'

13'(.
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REPUBLIC OF THE JAN 20 PM I: 37
SUPREME COURT
Manila
EN BANC
BAYAN MUNA REPRESENTATIVES
NERI JAVIER COLMENARES AND
CARLOS ISA GANI ZARA TE, et al.,
Petitioners,
-versus-
ENERGY REGULATORY
COMMISSION AND MANILA
ELECTRIC COMPANY,
Respondents.
x-------------------------------------------------x
NATIONAL ASSOCIATION OF
ELECTRICITY CONSUMERS FOR
REFORMS REPRESENTED BY
PETRONILO L. ILAGAN, et al.,
Petitioners,
-versus-
MANILA ELECTRIC COMPANY,
ENERGY REGULATORY
COMMISSION AND DEPARTMENT OF
ENERGY,
Respondents.
x-------------------------------------------------x
MANILA ELECTRIC COMPANY,
Petitioner,
-versus-
PHILIPPINE ELECTRIC MARKET
CORPORATION, et al.,
Respondents.

G.R. No. 210245.
G.R. No. 210255
G.R. No. 210502
CONSOLIDATED COMMENT
Respondents Therma Mobile, Inc. ("TMO") and Therma Luzon Inc.
("TLI"), through counsel, most respectfully submit this Consolidated
Comment to: (i) the Amended Petition for Certiorari and Prohibition with
Prayer for a Temporary Restraining Order and/or Preliminary Injunction
dated January 13, 2014 filed by Bayan Muna Representatives, et al., G.R.
No. 210245, (ii) the Petition for Certiorari and/or Prohibition dated 16
December 2013 filed by National Association of Electricity Consumers for
Reforms ("NASECORE"), et al., G.R. No. 210255 Gointly referred to as the
"Petitions"); and (iii) the Consolidated Comment/Opposition with Counter-
Petition dated 8 January 2014 filed by Manila Electric Company
("MERALCO"), G.R. No. 210502 (the "Meralco Counter-Petition"), and
most respectfully state that:
This Consolidated Comment incorporates by reference as an integral
part of this submission the Regulatory Regime of the electric power industry
of the Philippines set out in Annex 1 attached hereto.
Respondents TMO and TLI operate independently under this
Regulatory Regime within the confines of the law, government rules and
regulations, their contractual obligations and their responsibilities as
generation companies.
Respondents TMO and TLI have been undeservedly vilified in the
Petitions with unsubstantiated allegations. The Petitions ought to be
dismissed outright as a wrong remedy and for being founded upon pure
conjectures and misleading statements, and for utter lack of merit .. The
Meralco Counter-Petition is also completely inappropriate and should
likewise be dismissed.
A wrong remedy is a fatal error and a petition that is rooted in
misleading narrative, twisted reasoning and overreaching interpretations of
law cannot pass muster and should be thrown out.
In fine, no good reason exists to keep the temporary restraining order
issued by the Honorable Court on 23 December 2013 ("TRO") in effect and
it should be lifted immediately to prevent MERALCO from further using the
TRO as an excuse to evade its contractual and legal payment obligations to
the generation companies.
2
I.
FACTS RELEVANT TO TMO AND TLI
1.1 To the extent that any part of the allegations in the Petitions which
is passed off as a "fact" is inconsistent with the true circumstances stated
below or is irrelevant to TMO or TLI or beyond the personal knowledge of
TMO or TLI, then it is deemed disputed by TMO and TLI.
A. Facts Relevant to TMO
1.2 TMO is a corporation duly organized and existing under the laws
of the Republic of the Philippines.
1
.
1.3 TMO is one hundred percent (100%) owned by Therma Power,
Inc.,2 a wholly-owned subsidiary of Aboitiz Power Corporation,
3
which is a
subsidiary of Aboitiz Equity Ventures, Inc.
4
1.4 TMO owns and operates four (4) barge-mounted bunker-fired
diesel power generating and interconnection facilities in Navotas Fishport,
Manila with a total installed capacity of 242 MW, with only 100 MW
currently available (the "TMO Plant").
1.5 TMO is registered with Philippine Electricity Market Corporation
("PEMC") as a direct member in the Wholesale Electricity Spot Market
("WESM"). It is fully compliant with the basic rules, requirements and
procedures set out in the WESM Rules
5
and the relevant market manuals
that govern WESM. It is legally authorized and permitted to participate as a
generation company in the electricity spot market.
Shutdown of Malampaya
1.6 As early as 2012, it was made known by the National Grid
Corporation of the Philippines ("NGCP") that the Malampaya Deep Water
Gas-to-Power Project ("Malampaya"), operated by Shell Philippines
Exploration ("SPEX") under Service Contract No. 38 entered into between
SPEX, Chevron Malampaya LLC and PNOC Exploration Corporation
(collectively, the "SC38 Consortium") as contractors and the Republic dfthe
Philippines as represented by the President of the Philippines in December
1990, would undergo maintenance works and will be shutdown in November
2013. As representative of the of the Philippines and pursuant to
the 1987 Philippine Constitution, the Department of Energy ("DOE") has
1
Articles of Incorporation ofTMO, as amended dated 30 September 2009.
2
2013 General Information Sheet ofTMO.
3
2013 General Information Sheet of Therma Power Inc.
4
2013 General Information Sheet of Aboitiz Power Corporation.
5
The WESM Rules was formulated jointly with electric power industry participants and promulgated by
the DOE on 28 June 2002.
3
control and supervision of SPEX' s activities as operator of Malampaya in
connection with the exploration, development and utilization of Malampaya
natural gas.
1. 7 Malampaya supplies natural gas to three (3) natural gas power
plants with an aggregate capacity of 2, 700 MW, namely the 1,200"".MW
Ilijan Power Plant ("Ilijan"), the 1,000-MW Sta. Rita Power Plant ("Sta.
Rita") and the 500-MW San Lorenzo Power Plant ("San Lorenzo"). The
sale and purchase of Malampaya natural gas are governed by three (3)
separate gas sale and purchase agreements between the SC 38 Consortium as
sellers and National Power Corporation ("NPC")
6
First Gas Power
Corporation and FGP Corp., respectively.
1.8 MERALCO is highly dependent on Ilijan, Sta. Rita and San
Lorenzo and provide for approximately forty percent ( 40%) of its base. load
requirements. Accordingly, when Malampaya is shutdown for maintenance
or other reasons, MERALCO is unable to receive power from natural gas
turbines of Ilijan, Sta. Rita and San Lorenzo and is constrained to obtain its
electricity requirements from sources other than natural gas.
1.9 On 27 September 2013, TMO and MERALCO executed a power
supply agreement with MERALCO (the "MERALCO-TMO PSA") with the
following key terms and conditions:
(a) The Contracted Capacity of 234MW, subject to the dependable
capacity of the TMO plant or the capacity of the electrical
connection facilities, whichever is lower;
(b) The Monthly Maximum Capacity Factor of forty percent
(40%);
( c) The MERALCO-TMO PSA has a term of three (3) years and
nine (9) months or from 27 September 2013 until 25 June 2017
unless terminated earlier or extended in accordance with the
terms of the PSA;
(d) The TMO Plant is embedded to MERALCO's distribution
system through the Malabon-Grace Park 115 kV Line; and
( e) The Operating Procedures of the MERALCO-TMO PSA
7
require TMO to submit its generation offers to the WESM
consistent with the day-ahead nominations of MERALCO.
Briefly, the daily WESM bidding procedure of TMO follows
the steps described below:
6
Pursuant to EPIRA, all contractual rights and obligations ofNPC were transferred to PSALM.
7
Appendix F, MERALCO-TMO PSA.
4
(i) TMO submits the TMO Plants' capacity hourly
Availability Schedule to MERALCO on or before 1 OOOH
on the day before the relevant day;
(ii) MERALCO acknowledges receipt of TMO's capacity
Availability Schedule;
(iii) MERALCO submits its day-ahead 24-hour nomination
schedule to TMO;
(iv) TMO acknowledges receipt of MERALCO's day-ahead
24-hour nomination schedule on or before 1400H of the
preceding day; and
(v) TMO then makes its hourly generation offers (both price
and quantity) to the WESM based on MERALCO's day-
ahead 24-hour nomination schedule.
1.10 TMO responded to the call of MERALCO to address the
impending shortage in electricity supply with the Malampaya shutdown
8
and
agreed to execute the MERALCO-TMO PSA albeit with the then 100-'.MW
available capacity as TMO continued to rehabilitate the entire 234..:MW
capacity. In agreeing to execute the PSA, TMO had no design, premeditated
or otherwise, to manipulate the WESM spot prices for the benefit of any
WESM trading participant. TMO strictly adhered to the provisions of the
MERALCO-TMO PSA and consistently followed the nomination
instructions ofMERALCO.
1.11 TMO was intended as a peaking power plant that will provide
electricity requirements to MERALCO's customers during peak hours. In
its application for ERC approval of the MERALCO-TMO PSA, MERALCO
stated thus:
"10. First, it will lessen MERALCO's exposure to
WESM during the Malampaya Gas Plant shutdown for
scheduled maintenance starting 09 November to 08 December
2013. It must be mentioned that a significant portion of
MERALCO's plant portfolio depends on the Malampaya Gas
Facility. During said period, MERALCO will be exposed to the
WESM where the price is known to be volatile. What further
aggravates the situation is that certain plants (such as Pagbilao
power plant - Unit 2, Ilijan power plant - Unit 2, Calaca power
plant - Unit 2 and San Lorenzo power plant - Unit 50) will be
undergoing maintenance schedule that would coincide with the
Malampaya Gas Plant shutdown. In addition, Unit 60 of San
8
The shutdown was initially scheduled from 1November2013 to 30 November 2013 but was moved to 8
November 2013 to 7 December 2013 and moved again to 11November2013 to 10 December 2013. '
5
Lorenzo power plant is still undergoing repair until first quarter
of next year. The combination of these events will put much
strain on the supply side that will likely drive the market price
into very high levels thereby probably resulting to price shocks
on MERALCO's end-users.
11. Second, it will greatly help in providing more
reliable and quality electricity to the end-users as it will
contribute in voltage improvement at MERALCO's Sector 1 -
115 kV buses and will relieve its transformer capacity at its
delivery points in Balintawak, Duhay, Paco. Third, there will be
no additional burden on the customers in terms of NGCP
transmission charges considering that the power barges are
embedded within MERALCO's franchise. Fourth and as
mentioned earlier, the capacity taken from TMO will reduce
MERALCO's exposure to high spot market prices from the
WESM as MERALCO will take energy from TMO during peak
hours providing lower and/or stable electricity prices. And
lastly, the PSA would effectively serve as additional insurance
of continued supply of electricity at stable price during the
period of unexpected outages or system failure. "
9
ERC provisionally approved the MERALCO-TMO PSA
1.12 The MERALCO-TMO PSA became operationally effective
after the issuance of a provisional authority by the Energy Regulatory
Commission ("ERC") in an order dated 4 November 2013 (the "ERC
Order"). The ERC. Order is herein attached as Annex 2 and made an integral
part of this Comment.
Daily WESM bidding process of TMO
depends upon MERALCO 's instructions
1.13 TMO, from 12 November 2013 to 25 December 2013, made
generation offers (price and quantity) in accordance with MERALCO's
instructions in its day-ahead 24-hour nomination schedules.
1.14 Based on MERALCO's day-ahead 24-hour nomination
schedules, TMO was trading consistent with MERALCO's intention for the
TMO Plant to be a peaking plant, which is available only for dispatch during
MERALCO's peak load requirements.
1.15 In following MERALCO's instructions, TMO was merely
fulfilling its contractual obligations, believing in good faith that MERALCO
9
MERALCO's Application dated 27 September 2013, In the Matter of the Application for Approval of the
Power Supply Agreement (PSA) between Manila Electric Company (MERALCO) and Therma Mobile Inc.
(TMO), ERC Case No. 2013-196 RC.
6
was acting as a prudent distribution utility operator without any motive other
than to ensure supply to its customers and without any intention of causing a
spike in the WESM spot market prices.
TMO 's bidding pattern shows MERALCO 's strategy
1.16 MERALCO would instruct TMO to bid at the Offer Price
Ceiling of Php62,000/MWh or Php62.00/kWh
10
during MERALCO's off-
peak period: (i) the intervals from OOOOH-01 OOH to 0700H-0800H and
2300H-2400H during weekdays; and (ii) the intervals from OOOOH-OlOOH to
2300H-2400H during weekends.
1.17 By long practice and experience in trading, MERALCO
purposely instructed TMO to bid at the Offer Price Ceiling of
Php62,000/MWh or Php62.00/kWh during off-peak hours in the expectation
that the TMO Plant would not be dispatched. The supposed intent of
MERALCO in instructing TMO to make a generation offer at the Offer
Price Ceiling of Php62,000/MWh or Php62.00/kWh, which at that time was
the highest possible generation offer in the WESM
11
during that time, is for
the exclusion of the TMO Plant in the merit order dispatch schedule of the
WESM.
1.18 Naturally, because of the high generation offer of TMO, the
TMO Plant will be stacked last in the merit order dispatch schedule and
since normally during the off-peak period, supply is higher than demand, the
TMO Plant, being last in the merit order dispatch, will not likely be
scheduled for dispatch.
1.19 Conversely, during MERALCO's peak load requirements, it
would instruct TMO to submit a generation offer at a negative price of
Php0.00/kWh or a low price offer.
1.20 A negative or a low price offer means that the TMO Plant will
be stacked first in the merit order dispatch schedule and will therefore be
scheduled for dispatch, thus allowing MERALCO to avail of TMO's
electricity output during peak hours since the TMO Plant was meant to be a
peaking plant.
1.21 Under normal circumstances, where: (i) during peak hours the
demand for electricity is higher than the supply for electricity; and (ii)
during off-peak hours where supply of electricity is higher than demand for
electricity, MERALCO's intended scenarios, as discussed above, would
have likely occurred, notwithstanding the shutdown of Malampaya from 11
10
WESM Tripartite "Setting the Initial Pre-Emptive, Market Mitigating Measures for the Commercial
Operations of the Philippine WESM" Committee Joint Resolution No. 2, series of2006.
II Id.
7
November 2013 to 10 December 2013 and the occurrence of the scheduled
outages and forced outages of the natural gas plants and other power plants.
Unforeseen events reversed
MERALCO 's expected results of bidding
1.22 As a result of the extraordinarily high demand for electricity
during November 2013 to December 2013 and the unexplained failure of the
Malaya Power Plant to make generation offers to the WESM, TMO's
generation offers at the Offer Price Ceiling were cleared and TMO's Plants
were scheduled for dispatch several times from 12 November 2013 to 25
December 2013, even during off-peak hours on weekdays and during
weekends, resulting in TMO setting the WESM spot market price.
1.23 After an analysis of the behavior of the WESM from 11
November 2013 to 10 December 2013, it was determined that had the
Malaya Power Plant been online and ordered to run by the System Operator
("SO"), the National Grid Corporation Philippines ("NGCP"), and offered
capacity during the Malampaya shutdown, WESM average prices (average
price for 11 November 2013 to 10 December 2013) should go down by
seventy-five percent (75%) from Php21,999/MWh or Php21.999/kWh
(actual prices) to Php5;415/MWh or Php5.415/kWh (re-run projected
prices). The simulation scenario if the Malaya Power Plant was online
during the Malampaya shutdown is hereto attached as Annex 3 and maqe an
integral part hereof.
1.24 From 12 November 2013 to 25 December 2013, TMO set the
WESM spot market price twenty-five (25) times out of one thousand fifty-
six intervals (1,056). This number is insignificant in comparison to the
number of times that the Limay Power Plant and Bauang Power Plant set the
spot market prices of the WESM at generation offers ranging from
Php40,000/MWh or Php40.00/kWh up to the Offer Price Ceiling.
No credible explanation {or the Malaya Plant's
Failure to comply with the must-offer rule
1.25 The Malaya Power Plant, a thermal power plant located in
Pililia, Rizal owned by Power Sector Assets and Liabilities Manageinent
Corporation ("PSALM") and operated by Salcon Power Corp. has an
installed capacity of 650 MW.
1.26 During the Malampaya shutdown from 11 November 2013 to
10 December 2013, the Malaya Plant was offline and failed to make any
generation offers to the WESM.
1.27 Because of the supply deficit caused by the Malampaya
shutdown and the occurrence of the scheduled outages of the natural gas
plants reliant on Malampaya for fuel, there was grave and compelling need
8
for the Malaya Power Plant to run, considering that its installed capacity of
650 MW could have greatly minimized the supply deficit.
1.28 Under the EPIRA, all generation companies shall ensure the
availability of its generation facilities at all times subject only to technical
constraints duly communicated to the SO (NGCP), in accordance with
existing rules and procedures.
