FREEDOM FROM DEBT COALITION v..

ENERGY REGULATORY COMMISSION,

G.R. NO. 161113, JUNE 15, 2004

FACTS:

The Petition assails the Order of respondent Energy Regulatory Commission (ERC),
provisionally authorizing respondent Manila Electric Company (MERALCO) to increase
its rates by an average amount of 12 centavos per kilowatt hour.

MERALCO filed with the ERC an Application for an increase in rates and also prayed ex
parte for the grant of a provisional authority to implement the increase according to the
schedule attached to its Application. National Association of Electricity Consumers for
Reforms, Inc. (NASECORE), Mr. Genaro Lualhati (Lualhati) and Freedom from Debt
Coalition (FDC) assailed separately, in a letter addressed to the ERC Chairman Manuel
R. Sanchez (Sanchez), informed him of their intention to file an Opposition to
MERALCO’s Application, seeking the dismissal of MERALCO’s Application and
expressed its intention to file an opposition to MERALCO’s Application, respectively.

ERC directed FDC, NASECORE and Lualhati to file their respective comments on the
Application within 15 days from their receipt thereof. NASECORE filed a Motion for
Production of Documents to enable it to evaluate MERALCO’s Application. ERC
directed MERALCO to file its comment on NASECORE’s Motion for Production of
Documents. ERC issued an Order directing MERALCO to submit certain documents in
connection with the evaluation of its Application. However, ERC, without first resolving
the Motions for Production of Documents of NASECORE and FDC and apparently
without considering Lualhati’s Opposition, issued an Order provisionally approving
MERALCO’s ex parte application for rate increases.

Bayan Muna, Bayan, KMU, Gabriela, Kadamay, Agham, Gabriela Women’s Party and
Anak Pawis argued that the Order is void for having been issued by ERC with manifest
bias in favor of MERALCO and without due regard for the rights of consumers, so they
filed their Motion to Intervene and attached thereto their Petition-in-Intervention. Hence,
this Instant Petition and Petition-in-Intervention.

ISSUES:

1. Whether or not the ERC has legal authority to grant provisional rate
adjustments under Republic Act (R.A.) No. 9136, otherwise known as the
"Electric Power Industry Reform Act of 2001" (EPIRA)

HELD:

Statutory Authority To Grant Provisional Increase

FDC posits that the ERC has no power to issue provisional orders because
the EPIRA repealed Commonwealth Act No. 146 (The Public Service Act) and E.O.
No. 172 (creating the ERB), which laws expressly granted upon the precursors of
ERC the power to grant provisional orders. It argues further that while Section 44 of
the EPIRA provides for the transfer of the powers and functions of the ERB to the ERC,
such transfer cannot be deemed to include the power to issue provisional orders
because such power is inconsistent with the policies ordained in Section 2 of the EPIRA
to protect the public interest insofar as it is affected by the rates and services of electric
utilities and other providers of electric power and to ensure transparency and full
accountability in rate-fixing. Considering that the EPIRA itself does not confer upon the
ERC the power to issue provisional orders, Section 4(e), Rule 3 of the law’s
Implementing Rules, which refers to the grant of provisional authority by the ERC,
constitutes an undue delegation of legislative power.

Legislative history supports ERC’s power to grant provisional rate adjustments.

The provisions of Public Service Act and E.O. No. 172 which relate to the power
of the regulatory body to approve provisional rates continue to have full force and effect,
and the power was transferred to ERC by virtue of Section 80 in relation to Section 44
of EPIRA. Said provisions aren’t inconsistent with EPIRA except the directives therein
dispensing with the need for prior hearing. They are deemed modified to the extent that
EPIRA imposes a publication requirement and, through IRR, assures the customers
affected the opportunity to oppose or comment on the application for provisional rate
adjustment before it is acted upon by ERC.Indeed, both the letter and spirit of the law
require that the authority of the ERC to grant provisional power rate adjustments should
be upheld. The law is so clear that it cannot be misread.

NOTES:

On the issue WON there was a grave abuse:

The FDC contends that the issuance of the Order provisionally approving
MERALCO’s application for rate increase is void because, among others, the affected
sectors were not afforded the opportunity to be heard. Since the issuance of provisional
orders is quasi-judicial in character, the ERC cannot dispense with the requirements of
notice and hearing. It likewise claims that the ERC based the provisional increase only
on MERALCO’s bare allegation that it was in dire financial straits, as there was no proof
of MERALCO’s actual financial condition. It is settled that there is grave abuse of
discretion when an act is done contrary to the Constitution, the law or jurisprudence, or
when executed whimsically, capriciously or arbitrarily out of malice, ill will or personal
bias.

The infirmities which attended the issuance of the Nov. 27, 2003 Order,
particularly: (1) the failure of MERALCO to publish its Application or at least a summary
thereof; (2) the failure of the ERC to resolve the Motions for Production of Documents
filed by the oppositors to MERALCO’s Application before acting on the motion for
provisional rate adjustment; and (3) the failure of the ERC to consider the arguments
raised by the oppositors in their respective pleadings prior to the issuance of the
assailed Order; the Court declares void the November 27, 2003 Order of the ERC for
having been issued with grave abuse of discretion.

Thus, should the case be simply remanded to the ERC without further action by
the Court, the defects would not be cleansed and they would retain their potency and
still serve as solid basis to nullify the challenged Order and all other issuances of the
ERC which would be infected by the infirmities. Indeed, such a denouement would be
inescapable once the application is elevated again to this Court in connection with the
infirm issuances. Clearly then, a remand is not in the best interest of MERALCO and the
ERC. Rather, it is to their advantage, same as with the consumers, that they begin
again on a clean slate.