G.R. No. 228588. March 21, 2021
PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY, SAN BEDA COLLEGE ALABANG INC., ATENEO DE MANILA UNIVERSITY, AND RIVERBANKS DEVELOPMENT CORPORATION, PETITIONERS,
LEONEN, J.:
“be germane to the objects and purposes of the law and . . . in
conformity with, the standards prescribed by the law”[1] to be held as a valid exercise of delegated legislative authority.
The Department of Energy is the agency tasked with formulating rules
and regulations that will animate the policy objectives of Republic Act
No. 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA). The
Energy Regulatory Commission, in turn, is tasked with implementing the
EPIRA rules and regulations as formulated and issued by the Department
of Energy. It is not empowered to supplant the Department of Energy’s
policies, rules, and regulations with its own issuances.[2]
This Court resolves these consolidated Petitions from electricity
end-users and electric cooperatives under EPIRA. They claim that
Department of Energy Circular No. DC2015-06-0010 and Energy Regulatory
Commission Resolution Nos. 5, 10, 11, and 28, all series of 2016, are
unconstitutional for usurping legislative authority, violating the right
to due process, equal protection clause, and non-impairment clause, as
well as being an unreasonable exercise of police power.
On June
8, 2001, the EPIRA was signed into law. It provided “a framework for the
restructuring of the electric power industry, including the
privatization of the assets of [National Power Corporation], the
transition to the desired competitive structure, and the definition of
the responsibilities of the various government agencies and private
entities.”[3]
In line
with the EPIRA, the Department of Energy and the Energy Regulatory
Commission issued several administrative issuances allowing electricity
end-users in the contestable market to freely choose from the qualified
retail electricity suppliers, including local retail electricity
suppliers and distribution utilities within their franchise area.[4]
On June 19, 2015, the Department of Energy issued Department Circular No. DC2015-06-0010[5]
(Department Circular), which provided policies for the full
implementation of Retail Competition and Open Access. The Department of
Energy noted that only about 35% of the total number of contestable
customers had chosen their retail electricity supplier and registered
with the Philippine Electricity Market Corporation.[6] This slow movement impacted its preparation of the Distribution Development Plan, particularly in demand forecasting.[7]
Thus, the Department Circular mandated all contestable customers with a
monthly average peak demand of one megawatt (MW) which were still
sourcing electricity from distribution utilities, to secure a retail
supply contract from any of the following energy suppliers by June 25,
2016:
Section 1. Compliance to Full Contestability by Contestable Customers with Average Demand of One (1) MW and Above.
All [Contestable Customers], which are currently being served by
their franchised [Distribution Utilities], are mandated to secure their
respective [Retail Service Contracts] no later than 25 June 2016, with
any of the following:
currently owning and operating power generation facilities, duly issued a
Certificate of Compliance (COC) by the [Energy Regulatory Commission]
and is offering to serve the power requirements of any [Contestable
Customers]: Provided, That it secures a [Retail Electricity Supplier] license from the [Energy Regulatory Commission];
As used in this Circular, a Prospective Generation Company shall refer
to any Person or Entity that power generation project is undergoing
construction or planned and has been included in the [Department of
Energy’s] Power Development Plan (PDP);Any [Retail Supply Contract] that the [Contestable Customer]
entered into with a Prospective Generation Company shall be deemed
compliant with the Mandatory Contestability prescribed in this Circular;The [Contestable Customer] and its counterparty [Retail
Electricity Supplier], Generation Company or Prospective Generation
Company shall submit to [the Department of Energy] and [Energy
Regulatory Commission] their signed [Retail Supply Contract] for
assessment, monitoring, policy and rule-making purposes particularly on
the timelines and effectivity date of the [Retail Supply Contract].[8] (Emphasis supplied)
The Department Circular likewise gave a similar deadline to
end-users with a monthly average peak demand ranging from 750 kilowatt
(kW) to 999 kW to secure a retail supply contract with a retail
electricity supplier.[9] It
lowered the contestability threshold from one MW to below 750 kW and
directed end-users with an average demand of 501 kW to below 750 kW to
choose their retail electricity suppliers by June 26, 2018, subject to
the Energy Regulatory Commission’s evaluation of the retail market’s
performance.[10]
The
Department Circular also directed the Energy Regulatory Commission to
issue the necessary rules and procedures to resolve any displaced
contract capacity or energy that the distribution utilities may
experience due to the mandatory migration of their customers to Retail
Competition and Open Access.[11]
On March 8, 2016, the Energy Regulatory Commission issued Resolution No. 5[12]
(ERC Resolution No. 5), which adopted the Rules Governing the Issuance
of Licenses to Retail Electricity Suppliers and Prescribing the
Requirements and Conditions Therefor.[13] Its Section 3 provided those that may be retail electricity suppliers:
Section 3. Who may become a [Retail Electricity Supplier]
In accordance with the Act and its [Implementing Rules and
Regulations], any of the following may become a [Retail Electricity
Supplier];
- Generation Company or Affiliate thereof;
- An Affiliate of a [Distribution Utility] with respect to the
latter’s Contestable Market within or outside its Franchise Area,
subject to restrictions imposed by the [Energy Regulatory Commission] on
market share limits and the conduct of business activities;- Retail Aggregators;
- An Independent Power Producer (IPP) Administrator; and
- Any other Person intending to engage in the selling,
brokering[,] or marketing of electricity to the Contestable Market,
consistent with the Act and its [Implementing Rules and Regulations].The [Energy Regulatory Commission] shall not be precluded from
imposing additional restrictions contained in separate rules issued, or
still be issued by it. The [Energy Regulatory Commission], for
justifiable reasons, may likewise exempt compliance by a [Retail
Electricity Supplier] license holder to specific license conditions,
taking into account the actual operations of such [Retail Electricity
Supplier] license holder.[14]
On May 12, 2016, the Energy Regulatory Commission issued Resolution No. 10[15] (ERC Resolution No. 10), which adopted the Revised Rules for Contestability.[16]
It mandated end-users with an average monthly peak demand of at least
one MW to enter into a retail supply contract with a retail electricity
supplier by December 26, 2016. It also mandated end-users with an
average monthly peak demand of at least 750 kW to enter into a retail
supply contract with a retail electricity supplier by June 26, 2017. It
then allowed for retail aggregation by June 26, 2018, in which
electricity suppliers may contract with groups of end-users with an
aggregate demand of at least 750 kW per group.[17]
Also on May 12, 2016, the Energy Regulatory Commission issued Resolution No. 11[18]
(ERC Resolution No. 11), which imposed restrictions on distribution
utilities and retail electricity suppliers in the Competitive Retail
Electricity Market. It forbade distribution utilities from participating
as suppliers in the contestable market and gave local retail
electricity suppliers three years to wind down their business. It also
barred them from entering into new retail supply contracts:
NOW THEREFORE, pursuant to its mandate to promote competition
and protect customer interests and to establish the ultimate goal of
achieving a robust and competitive retail electricity market, the ERC
hereby RESOLVES to ADOPT the following:
within three (3) years from effectivity [of] the instant Resolution.
Existing Retail Supply Contracts (RSCs) entered into with their
respective Contestable Customers shall remain valid until the expiration
of the said contracts subject to the winding down period. Accordingly,
no new RSCs shall be signed and executed after the effectivity of this
Resolution.
the Local RES shall continue to comply with all reportorial requirements
prescribed by the Commission.
be allowed to supply more than thirty percent (30%) of the total average
monthly peak demand of all contestable customers in the [Competitive
Retail Electricity Market]. The level demand shall be determined by the
[Energy Regulatory Commission] on a quarterly basis which should be
posted on the website every 30th of the month following the quarter.
be allowed to transact more than fifty percent (50%) of the total energy
transactions of its Supply business, with its affiliate Contestable
Customers.Any [Retail Electricity Supplier] not in compliance with this
safeguard shall be given a period of two (2) years from 26 December 2016
to comply therewith: Provided further, That in no case shall it
be allowed to execute any [Retail Service Contracts] with Affiliates,
nor renew its [Retail Service Contracts] with the said affiliates unless
such execution or renewal no longer amounts to a breach of the
aforementioned safeguard.[19]
On November 15, 2016, the Energy Regulatory Commission issued Resolution No. 28[20]
(ERC Resolution No. 28), which amended the mandatory contestability
date for end-users with an average monthly peak demand of at least one
MW. Originally set on December 26, 2016 per the Revised Rules for
Contestability, the deadline was moved to February 26, 2017.[21]
However, ERC Resolution No. 28 did not amend the mandatory
contestability deadlines for end-users with an average monthly peak
demand of at least 750 kW and 500 kW.
On December 27, 2016,
petitioners Philippine Chamber of Commerce and Industry, San Beda
College Alabang, Inc., Ateneo de Manila University, and Riverbanks
Development Corporation filed a Petition for Certiorari, Prohibition,
and Injunction[22] (First
Petition) against respondents Department of Energy, Energy Regulatory
Commission, and their respective officers. Petitioners claim to be
end-users that have migrated to the contestable market to be able to
freely choose from the retail electricity suppliers, including local
retail electricity suppliers and distribution utilities, within their
franchise area.[23]
The First Petition asserts that under Section 31 of the EPIRA, any
migration of electricity end-users to the contestable market is
voluntary,[24] as supported by congressional deliberations.[25]
It argues that respondents abandoned the clear policy of the EPIRA,
which was to promote competition through greater end-user choice,[26] when they issued the “patently unconstitutional” Department Circular, as well as ERC Resolution Nos. 5, 10, 11, and 28.[27]
The First Petition emphasizes that under ERC Resolution No. 10, an
end-user that fails to enter into a retail supply contract before the
deadline will be physically disconnected from its distribution utility.
The same resolution also prohibited distribution utilities from
supplying electricity, except as suppliers of last resort, which would
“compel them to pay a 10% premium over the higher contract price and
[Wholesale Electricity Spot Market] price.”[28] It also prohibited local retail electricity suppliers from entering into new retail supply contracts.[29]
The First Petition alleges that because of the assailed issuances,
petitioners are forced to abrogate their current electricity supply
contracts and negotiate on an unequal footing with the retail
electricity suppliers accredited by respondent Energy Regulatory
Commission.[30]
On January 17, 2017,[31] this Court directed respondents to comment on the First Petition.
