e., without MERALCO's proposed staggered collection, would have prejudiced the consumers. Put simply, the staggered recovery protected the interest of the consumers, and this undoubtedly falls under the "good cause" exception contemplated in Section 1, Article VIII of the AGRA Rules, especially since it was in the public interest and was not contrary to law or any related rules and regulations.

The staggering of MERALCO's recovery merely affected the when of shouldering the burden of increased cost, which ultimately falls on the end users, but it did not change the nature of the said increase, which is ultimately a rate adjustment under the AGRA Rules, not subject to the requirements under Section 4(e), Rule 3 of the EPIRA IRR.

The ERC thus used its powers to ensure consumer protection88 when it put specific measures in its approval of the staggered recovery by MERALCO. Following the safeguards already existing in the AGRA Rules, the ERC was very specific that its approval of the staggered recovery did not mean the ERC was already confirming the basis of MERALCO's computation, but that it was still subject to the confirmation and post-verification proceedings as outlined above.

Thus, the Court cannot see how the ERC can be said to have acted with grave abuse of discretion when it approved MERALCO's proposal for the staggered recovery of its generation cost - for the benefit of the consuming public.

Associate Justice Marvic M.V.F. Leonen, however, argues that the staggered scheme shows a complexity beyond otherwise routine adjustment and that this was the reason an opportunity to hear from others was vital.89 The Court disagrees.

As mentioned by Justice Leonen, "there is grave abuse of discretion warranting the issuance of a writ when [the] 'respondent judge, tribunal[,] or board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in contemplation of law.' There is grave abuse of discretion when acts are done 'contrary to the Constitution, the law or jurisprudence,' or when they are executed in a capricious manner that amounts to lack of jurisdiction."90

Evasion of a positive duty, therefore, as a form of "grave abuse of discretion" necessitates that the act be done contrary to the Constitution, the law or jurisprudence, or even rules and regulations. Here, as mentioned, the ERC's actions were done within the ambit of the AGRA Rules, not contrary thereto. Instead of evading its positive duty, the ERC, in fact, acted in such a manner that is compliant with the law, and the rules and regulations applicable.

The ERC's act of not construing MERALCO's proposal in the same way the dissents are treating it, i.e., as a petition for a rate adjustment under Section 4(e), Rule 3 of the EPIRA IRR, is not an act that is tantamount to grave abuse of discretion as described above. The mere fact that the ERC had treated MERALCO's proposal "less prudently" or differently does not taint the ERC's act with grave abuse of discretion because the ERC's response to MERALCO's proposal fell squarely within the ambit of the AGRA Rules and its exception clause. To reiterate, MERALCO's proposal pertained to the recovery of its generation rates, which is governed by the AGRA Rules. Applying the exception clause in the AGRA Rules, MERALCO's proposal for the staggered recovery of its generation rates was approved by the ERC. Thus, even assuming that the dissents' suggested act is "more prudent," this does not change the fact that the ERC's act was made merely pursuant to and within the bounds created by the AGRA Rules.

Justice Leonen insists that the Court may consider what would have been more prudent actions as these actions were "well-within not only the [ERC's] competence but, more importantly, its mandate."91 He adds:

x x x It is a definite duty devolved upon the [ERC] as a regulatory mechanism to "ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability." This is a positive duty enjoined by law, evasion of which or refusal to perform it amounts to grave abuse of discretion. To carry it out, the [ERC] is vested with a wide array of powers and prerogatives.

It is reasonable to inquire how the [ERC] - with many prerogatives at its call and with vast material, human, and intellectual resources available to it - endeavored to fulfill its mandate. So too, it is reasonable to impugn the [ERC] for acts that demonstrate how it acted in a manner quite contrary to its mandate. To recall, the [ERC] took all of a single working day to favorably act on MERALCO's letter, foreclosed any chance of considering countervailing views or approaches, tied itself to nothing but the three options MERALCO itself proposed, and nipped an otherwise evaluative process in its proverbial bud. It was never even critical of the calculated value of P9.107 per kWh. These circumstances speak volumes about how [the ERC] abandoned its tasks. Its course of action demonstrates infidelity to duty and grave abuse of discretion.92

The foregoing reasoning is misplaced.