12
1.29 All generation companies, including those with bilateral supply
contracts, connecting to the Grid
13
must register with the WESM
14
and
submit a standing generation offer
15
for all of its generating units during all
trading intervals which should not be less than the maximum available
capacity of the each generating unit.
16
1.30 The above obligations under the EPIRA, WESM Rules; and
DOE Department Circular No. DC 2010-03-0003, do not distinguish
between generation companies/generating units that are privately owned or
publicly owned. A "generation company" is simply defined in the EPIRA
and WESM Rules as "any Person or entity authorized by the ERC to operate
facilities used in the generation of electricity", "and registered with the
market operator in that capacity".
17
1.31 Pursuant to the foregoing, absent any technical constraints
made known to the SO (NGCP), the Malaya Power Plant should have been
online and made generation offers to the WESM during the Malampaya
shutdown up to its maximum available capacity.
1.32 It must be noted that if the Malaya Power Plant was not limited
by technical constraints communicated to the SO (NGCP) during the
Malampaya shutdown and it intentionally did not make any generation
offers, such action would fall within the meaning of anti-competitive
behavior under the EPIRA IRR and WESM Market Manual (Market
Surveillance, Compliance and Enforcement Market Manual).
1.33 Section 7.4.3 of the WESM Market Manual (Market
Surveillance, Compliance and Enforcement Market Manual) states:
The following conduct of a WESM member shall,
among others, be considered as Anti-Competitive
12
DOE Department Circular No. DC 2010-03-003 dated 26 February 2010, Directing All Power
Generation Companies, the Transmission Service Provider, and all Distribution Utilities to Ensure
Adequate and Reliable Electric Power Supply in the Country.
13
The Grid refers to the high voltage backbone system of interconnected transmission lines, substations and
related facilities. (EPIRA, sec. 4(z)).
14
WESM Rules, Section 4(h), Rule 5, Part II, EPIRA IRR; Section 2.3.1.1.
15
WESM Rules, Section 3.5.5.1and3.5.5.2.
16
WESM Rules, A 1.1 (e ), Appendix A.
17
WESM Rules, Definition of Generation Company, Chapter 11.
9
Behavior when such conduct significantly affects prices
in the WESM:
(a) Physical withholding or the refusal to offer to sell,
or schedule, the maximum available output of reserve
to the WESM, by a facility available and capable of
producing such output or reserve. This type of conduct
may, among others, include:
(i) Falsely declaring that a generation facility has been
forced out of service, or has otherwise become
unavailable or has constraints that limits its output or
reserve; x x x
1.34 To date, no formal explanation has been given for the failure of
the Malaya Power Plant to run and make generation offers during the
Malampaya shutdown by either PSALM, the owner of the Malaya Power
Plant and Salcon Power Corp., the operator of the Malaya Power Plant.
1.35 Further, despite knowing the consequences of the Malampaya
shutdown and the high demand for electricity in November 2013 and
December 2013 during the shutdown, neither the DOE nor the SO (NGCP),
inconsistent with their mandate and functions, compelled Malaya to run.
1.36 The DOE is duty-bound under the EPIRA to ensure the
reliability, quality and security of electric power supply while the SO
(NGCP) pursuant to the EPIRA, ERC Resolution No. 115 otherwise known
as the Philippine Grid Code and the WESM Rules has the responsibility to
ensure the safety, power quality, stability, reliability and security of the Grid.
TMO did not benefit from being a price-setter
1.37 Further, it must be noted that TMO did not benefit from being
the marginal plant and setting the WESM spot market price. TMO's
generation offer is irrelevant to the payment it receives for its generated
capacity dispatched to the Grid. Because TMO's generation capacity is fully
contracted pursuant to the MERALCO-TMO PSA, it will only be paid the
contract price based on a pre-determined formula regardless of the priCe of
its generation offers to the WESM.
1.38 From the foregoing it is clear that TMO did not receive any
benefit from setting its generation offer at the Offer Price Ceiling.
1.39 TMO merely followed the instructions of MERALCO and
complied with its contractual obligations under the MERALCO-TMO PSA,
the terms and conditions of which have been provisionally approved by the
ERC and which have become operationally effective as of 12 November
2013.
10
1.40 TMO was obligated to make a generation offer pursuant to the
WESM Rules, specifically Section 3.5.5, Chapter 3 and Section Al.I,
Appendix A of the WESM Rules, which state:
CHAPTER3
THE MARKET
3.5 SUBMISSION OF OFFERS, BIDS, AND DATA
3.5.5 Generation Offers and Data
3.5.5. l Each Scheduled Generation Company including
Generation Companies with bilateral contracts shall
submit a standing generation offer for each of its
scheduled generating units for each trading interval in
each trading day of the week in accordance with the
timetable.
3.5.5.2 Each generation offer shall include the
information specified in Appendix A 1.1.
xxx
APPENDIX A
APPENDICES TO CHAPTER 3
Appendix Al. Information to be Supplied with Offers
to Supply and to Buy Electricity
Al.1 Generation Offer
Generation offers:
xxx
( c) May include up to ten (10) energy offer blocks per
(aggregate) unit. The maximum combined capacity of
generation and reserve offers must not be less than the
maximum available capacity of the generator. (As
amended by DOE DC No. 2006-01-0001 dated 10
January 2006)
1.41 Pursuant to the foregoing, TMO has to make a generation offer
during every trading interval. However, TMO is also obligated under the
MERALCO-TMO PSA to supply electricity to the Grid when MERALCO
will need it, which is usually during peak hours.
11
1.42 Thus, in order for TMO to comply with the requirements of
Section 3.5.5, Chapter 3 and Section Al.1, Appendix A of the WESM Rules
and to fulfill its obligations under the MERALCO-TMO PSA, MERALCO's
recourse was to instruct TMO to bid at a negative or low price during peak
hours, when MERALCO would have greater need of electricity and to bid at
the Offer Ceiling Price during off-peak hours when MERALCO did not need
electricity.
1.43 MERALCO expects that when it instructs TMO to make a
generation offer at a negative or low price during peak hours, the TMO Plant
will be dispatched and when it instructs TMO to make a generation offer at
the Offer Ceiling Price during off-peak hours, the TMO Plant will not be
dispatched since there is more supply than demand during those hours.
1.44 Further, it must be noted that the TMO Plant had a Monthly
Maximum Capacity Factor of only forty percent (40%). Since, MERALCO
will naturally need to allocate the electricity production of the TMO Plant
during its peak load requirements and not during off-peak hours.
1.45 The instructions of MERALCO to TMO do not constitute a
form of anti-competitive behavior. TMO did not derive any economic: gain
from it. TMO believed in good faith that MERALCO was merely
guaranteeing that its demand requirements for its customers during peak
hours will be met by TMO considering that it is entitled to the same pursuant
to the MERALCO-TMO PSA.
1.46 The WESM Rules and market manuals do not prohibit making
generation offers at the Offer Ceiling Price.
TMO is bound by its contractual obligations to MERALCO
1.47 Had TMO disregarded the instructions ofMERALCO to submit
generation offers at the Offer Ceiling Price, TMO would be liable for breach
of its contractual obligations.
1.48 Absent its contractual obligations to MERALCO to mirror
MERALCO's day-ahead 24-hour nomination schedules, it was not in the
best interest of TMO to make generation offers at the Offer Ceiling Price
where dispatch was unlikely.
1.49 Hence, TMO could not have colluded with MERALCO as
TMO did not stand to gain in setting the WESM spot market price at the
Offer Ceiling Price in excess of the contracted price under the pRC
approved MERALCO-TMO PSA.
1.50 Any accusation against TMO of taking part in price
manipulation or market abuse is readily belied by the true circumstances.
12
B. Facts Relevant to TLI
1.51 TLI is a corporation duly organized and existing under the laws
of the Republic of the Philippines.
18
TLI is one hundred percent (100%)
owned by Therma Power, Inc.,
19
a wholly-owned subsidiary of Aboitiz
Power Corporation,
20
which is a subsidiary of Aboitiz Equity Ventures,
Inc.
21
TL! as IP P Administrator
1.52 TLI is the IPP Administrator
22
of a coal-fired power generating
facility in Pagbilao, Quezon with an installed capacity of 764 MW (the
"Pagbilao Plant"), which is owned, operated and maintained by the IPP,
TeaM Energy Corp.
1.53 The Pagbilao Plant is composed of two (2) power generating
units each with an installed capacity of 3 82 MW or an aggregate capacity of
764 MW. The two (2) units are referred to as Pagbilao Unit 1 and Pagbilao
Unit 2.
1.54 As IPP Administrator, TLI is responsible for paying monthly
fees to PSALM, procuring the fuel requirements of and selling the electricity
generated by the Pagbilao Plant of up to 700 MW, while TeaM Energy
Corp., as owner, is responsible for the physical operation and maintenance
of the Pagbilao Plant which includes approving the period for scheduled
outages as recommended by the IPP Administrator and restoring the
operations and generating capacity of the Pagbilao Plant (both Pagbilao Unit
1 and Pagbilao Unit 2) in the event that it goes on a scheduled or forced
outage.
1.55 TLI is registered with PEMC as a direct member in the WESM.
It is fully compliant with the basic rules, requirements and procedures set out
in the WESM Rules that govern the operation of the Philippine electricity
market and is legally authorized and permitted to participate as a generation
company in the electricity spot market.
18
Certificate of Incorporation ofTLI dated 20 October 2008.
19
2013 General Information Sheet ofTLI.
20
2013 General Information Sheet of TPI.
21
2013 General Information Sheet of Aboitiz Power Corporation.
22
IPP Administrator refers to qualified independent entities appointed by PSALM who shall administer,
conserve and manage the contracted energy output of NPC IPP contracts, including selling the contracted
energy output of these contracts and offering Ancillary Services, where applicable.
13
TL! committed all of Pagbilao Unit 1 output to MERALCO
1.56 Pursuant to its functions as IPP Administrator, on 29 February
2012, TLI executed a power supply agreement with MERALCO (the
"MERALCO-TLI PSA") committing all of Pagbilao Unit 1 's electrical
output of up to 350,000 kW or 350 MW to supply MERALCO's electricity
needs.
1.57 Under the MERALCO-TLI PSA Pagbilao Unit 1 is allowed to
go on scheduled outages or be shutdown for a x i m u ~ period of thirty (30)
days for scheduled repairs and maintenance, during which time MERALCO
will independently source replacement electricity from the WESM at its own
cost.
23

1.58 MERALCO and TLI agreed to the scheduled outages period of
16 February 2013 to 17 March 2013 upon prior concurrence and approval of
the SO (NGCP) and the IPP, TeaM Energy. To TLI's best knowledge, the
approved scheduled outage of Pagbilao Unit 1 is known only to TLI,
MERALCO, TeaM Energy and SO (NGCP).
1.59 The SO (NGCP) having the responsibility to ensure the safety,
power quality, stability, reliability and security of the Grid has information
of all the scheduled outages of all generating facilities in the country.
1.60 Thus, on 16 February 2013, pursuant to the agreement with
MERALCO and with the approval of NGCP, Pagbilao Unit 1 went on a
scheduled outage for repairs and maintenance.
1.61 On 29 November 2013 to 13 December 2013, unforeseen by
TLI, Pagbilao Unit 1 went on a forced outage as a result of a tube leak.
1.62 Under the MERALCO-TLI PSA, the Pagbilao Unit 1 is allowed
forced outages not to exceed fifteen ( 15) days for every contract year. Thus
Pagbilao Unit l's forced outages from 29 November 2013 to 13 December
2013 were within its allowed number of forced outages under the
MERALCO-TLI PSA.
1.63 TLI has no control over when a forced outage would occilr for
Pagbilao Unit 1 or when it can go back online. It is merely the IPP
Administrator and is not in charge of the operations and maintenance of the
Pagbilao Plant.
23
Article 7, Power Supply Agreement between Therma Luzon, Inc. and Manila Electric Company dated 29
February 2012.
14
TL! offered Pagbilao Unit 2 output to other buyers
1.64 TLI also executed various power supply agreement with
cooperatives and other distribution utilities in relation to the electricity
output of Pagbilao Unit 2.
Pagbilao Unit 2 forced outage coincided with
Pagbilao Unit 1 forced outage
1.65 On 31 August 2013 to 26 November 2013, Pagbilao Unit 2
went on a scheduled outage for repairs and maintenance.
1.66 Operation of Pagbilao Unit 2 was restored after the scheduled
outage. However, only days after being online it was discovered during the
testing and commissioning of Pagbilao Unit 2 that there was a tube leak
prompting the immediate shutdown of Pagbilao Unit 2 from 29 November
2013 to 14 December 2013 (also the scheduled outage of Pagbilao Unit 1)
and at the tail end of the Malampaya shutdown on 11November2013 to 10
December 2013.
1.67 Because of Pagbilao Unit 2's forced outage from 29 November
2013 to 14 December 2013, TLI was constrained to source replacement
electricity from the WESM at the spot market price to service the electricity
needs of the customers being supplied electricity by Pagbilao Unit 2.
1.68 TLI, as IPP Administrator, has no control over the forced
outages of Pagbilao Unit 1 from 29 November 2013 to 13 December 2013
and Pagbilao Unit 2 from 29 November 2013 to 14 December 2013 during
the shutdown ofMalampaya.
1.69 The Philippine Grid Code defines a forced outage as an
Outage
24
that results from emergency conditions directly associated with a
Component,
25
requiring that it be taken out of service immediately, either
automatically or as soon as switching operations can be performed. Also, an
Outage can be caused by human error or the improper operation of
Equipment.
1. 70 As stated earlier, TLI is only the IPP Administrator of the
Pagbilao Plant, it is not involved in the operations and maintenance of the
Pagbilao Plant and cannot therefore foresee or cause a forced outage.
24
Outage refers to the state of a Component when it is not available to perform its intended function due to
some event directly associated with that Component. An outage may or may not cause an Interruption of
service to Customers (Philippine Grid Code).
25
Component refers to a piece of Equipment, a line or circuit, a section of line or circuit, or a group of
items, which is viewed as a unit for a specific purpose. (Philippine Grid Code).
Equipment refers to all appratus, machines, conductors, etc. used as part of, or in connection with, an
electrical installation. (Philippine Grid Code).
15
1. 71 Further, it is not in the best interest of TLI for any of the units
of the Pagbilao Plant to go on a forced outage.
1. 72 The capacity of the Pagbilao Plant is has been contracted
through power supply agreements with MERALCO and other distribution
utilities and cooperatives, if any of the units of the Pagbilao Plant go on a
forced outage, TLI will be required to source replacement electricity from
the WESM to comply with its obligations under the relevant power supply
agreements.
1. 73 In fact, during Pagbilao Unit 2 's recent forced outage from 29
November 2013 to 14 December 2013, TLI suffered losses amounting to
Nine Hundred Eight Two Million Philippine Pesos (Php982,000,000.00) due
to its purchase of replacement electricity from the WESM.
1. 7 4 Under some of its power supply agreements, if Pagbilao Unit 2
goes on a forced outage beyond the number of allowable forced outages
under the relevant power supply agreement, it will be required to source
electricity from the WESM at spot market price and it will bear the cost of
the difference between the contract price and the WESM spot market price.
If the WESM spot market price is higher than the contract price, TLI will be
paid by its counter-parties only at the contract price and TLI will bear the
difference between the WESM spot market price and the contract price ..
1. 7 5 Thus, TLI paid more for energy purchased at the WESM than
what it received for energy sold to its other counter-parties.
I. 7 6 It is therefore not logical for TLI to intentionally place the
Pagbilao Plant on a forced outage and conspire with other generation
compames.
C. Facts Relevant to both TMO and TLI
1. 77 Although TMO and TLI are affiliates, both have separate
juridical personalities. TMO and TLI are operationally independent from
each other, having separate trading offices.
1. 78 TMO and TLI are differently-situated since TMO is a peaking
plant with fully contracted capacity to MERALCO, while TLI is an IPP
Administrator which sells to MERALCO and many other buyers
1. 79 The operational strategies of TMO and TLI are very different,
and they act on distinct motives.
1.80 TLI had nothing to gain from TMO's compliance with
MERALCO's instructions to bid at the Offer Ceiling Price of P62.00/kwh.
16
In the same manner, TMO did not gain from the forced outage of TLI's
Pagbilao Unit 2.