On January 30, 2017, Silliman University filed its own Petition for Certiorari[32] (Second Petition), also seeking to nullify the assailed Department Circular and ERC Resolution No. 10, as amended.[33]
Petitioner Silliman University narrates that it received its
Certificate of Contestability from respondent Energy Regulatory
Commission on October 12, 2012. Pursuant to the deadline imposed in the
Department Circular, it sought proposals from retail electricity
suppliers, but failed to receive any firm proposals at a competitive
rate. On April 12, 2016 it wrote respondent Energy Regulatory
Commission, asking to be exempted from being a mandatory contestable
customer.[34] When this request was denied,[35] it filed this Second Petition.
The Second Petition alleges that the Department Circular and ERC
Resolution No. 10 are both invalid forms of subordinate legislation
since they exceeded the mandate of the law they sought to implement. It
points out that the EPIRA does not compel contestable customers to enter
into retail supply contracts, as its language is merely permissive; on
the other hand, the assailed issuances force contestable customers to
contract with retail electricity suppliers.[36]
The Second Petition asserts that the Department Circular and ERC
Resolution No. 10 went beyond the executive’s power to regulate
commerce.[37] It adds that by
forcing contestable customers to enter into contracts with the 23
licensed retail electricity suppliers, respondents are creating a
virtual oligopoly, which is contrary to the principles of free
enterprise and anti-trust under the Constitution.[38]
Finally, the Second Petition claims that as a shareholder of Negros Oriental Electric Cooperative 2,[39]
petitioner enjoys rights as a co-owner and should not be forced to
enter into a retail supply contract when it could patronize its own
electric cooperative.[40]
On February 16, 2017, petitioners Batangas II Electric Cooperative,
Inc., Peninsula Electric Cooperative, Inc., Camarines Sur I
Electric Cooperative, Inc., Iloilo I Electric Cooperative, Inc.,
Aklan Electric Cooperative, Inc., Capiz Electric Cooperative,
Inc., Antique Electric Cooperative, Inc., and Leyte III Electric
Cooperative, Inc., all registered electric cooperatives, filed a
Petition for Certiorari, Prohibition, and Injunction[41]
(Third Petition) against respondents. They likewise seek to nullify
the Department Circular and ERC Resolution Nos. 5, 10, 11, and 28.[42]
The Third Petition argues that under the EPIRA’s Retail Competition
and Open Access, end-users that switch to the contestable market may
choose their electricity supplier from either a retail electricity
supplier or a local retail electricity supplier. It stresses that before
the assailed issuances, local retail electricity suppliers of
distribution utilities or electric cooperatives were not required to
obtain licenses to operate within their existing franchise area.
However, in defiance of the EPIRA, the assailed issuances prohibited
them from contracting with contestable customers, even within their
franchise areas.[43]
The Third Petition underscores that such prohibition will cause electric
cooperatives to lose some of their current clients and future business
opportunities,[44] depriving them of their right to engage in a legitimate business.[45]
Petitioners’ constitutional right to equal protection is also allegedly
violated, as the issuances discriminate against distribution utilities
and electric cooperatives.[46] It likewise raises that the issuances violate the constitutional guarantee of non-impairment of contracts.[47]
The Third Petition also claims that the assailed issuances are not
valid exercises of police power because they do not serve the public
interest and even impede, rather than foster, free and open competition
by removing electric cooperatives and distribution utilities from the
qualified retail electricity suppliers for contestable customers. It
adds that excluding electric cooperatives and distribution utilities
from the contestable market will raise electricity rates in the captive
market.[48]
The Third
Petition advances that the assailed issuances are void for usurping
legislative functions, as they went beyond the scope of the EPIRA by
prohibiting distribution utilities and electric cooperatives from
participating in the contestable market.[49]
On February 21, 2017,[50] the Court issued a Temporary Restraining Order enjoining respondents from implementing the assailed issuances:
NOW, THEREFORE, effective immediately and continuing until
further orders from this Court, You, respondents Department of Energy
(DOE), DOE Secretary Alfonso G. Cusi, Energy Regulatory Commission
[ERC], ERC Chairperson Jose Vicente B. Salazar and ERC Commissioners
Alfredo J. Non, Gloria Victoria C. Yap-Taruc, Josefina Patricia M.
Asirit and Geronimo D. Sta. Ana, your agents, representatives, or
persons acting in your place or stead, are hereby ENJOINED from
implementing and enforcing DOE Circular No. DC2015-06-0010, Series of
2015, ERC Resolution No. 5, Series of 2016, ERC Resolution No. 10,
Series of 2016, ERC Resolution No. 11, Series of 2016, and ERC
Resolution No. 28, Series of 2016.[51]
On March 1, 2017,[52] this Court consolidated all three Petitions.
Two Petitions-in-Intervention[53]
assailing the same issuances from respondents Department of Energy and
Energy Regulatory Commission were also filed before this Court.
Petitioners-intervenors Maynilad Water Services, Inc., Silgan White Cap
Southeast Asia, Inc., and Fastech Electronique, Inc. claim to be captive
customers that purchase electricity from Manila Electric Company but
are negotiating with retail electricity suppliers.[54]
On the other hand, petitioners-intervenors Jocelyn Forge, Inc. and
Lyceum of the Philippines-Batangas assert that they are also captive
customers that have reached a monthly average peak of demand of
approximately 750 kW.[55]
As current captive customers with an average monthly peak demand of
approximately 750 kW to 999 kW, both groups of petitioners-intervenors
express concern about the effect that Phase Two of the assailed
issuances, or the mandatory switching by customers with an average
monthly peak demand of 750 kW to 999 kW, will have on them since it
restricted their choice of suppliers while also decreeing the mandatory
migration of all qualified contestable customers.[56]
Both Petitions-in-Intervention claim that this Court’s Temporary
Restraining Order, meant to maintain status quo and prevent the forcible
migration into the contestable market, was erroneously interpreted by
respondents and the Philippine Electricity Market Corporation to include
even voluntary switching or migration into the contestable market. As
such, voluntary switching was held in abeyance and
petitioners-intervenors were prevented from contracting with their
chosen retail electricity suppliers.[57]
Thus, they ask this Court to clarify that the Temporary Restraining
Order only covered the mandatory migration to the contestable market and
excluded voluntary migration.[58]
In their Comment,[59]
respondents Department of Energy and Energy Regulatory Commission,
represented by the Office of the Solicitor General, claim that the
assailed issuances were issued in the exercise of their
quasi-legislative power; hence, Rule 65 is an improper remedy since it
is a remedy available against a tribunal, board, or officer exercising
judicial or quasi-judicial functions.[60]
They also claim that the cases cited by petitioners, supporting their
claim that certiorari is the appropriate remedy, were exceptional cases
that invoked this Court’s expanded jurisdiction and do not apply to
quasi-legislative acts issued by administrative agencies.[61]
Respondents state that petitioners prematurely availed of a petition
for certiorari under Rule 65 considering they failed to first exhaust
the available administrative remedies under the Energy Regulatory
Commission Rules of Procedure and Practice, the available speedy, plain,
and adequate remedy.[62] Respondents also point out that there is no actual case that would require judicial review, or prima facie evidence of grave abuse of discretion, in promulgating the assailed issuances.[63]
Respondents also assail petitioners’ standing in the First Petition,
saying that being compelled to migrate to the contestable market did not
cause them direct or potential injury.[64]
On the substantive issues, respondents assert that they acted within
the bounds of law when they issued the assailed issuances. They claim
that Section 31 of the EPIRA requires end-users upon reaching threshold
electricity demand to migrate from the captive market to the contestable
market. They further claim that the EPIRA granted respondent Department
of Energy encompassing quasi-legislative authority to formulate rules
and regulations, as well as “awesome”[65]
regulatory powers to exercise other powers necessary or incidental to
implement the EPIRA and restructure the electric power industry.[66]
Respondents aver that distribution utilities have no statutory right to
supply electricity in the contestable market. Instead, it is respondent
Energy Regulatory Commission that has the power to determine the
supplier in the contestable market.[67]
Respondents claim that distribution utilities are only authorized to
supply electricity in the captive market and not in the contestable
market.[68] They allege that
the previous allowance for distribution utilities to provide electricity
supply in the contestable market, despite the wording of the EPIRA, was
only a temporary measure to address a projected gap in the supply, and
was only meant until the gap could be addressed by the incoming retail
electricity suppliers.[69]
Respondents maintain that the assailed issuances were not issued to
recognize the statutory right of contestable customers to choose their
electricity supplier, but formed part of restructuring the electric
industry that respondent Energy Regulatory Commission implemented per
its mandate under the EPIRA to facilitate the establishment of the
Retail Competition and Open Access.[70]
Respondents assert that the migration of contestable customers to the
contestable market is mandatory. They claim that the phrase “shall
allow” under Section 31 of the EPIRA should be read in relation to the
provision’s entirety.[71] They
also claim that it will be difficult to create a substantial
contestable market that will entice business entities to engage in
supplying electricity if end-users are given the option to voluntarily
migrate from captive market to the contestable market.[72]
They also state that the mandatory migration will foster competition in
the supply sector, which would lower electricity prices and not, as
petitioners fear, create a “virtual cartelization” of the contestable
market.[73]
Respondents maintain that the issuances on physical disconnection or the
payment of premiums for failure to timely execute a retail supply
contract are valid, considering the mandatory migration to the
contestable market of the affected end-users required by the EPIRA.[74]
However, they manifested that respondent Energy Regulatory Commission
has already proposed amending the supplier of last resort premium from
the original rate of 10% to 2% for the first and second billing periods,
6% for the third and fourth billing periods, and 8% for the fifth and
sixth billing periods. Further, the premium will not be imposed until
three months after the mandatory contestability period of February 26,
2017.[75]
Respondents
assert that the assailed issuances do not violate the non-impairment
clause because a franchise is in the nature of a grant, which is not
covered by the non-impairment clause.[76] They also maintain that the issuances were valid exercises of police power delegated to them by Congress.[77]
Respondents claim that the issuance of a status quo ante
order or temporary restraining order is not warranted because, first,
petitioners have no clear and unmistakable legal right that ought to be
protected since the issuances were valid. Second, the EPIRA authorizes
distribution utilities to supply electricity without a license only in
the captive market; the local retail electricity suppliers, or the
supply arms of distribution utilities, do not have a statutory right to
supply electricity in the contestable market.[78]
Respondents claim that petitioners failed to show that they will suffer
any grave and irreparable injury if injunctive relief is not issued.
