Freedom From Debt Coalition v. MERALCO : 161113 : June 15, 2004 : J. Puno : En Banc : Concurring and Dissenting Opinion

EN BANC

[G.R. NO. 161113 : June 15, 2004]

FREEDOM FROM DEBT COALITION, ANA MARIA NEMENZO, as President of FREEDOM FROM DEBT COALITION, MA. TERESA I. DIOKNO-PASCUAL, REP. LORETTA ANN ROSALES (Party-List Akbayan), REP. JOSE VIRGILIO BAUTISTA (Party-List Sanlakas), REP. RENATO MAGTUBO (Party-List Partido Manggagawa), Petitioners, v. ENERGY REGULATORY COMMISSION, MANILA ELECTRIC COMPANY (MERALCO), Respondents.

CONCURRING AND DISSENTING OPINION

PUNO, J.:

The case at bar involves two purely legal issues, one substantive and the other procedural. The substantive issue is whether the Energy Regulatory Commission (ERC) has legal authority to grant provisional rate adjustments under the Electric Power Industry Reform Act of 2001 (EPIRA); the procedural issue is whether the grant by the ERC of the provisional rate adjustment to the Manila Electric Company (Meralco) was done in accord with section 4 (e), Rule 3 of the Implementing Rules and Regulations of the EPIRA law. The reasonability of the rate increase applied for by Meralco and provisionally granted by the ERC is not an issue before the Court and should not shade our decision. On the substantive issue, I join the majority without any hesitation. On the procedural issue, I beg to dissent.

I. Facts

First, the facts without the fat.

On October 10, 2003, Meralco applied for a rate hike with the ERC and sought the ex-parte grant of provisional authority to increase such rates in accordance with a schedule attached to its application.¹ On the same date, Meralco published a notice of the filing of the application for a rate hike in the Manila Times.² A day before filing its application with the ERC, Meralco furnished the Sangguniang Panglungsod of Pasig City with a copy of the application.³ Ï‚rνll

With the public given such notice, the National Association of Electricity Consumers for Reform (NASECORE), on October 14, 2003, manifested its intent with the ERC to file an opposition to Meralcos application.⁴ Ï‚rνll

Other oppositors followed suit. Mr. Genaro Lualhati filed a letter with the ERC on October 24, 2003 demanding for the dismissal of Meralcos application.⁵ Ï‚rνll

On October 29, 2003, no less than petitioner Freedom from Debt Coalition (FDC) filed a letter with the ERC expressing its intent to file an opposition to Meralcos application.⁶ The ERC then directed FDC, Mr. Lualhati and NASECORE to file their comments on the application.⁷ Ï‚rνll

On November 11, 2003, NASECORE moved for the production of material documents by Meralco.⁸ On November 13, 2003, ERC ordered Meralco to comment on NASECOREs motion.⁹ On November 19, 2003, it directed Meralco to submit certain documents.¹⁰ Ï‚rνll

On November 21, 2003, Mr. Lualhati filed his Opposition to Meralcos application.¹¹ Ï‚rνll

On November 25, 2003, NASECORE, manifested that it still could not file its opposition until the documents it had requested from Meralco had been produced.¹² On the same date, petitioner FDC filed a Motion for Production of Documents with the ERC to enable it to submit a comment on Meralcos application and reserved its right to oppose the same.¹³ Ï‚rνll

In an Order dated November 27, 2003 (the Questioned Order) issuedex-parte, the ERC granted Meralco provisional authority to increase its rates by 12 centavos/kWh effective January 2004,¹⁴ the dispositive portion of which states as follows:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

WHEREFORE, considering all the foregoing, this Commission, pursuant to Section 8 of Executive Order No. 172 and Section 4 (e) of the Implementing Rules and Regulations of the EPIRA (R.A. 9136), hereby provisionally authorizes applicant Manila Electric Company (MERALCO) to adopt and implement the attached rate schedules embodying a rate adjustment in the average amount of TWELVE (12) CENTAVOS per kWh, effective with respect to its billing cycles beginning January 2004. The impact of this approved rate adjustment will vary from one customer class to another depending on the load factors.cralawlibrary

The rate adjustment authorized herein shall be subject to refund in the event that this Commission finds, after completion of the hearings of this case, that the same is unjust and unreasonable.

The hearing of this case is hereby set on December 22, 2003 at nine o clock in the morning (9:00 A.M.) at the ERC Hearing Room, 15^th Floor, Pacific Center Building, San Miguel Avenue, Ortigas Center, Pasig City. In this connection, MERALCO is herebydirected to publish, at its own expense, the attached Notice of Public Hearing at least twice (2) (sic) for two (2) successive weeks in two (2) newspapers of nationwide circulation in the country, the last date of publication to be made not later than two (2) weeks before the scheduled date of initial hearing.cralawlibrary

Let copies of this Order and the attached Notice of Public Hearing be furnished all the Municipal/City Mayors within the MERALCOs franchise area for the appropriate posting thereof on their respective bulletin boards.

Likewise, let copies of this Order and the attached Notice of Public Hearing be furnished the Office of the Solicitor General (OSG), the Commission on Audit (COA) and the Committees on Energy of both Houses of Congress who are hereby requested to have their respective duly authorized representatives present at the aforesaid initial hearing¹⁵ (emphasis supplied)

On December 2, 2003, Meralco filed a Motion for Extension of Time to submit the documents indicated in the ERCs Order of November 19, 2003.¹⁶ Ï‚rνll

On December 3, 2003, Mr. Zosimo Yeban, filed a letter with the ERC objecting to the rate increase granted to Meralco.¹⁷ Ï‚rνll

On December 8, 2003, NASECORE filed with the ERC an Urgent Motion to Resolve Motion for Production of Documents and Opposition to the Provisional Authority, while the National Consumer Affairs Council filed a letter seeking reconsideration of the ERCs Questioned Order. ¹⁸ Ï‚rνll

On December 9, 2003, the Federation of Philippine Industries, Inc. likewise filed a letter with the ERC seeking reconsideration of the Questioned Order.¹⁹ Ï‚rνll

On December 11, 2003, Mr. Lualhati and the Philippine Consumers Watch (Bantay Mamamayan) Foundation filed with the ERC a Motion to Resolve Opposition and Manifestation Joining NASECORE in its Opposition and Motion for Production of Documents, respectively.²⁰ A day later, Napocor Industrial Consumers Association, Inc. (NICAI) filed an Urgent Motion to Suspend Implementation and Motion for Reconsideration.²¹ Ï‚rνll

On December 15, 2003, the Philippine Consumers Welfare Union, Atty. Ruperto Estrada, Martsa ng Bayan Contra Meralco, Corazon Villa and Daday Tupay filed oppositions asking ERC to reconsider the Questioned Order while Atty. Estrada filed a motion for production of documents.²² Ï‚rνll

On December 19, 2003, Meralco opposed the motion for production of material documents on the ground that the documents sought by the petitioners were immaterial and irrelevant to its application.²³ Ï‚rνll

On December 21, 2003, Mr. Arnulfo Paca also raised his objections and comments on the provisional increase via e-mail sent to the ERC. ²⁴ Ï‚rνll