1. 81 In fact, during TLI' s forced outage, TLI was constrained to
source replacement electricity from the WESM at a high spot market price in
order to fulfill its contractual obligations under the power supply agreements
for Pagbilao Unit 2, suffering losses amounting to Nine Hundred Eight Two
Million Philippine Pesos (Php982,000,000.00).
1.82 Taking into account the foregoing, any accusation of collusion
between TMO and TLI is utterly absurd.
1.83 TMO and TLI conducted their businesses in the regular course
and in accordance with the relevant laws and regulations.
II.
REASONS WHY THE PETITIONS
AND THE MERALCO COUNTER-PETITION
SHOULD BE DISMISSED
A. Certiorari is the wrong remedy;
B. In any case, the Petitions lack merit; and
C. The Meralco Counter-Petition is inappropriate.
DISCUSSION
A. CERTIORARI IS THE WRONG REMEDY.
2.1 Certiorari
26
involves the judicial or quasi-judicial functions of a
tribunal, board or officer. The 9 December 2013 letter (the "December 9
letter") of the ERC
27
can hardly be described as a quasi-judicial act of the
ERC.
26
Section 1, Rule 65 clearly states that:
Section 1. Petition for certiorari. - When any tribunal, board or
officer exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby may
file a verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs as law and
justice may require. (Emphasis supplied)
27
Attached as Annex C to Bayan Muna's Petition. In the letter dated 9 December 2013, the ERC granted
MERALCO the clearance to stagger implementation of its generation cost recovery (for November 2013
supply month) by way of an exception to the AGRA Rules. MERALCO was authorized to implement a
generation charge of Php7.67/kWh in its December 2013 billing and add to its calculated generation charge
for February 2014 billing the generation rate of Phpl.00/kWh. The letter further stated that "[t]he balance
of the deferred generation amount without any carrying costs shall be included in MERALCO's generation
17
2.1.1 "Quasi-judicial function is a term that applies to the
action or discretion of public administrative officers or bodies given
the authority to investigate facts or ascertain the existence of facts,
hold hearings, and draw conclusions from them as a basis for their
official action using discretion of a judicial nature."
28
2.1.2 The Supreme Court has previously dismissed a Petition
for Certiorari questioning the validity of a regulation issued by the
ERC (i.e., Distribution Services and Open Access Rules) because such
rules do not involve the ERC's exercise of its quasi-judicial functions,
as in this case. The Supreme Court ruled that:
[I]n Philnabank Employees Association v. Estanislao, we
did not grant a petition for certiorari against the
Department Secretary who did not act in any judicial
or quasi-judicial capacity but merely promulgated the
questioned implementing rules under the mandate of
Republic Act No. 6971, the applicable law in this cited
case. (Emphasis supplied/
9
2.1.3 The December 9 letter of the ERC was not issued by the
ERC in the exercise of its quasi-judicial function. There was no
conclusion drawn as a basis for official action after investigating facts
or holding hearings, as what a quasi-judicial function has been
described. Instead, the December 9 letter of the ERC was issued
pursuant to the following regulations allowing the automatic increase
in generation rates, which rules are quasi-legislative in nature:
(a) Article III, Section 2 of the Guidelines for the Automatic
Adjustment of Generation Rates and System Loss Rates
by Distribution Utilities (the "AGRA Guidelines"),
which allows Distribution Utilities ("DU") to bill their
customers the generation rates calculated in accordance
with the stated formula, effective on the 10th day ofeach
month:
Section 2. Billing of New Generation Rate -
The Distribution Utilities shall bill their
customers the Generation Rates calculated
in accordance with the immediately
preceding Section effective on the tenth (10)
day of each month.
charge for March 2014. Should MERALCO seek to recover its carrying costs on the entire deferred
amount, it shall file a formal application on this."
28
Chamber of Real Estate and Builders' Associations, Inc. (CREBA) v. Energy Regulation
Commission (ERC), G.R. No. 174697, 8 July 2010.
29 Id.
18
(b) Article VIII, Section 1 of the AGRA Guidelines, which
empowers the ERC to "allow an exception from any
provisions" of the AGRA Guidelines, "if such exception
is found to be in the public interest and is not contrary to
law or any other related rules and regulations".
( c) Amendment to Section 4( e ), Rule III of the EPIRA IRR,
which provides that the verification, hearing and
publication requirements shall not apply to, among
others, Automatic Generation Rate Adjustment
Mechanism. Notably, the EPIRA IRR and the
amendments were issued by the DOE and not the ERC.
2.1.4 Clearly, questioning the validity of the December 9 letter
of the ERC by way of certiorari was a fatal mistake because of the
wrong remedy.
2.2 Moreover, certiorari is a wrong remedy if there is an appeal, or
other plain, speedy, and adequate remedy in the ordinary course of law .. The
ERC Rules of Procedure provides for an adequate remedy either by filing a
Petition or a complaint, and making the December 9 letter of the ERC the
subject-matter of the action. The Petitioners could have availed of the
following remedies under the ERC Rules of Procedure:
Section 4. Petition - By means of a petition, a person,
other than an applicant or complainant, petitions the
Commission for affirmative relief under any statute or
other authority delegated to the Commission. It shall state
clearly and concisely the petitioner's grounds of interest
in the subject matter, the facts relied upon, and the relief
sought, and shall cite by appropriate reference the
statutory provision or other authority relied upon for
relief. If the relief sought affects the rights of other
persons, it shall implead all these other persons as
respondents and state their complete names and
addresses.
Section 5. Complaint. - The complaint is a concise
statement of the ultimate facts of the matter complained
of within the regulatory power of the Commission, and
shall specify the principal relief sought. It shall state the
complete name and address of the respondent against
whom the complaint if directed.
2.2.1 It is settled that certiorari cannot take the place of other
remedies. Accordingly, the Supreme Court dismissed cases for failure
to exhaust administrative remedies. The Supreme Court explained the
19
rationale of the rule on exhaustion of administrative remedies m
Gonzales v. Court of Appeals:
30
The thrust of the rule on exhaustion of administrative
remedies is that the courts must allow the
administrative agencies to carry out their functions
and discharge their responsibilities within the
specialized areas of their respective competence. It is
presumed that an administrative agency, if afforded an
opportunity to pass upon a matter, will decide the same
correctly, or correct any previous error committed in its
forum. Furthermore, reasons of law, comity and
convenience prevent the courts from entertaining cases
proper for determination by administrative agencies.
Hence, premature resort to the courts necessarily
becomes fatal to the cause of action of the petitioner.
(Emphasis supplied)
2.3 Furthermore, certiorari is the wrong remedy for what is actually
a rate dispute disguised as a supposed challenge to the validity of the
December 9 letter of the ERC.
2.3.1 By questioning the December 9 letter of the ERC, the
Petitioners are actually disputing the electricity rate that MERALCO
is passing on to consumers. Such rate dispute is within the original
and exclusive jurisdiction of the ERC. Section 43(v) of the EPIRA
states:
(v) The ERC shall have the original and exclusive
jurisdiction over all cases contesting rates, fees, fines
and penalties imposed by the ERC in the exercise of the
abovementioned powers, functions and responsibilities
and over all cases involving disputes between and among
participants or players in the energy sector. All notices of
hearings to be conducted by the ERC for the purpose of
fixing rates or fees shall be published at least twice for
two successive weeks in two (2) newspapers of
nationwide circulation. (Emphasis supplied)
2.3.2 The technical nature of this controversy (involving
disputes on the increase in generation rates) requires the ERC's
expertise, which is the government agency tasked to regulate the
electric power industry sector. The Supreme Court cannot thus. take
cognizance of this rate dispute without violating the doctrine of
primary administrative jurisdiction. The Supreme Court explained the
30
G.R. No. 106028, 9 May 2001.
20
doctrine of primary administrative jurisdiction in Ferrer et.al. v.
Raco et. al. :
31
Under the doctrine of primary administrative jurisdiction,
courts cannot or will not determine a controversy where
the issues for resolution demand the exercise of sound
administrative discretion requiring the special
knowledge, experience, and services of the
administrative tribunal to determine technical and
intricate matters of fact. In other words, if a case is such
that its determination requires the expertise, specialized
training and knowledge of an administrative body, relief
must first be obtained in an administrative proceeding
before resort to the courts is had even if the matter may
well be within their proper jurisdiction.
2.3 .3 Resolution of rate disputes also requires factual
determination of the propriety of the generation charges. The
Supreme Court cannot therefore take cognizance of rate disputes as it
is not a trier of facts.
2.3 .4 The Supreme Court has explained the limits of its
exercise of certiorari jurisdiction. It explicitly declared that factual
issues are not proper subjects for a certiorari. In PM! Colleges v.
National Labor Relations Commission,
32
the Supreme Court held that:
A mere perusal of the issues raised by petitioner already
invites dismissal for demonstrated ignorance and
disregard of settled rules on certiorari. Except perhaps for
the third issue, the rest glaringly call for a re-
examination, evaluation and appreciation of the weight
and sufficiency of factual evidence presented before the
Labor Arbiter. This, of course, the Court cannot do in the
exercise of its certiorari jurisdiction without transgressing
the well-defined limits thereof. The corrective power of
the Court in this regard is confined only to jurisdictional
issues and a determination of whether there is such grave
abuse of discretion amounting to lack or excess of
jurisdiction on the part of a tribunal or agency. So
unyielding and consistent are the decisional rules thereon
that it is indeed surprising why Petitioner's counsel failed
to accord them the observance they deserve. Thus, in San
Miguel Foods, Inc. Cebu B-Meg Feed Plant v. Hon.
Bienvenido Laguesma, we were emphatic in declaring
that: "This Court is definitely not the proper venue to
31
G.R. No. 174129, 5 July2010.
32
G.R. No. 121466, 15 August 1997.
21
I
consider this matter for it is not a trier of facts ....
Certiorari is a remedy narrow in its scope and
inflexible in character. It is not a general utility tool in
the legal workshop. Factual issues are not a proper
subject for certiorari, as the power of the Supreme
Court to review labor cases is limited to the issue of
jurisdiction and grave abuse of discretion .... " Of the
same tenor was our disquisition in !locos Sur Electric
Cooperative, Inc. v. NLRC where we made plain that:
"In certiorari proceedings under Rule 65 of the Rules
of Court, judicial review by this Court does not go so
far as to evaluate the sufficiency of evidence upon
which the Labor Arbiter and the NLRC based their
determinations, the inquiry being limited essentially
to whether or not said public respondents had acted
without or in excess of its jurisdiction or with grave
abuse of discretion." (Emphasis supplied)
2.3.5 The Supreme Court is not a trier of facts in a proceeding
for certiorari under Rule 65. The above rulings of the Supreme Court
show that this rule is "unyielding". While there are exceptions to this
rule, as enumerated below, these exceptions pertain to the cases which
where brought to the Supreme Court on petition for review on
certiorari under Rule 45 and not Rule 65:
2.3 .5.1 When the findings of fact of the lower court
or administrative agency and the Court of Appeals are
conflicting;
33
2.3.5.2 Findings of facts of the trial courts and the
Court of Appeals may be set aside when such findings are not
supported by the evidence or when the trial court failed to
consider the material facts which would have led to a
conclusion different from what was stated in its judgment;
34
2.3.5.3 Where the conclusion is a finding grounded
. 1 1 . . d . 3s
enttre yon specu atlon, surmise an conjectures;
2.3.5.4
mistaken
36
'
2.3.5.5
Where the inference made is manifestly
Where there is grave abuse of discretion;
37
33
Commissioner of Internal Revenue v. Benguet Corp., G.R. Nos. 134587 & 134588, 8 July 2005.
34
McKee v. Intermediate Appellate Court, G.R. No. 68102, 16 July 1992.
35
Asset Privatization Trust v. Sandiganbayan, G.R. No. 138598, 29 June 200 I; Cosme v. People of the
Philippines, G.R. No. 149753, 27 November 2006.
36 ld.
37 Id.
22
2.3.5.6 The findings of fact are premised on the
absence of evidence;
38
2.3.5.7 The findings of fact are contradicted by
evidence on record.
39
2.3.5.8 When the findings are conclusions without
citation of specific evidence on which they are based;
40
and
2.3.5.9 When the facts set forth in the petition as
well as in the petitioner's main and reply briefs are not disputed
by the respondent.
41
2.3 .6 It is clear from the said exceptions that the Supreme
Court only considered facts after a lower court or administrative
agency has already received evidence, but made wrong findings of
fact, which is not the case at bar.
2.4 Furthermore, the other questioned rules and regulations,
namely: the amendments to Section 4( e ), Rule III of the EPIRA IRR, the
AGRA Guidelines, and the ERC's Resolutions No. 10-01 and 10-04, both
series of 2004, were issued pursuant to regulatory and quasi-legislative (not
quasi-judicial) power. Certiorari is the wrong remedy to question quasi-
legislative issuances because certiorari applies only to judicial or quasi-
judicial acts.
2.5 Finally, certiorari 1s the wrong remedy to challenge the
constitutionality of laws.
2.5.1 A perusal of NASECORE's petition reveals that by
questioning the December 9 letter of the ERC, it is collaterally
questioning the constitutionality of the "Amendments to Section 4 ( e)
of Rule 3 and Section 7 of Rule 18 of the Implementing Rules and
Regulations (IRR) of Republic Act No. 9136, otherwise known as the
Electric Power Industry Reform Act" (the "Amendments to the IRR"),
for purportedly "effectively doing away with the requirement of
publication in certain rate increases and adjustment applications of
distribution utilities."
42
2.5.2 Bayan Muna also filed a Petition for Certiorari under
Rule 65 of the Rules of Court to "assail (1) ERC's approval of
MERALCO' s proposal to pass on to consumers the increase in the
generation cost for November 2013 not only as a violation of
38
Mendoza v. People, G.R. No. 146234, 29 June 2005.
39 Id.
40
Heirs of Carlos Alcaraz v. Republic of the Philippines, G.R. No. 131667, 28 July 2005.
41 Id.
42
NASECORE's Petition, par. 24, pp. 11-12.
23
Petitioners' and the public's right to due process but also because it
approved the same despite indications that the power rate increase was
a result of combinations in restraint of trade prohibited under the 1987
Constitution and relevant Philippine laws; (2) Sections 6 and 29 of
Republic Act 9136, An Act Ordaining Reforms in the Electric Power
Industry, Amending for the Purpose Certain Laws and for Other
Purposes (Electric Power Industry Reform Act of 2001, or
hereinafter, the EPIRA); and (3) assail the constitutionality of Section
45 of the EPIRA which allows cross-ownership among energy players
from the distribution to the generation sector."
2.5.3 Clearly, NASECORE and Bayan Muna are questioning
the constitutionality of Sections 6 and 29 of the EPIRA,, the
Amendments to Section 4( e ), Rule III of the EPIRA IRR, the AGRA
Guidelines and Resolution Nos. 10-01 and 10-04, both series of 2004.
These laws should have been questioned separately through a Petition
for Declaratory Relief under Rule 63 of the Rules of Court, assuming
the requisites are present (and there is no ground to make that
assumption).
2.5.4 The Supreme Court has repeatedly dismissed petitions
for certiorari which were intended to question the constitutionality of
laws and administrative rules and regulations.
(a) In Chamber of Real Estate and Builders' Associations,
Inc. (CREBA) v. Energy Regulatory Commission, supra.,
the petition was dismissed for committing the same
mistake of filing a petition for certiorari under Rule 65
and not a declaratory relief under Rule 63 of the Rufos of
Court. In the said case, petitioner filed a Petition for
Certiorari with Prayer for the Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction
to nullify Section 2.6 of the Distribution Services and
Open Access Rules (DSOAR), promulgated by
respondent ERC on January 18, 2006. The Supreme
Court held that:
xxx Even if they had been properly
aggrieved parties, the petition must still be
dismissed for violation of yet another basic
principle applicable to Rule 65. This rule
requires, for a petition for certiorari to be an
appropriate remedy, that there be no appeal
or plain, speedy, and adequate remedy in the
ordinary course of law. Since the petitioner
assails the validity of a rule or statute and
seeks our declaration that the rule is
unconstitutional, a petition for
24
declaratory relief under Section 1, Rule
63 of the Rules of Court provides a
remedy more appropriate than certiorari.
In the present case, the petitioner cannot come
before this Court using an incorrect remedy
and claim that it was oppressed, or that its
rights to due process and equal protection have
been violated by an administrative issuance that
does not even affect its rights and obligations.
The writ of certiorari is an extraordinary
remedy that the Court issues only under closely
defined grounds and procedures that litigants
and their lawyers must scrupulously observe.
