SPPC v. ERC Decision

Republic of the Philippines
Court of Appeals
MANILA
THIRTEENTH DIVISION
SOUTH PREMIERE POWER CA-G.R. SP No. 176036

CORP.,
Petitioner,
- versus -
ENERGY REGULATORY JUNE 27, 2023

COMMISSION, MANILA
ELECTRIC COMPANY,
NATIONAL ASSOCIATION OF
ELECTRICITY CONSUMERS
FOR REFORMS, INC. AND
URIEL BORJA,
Respondents.
x--------------------------------------- ------------x
SAN MIGUEL ENERGY CA-G.R. SP No. 176037
CORPORATION,
Petitioner,
- versus - Members:
ENERGY REGULATORY PAREDES, V.I.A., CHAIRPERSON,

COMMISSION, MANILA MAMAUAG, JR., F.M., AND
ELECTRIC COMPANY, HERNANDEZ-AZURA, M.C.V., JJ.
NATIONAL ASSOCIATION OF
ELECTRICITY CONSUMERS
FOR REFORMS, INC., AND Promulgated:
URIEL BORJA,
Respondents.
____________________________
x------------- --------------------------------------x
JO IN T D EC ISI ON
HERNANDEZ-AZURA, J:
The instant consolidated1 petitions for certiorari2 with application for

the issuance of a temporary restraining order (TRO) and/or a writ of
preliminary injunction (WPI), seek to annul and set aside the Assailed
1
Rollo (SP 176036), pp. 1585-1601; Rollo (SP 176037), pp. 1273-1290.
2
CA-G.R. SP Nos. 176036 & 176037 Page 2 of 26
Joint Decision
Orders dated September 29, 20223 rendered by the Majority of the Energy
Regulatory Commission (ERC) in ERC Cases Nos. 2019-081 and 2019-083.
The Antecedents
The instant cases commenced from the verified Joint Application with
Prayer for Provisional Authority and/or Interim Relief and Motion for
Confidential Treatment of Information4 (Joint Application), separately filed
by South Premier Power Corporation (SPPC) and San Miguel Energy
Corporation (SMEC) jointly with the Manila Electric Company
(MERALCO) on October 22, 2019. Each Joint Application prays for ERC’s
approval of the Power Supply Agreement (PSA)5, and for provisional
authority and/or interim relief and confidential treatment of information.6
By virtue of Republic Act (R.A.) No. 9136, also known as the Electric
Power Industry Reform Act (EPIRA), ERC was created as an independent
quasi-judicial regulatory body to perform functions that are necessary to
promote consumer interest.
In July 2019, MERALCO invited several power-generating entities in

the Competitive Selection Process (CSP) for the supply of electricity in its
franchise areas. SPPC and SMEC, among other power-generating entities,
participated in the CSP. MERALCO executed separate PSAs with SPPC and
SMEC as their offers were among the lowest rates procured by MERALCO
for its customers in recent years.7 In their respective PSAs, SPPC is required
to supply power to MERALCO with 670MW (net) baseload capacity, from
the output of the 2 x 600 MW Ilijan combined-cycle power generating
facility fired on natural gas (Ilijan Power Plant), the Wholesale Electricity
Spot Market (WESM), or any other source, while SMEC is required to
supply power to MERALCO with 330MW (net) baseload capacity, from the
output of the 1200 MW coal-fired power generating facility in Sual,
Pangasinan (Sual Power Plant), the WESM, or any other source. Both PSAs
cover a supply period of ten (10) years from December 26, 2019 to
December 25, 2029, with extension and/or increase in contracted capacity
subject to prior approval of ERC, pursuant to its rules and regulations and
policies on CSP.8
On November 7, 2019, ERC issued Orders and Notices of Public

Hearing, setting the Joint Applications for hearing for the determination of
compliance with the jurisdictional requirements, expository presentation,
pre-trial conference and presentation of evidence. In the course of the
3
4
5
6
Supra Note 4.
7
Rollo (SP 176036), pp. 1728-1730, 2068, 2448-2451.
8
Rollo (SP 176036), p. 102; Rollo (SP 176037), p. 103.
Joint Decision
proceedings, the following were admitted as Intervenors: (1) National

Association of Electricity Consumers for Reforms, Inc. (NASECOR); and
(2) Mr. Uriel G. Borja (Mr. Borja). On the other hand, the Center for
Energy, Environment and Development, Inc. (CEED), Philippine Movement
for Climate Justice, Inc. (PMCJ), Sanlakas, and Laban Konsyumer, Inc.
(LKI) were treated as Oppositors.9
On March 16, 2020, ERC issued Orders dated December 10, 201910,
granting provisional authority for MERALCO, SPPC, and SMEC to
implement the PSAs, subject to the conditions specified in the Order. On
March 31, 2020, SPPC and SMEC filed their respective Motions for
Reconsideration11 of the Orders dated December 10, 2019. Consequently,
ERC issued an Order dated June 16, 202012 granting their Motions for
Reconsideration, subject to the conditions set out therein. Thereafter, ERC
issued an Order dated November 26, 202013, granting interim relief for
Applicants to implement the PSA, subject to the same conditions as those
provided in ERC’s Orders dated December 10, 2019 and June 16, 2020, until
revoked or until the issuance of a Decision.14
On May 11, 2022, SPPC and SMEC separately filed with Meralco
their Joint Motions for Price Adjustment (Joint Motions). The ERC set the
Joint Motions for clarificatory hearing on June 9, 2022, where SPPC and
SMEC made their presentations relative to the Joint Motions. NASECOR
and the ERC also propounded clarificatory questions upon the movants and
the hearing was thereafter adjourned.
Meanwhile, on June 7, 2022, NASECOR filed a Motion to Enforce