The fact that the ERC possesses various and vast powers, and in the exercise of its discretion decided not to exercise the same, does not automatically mean that it evaded a "positive duty" - and, therefore, was guilty of grave abuse of discretion.

The ERC's duty is to use its powers within the ambit of the laws and rules applicable to the transaction. As shown above, the staggered recovery of generation rates, its approval, and its confirmation and verification are all within the coverage of the AGRA Rules. It is not for the ERC to use its myriad of powers but, in the process, disregard the AGRA Rules and require an entirely different procedure for the recovery of generation rates. Its myriad of powers exists and should be used alongside the existing rules and regulations applicable to a specific transaction. Verily, the laws, as well as the rules and regulations, are what comprise the metes and bounds of ERC's "positive duty." To go against the AGRA Rules and the EPIRA IRR, when these are clearly applicable, would be the act that constitutes grave abuse of discretion.

As stated above, the AGRA Rules were meant to be a balancing act among ensuring appropriate recovery of costs, fair and transparent process of confirmation of automatic costs adjustments, ensuring quality, reliable, secure, and affordable supply of electric power, and protecting the public interest. As much as the protection of the public is an important objective of the ERC, it is equally important that participants in the power sector can rely on the applicability of certain rules when the circumstances call for their application.

For her part, Associate Justice Amy C. Lazaro-Javier is of the view that the ERC could not have completed the investigation in four to five days.93 Investigation should have been done and what the ERC did was not fair, principled, thorough, competent, and independent.94 Justice Leonen even characterized the ERC to have "fallen hook, line, and sinker for a monolithic business interest's self-indulgent representation."95

The foregoing are but fears that do not find support in the situation at hand. The ERC was not rendered nor did it render itself powerless and inert because it approved the staggered recovery of the Generation Rate. As shown above, the AGRA Rules include a verification process following the imposition of the Generation Rate. This is even echoed by the ERC in its December 9, 2013 letter-approval when it said that the approval was still subject to confirmation and post-verification proceedings.

The AGRA Rules provide a framework that both the ERC and the stakeholders can rely on as to the computation and imposition of the Generation Rate. The Court understands that for the period covered by this case, the cost was higher than usual. However, this is not sufficient to abandon the AGRA Rules when they provide a mechanism for the ERC to confirm and verify the basis of MERALCO's imposition of a higher Generation Rate. Neither should the ERC's act be called grave abuse of discretion just because the confirmation and verification process were intended to be done after and not before.

To emphasize, the confirmation and post-verification process are expressly provided in the AGRA Rules. Whether the ERC could have "done better," as what the dissents would have wanted the Court to undertake, is an unwarranted journey into the functions of the administrative body that has the expertise to regulate the power industry. Even if it were conceded that the ERC could have done better, that it did not do so does not mean that the ERC committed grave abuse of discretion - as it was, again, simply following the AGRA Rules.

Following the AGRA Rules, the Generation Rate, as staggered, was not, for all intents and purposes, final.ℒαwρhi৷ Indeed, the ERC, as regulator, has a myriad of powers such as those in Section 43(k) of the EPIRA which empowers it to take measures to penalize abuse of market power, cartelization, and anti-competitive or discriminatory behavior of any participant in the energy industry. The AGRA Rules also provide the documents that MERALCO was required to submit to support the Generation Rate. All these things considered, the ERC was therefore armed and capable in ensuring the correctness and validity of MERALCO's Generation Rate and by no means has it accepted MERALCO's computation as gospel truth when it allowed its staggered imposition.