They cannot seek refuge under the umbrella of
th.is remedy on the basis of an undemonstrated
claim that they raise issues of transcendental
importance, while at the same time flouting the
basic ground rules for the remedy's grant.
(Emphasis supplied)
(b) In Galicto v. Aquino 111,
43
the Supreme Court dismissed
the Petition for Certiorari and Prohibition filed by
Galicto, which questioned the constitutionality of
Executive Order No. (EO) 7 issued by the Office of the
President on September 8, 2010, and held that:
Under the Rules of Court, petitions for
Certiorari and Prohibition are availed of to
question judicial, quasi-judicial and
mandatory acts. Since the issuance of an
EO is not judicial, quasi-judicial or a
mandatory act, a petition for certiorari
and prohibition is an incorrect remedy;
instead a petition for declaratory relief
under Rule 63 of the Rules of Court, filed
with the Regional Trial Court (RTC), is
the proper recourse to assail the validity
ofE07xxx
Second, although the instant petition is
styled as a petition for certiorari, in
essence, it seeks the declaration by this
Court of the unconstitutionality or
illegality of the questioned ordinance and
43
G.R. No. 193978, 28 February 2012.
25
executive order. It, thus, partakes of the
nature of a petition for declaratory relief
over which this Court has only appellate,
not original, jurisdiction. Section 5, Article
VIII of the Constitution provides:
xxx
As such, this petition must necessar[ily]
fail, as this Court does not have original
jurisdiction over a petition for
declaratory relief even if only questions of
law are involved.
While we have recognized in the past that
we can exercise the discretion and
rulemaking authority we are granted under
the Constitution, and set aside procedural
considerations to permit parties to bring a
suit before us at the first instance through
certiorari and/or prohibition, this liberal
policy remains to be an exception to the
general rule, and thus, has its limits. In
Concepcion v. Commission on Elections
(COMELEC), we emphasized the
importance of availing of the proper
remedies and cautioned against the wrongful
use of certiorari in order to assail the quasi-
legislative acts of the COMELEC, especially
by the wrong party. In ruling that liberality
and the transcendental doctrine cannot
trump blatant disregard of procedural
rules, and considering that the petitioner
had other available remedies (such as a
petition for declaratory relief with the
appropriate RTC under the terms of Rule
63 of the Rules of Court), xxx (Emphasis
supplied)
2.6 Clearly, certiorari is the wrong remedy and the Supreme Court
should dismiss the Petitions consistent with its previous rulings.
No justiciable controversy
2.7 More importantly, the Petitions should be dismissed because
there is no justiciable controversy.
26
2. 7 .1 The case is actually a complaint against the rates of
MERALCO which is within the exclusive original jurisdiction of the
ERC but to give the appearance of a challenge to the constitutionality
of the EPIRA provisions, Petitioners improperly included other issues.
If indeed there was an actual justiciable controversy about the
constitutionality of certain EPRIA provisions, then Petitioners should
have filed an action for declaratory relief.
2. 7 .2 One of the requirements for the filing of a petition for
declaratory relief is the existence of a justiciable controversy, which is
defined as "a definite and concrete dispute touching on the legal
relations of parties having adverse legal interests which may be
resolved by a court of law through the application of a law."
44
2. 7.3 There is no justiciable controversy in this case. It is
settled that when the issue of unconstitutionality of a legislative act is
raised, the Court may exercise its power of judicial review only if the
following requisites are present: ( 1) an actual and appropriate case and
controversy; (2) a personal and substantial interest of the party raising
the constitutional question; (3) the exercise of judicial review is
pleaded at the earliest opportunity; and ( 4) the constitutional question
raised is the very lis mota of the case.
45
.
2. 7.4 The first and the fourth requisites are not present in this
case.
2. 7 .5 There is no actual and appropriate case. The Petitions
unduly attack the wisdom of behind the law, which the Supreme Court
has no jurisdiction to resolve.
2.7.5.l In Garcia v. Executive Secretary,
46
the
Supreme Court dismissed the petition for certiorari which
questioned the propriety of implementing full deregulation by
removing the system of price controls in the local downstream
oil industry:
The petition fails to satisfy the very first of these
requirements - the existence of an actual case
or controversy calling for the exercise of
judicial power. An actual case or controversy is
one that involves a conflict of legal rights, an
assertion of opposite legal claims susceptible of
judicial resolution; the case must not be moot or
academic or based on extra-legal or other similar
44
Cutaran v. Department of Environment and Natural Resources, G.R. No. 134958, 31January2001
45
Estarija v. Ranada et.al., G.R. No. 159314, 26 June 2006.
46
G.R. No. 157584, 2 April 2009.
27
considerations not cognizable by a court of justice.
Stated otherwise, it is not the mere existence of a
conflict or controversy that will authorize the
exercise by the courts of its power of review; more
importantly, the issue involved must be susceptible
of judicial determination. Excluded from these
are questions of policy or wisdom, otherwise
referred to as political questions:
As Tanada v. Cuenca puts it, political questions
refer "to those questions which, under the
Constitution, are to be decided by the people in
their sovereign capacity, or in regard to which
full discretionary authority has been delegated
to the legislative or executive branch of
government." Thus, if an issue is clearly
identified by the text of the Constitution as matters
for discretionary action by a particular branch of
government or to the people themselves then it is
held to be a political question. In the classic
formulation of Justice Brennan in Baker v. Carr,
11
[p ]rominent on the surface of any case held to
involve a political question is found a textually
demonstrable constitutional commitment of the
issue to a coordinate political department; or a lack
of judicially discoverable and manageable
standards for resolving it; or the impossibility of
deciding without an initial policy determination of
a kind clearly for non-judicial discretion; or the
impossibility of a court's undertaking independent
resolution without expressing lack of the respect
due coordinate branches of government; or an
unusual need for unquestioning adherence to a
political decision already made; or the potentiality
of embarrassment from multifarious
pronouncements by various departments on the
one question.
11
(Emphasis supplied)
2.7.5.2 The Supreme Court further held that the
courts should not involve themselves with or delve into the
policy or wisdom of a statute, because it sits, not to review or
revise legislative action, but to enforce the legislative will:
In Tatad, we declared that the fundamental
principle espoused by Section 19, Article XII of
the Constitution is competition. Congress, by
enacting R.A. No. 8479, determined that this
objective is better realized by liberalizing the oil
28
market, instead of continuing with a highly
regulated system enforced by means of restrictive
prior controls. This legislative determination was a
lawful exercise of Congress' prerogative and one
that this Court must respect and uphold.
Regardless of the individual opinions of the
Members of this Court, we cannot, acting as a
body, question the wisdom of a co-equal
department's acts. The courts do not involve
themselves with or delve into the policy or
wisdom of a statute; it sits, not to review or
revise legislative action, but to enforce the
legislative will. For the Court to resolve a
clearly non-justiciable matter would be to
debase the principle of separation of powers
that has been tightly woven by the Constitution
into our republican system of government xxx
(Emphasis supplied)
2.7.5.J The constitutional challenge to the
provisions of the EPIRA is not the !is mota of the case.
2.7.5.4 The Supreme Court explained the concept of
!is mota in General v. Urro:
47
Lis mota literally means "the cause of the suit or
action." This last requisite of judicial review is
simply an offshoot of the presumption of validity
accorded the executive and legislative acts of our
co-equal branches of the government. Ultimately,
it is rooted in the principle of separation of powers.
Given the presumed validity of an executive act,
the petitioner who claims otherwise has the burden
of showing first that the case cannot be resolved
unless the constitutional question he raised is
determined by the Court.
2.7.5.5 The cause of this suit or action is the alleged
anti-competitive behaviour and market abuse of the generation
companies. The constitutionality of the provisions o( the
EPIRA is inconsequential to the complaint about the rate
increase ofMERALCO, which is allegedly caused by the anti-
competitive behavior and market abuse of the generation
compames.
47
G.R. No. 191560, 29 March 2011.
29
B. IN ANY CASE, THE PETITIONS LACK MERIT.
No grave abuse of discretion
2.8 Petitioners fail to substantiate their allegation that the ERC
committed grave abuse of discretion in issuing the December 9 letter of the
ERC and approving MERALCO's request for clearance to stagger the
collection of generation costs for the November 2013 supply month.
2.8.l In Dumangcas, Jr. v. Hon. Marcelo, et al.,
48
the Supreme
Court defined grave abuse of discretion as:
Grave abuse of discretion is the capricious and
whimsical exercise of judgment on the part of public
officer concerned which is equivalent to an excess or
lack of jurisdiction. The abuse of discretion must be so
patent and gross as to amount to an invasion of a
positive duty or a virtual refusal to perform a duty
enjoined by law, or to act at all in contemplation of law
as where the power is exercised in an arbitrary and
despotic manner by reason of passion and hostility.
(Emphasis supplied)
2.8.2 The ERC acted within its powers and pursuant to valid
laws in issuing the December 9 letter. The December 9 letter of the
ERC implemented the AGRA Guidelines and the amendments to
Section 4( e ), Rule III of the EPIRA IRR. In tum, these laws are
presumed valid and constitutional.
2.8.3 No amount of rationalizing by the Petitioners can change
the fact that the questioned provisions of the AGRA Guidelines and
the amendments to Section 4( e ), Rule III of the EPIRA IRR are
presumed valid and constitutional hence, legally binding. Thus, ERC
is legally bound to implement these provisions.
2.8.4 Laws enjoy the presumption of validity . and
constitutionality. In Dasmarifzas Water District v. Monterey Foods
Corporation,
49
the Supreme Court upheld the validity and
constitutionality of a law (i.e., Section 39 of P.D. 198) and held that "a
law is deemed valid unless declared null and void by a
court". AGRA Guidelines and the amendments to Section 4( e ), Rule
III of the EPIRA IRR are quasi-legislative issuances which have the
force of law. These laws were not, and still have not, been declared
48
G.R. No. I 59949, 27 February 2006.
49
G.R. No. 175550, 17 September 2008.
30
null and void by any court. Thus, the ERC is duty-bound to implement
these.
2.8.5 Moreover, the Petitioners cannot be allowed to
collaterally attack certain provisions of the EPIRA. The Petitions
mainly question the issuance of the December 9 letter of the ERC, yet
collaterally attack the amended Section 4( e ), Rule III of the EPIRA
IRR, the AGRA Guidelines, and Resolutions No. 10-01 and 10-04,
both series of 2004. This collateral attack cannot be allowed. In the
same case of Dasmarinas Water District v. Monterey Foods
Corporation, supra., the Supreme Court declared that:
[A] collateral attack on a presumably valid law is not
allowed. We have ruled time and again that the
constitutionality or validity of laws, orders, or such other
rules with the force of law cannot be attacked
collaterally. There is a legal presumption of validity of
these laws and rules. Unless a law or rule is annulled in a
direct proceeding, the legal presumption of its validity
stands.
2.8.6 In ABS-CBN v. Philippine Multi-Media, Inc., et al.,
50
the
Supreme Court refused to rule on the validity of Memoraridum
Circular No. 04-08-88 because it constituted a collateral attack on its
validity, thus:
The records show that petitioner assailed the
constitutionality of Memorandum Circular No. 04-08-88
by way of a collateral attack before the Court of Appeals.
In Philippine National Bank v. Palma, we ruled that for
reasons of public policy, the constitutionality of a law
cannot be collaterally attacked. A law is deemed valid
unless declared null and void by a competent court; more
so when the issue has not been duly pleaded in the trial
court.
2.8.7 In implementing the foregoing laws and regulations, the
ERC is fulfilling its legal duty under Section 43 (a) of the EPIRA to
"enforce the implementing rules and regulations" of the said law.
2.8.8 The ERC validly issued the December 9 letter of the
ERC even without prior investigation. Price manipulation, anti-
competitive behavior and other similar conduct cannot be presumed.
These are subject to formal proceedings under the ERC's Competition
Rules and Complaints Procedures (the "Competition Rules).
so G.R. Nos. 175769-70, January 19, 2009.
31
2.8.9 Petitioners erroneously argue that the December 9 letter
of the ERC is invalid because it was allegedly issued without prior
investigation. Petitioners make it appear that the ERC is under the
legal obligation to conduct an investigation and penalize anti-
competitive behavior and market power abuse, among others, even
without any competent evidence to support such speculations.
2.8.lOAs discussed, MERALCO's 5 December 2013 letter
51
requested for a staggered implementation of the increase in generation
costs. In tum, these generation costs have automatically increased in
accordance with the AGRA Guidelines. In fact, MERALCO
requested for a staggered (and not outright) implementation of the
increase in generation costs so that the consumers will not be required
to pay the increase in a single instance. In other words, MERALCO
proposed the staggered implementation of the increase in generation
costs for the benefit of the public. This being the case, the ERC has no
reason to even speculate that MERALCO's request was tainted with
any anti-competitive behavior and/or intentions to abuse the market.
2.8.11 While the ERC has the power to investigate instances of
anti-competitive behavior and market power abuse, such power
cannot be loosely and haphazardly exercised. Thus, ERC's
Competition Rules prescribes a detailed manner and procedure by
which the allegations of such conduct can be monitored, investigated
and penalized.
(a) Among other things, Rule 21, Section 1 of the
Competition Rules requires that a formal complaint be
filed, and that proceedings for alleged violations should
include "all supporting affidavits and documents, !!!
would reasonably tend to establish prima facie the
truth of the allegations therein."
(b) Further, Rule 21, Section 2 of the Competition Rules
provides that the Complaint and all proceedings
thereafter shall be governed by the ERC's Rules of
Practice and Procedure.
2.8.12The foregoing requirements under the Competition Rules
clearly demonstrate that the complaints for alleged anti-competitive
behavior and market power abuse, among others, must undergo rigid
and formal proceedings, and cannot be founded on empty
speculations. Thus, there being no prima facie case of any price
manipulation, monopoly, anti-competitive behavior and/or market
power abuse, the ERC is clearly not obliged to conduct any
investigation before issuing the December 9 letter.
51
Attached as Annex A to Bayan Muna's Petition.
32
2.9 At any rate, TMO and TLI did not commit any act of price
manipulation, anti-competitive behavior, market abuse and/or restraint of
trade.
2.9.1 Petitioners speculate that there was a so-called
"collusion" and that the power plant shutdowns were supposedly
orchestrated to drive up the prices of electricity. Such allegations are
more imagined than real. Petitioners obviously use these terms
casually without even understanding their legal meaning.
2.9.2 Section 45 of the EPIRA reads:
Section 45. Cross Ownership, Market Power Abuse And
Anti-Competitive Behavior. - No participant in the
electricity industry may engage in any anti-competitive
behavior including, but not limited to, cross-subsidization,
price or market manipulation, or other unfair trade
practices detrimental to the encouragement and protection
of contestable markets.
No generation company or distribution utility, or its
respective subsidiary or affiliate or stockholder or official
of a generation company or distribution utility, or other
entity engaged in generating and supplying electricity
specified by ERC shall be allowed to hold any interest,
direct or indirect, in TRANSCO or its concessionaire.
Likewise, the TRANSCO, or its concessionaire or any of
. its stockholders or officials or any of their relatives within
the fourth civil degree of consanguinity or affinity, shall
not hold any interest, whether direct or indirect, in any
generation company or distribution utility. Except for
government-appointed representatives, no person who is
an officer or director of TRANSCO or its concessionaire
shall be an officer or director of any generation company,
. distribution utility or supplier.
To promote true market competition and prevent harmful
monopoly and market power abuse, the ERC shall enforce
the following safeguards:
(a) Starting not later than five (5) years from the
approval of this Act and until such time that the
ERC has reduced the threshold level to one
hundred kilowatts (lOOkW), no company or related
group can own and operate or control and operate
more than forty percent ( 40%) of the installed
generating capacity of a grid and/or thirty percent
(30%) of the national installed capacity; and
33
(b) Distribution utilities may enter into bilateral power
supply contracts subject to review by ERC.
For purposes of this Section, the grid basis shall consist
of three (3) separate grids, namely Luzon, Visayas and
Mindanao. The ERC shall have the authority to modify
or amend this definition of a grid when two or more of
the three separate grids become sufficiently
interconnected to constitute a single grid or as conditions
may otherwise permit.
Exceptions from these limitations shall be allowed for
isolated grids that are not connected to the high voltage
transmission system. Except as otherwise provided for in
this Section, any restriction on ownership and/or control
between or within sectors of the electricity industry may
be imposed by ERC only insofar as the enforcement of
the provisions of this Section is concerned.