On December 22, 2003, Mr. Lualhati filed a Motion for Reconsideration of the Questioned Order.²⁵ On the same date, Bagong Alyansang Makabayan (BAYAN), Kilusang Mayo Uno (KMU), Gabriela Womens Partylist (GABRIELA), Anakpawis Partylist, Kalipunan ng Damayang Mahihirap (KADAMAY), and Samahan ng Nagtataguyod ng Agham at Teknolohiya Para sa Sambayanan (AGHAM) filed an Opposition with Motion for Reconsideration.²⁶ Ï‚rνll

In the public hearing held on December 22, 2003, several oppositors, asked the ERC to reconsider its Questioned Order. The ERC refused insisting it has the power to issue provisional orders.²⁷ Instead of seeking reconsideration, FDC filed with this Court on December 23, 2003, a petition for certiorari , prohibition and injunction with prayer for the issuance of a temporary restraining order or a status quo order. Six days later, FDC reiterated its prayer for a temporary restraining or status quo order.²⁸ Ï‚rνll

On December 30, 2003, Meralco filed a Consolidated Comment to the various oppositions with the ERC.²⁹ Ï‚rνll

On January 13, 2004, this Court ordered the ERC and Meralco to comment on FDCs petition and enjoined them to observe the status quo prevailing before the filing of the petition. The case was set for oral arguments on January 27, 2004.³⁰ Ï‚rνll

Prior to and shortly after the January 13, 2004 status quo order of this Court, several parties had, in the meantime, filed other pleadings with the ERC. The Philippine Chamber of Commerce and Industryfiled a letter on January 5, 2004 requesting for a public hearing before the grant of the provisional increase.³¹ On January 6, 2004, Mr. Lualhati filed a Rejoinder with Motion for Reconsideration, while Mr. Juan Paqueo III filed a Petition to Suspend the Granting of Electric Power Increase Against Meralco Company.³² BAYAN, Bayan Muna Partylist, KMU, GABRIELA, Anakpawis Partylist, KADAMAY, and AGHAM filed a Manifestation with Motion to Immediately Resolve Motion for Reconsideration and to Suspend Provisional Authority on January 9, 2004.³³ They also filed their Rejoinder to Meralcos Consolidated Comment on January 13, 2004.³⁴ In the meantime, NICAI and Mr. Yeban filed their respective Rejoinders to Meralcos Consolidated Comment on January 12, 2004.³⁵ On January 15, 2004, NASECORE filed its Rejoinder.³⁶ The OSG filed an Urgent Motion to Resolve Pending Motions filed by the Oppositors on January 29, 2004.³⁷ It sent a letter to the Commission on Audit (COA) requesting assistance with regard to Meralcos application on February 4, 2004³⁸ and filed a motion with the ERC on February 16, 2004 seeking to direct the COA to conduct a rate audit.³⁹ Ï‚rνll

Meralco, ERC and the OSG filed their respective comments with this Court on January 26, 2004.

The petitioners-in-intervention⁴⁰ filed a motion to intervene attaching thereto their petition-in-intervention which this Court admitted in a Resolution dated January 27, 2004.⁴¹ Ï‚rνll

During the oral arguments on January 27, 2004, the parties were required to file their respective memoranda within a non-extendible period of twenty days. Counsel for ERC was ordered in open court to produce certain documents.cralawlibrary

The parties (except for petitioner FDC) submitted their respective Memoranda dated February 16, 2004.⁴² Ï‚rνll

It will be noted that several motions assailing the Questioned Order remain pending before the ERC for resolution as shown by the OSGs Urgent Motion to Resolve Pending Motions Filed by the Oppositors filed with the ERC on January 29, 2004.⁴³ These pending motions are the following: a letter-complaint of Zosimo Yeban, Jr. filed on December 3, 2003 objecting to the rate increase granted to Meralco;⁴⁴ an Urgent Motion to Resolve Motion for Production of Documents and Opposition to the Provisional Authority of the NASECORE approved by its President, Pete L. Ilagan, filed on December 8, 2003;⁴⁵ a letter of the National Consumers Affairs Council filed on December 8, 2003 seeking reconsideration of the provisional authority;⁴⁶ a letter of the Federation of Philippine Industries, Inc. filed on December 9, 2003 asking reconsideration of the ERC Order granting the provisional increase;⁴⁷ a Manifestation of the Philippine Consumers Watch (Bantay Mamamayan) Foundation, represented by its Chairman, Juan Ponce Enrile, filed on December 11, 2003, joining the NASECORE in its opposition to the provisional authority and Motion for Production of Documents;⁴⁸ an Urgent Motion to Suspend Implementation and Motion for Reconsideration of the Napocor Industrial Consumers Association, Inc. (NICAI) filed on December 12, 2003;⁴⁹ an Opposition of the Philippine Consumers Welfare Union (PCWU), Martsa ng Bayan Kontra Meralco, Corazon Villa and Daday Tupas filed on December 15, 2003 asking the ERC to reconsider its order granting the provisional increase;⁵⁰ an electronic mail message of Michael Paca dated December 21, 2003 (and stamped received by the ERC on January 8, 2004) with an attached write-up containing comments on the rate increase;⁵¹ a Motion for Reconsideration of Mr. Genaro C. Lualhati filed on December 22, 2003;⁵² a letter of the Philippine Chamber of Commerce and Industry filed on January 5, 2004 asking the ERC to conduct public hearings prior to the grant of provisional increase;⁵³ a Petition of Juan B. Paqueo III filed on January 6, 2004 to suspend the grant of rate increase to Meralco;⁵⁴ and a Manifestation (with motions to immediately resolve motion for reconsideration and to suspend provisional authority) of BAYAN, KMU, GABRIELA, KADAMAY and AGHAM filed on January 9, 2004.⁵⁵

II. Issues

The issues are strictly legal.

First, whether the ERC has legal authority to grant provisional rate adjustments under the new EPIRA law.

Second, whether the grant by the ERC of the provisional rate adjustment to Meralco violates the Implementing Rules and Regulations of the EPIRA law and hence constitutes grave abuse of discretion amounting to lack or excess of jurisdiction.cralawlibrary

Let me start with an overview of the. ..

III. Statutory History of Electric Power

Regulation in the Philippines

Commonwealth Act No. 146 or the Public Service Act was passed into law on November 7, 1936 creating the Public Service Commission (PSC) with jurisdiction, supervision and control over public services such as those for electric light, heat and power.⁵⁶ Under the Act, the PSC had authority to fix rates charged by a public service. By express provision of law, the PSC could approve provisional rates ex-parte.⁵⁷ Ï‚rνll

Under the reorganization plan effected by Presidential Decree No. 1, as amended by Presidential Decree No. 458 issued on May 16, 1974, jurisdiction, supervision and control over public services related to electric light, power and waterworks vested in the PSC were transferred to the Board of Power and Waterworks.cra

The Board of Power and Waterworks was abolished under Presidential Decree No. 1206 enacted on October 6, 1977. Its powers and functions relative to power utilities, including its authority to grant provisional relief,⁵⁸ were transferred to the Board of Energy.⁵⁹ Ï‚rνll

On May 8, 1972, institutional reforms were made in the energy sector under Executive Order No. 172 which created the Energy Regulatory Board (ERB) . Under the law, the Board of Energy (BOE) was reconstituted into the ERB and the powers and functions of the BOE under Republic Act No. 6173, as amended by Presidential Decree No. 1206, were transferred to the ERB.⁶⁰ The law expressly authorizes the ERB to grant provisional relief.⁶¹ Ï‚rνll

Most recently, Republic Act No. 9136, known as the Electric Power Industry Reform Act of 2001 (EPIRA), was enacted on June 8, 2001 to provide a framework for restructuring the electric power industry.⁶² One of the purposes of the EPIRA is to establish a strong and purely independent regulatory body.⁶³ The ERB was abolished⁶⁴ and its powers and functions not inconsistent with the provisions of the EPIRA were expressly transferred to the Energy Regulatory Commission (ERC). ⁶⁵ Ï‚rνll

With due respect to the majority, I submit that. ..

