National Power Corporation vs East Asia Utilities Corporation

G.R. No. 170934, 23 July 2008

FACTS:
Petitioner National Power Corporation (NPC) is a government-owned and controlled
corporation created and existing by virtue of Republic Act 6395, as amended. On the other hand,
respondents East Asia Utilities Corporation (EAUC) and Cebu Private Power Corporation (Cebu
Power) are private corporations duly organized under the existing laws of the Republic of the
Philippines.
Respondents are both independent power producers (IPPs) duly accredited with the
Department of Energy (DOE) as operators of diesel power generating units. Both had secured the
approval of the then Energy Regulatory Board (ERB) to sell their excess power to the Visayan
Electric Company, Inc. (VECO). While respondent EAUC is a registered ecozone utility
enterprise of the Mactan Economic Processing Zone (MEPZ) which wheels its excess capacity to
VECO using its own 69 KV sub-transmission line, respondent Cebu Power sells its entire
generating capacity to VECO using a direct connection to VECO’s 69 KV grid through its
Ermita Substation.
Sometime in 1999, the petitioner billed respondent EAUC as PDS tariffs the amount
of P29,069,294.93 for the period covering December 26, 1998 to April 15, 1999. Respondent
EAUC paid under protest the total amount billed, out of which the sum of P17,551,912.59 is being
contested. Petitioner also billed respondent Cebu Power as PDS tariffs the amount
of P3,032,509.08 for the period covering March 26, 1999 to April 25, 1999. Respondent Cebu
Power paid under protest the total amount billed and contested P1,324,275.31 thereof.
Despite respondents’ protestations, petitioner NPC continued to bill the former with what they
claimed as inapplicable/contested tariffs. Fearing that the said unauthorized billings by the
petitioner NPC would continuously amplify and escalate to their prejudice, the respondents filed
on August 24, 1999 a complaint in the then ERB against petitioner NPC for a refund/credit and/or
collection of inapplicable/unauthorized tariffs with prayer for a cease and desist order and/or
preliminary injunction.
The petitioner NPC filed its comment on said complaint. It averred that the Power
Delivery Services (PDS) that it provides and for which respondent EAUC is being charged of
refer to the one associated with the firm Load Following and Frequency Regulation (LFFR) and
Spinning Reserve (SR) services. It also averred that the use of its transmission and sub-
transmission facilities is the reason why it charges PDS under the approved tariffs for Open
Access Transmission Services (AOTS) and Ancillary Services (AS). Also, the PDS charges were
applied to the respondents in conjunction with the AS provided to them. Petitioner further
averred that it applied the approved PDS charges only to a certain percentage of the billing
capacities of the IPPS, i.e., 13.2% of the billing capacities in conjunction with the provision of
the firm LFFR and SR while additional PDS charges were applied when back-up power services
were requested.
On January 11, 2000, respondents EAUC and Cebu Power filed a reply to petitioner's
comment with Motion to Reiterate Prayer for the Issuance of a Cease and Desist Order and/or
Writ of Preliminary Injunction against the petitioner. Respondents contended that petitioner
cannot and must not charge its transmission customers rates that have not been approved by ERB
in ERB Case No. 96-118
 The ERB ruled in favor of EAUC and Cebu Power, stating that the NPC must refrain
from charging complainants the PDS charges. ERC modified the ruling of ERB. CA affirmed.
Hence, this petition.

ISSUE:
Whether the CA erred in affirming the decision of the ERB and the order of the ERC that
respondents are not subject to Power Delivery Service charges for Ancillary Services.