The ERC shall, within one ( 1) year from the effectivity of
this Act, promulgate rules and regulations to promote
competition, encourage market development and
customer choice and discourage/penalize abuse of market
power, cartelization and any anti-competitive or
discriminatory behavior, in order to further the intent of
this Act and protect the public interest. Such rules and
regulations shall define the following:
(a) the relevant markets for purposes of establishing
abuse or misuse of monopoly or market position;
(b) areas of isolated grids; and
( c) the periodic reportorial requirements of electric
power industry participants as may be necessary to
enforce the provisions of this Section.
The ERC shall, motu propio, monitor and penalize any
market power abuse or anti-competitive or discriminatory
act or behavior by any participant in the electric power
industry.
Upon finding that a market participant has engaged in
such act or behavior, the ERC shall stop and redress the
same. Such remedies shall, without limitation, include
the imposition of price controls, issuance of injunctions,
requirement of divestment or disgorgement of excess
34
profits and imposition of fines and penalties pursuant to
this Act.
The ERC shall, within one ( 1) year from the effectivity of
this Act, promulgate rules and regulations providing for a
complaint procedure that, without limitation, provides the
accused party with notice and an opportunity to be heard.
2.9.3 Further, Rule 4, Section 1 of the Competition Rules
explains the concept of anti-competitive agreements, as follows:
Section 1. Anti-Competitive agreements. Subject to Rule
8, 9 and 10, a Person shall not:
(a) make an agreement or arrangement, or arrive at an
understanding, if a provision thereof:
(i) would have, or would be likely to have, the
effect of substantially lessening competition
in the Market; or
(ii) is a price-fixing provision; or
(b) give effect to a provision of an agreement,
arrangement or understanding entered into after the
effectivity of the EPIRA if that provision:
(i) would have, or would be likely to have, the
effect of substantially lessening competition
in the Market; or
(ii) is a price-fixing provision.
2.9.4 On the other hand, Rule 5, Sections 1 to 4 of the
Competition Rules explain the legal concept of misuse of market
power as follows:
Section 1. Prohibition. A Person that has a substantial
degree of power in a Market shall not misuse that power.
In this Rule, a reference to power is a reference to market
power.
Section 2. Degree of power; Factors. Without prejudice
to the preceding paragraph, a Person is to be taken to
have a substantial degree of power in that Market if:
(a) an Affiliate of a Person, or two or more Affiliates
of a Person; or
(b) a Person and its Affiliate, or a Person and two
more of its Affiliates,
together, have a substantial degree of power in a Market.
35
Section 3. Misuse of power; Factors. In determining
whether or not a Person has misused its power in a
Market, the following factors, among others, shall be
considered:
(a) that Person would have acted in the way it did,
whether or not it had a substantial degree of
market power; and
(b) the Person was reasonably justified in using its
power in the way it did.
Section 4. Use/Misuse of power; How done. The
circumstances in which a Person uses or misuses its
power in a Market may include where that Person:
(a) does an act; or
(b) refuses to do, or intentionally refrains from doing,
an act; or
( c) makes it known that an act or will not be done; or
( d) refuses to do an act, or to offer to do an act, except
on a condition or conditions; or
( e) makes it known that an act will not be done, except
on a condition or conditions; or
( f) makes it known that an act will be done on a
condition or conditions.
2.9.5 Other than bare conjectures and insinuations, Petitioners
failed to establish that TMO and TLI committed any act of anti-
competitive behavior and market abuse, as defined under the EPIRA
and the Competition Rules.
2.9.6 The fact that TMO and TLI are affiliate companies is not
in itself an anti-competitive behavior or a form of market abuse.
TMO and TLI did not make an agreement or arrangement, or arrive at
an understanding of give effect to a provision that (i) would have, or
would be likely to have, the effect of substantially lessening
competition in the market; or (ii) has a price-fixing provision.
2.9.7 TMO and TLI, although affiliate companies, did not
misuse their market power to do an act; refuse to do, or intentionally
refrain from doing, an act; make it known that an act will or will not
be done; refuse to do an act, or to offer to do an act, except on a
condition or conditions; make it known that an act will not be done,
except on a condition or conditions; or make it known that an act will
be done on a condition or conditions.
2.9.8 In fact, TLI was put at a disadvantage when TMO's
generation offers that were at the Offer Ceiling Price set the WESM
spot market price during the time that Pagbilao Unit 2 was on a forced
outage. TLI was constrained to purchase replacement electricity as the
36
WESM spot market price set by TMO at the Offer Ceiling Price of
Php62,000/MWh or Php62.00/kWh to fulfill it's contractual
obligations to supply power to it's customers, consequently suffering
a loss amounting to Nine Hundred Eighty Two Million Philippine
Pesos (Php982,000,000.00).
2.9.9 From the foregoing, there can be no basis to even suggest
that TMO and TLI engaged in anti-competitive behavior and market
abuse.
2.9.lOFurther, there is no basis to the allegation of monopoly.
No one entity controls all energy industry participants. No
combination and restraint in trade occurred. There was no collusion
in the shutdowns of the power plants. The plants have to undergo
maintenance shutdowns and since they were not allowed to shutdown
in May during the elections, most postponed and coincided with other
shutdowns. These were not orchestrated to drive up the prices of
electricity.
2.9.10.1 TMO and TLI are separate entities and are
operationally separate from each other. More importantly,
TMO and TLI distinct entities with separate operational
strategies. TMO is a peaking plant while TLI is an IPP
Administrator.
2.9.10.2 TMO and TLI did not conspire with each
other and/or other generation companies regarding the forced
outages of Pagbilao Unit 1 (from 19 November to 13 December
2013) and Pagbilao Unit 2 (from 29 November to 14 December
2013), during the shutdown of Malampaya. These forced
outages were neither planned nor anticipated by any of the
parties concerned.
(a) Pagbilao Unit 1 is allowed to go on scheduled
outages or be shutdown for a maximum period of thirty (30)
days for scheduled repairs and maintenance.
52
The scheduled
outages period of 16 February 2013 to 17 March 2013 was
scheduled upon prior concurrence and approval of NGCP and
the IPP, TeaM Energy. Thus, on 16 February 2013, Pagbilao
Unit 1 went on a scheduled outage for repairs and maintenance.
(b) However, on 29 November 2013 to 13 December
2013, Pagbilao Unit 1 went into a forced outage due to a tube
leak. This incident was neither planned nor scheduled, and
could not have been foreseen or controlled by TLI.
52
Article 7, MERALCO-TLI PSA.
37
(c) Pagbilao Unit 2 is allowed to go on scheduled
outages from 31 August 2013 to 26 November 2013 for repairs
and maintenance.
(d) However, only a few days after restoring its
operations, a tube leak was discovered, prompting the
immediate shutdown of Pagbilao Unit 2 from 29 November
2013 to 14 December 2013. This forced shutdown was at the
tail end of the Malampaya shutdown on 9 November to 8
December 2013. As with Pagbilao Unit 1, this incident was
neither planned nor scheduled, could not have been foreseen or
controlled by TLI.
2.9.10.3 As discussed, TLI did not, and will not
benefit from the forced outages of Pagbilao Units 1 and 2. If
any of the units of the Pagbilao Plant go on a forced outage,
TLI may be required to source replacement electricity from the
WESM depending on the provisions of the relevant power
supply agreements of TLI. TLI will thus bear the cost of the
difference between the contract price and the WESM spot
market price.
2.9 .10.4 In view of the foregoing, it is clearly not
logical for TLI to intentionally place the Pagbilao Plant on a
forced outage and collude with other generation companies to
drive up the prices of electricity.
No violation of due process or failure to regulate
2.9.l lFurthermore, the December 9 letter of the ERC does not
violate substantive and procedural due process of law because the
approval of the pass-through of the generation charge to consumers is
not yet final. It is still subject to the AGRA Guidelines' post-
verification procedure.
2.9.11.1 The substantive and procedural aspect of
Constitutional due process was explained by the Supreme Court
in Corona et.al. v. United Harbor Pilots Association of the
Ph
1 . l 53
1 ippmes et. a . ,
Section 1 of the Bill of Rights lays down what is
known as the "due process clause" of the
Constitution, viz.:
53
G.R. No. 111953, 12 December 1997.
38
"SEC. 1. No person shall be
deprived of life, liberty, or property
without due process of law, ... "
In order to fall within the aegis of this provision,
two conditions must concur, namely, that there is a
deprivation and that such deprivation is done
without proper observance of due process. When
one speaks of due process of law, however, a
distinction must be made between matters of
procedure and matters of substance. In essence,
procedural due process "refers to the method
or manner by which the law is enforced," while
substantive due process "requires that the law
itself, not merely the procedures by which the
law would be enforced, is fair, reasonable, and
just." PPA-AO No. 04-92 must be examined in
light of this distinction. (Emphasis supplied)
2.9.11.2 The respondents in the said case argued that
due process was not observed in the adoption of PPA-AO No.
04-92
54
allegedly because no hearing was conducted whereby
"relevant government agencies" and the pilots themselves could
ventilate their views. The Supreme Court pointed out that they
were referring to procedural due process and explained why the
same was not violated:
They are obviously referring to the procedural
aspect of the enactment. Fortunately, the Court has
maintained a clear position in this regard, a stance
it has stressed in the recent case of Lumiqued v.
Hon. Exevea, where it declared that "(a)s long
as a party was given the opportunity to defend
his interests in due course, he cannot be said to
have been denied due process of law, for this
opportunity to be heard is the very essence of
due process. Moreover, this constitutional
mandate is deemed satisfied if a person is granted
an opportunity to seek reconsideration of the
action or ruling complained of." (Emphasis
supplied)
2.9.11.3 Bayan Muna's claim that due process was
violated is baseless. ERC's allowance of the pass-through of
54
PP A-AO No. 04-92 provides for the limiting of the term of Appointment of harbor pilots to one (1) year
subject to renewal or cancellation by the authority after conduct of a rigid evaluation of the appointee's
performance.
39
the generation charges to consumers is provisional in nature
because it is still subject to the post-verification procedure in
the AGRA Guidelines.
2.9.11.4 The allowance of provisional approval of
pass-through of generation charge complies with substantive
due process. It is fair, reasonable and just given the volatility of
generation cost, which is highly dependent on fuel costs and
foreign exchange rates.
2.9.11.5 The amendment to Section 4 (e), Rule III of
the EPIRA IRR, removing the GRAM, etc. from the ambit of
the rule on publication and notice complies with procedural due
process. This is because the procedure for recovery of
generation charges, while automatic, still needs to comply with
notice and hearing to determine whether the rate that was
automatically charged was reasonable and does not result in
over or under recovery.
2.9.11.6 Petitioners erroneously assume that the rates
imposed have not been regulated and/or are not being regulated
by the ERC at all. This haphazard conclusion is both incorrect
and misleading.
2.9.11.7 DUs enter into power supply contracts with
power producers when they procure bulk power supply for their
captive market. On the other hand, the uncontracted energy is
deemed purchased from the WESM. In tum, the energy
deemed purchased from the WESM is priced in accordance
with a price determination methodology formulated by the
DOE, and approved by the ERC, in accordance with Section 30
of the EPIRA.
2.9.11.8 The DUs thereafter submit these power
supply contracts to the ERC for approval. The ERC then
subject these applications to publication and a full-blown
notice and hearing process as mandated under Section 4 (e)
Rule III of the EPlRA IRR. Thus, the power supply contracts
comply with due process requirements.
2.9.11.9 In tum, Rule 6 of ERC's Rules of Practice
and Procedure provide the ERC's pre-filing requirements of for
rate applications and other application or petitions for relief
affecting the consumers. These rate applications are also
subjected to due process requirements of notice and hearing.
The ERC may either approve or modify the proposed power
supply contract. The DUs then automatically pass-on to its
captive market the retail rate of its generation costs using the
40
ERC-approved formula or mechanism for calculating the
generation costs stipulated in the power supply contract.
2. 9 .11.10 Thus, the pre-filing requirements provided
under Rule 6 of ERC's Rules of Practice and Procedure are
consistent with Section 25 of the EPlRA which provides that
the retail rates charged by distribution utilities for the supply of
electricity in their captive market shall be subject to regulation
by the ERe based on the principle of full recovery of prudent
and reasonable economic costs incurred, or such other
principles that will promote efficiency as may be determined by
the ERC.
2.9.12Since the ERC must act under valid rules and regulations,
the ERC acted consistently with the amendments to Section 4( e ), Rule
III of the EPIRA IRR and the AGRA Guidelines that do not require
prior notice, publication and hearing. It bears stressing that these
rules have the force of law and are presumed valid.
2.9.13To be clear, the December 9 letter of the ERC did not
approve an automatic increase in generation costs. Rather, the said
letter approved MERALCO's request for staggered collection of
generation costs for the November 2013 supply month. The increase
in generation rates (governed by the AGRA Guidelines) is separate
and distinct from its staggered collection (covered by the December 9
letter of the ERC). Petitioners did not, as they cannot, cite any specific
legal provision requiring notice, publication and hearing for the
approval of such staggered collection.
2.9.14In fact, there is no specific prov1s1on in the EPIRA
which requires that applications for increase in generation costs
must be published. The publication requirement was only
introduced under Section 4(e), Rule III of the EPIRA IRR, prior
to its amendment by the DOE. The DOE thus correctly amended
Section 4(e), Rule III of the EPIRA IRR to remove the publication
requirement for AGRA.
2.9.15The ERC's issuance of the AGRA Guidelines is
consistent with its power under the EPIRA to establish a rate-setting
methodology to ensure reasonable price of electricity. Section 43 (g)
of the EPIRA states:
g) In the public interest, establish and enforce a
methodology for setting transmission and
distribution wheeling rates and retail rates for the
captive market of a distribution utility, taking into
account all relevant considerations, including the
efficiency or inefficiency of the regulated entities.
41
The rates must be such as to allow the recovery of
just and reasonable costs and a reasonable return
on rate base (RORB) to enable the entity to operate
viably. The rate-setting methodology so adopted
and applied must ensure a reasonable price of
electricity. The rates prescribed shall be non-
discriminatory. To achieve this objective and to
ensure the complete removal of cross subsidies, the
cap on the recoverable rate of system losses
prescribed in Section 10 of Republic Act No. 7832,
is hereby amended and shall be replaced by caps
which shall be determined by the ERC based on
load density, sales mix, cost of service, delivery
voltage and other technical considerations it may
promulgate. The ERC shall determine such form of
rate-setting methodology, which shall promote
efficiency xxx
The amendment to Section 4(e), Rule III of the
EPIRA !RR, the AGRA Guidelines and Resolution
Nos. 10-01 and 10-4. both series of 2004 all
comply with EPIRA mandate.
2.10 Section 77 of the EPIRA empowers the DOE to issue the
Implementing Rules and Regulations -
SEC. 77. Implementing Rules and Regulations. - The
DOE shall, in consultation with relevant government
agencies, the electric power industry participants, non-
govemment organization and end-users, promulgate the
Implementing Rules and Regulation (IRR) of the Act
within six (6) months from the effectivity of this Act,
subject to the approval by the Power Commission.
2.10.1 On 27 February 2002, or more than eight (8) months after
the passage of the EPIRA on 8 June 2001, the EPIRA IRR was issued
by the DOE under the following premises:
Pursuant to Sections 3 7 and 77 of Republic Act No.
9136, an Act Ordaining Reforms in the Philippine
Electric Power Industry, otherwise known as the
"Electric Power Industry Reform Act of 2001" (Act), the
Department of Energy (DOE), in consultation with the
appropriate government agencies such as the Energy
Regulatory Commission (ERC), Department of Finance
(DOF), National Electrification Administration (NEA),
National Power Corporation (NPC), Department of Trade
and Industry (DTI), Department of Justice (DOJ),
42
Department of Budget and Management (DBM), Power
Sector Assets and Liabilities Management Corporation
(PSALM), the Electric Power Industry Participants, and
with the approval of the Joint Congressional Power
Commission (Power Commission), hereby issues, adopts
and promulgates the following rules and regulations to
implement the provisions of the Act. (Preamble of
EPIRA IRR)
2.10.2In 2007, the DOE issued the amendments to Section 4( e ),
Rule III of the EPIRA IRR, excluding the AGRA from the publication
requirements, and thus allowing for the automatic increase in
generation rates in accordance with the provisions of the AGRA
Guidelines.
2.10.3Notably, the amendments to Section 4(e), Rule III of the
EPIRA IRR were approved by the Joint Congressional Power
Commission ("JCPC"). The JCPC sent its Letter dated 20 June 200?5
5
to the DOE confirming the approval of the amendements.