IV. ERC complied with the rules and did not act

with grave abuse of discretion in issuing the

Questioned Order.

This is the spearhead of my disagreement with the majorityand I wish to address it first. I respectfully make the following submissions: (a) there is no violation of the procedure set forth in the EPIRAs Implementing Rules and Regulations when ERC issued its Questioned Order; indeed, the oppositors had full opportunity to assail its legality and propriety in a public hearing before its effectivity; (b) ex-parteorders issued to protect the interest of the public are universally recognized as legitimate exercise of the police power of the State; and (c) it is prematurefor the Court to strike down the Questioned Order at this time since it is merely provisional and is pending reconsideration before the ERC; in fine, there is an effective and available administrative remedy before the ERC which no party should shortcircuit and which this Court should allow to flow unimpeded.

The Questioned Order did not violate

the Implementing Rules and

Regulations of the EPIRA; there is

no denial of procedural due process.

The majority based its holding that the ERC committed grave abuse of discretion in issuing the Questioned Order on the following ratiocination:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

1. Meralco failed to comply with the publication requirementprovided in Section 4 (e), Rule 3 of the Implementing Rules and Regulations. It notes that the Notice of Application, quoted in full below, which was published on October 10, 2003 in the Manila Times does not contain the textof Meralcos application, or at least a summary thereof:

MANILA ELECTRIC COMPANY

PasigCity

NOTICE OF APPLICATION

Pursuant to paragraph (e), Section 4, Rule 3 of the Implementing Rules and Regulations of R.A. 9136, notice is hereby given that an Application dated October 8, 2003, for the approval of revised rate schedules and provisional authority, will be filed by the MANILA ELECTRIC COMPANY with address at Meralco Center, Ortigas Avenue, Pasig City, before the Energy Regulatory Commission.

Issued this 9^th day of October 2003.

(Sgd.) GIL S. SAN DIEGO

Vice-President and Head

Legal Services⁶⁶ Ï‚rνll

2. The Questioned Order failed to consider the pleadings filed by parties who opposed Meralcos application, as required by Section 4 (e), Rule 3 of the Implementing Rules and Regulations, and was based solely on Meralcos application and its supporting documents.

3. The ERC issued the Questioned Order despite the pendency of several Motions for Production of Documents filed by various oppositors and despite their manifestation that they would oppose Meralcos application.

These grounds relied upon by the majority cannot stand close scrutiny. Sections 4 (e) and (r), Rule 3 of the EPIRAs Implementing Rules and Regulations set forth the procedure in rate adjustment cases, viz:

(e) Any application or petition for rate adjustment or for any relief affecting the consumers must be verified; and accompanied with an acknowledgment of receipt of a copy thereof by the LGU Legislative Body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy five (75) calendar days from the filing of the application or petition, based on the same and the supporting documents attached thereto and such comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide the matter on the merits not later than twelve (12) months from the issuance of the aforementioned provisional order.

This Section 4(e) shall not apply to those applications or petitions already filed as of 26 December 2001 in compliance with Section 36 of the Act.

x        x        x

(r) 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 (2) successive weeks in two (2) newspapers of nationwide circulation.

There are two publication requirements in the afore-cited rule. The first is the notice of publication of the petition or application in a newspaper of general circulation in the locality where the petitioner principally operates. The certification to this effect must accompany the petition or application when filed. The second refers to the publication of all notices of hearing to be conducted by the ERC for the purpose of fixing rates or fees. The notices shall be published at least twice for two (2) successive weeks in two (2) newspapers of nationwide circulation.

The majority assails Meralcos failure to comply with the first publication requirement. It stresses that Meralco did not cause the publication of its petition or application in its entirety. It merely published a notice of the filing of application. I respectfully submit that the published notice sufficiently complies with the requirements of the rules.The application and its 17 annexes are hundreds of pages long and almost an inch thick. It would be absurd to require Meralco to publish the entirety of its application. As postulated by the ERC, the rules should not be given an unreasonable construction, viz:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Given that rate cases usually entail the filing of applications consisting of hundreds of pages including all the attachments in support thereof, which often enough are made integral parts thereof by reference, it is absurd to expect all the applicants to be able to comply with the publication requirement if it were construed that the entirety of their application must be the one published and not just the notice of the filing thereof. With a one-whole page advertisement in a newspaper of general circulation easily costing hundreds of thousands of pesos, and with one application eating up more than ten pages of newspaper space even with the smallest of fonts, it is simply too onerous and inconvenient for the applicants, including the smallest debt-ridden and barely surviving electric cooperative, to be required to shell out millions of pesos just so that they could apply for some relief with respondent ERC.

This must not have been the intention of those luminaries that drafted and approved the EPIRA Implementing Rules. When the legislative intent of informing the public of the filing of the application with respondent ERC is duly served by mere notice, as this is in fact what due process requires, it must not have entered the minds of the drafters of the Implementing Rules to expand such requirement by asking for something close to impossibility (sic). ⁶⁷ (emphases supplied)

The rationale for the first rule on publication is to ensure that the people in the locality where the petitioner principally operates is informed of the notice of application. Once they receive the notice, they can then proceed to obtain copies of the entire applicationin order to prepare their opposition or comments thereto. In the case at bar, it is undeniable that Meralco published its Notice of Application for provisional rate increase. It is also undeniable that various parties, including the petitioners in the case at bar, secured copies of Meralcos application after publication of its Notice of Application. It is also undeniable that various parties were able to oppose Meralcos application for provisional rate increase. It cannot be gainsaid therefore that the rationale for the rule has been satisfied.

The majority opines that at least a summary of the application should have been published.⁶⁸ With due respect, the rules do not require the publication of a summary of the application. The rules require that a certification of the notice of publication should accompany the application. Indeed, a summary would not enable anyone to prepare an intelligent opposition to the application. Rate cases are, by nature, highly technical and dependent on scientific data which do not easily lend themselves to summarization. Anyone seriously intending to comment or oppose the application needs to secure a copy of the application and its annexes.

I respectfully reject the majority holding that the ERC failed to consider the pleadings and comments of oppositors as required by the Implementing Rules and Regulations before it issued its Questioned Order. In the first place, there is no showing that the ERC did not consider the oppositions filed by various parties to Meralcos application. In the secondplace, the Rules do not expressly require any person to file a comment or pleading on an application for provisional rate increase. Section 4 (e), Rule 3 of the Implementing Rules and Regulations simply provides that the ERC should act on the provisional relief (1) not later than seventy-five calendar days from the filing of the application; (2) based on the application or petition; (3) based on documents supporting the application or petition; and (4) based on comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be. In fine, the application for provisional rate increase can be acted upon by the ERC if there are no comments or pleadings filed by the consumers or LGUs concerned.