HELD:
No. The then ERB was created under Executive Order No. 172, dated May 8, 1987.
Pursuant to Republic Act (RA) No. 7638 or the "Department of Energy Act of 1992," the ERB
was tasked to determine, fix and prescribe the rates being charged by NPC to its customers.
Section 18 of RA No. 7638 states that the power of the NPC to determine, fix, and
prescribe the rates being charged to its customers under Section 4 of the [sic] Republic Act No.
6395, as amended, xxx are hereby transferred to the Energy Regulatory Board. The Board shall
exercise its new powers only after due notice and hearing and under the same procedure
provided for in Executive Order No. 172.
Under the decision in ERB Case No. 96-118, which approved the allowable rates for the
charges on services provided by NPC to its customers, it is undisputed that there is no provision
which allows NPC to charge PDS charges on AS separately from AS charges. On the contrary,
the AS charges already cover all costs necessary to provide the same.
As correctly pointed out by respondents, there are two separate tariffs for transmission
and AS. NPC's customers are charged for both Power Delivery (actual usage of the line in
transport) and AS Charges (maintenance of grid reliability). Accordingly, PDS charges are only
applicable to IPPs using the transmission facilities in transporting power while AS are required
in maintaining grid reliability. Consequently, an IPP need not pay PDS charges if its facilities are
embedded in the distribution network but must, however, pay for AS necessary for maintaining
grid reliability. To charge respondents for AS and PDS charges on AS would be tantamount to
double charging.
The findings of administrative or regulatory agencies on matters within their technical
area of expertise are generally accorded not only respect but finality if such findings are
supported by substantial evidence. Specifically, the matter of rate-fixing calls for a technical
examination and a specialized review of specific details which the courts are ill-equipped to
enter; hence, such matters are primarily entrusted to the administrative or regulating authority.
In the case at bar, the ERC (then the ERB) is the agency tasked by law to fix, determine
and prescribe the rates being charged by NPC to its customers. In accordance with this mandate,
the ERC approved the rates and the guidelines that NPC must comply with in charging its
customers. In the absence of grave abuse of discretion on the part of the ERC, its finding that
there is no basis to assess respondents for PDS charges on AS is binding on this Court.
Freedom from Debt Coalition vs Energy Regulatory Commission
G.R.161113, 15 June 2004

FACTS:
The Petition assails the Order of respondent Energy Regulatory Commission (ERC),
provisionally authorizing respondent Manila Electric Company (MERALCO) to increase its rates
by an average amount of 12 centavos per kilowatt hour. MERALCO filed with the ERC
an Application for an increase in rates and also prayed ex parte for the grant of a provisional
authority to implement the increase according to the schedule attached to its Application.
National Association of Electricity Consumers for Reforms, Inc. (NASECORE), Mr.
Genaro Lualhati (Lualhati) and Freedom from Debt Coalition (FDC) assailed separately, in
a letter addressed to the ERC Chairman Manuel R. Sanchez (Sanchez), informed him of their
intention to file an Opposition to MERALCO’s Application, seeking the dismissal of
MERALCO’s Application and expressed its intention to file an opposition to MERALCO’s
Application, respectively. ERC directed FDC, NASECORE and Lualhati to file their respective
comments on the Application within 15 days from their receipt thereof. NASECORE filed a
Motion for Production of Documents to enable it to evaluate MERALCO’s Application.
ERC directed MERALCO to file its comment on NASECORE’s Motion for Production
of Documents. ERC issued an Order directing MERALCO to submit certain documents in
connection with the evaluation of its Application. However, ERC, without first resolving
the Motions for Production of Documents of NASECORE and FDC and apparently without
considering Lualhati’s Opposition, issued an Order provisionally approving MERALCO’s ex
parte application for rate increases. Bayan Muna, Bayan, KMU, Gabriela, Kadamay, Agham,
Gabriela Women’s Party and Anak Pawis argued that the Order is void for having been issued by
ERC with manifest bias in favor of MERALCO and without due regard for the rights of
consumers, so they filed their Motion to Intervene and attached thereto their Petition-in-
Intervention. Hence, this Instant Petition and Petition-in-Intervention.

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

HELD:
Yes. The conferment upon the ERC of the power to grant provisional rate adjustments is
not inconsistent with any provision of the EPIRA. The principal powers of the ERB relative to
electric public utilities transferred to the ERC are the following: 1. To regulate and fix the power
rates to be charged by elective companies; 2. To issue certificates of public convenience for the
operation of electric power utilities; 3. To grant or approve provisional electric rates. It bears
stressing that the conferment upon the ERC of the power to grant provisional rate adjustments is
not inconsistent with any provision of the EPIRA. The powers of the ERB transferred to the ERC
under Section 44 are in addition to the new powers conferred upon the ERC under Section 43.
The power to approve provisional rate increases is included among the powers transferred
to the ERC by virtue of Section 44 since the grant of that authority is not inconsistent with the
EPIRA. The above-quoted applicability clause is quite clear. It cannot be argued that the clause
could not have referred to the provisions of the prior laws empowering the Public Service
Commission (PSC) and the ERB to grant provisional rate adjustments on the premise that the
lawmakers deliberately deleted the provisions in the crafting of the EPIRA. Such an argument
begs the question. What is clear from Sections 80 and 44 is that the legislators saw the
superfluity or needlessness of carrying over in the EPIRA the same provision found in the
previous laws. The power to approve provisional rate increases is included among the powers
transferred to the ERC by virtue of Section 44 since the grant of that authority is not inconsistent
with the EPIRA; rather, it is in full harmony with the thrust of the law which is to strengthen the
ERC as the new regulatory body.
Neither is the notion of provisional rate adjustment incompatible with the policy to
protect public interest, as enunciated in Section 2(f) of the law. The common weal is not
relegated to the back-burner simply by upholding the grant to the ERC of the authority to
approve provisional rate adjustments. Again for one, even if there is a ground to grant the
provisional rate increase, the ERC may do so only after the publication requirement is met and
the consumers affected are given the opportunity to present their side. For another, the rate
increase is provisional in character and therefore may be modified or even recalled anytime. Still
for another, the ERC is mandated to prescribe a rate-setting methodology “in the public interest”
and “to promote efficiency.”
Energy Regulatory Board vs Court of Appeals
G.R. No. 113079, 20 April 2009 


