G.R. No. 268094 , October 30, 2024
PEAKPOWER SAN FRANCISCO, INC., PETITIONER, VS. ENERGY REGULATORY COMMISSION, RESPONDENT.

FACTS

This case involves a Petition for Certiorari filed by Peakpower San Francisco, Inc. against the Energy Regulatory Commission (ERC). The ERC terminated the provisional authority it had granted for a second Power Purchase and Transfer Agreement (PPTA) between Peakpower and the Agusan Del Sur Electric Cooperative, Inc. (ASELCO). The ponencia (main decision) granted Peakpower’s petition. In this dissenting opinion, Justice Leonen argues for the petition’s dismissal on procedural and substantive grounds. Procedurally, Peakpower failed to implead ASELCO, an indispensable party to the case, as the termination directly affects ASELCO’s eventual ownership of the power unit. Substantively, the petition fails to demonstrate compliance with the mandatory Competitive Selection Process (CSP) required by the Department of Energy (DOE) for power supply agreements. The dissenting opinion references the case of Alyansa para sa Bagong Pilipinas, Inc. v. Energy Regulatory Commission, which struck down ERC orders postponing the CSP, emphasizing that such agreements without CSP are not binding for determining pass-through costs to consumers.

ISSUE

1. Whether the Petition for Certiorari should be dismissed for failure to implead an indispensable party (ASELCO).
2. Whether the Petition for Certiorari should be denied for failing to prove compliance with the mandatory Competitive Selection Process (CSP) for power supply agreements.

RULING

Justice Leonen, in his dissenting opinion, votes for the DISMISSAL of the Petition for Certiorari.
1. On the Procedural Issue: The petition is fatally defective for not joining ASELCO as an indispensable party. The absence of an indispensable party renders all subsequent court actions null and void, as it deprives the court of authority to act and violates the absent party’s right to due process. The ponencia itself recognized that ASELCO would be deprived by the termination, making its joinder essential.
2. On the Substantive Issue: The petition should be denied for failing to prove compliance with the CSP. Electricity generation and distribution are imbued with public interest, and distribution utilities operate as regulated monopolies. To protect consumers from price gouging, the state mandates a competitive public bidding process (CSP) for power supply purchases. The provisional approval of the second PPTA by the ERC was granted during a postponed CSP period, which the Court in Alyansa had already declared as issued with grave abuse of discretion. Contracts in such a regulated industry are subject to state supervision under its police power. The constitutional non-impairment clause does not absolutely protect contracts, especially those relating to public welfare, franchises, or permits, and yields to the state’s police power to safeguard public interest.