We now determine whether the ERC ignored the comments of the consumers or the LGUs concerned before it issued its Questioned Order. The records will show that the comments or pleadings pending before the ERC before it issued the Questioned Order on November 27, 2003 are the following:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

1. NASECOREs letter filed on October 14, 2003 placing it on record that it would oppose Meralcos application, its Motion for Production of Documents filed on November 11, 2003, and Compliance filed on November 25, 2003 manifesting that it could not file its opposition until the documents it requested were made available;chanroblesvirtuallawlibrary

2. Mr. Genaro Lualhatis letter filed on October 24, 2003 asking for the dismissal of the application and his Opposition filed on November 21, 2003;chanroblesvirtuallawlibrary

3. FDCs letter filed on October 29, 2003 expressing its intent to oppose the application and Motion for Production of Documents filed on November 27, 2003, the day the Questioned Order was issued.

It will be noted that the only substantive opposition or comment filed with the ERC from the time of the filing of Meralcos petition on October 10 until the issuance of the Questioned Order on November 27, 2003, is that filed by Mr. Genaro Lualhati. I respectfully submit that the ERC correctly gave Mr. Lualhatis Opposition the significance of a cipher. To begin with, his opposition was filed way beyond the 30-day period for opposing Meralcos application. And as pointed out by Meralco, Mr. Lualhatis argumentsare mere reiterations of his arguments in ERC Case Nos. 2001-900 and 2001-646, which the ERC had already rejected.⁶⁹ There is therefore nothing tectonic about the arguments of Mr. Lualhati which would defeat the issuance of the Questioned Order.

The majority also holds that the ERC failed to consider other pleadings such as Motions for Production of Documents or letters of intent to file oppositions before it issued its Questioned Order. I respectfully reiterate that there is nothing in the rules requiring the ERC to hold its provisional order in abeyance pending the resolution of such motions as a Motion for Production of Documents. As aforestressed, the ERC is allowed by the Rules to grant or deny the relief prayed for based on the application and its supporting documents, and such comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.⁷⁰ The ERC is mandated to consider only pleadings filed within 30 days counted from the LGU or consumers receipt of the application or publication thereof, as the case may be. That is all. It is not required to wait until all pleadings are submitted nor is its power to issue provisional orders stayed by pending matters such as motions for production of documents. To rule otherwise as the majority did is to hold ERC hostage by the simple expedient of filing such motions as motions for production of documents or letters of intent to file oppositions or comments.

It is beyond debate that the standard for interim orders is different from those used for final orders. The standards for interim orders are less stringent because such temporary orders are determined expeditiously, without such investigation as might be deemed necessary to a determination of permanent cases.⁷¹ If the standards for interim orders are as strict as those for final orders, then interim orders could not be issued summarily. For this reason, the ERC, under the Implementing Rules and Regulations, has only seventy-five days to provide provisional relief. It is in this context, that the full ventilation and resolution of a motion for production of documents should be viewed. A motion for production of documents is a mode of discovery utilized by one in order to be fully apprised of the relevant details of a case. Its use is more relevant in opposing a final rate increase order which must be based on substantial evidence. Consequently, a motion for production of documents need not hinder the issuance of an order granting a provisional rate increase.

Under the Rules, the application and its supporting documents, if sufficient, can provide the basis for the ERC to issue an Order for a provisional rate increase. It should not be overlooked that the ERC is a special agency with a database of reliable information which it has accumulated thru experience and its expertise. It is free to resort to these data without offending procedural due process.

I respectfully submit that the administrative process of rate making should not be overly judicialized, otherwise, its very reason for existing will be subverted. It will not be able to address the needs for which it was created and for which the judicial process was found lacking.

There is another reason why the majority cannot hold that ERC violated procedural due process when it issued its Questioned Order. It is familiar knowledge that due process only demands opportunity to be heard. The Questioned Order was issued on November 27, 2003 but the provisional rate increase was to be effective beginning January 2004. The public hearingon the provisional rate was set on December 22, 2003. The oppositors were given all the opportunity to assail Meralcos application in the hearing of December 22, 2003. It cannot therefore be maintained that the oppositors were denied the opportunity to be heard before the provisional rate increase order became effective in January 2004. The majority cannot close its eyes to this reality.

Administrative agencies are allowed

to issue ex-parte orders when

required by public interest and as an

exercise of police power.

Further, the rationale behind the creation of administrative agencies and the States police power explain the need for allowing them to issue ex- parte orders to protect public interest.

History tells us that the rise of the administrative process, combining legislative and judicial powers, was caused by the following:

1. the development of an industrialized and complex society requiring economic regulation;

2. the need for specialization to develop the necessary expertise, flexible regulation to parallel the changing needs of the regulated field, and continuity of public policy; andcralawlibrary

3. the evident inability of the judicial process to perform the necessary adjudication with regard to the vastly expanded scope of governmental activity.⁷² Ï‚rνll

With the complexity of modern life, government functions have to multiply as the areas subject to regulations increased.⁷³ Different bodies were created to address these various needs agencies dealing with public health, transportation, commerce and even the practice of professions were thus established. In the different areas addressed by these administrative bodies, subject specialists with expertise in their respective fields have to be developed for effective regulation. The demands of modern society likewise exposed the inefficiency of traditional judicial processes to deal with the day-to-day requirements of government. Administrative processes stepped in as a more flexible means of speedily and expeditiously dealing with various affairs that the stricter and more cumbersome judicial processes cannot manage. The advantage of specialized administrative bodies is their expertise in regulatory adjudication in a narrowly defined area.⁷⁴ For all these reasons, the administrative process has evolved into a more informal procedure characterized by correspondence, conference and investigation.⁷⁵ As stated by President Roosevelt,

The administrative tribunal or agency has been evolved in order to handle controversies arising under particular statutes. It is characteristic of these tribunals that simple and non-technical hearings take the place of court trials, and informal proceedings supersede rigid and formal pleadings and processes⁷⁶ Ï‚rνll

Corrollarily, administrative agencies have also been conceded the power to grant temporary measures ex-parte which are recognized as essential to take care of problems that cannot be allowed to wait for the completion of formal proceedings.⁷⁷ As explained by Davis:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

If the contagion is spreading, or the unfit pilot is about to jeopardize the passengers, or the harmful medicinal preparation is being sold to the public, summary administrative action in advance of hearing is appropriate.⁷⁸ (emphasis supplied)

It is therefore clear that administrative bodies were created to be able to address the multifarious concerns of society with speed and efficiency. Thus, if poisoned meat has entered our docks or a disease-carrying traveler has landed on our shores, it cannot be doubted that the proper administrative authorities have sufficient power to swiftly address these problems. If these administrators were hamstrung from taking temporary measures, if they have to conduct hearings before they could take measures to protect the public, the result would be tragedy to our people. The power to enact these interim measures is essential for the daily self-preservation of society. The power is indispensable to administrative bodies if we expect them to deal with unseen emergencies and exigencies with effectiveness.