Section 3 of Rule 14 of the ERC Revised Rules of Practice and Procedures
(Motion to Enforce), praying that the motion for issuance of interim relief
contained in the Joint Application of SPPC and MERALCO be resolved first
before the Joint Motion can be acted upon. NASECOR also filed a similar
Motion on June 13, 2022 with respect to the Joint Application of SMEC and
MERALCO. SPPC and SMEC filed their respective Comment-Oppositions
to NASECOR’s motions on June 17, 2022, while MERALCO filed its
Comments on June 20, 2022. On July 14, 2022, NASECOR filed its Reply
to MERALCO’s and SPPC’s Comment (Re: Motion to Enforce) of even
date.15
Nevertheless, ERC issued an Order dated June 17, 2022 directing

NASECOR to file its Comment on the Joint Motions. On June 22, 2022,
9
Ibid.
10
11
12
13
14
15
Joint Decision
NASECOR filed its Comment on the Joint Motions. On the same date,
SPPC and SMEC filed their respective Reply-Opposition on NASECOR’s
Comment. On July 21, 2022, Oppositors PMCJ, Sanlakas, and CEED filed a
Joint Objection and Opposition to the Joint Motions. On July 22, 2022,
Applicants filed their Memoranda16 in support of the Joint Motions17
(Memoranda).
On August 5, 2022, MERALCO filed an Urgent Manifestation18,

informing ERC of MERALCO’s receipt of SPPC’s and SMEC’s respective
Notice of Termination19 of the PSAs which are subjects of the Joint
Applications. Acting on the information, ERC issued an Order dated August
23, 2022 setting the Urgent Manifestation for clarificatory hearing. During
the August 30, 2022 clarificatory hearing, MERALCO, SPPC, and SMEC
made their respective presentations20 relative to the Urgent Manifestation on
the Notice of Termination, as well as the Joint Motions. Thereafter, ERC,
NASECOR, Oppositors and Observers as of the date prior to the
clarificatory hearing propounded clarificatory questions to SPPC and
SMEC.21
After the August 30, 2022 clarificatory hearing, ERC received the
following submissions from the Oppositors and other individuals who
expressed interest in the case: (1) Joint Compliance and Consolidated
Comment (on CEED’s Joint Questions and Manifestation and NASECOR’s
Manifestation/Opposition) filed by MERALCO on September 2, 2022; (2)
Manifestation/Comment (on the Presentation of Applicants) filed by
AGHAM on September 2, 2022; (3) Letter re: Clarificatory Hearing on the
Termination of Supply Agreement between MERALCO and San Miguel
Corporation (SMC) filed by Ms. Lovely Razon, residential customer of
MERALCO (from Tagaytay) on September 2, 2022; (4) Manifesto filed by
Mr. Nic Satur, Jr. of Kuryente. org on September 2, 2022; (5) Manifestation
filed by Atty. Antonio Ligon on September 5, 2022; (6) Electronic mail re:
Increase in Electricity Rates from the Termination of San Miguel Contracts
sent by Ms. Nessita L. Barrameda (business owner and residential customer
of MERALCO, Barrameda Computer Shop in Taguig City) on September 5,
2022; (7) Letter dated September 1, 2022 re: ERC’s Discriminatory
Treatment of Consumers filed by Intervenor NASECOR on September 5,
2022; and (8) Letter dated September 16, 2022 re: ERC’s Discriminatory
Treatment of Consumers filed by Intervenor NASECOR on September 16,
2022.22
16
17
Supra Note 15.
18
19
20
Rollo (SP 176036), pp. 711-196, 1065-1096; Rollo (SP 176037), pp. 742-752, 959-990.
21
22
Joint Decision
On September 2, 2022, MERALCO filed its Supplemental Formal

Offer of Evidence23. On September 12, 2022, SPPC and SMEC filed their
respective Formal Offer of Evidence24 (in support of the Joint Motions).
Subsequently, on September 19, 2022, MERALCO filed an Urgent
Manifestation, informing ERC of the status of the action it pursued in
sending out requests for proposals for a possible emergency PSA. One of the
offers received by MERALCO was from Sem-Calaca Power Corporation
(SCPC-Calaca), which was found to be one of the power suppliers with the
lowest final offers and formally accepted by MERALCO. However,
MERALCO eventually received a letter from SCPC-Calaca manifesting the
formal withdrawal of its proposal due to technical issues in its power plant.25
On September 29, 2022, the Majority of ERC denied both Joint

Motions for Price Adjustment on similar grounds, namely: that the subject
PSAs do not require SPPC and SMEC to exclusively supply from the
nominated power plant; that the fixed price nature of the subject PSAs is
meant precisely to protect consumers from market volatilities due to external
factors like increases in fuel cost for its nominated plant, as alleged by
Applicants; that under the PSAs, SPPC and SMEC must assume all risks
attendant to market conditions and economic realities; that Applicants’
reliance on Article 1267 of the Civil Code, which applies only to personal
obligations, is misplaced since the obligation of SPPC and SMEC to deliver
energy under the PSAs is a real obligation; that the escalation rate in the
PSAs should have already considered economic factors that could affect the
costs of generation and operation of a physical plant; that MERALCO’s
calculations on price impact to consumers under a scenario wherein the
PSAs with SMEC and SPPC are terminated should not be considered since
such scenario was not the subject of Applicants’ prayer in their Joint
Motions; that with regard to the Notice of Termination received by SPPC
and SMEC, the PSAs are replete with remedies available to MERALCO to
protect its consumers, enforce the terms of the PSAs, and preserve the same;
that in any event, termination by the power supplier can only take effect
sixty (60) days after the denial of the motion for price adjustment or inaction
by the ERC after the lapse of sixteen (16) months; and that while it may
appear that the parties have an absolute option to terminate the PSA by
mutual agreement, they are reminded that PSAs are contracts imbued with
public interest and contain a stipulation pour autrui as electricity is a basic
necessity that must be supplied in the least cost manner.26
23
24
Rollo (SP 176036), pp. 1175-1191; Rollo (SP 176037), pp.1063-1083.
25
26
Supra Note 3. The respective fallo reads as follows:
ERC Case No. 2019-081
“WHEREFORE, the foregoing premises considered, the Joint Motion for Price Adjustment dated
10 May 2022 filed by Applicants Manila Electric Company (MERALCO) and South Premiere Power
Corporation (SPPC) is hereby DENIED.
The Urgent Manifestations dated 05 August 2022 and 19 September 2022 filed by MERALCO are
hereby NOTED.
Joint Decision
On the grounds invoking the provisions of “Change in