However, they point out that even if petitioners successfully prove that
they will suffer injury, that injury is not irreparable because it is
pecuniary in nature and can be compensated. Respondents emphasize that
with the issuance of a temporary restraining order, it is the public
that will suffer grave and irreparable injury because the implementation
of the Retail Competition and Open Access will once again be delayed.[79]
In their Consolidated Comment[80]
to the Second and Third Petitions, respondents reiterate that the
assailed issuances are consistent with the EPIRA’s objective of complete
migration of all end-users from the captive market to the contestable
market.[81] They further assert that allowing distribution utilities in the contestable market will defeat the essence of open access.[82]
They point out that the franchise of distribution utilities and
electric cooperatives is limited to their captive customers; hence, they
cannot point to a right to operate in the contestable market.[83]
The previous permission granted to distribution utilities to supply
electricity to the contestable market was merely an interim measure in
view of the necessary transition toward the desired scenario of full
migration.[84]
Respondents likewise deny that the assailed issuances violated
petitioners-intervenors’ freedom to contract because contestable
customers have other options aside from entering into retail supply
contracts with retail electricity suppliers.[85]
They also assert that the issuances do not violate the non-impairment
clause, as the latter does not apply to non-finalized power supply
agreements and retail supply contracts,[86]
or the right to property, as distribution utilities have no
constitutional right to supply electricity to the contestable market.[87]
The National Association of Electricity Consumers for Reforms, Inc. (NASECORE),[88] AC Energy Holdings, Inc. (AC Energy),[89] and PHINMA Energy Corporation (Phinma)[90] then filed their respective Comments-in-Intervention.
NASECORE and AC Energy both maintain that Section 31 of the
EPIRA granted respondents the power to define the contestable market,[91] with NASECORE adding that mandatory migration is also included.[92]
NASECORE points out that the EPIRA itself categorically states in
Section 75 that its provisions should “be construed in favor of the
establishment, promotion, preservation of competition[;] and people
empowerment so that the widest participation of the people, whether
directly or indirectly, is ensured.”[93]
Meanwhile, AC Energy avers that mandatory migration is the only logical
interpretation in light of the legislative intent of full
contestability down to the household level, in effect freeing all
end-users from the captive market.[94]
For its part, Phinma asserts that the prohibition on a distribution
utility from directly participating in the contestable market was the
only way to assure a free and competitive electricity marketplace.[95]
NASECORE then proclaims that the assailed issuances were reasonable state regulations[96] and valid exercises of respondents’ police power[97]
to dismantle the existing monopoly and provide end-users with “fair and
reasonable electricity prices brought about by retail competition.”[98]
Additionally, NASECORE underscores that the assailed issuances, in prohibiting distribution utilities[99]
and local retail electricity suppliers from participating in the
contestable market, did not violate the equal protection clause because
there were substantial differences between local retail electricity
suppliers and retail electricity suppliers, and end-users in the captive
market and contestable market.[100]
Finally, AC Energy and Phinma both contend that the voluntary migration
to the contestable market is not in issue; hence, this Court’s decision
should only be limited to the matters raised, such as the mandatory
migration and prohibition of distribution utilities from the captive
market.[101]
In their respective replies,[102] petitioners and petitioners-intervenors insist that the assailed issuances are ultra vires[103] for amending the EPIRA in a way that is not germane to the purpose of the law.[104]
Petitioner Silliman University underscores that while the EPIRA’s
ultimate goal was to allow for contestability up to the household level,
the “democratization of the market cannot be done undemocratically.”[105]
Petitioners also assert that the assailed issuances violated their freedom to contract.[106]
They supposedly gave unfair negotiating leverage to the accredited
retail electricity suppliers, which merely had to sit back and wait for
the end-users, the ones being forced to enter into lopsided negotiations
to meet the enforced deadline.[107]
Finally, petitioners maintain that this Court’s issuance of a temporary
restraining order led to an increase in the number of registered
contestable customers in the contestable market as greater market
competition resulted, which, in turn, enticed the qualified end-users to
voluntarily migrate to the contestable market.[108]
They stress that “a market that promotes greater end-user choice and
allow[s] the most number of qualified suppliers to compete for
petitioners’ and other end-users’ business”[109] was what was most beneficial to end-users and what was intended by the EPIRA.[110]
On December 19, 2017, the Office of the Solicitor General[111]
manifested that it would no longer be representing respondent
Department of Energy, but clarified that it would still be acting on
respondent Energy Regulatory Commission’s behalf:
3. The OSG also manifests that it will only be representing the
ERC in this case from hereon, as the Department of Energy (DOE) has
communicated to the OSG its recent views in the present case last 22
November 2017. Upon an in-depth study of the case, the OSG manifests
before the Honorable Court that it maintains and shares the ERC’s views
that (a) the local retail electricity suppliers (RES) of distribution
utilities (DUs) should be prohibited from participating as suppliers in
the contestable market pursuant to Republic Act No. 9136 (“EPIRA”), and
(b) the migration of end-users, upon reaching the threshold for
contestabiiity under Section 31 of the EPIRA, to the contestable market
is mandatory.[112]
On April 5, 2018, respondent Department of Energy filed a separate Comment[113]
to the consolidated Petitions and Petitions-in-Intervention, with
motion for early resolution. It admits that after reviewing its assailed
Department Circular and comparing it with its previous Retail
Competition and Open Access-related issuances, it found the Department
Circular to be inconsistent with the EPIRA, particularly with its
requirement for the mandatory migration to the contestable market.[114]
Respondent Department of Energy says that it manifested to the Office
of the Solicitor General its intention to issue new policy directives
which would more accurately reflect the EPIRA, but the Office of the
Solicitor General said it would maintain its original position and would
only represent respondent Energy Regulatory Commission moving forward.[115]
Respondent Department of Energy states that all of its Retail Competition and Open Access-related issuances[116]
prior to the assailed Department Circular consistently upheld the
customers’ power of choice to migrate to the contestable retail market.[117]
It admits that its assailed Department Circular departed from the
intent of the EPIRA when it restricted the participation of distribution
utilities in the supply sector to its captive customers.[118]
Respondent Department of Energy states that on November 29, 2017, it issued Department Circular Nos. DC2017-12-0013[119] and DC2017-12-0014.[120]
These issuances supposedly revoked and rectified the policies in the
assailed Department Circular to reflect the true intent of the EPIRA.[121]
Respondent adds that with its rectification, the guidelines issued
by respondent Energy Regulatory Commission became devoid of legal basis:
23. With the rectification by DOE of its RCOA policies primarily
those that are contained in DOE DC2015-06-0010, the regulatory
guidelines anchored and issued in accordance thereof, now stand without
legal basis. Under Section 4 of Republic Act No. 7638 (otherwise known
as the Department of Energy Act of 1992) the responsibility and
authority to “prepare, integrate, coordinate, supervise and control all
plans, programs[,] projects, and activities of the Government relative
to energy exploration, development, utilization, distribution[,] and
conservation” is vested with the DOE.[122]
Thus, respondent Department of Energy asserts that there was no
longer any justiciable issue for the Court’s consideration, rendering
the case moot.[123]
The issues for this Court’s resolution are:
First, whether or not the assailed issuances should be struck down for being ultra vires; and
Second, whether or not the Petitions have been mooted by respondent
Department of Energy’s revocation of its assailed Department Circular.
I
Electricity is recognized as a basic necessity “whose generation and distribution is imbued with public interest”;[124]
thus, providing electricity to the entire country, especially the rural
areas, has always been a principal concern of the government.[125]
Prior to the EPIRA, all electricity end-users belonged to the captive
market, as they could not choose their electricity suppliers and had no
option but to be serviced by the electricity supplier that had
jurisdiction over the area. But with the EPIRA enacted and the Retail
Competition and Open Access implemented, end-users down to the household
level would soon be able to choose their own electricity suppliers.
This is apparent in Section 31 of the EPIRA:
SECTION 31. Retail Competition and Open Access. — Any law
to the contrary notwithstanding, retail competition and open access on
distribution wires shall be implemented not later than three (3) years
upon the effectivity of this Act, subject to the following conditions:(a) Establishment of the wholesale electricity spot market;
(b) Approval of unbundled transmission and distribution wheeling charges;
(c) Initial implementation of the cross subsidy removal scheme;
(d) Privatization of at least seventy (70%) percent of the total
capacity of generating assets of NPC in Luzon and Visayas; and
(e) Transfer of the management and control of at least seventy
percent (70%) of the total energy output of power plants under contract
with [National Power Corporation] to the [Independent Power Producers]
Administrators.Upon the initial implementation of open access, the [Energy
Regulatory Commission] shall allow all electricity end-users with a
monthly average peak demand of at least one megawatt (1MW) for the
preceding twelve (12) months to be the contestable market. Two (2) years
thereafter, the threshold level for the contestable market shall be
reduced to seven hundred fifty kilowatts (750kW). At this level,
aggregators shall be allowed to supply electricity to end-users whose
aggregate demand within a contiguous area is at least seven hundred
fifty kilowatts (750kW). Subsequently and every year thereafter, the
[Energy Regulatory Commission] shall evaluate the performance of the
market. On the basis of such evaluation, it shall gradually reduce the
threshold level until it reaches the household demand level. In the case
of electric cooperatives, retail competition and open access shall be
implemented not earlier than five (5) years upon the effectivity of this
Act.
Retail Competition and Open Access paved the way for the creation
of the Competitive Retail Electricity Market, where qualified end-users
in the contestable market and retail electricity suppliers can directly
enter into electricity supply contracts with each other. The EPIRA
anticipated that robust competition among retail electricity suppliers
in the contestable market will eventually lead to lower electricity
rates and improved services.