It bears emphasis that the regulatory power of administrative bodies should not be niggardly given for it is rooted in the States police power. Police power was originally limited in scope.⁷⁹ It was anchored in the limitations that the courts had imposed upon individual rightsas embodied in the common law maxim, sic utere tuo ut alienum non laedas,meaning, use your own property in such a manner as not to injure that of another. ⁸⁰ Over the years, however, the range of police power was no longer limited to the preservation of public health, safety and morals, which used to be the primary social interests in earlier times.⁸¹ Police power now requires the State to assume an affirmative duty to eliminate the excesses and injustices that are the concomitants of an unrestrained industrial economy.⁸² Police power is now exerted to further the public welfare a concept as vast as the good of society itself.⁸³ Hence, police power is but another name for the governmental authority to further the welfare of society that is the basic end of all government.⁸⁴ When police power is delegated to administrative bodies with regulatory functions, its exercise should be given a wide latitude. Police power takes on an even broader dimension in developing countries such as ours, where the State must take a more active role in balancing the many conflicting interests in society. The Questioned Order was issued by the ERC, acting as an agent of the State in the exercise of police power. We should have exceptionally good grounds to curtail its exercise. This approach is more compelling in the field of rate-regulation of electric power rates. Electric power generation and distribution is a traditional instrument of economic growth that affects not only a few but the entire nation. It is an important factor in encouraging investment and promoting business. The engines of progress may come to a screeching halt if the delivery of electric power is impaired. Billions of pesos would be lost as a result of power outages or unreliable electric power services. The State thru the ERC should be able to exercise its police power with great flexibility, when the need arises. The power of the ERC to issue rate orders ex-parte, pending the conduct of full-blown hearings for the issuance of final rates, should not be denied except for the strongest reasons. There is none in the case at bar except its imagined perception that the Questioned Order denied oppositors procedural due process.

It is Premature for the Court to

Interfere With the ERCs Ruling at This Time since the Questioned

Order is Merely Provisional and can

be Corrected.

It should be emphasized that the ERC issued merely a provisional order, one that it could modify or correct at any time. The said Order is the subject of various motions for reconsideration. ERC is far from issuing decision on the merits of Meralcos application. It is too early to fear that the Questioned Order will cause irreparable injury to the consumers whose interest should be balanced with the interest of MERALCO. In the balancing of interest, it should be the public interest that should prevail. It should be noted that there are numerous motions opposing the Questioned Order currently pending before the ERC. I respectfully submit that the ERC should first be given the chance to consider the arguments raised by the oppositors in these motions. A cursory examination of the pleadings and oppositions to the Questioned Order which are still pending resolution by the ERC shows that the expertise and specialized knowledge of the ERC is necessary in order to deal with the various grounds that were raised. These grounds include the following:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

1. It is the obligation of Meralcos stockholders, not the consumers, to finance Meralcos expansion projects and pay its financial obligations.⁸⁵ Ï‚rνll

2. When Meralco was experiencing difficulties in raising funds for capital projects, it should have divested its interests in businesses not directly connected to their primary business as an electric power distribution utility.⁸⁶ Ï‚rνll

3. The absence of a public hearing before the issuance of the Questioned Order shows lack of transparency in the grant of the provisional authority.⁸⁷ Ï‚rνll

4. Widespread opposition to the rate increase by the consuming public shows that they believe that the increase has no legal basis.⁸⁸ Ï‚rνll

5. President Gloria Macapagal-Arroyo, herself, has requested the ERC to reconsider its decision in light of public outrage.⁸⁹ Ï‚rνll

6. Any expansion project should be supported by a feasibility study showing the projected additional revenues which would justify the cost of expansion.⁹⁰ Ï‚rνll

7. Increased power rates would make industries and businesses located in Meralcos franchise area less competitive, resulting in their closure and termination of employment for their employees.⁹¹ Ï‚rνll

8. Any capital expenditure by Meralco goes into the computation of its rate base, thereafter, the legal return-on-rate-base (RORB) must be determined after proper valuation and appraisal. To make its customers advance the needed capital for Meralcos projects would be doubly injurious to its consumers as they are bound to subsequently pay for the cost of these projects through their monthly billings despite the fact that they financed the same in the first place.⁹² Ï‚rνll

9. Meralco failed to show proof of the urgent need for the issuance of the provisional authority, viz:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

A. With regard to Meralcos pending application before the ERC (Case No. 2003-389) to increase capacity in its substations and to redesign/revamp and/or extend its distribution, it was shown that financial difficulties did not hinder the timely implementation of such projects. The delay was caused by other factors, such as coordinating with government agencies in the obtention of construction permits.⁹³ Ï‚rνll

b. Though Meralcos financial statements as audited for the year 2002 indicated a net loss of P2.015 billion, it was recently granted a rate increase by the ERC in Case Nos. 2001-646 and 2001-900 resulting in the unbundling of rates. Meralco did not present any interim audited financial statements to the ERC showing losses in its utility operations while taking into account the effects of the rate increase as an aftermath of the unbundling of rates. Further, the use of the year 2002 as a test year is questionable as the effects of the most recent rate increase adjustments granted to Meralco are not reflected in the year 2002 audited financial statements.⁹⁴ Ï‚rνll

10. The provisional authority was granted by the ERC based on the asset appraisal report of Meralco dated September 12, 2003, which has not yet been reviewed and approved on the merits by the ERC. This is a deviation from the accepted practice of evaluating rate increases on the basis of approved asset appraisal reports.⁹⁵ Ï‚rνll

11. The Questioned Order granting the provisional authority failed to present any computation of Meralcos most recent RORB, which is a basic presentation before any rate adjustment of a regulated utility is granted.⁹⁶ Ï‚rνll

12. The provisional authority is based on most of Meralcos rate figures in its Rate Design 1, which may not be the best rate format to reflect cost. There is no reason to believe that transmission charges should differ for customer classes when Meralco is actually paying for the same charge to Transco for whatever class of customer it serves.⁹⁷ Ï‚rνll

13. The ERCs issuance of a provisional authority to Meralco on the basis of the latters failure to meet its maturing debt obligations indicated a cash-flow approach which veers away from the RORB methodology for rate adjustments. The ERC should look into the cash flows to and from the books of Meralco and its sister companies to make this approach more objective.⁹⁸ Ï‚rνll

14. Meralco does not have a sincere desire to lower operating costs. In the ERCs order dated May 30, 2003 approving the unbundling of rates in ERC Case Nos. 2001-646 and 2001-900, the ERC ordered Meralco to exert its best efforts to renegotiate with its Independent Power Producers in order to mitigate the impact of increase rates. However, instead of complying with this directive, Meralco withdrew its application for approval of contract amendments of its Power Purchase Agreement with Quezon Power (Phils.) Ltd. which could have resulted in lower purchase power costs. In fact, Meralco is even now applying for upward adjustments of its power purchase rates with DURACOM in ERC Case No. 2003-434.⁹⁹ Ï‚rνll

15. If, as Meralco contends, its financial difficulties are due to the devaluation of the peso, this can be mitigated by temporary adjustments using the ICERA¹⁰⁰ mechanism which has been approved by the ERC.¹⁰¹ Ï‚rνll

16. Meralco is unfit to operate a power utility service due to its inability to meets its financial obligations to its creditors; gross mismanagement of the utility despite its having a monopoly in the power distribution industry for around 50 years and providing services to 70% of the country; losses due to pilferages for failure to have adequate support services; failure to maintain its infrastructure; and having poor customer relations.¹⁰² Ï‚rνll

17. Visayas Electric Company (VECO) charges its customers significantly less than Meralco despite the inherent advantages of the Napocor-Transco-Meralco system with its technologically more cost-effective power generation process. VECO sources its power mainly from thermal generating plants which generate more expensive electricity compared to Meralco which sources cheaper electricity from hydroelectric and geothermal plants. It is possible that Meralco-serviced customers are being overcharged or that within the generation/transmission/distribution system of Napocor, Transco and Meralco there is wastage, inefficiency or unnecessary overheads which are being passed on to customers.¹⁰³ Ï‚rνll