2.10.4 The Supreme Court also recognized that the EPIRA IRR
may be revised to allow automatic rate adjustments or increases. In
National Association of Electricity Consumers for Reforms
(NASECORE) v. Energy Regulatory Commission (ERC) and Manila
Electric Company (MERALCO),
56
a case involving the validity of the
ERC 's Order approving MERALCO' s increase in generation (which
was cited by the Petitioners themselves), the Supreme Court held that
the adjustment of rates cannot be automatic unless the the EPIRA IRR
is amended. This clearly indicates that the Supreme Court has
recognized that the law may be amended to allow for an automatic
increase in rates. The Supreme Court ruled:
[It] should be clear that unless Section 4 (e), Rule III of
the IRR of the EPIRA is amended, the adjustments of
rates based on purchased power or fuel adjustment costs
shall not or in no case be "automatic".
2.10.5Petitioner erroneously invokes the case of National
Association of Electricity Consumers for Reforms (NASECORE) v.
Energy Regulatory Commission (ERC) and Manila Electric Company
(MERALCO), supra., to give some semblance of credence to their
flawed reasoning that generation rate adjustments has been disallowed
by the Supreme Court.
55
Attached as Annex 4 to MERALCO's Consolidated Comment/Opposition with TRO.
56
G.R. No. 163935, 2 February 2006.
43
2.10.6In National Association of Electricity Consumers for
Reforms (NASECORE) v. Energy Regulatory Commission (ERC) and
Manila Electric Company (MERALCO), supra., the Supreme Court
ruled that the automatic increase in rates is not allowed because
MERALCO's application has not been published, among others. This
Honorable Court should note, however, that the NASECORE Case
was decided in 2006, or prior to the issuance of the amendments to
Section 4( e ), Rule III of the EPIRA IRR. As discussed, these EPIRA
IRR amendments, as approved by the JCPC, specifically excluded the
AGRA from publication requirements.
2.10. 7The Petitioners erroneously theorize that in amending
Section 4 ( e) of Rule III, the DOE violated the State policy declared in
Section 2 ( c) of the EPIRA "to ensure transparent and reasonable
prices of electricity in a regime of free and fair competition and full
public accountability to achieve greater operational and economic
efficiency and enhance the competitiveness of Philippine products in
the global market; " The Petitioners are overreaching.
2.10. 8 The Petitioners' interpretation of the above prov1s10n
strays too far beyond the plain meaning of the law. The rule is that if
the law is clear, it shall be read in its literal sense. In Signey v. Social
Security System,
57
the Supreme Court held that:
Under the principles of statutory construction, if a statute
is clear, plain and free from ambiguity, it must be given
its literal meaning and applied without attempted
interpretation. This plain meaning rule or verba legis,
derived from the maxim index animi sermo est (speech is
the index of intention), rests on the valid presumption
that the words employed by the legislature in a statute
correctly express its intent by the use of such words as
are found in the statute. Verba legis non est recedendum,
or, from the words of a statute there should be no
departure.
2.10.9Transparency in the price of electricity does not mean
prior publication and notice and hearing. No valid reason exists to
read this into the law. In Philippine National Bank v. Garcia,
58
the
Supreme Court explained that:
xxx Where the language of a statute is plain and
unambiguous and conveys a clear and definite meaning,
there is no occasion for resorting to the rules of statutory
57
G.R. No. 173582, 28 January 2008.
58
G.R. No. 141246, 9 September 2002.
44
construction, and this Court has no right to look for or
impose another meaning.
2.10.10 Since there is no law that requires prior
publication, notice and hearing for a generation rate adjustment, then
the DOE acted within its powers in amending Section 4( e ), Rule III of
the EPIRA IRR.
2.10.11 Moreover, contrary to Petitioners' bare claims, the
December 9 letter of the ERC, amendments to Section 4( e ), Rule III
of the EPIRA IRR, the AGRA Guidelines and Resolution Nos. 10-01
and 10-4, both series of 2004 complied with the EPIRA mandate. The
AGRA Guidelines were issued pursuant to the ERC's power to
regulate rates and adopt alternative forms of internationally-accepted
rate setting methodology to ensure reasonable price of electricity and
reflect the true cost of power.
2.10.11.1 Part III, Rule 15, Section 5 of the EPIRA
IRR empowers the ERC to "adopt alternative forms of
internationally-accepted rate setting methodology as it may
deem appropriate" that will ensure reasonable price of
electricity.
2.10.11.2 In its Order dated 13 October 2004 in ERC
Case No. 2004-322,
59
which approved the AGRA Guidelines,
the ERC confirmed that the AGRA Guidelines were issued
pursuant to the ERC's power to adopt alternative forms of
internationally-accepted rate setting methodology. In the same
Order, the ERC adopted the AGRA Guidelines to replace the
Generation Rate Adjustment Mechanism ("GRAM") with the
AGRA. Prior to AGRA, the DUs recover generation costs
through the GRAM which is a deferred recovery mechanism
using a three (3) month test period. The implementation of the
GRAM had been criticized for, among others, the following
reasons: a) it does not represent the true cost of power during
the period for which it is being covered; and b) it resulted to
cash flow problems on the part of ihe DUs.
2.10.11.3 Clearly then, contrary to Petitioners' claims,
the ERC adopted the AGRA Guidelines in order to address the
deficiencies of the GRAM and reflect the true cost of power.
Resolution Nos. 10-01 and 10-04, which merely amended
portions of the AGRA Guidelines (regarding some
computations) were likewise issued to reflect the true cost of
power and correct the deficiencies under the GRAM.
59
Attached as Annex l to MERALCO's Consolidated Comment/Opposition with Counter-Petition.
45
2 .10 .12 There is no doubt, therefore, that the amendment to
Section 4( e ), Rule III of the EPIRA IRR, the AGRA Guidelines and
Resolution Nos. 10-01 and 10-4, both series of 2004 all comply with
the EPIRA mandate and are valid acts of the DOE and the ERC. Thus,
the December 9 letter of the ERC which was issued pursuant to the
said rules and guidelines, is equally valid.
The automatic rate adjustment does not constitute
a surrender of ERC 's regulatory functions
2.11 The automatic increase in generation rates does not mean that
the ERC surrendered its regulatory control over the generation companies, as
Petitioners erroneously insist. There is also no basis for the allegation that
the automatic increase in generation rates and the staggered implementation
of such rates constitutes market abuse and anti-competitive behavior. The
rate adjustments are subject to sufficient statutory safeguards to prevent anti-
competitive behavior and market abuse, among others.
2.11.1 The post-verification process under the AGRA
Guidelines empowers the ERC to validate the recovery of generation
costs by the DU (AGRA Guidelines, Article V, Section 1.).
2.1 l.2The AGRA Guidelines also set for the Adjustment
Formulas for both the Generation Rate (AGRA Guidelines, Article
III) and the System Loss Rate (Article IV).
2.11.3 In fact, in its December 9 letter, the ERC emphasized that
the automatic rate adjustments "shall remain subject of the
confirmation and post-verification proceedings" in accordance with
the ERC rules.
2.11.4 The ERC also issued Rules Governing the Automatic
Cost Adjustment and True Up Mechanisms and Corresponding
Confirmation Process for Distribution Utilities.
2.11.SThe AGRA Rules also include post-verification
proceedings, where the ERC shall determine if the rate for the
recovery for generation cost has resulted in over or under recovery.
(a) Under Section 1 of the AGRA Rules, the DUs are
required to regularly submit a report to the ERC (every 20th
day of the month). These reports shall contain all the
calculations made pursuant to Articles III and IV of the AGRA
Rules. The report shall also contain all supporting
documentation, including invoices from power suppliers and
sample bills to end-users, among others.
46
(b) Under Section 2 of the AGRA Rules, at least every
six ( 6) months, the ERC shall verify the recovery of generation
costs by comparing the actual allowable costs incurred for the
period with the actual revenues for the same period generated
by the Generation Rates and the portion of the Systems Loss
Rates attributable to Generation Costs. Upon completion of the
semi-annual verification process, the ERC shall issue an Order
establishing the adjustments to be included in the Other
Generation Adjustments from the foregoing semi-annual
verification. These adjustments shall thereafter be implemented
inthe succeeding six ( 6) month period to reflect any over or
under recovery.
Sections 6 and 29 of the EPIRA are
constitutional.
2.12 Sections 6 and 29 of the EPIRA read in relevant parts:
Section 6. Generation Sector. - Generation of electric power
shall be competitive and open.
xxx
Any law to the contrary notwithstanding, power generation
shall not be considered a public utility operation. For this
purpose, any person or entity engaged or which shall engage in
power generation and supply of electricity shall not be required
to secure a local or national franchise.
Upon implementation of retail competition and open access, the
prices charged by a generation company for supply of
electricity shall not be subject to regulation by the ERC except
as otherwise provided in this Act
xxx
Section 29. Supply Sector. - The supply of electricity to the
contestable market shall require a license from the ERC, except
for distribution utilities and electric cooperatives with respect to
their existing franchise areas.
xxx
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 local or national franchise.
47
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 xxx
2.12.1 Sections 6 and 29 of the EPIRA supposedly contravene
Section 9 of Article II and Section 6 of Article XII of the Constitution.
Section 9, Article II of the Constitution states:
The State shall promote a just and dynamic social order
that will ensure the prosperity and independence of the
nation and free the people from poverty through policies
that provide adequate social services, promote full
employment, a rising standard of living, and an improved
quality of life for all.
Section 6, Article XII of the Constitution states:
The use of property bears a social function, and all
economic agents shall contribute to the common good.
Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall
have the right to own, establish, and operate economic
enterprises, subject to the duty of the State to promote
distributive justice and to intervene when the common
good so demands.
2.12.2The Supreme Court has repeatedly ruled that Articles II
and some sections of XII of the Constitution are not self-executing or
ready for enforcement through the courts.
2.12.3As noted by the Supreme Court in Tanada v. Angara,
60
the title of Article II of 1987 Constitution reveals its very nature
and purpose as mere declarations of state policies:
By its very title, Article II of the Constitution is a
"declaration of principles and state policies." The
counterpart of this article in the 1935 Constitution is
called the "basic political creed of the nation" by Dean
Vicente Sinco. These principles in Article II are not
intended to be self-executing principles ready for
60
G.R. No. 118295, 2 May 1997.
48
enforcement through the courts. They are used by the
judiciary as aids or as guides in the exercise of its
power of judicial review, and by the legislature in its
enactment of laws. (Emphasis supplied)
2.12.4Clearly, whether the legislative department was properly
guided by Articles II and XII of the Constitution goes into the wisdom
of the law, which is not justiciable and not a proper subject of
certiorari.
2.12.4.1 In Garcia v. Executive Secretary, supra, the
Supreme acknowledged that only the legislative department has
the full discretionary authority to formulate the policy of the
law:
Stripped to its core, what petitioner Garcia raises
as an issue is the propriety of immediately and
fully deregulating the oil industry. Such
determination essentially dwells on the
soundness or wisdom of the timing and manner
of the deregulation Congress wants to
implement through R.A. No. 8497. Quite
clearly, the issue is not for us to resolve; we
cannot rule on when and to what extent
deregulation should take place without passing
upon the wisdom of the policy of deregulation
that Congress has decided upon. To use the
words of Baker v. Carr, the ruling that
petitioner Garcia asks requires "an initial
policy determination of a kind clearly for non-
judicial discretion"; the branch of government
that was given by the people the full
discretionary authority to formulate the policy
is the legislative department.
Directly supporting our conclusion that Garcia
raises a political question is his proposal to adopt
instead a system of partial deregulation - a
system he presents as more consistent with the
Constitutional "dictate". He avers that free market
forces (in a fully deregulated environment) cannot
prevail for as long as the market itself is dominated
by an entrenched oligopoly. In such situation, he
claims that prices are not determined by the free
play of supply and demand, but instead by the
entrenched and dominant oligopoly where
overpricing and price-fixing are possible. Thus,
before full deregulation can be implemented, he
49
calls for an indefinite period of partial deregulation
through imposition of price controls.
Petitioner Garcia's thesis readily reveals the
political, hence, non-justiciable, nature of his
petition; the choice of undertaking full or
partial deregulation is not for this Court to
make. (Emphasis supplied)
2.12.4.2 In any case, Congress was correct in not
classifying the generation and supply sectors as public utilities.
This is because assuming (without conceding) that the
classification of which business or service qualify as public
utility may be judicially determined, the nature of power
generation business does not fall under the jurisprudential
definition of a public utility.
2.12.4.3 In JG Summit Holdings, Inc. v. Court of
Appeals,
61
had to the occasion to explain and define a "public
utility":
The principal determinative characteristic of a
public utility is that of service to, or readiness to
serve, an indefinite public or portion of the
public as such which has a legal right to
demand and receive its services or commodities.
Stated otherwise, the owner or person in control
of a public utility must have devoted it to such
use that the public generally or that part of the
public which has been served and has accepted
the service, has the right to demand that use or
service so long as it is continued, with
reasonable efficiency and under proper charges.
Unlike a private enterprise which
independently determines whom it will serve, a
"public utility holds out generally and may not
refuse legitimate demand for service." Thus, in
Jloilo Ice and Cold Storage Co. vs. Public Utility
Board, this Court defined "public use," viz:
"Public use" means the same as "use by the
public." The essential feature of the public use is
that it is not confined to privileged individuals, but
is open to the indefinite public. It is this indefinite
or unrestricted quality that gives it its public
character. In determining whether a use is public,
61
G.R. No. 124293, 24 September 2003.
50
we must look not only to the character of the
business to be done, but also to the proposed mode
of doing it. If the use is merely optional with the
owners, or the public benefit is merely incidental,
it is not a public use, authorizing the exercise of
jurisdiction of the public utility commission. There
must be, in general, a right which the law compels
the owner to give to the general public. It is not
enough that the general prosperity of the public is
promoted. Public use is not synonymous with
public interest. The true criterion by which to
judge the character of the use is whether the
public may enjoy it by right or only by
permission. (Emphasis in the original)
2.12.4.4 This 2003 ruling of the Supreme Court
confirmed the earlier opinion of the Department of Justice in
DOJ Opinion No. 095, series of 1988
62
which stated:
A public utility is commonly defined as a business
organization which regularly supplies the public
with some commodity or service, such as
electricity, gas water or transportation (Board of
Country Commissioners vs. Simmons, 151 P2d
960) While there is no exact definition of the term
(Capen vs. Portland, 228 P 105), the principal
determinative characteristic of a public utility is
that of service to, or readiness to serve, the general
public, or any part thereof, which possesses a legal
right to demand and receive such service; thus, it
precludes the idea of service which is private in
nature and is not to be obtained by the public ( 64
AJ2d 549-550; 73 C.J.S. 990-991). The test is said
to be whether or not the operator holds himself
out as engaged in the business of supplying his
product or service to the public, as contra-
distinguished from holding himself out as
serving only particular individuals (Natural
Service Gas Co. vs. Serv-Yu Cooperative, 219 P2d
324). (Emphasis supplied)
2.12.4.5 While electricity from the Generation and
Supply sectors ultimately reaches the public, the industry
framework under the EPIRA clearly takes out the businesses of
power generation and supply from the judicial definition of a
"public utility".
62
A copy of the DOJ Opinion No. 095, series of 1988 is attached as Annex 4.
51
2.12.4.6 On the question of whether or the
Generation and Supply sector hold themselves out to supplying
their service to the public, the answer is in the negative. The
Generation and Supply sectors only serve a limited clientele
whom it may choose to serve at its discretion (either through its
bilateral contracts or participation in the WESM). They do not
have legal obligation to render the services sought by each and
every client.
2.12.5Furthermore, contrary to Petitioners' arguments, the
Generation and Supply sectors are still subject to the regulatory
functions of the ERC.
2.12.5.1 Under Section 45 of the EPIRA, the bilateral
power supply contracts between the DU and generation
companies are "subject to review by ERC". These contracts
include the retail rates (wherein generation rate as a
component), which may be disapproved or modified by the
ERC. Thus, the ERC still exercises the power to review and
modify generation rates indicated the bilateral power supply
contracts.
2.12.5.2 Moreover, Article III of the AGRA
Guidelines also provides specific guidelines and computations
for the adjustment of generation rates. Thus, the ERC has the
power to determine whether the generation rates are just and
reasonable.
2.12.5.3 The Supply Sector is likewise monitored by
the ERC. Under Section 29 of the EPIRA, as well as ERC's
Revised Rules for the Issuance of Licenses to Retail Electricity
Suppliers, a license is required before certain categories of
suppliers can operate. In tum, this license is granted, regularly
reviewed and monitored by the ERC, in accordance with
specific guidelines.