Circumstances” (CIC), ERC found that the Joint Motion of MERALCO and
SPPC fails to qualify the Notices of Gas Restrictions27 by the National
Power Commission (NPC) as law but merely as notifications on the states of
gas availability from Malampaya. Similarly, ERC opined that the Joint
Motion of MERALCO and SMEC fails to state any change in law, such as
any laws in response to the coal export ban imposed by Indonesia and
commercial laws relative to the ongoing Ukraine-Russia War, upon which
the claim of CIC may be anchored as basis for the price adjustment. ERC
emphasized that there is nothing in the enumeration of instances in the
definition of CIC that contemplates abrupt or sudden increases in costs of
operations claimed by SMEC.28
On the other hand, the dissenting minority voted to grant the Joint
Motions for Price Adjustment filed by: (i) MERALCO and SPPC; and (ii)
MERALCO and SMEC for the following reasons: (1) the PSAs allow the
Applicants to claim a temporary price adjustment for a specific period based
on a CIC; (2) based on the evidence, CIC is satisfactorily found to exist, thus
warranting price adjustment; and (3) based on the rate impact simulations
presented before the ERC and the evaluation made by the Regulatory
Operations Service (ROS), a denial of the Joint Motions for Price
Adjustment would expose the consumers to unknown and higher rates than
granting the same, not only in the near term but until 2029.29
Both petitioners did not file a motion for reconsideration or a petition

for review under Rule 43.
Hence, the twin petitions before Us.
Meanwhile, on November 23, 2022, the Court, through its Thirteenth

th
(13 ) Division, in CA-G.R. SP No. 176036 issued a Resolution granting
SPPC’s application for TRO conditioned upon the posting of a bond
amounting to P50,000,000.00. In the same Resolution, the Court ordered the
suspension of the continued implementation of the PSA between SPPC and
MERALCO. After a hearing conducted on January 11, 2023, the Court
issued a Resolution dated January 25, 2023 granting SPPC’s application for
SO ORDERED.”
ERC Case No. 2019-083
“WHEREFORE, the foregoing premises considered, the Joint Motion for Price Adjustment dated
10 May 2022 filed by Applicants Manila Electric Company (MERALCO) and San Miguel Energy
Corporation (SMEC) is hereby DENIED.
The Urgent Manifestations dated 05 August 2022 and 19 September 2022 filed by MERALCO are
hereby NOTED.
SO ORDERED.”
27
Rollo (SP 176036), pp. 942-981.
28
Supra Note 3.
29
Joint Decision
WPI conditioned upon the posting of a bond amounting to

P100,000,000.00.30 On February 10, 2023, OSG filed a motion31 for
reconsideration ex abundanti ad cautelam of Our Resolution dated January
25, 202332 in re: the issuance of writ of preliminary injunction in favor of
SPPC. On the same date, MERALCO also filed a motion33 for
reconsideration of the same Court Resolution. On March 15, 2023, SPPC
filed its opposition34 to the motions filed by OSG and MERALCO.
Thereafter, the Court in its Resolution dated April 3, 2023 denied the
motions for reconsideration.
On the other hand, in its Resolution dated January 13, 2023, the Court,
through its Sixteenth (16th) Division in CA-G.R. SP No. 176037, denied
SMEC’s application for TRO and granted the consolidation of SMEC’s
petition with SPPC’s petition (pending with the Court’s Thirteenth
Division).35 SMEC filed a motion for partial reconsideration on February 10,
2023.36 ERC and MERALCO filed their respective comments on the
SMEC’s motion for reconsideration.37
In these petitions, SPPC and SMEC contend that:
1. The majority of ERC acted with grave abuse of discretion

amounting to lack or excess of jurisdiction when it resolved an
issue that was beyond its jurisdiction in violation of the movants’
constitutional right to due process.
amounting to lack or excess of jurisdiction vested by Section 45(b)
of the EPIRA when it determined judicial questions and interfered
with the parties’ contractual relations as an incident of its review of
the subject PSAs.
3. The findings of the majority of ERC were attended with grave
abuse of discretion amounting to lack or excess of jurisdiction.
amounting to lack or excess of jurisdiction when it rejected the
movants’ application for a temporary price adjustment despite
substantial evidence justifying the same.
I. Petitioners’ Arguments
Petitioners emphasize:
30
Rollo (SP 176036), pp. 1805-1812.
31
Rollo (SP 176036), pp. 2165-2238.
32
Rollo (SP 176036), pp. 1805-1812.
33
Rollo (SP 176036), pp. 2344-2360.
34
Rollo (SP 176036), pp. 2932-2949.
35
Rollo (SP 176036), pp. 2241-2268.
36
Rollo (SP 176036), pp. 2150-2161.
37
Rollo (SP 176036), pp. 2979-3003, 3013-3025.
Joint Decision
(a) that the petitions comply with the procedural requirements under
Rule 65 of the Rules of Court;
(b) that they have no plain, speedy, and adequate remedy; and
(c) that the non-filing of a motion for reconsideration is excused under

the circumstances.
Additionally, in support of their above-mentioned arguments,

petitioners aver that:
(d) the Notice of Termination was only brought to ERC’s attention

through MERALCO’s Urgent Manifestation dated August 5, 2002 and was
never made an issue in the Joint Motion for Price Adjustment or in any of
their subsequent pleadings. Thus, when ERC took it upon itself to rule on the
validity of the Notice of Termination without giving them the chance to be
heard or present evidence thereon, petitioners were deprived of due process;
(e) ERC’s power to review the PSA does not extend to determining
the legal rights of the parties under the contract since such question is
judicial in nature and should be properly addressed to the courts of law or, as
in this case, an arbitral tribunal chosen by MERALCO and petitioners;
(f) ERC committed grave abuse of discretion amounting to lack or