The ERC's actions were in accordance with its mandate under the EPIRA

Justice Lazaro-Javier posits that the issue in this case pertains not to what the decision of the ERC was, "but how it should have acted on it."96 Justice Lazaro-Javier essentially faults the ERC for supposedly not exercising its discretion despite the "special circumstances" present in this case, i.e., exponential increase in the charges.97

It is not the Court's place to supplant its wisdom for that of a regulatory agency. Vast as its powers may be, it is not part of the Court's constitutional mandate to dictate upon regulatory agencies on what to do in each situation in the absence of any law or rule that would serve as guide. It is not the Court's place to dictate on the regulatory agency on its course of action when its action is consistent with the agency's guidelines and framework. The Court is neither a policy maker nor a regulator.

Section 43(k) of the EPIRA gives the ERC the power to monitor and take measures to penalize market power, cartelization, and anti-competitive or discriminatory behavior of any participant in the energy industry. There is no dispute that this power, as well as all the other powers given to the ERC as a regulator, allows the ERC to review, confirm, and verify the costs as imposed by MERALCO. Again, such powers, however, should be read in consonance with the AGRA Rules and the mechanism they provide.

As stated above, MERALCO took it upon itself to propose in the December 5, 2013 letter the staggered recovery of the Generation Rate, as computed, even if it was entitled to collect the same in full in one bill under the AGRA Mechanism. MERALCO made this proposal in order "[t]o mitigate the effects of the abrupt [rate] increase"98 - for the benefit of the consumer.

In response, the ERC's December 9, 2013 letter-approval: (1) approved MERALCO's proposed staggered collection; (2) denied its recovery of carrying costs; and (3) emphasized that MERALCO's generation costs are still subject to confirmation and post-verification proceedings under the AGRA Rules. Clearly, therefore, the ERC acted well within the ambit of the EPIRA IRR and the AGRA Rules when it issued the December 9, 2013 letter-approval. Without question, the ERC acted within the confines of its regulatory powers and cannot therefore be said to have acted with grave abuse of discretion.

Grave abuse of discretion, not the inherent wisdom or efficiency of a policy or course of action, remains the standard when it comes to the Court's review of the acts of government agencies. As illustrated, there is no grave abuse of discretion here as the ERC's actions were well justified under the AGRA Rules and the EPIRA IRR.ℒαwρhi৷ It is highly absurd for public officers to be adjudged to have acted with grave abuse of discretion when they were clearly acting within the bounds of discretion granted to them by the law and rules. It is arbitrary, if not outright judicial tyranny, for the Court to declare something as having been issued with grave abuse of discretion when it simply disagrees with the course of action which the agency or public officers have taken.

Considering that the ERC has not been shown to have violated any law or issuance in the December 9, 2013 letter-approval, a finding of grave abuse of discretion has therefore no leg to stand on. Accordingly, declaring as null and void the ERC's December 9, 2013 letter-approval for having been issued with grave abuse of discretion is clearly not warranted.

IV

The March 3, 2014 ERC Order is nullified

The ERC filed a manifestation and motion attaching a copy of its March 3, 2014 Order in the case docketed as ERC Case No. 2014-021MC.

Notably, the ERC rendered this March 3, 2014 Order even if it was still in the process of "completing its findings on the possible abuse of market power which could have negatively impacted on the prices of electricity in the market."99

The March 3, 2014 Order acknowledged that it was based on an unfinished investigation,100 and yet it included a fallo voiding the Luzon WESM prices and imposing regulated prices instead.101

According to respondents, the ERC also did not notify the affected parties about ERC Case No. 2014-021MC, in violation of their right to due process. Most of them manifested before this Court that they filed petitions to intervene102 in the ERC case, and motions for reconsideration of the March 3, 2014 Order,103 to challenge its premature and erroneous findings.

Thus, the March 3, 2014 ERC Order is nullified considering the circumstances of its issuance.

WHEREFORE, premises considered, the March 3, 2014 Order of the Energy Regulatory Commission is declared NULL and VOID. The petition in G.R. No. 210502 is granted insofar as it prayed for the dismissal of the petitions in G.R. Nos. 210245 and 210255, as these are hereby DISMISSED. The December 9, 2013 Order of the Energy Regulatory Commission is AFFIRMED.