The controversy before us hinges on
the proper interpretation of “shall allow” in Section 31, in relation
to the transfer of a qualified end-user to the contestable market.
Petitioners contend that the migration is merely voluntary,[126] as evidenced by congressional deliberations[127] on the EPIRA law and the EPIRA’s policy of promoting competition through greater end-user choice.[128]
On the other hand, respondents assert that the migration is mandatory,
as supported by the EPIRA itself. They posit that the assailed issuances
providing for mandatory migration fall under respondent Department of
Energy’s power and function under the EPIRA to formulate rules and
regulations to implement the objectives of the law.[129]
Respondents are mistaken.
It is well established that when the law is clear and unambiguous, “it should be applied as written.”[130] Further, the statute must be construed as a whole to give effect to all its provisions.[131] National Tobacco Administration v. Commission on Audit[132] instructs:
Cardinal is the rule in statutory construction “that the
particular words, clauses and phrases should not be studied as detached
and isolated expressions, but the whole and every part of the statute
must be considered in fixing the meaning of any of its parts and in
order to produce a harmonious whole. A statute must be so construed as
to harmonize and give effect to all its provisions whenever possible.”
And the rule — that statute must be construed as a whole — requires that
apparently conflicting provisions should be reconciled and harmonized,
if at all possible.[133] (Citations omitted)
A plain interpretation of the phrase “shall allow” implies that an
end user has requested to transfer to the contestable market to the
Energy Regulatory Commission for its approval. The use of “shall” prior
to “allow” signifies that it is mandatory upon the Energy Regulatory
Commission to grant the request if the applicant end-user meets all of
the requisites for transfer to the contestable market. Nothing in
Section 31 insinuates that an end-user’s transfer to the contestable
market is automatic.
Department of Energy Circular No.
DC2012-05-0005 (Prescribing the General Policies for the Implementation
of the Retail Competition and Open Access) supports the voluntary
transfer to the contestable market by recognizing the contestable
customer’s choice of its electricity supplier and directing respondent
Energy Regulatory Commission to certify the eligible contestable
customers before the implementation of the retail competition and open
access:
Section 4. Customer’s Choice. Upon Open Access Date, a [Contestable Customer (CC)] shall be allowed to choose where to source its electricity.
For this purpose, a CC can source from a Generation Company, a
Supplier, an affiliate of a [Distribution Utility (DU)] which has
constituted itself as a Supplier, or the Supply Business of a
Distribution Utility (DU) within its franchise area.4.1. All CCs shall only deal with a supplier of electricity
duly licensed by the ERC. This includes DUs that have structurally or
functionally unbundled their business into Wire and Supply businesses,
duly approved by the ERC.4.2. The ERC shall certify all eligible CCs at least six (6) months prior to the initial implementation of the RCOA.
For this purpose, all DUs are hereby mandated to provide DOE, ERC[,]
and PEMC the list of CCs including pertinent information, such as but
not limited to load profile for the last twelve (12) months, name of
customers, among others.4.3. The PEMC is hereby directed to register all eligible CCs
certified by the ERC within three (3) months prior to Open Access Date.[134] (Emphasis supplied)
Department of Energy Circular No. DC2012-11-0010 (Providing for
Additional Guidelines and Implementing Policies for Retail Competition
and Open Access and Amending Department Circular No. DC2012-05-0005)[135]
then tasked respondent Energy Regulatory Commission with, among others,
specifying the contestable market by issuing certificates of
contestability “to electricity end-users with an average twelve months
peak demand of one (1) megawatt and above[.]”[136]
Notably, “mandatory contestability” was only mentioned for the first
time in Department Circular No. DC2012-11-0010, but this was used
alongside “customer choice” and with reference to the Retail Open
Competition Access’s promotion of genuine competition and customer
choice:
Section 7. Mandatory Contestability and Customer Choice. Consistent
with the EPIRA, the RCOA should promote genuine competition, greater
efficiency, customer choice, and the true cost of electricity. For this
purpose, the power of choice is conferred to Contestable Customers
subject to the rules and regulations prescribed herein as well as to
subsequent issuances by the DOE.Accordingly, all Contestable Customers shall be allowed to
choose where to source its supply of electricity. For this purpose, any
Contestable Customer may source its electricity supply requirements from
a Supplier duly licensed by ERC, a Local Supplier duly authorized by
ERC to perform such, or through the WESM. In the latter case, the
Contestable Customer shall be responsible to manage its registration and
compliance with the WESM Rules and Manuals, and managing its own risks
as well.As a general policy, a Contestable Customer can have one
Supplier of electricity per Metering Point. Thus, any Contestable
Customer may have several contracted Suppliers based on the number of
its Metering Points. However, should a Contestable Customer opts (sic)
to enter into a (sic) multiple supply contracts even with only single
Metering Point, it shall be allowed, provided arrangements shall be
consistent with the Circular and the Retail Rules to be promulgated by
the DOE, and ERC rules and regulations.[137] (Emphasis in the original)
In Department of Energy Circular No. DC2013-07-0013[138]
(Providing Supplemental Policies to Empower the Contestable Customers
under the Regime of Retail Competition and Open Access and Ensure
Greater Competition in the Generation and Supply Sectors of the
Philippine Electric Power Industry), respondent Department of Energy
noted the concerns raised by a significant number of contestable
customers that they were having difficulty obtaining offers for retail
supply contracts from retail electricity suppliers,[139] as well as the perception of the Retail Competition Open Access as a suppliers’ market.[140]
This prompted it to issue supplemental policies to empower contestable
customers and promote “greater competition in the generation and supply
sectors in order to achieve the objectives of [Retail Competition and
Open Access.)”[141]
Like the previous department circulars, Department Circular No.
2013-07-0013 also emphasized customer choice, with the contestable
customer at liberty to source its electricity supply from licensed and
authorized local retail electricity suppliers “and, on its option,
directly through the Wholesale Electricity Spot Market.”[142]
Additionally, Department Circular No. DC2013-07-0013 empowered
contestable customers to switch to a more favorable contract with
another retail electricity supplier, but counterbalanced this with a
matching option for the incumbent retail electricity suppliers to retain
their respective retail supply contracts by matching the new offer.[143]
This reflects the EPIRA’s underlying objective of creating a free and
competitive market that will provide reliable electricity at reasonable
prices.[144] The concept of
“true market competition” is echoed repeatedly in the EPIRA, with
Section 2(c) of the law declaring it a State policy “[t]o ensure
transparent and reasonable prices of electricity in a regime of free and
fair competition and full public accountability[.]”
In its Comment with Motion for Early Resolution,[145]
respondent Department of Energy admits that upon further scrutiny of
the assailed issuances, it found palpable inconsistencies with the
EPIRA, particularly on the mandatory migration of eligible end-users to
the contestable market and the prohibition imposed on distribution
utilities from supplying electricity outside their captive market.[146] It state:
15. In all the above-cited issuances, the power of choice of the
customers was consistently upheld in that the option of whether or not
to migrate to the Contestable Retail Market (CREM) was given to them.
This brings us to the core of DC2015-06-0010 which departed from the
previous policy issuances of the DOE and provided for mandatory
migration of eligible customers to the CREM. Thus:“Section 1. Compliance to Full Contestability by Contestable Customers with Average Demand of One (1) MW and Above. All CCs which are currently being served by their franchised DUs, are mandated to secure their respective RSCs not later than 25 June 2016.”
Section 2. Contestability of End-Users with Average Demand from 750kW and above.
- All CCs with average demand ranging from 750kW and 999kW
for the preceding 12-month period, are mandated to secure their RSCs
with a RES no later than June 2016;- Effective 26 June 2016, all Aggregators shall be allowed to
compete with RES, Generation Companies[,] [and] Prospective Generation
Companies;- In the case of retail aggregation, any CCs within a
contiguous area may individually or collectively aggregate their
electricity supplier requirements to an Aggregator duly licensed with
the ERC. The aggregated demand shall in no case be lower than 750kW.[147] (Emphasis in the original)
Equi-Asia Placement, Inc. v. Department of Foreign Affairs[148]
stressed that the resulting complexities of modem life called for the
exercise of delegated legislative authority by specialized
administrative agencies. Nonetheless, regulations issued under the power
of subordinate legislation must still conform to the law it seeks to
enforce:
All that is required for the valid exercise of this power of
subordinate legislation is that the regulation must be germane to the
objects and purposes of the law; and that the regulation be not in
contradiction to, but in conformity with, the standards prescribed by
the law. Under the first test or the so-called completeness test, the
law must be complete in all its terms and conditions when it leaves the
legislature such that when it reaches the delegate, the only thing he
will have to do is to enforce it. The second test or the sufficient
standard test, mandates that there should be adequate guidelines or
limitations in the law to determine the boundaries of the delegate’s
authority and prevent the delegation from running riot.[149] (Citations omitted)
Thus, to be a valid delegation of legislative power, the
subordinate legislation issued by specialized administrative agencies
such as respondents must “be germane to the objects and purposes of the
law and . . . in conformity with, the standards prescribed by the law.”[150]
The EPIRA champions customer choice and allows contestable customers to choose from either franchise holders[151] who have unbundled[152] their business or non-regulated electricity suppliers.[153] Clearly, as respondent Department of Energy itself admits,[154]
the mandatory migration of qualified end-users to the contestable
market required in the assailed issuances finds no basis in the law they
seek to implement.
II
The EPIRA reorganized the electric power industry by dividing
it into generation, transmission, distribution, and supply sectors.[155]
It then required electric power industry participants to “functionally
and structurally unbundle [their] business activities and rates”[156] to correspond to the reorganized sectors.
For the supply side, the EPIRA included public utilities like
distribution utilities and electric cooperatives as part of the supply
sector and exempted them from procuring a license from respondent Energy
Regulatory Commission:
SECTION 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.
