GR 180642; (February, 2016) (Digest)
G.R. No. 180642 February 3, 2016
NUEVA ECIJA I ELECTRIC COOPERATIVE INCORPORATED (NEECO I), Petitioner, vs. ENERGY REGULATORY COMMISSION, Respondent.
FACTS
The Energy Regulatory Commission (ERC) directed petitioner Nueva Ecija I Electric Cooperative Incorporated (NEECO I) to refund over-recoveries from implementing the Purchased Power Adjustment (PPA) Clause under Republic Act (R.A.) No. 7832. The law capped recoverable system losses for rural electric cooperatives. NEECO I, through its association, filed an application for an amended PPA formula, which the Energy Regulatory Board (ERB, later succeeded by the ERC) provisionally approved in 1997. NEECO I implemented this formula from July 1999 to April 2005. However, for the period March 1996 to June 1999, it used a different “multiplier” scheme. In 2003, the ERC issued an order clarifying that for future PPA confirmations, the power cost should be based on “net” (with discounts passed to consumers), not “gross.” The ERC subsequently found that NEECO I had over-recovered from its consumers and ordered a refund.
ISSUE
Whether the ERC’s order, which applied the “net” costing methodology retroactively to NEECO I’s past billings, is valid.
RULING
No, the ERC’s order cannot be applied retroactively. The Supreme Court affirmed the Court of Appeals’ dismissal of NEECO I’s appeal on procedural grounds but proceeded to resolve the substantive issue to prevent future litigation. The Court ruled that the 2003 ERC order, which adopted the “net” costing method, constituted a new rule or interpretation. Administrative issuances that are interpretive in nature or which prescribe new obligations cannot be given retroactive effect, as this would violate the constitutional prohibition against ex post facto laws and impair vested rights. Retroactive application would unjustly penalize NEECO I for actions taken based on the prior “gross” costing policy that was in force at the time. The law and its original implementing rules did not explicitly specify the “net” method. Therefore, the new interpretation could only be applied prospectively from its effectivity in 2003. Consequently, the ERC’s computation of over-recoveries, which applied the “net” method to periods preceding the 2003 order, was invalid. The case was remanded to the ERC for a proper recomputation of any over-recovery using the applicable rules and methodology in force during the relevant billing periods.