SO ORDERED.

Gesmundo, C. J., I join Justice Leonen's dissent.

Hernando, Carandang, Inting, M. Lopez, and Gaerlan, JJ., concur.

Perlas-Bernabe, J., no part.

Leonen, J., I dissent. See separate opinion.

Caguioa,* J., no part.

Lazaro-Javier, J., Pls. see Dissenting Opinion.

Zalameda, J., I join the dissent of J. Leonen.

Rosario, J., I am joining the dissent of Justice Leonen.

Footnotes

* No part. (J. Caguioa's law firm participated as the counsel for two of the parties)

1 Rollo (G.R. No. 210245), Vol. I, pp. 33-35.

2 Id. at 33.

3 Id. at 33-34.

4 Later replaced by ERC Resolution No. 16, Series of 2009 adopting the RULES GOVERNING THE AUTOMATIC COST ADJUSTMENT AND TRUE-UP MECHANISMS AND CORRESPONDING CONFIRMATION PROCESS FOR DISTRIBUTION UTILITIES, July 13, 2009.

5 Id. at 34-35.

6 Id. at 38.

7 Id. at 38-39.

8 Id. at 3-40.

9 AN ACT ORDAINING REFORMS IN THE ELECTRIC POWER INDUSTRY, AMENDING FOR THE PURPOSE CERTAIN LAWS AND FOR OTHER PURPOSES, approved on June 8, 2001.

10 Rollo (G.R. No. 210245), Vol. I, p. 25.

11 Rollo (G.R. No. 210255), Vol. I, pp. 3-42.

12 Id. at 15.

13 Rollo (G.R. No. 210245), Vol. I, pp. 42-45.

14 Id. at 44.

15 Rollo (G.R. No. 210502), Vol. I, pp. 3-141.

16 Id. at 3.

17 Rollo (G.R. No. 210245), Vol. I, pp. 522-524.

18 Id. at 66-67.

19 Id. at 682A-682D.

20 Id., Vol. XXVII, pp. 17242-17297.

21 Rollo (G.R. No. 210502), Vol. IX, pp. 7175-7177.

22 Rollo (G.R. No. 210245), Vol. XXVII, pp. 17057-17062.

23 Id. at 17069-17103.

24 Id. at 17058-17062.

25 Id. at 17100-17101.

26 Id. at 17153-17156.

27 Subject-matter jurisdiction as defined under Batas Pambansa (BP) Blg. 129. Section 9 of the said law refers to the jurisdiction of the Court of Appeals, Sections 19 to 23 refer to the jurisdiction of the Regional Trial Court, while Sections 32 to 36 define the jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts. Presidential Decree (PD) No. 1083 define the jurisdiction for Shari'a District and Circuit Courts. PD No. 1606, as amended by R.A. No. 8249, states the jurisdiction of the Sandiganbayan. R.A. No. 1125, as amended by R.A. No. 9282, defines the jurisdiction for the Court of Tax Appeals.

28 Generally, the type of action could either be civil or criminal. BP Blg. 129, as amended by R.A. No. 7691, assigns the court of origin for civil cases based on the amount of the claim involved. Section 19 of BP Blg. 129 refers to the jurisdiction in civil cases of the Regional Trial Court, while Section 33 for Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

29 Procedure or remedies that could be availed of with this Court is defined in Sections 1 and 5(1) and (2), Article VIII of the Constitution. An ordinary litigant's modes of seeking relief to this court is either through appeal by certiorari under Rule 45 of the Rules of Court, review of judgments and final orders or resolution of the Commission on Elections or Commission on Audit under Rule 64 or certiorari prohibition, and mandamus via Rule 65. Extraordinary writs such as habeas corpus, amparo, data or kalikasan also find original jurisdiction in this Court.