(Emphasis supplied)
Taking its cue from the EPIRA and its emphasis on customer choice,
Department Circular No. DC2012-05-0005 allowed distribution utilities
which unbundled their business or constituted itself as a supplier, to
supply electricity in the contestable market:
Section 4. Customer’s Choice. Upon Open Access Date, a
[Contestable Customer] shall be allowed to choose where to source its
electricity. For this purpose, a [Contestable Customer] can source from a Generation Company; a Supplier, an affiliate of a [Distribution Utility] which has constituted itself as a Supplier, or the Supply Business of a Distribution Utility (DU) within its franchise area.4.1. All [Contestable Customers] shall only deal with a
supplier of electricity duly licensed by the [Energy Regulatory
Commission]. This includes [Distribution Utilities] that have
structurally or functionally unbundled their business into Wire and
Supply businesses, duly approved by the [Energy Regulatory Commission].4.2. The [Energy Regulatory Commission] shall certify all
eligible [Contestable Customers] at least six (6) months prior to the
initial implementation of the [Retail Competition and Open Access]. For
this purpose, all [Distribution Utilities] are hereby mandated to
provide [Department of Energy], [Energy Regulatory Commission] and
[Philippine Electricity Market Corporation] the list of [Contestable
Customers] including pertinent information, such as but not limited to
load profile for the last twelve (12) months, name of customers, among
others.4.3. The [Philippine Electricity Market Corporation] is hereby
directed to register all eligible [Contestable Customers] certified by
the [Energy Regulatory Commission] within three (3) months prior to Open
Access Date.. . . .
Section 13. Protection for Captive Customers.
13.1. Consistent with its mandate under the EPIRA,
[Distribution Utilities] shall secure Supply Contracts in the least cost
manner for its Captive Customers.13.2. [Distribution Utilities] may continue to provide
electricity services to [Contestable Customers] within its franchise
area as a local Supplier, a separate entity.[157] (Emphasis supplied)
Department Circular No. DC2012-05-0005 also allowed bundled
distribution utilities to have limited participation in the contestable
market as suppliers of last resort.[158]
Subsequently, Department of Energy Circular No. DC2012-11-0010 revised
Section 2 of DC2012-05-0005 to include “Local Supplier” in its
Definition of Terms, recognizing the participation of unbundled
distribution utilities as suppliers within their franchise area:
4.2 A new definition is hereby added to Section 2 of Department Circular No. DC2012-05-0005, as follows:
1) “Local Supplier” refers to the non-regulated supply
business of a Distribution Utility (DU) catering to the Contestable
Customers within its franchise area, duly authorized by the [Energy
Regulatory Commission]. This shall also include the Philippine Economic
Zone Authority (PEZA) and the PEZA-accredited Utility Ecozone
Enterprises in the public and private Economic Zones (EZs),
respectively.
It also restated the distribution utilities’ status as suppliers
of last resort, with the addition that they were allowed to become
suppliers of last resort even outside their franchise areas in
exceptional circumstances.[159]
Department Circular No. DC2013-07-0013 then listed local retail
electricity suppliers, or the “non-regulated business segment of the
[distribution utility],”[160] as among the Energy Regulatory Commission-approved suppliers that contestable customers can choose from,[161] acknowledging the participation of unbundled distribution utilities in the contestable market.
Respondent Department of Energy again admits that when it came to the
participation of distribution utilities in the supply sector, the
assailed issuances “made a substantial departure from the intent and
letter of the EPIRA”:[162]
16. DC2015-06-0010, likewise, made a substantial departure from
the intent and letter of the EPIRA in terms of the supply side as
implemented in the earlier DOE issuance by the (sic) restricting
participation of DUs in the supply sector. Thus, while DC2012-05-0005
upholds the policy of customer choice, to wit:Section 1. Declaration of Policy. Consistent with the
EPIRA it is hereby declared that the transition to RCOA should promote
genuine competition, greater efficiency, customer choice, and the true
cost of electricity.For this purpose, the power of choice of supplier as
envisioned in the EPIRA is hereby provided to Contestable Customers
(CCs) subject to the rules and regulations herein discussed as well as
to subsequent rules and regulations as may be promulgated by the DOE.x x x
Section 4. Customer Choice. Upon Open Access Date, a CC
shall be allowed to choose where to source its electricity. For this
purpose, a CC can source from a Generation Company, a Supplier, an
affiliate of a DU which has constituted itself as a Supplier, or the
Supply Business of a Distribution Utility (DU) within its franchise
area.4.1. All CCs shall only deal with a supplier of electricity duly licensed by the ERC. This
includes DUs that have structurally or functionally unbundled their
business into Wire and Supply businesses, duly approved by the ERC.”DC2015-06-0010, on the other hand, has laid down the policy of
prohibiting DUs from engaging in the supply business beyond its captive
customers. Thus:Section 5. Licensing of Retail Electricity Suppliers. Pursuant
to the EPIRA, any entity engaged in the distribution of electricity to
End-Users shall provide open and non-discriminatory access to its
distribution system. To ensure compliance with this EPIRA provision, and
that all players are afforded a level playing field, the DOE is
cognizant that ERC is in the process of reviewing its guidelines taking
into account the following:
x x x
(h) Prohibiting DU to engage in the Supply Business beyond its Captive Customers.
Provided, that the existing Local RES after the effectivity of this
Circular may continue to perform its Local RES function until expiration
of its RSCs entered into with CCs as of the effectivity of this
Circular. . . .17. Finally, to further highlight the inconsistencies of
DC2015-06-0010 with the EPIRA, Section 29, in conjunction with Section
36 all of the EPIRA, allows DUs to register as RES, provided they comply
with the unbundling requirements mandated by law. Thus: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.
SEC. 36. Unbundling of Rates and Functions. x x x
x x x
Any electric power industry participant shall functionally and
structurally unbundle its business activities and rates in accordance
with the sectors as identified in Section 5 hereof. The ERC shall ensure
full compliance with this provision. . . .Notwithstanding the above-quoted provisions of the EPIRA,
DC2015-06- 0010 provides, as a matter of policy, that DUs cannot engage
in the supply business beyond its captive customers.[163] (Emphasis in the original)
Undoubtedly, the assailed issuances are ultra vires for
going beyond the limits of authority conferred to respondent
administrative agencies. They should, therefore, be struck down.
III
Respondent Department of Energy claims that, in any case, since it issued Department Circular Nos. DC2017-12-0013[164] and DC2017-12- 0014,[165] the assailed issuances have been rectified, mooting any real justiciable controversy for this Court’s resolution.[166]
Respondent is mistaken.
This Court’s power of judicial review is limited to an actual case or controversy,[167] or a conflict of legal rights or opposite legal claims capable of judicial resolution and a specific relief.[168] The controversy must be real and must require a specific relief that this Court can grant.[169]
A case is rendered moot when there is no longer a conflict of legal
rights which would entail judicial review. This Court is precluded from
ruling on moot cases, where no justiciable controversy exists. However,
exceptions do exist. In David v. Arroyo: [170]
Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of the Constitution; second, the exceptional character of the situation and the paramount public interest is involved; third,
when constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public; and fourth, the case is capable of repetition yet evading review.[171] (Citations omitted)
Here, while the repealing Department Circulars may have modified
or repealed portions of the assailed Department Circular, respondent
Energy Regulatory Commission continues to assert that distribution
utilities should be prohibited from participating in the contestable
market, and that the migration of qualified end-users to the contestable
market is mandatory.[172] Clearly, there remains a continuing controversy which requires judicial resolution.
Both repealing Department Circulars were issued as a result of this
Court’s Temporary Restraining Order on the assailed issuances, to
provide guidance to the affected end-users and suppliers.[173]
Department Circular No. DC2017-12-0013 allowed the voluntary
participation or voluntary migration of end-users with a monthly average
peak demands of 750 kW and above and 500 kW to 749 kW into the
contestable market, as well as voluntary demand aggregation:
Section 1. Voluntary Participation of Contestable Customers
(CC) with Average Peak Demand of 750 kW and above in the Retail Market.
Upon the effectivity of this Circular, all CCs with a monthly average
peak demand of 750 kW and above, for the preceding 12 months, may
participate in the Retail Market. Participation in the Retail Market
shall require a Retail Supply Contract (RSC) between a CC and Retail
Electricity Supplier (RES) and registration of the RSC in the WESM.Section 2. Voluntary Participation of Contestable Customers with Average Peak Demand of 500 kW to 749 kW in the Retail Market.
By 26 June 2018 or on an earlier date specified by the ERC, all
eligible electricity End-users to become CCs with a monthly average peak
demand of 500 kW to 749 kW for the preceding 12 months may voluntarily
participate in the Retail Market.Section 3. Voluntary Demand Aggregation. By 26 December
2018 or on an earlier date specified by the ERC, electricity End-users
within a contiguous area whose aggregate average peak demand is not less
than 500 kW for the preceding 12-month period may aggregate their
demand to be part of the Contestable Market and may voluntarily enter
into RSC with the Aggregators. Aggregators as defined in the EPIRA,
refers to a person or entity, engaged in consolidating electric power
demand of End-Users in the Contestable [M]arket, for the purpose of
purchasing and reselling electricity on a group basis.[174] (Emphasis in the original)
The voluntary participation or migration of contestable customers
to the contestable market in Department Circular No. DC2017-12-0013 is
contrary to the directive of mandatory migration contained in the
assailed issuances. Thus, its repealing clause[175] abolished Sections 1 and 2 of the assailed Department Circular, which read:
Section 1. Compliance to Full Contestability by Contestable Customers with Average Demand of One (1) MW and Above.