18. Despite Meralcos claim that it has not had a rate increase since 1994, its billings have increased after the unbundling of its rates.¹⁰⁴ Ï‚rνll

19. Even without any increase, the current rates as approved on May 30, 2003 already exceed Meralcos adjusted revenue requirement for the year 2002 of P27,474,325,672 by no less than P13,941,541,193 even using the lower sales volume of P21,880,741,000 kWh for the year 2002.¹⁰⁵ Ï‚rνll

20. There is a prejudicial question in Case No. 77559, a Petition for Review of the ERCs order approving an allegedly excessive increase in Meralcos rates, which is pending before the Court of Appeals.¹⁰⁶ Ï‚rνll

21. A hearing should be held prior to the issuance of a provisional authority as there are issues which should be resolved, to wit:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

A. the audit, verification and approval of the value of Meralcos assets for the year 2002;chanroblesvirtuallawlibrary

b. the basis of the rate increase, i.e., should this be based on actual operating investments or on the value of investments needed for expansion prior to any actual investment (in effect, would consumers be funding the expansion);chanroblesvirtuallawlibrary

c. the implementation of Meralcos renegotiation with its Independent Power Producers to remove or significantly reduce the P3.50 per kWh generation bill, among which is Meralcos application to implement the Generation Rate Adjustment Mechanism or GRAM in ERC Case No. 2003-566, which would reduce the generation charge by P0.1843 per kWh;chanroblesvirtuallawlibrary

d. Meralcos refunds due to the industrial and commercial sectors; andcralawlibrary

e. the review of Meralcos application of a higher rate of systems loss (16.5%) to residential users compared to the legally allowed 9.5% to all customers across the board.¹⁰⁷ Ï‚rνll

It is obvious to the eye that all the possible serious objections to the Questioned Order have been raised by the consumers. Nobody has raised the argument that he has been denied the opportunity to oppose MERALCOs application due to its non publication in toto. It is therefore purposeless for the majority to annul the Questioned Order and require the republication of MERALCOs application. The better course of action is to remand the case to the ERC so that it can review its provisional order in light of the opposition to it.

I agree, however, with the majority that - - -

V. The ERC Has Authority To Issue Provisional

Orders under the new EPIRA Law.

The Nature of Rate-Regulation

This Court discussed the nature of rate-regulation in Republic of the Philippines, represented by the Energy Regulatory Board v. Manila Electric Company, G.R. NOS. 141314 and 141369, promulgated on November 15, 2002, viz:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The regulation of rates to be charged by public utilities is founded upon the police powers of the State and statutes prescribing rules for the control and regulation of public utilities are a valid exercise thereof. When private property is used for a public purpose and is affected with public interest, it ceases to be juris privati only and becomes subject to regulation. The regulation is to promote the common good. Submission to regulation may be withdrawn by the owner by discontinuing use; but as long as use of the property is continued, the same is subject to public regulation.

In regulating rates charged by public utilities, the State protects the public against arbitrary and excessive rates while maintaining the efficiency and quality of services rendered. However, the power to regulate rates does not give the State the right to prescribe rates which are so low as to deprive the public utility of a reasonable return on investment. Thus, the rates prescribed by the State must be one that yields a fair return on the public utility upon the value of the property performing the service and one that is reasonable to the public for the services rendered.The fixing of just and reasonable rates involves a balancing of the investor and the consumer interests. (emphases supplied and footnotes omitted)

It is evident that rate-regulation is one of the more important aspects of public utility regulation. It allows the regulator sufficient power to protect consumers from unreasonable charges while ensuring that the utility is able to maintain a viable business. As explained in Potomac Electric Power Company v. Public Service Commission of the District of Columbia, (t) his zone is bounded on the one side by the interests of utility customers in not paying exorbitant rates On the other side are the interests of utility investors in achieving a rate of return sufficient to maintain the utilitys financial integrity, to permit the utility to attract necessary capital at a reasonable cost, and fairly to compensate themselves for the risks they have assumed.¹⁰⁸

Interim Rate-Regulation

Interim rate-regulation is a well-entrenched concept in utility regulation. Interim rates are defined as rates charged by the utility for services or products pending the establishment of a permanent rate, in emergency situations, or where a bond is posted that guarantees a refund to consumers for any excess paid by them prior to the Commissions final determination.¹⁰⁹ It should be emphasized that interim rates are not limited to emergency situations. In one case, interim rates were allowed pending the imposition of final rates when the previous rates were considered so low as to be confiscatory.¹¹⁰ It has also been allowed to alleviate financial problems whose correction cannot safely await a decision on the proper level of permanent rates.¹¹¹ Ï‚rνll

Interim rate-regulation has also been viewed as a solution to the so-called regulatory lag associated with full-blown hearings.¹¹² Regulatory lag is defined as the loss of proper earnings claimed by a utility between the time a petition for rate increase is filed and the rate relief actually becomes effective by administrative or judicial determination.¹¹³ Ï‚rνll

In the United States, numerous state public utilities commissions have generally recognized and sanctioned temporary rates to meet emergencies or determine by experiment or trial what rates would be just.¹¹⁴ This has been applied to various types of utilities such as those providing services for sanitation,¹¹⁵ telephone,¹¹⁶ and electric power.¹¹⁷ Ï‚rνll

To emphasize the importance of a regulators power to grant interim relief, many states have even taken the position that interim rate-regulation is implied from the power to fix final rates even in the absence of specific statutory authority.¹¹⁸ Ï‚rνll

In the case of Far North Sanitation, Inc. v. Alaska Public Utilities, Inc.,¹¹⁹ a company engaged in garbage collection challenged the interim order of the Public Utilities Commission declaring a rate refund. The Supreme Court of Alaska held that the broad powers of the Public Utilities Commission to establish fair and just rates implied its authority to declare rates interim and refundable so long as the Commission provided protection for the interests of both the utility and public. While the Alaska Supreme Court acknowledged the existence of conflicting case law on this question citing Electric Dist. No. 1 which held that the plain language of the relevant law requiring the commission to fix rates meant that it could only fix final rates, it was persuaded by the weight of jurisprudence upholding the implied power of regulators to exercise interim rate-regulation:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

We think the better view is that the APUC has implied authority to set interim rates. See Pueblo Del Sol Water Co. v. Arizona Corp. Comm'n, 160 Ariz. 285, 772 P.2d 1138, 1140 (App.1988) (although no express authority exists, it is only "logical" that commission can impose interim rates subject to a decrease) ; United Tel. Co. of Florida v. Mann, 403 So.2d 962 (Fla.1981); Grindstone Butte Mut. Canal Co. v. Idaho Power Co., 98 Idaho 860, 574 P.2d 902, 906 (1978) (implied in an on-going investigation is the power to set temporary rates) ; see also Potomac Elec. Power Co. v. Public Serv. Comm'n of Dist. of Columbia, 457 A.2d 776, 780 n. 1 (D.C.App.1983) (Commission's power to grant interim rate increases is "implied from Commission's specifically granted statutory powers") . AS 42.05.141(a) (1) ¹²⁰ (emphases supplied)

In the 1977 case of Public Utility Commission of Texas et al. v. City of Corpus Christi, a public utility commission and a power company appealed the decision of a lower court enjoining the commission from enforcing an interim rate order and enjoining the power company from imposing the rates arising from such order.¹²¹ The appellate court ruled in favor of the commission and the power company, holding that the power of the commission to set interim rates is a power necessarily inferred from or incidental to the express power to fix a permanent rate.¹²² The court stressed that this position has been consistently upheld in other states.¹²³ Ï‚rνll

