GR 228588; (March, 2021) (Digest)
G.R. No. 228588 , March 21, 2021; G.R. No. 229143, March 2, 2021; G.R. No. 229453, March 2, 2021.
PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY, SAN BEDA COLLEGE ALABANG INC., ATENEO DE MANILA UNIVERSITY, AND RIVERBANKS DEVELOPMENT CORPORATION, PETITIONERS, MAYNILAD WATER SERVICES, INC., SILIGAN WHITE CAP SOUTHEAST ASIA, INC., AND FASTECH ELECTRONIQUE, INC., PETITIONERS-IN-INTERVENTION, JOCELYN FORGE, INC. AND LYCEUM OF THE PHILIPPINES BATANGAS CAMPUS, PETITIONERS-IN-INTERVENTION, VS. DEPARTMENT OF ENERGY, HON. ALFONSO G. CUSI, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENERGY, ENERGY REGULATORY COMMISSION AND HON. JOSE VICENTE B. SALAZAR, IN HIS OFFICIAL CAPACITY AS CHAIRPERSON OF THE ENERGY REGULATORY COMMISSION, AND HON. ALFREDO J. NON, HON. GLORIA VICTORIA C. YAPTARUC, HON. JOSEFINA PATRICIA M. ASIRIT, AND HON. GERONIMO D. STA. ANA, IN THEIR OFFICIAL CAPACITY AS INCUMBENT COMMISSIONERS OF THE ENERGY REGULATORY COMMISSION, RESPONDENTS. NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS, INC. (NASECOR), INTERVENOR, AC ENERGY HOLDINGS, INC., INTERVENOR, RETAIL ELECTRICITY SUPPLIERS ASSOCIATION OF THE PHILIPPINES, INC. (RESA), INTERVENOR, PHINMA ENERGY CORPORATION, INTERVENOR. SILLIMAN UNIVERSITY, REPRESENTED BY ITS PRESIDENT, DR. BEN S. MALAYANG III, PETITIONERS, VS. DEPARTMENT OF ENERGY AND ENERGY REGULATORY COMMISSION, RESPONDENTS. BATANGAS II ELECTRIC COOPERATIVE, INC., PENINSULA ELECTRIC COOPERATIVE, INC., CAMARINES SUR I ELECTRIC COOPERATIVE, INC., ILOILO I ELECTRIC COOPERATIVE, INC., AKLAN ELECTRIC COOPERATIVE, INC., CAPIZ ELECTRIC COOPERATIVE, INC., ANTIQUE ELECTRIC COOPERATIVE INC., AND LEYTE III ELECTRIC COOPERATIVE, INC., PETITIONERS, VS. DEPARTMENT OF ENERGY AND ENERGY REGULATORY COMMISSION, RESPONDENTS.
FACTS
The petitions challenge the constitutionality of Department of Energy (DOE) Circular No. DC2015-06-0010 and Energy Regulatory Commission (ERC) Resolution Nos. 5, 10, 11, and 28, all series of 2016, issued pursuant to the Electric Power Industry Reform Act of 2001 (EPIRA). The EPIRA restructured the electric power industry to foster competition. The DOE Circular mandated all contestable customers (end-users) with a monthly average peak demand of one megawatt (MW) and above, who were still being served by their franchised distribution utilities, to secure a retail supply contract with a licensed Retail Electricity Supplier (RES), a Generation Company, or a Prospective Generation Company by June 25, 2016. It also set deadlines for end-users with lower demand thresholds. The ERC subsequently issued resolutions: Resolution No. 5 governed the issuance of RES licenses; Resolution No. 10 set the deadlines for mandatory migration to the contestable market; Resolution No. 11 imposed restrictions, including barring distribution utilities from supplying the contestable market and ordering local RES to wind down their business within three years; and Resolution No. 28 amended the rules for contestability. Petitioners, comprising electricity end-users and electric cooperatives, argued these issuances were unconstitutional for usurping legislative power, violating due process, equal protection, the non-impairment clause, and for being an unreasonable exercise of police power.
ISSUE
Whether the DOE Circular and the assorted ERC Resolutions are unconstitutional.
RULING
The Supreme Court declared the DOE Circular and the challenged ERC Resolutions UNCONSTITUTIONAL. The Court held that the DOE Circular’s mandate for contestable customers to secure a retail supply contract was an invalid exercise of delegated legislative power because it amended the EPIRA. The EPIRA created a framework for retail competition but did not make participation mandatory; it preserved the option for customers to remain with their distribution utility. The Circular effectively removed this option, thereby altering the law’s policy. Furthermore, ERC Resolution No. 11, which prohibited distribution utilities from participating in the contestable market and ordered the winding down of local RES, contravened the EPIRA and the DOE’s own rules, which expressly allowed distribution utilities to act as suppliers within their franchise area. The ERC, tasked with implementing the policies and rules formulated by the DOE, overstepped its authority by issuing rules that supplanted and conflicted with the DOE’s policy. The Court found that these issuances violated the petitioners’ right to due process by depriving them of their choice of electricity supplier without sufficient justification and through arbitrary means. The petitions were granted, and the issuances were struck down as invalid.