excess of jurisdiction when it ruled that the PSA is a financial contract with
a stipulation pour autrui, that SPPC and SMEC assumed all risks associated
with market volatility, and that Article 1267 of the Civil Code finds no
application in the determination of the rights of the petitioners under the
PSA;
(g) the grant of the joint motion for price adjustment is justified by
ERC’s admission of the merits of the factual grounds cited by movants in
their joint motion for price adjustment as well as the substantial evidence on
record submitted by the movants; and
(h) ERC would have the parties absorb massive financial losses
resulting from the CIC in a manner that is unduly harsh and confiscatory.38
Likewise, in its motion for partial reconsideration of the denial of its

application for injunctive writ in CA-G.R. SP No. 176037, SMEC argues
that it has a clear and unmistakable constitutional right against deprivation of
liberty and property without due process of law and against the taking of its
property for public use without just compensation; that the assailed ERC
38
Supra Note 2.
Joint Decision
Order effectively, if not expressly, enjoined MERALCO to ensure the

preservation of the PSA; that it stands to suffer grave and irreparable injury
as a result of the assailed ERC Order which threatens its very existence; that
there is no ordinary, speedy, and adequate remedy to prevent the infliction of
irreparable injury upon it; and that the Court should consider the same
grounds for its grant of SPPC’s application for WPI inasmuch as the two
applications involve common issues.39
II. Respondents’ Arguments:
1. Energy Regulatory Commission
ERC made the following similar arguments in support of the

procedural and substantive issues which it raised in its comment ad
cautelam, as follows:
(1.a) SPPC and SMEC availed of the wrong remedy in assailing

ERC’s Order dated September 29, 2022. Since the Order is a final
adjudication on the merits insofar as the motions for provisional price
adjustment are concerned, the proper remedy of the petitioners is a petition
for review under Rule 43, not a petition for certiorari under Rule 65;
(1.b) the finality of the ERC Order is incontrovertible in the sense that
the same was not questioned by any of the parties in the proceedings a quo
through the timely filing of a motion for reconsideration and subsequent to a
denial, the filing of an appeal;
(1.c) assuming that the correct remedy is a petition for certiorari under
Rule 65, the same should not prosper because of SPPC’s and SMEC’s
failure to file a motion for reconsideration;
(1.d) the petitions raise pure questions of law which should be

cognizable only by the Supreme Court;
(1.e) only the Supreme Court has the power to issue a TRO/WPI as
regards the implementation of EPIRA;
(1.f) the Assailed Order did not pass upon the validity or invalidity of
SPPC’s Notice of Termination to MERALCO as it was not an issue in either
of the Joint Motions for Price Adjustment and nothing in the dispositive
portions of the Assailed Orders serve as definite adjudication on the validity
of the Notice of Termination;
39
Supra Note 34.
Joint Decision
(1.g) SPPC and SMEC cannot claim denial of due process as they had
the opportunity to seek reconsideration of the Assailed Order but failed to do
so;
(1.h) its discussion of the PSAs is merely in relation to the

determination of the Joint Motion for Price Adjustment, and no injunction
was issued to MERALCO in relation to the PSAs;
(1.i) at any rate, the PSAs, being contracts imbued with public
interest, are subject to the provisions of the EPIRA for the protection of
consumers and are subject to the regulatory powers of ERC;
(1.j) it acted within its authority when it ruled that the issuance of
Notices of Gas Restriction did not justify a CIC as contemplated in SPPC’s
PSA which warrants a price adjustment and that Article 1267 of the Civil
Code does not apply since the obligation to deliver energy is a real
obligation;
(1.k) ERC acted within its authority when it ruled that the unexpected
and extraordinary surge in fuel costs brought by the coal export ban and the
Russian invasion of Ukraine does not amount to a CIC as contemplated in
the SMEC’s PSA that would warrant a price adjustment and that Article
1267 of the Civil Code does not apply as the obligation to deliver energy is a
real obligation; and
(1.l) SMEC is not entitled to injunctive reliefs since the granting

thereof would have the effect of prejudging the disposition of the main
petition and the element of grave and irreparable injury is not present or
attributable to ERC.
ERC also submitted that the granting of the petitions will set a
dangerous precedent because it will empower other energy suppliers to
renege on their contractual obligations once they express financial losses.40
Regarding the motion for partial reconsideration of SMEC, ERC, through
OSG, stressed that:
(1.m) no injunction was issued to MERALCO in relation to the PSA;
(1.n) the Sixteenth (16th) Division of the Court is correct in denying

the application for injunctive reliefs since SMEC failed to prove the
requisites for the granting of an injunctive writ; and
(1.o) the consolidation of the two petitions does not by itself warrant
the grant of SMEC’s application for the issuance of injunctive writs.41
40
Rollo (SP 176036), pp. 1726-1800, 2444-2516.
41
Supra Note 35.
Joint Decision
2. Manila Electric Company
For its part, MERALCO maintains that:
(2.a) the adjustment of the contract price of the SPPC’s PSA for the
CIC period is justified under the provisions therein and similarly, the
adjustment of the contract price of the SMEC’s PSA for the CIC period is
justified under Article 1267 of the New Civil Code and the provisions of the
PSA;
(2.b) while the PSA is a financial contract, it is subject to the

assumptions expressly indicated under the contract and once the assumptions
are no longer present, the CIC provision in the PSA applies;
(2.c) NPC’s Notice of Gas Restrictions which affected the generation

capacity of the Ilijan Power Plant amount to a CIC as defined under the PSA
between MERALCO and SPPC;
(2.d) the contract price of SMEC’s PSA must be adjusted considering