2.12.6There is also absolutely no merit in Bayan Muna's claim
that Sections 6 and 29 of the EPIRA "are contrary to Section 1
Article III of the 1987 Constitution which prohibits the taking of
property without due process since prohibiting the regulation of
prices charged by generation companies and suppliers has resulted in
depriving the consumers of their hard earned income in order to pay
inordinately high electricity rates. "
2.12.6.1 Section 1, Article III or the Bill of Rights is
not applicable in this case. Article III of the 1987 Constitution
cannot be invoked against private individuals, such as
52
Generation Companies. In People v. Marti,
63
the Supreme
Court explained:
That the Bill of Rights embodied in the
Constitution is not meant to be invoked against
acts of private individuals finds support in the
deliberations of the Constitutional Commission.
True, the liberties guaranteed by the fundamental
law of the land must always be subject to
protection. But protection against whom?
Commissioner Bernas in his sponsorship speech in
the Bill of Rights answers the query which he
himself posed, as follows:
First, the general reflections. The protection of
fundamental liberties m the essence of
constitutional democracy. Protection against
whom? Protection against the state. The Bill of
Rights governs the relationship between the
individual and the state. Its concern is not the
relation between individuals, between a private
individual and other individuals. What the Bill of
Rights does is to declare some forbidden zones in
the private sphere inaccessible to any power
holder. (Sponsorship Speech of Commissioner
Bernas, Record of the Constitutional Commission,
Vol. 1, p. 674; July 17, 1986)
2.12.6.2 It is absurd to suggest that the State is taking
property from the consumers by not considering power
generation and supply of electricity as public utilities. Even if
the generation or supply rates are subject to regulation by the
ERC, it does not mean that the ERC will determine that the
consumers should not be made to pay. The consumers have a
duty in equity to pay for the electricity that they consumed.
2.12.6.3 In fact, Sections 6 and 29 of the EPIRA
adhere to the State policies declared in Section 2 of the EPIRA:
(a) To ensure and accelerate the total electrification of the
country;
(b) To ensure the quality, reliability, security and
affordability of the supply of electric
power;
63
G.R. No. 81561, January 18, 1991.
53
(c) To ensure transparent and reasonable prices of
electricity in a regime of free and fair competition and
full public accountability to achieve greater operational
and economic efficiency and enhance the
competitiveness of Philippine products in the global
market;
(d) To enhance the inflow of private capital and broaden
the ownership base of the power generation, transmission
and distribution sectors;
(e) To ensure fair and non-discriminatory treatment of
public and private sector entities in the process of
restructuring the electric power industry;
(f) To protect the public interest as it is affected by the
rates and services of electric utilities and other providers
of electric power;
(g) To assure socially and environmentally compatible
energy sources and infrastructure;
(h) To promote the utilization of indigenous and new and
renewable energy resources in power generation in order
to reduce dependence on imported energy;
(i) To provide for an orderly and transparent privatization
of the assets and liabilities of the National Power
Corporation (NPC);
G) To establish a strong and purely independent
regulatory body and system to ensure consumer
protection and enhance the competitive operation of the
electricity market; and
(k) To encourage the efficient use of energy and other
modalities of demand side management.
2.13 Clearly, therefore, the Petitions cannot withstand legal scrutiny
as they are anchored on weak or non-existent basis unworthy of further
consideration of this Honorable Court. Thus, the Petitions should be
dismissed for utter lack of merit.
54
C. THE MERALCO COUNTER-PETITION IS
INAPPROPRIATE.
2.14 MERALCO erroneously claims that "[t]he material interest of
the GenCos, PEMC and NGCP in the controversy is beyond dispute as the
final decree of this Honorable Court, granting or denying the automatic
increase in generation charge (and other pass through adjustments including
transmission charge) authorized by the 9 December 2013 letter of the ERC,
would necessarily affect the GenCos, PEMC's and NGCP's rights." (par.
6.4, Meralco Comment)
2.15 The truth is that the inability of MERALCO to collect from
consumers does not relieve MERALCO of its obligation to pay TMO and
TLI under the power supply agreements.
2.16 Moreover, the question on the constitutionality of Sections 6
and 29 of the EPIRA and the validity of the regulations pertaining to
automatic adjustments are not for the generation companies to defend. As
discussed above, constitutionality of law and rules and regulations is the
proper subject of a petition for declaratory relief under Rule 63 of the Rules
of Court. Section 3, Rule 63 of the Rules of Court clearly states that the
constitutionality of a statute and governmental regulation is for the Office of
the Solicitor General to defend:
Section 3. Notice on Solicitor General. - In any action which
involves the validity of a statute, executive order or regulation,
or any other governmental regulation, the Solicitor General
shall be notified by the party assailing the same and shall be
entitled to be heard upon such question.
2.17 Thus, it was inappropriate for MERALCO to implead all the
generation companies by way of Counter-Petition. It was within the sound
judgment of each generation company to determine for itself if it wanted to
intervene in this case but MERALCO's counter-petition pre-empted their
decision. The counter-petition ought to be dismissed.
55
III.
THE TEMPORARY RESTAINING ORDER
SHOULD BE LIFTED.
3 .1 Respondents respectfully submit that this Honorable Court must
lift the TRO because the Petitioners failed to show the existence of the
elements
64
for the grant of such injunctive relief. Moreover, the TRO must
be lifted so as not to pre-empt the post-verification proceedings to be
conducted by the ERC pursuant to the AGRA Guidelines.
Petitioners have no clear and unmistakable
right.
3 .2 Petitioners try to make it appear that their supposed "right to
affordable, transparent, and reasonable prices of electricity, as well as the
constitutional right to due process, and right against monopolies damaging to
the public interest" translate to a right to cheaper electricity. There is no law,
rule or regulation that supports this claim.
3 .3 The ERC is tasked to adopt a rate-setting methodology that
ensures "a reasonable price of electricity.
65
Thus, reasonable price of
electricity is what consumers are entitled to.
3.3.1 The ERC has yet to determine the reasonable price of
electricity under the AGRA Guidelines. As discussed, Section 2 of the
AGRA Guidelines requires the ERC to conduct post-verification
proceedings to ensure that there is no over or under recovery from the
d
. . . 66
a ~ u s t m n t m generat10n cost.
64
In Roman Catholic Archbishop of San Juan v. Soriano, G .R. No. I 7 August 2011, the requisites for the
issuance of preliminary injunctive relief were laid down -
(a) The applicant must show that there exists a clear and unmistakable right which is directly
threatened by an act sought to be enjoined;
(b) The invasion of the right is material and substantial; and
(c) There is an urgent and paramount necessity for the writ to prevent serious and irreparable
injury.
65
EPIRA, Section 43(f).
66
AGRA Guidelines, Section 2 provides:
Section 2. Post Verification - At least every six (6) months, the ERC shall verify the
recovery of Generation Costs by comparing the actual allowable costs incurred for
the period with the actual revenues for the same period generated by the Generation
Rates and the portion of the Systems Loss Rates attributable to Generation Costs.
Should the ERC fail to verify the Generation Rate (including the OGA) and System Loss
Rate within six (6) months from the submission of calculation and supporting
documentations in accordance with the immediately preceding Section, the rates shall be
deemed final and confirmed.
Upon completion of the semi-annual verification process, the ERC shall issue an
Order establishing the adjustments to be included in the OGA resulting from said
semi-annual verification. These adjustments shall be implemented in the succeeding six
(6) month period to reflect any over or under recovery. (Emphasis supplied)
56
3 .3 .2 It is therefore premature for the Petitioners to insist on
their cheaper price as the reasonable price of electricity.
Petitioners do not stand to suffer any
irreparable injury.
3.4 Moreover, there is no basis in Petitioners' argument that they
will suffer grave and irreparable injury because the allegedly high interest
penalties will be passed through to the public. "Irreparable injury" refers to
damages where there is no standard by which their amount can be measured
with reasonable accuracy.
67
No irreparable injury will result to Petitioners in
the present case.
3 .4.1 This Honorable Court may take judicial notice of the fact
that this is not the first time that electricity consumers sought
remedies from the Court. In the past, electricity consumers have
assailed power rate adjustments applied for and approved by
MERALCO and ERC, respectively.
68
3.4.2 In these cases, this Honorable Court had ordered
MERALCO to refund certain amounts to its consumers under a
defined refund scheme. Exact amounts were computed and the
refund scheme implemented in favor of all of MERALCO's affected
customers. This previous experience disproves any claim that
Petitioners stand to suffer an irreparable injury as a result of the
alleged illegal automatic adjustments.
In contrast, TL! and TMO will stand to
suffer grave and irreparable injury with the
grant of injunctive relief
3.5 Under Section 6, Rule 58 of the Rules of Court, injunctive relief
may be refused or, if granted, dissolved, if it appears after hearing that
although the plaintiff is entitled to the injunction, the issuance or
continuance thereof, as the case may be, would cause great damage to the
defendant while the plaintiff can be fully compensated for such damages as
he may suffer, upon the filing of a bond by the defendant on the condition
that he will pay all damages which plaintiff may suffer by the refusal or
dissolution of the injunction.
3.5.1 Respondents will stand to suffer grave and irreparable
injury if the TRO is not immediately dissolved. Respondents are being
made to suffer the consequences of a TRO, and accused of engaging
67
Power Sites and Signs, Inc. v. United Neon,_G.R. No. 163406, 24 November 2006 citing Social Security
Commission v. Bayona,_G.R. No. L-13555, 30 May 1962.
68
See Republic of the Philippines v. Manila Electric Company and Lawyers Against Monopoly, G.R. No.
141314, 15 November 2002 and Poverty (LAMP) v. Manila Electric Company, G.R. No. 141369, 15
November 2002.
57
in price manipulation and other anti-competitive conduct, even before
the ERC (which is the agency tasked to determine whether or not rates
are reasonable) has determined the existence of over-recovery of
generation costs. In contrast, the Petitioners have already consumed
the electricity that MERALCO supplied. They will not be damaged by
paying for the electricity they consumed and a further reckoning of
MERALCO's rate is still forthcoming. If an over-recovery has been
made, then the consumers will be refunded by MERALC0.
69
3.6 In view of the foregoing, the TRO must thus be immediately
dissolved and the ERC must be allowed to conduct and complete the post-
verification proceedings in accordance with the AGRA Guidelines.
IV.
SUMMATION
4.1 Petitioners Bayan Muna and NASECORE incorrectly pray for
this Honorable Court to resolve issues that are not proper subjects of a
petition for certiorari under Rule 65 of the Rules of Court.
4.2 The Petitions must be dismissed for being procedurally and
substantively fatally flawed. The Petitioners availed of the wrong remedy of
Certiorari for an act (the ERC's December 9 letter) that does not involve an
exercise of a quasi-judicial power. The Petitioners rushed to the Supreme
Court without even exhausting administrative remedies over a rate dispute,
the determination of which is under the original and exclusive jurisdiction of
the ERC. The technical nature of this controversy requires the ERC's
expertise, which is the government agency tasked to regulate the electric
power industry sector.
4.3 As if to give a semblance of significance to their direct resort to
the Supreme Court, the Petitioners attempted to tailor-fit their allegations to
69
In response to Petitioner Bayan Muna's baseless prayer for a preliminary injunction of the generation
charge (Bayan Muna's Amended Petition dated January 13, 2013, pp. 36-37, par. 115-118), it must be
noted that power generation is indeed imbued with public interest. Public interest requires that there be a
surplus of power supply to make prices more competitive. This is a function of the law of supply and
demand. Thus, in order to really help the consumers and the nation as a whole, the validity of Sections 6
and 29 of the EPIRA should be upheld. The fact that power generation and supply are not public utilities is
meant to encourage investors to continue to operate existing power plants, as well as attract new investors
to construct capital intensive power plants.
A TRO on the generation companies' collection of its generation charge will be more detrimental
to the consumers and the national economy. Enjoining the collection of generation charges and preventing
MERALCO from making timely payments to its power suppliers, such as TLI and TMO, will surely affect
the financial position of the power producers. MERALCO's non-payment will result to the power
producers' default in their existing financial obligations, inability to procure fuel (which runs the generating
facilities), and eventually their inevitable closure.
A TRO on the collection of generation charges will not only result to closure of existing power
plants, it will also dissuade the construction of new ones.This will aggravate the existing energy situation
and naturally result to much higher power rates. These higher power rates and frequent power outages will
be more daunting for the consumers and economically unbearable for the country.
58
pass off as a challenge to the constitutionality of the EPIRA and the
pertinent rules and regulations, which should be under the original
jurisdiction of the regional trial court. As it turns out, there is also no
justiciable issue because the Petitions failed to pose a genuine constitutional
issue and instead, what the Petitioners foisted was a lame attack on the
wisdom behind the law and the pertinent rules and regulations which are
beyond the ambit of judicial review by the Supreme Court.
4.4 Strong and compelling grounds exist to dismiss the Petitions for
utter lack of merit. The ERC did not commit any grave abuse of discretion
in issuing the December 9 letter because it was within the power of the ERC
to implement the AGRA Guidelines and the amended Section 4( e ), Rule III
of the EPIRA IRR, which are presumed valid and constitutional.
4.5 There was no basis for the ERC to conduct a prior investigation
because there was no credible evidence of collusion, anti-competitive
behavior or market abuse. TMO and TLI followed the rules laid down by the
government.
4.5. l Petitioners' unfounded speculations that there was a so-
called "collusion" and that the power plant shutdowns were
supposedly orchestrated to drive up the prices of electricity were pure
conjectures. TMO responded to the call of MERALCO to address the
impending shortage in electricity supply with the Malampaya
shutdown and agreed to execute the MERALCO-TMO PSA albeit
with the then 100 MW available capacity as TMO continued to
rehabilitate the entire 234 MW capacity. In agreeing to execute the
PSA, TMO had no design, premeditated or otherwise, to manipulate
the WESM spot prices for the benefit of any WESM participant.
TMO strictly adhered to the provisions of the PSA and consistently
followed the nomination instructions ofMERALCO.
4.5.2 TLI, on the other hand, was forced to buy power from the
WESM to meet its contractual obligation to deliver power because
Pagbilao Unit 2 was on forced outage. It did not benefit from the
price set by TMO and others at the Php62.00/kWh, on the contrary, it
lost money because TLI bought power from the WESM at a price
higher than what it will be paid by its customers at contract price.
4.6 The belated pretext to challenge the constitutionality of
Sections 6 and 29 of the EPIRA only fuels the impression that the Petitioners
are just shooting off aimlessly. Section 9 of Article II and Section 6 of
Article XII of the Constitution, which are used to mount their constitutional
challenge are not "self-executing" and "ready for enforcement through the
courts." Moreover, the use of Section 1 of Article III (taking without due
process of law) is clearly improper since the Bill of Rights may only be
invoked against the State. The overreaching interpretation of the
Constitution is utterly absurd.
59
4.7 MERALCO's Counter-Petition is equally inappropriate and
deserves to be dismissed. MERALCO's inability to collect from consumers
does not relieve it of its contractual and legally-binding obligation to pay
TMO and TLI under its power supply agreements.
4.8 Finally, this Honorable Court should lift the TRO and not pre-
empt the post-verification proceedings to be conducted by the ERC pursuant
to the AGRA Guidelines. The Petitioners have an obligation to pay for what
they consumed.
4.9 A TRO on the generation companies' collection of its
generation charge will be more detrimental to the consumers and the
national economy. Enjoining the collection of generation charges and
preventing MERALCO from making timely payments to its power suppliers,
such as TLI and TMO, will surely affect the financial position of the power
producers. MERALCO's non-payment will result to the power producers'
default in their existing financial obligations, inability to procure fuel (which
runs the generating facilities), and eventually their inevitable closure. A
TRO on the collection of generation charges will not only result to closure of
existing power plants, it will also dissuade the construction of new ones.
This will aggravate the existing energy situation and naturally result to much
higher power rates. These higher power rates and frequent power outages
will be more daunting for the consumers and economically unbearable for
the country.
v.
PRAYER
WHEREFORE, Respondents Therma Luzon, Inc. and Therma
Mobile, Inc. respectfully pray that this Honorable Court:
a. LIFT the Temporary Restraining Order and DENY the
application for Writ of Preliminary Injunction for utter lack of
merit; and
b. DISMISS the Petitions filed by Bayan Muna Representatives
and NASECOR and the Counter-Petition filed by MERALCO.
Other reliefs just and equitable are likewise prayed for.
Pasig City for City of Manila, 19 January 2014.