All [Contestable Customers], which are currently being served by
their franchised [Distribution Utilities], are mandated to secure their
respective [Retail Supply Contracts] no later than 25 June 2016, with
any of the following:
owning and operating power generation facilities, duly issued a
Certificate of Compliance (COC) by the [Energy Regulatory Commission]
and is offering to serve the power requirements of any [Contestable
Customers]: Provided, That it secures a license from [Energy Regulatory Commission];
As used in this Circular, a Prospective Generation Company shall refer
to any Person or Entity that power generation project is undergoing
construction or planned and has been included in the DOE’s Power
Development Plan (PDP);Any [Retail Supply Contract] that the [Contestable Customer]
entered into with a Prospective Generation Company shall be deemed
compliant with the Mandatory Contestability prescribed in this Circular;
The [Contestable Customer] and its counterparty [Retail Electricity
Supplier], Generation Company or Prospective Generation Company shall
submit to [Department of Energy] and [Energy Regulatory Commission]
their signed [Retail Supply Contract] for assessment, monitoring, policy
and rule-making purposes particularly on the timelines and effectivity
date of the [Retail Supply Contract].The [Department of Energy] and [Energy Regulatory Commission]
shall recognize such compliance of the [Contestable Customers] to the
Mandatory Contestability if any of the following conditions are met:
That the [Retail Supply Contract] shall be effective only upon the
Generation Company’s acquisition of a [Retail Electricity Supplier]
license from the [Energy Regulatory Commission];
Customer] has entered into a Forward [Retail Service Contract] with a
Prospective Generation Company, with the following conditions:
indicate the commitment of the Prospective Generation Company to
commence the commercial operations of its power project on or before the
effectivity date of the [Retail Supply Contract];
[Retail Supply Contract] signed by a [Contestable Customer] with a
Prospective Generation Company, the concerned franchised [Distribution
Utility] shall continue to serve the electricity requirements of the
[Contestable Customer] until the [Retail Supply Contract] between the
[Contestable Customer] and the Prospective Generation Company has become
effective; and
has secured its [Retail Electricity Supplier] license from the [Energy
Regulatory Commission].
that fails to comply with the provisions of its Forward [Retail Supply
Contract] with the [Contestable Customer] shall be imposed with fines
and penalties, and an alternative [Retail Electricity Supplier] shall be
appointed by the [Energy Regulatory Commission] to supply the affected
[Contestable Customer], which shall be given a (sic) six (6) months to
secure a new [Retail Electricity Supplier].Section 2. Contestability of End-Users with Average Demand from 750 kW and Above.
Customers] with an average demand ranging from 750 kW and 999 kW for the
preceding 12-month period, are mandated to secure their [Retail Supply
Contracts] with a [Retail Electricity Supplier] no later than 25 June
2016;
shall be allowed to compete with [Retail Electricity Supplier],
Generation Company and Prospective Generation Company;
any [Contestable Customers] within a contiguous area may individually or
collectively aggregate their electricity supply requirements to an
Aggregator, duly licensed by the [Energy Regulatory Commission]. The
aggregated demand shall in no case be lower than 750 kW.
refers to a person or entity, engaged in consolidating electric power
demand of End-users in the contestable market, for the purpose of
purchasing and reselling electricity on a group basis. The Aggregator
may secure the same through a Competitive Supply Procurement (CSP)
process to be prescribed by the [Energy Regulatory Commission] in a
separate Issuance.
continuity of the contestability in the Supply Sector, the [Energy
Regulatory Commission] shall promulgate the applicable guidelines on
retail aggregation.[176] (Emphasis in the original)
Department Circular No. DC2017-12-0014,[177]
in turn, modified the assailed Department Circular by repealing the
prohibition on distribution utilities to supply electricity beyond its
captive customers. Its Section 7[178] repealed Section 5(h) of the assailed Circular, which had provided:
Section 5. Licensing of Retail Electricity Suppliers. Pursuant
to the EPIRA, any entity engaged in the distribution of electricity to
End-users shall provide open and non-discriminatory access to its
distribution system. To ensure compliance with this EPIRA provision, and
that all players are afforded a level playing field, the DOE is
cognizant that [the Energy Regulatory Commission] is in the process of
reviewing its guidelines, taking into account the following:. . . .
(h) Prohibiting [Distribution Utilities] to engage in the Supply Business beyond its Captive Customers: Provided,
That the existing Local [Retail Electricity Suppliers] after the
effectivity of this Circular may continue to perform its Local [Retail
Electricity Supplier] function until expiration of its [Retail Supply
Contracts] entered into with [Contestable Customers] as of the
effectivity of this Circular.[179] (Emphasis in the original)
In contrast, Department Circular No. DC2017-12-0014 allowed
distribution utilities to supply contestable customers within its
franchise area:
Section 4. Distribution Utilities as Local RES. Distribution
Utilities (DU) may provide electricity services to [Contestable
Customers] within its franchise area as a Local [Retail Electricity
Supplier], upon authorization from the [Energy Regulatory Commission];
Provided, that the [Distribution Utility] shall comply with the
unbundling provisions of the RA 9136 and Rule 10 of the rules and
regulations to implement Republic Act No. 9136.[180] (Emphasis in the original)
Its Section 2 also included an affiliate of a distribution utility
among the possible electricity suppliers that may enter into a retail
supply contract with a contestable customer. Affiliates were not
previously included in the now repealed Section 1 of Department Circular
No. DC2015-06-0010. Section 2 of Department Circular No. DC2017-12-0014
reads:
Section 2. Licensing of Retail Electricity Suppliers. Subject
to the qualifications set by the [Energy Regulatory Commission] in
accordance with the EPIRA and its implementing rules, any of the
following entities may be considered to become a [Retail Electricity
Supplier]:
- A Generation Company or Affiliate thereof;
- An Affiliate of a Distribution Utility;
- Retail Aggregators;
- An [Independent Power Producer] Administrator; and
- Any Prospective Generation Company. A Prospective Generation
Company shall refer to any person or entity which has a power generation
project that is undergoing construction or that is planned to be
constructed which project is included in the [Department of Energy’s]
Power Development Plan (PDP) as committed power project;- Any other Person authorized by the [Energy Regulatory
Commission] to engage in the selling, brokering or marketing of
electricity to the Contestable Market, consistent with the EPIRA and its
implementing rules and regulations.In order to serve the Contestable Customers, individually or as
an aggregate demand, these entities shall secure a [Retail Electricity
Supplier] license from the [Energy Regulatory Commission].Consistent with the EPIRA and implementing rules and regulations
and subject to further qualifications of the [Energy Regulatory
Commission], any other persons authorized by the [Energy Regulatory
Commission] to engage in the selling, brokering or marketing of
electricity to the Contestable Customer shall likewise secure a license
as [Retail Electricity Supplier].[181]
With the assailed Department Circular No. DC2015-06-0010 having
been repealed, the assailed Energy Regulatory Commission Resolutions,
which were regulatory guidelines to the Department Circular, have become
bereft of legal basis. As respondent Department of Energy admits:
23. With the rectification by the DOE of its RCOA policies
primarily those that are contained in DOE DC2015-06-0010, the
regulatory guidelines anchored and issued in accordance thereof, now
stand without legal basis. Under Section 4 of Republic Act No. 7638
(otherwise known as the Department of Energy Act of 1992) the
responsibility and authority to “prepare, integrate, coordinate,
supervise and control all plans, programs[,] projects, and
activities of the Government relative to energy exploration,
development, utilization, distribution and conservation” is vested with
the DOE.[182]
When the EPIRA became effective on June 26, 2001, it sought “to
provide a framework for the restructuring of the electric power
industry”[183] to attain its
underlying objective of creating a free and competitive market that will
provide reliable electricity at reasonable prices.[184]
The EPIRA then gave respondent Department of Energy the power “to supervise the restructuring of the electricity industry”[185] and amended Republic Act No. 7638 to reflect the Department’s new powers and functions.
The EPIRA abolished the Energy Regulatory Board and created respondent
Energy Regulatory Commission, a quasi-judicial and independent
regulatory body, in its stead.[186]
Respondent Energy Regulatory Commission was then tasked with promoting
competition, encouraging market development, ensuring customer choice,
and penalizing abuse of market power in the restructured electricity
industry.[187]
Both
respondents possess similar mandates in that they are the administrative
agencies tasked with supervising and overseeing the energy sector.
However, in differentiating their functions, Alyansa Para sa Bagong Pilipinas v. Energy Regulatory Commission[188]
explained that respondent Department of Energy formulates the rules and
regulations to implement the EPIRA. Respondent Energy Regulatory
Commission then enforces these rules and regulations.[189] Alyansa
stressed that respondent Energy Regulatory Commission “has no
independence or discretion to ignore, waive, amend, postpone, or revoke
the rules and regulations of the DOE pursuant to the EPIRA.”[190]
Alyansa likewise expounded on the complementary functions of respondents under the EPIRA:
Under the EPIRA, it is the DOE that issues the rules and
regulations to implement the EPIRA, including the implementation of the
policy objectives stated in Section 2 of the EPIRA. Rules and
regulations include circulars that have the force and effect of rules or
regulations. Thus, pursuant to its powers and functions under the
EPIRA, the DOE issued the 2015 DOE Circular mandating the conduct of
CSP.The 2015 DOE Circular, as stated in its very provisions, was
issued pursuant to the DOE’s power to “formulate such rules and
regulations as may be necessary to implement the objectives of the
EPIRA,” where the State policy is to “[p]rotect the public interest as
it is affected by the rates and services of electric utilities and other
providers of electric power.” Under the EPIRA, it is also the State
policy to “ensure the x x x affordability of the supply of electric
power.” The purpose of the 2015 DOE Circular is to implement the State
policies prescribed in the EPIRA. Clearly, the 2015 DOE Circular
constitutes a rule or regulation issued by the DOE pursuant to its
rule-making power under Section 37(p) of the EPIRA.The EPIRA also provides for the powers and functions of the ERC.
Section 43 of the EPIRA mandates that the ERC “shall be responsible for
the following key functions in the restructured industry:”
generation and supply of the electric power industry with the end in
view of promoting free market competition and ensuring that the
allocation or pass through of bulk purchase cost by distributors is
transparent, non-discriminatory and that any existing subsidies shall be
divided pro-rata among all retail suppliers;Thus, the very first mandate of the ERC under its charter, the
EPIRA, is to “[e]nforce the implementing rules and regulations” of the
EPIRA as formulated and adopted by DOE. Clearly, under the EPIRA, it is
the DOE that formulates the policies, and issues the rules and
regulations, to implement the EPIRA. The function of the ERC is to
enforce and implement the policies formulated, as well as the rules and
regulations issued, by the DOE. The ERC has no power whatsoever to amend
the implementing rules and regulations of the EPIRA as issued by the
DOE. The ERC is further mandated under EPIRA to ensure that the “pass
through of bulk purchase cost by distributors is transparent [and]
non-discriminatory[.]”[191] (Citations omitted)
Clearly, then, respondent Department of Energy, with its mandate
of supervising the restructuring of the electricity industry, is the
agency tasked with formulating rules and regulations to give life to
EPIRA’s policy objectives. Respondent Energy Regulatory Commission, for
its part, is tasked with implementing the rules and regulations
formulated and issued by respondent Department of Energy. It cannot
supplant respondent Department of Energy’s policies, rules, and
regulations with its own issuances.[192]
Finally, with the promulgation of Department Circular Nos.