the changes in circumstances such as the geopolitical events that caused the
drastic increase of coal prices which, in turn, affected the supply of electric
power by SMEC to a degree that was manifestly beyond the parties’
contemplation at the time of the CSP for the 330 MW contract capacity and
at the time of the execution of the PSA; and
(2.e) the adjustment of the contract price, and thereby the preservation
of the PSAs, is warranted as it is the most cost efficient measure to ensure
consumer protection and to promote public interest.42
Meanwhile, in response to SMEC’s motion for partial reconsideration

of the denial of its application for the issuance of an injunctive writ,
MERALCO commented that:
(2.f) SMEC has no clear and unmistakable right to be compensated

beyond the agreed contract price under the PSA as its alleged right to its
property must be seen in the light of its existing obligation to supply electric
power to MERALCO under its PSA which only allows the adjustment of the
compensation to be received by SMEC if a CIC is found to exist;
(2.g) ERC only maintained the status quo between the parties when it
enjoined the preservation of the PSA between MERALCO and SMEC as
this does not constitute a material invasion of SMEC’s alleged right;
42
Rollo (SP 176036), pp. 2067-2093, 2117-2143.
Joint Decision
(2.h) SMEC failed to show that it will suffer any grave and irreparable
injury if an injunctive relief is not issued as it was able to provide a
mathematical computation of its supposed loss;
(2.i) the grant of injunctive relief will disrupt the basic and essential
services being rendered by SMEC and MERALCO to consumers and will
expose the latter to high electric rates, contrary to the state objectives under
the EPIRA; and
(2.j) notwithstanding the consolidation of SMEC’s case with SPPC’s

case, the grant or denial of the relief prayed for in each of the cases must be
determined based on the independent examination of the facts and issues
involved in each case.43
3. National Association of Electricity Consumers for Reforms,

Inc.
Representing the interests of consumers, NASECOR also contended
that:
(3.a) the injury claimed by petitioners cannot be remedied by injunction

as the requisites therefor are not present in the case;
(3.b) the remedy sought by petitioners is far too expansive and

excessive vis-à-vis the remedy that they sought before the ERC when
petitioners effectively killed the case by serving MERALCO their respective
Notices of Termination of the PSAs;
(3.c) ERC never issued a writ of injunction against petitioners in any

form, and at any rate, an application for injunction against ERC is not the
remedy to compel the Commission to approve the unilateral termination of
the PSAs because it would prejudice their co-applicant MERALCO;
(3.d) the Court cannot rescue petitioner from bad business decisions;
(3.e) if no other power generator can offer to supply electricity to

MERALCO on terms as good or better than the terms under the PSAs, then
it would be in favor of the approval of the Joint Motions for Price
Adjustment; and
(3.f) petitioners have remedies under the mechanisms available in the

PSAs and can alternatively enter into arbitration proceedings with
MERALCO as suggested by ERC in the Assailed Orders for a permanent
solution without breaking the sanctity of contracts.44
43
Supra Note 35.
44
Rollo (SP 176036), pp. 1675-1687.
Joint Decision
III. Intervenors Power for People Coalition (P4P) Convenor Gerard

Arances, Bukluran ng Manggagawang Pilipino (BMP) Chairperson
Leodegario De Guzman, BMP President Renecio Espiritu, Jr. Sanlakas
President Marie Marguerite Lopez, Philippine Movement for Climate Justice
(PMCJ) National Coordinator Bibiano Rivera Jr., and Freedom from Debt
Coalition (FDC) President Rene Ofreneo jointly aver that:
(a) the petitions do not comply with the procedural requirements

under Rule 65;
(b) petitioners availed of the wrong remedy because they are raising
errors of judgment and praying for the reversal of the assailed ERC Order;
(c) ERC did not act with grave abuse of discretion amounting to lack
or excess of jurisdiction because it resolved an issue that is well within its
jurisdiction and respected petitioners’ right to due process;
(d) ERC did not act with grave abuse of discretion amounting to lack
or excess of jurisdiction when it determined judicial questions because it is
clear in the provisions of the EPIRA that it is a quasi-judicial body;
(e) ERC did not act with grave abuse of discretion amounting to lack
or excess of jurisdiction when it rejected petitioners’ application for a
temporary price adjustment because they failed to present substantial
evidence to prove their allegations of financial losses and their entitlement to
the application of the CIC provision on the grounds of Malampaya gas
derations (for SPPC) and world events raising the price of coal (for SMEC);
(f) the granting of the petition will set a dangerous precedent that will
open the flood gates for other generation companies to charge higher
electricity rates;
(g) petitioners cannot avail of Article 1267 of the Civil Code as a

shield against its actions or the doctrine of rebus sic stantibus as the changes
in their costs of operation fall under the exception of CIC in their respective
PSAs;
(h) petitioners cannot terminate their PSAs, and their failure to supply
electricity under their PSAs should be considered events of defaults for
which they can be penalized by the forfeiture of their bond for devious
actions that harm consumers’ interests;
(i) petitioners failed to meet the requisites for the issuance of

injunctive reliefs because their alleged injury is not irreparable and can be
measured with reasonable accuracy; and
Joint Decision
(j) it is the respondents-intervenors, instead of petitioners, who will

suffer irreparable injury should the injunctive writs remain in effect.45
In its Consolidated Reply, SPPC argues that:
(1.aa) the characterization of the PSA as a financial contract is entirely

without basis since the PSA is ultimately a power supply contract premised
on the provision of supply mainly from the nominated plant;
(1.bb) the admission of ERC on the fact that the validity or invalidity
of the Notice of Termination was not raised as an issue in the proceedings a
quo proves that ERC has no jurisdiction to pass upon such issue and
notwithstanding its lack of jurisdiction, ERC ruled upon the validity of the
Notice of Termination and made a categorical directive to MERALCO not to
accept the termination of the PSA by enjoining it to exhaust all its remedies
under the PSA, enforce the terms thereof and preserve the same;
(1.cc) the dangerous precedent that will supposedly be set by the grant
of the petition is wholly imagined on the part of ERC;
(1.dd) contrary to ERC’s claim, the petition for certiorari is the proper
remedy to question the ERC Order which is an interlocutory order and not a
final order within the contemplation of Rule 43 of the Rules of Court since
the resolution of the joint motion for price adjustment was filed merely as an
incident to the main case;
(1.ee) the filing of a motion for reconsideration before the ERC is