In the case of State ex rel. Laclede Gas Co. v. Public Service Commission of Missouri, the issue before the Missouri Court of Appeals was whether the Laclede Gas Company should have been granted an interim rate increase by the Public Service Commission of Missouri pending the latters determination of whether a permanent rate increase should be allowed. The Court noted that the question presented was a recurring one of great public concern requiring its consideration even though the Commission subsequently granted a permanent increase. The Court explained the well-established doctrine of implied interim rate-making powers, viz:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The very real necessity of recognizing such a power in the regulatory agency has long been recognized by courts throughout the country. Not a single case has been cited by Jackson County nor found by independent research which has ever denied such a power to a regulatory agency such as the Missouri Public Service Commission. On the other hand, numerous cases from diverse jurisdictions have recognized and given effect to such an implied power even in the absence of specific statutory authority: Omaha & C.B. St. Ry. Co. v. Nebraska State Railway Commission, 103 Neb. 695, 173 N.W. 690 (1919) (decided prior to the present Nebraska statute expressly authorizing temporary increases in an emergency); Muskogee Gas & Electric Co. v. State, 81 Okl. 176, 186 P. 730 (1920), City of Bartlesville v. Corporation Commission, 82 Okl. 160, 199 P. 396 (1921), and Oklahoma Gas & Electric Co. v. State Corporation Commission, 83 Okl. 281, 201 P. 505 (1921) (decided in the absence of any statute granting express power to make interim increases) ; State ex rel. Puget Sound Navigation Co. v. Department of Transportation of Washington, 33 Wash.2d 448, 206 P.2d 456 (banc 1949) (without reliance upon any specific statutory power) ; Chesapeake & Potomac Tel. Co. v. Public Service Commission, 330 A.2d 236 (D.C.App.1974) (authority found solely by implication) ; City of New York v. New York Telephone Co., 115 Misc. 262, 189 N.Y.S. 701 (1921) (decided before the adoption of the present New York statute specifically authorizing temporary increases); State ex rel. Utilities Commission v. Morgan, 16 N.C.App. 445, 192 S.E.2d 842 (1972) and State ex rel. Utilities Commission v. Edmisten, 26 N.C.App. 662, 217 S.E.2d 201 (1975) (decided under a file and suspend statute substantially similar to that of Missouri and with no provision expressly permitting temporary rates); Southern Bell Telephone & Telegraph Co. v. Bevis, 279 So.2d 285 (Fla.1973) (decided before adoption of the present Florida statute specifically authorizing interim increases); Federal Power Commission v. Tennessee Gas Transmission Co., 371 U.S. 145, 150, 83 S.Ct. 211, 9 L.Ed.2d 199 (1962). ¹²⁴ (emphases supplied)

The rationale for this position is best explained in the case of Muskogee Gas and Electric Company v. State, viz:

The power lodged in the commission to promulgate rates is a legislative power, and its exercise by the commission involves legislative discretion and policy. Any rule that would require the commission, before it promulgates any order fixing a rate, to have before it evidence that would establish to a mathematical certainty the reasonableness of the proposed rate, would greatly hinder, if not almost entirely prevent, the commission from exercising that power . ¹²⁵ (emphases supplied)

In Muskogee, the temporary rate schedules for electric service for Muskogee and Ft. Gibson issued by the Corporation Commission was challengedas it was temporary and experimental and was put into effect only until such time as the commission could secure data upon which to make a valuation of the property of the company and prescribe a permanent rate schedule. In ruling for the public utility, the Court described the danger arising from a situation where a defanged regulator has no power to grant provisional relief:

The first contention strikes at the very foundation of the fundamental law creating the commission and defining its duties, and, if sustained, must work a result quite as surprising and disastrous to the appellant as to the patrons of the company and the general public, for, if the commission were limited to prescribing rates to instances where it had made a complete inventory and valuation, there could be little or no relief from rapidly fluctuating prices brought about by war conditions and incident to the reconstruction period .

This contention of the appellant fails to take into consideration the purpose for which the commission was created and the powers conferred upon it through the Constitution and the laws enacted by the Legislature.¹²⁶ (emphases supplied)

In the Philippines, interim rate-regulation has been consistently recognized. The statutory history of Philippine electric power regulation discussed earlier shows that public utility regulators have always had statutory authority to grant provisional relief. As early as 1926, in the case of Madrigal y Compania et al. v. Cui, G.R. No. 19829, November 28, 1922, the Court recognized the power of the Public Utility Commission to grant temporary rate increases to ship owners transporting freight and passengers. The power of public utility regulators to grant interim rate increases has also been shown in various regulated industries such as those relating to electric power distribution,¹²⁷ petroleum products,¹²⁸ telecommunication services,¹²⁹ and toll rates.¹³⁰ In terms of provisional relief not related to rate-setting, the Court has upheld the power of the public utility regulators to grant temporary permits in favor of ice plant operators,¹³¹ auto-truck operators,¹³² and public utility vehicle operations.¹³³ Ï‚rνll

As shown by the foregoing discussions, the power to fix interim rates is necessarily implied from the power to fix permanent rates, hence, the absence of an express statutory provision in the EPIRA does not negate the ERCs power to fix interim rates.

It is given that the ERC has the power to fix rates of distribution utilities, such as Meralco, under the EPIRA by virtue of the following provisions:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Sec. 25. Retail Rate. The retail rates charged by distribution utilities for the supply of electricity in their captive market shall be subject to regulation by the ERC 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(emphasis supplied)

Sec. 43. Functions of the ERC. The ERC shall promote competition, encourage market development, ensure customer choice and penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured industry:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

x        x        x

(f) 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. The rate 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 ERC may adopt alternative forms of internationally-accepted rate-setting methodology as it may deem appropriate. 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

x        x        x

(u) 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.(emphases supplied)

In fact, Section 25, supra,does not even distinguish between final and temporary rates. Hence, this provision can be read as a broad grant of power to the ERC to fix final and interim rates.

But even granting arguendo that the above-cited provisions of the EPIRA only contemplate the fixing of permanent rates, the unbending doctrine set forth in the cases discussed earlier (Far North Sanitation, Inc. v. Alaska Public Utilities,¹³⁴ Public Utility Commission of Texas v. City of Corpus Christi,¹³⁵ State ex. Rel. Laclede Gas Co. v. Public Service Commission of Missouri and AFC Industries, Inc.,¹³⁶ and Muskogee Gas and Elec. Co. v. State¹³⁷ ) holds that a Commissions authority to grant interim rates is necessarily implied from the express authority to regulate rates and supervise public utilities.¹³⁸ Ï‚rνll

There is no reason to move away from the principle that when the legislature delegates express powers to an administrative body, all incidental powers necessary to implement such express powers are also deemed delegated. As well stated in Matienzo v. Abellera, viz:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

It is a settled principle of law that in determining whether a board or commission has a certain power, the authority given should be liberally construed in the light of the purposes for which it was created, and that which is incidentally necessary to a full implementation of the legislative intent should be upheld as being germane to the law. Necessarily, too, where the end is required, the appropriate means are deemed given¹³⁹ (emphasis supplied)

Effective utility regulation requires that a responsive regulator should be able to swiftly and flexibly respond to the exigencies of the times. As explained in Ft. S. & W. Ry. Co. v. State:

Any rule that would require the commission, before it promulgates any order fixing a rate, to have before it evidence that would establish to a mathematical certainty the reasonableness of the proposed rate, would greatly hinder, if not almost entirely prevent, the commission from exercising that power. ¹⁴⁰ (emphasis supplied)

The dangers emanating from a regulatory environment with a toothless regulator is illustrated by the Court of Appeals of Missouri in State ex. rel. Laclede Gas Co. v. Public Service Commission of Missouri and AFC Industries, Inc., to wit:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The ravaging inflation of the past few years has demonstrated the practical need for this power.¹⁴¹ A striking example of the necessity for granting this type of emergency relief to a utility was demonstrated in Sho-Me Power Corp., Case No. 17,381 (1972), in which the Commission allowed an interim rate increase where the applicant was operating at a loss of over $70,000 per month and where it had paid no dividends for a period of five years. So also in the Missouri Power & Light Co. case, No. 17,815 (1973), the Commission found it appropriate to grant an interim rate increase to halt a deteriorating financial situation which constituted a threat to the company's ability to render adequate service. ¹⁴² (footnote supplied)

These clear dangers also stare at us in our own regulatory environment. Our economic history teaches us that the Philippines is vulnerable to the rapid fluctuations in the exchange rate. In recent years, we saw how numerous industries failed to survive the Asian financial crisis fueled by the uncertainties of exchange rates. All these have had adverse financial impact on public utilities such as Meralco in terms of skyrocketing costs of debt servicing, and maintenance and operating expenses. A regulator such as the ERC should have sufficient power to respond in real time to changes wrought by the multifarious factors affecting public utilities.

This is not all. The transferability clause of the EPIRA can lead to no other conclusion that the powers of the ERB, the predecessor of the ERC, have been transferred to the ERC.

SECTION 44. Transfer of Powers and Functions. - The powers and functions of the Energy Regulatory Board not inconsistent with the provisions of this Act are hereby transferred to the ERC. The foregoing transfer of powers and functions shall include all applicable funds and appropriations, records, equipment, property and personnel as may be necessary. ¹⁴³ (emphasis supplied)

It is undisputed that the ERB had the power to grant provisional relief:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

SECTION 8. Authority to Grant Provisional Relief. - The Board may, upon the filing of an application, petition or complaint or at any stage thereafter and without prior hearing, on the basis of supporting papers duly verified or authenticated, grant provisional relief on motion of a party in the case or on its own initiative, without prejudice to a final decision after hearing, should the Board find that the pleadings, together with such affidavits, documents and other evidence which may be submitted in support of the motion, substantially support the provisional order: Provided, That the Board shall immediately schedule and conduct a hearing thereon within thirty (30) days thereafter, upon publication and notice to all affected parties.¹⁴⁴ Ï‚rνll

The next question is whether such power to grant provisional relief is inconsistent with the other provisions of the EPIRA. The petitioners argue that the power to grant provisional rate adjustments is inconsistent with the EPIRA.¹⁴⁵ They contend that the inconsistency lies in the declaration of policy of the EPIRA to protect the public interest as it is affected by the rates and services of electric and other providers of electric power and Section 75 of the law requiring a statutory construction in favor of people empowerment so that the widest participation of the people, whether directly or indirectly, is ensured vis--vis an interpretation to the effect that the powers transferred to the ERC include the power to issue provisional orders.¹⁴⁶ They submit that the power to issue provisional orders would defeat the policy of the law to protect and empower the public as such power would limit the publics right to due process and would be in derogation of the ERCs responsibility of protecting public interest regarding utility rates. This reveals an unjustified mindset against interim rate-making. It would appear that interim rate-making is viewed as undesirable per se. I respectfully submit, however, that the protection of public interest in utility rate-regulation and the publics right to due process are not mutually exclusive with the regulatory bodys power to grant interim rates. Exercised properly, interim rate-making can ensure that the public utility remains viable yet its service to the consuming public is unimpaired. Interim rate-making is no hobgoblin which will gobble up unwary consumers. In the context of proper public utility regulation, this power is meant to allow the regulator sufficient leeway to act under exigent circumstances.

Further, an examination of the intent of the law supports the thesis that the legislators did not intend to clip the powers of the ERC. One of the EPIRAs policies is to establish a strong and purely independent regulatory body and system to ensure consumer protection.¹⁴⁷ Hence it is illogical to deny the ERCs power to conduct interim rate-regulation because the inability of the ERC to respond to the needs of public utility services would subvert the policy of the law to protect public interest under any and all circumstances.

Accordingly, since the ERC has authority to grant interim rates under EPIRA, then Section 4 (e), Rule 3 of the EPIRAs Implementing Rules and Regulations on the ERCs power to provisionally grant applications for rate adjustment is valid. This provision in the Implementing Rules and Regulations is pursuant to the Department of Energys mandate to formulate such rules and regulations as may be necessary to implement the objectives of the EPIRA.¹⁴⁸ This is also consistent with the doctrine of subordinate legislation as explained in the case of Free Telephone Workers Union v. Minister of Labor:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency toward the delegation of greater powers by the legislature and toward the approval of the practice by the courts. Consistency with the conceptual approach requires the reminder that what is delegated is authority non-legislative in character, the completeness of the statute when it leaves the hands of Congress being assumedThus from Justice J.B.L. Reyes in People v. Exconde: It is well established in this jurisdiction that, while the making of laws is a non-delegable activity that corresponds exclusively to Congress, nevertheless the latter may constitutionally delegate authority to promulgate rules and regulations to implement a given legislation and effectuate its policies, for the reason that the legislature often finds it impracticable (if not impossible) to anticipate and provide for the multifarious and complex situations that may be met in carrying the law into effect. All that is required is that the regulation should be germane to the objects and purposes of the law; that the regulation be not in contradiction with it; but conform to the standards that the law prescribes. ¹⁴⁹ (emphasis supplied)

VI. Summation

On the issue of whether the ERC has legal authority to grant provisional rate adjustments under the EPIRA law, I concur with the majority. The ERC has authority to grant provisional adjustments by virtue of the express transfer from the ERB to the ERC of the formers power to grant provisional relief, the doctrine that interim rate-regulation is implied from or incidental to the express power to fix a permanent rate, the broad provisions of the EPIRA which make no distinction between interim or permanent rate-regulation, and the intent of the EPIRA and rate-regulation. Further, the provisional relief may be granted even prior to a full hearing without violating the requirements of due process.

On the issue of whether the grant by the ERC of the provisional rate adjustment to Meralco was done with grave abuse of discretion amounting to lack or excess of jurisdiction, I respectfully dissent from the majority. First, there was no violation of the procedure set forth in the EPIRAs Implementing Rules and Regulation when ERC issued its Questioned Order. The public was duly notified of Meralcos application and was able to assail its legality and propriety in a public hearing before the effectivity of the Questioned Order. Second, the issuance of ex-parte orders is universally recognized as a legitimate exercise of the police power of the State and should not be niggardly construed. Third, it is premature for the Court to strike down the Questioned Order since it is merely provisional and pending reconsideration before the ERC. The Court should allow the unimpeded flow of the effective and available administrative remedy before the ERC. Hence, the case at bar should be remanded to the ERC, which should be allowed to resolve the pending motions assailing the propriety of the provisional rate increase in favor of Meralco, especially its factual bases.