60
By:
PUNO AND PUNO
Counsel for Therma Luzon, Inc.
and Therma Mobile, Inc.
lih Floor, East Tower
Philippine Stock Exchange Center
Exchange Road, Ortigas Center, Pasig City
Telephone Nos. 631-1261to64
Fax No. 631-2517
RODERICO V. PUNO
Roll of Attorneys No. 36332
PTR No. 8412054/1.04.2013/Pasig City
IBP No. 840335/1.3.2011/Lifetime; Makati City
MCLE Compliance No. IV-0011788; 1.25.13
E-mail address: rvpuno@punolaw.com
HELENA ROSALES-CALO
Roll of Attorneys No. 37620
PTR No. 8412055/1.04.2013/Pasig City
IBP No. 840182/1.3.2011/Lifetime; Manila 4
MCLE Compliance No. IV-0009780; 11.23.12
E-mail address: hrcalo@punolaw.com
RICHIE A VIGALE RAMOS-PILARES
Roll of Attorney's No. 54033
PTR No. 8412079/1.04.2013/Pasig City
IBP No. 913573/01.02.2013/Makati City
MCLE Compliance No. IV-0009738; 11.22.12
E-mail address: rrpilares@punolaw.com
61
IEL T. ENRIQUEZ
Rollo omeys No. 59102
PTR No.8412085/1.04.2013/Pasig City
IBP No. 09920 /4-8-2011/Lifetime-Pampanga
MCLE Compliance No. IV-0013072; 3.1.13
E-mail address: ktenriquez@punolaw.com
62
Copy Furnished:
ATTY.MARIACRISTINAP. YAMBOT
Counsel for Petitioners in G.R. No. 210245
45 K-th St., Brgy. West Kamias
Quezon City
NATIONAL GRID CORPORATION
Quezon A venue comer BIR Road
Diliman, Quezon City 1100
ATTY. RONNIE B. RODILLAS
Counsel for Petitioners in G.R. No. 210255
137 Libis Gochuico St., Circumferential Road 3
Caloocan City
Copy Furnished:
PUYAT JACINTO & SANTOS LAW
Counsel for Respondent SEM-Calaca Power Corporation
12/F VGP Center
6772 Ayala Avenue, Makati City 1226
PUYAT JACINTO & SANTOS LAW
Counsel for Respondent Masinloc Power Partners Co., Ltd.
12/F VGP Center
6772 Ayala Avenue, Makati City 1226
PUYAT JACINTO & SANTOS LAW
Counsel for Respondent Quezon Power (Phils.) Ltd. Co.
12/F VGP Center
6772 Ayala Avenue, Makati City 1226
POBLADOR BAUTISTA & REYES
Counsel for Respondent San Miguel Energy Corporation
5/F SEDCCO 1 Building
120 Rada comer Legaspi Streets, Legaspi Village
Makati City 1229
POBLADOR BAUTISTA & REYES
Counsel for Respondent South Premiere Power Corporation
5/F SEDCCO 1 Building
120 Rada comer Legaspi Streets, Legaspi Village
Makati City 1229
POBLADOR BAUTISTA & REYES
Counsel for Respondent First Gas Power Corporation
5/F SEDCCO 1 Building
120 Rada comer Legaspi Streets, Legaspi Village
Makati City 1229
POBLADOR BAUTISTA & REYES
Counsel for Respondent FGP Corporation
5/F SEDCCO 1 Building
120 Rada comer Legaspi Streets, Legaspi Village
Makati City 1229
POBLADOR BAUTISTA & REYES
Counsel for Respondent Bae-Man Energy Development Corporation/
Bae-Man Geothermal, Inc.
5/F SEDCCO 1 Building
120 Rada comer Legaspi Streets, Legaspi Village
Makati City 1229
POBLADOR BAUTISTA & REYES
Counsel for Respondent First Gen Hydro Power Corporation
5/F SEDCCO 1 Building
120 Rada comer Legaspi Streets, Legaspi Village
Makati City 1229
POBLADOR BAUTISTA & REYES
Counsel for Respondent Strategic Power Development Corporation
5/F SEDCCO 1 Building
120 Rada comer Legaspi Streets, Legaspi Village
Makati City 1229
TANTOCO VILLANUEVA DE GUZMAN & LLAMAS
Counsel for Respondent 1590 Energy Corporation
4th & 6th Floors, Filipino Mercantile Building
13 5 dela Rosa Street, Legaspi Village
Makati City 1229
TANTOCO VILLANUEVA DE GUZMAN & LLAMAS
Counsel for Respondent Vivant Sta. Clara Northern Renewables Generation
Corporation
4th & 6th Floors, Filipino Mercantile Building
135 dela Rosa Street, Legaspi Village, Makati City 1229
POWER SECTOR ASSETS & LIABILITIES
MANAGEMENT CORPORATION
ih Floor Bankmer Building,
6756 Ayala Avenue, Makati City
THE SOLICITOR GENERAL
Counsel for Public Respondents
134 Amorsolo St., Legaspi Village
Makati City
GATMAYTAN YAP PATACSIL GUTIERREZ & PROTACIO
Counsel for Respondent SN Aboitiz Power - Benguet, Inc.
30/F 88 Corporate Center
Sedefio cor. Valero Streets
Salcedo Village, Makati City 1227
GATMAYTAN YAP PATACSIL GUTIERREZ & PROTACIO
Counsel for Respondent SN Aboitiz Power - Magat, Inc.
30/F 88 Corporate Center
Sedefio cor. Valero Streets
Salcedo Village, Makati City 1227
TRANS-ASIA POWER GENERATION
CORPORATION
11th Floor PHINMA Plaza
39 Plaza Drive, Rockwell Center,
Makati City 1200
ATTY. RENE A.V. SAGUISAG
Counsel for Petitioners in G.R. No. 210255
4045 Bigasan St., Brgy. Palanan
Makati City
ATTY. NELSON A. LOYOLA
Counsel/or Petitioners in G.R. No. 210255
Suite 201 Carreon Bldg.,
2746 Zenaida St., Brgy. Poblacion
Makati City
SYCIP SALAZAR HERNANDEZ & GATMAITAN
Counsel for Respondent Philippine Electric Market Corporation
SyCipLaw Center
105 Paseo de Roxas
Makati City 1226
Copy Furnished:
DEPARTMENT OF ENERGY
c/o Secretary Carlos Jericho L. Petilla
Energy Center, Rizal Drive
Bonifacio Global City, Taguig City
ANGARA ABELLO CONCEPCION REGALA & CRUZ
Counsel for Respondent Manila Electric Company, Inc.
22nd Floor, ACCRALA W Tower
2nd Avenue comer 30th Street, Crescent West Park
Bonifacio Global City, 0399 Taguig City
AP RENEW ABLES, INC.
15/F NAC Tower, 32nd Street
Bonifacio Global City, Taguig City
Copy Furnished:
ENERGY REGULATORY COMMISSION
Pacific Center Building
San Miguel A venue, Pasig City
GNPOWER MARIVELES COAL PLANT LTD. CO.
1905 Orient Square Building
Don Francisco Ortigas Jr. Road,
Ortigas Center, Pasig City
PANASIA ENERGY HOLDINGS, INC.
2nd Floor 808 Building
Meralco Avenue, Pasig City 1600
VERIFICATION
I, Manuel R. Lozano, Filipino, of legal age, and with office address
at the NAC Tower, 32nd Street, Bonifacio Global City, Taguig City, after
having been sworn in accordance with law, depose and state that:
1. I am the Treasurer of Therma Mobile, Inc. ("TMO"), a
Respondent in the above-captioned case.
2. I have caused the preparation of the foregoing Consolidated
Comment in my capacity as the Treasurer of TMO and as the duly
authorized representative of TMO, as evidenced by the Secretary's
Certificate dated January 17, 2014 attached hereto.
3. I have read and understood all the allegations therein
contained and the same are true and correct to the best of my own
personal knowledge and/or based on authentic records.
IN WITNESS WHEREOF, I have hereunto set my hands this 1'
111
'
day of January 2014 in Taguig City.
1 ,.,
SUBSCRIBED AND SWORN to before me this 10 day of January 2014
in 1AGUtG Cl1'", affiant being personally known to me and exhibiting to
me his Passport No. XX5696069 valid until March 5, 2015 at Manila and
SSS No. 3333575199.

AboitizPower
A Better Future
THERMA MOBILE, INC.
REPUBLIC OF THE PHILIPPINES)
CITY OF CEBU ) S.S.
SECRETARY'S CERTIFICATE
I, FRANCIS NICHOLAS VOLTAIRE E. MALILONG, after having been duly sworn according to law, hereby
depose and state that:
1. I am a Filipino citizen, of legal age with office address Aboitiz Corporate Center, Gov. Manuel A.
Cuenco Avenue, Kasambagan, Cebu City.
2. I am the Assistant Corporate Secretary of THERMA MOBILE, INC. (the "Corporation"), a
corporation duly organized and existing under and by virtue of the laws of the Philippines with
principal office address at Philippine Fisheries Development Authority Building, Navotas Fish Port
Complex, North Bay Boulevard, Navotas City.
3. At the regular meeting of the Board of Directors held on January 14, 2014, at which meeting a
quorum was present and acting throughout, the following resolutions were unanimously passed
and approved:
"RESOLVED, that the Board of Directors of Therma Mobile, Inc. (the
"Corporation") authorizes, as it hereby authorizes the Corporation to
participate as a party in the cases filed by: (i) Bayan Muna Representatives
docketed as G.R. No. 210245; (ii) National Association of Electricity
Consumers for Reforms ("NASECORE") docketed as G.R. No. 210255; (iii)
Manila Electric Company ("MERALCO") docketed as G.R. No. 210502; or (iv)
any other p,arty in the Supreme Court and other fora where the similar
issues are raised (the "Petitions");
RESOLVED FURTHER, that Puno and Puno Law Offices, or any of its
partners or associates, is appointed as counsel of the Corporation in the
Supreme Court and other fora where similar issues are raised;
RESOLVED Fl NALLY. that any one (1) of the following officers of the
Corporation:
Jose Venancio P. Batiquin
Edmundo B. Ang Vice President-Operations
Manuel R. Lozano Treasurer
be authorized, as each is hereby authorized to represent the Corporation in
connection with the aforementioned Petitions or any other action that
involve similar facts and issues, with specific power and/or authority to
sign, execute and deliver on behalf of and in the name of the Corporation
all deeds and documents, including verifications and certifications for
pleadings and motions, necessary to effectuate and implement the
foregoing resolution and bind the Corporation in all pleadings, papers,
documents and agreements necessary and desirable in the said cases."
4. The foregoing resolutions have not been revoked, superseded or amended, and thus
continue to be in force and effect as of this date.
5. The above resolutions are in accordance with the records of the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this January 17. 2014 at Cebu City, Philippines.
VOLTAIRE E. MALILONG
Assistant Corporate Secretaryttf
SUBSCRIBED AND SWORN to before me this January 17. 2014 at Cebu City, Philippines. Affiant, who
is personally known to me, exhibited to me his Unified Multi.:..Purpose Identification Card No. CRN-
0034-0455883-8 issued at Cebu City and Community Tax Certificate No. 00655173 issued at Cebu
City on February 5, 2013.
Doc. No. 126;
Page No. 26;
Book No. I:
Series of 201
BET UEI. NUP AN
Notar Public for Cebu City
Notarial ommis::;ion No.100-13
Uni:iI Oecernbr.i :'31,
Aboifo: Center
Gov. M. Ct..:e:icc !,,,a__, City
ROLL N0. lf7708
PTR No. 43657lS Cebu City 1.03.14
IBP No. 937011 Cebu City1.03.14
MCLE Compliance No. IV-OOZ0015
VERIFICATION
I, Charles A. Garno, Filipino, of legal age, and with office address at
the NAC Tower, 32nd Street, Bonifacio Global City, Taguig City, after
having been sworn in accordance with law, depose and state that:
1. I am the First Vice President for Corporate Services of
Therma Luzon, Inc. ("TLI"), a Respondent in the above-captioned
case.
2. I have caused the preparation of the foregoing Consolidated
Comment in my capacity as the First Vice President for Corporate
Services of TLI and as the duly authorized representative of TLI, as
evidenced by the Secretary's Certificate dated January 17, 2014
attached hereto.
3. I have read and understood all the allegations therein
contained and the same are true and correct to the best of my own
personal knowledge and/or based on authentic records.
IN WITNESS WHEREOF, I have hereunto set my hands this /'i'(r'
day of January 2014 in Taguig City.
~
Charles A. Gamo
Affiant
SUBSCRIBED AND SWORN to before me this tt>i llf day of January
2014 in TAGrrn- ~ . , affiant being personally known to me and
exhibiting to me his Passport No. EB6774013; issued on 1/16/12; valid
until 11/15/17; issued at DFA NCR West and SSS No. 0385819136.
Until Ommber 31, 2014
NA( Tower, 32nd Street, Bonifacio Global City, Tagulg City
PTHlo. A-2017535, January 3, 2014, Tagulg City
lifetime IBP No. 04551, March 5, 29GJ
Roll No. 48052, IBPMakatl Chapt&r
MCLE Cempliance No. IV-0012700
le
AboitizPower
THERMA LUZON, INC.
REPUBLIC OF THE PHILIPPINES}
CITY OF CEBU ) S.S.
..
SECRET ARV'S CERTIFICATE
I, JUSTINE MAE A. CABATINGAN, after having been duly sworn in accordance with law, hereby depose and
state that: .
1. I am a Filipino citizen, of legal age, with office address at Aboitiz Corporate Center, Gov. Manuel A.
Cuenco Avenue, Kasambagan, Cebu City.
2.
I am the duly elected, qualified and incumbent Assistant Corporate Secretary of THERMA LUZON,
INC. (the "Corporation"), a corporation duly organized and existing under and by virtue of the laws
of the Philippines with principal office address at NAC Tower, 32"d Street, Bonifacio Global City,
Taguig City.
3. At the special meeting of the Board of Directors held on January 14, 2014, during which meeting a
quorum was present and existing throughout, the following resolutions were unanimously passed
and approved:
"RESOLVED. that the Board of Directors of Therma Luzon Inc. (the "Corporation")
authorize, as it hereby authorizes the Corporation to participate as .a party in the
cases filed by: (i} Bayan Muna Representatives docketed as G.R. No. 210245; (ii)
National Association of Electricity Consumers for Reforms ("NASECORE") docketed
as G.R. No. 210255; (iii) Manila Electric Company ("MERALCO") docketed as G.R. No.
210502; or (iv) any other party in the Supreme Court and other fora where the
similar issues are raised (the "Petitions");
RESOLVED FURTHER, that Puno and Puno Law Offices, or any of its partners or
associates, is appointed as counsel of the Corporation in the Supreme Court and
other fora where similar issues are raised;
RESOLVED FINALLY, that any one (1) of the following officers of the Corporation:
Antonio R. Moraza
Benjamin A. Cariaso, Jr. President and Chief Operating Officer
Charles A. Garno First Vice President for Corporate Services
be authorized, as each is hereby authorized to represent the Corporation in
connection with the aforementioned Petitions or any other action that involve
similar facts and issues, with specific power and/or authority to sign, execute and
deliver on behalf of and in the name of the Corporation all deeds and documents,
including verifications and certifications for pleadings and motions, necessary to
effectuate and implement the foregoing resolution and bind the Corporation in all
pleadings, papers, documents and agreements necessary and desirable in the said
cases."
4. The foregoing resolutions have not been revoked, superseded or amended, and thus continue to be
in force and effect as of this date.
5. The above resolutions are in accordance with the records of the Corporation.
Pagelofl

AboitizPower
IN WITNESS WHEREOF, I have hereunto set my hand this January 17, 2014 at Cebu City, Philippines.
JUSTINE MAE A.'l:l:iNGAN
Assistant Corporate Secretaryrnp
SUBSCRIBED AND SWORN to before me this January 17, 2014 in Cebu City, Philippines. Affiant, who is
personally known to me, exhibited her Driver's License No. G06-03-079669, issued on May 22, 2012 in
Cebu City and Community Tax Certificate No. 00712388 issued on February 26, 2013 in Cebu City.
Book No.
Series of 2
BET UEL T UPAN
Notar Public r Cebu City
Notarial Commission No. 100-13
Untif December 31, 2014
Aboifil: Corporate Center
Gov. M. Cueracci tive., Cebu City
ROLL NO. 47709
PTR No.4365729 Cebu City 1.03.14
IBP No. 937011 Cebu City 1.03.14
MCLE Compliance No. IV-0020015
Page 2of 2