dispensable under the settled exceptions to the doctrine of exhaustion of
administrative remedies;
(1.ff) Congress cannot limit the Court’s inherent power to issue the
injunctive writs;
(1.gg) ERC’s attempt to downplay the manner by which it exceeded

jurisdiction vested in it by Section 45(b) of the EPIRA when it determined
judicial questions and interfered with the parties’ contractual relations as an
incident of its review of the subject PSA must be rejected;
(1.hh) ERC gravely abused its discretion when it rejected the joint
motion for price adjustment despite substantial evidence justifying the same
and while it remains unrebutted; and
(1.ii) contrary to NASECOR’s theory, the service by SPPC of a

Notice of Termination against MERALCO did not render moot the Joint
45
Rollo (SP 176036), pp. 2795-2837.
Joint Decision
Motion for Price Adjustment for the period prior to termination.46 SMEC
also filed a Consolidated Reply, asserting arguments that are essentially
similar to those of SPPC.47
The Issues
In fine, the issues to be resolved by the Court are:
1. Whether the remedy of petition for certiorari was properly

resorted to by the petitioners.
2. Whether the majority of ERC acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in declaring petitioners’
notice of termination invalid and in directing MERALCO to
preserve and enforce the subject PSAs.
3. Whether the majority of ERC acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in rejecting the
petitioners’ application for a temporary price adjustment.
Our Ruling
The Court finds merit in the petitions.
The proper remedy is the petition for

certiorari under Rule 65 of the Rules of
Court:
Respondents’ submission that petitioners erroneously availed of the

remedy of certiorari under Rule 65 is bereft of merit since the Assailed
Orders, being interlocutory orders that provisionally resolved an incident in
the main cases of the Joint Application with Prayer for Provisional
Authority and/or Interim Relief and Motion for Confidential Treatment of
Information are not appealable under Rule 43 of the Rules of Court.48
It should be emphasized that the order subject of these petitions is the

ERC assailed Order dated September 29, 2022 denying the Joint Motions for
46
Rollo (SP 176036), pp. 2668-2709.
47
Rollo (SP 176036), pp. 2594-2635.
48
Rule 43
Appeals From the Court of Tax Appeals and Quasi-Judicial Agencies to the Court of Appeals
Section 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax
Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial
agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the
President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory
Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act
No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural
Invention Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law.
Joint Decision
Price Adjustments filed by SPPC and MERALCO and by SMEC and

MERALCO, both of which are not the main cases pending before the ERC.
The Supreme Court in the case of Jose vs. Javellana49 made a distinction
between a final order and an interlocutory order. A final order disposes of
the subject matter in its entirety or terminates a particular proceeding or
action, leaving nothing more to be done except to enforce by execution what
the court has determined, but an interlocutory order does not completely
dispose of the case but leaves something else to be decided upon. An
interlocutory order deals with preliminary matters and the trial on the merits
is yet to be held and the judgment rendered. The test to ascertain whether or
not an order or a judgment is interlocutory or final is: does the order or
judgment leave something to be done in the trial court with respect to the
merits of the case? If it does, the order or judgment is interlocutory;
otherwise, it is final.
Thus, the Assailed ERC Order being interlocutory, the proper remedy
is a petition for certiorari under Rule 65, Rules of Court. Under the said rule,
the following requisites must be present in order that a petition for certiorari
may prosper: (1) the writ is directed against a tribunal, a board, or any
officer exercising judicial or quasi-judicial functions; (2) such tribunal,
board, or officer has acted without or in excess of jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction; and (3) there
is no appeal or any plain, speedy, and adequate remedy in the ordinary
course of law.50
All the above-mentioned requisites are present in these cases. It is not

disputed that ERC is a quasi-judicial body and that it issued the Assailed
Order in the exercise of its quasi-judicial function. Second, the Assailed
Order is sought to be annulled on the ground that this was issued without or
in excess of its jurisdiction, or with grave abuse of discretion. Third, there is
no appeal or any plain, speedy, and adequate remedy in the ordinary course
of law.
The non-filing of a Motion for

Reconsideration is excused in the
instant cases.
Respondents assert that the petitions for certiorari under Rule 65 filed
by the petitioners should not prosper because of petitioners’ failure to file a
motion for reconsideration.
We are not convinced.
49
Jose v. Javellana, G.R. No. 158239, January 25, 2012
50
Santos v. Gabaen, G.R. No. 195638, March 22, 2022.
Joint Decision
Although it is a general rule that a motion for reconsideration must