30 Jurisdiction over the defendant in a civil case is acquired through service of summons (RULES OF COURT, Rule 14). Jurisdiction over the accused in a criminal case is either through voluntary appearance or through a legally effected arrest (RULES OF COURT, Rule 113).

31 CONSTITUTION, Art. VIII, Sec. 2.

32 Guy, et al., v. Ignacio, 636 Phil. 689, 703-704 (2010). Citations omitted.

33 263 Phil. 352 (1990).

34 Id. at 358. Citation omitted.

35 SEC. 43. Functions of the ERC. - x x x

x x x x

(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.

All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published at least twice for two successive weeks in two (2) newspapers of nationwide circulation.

36 "Transmission Charge" refers to the regulated cost or charges for the use of a transmission system which may include the availment of ancillary services. (R.A. No. 9136, Sec. 4[aaa]; see also Sec. 19.)

37 "Distribution Wheeling Charge" refers to the cost or charge regulated by the ERC for the use of a distribution system and/or the availment of related services. (R.A. No. 9136, Sec. 4[p]; see also Sec. 24)

38 "Retail Rate" refers to the total price paid by end-users consisting of the charges for generation, transmission and related ancillary services, distribution, supply and other related charges for electric service. (R.A. No. 9136, Sec. 4[ss]; see also Sec. 25.)

39 Section 1. Applications for a General Change in Rate Schedules or Revision of Rates. - Applications for a general change in rate schedules shall indicate the revised rates applied for and the reasons cited to justify such revision or adjustment. Rate applications of distribution utilities that are not yet under performance-based regulation shall conform to the appropriate form in the attached ERC Standard Forms.

40 ERC's Rules of Practice and Procedure, Rule 6, Secs. 1 and 2.

41 Section 4. Petition. - By means of a petition, a person other than an applicant or complainant, petitions the Commission for affirmative relief under any statute or other authority delegated to the Commission. It shall state clearly and concisely the petitioner's grounds of interest in the subject matter, the facts relied upon, and the relief sought, and shall cite by appropriate reference the statutory provision or other authority relied upon for relief. If the relief sought affects the rights of other persons, it shall implead all these other persons as respondents and state their complete names and addresses.

42 CONSTITUTION, Art. VIII, Sec. 1.

43 United States v. Western Pacific R. Co., 352 U.S. 59, 63 (1956). Italics supplied.

44 Rosales v. Court of Appeals, 247-A Phil. 437, 443-444 (1988). Citations omitted.

45 Abe-Abe v. Judge Manta, 179 Phil. 416, 424 (1979). Citation omitted.

46 As enumerated in Republic v. Lacap, 546 Phil. 87, 97-98 (2007). Citations omitted. One of the earlier cases that compiled the list of exceptions to the doctrine of exhaustion of administrative remedies is Sunville Timber Products, Inc. v. Judge Abad, 283 Phil. 400 (2007). Included in the exceptions enumerated in Sunville is when the subject of the controversy is private land. Lacap included more grounds when it considered grounds (c), (h), and (i).

47 Rollo (G.R. No. 210245), Vol. I, pp. 656-659; rollo (G.R. No. 210255), Vol. II, pp. 676-679.

48 R.A. No. 9136, Sec. 78.

49 263 Phil. 57 (1990).

50 Id. at 64.

51 National Development Company, et al., v. Collector of Customs, 118 Phil. 1265 (1963).

52 Id.

53 R.A. No. 9209, Sec. 1.

54 Rollo (G.R. No. 210245), Vol. I, pp. 651-656.

55 Id., Vol. XXIII, pp. 14784-14811.

56 Id., Vol. XXV, pp. 15689-15752.

57 "Contestable Market" refers to the electricity end-users who have a choice of a supplier of electricity as may be determined by the ERC in accordance with this Act. (Sec. 4[h], EPIRA.)

58 "Retail Competition" refers to the provision of electricity to a Contestable Market by Suppliers through Open Access (Rule 4[vvv], EPIRA Implementing Rules and Regulations [IRR].)