FACTS:
Petitioner Shell is engaged in the business of importing crude oil, refining the same and
selling various petroleum products through a network of service stations throughout the country.
Private respondent Petroleum Distributors and Service Corporation (PDSC) owns and operates a
Caltex service station at the corner of the MIA and Domestic Roads in Pasay City.
On June 30,1983, Shell filed with the quondam Bureau of Energy Utilization (BEU) an
application for authority to relocate its Shell Service Station at Tambo, Parañaque, Metro Manila,
to Imelda Marcos Avenue of the same municipality. The application was initially rejected by the
BEU because Shell's old site had been closed for five (5) years such that the relocation of the
same to a new site would amount to a new construction of a gasoline outlet, which construction
was then the subject of a moratorium. Subsequently, however, BEU relaxed its position and gave
due course to the application.
PDSC filed an opposition to the application on the grounds that: (1) there are adequate
service stations attending to the motorists' requirements in the trading area covered by the
application; (2) ruinous competition will result from the establishment of the proposed new
service station; and (3) there is a decline not an increase in the volume of sales in the area. Two
other companies, namely Petrophil and Caltex, also opposed the application on the ground that
Shell failed to comply with the jurisdictional requirements.
On June 3, 1986, the BEU rendered a decision denying Shell's application. Meanwhile,
on May 8, 1987, Executive Order No. 172 was issued creating the Energy Regulatory Board
(ERB) and transferring to it the regulatory and adjudicatory functions of the BEU.
On May 9, 1988, the OEA rendered a decision denying the appeal of Shell and affirming
the BEU decision. Shell moved for reconsideration and prayed for a new hearing or the remand
of the case for further proceedings. In a supplement to said motion, Shell submitted a new
feasibility study to justify its application.
The OEA issued an order on July 11, 1988, remanding the case to the ERB for further
evaluation and consideration, noting therein that the "updated survey conducted by Shell" cited
new developments such as the accessibility of Imelda Marcos Avenue, now Benigno Aquino, Jr.
Avenue, to Parañaque residents along Sucat Road and the population growth in the trading area.
On September 17, 1991, the ERB rendered a Decision allowing Shell to establish the
service station in Benigno Aquino, Jr. Avenue. PDSC filed a motion for reconsideration of the
foregoing Decision. The motion was, however, denied. PDSC elevated its cause on to the Court
of Appeals.
CA reversed the ERB judgment. A motion for reconsideration was denied by the Court of
Appeals in a Resolution dated 6 April 1994. Dissatisfied, both Shell and ERB elevated the matter
to this Court by way of these petitions, which were ordered consolidated by the Court in a
Resolution dated July 25,1994.

ISSUE:
Whether CA gravely erred in making findings of facts contrary to those of the ERB whose
findings were based on substantial evidence?
HELD:
Yes. The policy of the government in this regard has been to allow a free interplay of market
forces with minimal government supervision. The purpose of governing legislation is to liberalize
the downstream oil industry in order to ensure a truly competitive market under a regime of fair
prices, adequate and continuous supply, environmentally clean and high-quality petroleum
products. Indeed, exclusivity of any franchise has not been favored by the Court, which is keen on
promoting free competition and the development of a free market consistent with the legislative
policy of deregulation as an answer to the problems of the oil industry.
The interpretation of an administrative government agency like the ERB, which is tasked to
implement a statute, is accorded great respect and ordinarily controls the construction of the courts.
A long line of cases establish the basic rule that the courts will not interfere in matters which are
addressed to the sound discretion of government agencies entrusted with the regulation of activities
coming under the special technical knowledge and training of such agencies.
When an administrative agency renders an opinion or issues a statement of policy, it merely
interprets a pre-existing law and the administrative interpretation is at best advisory for it is the
courts that finally determine what the law means. Thus, an action by an administrative agency may
be set aside by the judicial department if there is an error of law, abuse of power, lack of jurisdiction
or grave abuse of discretion clearly conflicting with the letter and spirit of the law.
However, there is no cogent reason to depart from the general rule because the findings of the
ERB conform to, rather than conflict with, the governing statutes and controlling case law on the
matter.