first be filed with the lower court (or a quasi-judicial agency, as in this case)
prior to resorting to the extraordinary remedy of certiorari since a motion
for reconsideration may still be considered as a plain, speedy, and adequate
remedy in the ordinary course of law, jurisprudence states that it is the
inadequacy, and not the mere absence of all other legal remedies and the
danger of failure of justice without the writ, that must usually determine the
propriety of certiorari. In this light, certain exceptions were crafted to the
general rule requiring a prior motion for reconsideration before the filing of
a petition for certiorari, viz: (a) where the order is a patent nullity, as where
the court a quo has no jurisdiction; (b) where the questions raised in the
certiorari proceedings have been duly raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower court; (c)
where there is an urgent necessity for the resolution of the question and
any further delay would prejudice the interests of the Government or of
the petitioner or the subject matter of the action is perishable; (d) where,
under the circumstances, a motion for reconsideration would be useless; (e)
where petitioner was deprived of due process and there is extreme
urgency for relief; (f) where, in a criminal case, relief from an order of
arrest is urgent and the granting of such relief by the trial court is
improbable; (g) where the proceedings in the lower court are a nullity for
lack of due process; (h) where the proceedings were ex parte or in which the
petitioner had no opportunity to object; and (i) where the issue raised is one
purely of law or where public interest is involved.51 Similarly, the doctrine
of exhaustion of administrative remedies, which provides that direct
recourse to the trial court, when administrative remedies are available, is a
ground for dismissal of the action, admits several exceptions, such as: (1)
where there is estoppel on the part of the party invoking the doctrine; (2)
where the challenged administrative act is patently illegal, amounting to
lack of jurisdiction; (3) where there is unreasonable delay or official
inaction that will irretrievably prejudice the complainant; (4) where the
amount involved is relatively so small as to make the rule impractical and
oppressive; (5) where the question involved is purely legal and will
ultimately have to be decided by the courts of justice; (6) where judicial
intervention is urgent; (7) where the application of the doctrine may
cause great and irreparable damage; (8) where the controverted acts
violate due process; (9) where the issue of non-exhaustion of administrative
remedies had been rendered moot; (10) where there is no other plain, speedy
and adequate remedy; (11) where strong public interest is involved; and
(12) in quo warranto proceedings.52
In the present cases, judicial intervention is urgent and necessary since

public interest is involved and grave and irreparable injury would be
51
Ombudsman Carpio-Morales v. Court of Appeals, G.R. Nos. 217126-27, November 10, 2015.
52
De Leon v. Asombrado-Llacuna, G.R. No. 246127, March 2, 2022.
Joint Decision
sustained by petitioners should the Court fails or delays the exercise of its
certiorari jurisdiction.
Petitioners raised questions of facts
Contrary to the position of respondents that the subject petitions raise

pure questions of law which should be cognizable by the Supreme Court, the
principal issue raised in the instant cases is a fact. What constitutes a CIC or
what may be considered as an event that authorizes the petitioners to invoke
the CIC provision under the PSAs is certainly a question of fact.
On the power of this Court to issue a

TRO or WPI
It is the primary contention of respondents that pursuant to Section

53
78 of EPIRA, only the Supreme Court may issue a TRO or WPI to enjoin
the implementation of the provisions of the law. The argument is unavailing.
In Carpio-Morales vs. Court of Appeals,54 the Supreme Court has held that
under Rule 58 of the Rules of Court, all courts have the inherent power to
issue temporary restraining orders or writs of preliminary injunction. More
importantly, Section 78 of EPIRA applies only when the action or petition
seeks to restrain or enjoin the implementation of a provision of the law.55 It
certainly does not apply to an action or petition which does not at all seek to
restrain or enjoin the enforcement of any provision of the law, as in this
case. Obviously, this Court has the power to issue injunctive reliefs in
relation to these consolidated cases.56
ERC’s Order invalidating the Notice of

Termination and directing Meralco to
preserve the PSAs effectively denied
petitioners’ right to due process
It is undisputed that the validity of the Notice of Termination

individually made by petitioners was not raised as an issue in the
proceedings before the ERC.
OSG argues that ERC did not make any categorical ruling on whether
the Notices of Termination were validly made while petitioners contend that
ERC issued a directive to MERALCO not to accept the termination of the
53
SECTION 78. Injunction and Restraining Order. — The implementation of the provisions of this Act
shall not be restrained or enjoined except by an order issued by the Supreme Court of the Philippines.
54
G.R.NO. 217126-27, November 10, 2015
55
Power Generation Employees Association- NPC, rep. by Raul M. Del Mundo and Jimmy D. Salman, in
their official capacities as President and Vice-President, Respectively, And in Behalf of All Similarly
Situated Officials and Employees of the National Power Corporation et al. vs. National Power Corporation
et al. , G.R. No. 187420, August 9, 2017.
56
Ibid..
Joint Decision
PSAs by enjoining it to exhaust all its remedies under the PSA, enforce the
terms thereof and preserve the same. Our reading, however, of the body of
the Assailed ERC Order reveals that ERC expressly directed MERALCO to
continue implementing the PSAs and to take all remedies available to it
under the PSAs. To Our mind, such Order effectively invalidates the Notice
of Termination as it specifically enjoins MERALCO to ensure that the PSAs
shall continue to be in effect despite the service by petitioners of their
respective Notice of Termination. In this regard, it has been held that “a
judgment is not confined to what appears on the face of the decision, but
extends as well to those necessarily included therein or necessary thereto.”57
Thus, when ERC ruled on an issue that was clearly not submitted by
the parties for adjudication before it, petitioners’ right to due process was
clearly violated.
The determination of the validity of the

Notices of Termination is not within the
scope of jurisdiction of the ERC.
Meralco maintains its position that the Joint Motions for price
increase due to CIC should be granted and that price adjustments in favor of
SPPC and SMEC should be directed. However, it also posits that there
would be no basis for SPPC and SMEC to terminate the PSAs in the event
that the price adjustments for the January to May 2022 billing periods are
ordered in favor of SPPC and SMEC. Meralco’s position in this regard is
not tenable.
SPPC and SMEC served Notices of Termination dated August 4,