DC2017-12-0013 and DC2017-12-0014, which abolished the assailed
issuances, respondent Energy Regulatory Commission is duty bound to
provide regulatory support[193]
by issuing the appropriate guidelines pursuant to its mandate under the
EPIRA to “‘[e]nforce the implementing rules and regulations’ of the
EPIRA as formulated and adopted by [respondent Department of Energy].”[194]
WHEREFORE, the Petitions are GRANTED.
Department of Energy Circular No. DC2015-06-0010, series of 2015, and
Energy Regulatory Commission Resolution Nos. 5, 10, 11, and 28, all
series of 2016, are declared VOID for being bereft of legal
basis. Respondent Energy Regulatory Commission is DIRECTED to promulgate
the supporting guidelines to Department Circular Nos. DC2017-12-0013
and DC2017-12-0014.
SO ORDERED.
Peralta, C.J.,
Perlas-Bernabe, Gesmundo, Hernando, Carandang, Lazaro-Javier, Inting,
Zalameda, M. Lopez, Delos Santos, Gaerlan, Rosario, and J. Lopez, JJ., concur.
Caguioa, J., no part.
[1] Gerochi v. Department of Energy, 554 Phil. 563, 585 (2007) [Per J. Nachura, En Banc].
[2] Alyansa Para Sa Bagong Pilipinas v. Energy Regulatory Commission,
G.R. No. 227670, May 3, 2019, <
http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/65064 > [Per
J. Carpio, En Banc].
[3] Republic Act No. 9136 (2001), sec. 3.
[4] Rollo (G.R.
No. 228588), pp. 3330-3332. DOE Department Circular No. DC2011-06-0006
(Creating the Steering Committee Defining the Policies for the
Commencement of Retail Competition and Open Access; DOE Department
Circular No. DC2012-05-0005 (Prescribing the General Policies for the
Implementation of Retail Competition and Open Access); DOE Department
Circular No. DC2012-11-0010 (Providing for Additional Guidelines and
Implementing Policies for Retail Competition and Open Access and
Amending Department Circular No. DC2012-05-0005; and DOE DC2013-07-0013
(Providing Supplemental Policies to Empower the Contestable Customers
Under the Regime of Retail Competition and Open Access and Ensure
Greater Competition in the Generation and Power Supply Sectors of the
Philippine Electric Power Industry).
[5] Id. at 142-147,
Providing Policies to Facilitate the Full Implementation of Retail
Competition and Open Access (RCOA) in the Philippine Electric Power
Industry.
[6] Id. at 143, DOE D.C. No. DC2015-06-0010 (2015), sixth Whereas Clause.
[7] Id. at 143, DOE D.C. No. DC2015-06-0010 (2015), seventh Whereas Clause.
[8] Id. at 143-144, DOE D.C. No. DC2015-06-0010 (2015), sec. 1.
[9] Id. at 144-145, DOE D.C. No. DC2015-06-0010 (2015), sec. 2.
[10] Id. at 145, DOE D.C. No. DC2015-06-0010 (2015), sec. 3.
[11] Id. at 145-146, DOE D.C. No. DC2015-06-0010 (2015), Sec. 4.
[12] Id. at 149-150, A
Resolution Adopting the 2016 Rules Governing the Issuance of Licenses to
Retail Electricity Suppliers (RES) and Prescribing the Requirements and
Conditions Therefor.
[13] Id. at 151-172.
[14] Id. at 152.
[15] Id. at 174-175.
[16] Id. at 176-194.
[17] Id. at 181, Revised Rules for Contestability, sec. 1 (1.2).
[18] Id. at 196-198, A
Resolution Imposing Restrictions on the Operations of Distribution
Utilities and Retail Electricity Suppliers in the Competitive Retail
Electricity Market.
[19] Id. at 197.
[20] Id. at 200-203,
Revised Timeframe for Mandatory Contestability, Amending Resolution No.
10 (2016) of the Revised Rules for Contestability.
[21] Id. at 202.
[22] Id. at 3-129.
[23] Id. at 45.
[24] Id. at 31.
[25] Id. at 32-36.
[26] Id. at 36-38.
[27] Id. at 4.
[28] Id. at 49.
[29] Id. at 48-49.
[30] Id. at 50.
[31] Id. at 408-409.
[32] Rollo (G.R. No. 229143), pp. 3-22.
[33] Id. at 3-4.
[34] Id. at 5.
[35] Id. at 6.
[36] Id. at 9-12.
[37] Id. at 12-13.
[38] Id. at 14.
[39] Id. at 4.
[40] Id. at 17-18.
[41] Rollo (G.R. No. 229453), pp. 3-36.
[42] Id. at 4.
[43] Id. at 12-16.
[44] Id. at 16-17.
[45] Id. at 18-20.
[46] Id. at 25-28.
[47] Id. at 28.
[48] Id. at 20-22.
[49] Id. at 23-25.
[50] Rollo (G.R. No. 228588), pp. 417-420.
[51] Id. at 418-419.
[52] Id. at 964-965.
[53] Id. at 911-930 and 1594-1611.
[54] Id. at 915.
[55] Id. at 1598.
[56] Id. at 915-919 and 1598-1601.
[57] Id. at 919-922 and 1602-1604.
[58] Id. at 927-928 and 1608-1609.
[59] Id. at 440-523. On April 4, 2017 respondents adopted its Comment to the First Petition for the Third Petition. See rollo (G.R. No. 228588), pp. 712-716.
[60] Id. at 462-463.
[61] Id. at 465-466.
[62] Id. at 463-465.
[63] Id. at 466-468.
[64] Id. at 468-470.
[65] Id. at 472.
[66] Id. at 470-472.
[67] Id. at 464-465.
[68] Id. at 477-478.
[69] Id. at 487.
[70] Id. at 486.
[71] Id. at 493-494.
[72] Id. at 500.
[73] Id. at 496-497.
[74] Id. at 503-504.
[75] Id. at 505.
[76] Id. at 507.
[77] Id. at 508-509.
[78] Id. at 514-515.
[79] Id. at 515-517.
[80] Id. at 1052-1132.
[81] Id. at 1070-1075.
[82] Id. at 1081-1083.
[83] Id. at 1083-1088.
[84] Id. at 1090-1094.
[85] Id. at 1095-1102.
[86] Id. at 1110-1113.
[87] Id. at 1113-1116.
[88] Id. at 612-636.
[89] Id. at 972-1051.
[90] Id. at 1640-1671.
[91] Id. at 621-624 and 1010-1015.
[92] Id. at 621-622.
[93] Id. at 623.
[94] Id. at 1012.
[95] Id. at 1664.
[96] Id. at 615.
[97] Id. at 618-629.
[98] Id. at 620.
[99] Id. at 624-625.
[100] Id. at 630-631.
[101] Id. at 997-999 and 1634-1636.
[102] Id. at 1320-1404,
2244-2301, 2342-2412, 2851-2932 [Philippine Chamber of Commerce]; 3252
3263, 3264-3272 [Maynilad]; 1882-1904, 3689-3699 [Batelec]; and
3582-3612 [Siliman].
[103] Id. at 1348-1360, 1892-1895, 3256-3259, and 3598-3604.
[104] Id. at 3267-3268.
[105] Id. at 3600.
[106] Id. at 1325-1337, 1902-1903, 3604-3609.
[107] Id. at 1341-1342.
[108] Id. at 2865-2866.
[109] Id. at 2868.
[110] Id. at 2870.
[111] Id. at 3112-3121.
[112] Id. at 3114.
[113] Id. at 3325-3339.
[114] Id. at 3328.
[115] Id. at 3328.
[116] Id. at 3330-3332.
[117] Id.
[118] Id. at 3332-3334.
[119] Id. at 3340-3342.
[120] Id. at 3343-3345.
[121] Id. at 3334-3336.
[122] Id. at 3336.
[123] Id.
[124] Manila Electric Co. v. Spouses Chua, 637 Phil. 80, 101 (2010) [Per J. Brion, Third Division].
[125] NPC Employees Consolidated Union v. National Power Corporation, 550 Phil. 199 (2007) [Per J. Sandoval-Gutierrez, First Division].
[126] Rollo (G.R. No. 228588), pp. 90-91; and rollo (G.R. No. 229143), pp. 9-12.
[127] Rollo (G.R. No. 228588), pp. 32-34.
[128] Id. at 36-38.
[129] Id. at 471-474.
[130] Commissioner of Internal Revenue v. Apo Cement Corp., 805 Phil 441, 460 (2017) [Per J. Leonen, Second Division], citations omitted.
[131] National Tobacco Administration v. Commission on Audit, 370 Phil. 793 (1999) [Per J. Purisima, En Banc].
[132] 370 Phil. 793 (1999) [Per J. Purisima, En Banc].
[133] Id. at 808.
[134] DOE Department
Circular No. DC2012-05-0005 (2012), sec. 4, <
https://www.doe.gov.ph/sites/default/files/pdf/issuances/dc_2012-05-0005.pdf
> (Last accessed on January 19, 2021).
[135] DOE Department
Circular No. DC2012-11-0010 (2012) <
https://www.doe.gov.ph/sites/default/files/pdf/issuances/dc_2012-11-0010.pdf
> (Last accessed on January 20, 2021).
[136] DOE Department Circular No. DC2012-11-001 0 (2012), sec. 5(a)(iv).
[137] DOE Department Circular No. DC2012-11-0010 (2012), sec. 7.
[138] DOE Department
Circular No. DC2013-07-0013 (2013) <
https://www.doe.gov.ph/sites/default/files/pdf/issuances/dc_2013-07-0013.pdf
> (Last accessed on January 20, 2021).