59 PEPOA Memorandum, rollo (G.R. No. 210245), Vol. XXIII, p. 14787.

60 TMO and TLI Memorandum, id., Vol. XXIV, p. 15501.

61 TSN, Oral Arguments, January 21, 2014, pp. 86-87.

62 MERALCO Memorandum, rollo (G.R. No. 210245), Vol. XXIII, p. 14998; TMO and TLI Memorandum, rollo (G.R. No. 210245), Vol. XXIV, pp. 15500-15502; SMEC Memorandum, rollo (G.R. No. 210245), Vol. XXV, pp. 15722-15723.

63 ERC and DOE Memorandum, rollo (G.R. No. 210255), Vol. XXIV, p. 22368.

64 TSN, Oral Arguments, January 21, 2014, p. 101.

65 Id. at 70-71.

66 AGRA Rules, Art. VIII, Sec. 1.

67 RULES OF COURT, Rule 65, Sec. 1.

68 Id., Sec. 2.

69 Smart Communications, Inc. v. National Telecommunications Commission, 456 Phil. 145, 156 (2003).

70 Sps. Delos Santos v. Metropolitan Bank and Trust Company, 698 Phil. 1, 16 (2012).

71 Freedom from Debt Coalition v. Energy Regulatory Commission, 476 Phil. 134 (2004), citing Republic v. COCOFED, 423 Phil. 735 (2001) and Tañada v. Angara, 338 Phil. 546 (1997).

72 Energy Regulatory Board v. Court of Appeals, 409 Phil. 36, 53-54 (2001).

73 CONSTITUTION, Art. VIII, Sec. 1.

74 530 Phil. 543 (2006).

75 Id. at 565-566. Citation omitted.

76 See Vivas v. The Monetary Board of the Bangko Sentral ng Pilipinas, et al., 716 Phil. 132, (2013), citing Gutierrez v. Department of Budget and Management, 630 Phil. 1 (2010).

77 Id., citing Dasmariñas Water District v. Monterey Foods Corp., 587 Phil. 403 (2008).

78 ERC Resolution No. 16, Series of 2009.

79 Id., Art. 1, Sec. 3.10.

80 Id., Art. 2, Sec. 2.

81 Id.

82 Id.

83 Id.

84 Id., Art. 3, Sec. 1.1 and 1.2.

85 ERC GUIDELINES FOR THE AUTOMATIC ADJUSTMENT OF GENERATION RATES AND SYSTEM LOSS RATES BY DISTRIBUTION UTILITIES, October 13, 2004, Art. V, Sec. 2.

86 Id., Art. VIII, Sec. 1.

87 Rollo (G.R. No. 210245), Vol. I, p. 34.

88 R.A. No. 9136, Sec. 2(j).

89 Dissenting Opinion of Justice Leonen, p. 46.

90 Id. at 41.

91 Id. at 65.

92 Id.

93 Dissenting Opinion of Justice Lazaro-Javier, p. 16.

94 Id. at 20.

95 Dissenting Opinion of Justice Leonen, p. 2.

96 Dissenting Opinion of Justice Lazaro-Javier, p. 1. Emphasis supplied.

97 Id. at 11-12.

98 Rollo (G.R. No. 210245), Vol. I, p. 34.

99 Rollo (G.R. No. 210245), Vol. XXVII, p. 17089.

100 Id. at 17073.

101 Id. at 17100-17101.

102 TLI Counter-Manifestation and Urgent Motion dated March 26, 2014, p. 4, rollo (G.R. No. 210245), Vol. XXVIII, p. 17592; AP Renewables Counter-Manifestation dated April 3, 2014, p. 2, rollo (G.R. No. 210245), Vol. XXVII, p. 17299.

103 SNAP Magat Counter-Manifestation dated April 4, 2014, p. 2, id. at 17372; SMEC Manifestation dated April 3, 2014, p. 2, id. at 17362.

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