[139] DOE Department
Circular No. DC2013-07-0013, fourth Whereas clause, <
https://www.doe.gov.ph/sites/default/files/pdf/issuances/dc_2013-07-0013.pdf
> (Last accessed on January 20, 2021).
[140] DOE Department Circular No. DC2013-07-0013 (2013), sixth Whereas clause.
[141] DOE Department Circular No. DC2013-07-0013 (2013), seventh Whereas clause.
[142] DOE Department Circular No. DC2013-07-0013 (2013), sec. 1.
[143] DOE Department Circular No. DC2013-07-0013 (2013, sec. 2 provides:
Section 2. Supply Contract and Customer Switching. Regardless of
the contract period of the RSC entered into by a CC and its RES, such
RSC shall provide “Customer Switching” provision whereby the CC shall be
allowed to terminate its RSC with its incumbent RES should there be a
competitive supply contract package that is more responsive to the needs
of the CC. The incumbent RES shall have the right to retain the RSC
provided that it can match the superior offer to the CC.Notwithstanding and consistent with Section 8 of DOE Circular
No. DC2012-11-0010, the initial switch of a CC to its new Supplier shall
only be allowed six (6) months after the full RCOA Commercial Operation
Date. The actual switching shall be based on a considerable period of
time as may be determined by the RES and the CC, but should not exceed
the applicable notification requirement by the CRB, as provided in the
same DOE Circular.Towards this end, the ERC shall provide the necessary guidelines
in determining competitiveness of an RSC. The competitiveness of a
supply contract package may include determination on among other things,
price, quality of power, and value added services.
[144] Republic Act No. 9136 (2001), sec. 2.
[145] Rollo (G.R. No. 228588), pp. 3325-3337.
[146] Id. at 3328.
[147] Id. at 3332.
[148] 533 Phil. 590 (2006) [Per J. Chico-Nazario, First Division].
[149] Id. at 607-608.
[150] Gerochi v. Department of Energy, 554 Phil. 563, 585 (2007) [Per J. Nachura, En Banc].
[151] Republic Act No. 9136 (2001), sec. 4(q) provides:
Section 4. Definition of Terms.-
(q) “Distribution Utility” refers to any electric cooperative,
private corporation, government-owned utility or existing local
government unit which has an exclusive franchise to operate a
distribution system in accordance with this Act;
[152] Republic Act No. 9136 (2001), sec. 36 provides:
Section 36. Unbundling of Rates and Functions. – Within
six (6) months from the effectivity of this Act, NPC shall file with the
ERC its revised rates. The rates of NPC shall be unbundled between
transmission and generation rates and the rates shall reflect the
respective costs of providing each service. Inter-grid and intra-grid
cross subsidies for both the transmission and generation rates shall be
removed in accordance with this Act.Within six (6) months from the effectivity of this Act, each
distribution utility shall file its revised rates for the approval by
the ERC. The distribution wheeling charges shall be unbundled from the
retail rate and the rates shall reflect the respective costs of
providing each service. For both the distribution retail wheeling and
supplier’s charges, inter-class subsidies shall be removed in accordance
with this Act. Within six (6) months from the date of submission of
revised rates by NPC and each distribution utility, the ERC shall notify
the entities of their approval.Any electric power industry participant shall functionally and
structurally unbundle its business activities and rates in accordance
with the sectors as identified in Section 5 hereof. The ERC shall ensure
full compliance with this provision.
[153] Republic Act No. 9136 (2001) sec. 4(xx) provides:
Section 4. Definition of Terms. – (xx) “Supplier” refers
to any person or entity authorized by the ERC to sell, broker, market or
aggregate electricity to the end-users;
[154] Rollo (G.R. No. 228588), pp. 3332, 3334.
[155] Republic Act No. 9136 (2001), sec. 5.
[156] Republic Act No. 9136 (2001), sec. 36(4).
[157] DOE Department
of Energy Circular No. DC2012-05-0005 <
https://www.doe.gov.ph/sites/default/files/pdf/issuances/dc_2012-05-000S.pdf
> (Last accessed on January 2021).
[158] DOE Department of Energy Circular No. DC2012-05-0005 (2012), sec. 10 provides:
Section 10. Supplier of Last Resort. The franchised DU shall act
as the Supplier of Last Resort (SOLR) in instances of Last Resort
Supply Event. To cover the requirement of the Last Resort Supply Event,
the DU-SOLR shall source electricity to be supplied to the CC through
WESM or any available supply in the market.
[159] DOE Department of Energy Circular No. DC2012-11-0010 (2012), sec. 11 provides:
Section 11. Supplier of Last Resort (SOLR). In the event that
the Supplier is not able to perform its obligations to its Contestable
Customers consistent with this Circular, the franchised DU shall act as
the SOLR in the Last Resort Supply Event as defined in this Circular.
However, should (sic) the franchised DU is deemed not capable to perform
the SOLR service, the ERC, prior to the full RCOA Commercial Operation
Date, shall designate another DU which will perform the SOLR function
for the affected Contestable Customers. The SOLR may source electricity
to be supplied to the Contestable Customers through the WESM or any
available source of energy supply. The SOLR shall be allowed to recover
their costs attributable to its SOLR services.Notwithstanding, the ERC shall design a mechanism to prevent the
occurrence of a Last Resort Supply Event, which may include, among
others, adequate due diligence on the technical and financial
capability, and other parameters used in the issuance of Supplier
License. The CRB, on the other hand, shall issue timely notification of
Suppliers’ compliance with the prudential requirement pursuant to the
WESM Rules.
[160] ERC Case No. 2010-008 RM (Revised Rules for the Issuance of Licenses to Retail Electricity Suppliers (RES), sec. 6 provides:
Section 6. Definition of Terms – …
Local Retail Electricity Supplier (Local RES) – The
non-regulated business segment of the DU catering to the Contestable
Market only within its franchise area, or Persons authorized by
appropriate entities to supply electricity within their respective
Economic Zones.
[161] DOE Department of Energy Circular No. DC2013-07-0013 (2013), sec. 1 provides:
Section 1. Customer Choice. Consistent with the objectives of
EPIRA and its Implementing Rules and Regulations (EPIRA-IRR), and other
applicable rules and regulations, a CC may source its electricity supply
requirements from ERC-licensed RES, ERC-authorized Local RES; and, on
its option, directly through the Wholesale Electricity Spot Market
(WESM). Further, a CC shall be allowed to enter into a Retail Supply
Contract (RSC) with a prospective Generation Company; provided, that the
Generation Company is issued a Certificate of Compliance (COC) by the
ERC and successfully registered as a Trading Participant in the WESM;
and provided, further, that before the effective date of the RSC, the
Generating Company shall have secured a Supplier’s license from the ERC.
[162] Rollo (G.R. No. 228588), p. 3332.
[163] Id. at 3332-3334.
[164] Id. at 3340-3342.
[165] Id. at 3343-3345.
[166] Id. at 3336.
[167] CONST., art. VIII, sec. 1 states:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.
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.
[168] David v. Macapagal-Arroyo, 522 Phil. 705, 753 (2006) [Per J. Sandoval-Gutierrez, En Banc] citing Isagani A. Cruz, Philippine Political Law, 259 (2002 ed.).
[169] Land Bank of the Philippines v. Fastech Synergy Philippines, Inc., 816 Phil. 422 (2017) [Per J. Leonen, Second Division].
[170] 522 Phil. 705 (2006) [Per J. Sandoval-Gutierrez, En Banc].
[171] Id. at 754.
[172] Rollo (G.R. No. 228588), p. 3114.
[173] Id. at 3340-3341 and 3343-3344.
[174] Id. at 3341.
[175] Id. at 3342. DOE Department of Energy Circular No DC2017-12-0013 (2017), sec. 9 provides:
Section 9. Repealing Clause. Section 4 of DC2012-05-0005,
Section 7 of DC2012-11-0010, Section 1, Section 2 of DOE Circular No.
DC2015-06-0010 and DOE Circular No. DC2016-04-0004 are hereby repealed
or modified accordingly. Except insofar as may be manifestly
inconsistent herewith, nothing in this Circular shall be construed as to
repeal any of the mechanisms already existing or responsibilities
already provided for under existing rules.
[176] Id. at 143-145.
[177] Id. at 3343-3345.
[178] Id. at 3345. DOE Department Circular No. DC2017-12-0014, sec. 7 provides:
Section 7- Repealing Clause. Section 5(h) of DOE Circular No.
DC2015-06-0010 is hereby repealed or modified accordingly. Except
insofar as may be manifestly inconsistent herewith, nothing in this
Circular shall be construed as to repeal any of the mechanisms already
existing or responsibilities already provided for under existing rules.
[179] Id. at 146.
[180] Id. at 3344.
[181] Id.
[182] Id. at 3336.
[183] Phil. Federation of Electric Cooperatives (PHILFECO) v. Ermita, January 27, 2015, G.R. No. 178082 (Notice) [En Banc].
[184] Republic Act No. 9136 (2001), sec. 2.
[185] Republic Act No. 9136 (2001), sec. 37.
[186] Republic Act No. 9136 (2001), sec. 38.
[187] Republic Act No. 9136 (2001), sec. 43.
[188] G.R. No.
227670, May 3, 2019, <
http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/65064 > [Per
J. Carpio, En Banc].
[189] Id.
[190] Id.
[191] Id.
[192] Id.
[193] DOE Department Circular No. DC2017-12-0013 (2017), sec. 4 states:
Section 4. Regulatory Support. For the proper implementation of
the policies set herein, the ERC is hereby enjoined to promulgate the
supporting guidelines, including but not limited to, the licensing of
the RES and Retail Aggregation: Provided, That such guidelines shall
specify sanctions and penalties that may be imposed to electric power
industry participants for violations of the promulgated policies and
guidelines. [Also found in Section 5 of Department Circular No.
DC2017-12-0014].
[194] Alyansa Para Sa Bagong Pilipinas v. Energy Regulatory Commission, G.R. No. 227670, May 3, 2019, < http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/65064 > [Per J. Carpio, En Banc].