2022, informing MERALCO of their decision to terminate the PSA effective
October 4, 2022. The contractual right of termination was exercised by
SPPC and SMEC because the unexpected increase in supply costs
amounting to P1.512 billion for SPPC and P3.751 billion as of May 2022
billing period have exceeded the Thereshold Level 1 provided under Section
11.4 (d) of the PSAs. This fact remains unrebutted. Accordingly, when the
Notices of Termination were served, SPPC and SMEC validly exercised
their right to terminate the the PSAs. Since SPPC and SMEC validly
exercised their right to terminate the PSAs which became effective on
October 4, 2022, the Court is without authority to compel them to continue
being parties to the PSA.58
Additionally, the Court is of the view that the validity or invalidity of

the Notice of Termination must be properly addressed to the proper tribunal
57
Manarin v. Manarin, G.R. No. 247564, January 11, 2023.
58
Pryce Corporation v. Philippine Amusement & Gaming Corp., G.R. No. 157840, May 6, 2005
Joint Decision
in accordance with the arbitration clause in the PSAs.59 Hence, when the
majority of the ERC exercised adjudicative powers upon a matter that should
have been brought to an arbitral tribunal, as provided in the PSAs, it
evidently did so with grave abuse of discretion.
While the contentions of the ERC that the PSAs are contracts imbued
with public interest and are subject to the provisions of the EPIRA for the
protection of consumers are true, the Court is of the opinion that the PSAs
can only be subject to the regulatory powers of the ERC as long as the latter
does not exercise such powers with grave abuse of discretion amounting to
lack or in excess of its jurisdiction, such as in the instant case.
Accordingly, the pronouncement in the Assailed ERC Orders

directing MERALCO to preserve the PSAs must be annulled and set aside
for having been rendered without jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction.
The issuance of the Notice of Gas

Restriction justified a CIC as
contemplated in the SPPC’s PSA while
the unexpected and extraordinary surge
in fuel costs brought by the coal export
ban and the Russian invasion of
Ukraine amounts to a CIC as
contemplated in the SMEC’s PSA, both
of which circumstances warrant a price
adjustment
CIC is defined under Article 1.1 of the PSAs as follows:
“Change in Circumstance means:
(a) any Law coming into effect after the signing of this Agreement,
including the adoption or enactment, or any change or repeal
with respect to the imposition of taxes, duties levies, fees,
charges, and similar impositions, and the right to remit or
convert currencies, but in all cases excluding any Legal
Requirement or the application or interpretation thereof in
59
Section 16.2.1 of the PSAs between MERALCO and SPPC and MERALCO and SMEC read as follows:
“16.2. ERC Proceedings/Arbitration
16.2.1. Provided that the ERC has jurisdiction over a Dispute between the Parties within its administrative
authority, any such Dispute that is not resolved under Section 16.1. shall be referred to and shall be heard
and resolved by the ERC in accordance with its rules on practice and procedure. Otherwise, the Dispute
shall be finally resolved by binding arbitration under the UNCITRAL Arbitration Rules (the “Arbitration
Rules”) in force on the date of commencement of the arbitration, which Rules are deemed to be
incorporated by reference into this provision (save as otherwise provide for on this Article 16) by three (3)
arbitrators (the “Tribunal”) appointed under the Rules. The place and seat of the arbitration shall be in
Pasig City.
Joint Decision
existence at such date but which by its explicit terms became

effective only after the date of this Agreement; or
(b) the amendment, modification, repeal or withdrawal of any Law
(including any official interpretation thereof which the Parties
have relied upon in entering into this Agreement) in force at
the date hereof; or
(c) the application, enforcement, interpretation or implementation
of any Law by a Governmental Instrumentality at any time
after the date of this Agreement
which causes or may cause serious damage to, or materially and

adversely affects the financial condition of any of the Parties.
For the avoidance of doubt, changes or variations over time of the

costs of operation of Power Supplier or Meralco or variations over
time of the market prices or the values of electricity shall not in
themselves constitute a Change in Circumstance.”
On this score, the Court adopts the findings of the minority of the
ERC and summarizes the salient features thereof below:60
In ERC Case No. 2019-081 RC:
1. The basis for the claim of CIC is Change in Law in the form of
a change in policy direction by a government instrumentality. The Notice of
Natural Gas Restriction as issued by National Power Corporation (NPC), a
state-owned company therefore a government instrumentality, unmistakably
qualifies to be a CIC as defined and contemplated by the Applicants in the
PSA. The Notice of Natural Gas Restriction insofar as the PSA is concerned
is a law, which as contemplated in the PSA, certainly leaves SPPC no other
option but to conform.
2. The Natural Gas Restriction issued by the NPC has

significantly restricted the generation capacity of the subject Ilijan Plant
which has no other viable fuel option other than Malampaya Gas,
particularly during the aforesaid claim period. Such that when NPC
unilaterally reduced the gas allocation to Ilijan, it reduced its capacity and
thus injected volatility in the WESM market. SPPC, including its affiliates,
have no spare uncontracted capacity and thus was constrained to buy the
deficient capacity from WESM, which is already undergoing massive
volatility. With the NPC gas restriction that was apparently effective on the
very same day that it was received, and with an indefinite duration as to
when the same will be lifted, leaves SPPC with no other recourse but to seek
for price adjustment as WESM prices, as an established fact, have spiked to
levels much higher than the gas price under Ilijan Gas Supply Agreement for
Malampaya Gas which was existing at the time of the CSP and contract
execution for this contract capacity.
60
Supra Note 30.
Joint Decision
These circumstances, which started from the Natural Gas Restriction

resulting to WESM purchase rate that is more than double than SPPC’s fuel
cost and more than the entire contract price for such contract capacity, are
definitely causing serious damage to SPPC, as presented and clarified,
during the clarificatory hearing on 30 August 2022.
3. To argue that SPPC must have foreseen such Natural Gas

Restriction forthcoming is of no relevance because the PSA does not, at all,
require that such issuances be unforeseen or unforeseeable to qualify as
CIC.
In ERC Case No. 2019-083 RC:
1. Under the PSA between SMEC and MERALCO, CIC captures

changes or variations that are abrupt and extraordinary. The clarificatory
clause only excludes changes or variations over time of factors affecting
costs of operation and the usual and normal parameters of market volatility
from what constitutes CIC. Otherwise, had it been the intention of
MERALCO to absolutely cover any and all changes or variations, regardless
of nature and extent, it should have removed the qualifying term “over time”
and just merely provide for escalation clause of 3.5% to cover ALL kinds of
changes or variations without need of belaboring the parties to the contract
with provisions relative to CIC as a ground for price adjustment. But such is
not the case in the incident before Us.
In fact, even the ERC, took note and took consideration of the
practically 10-year historical movement of different indices and price
references, such as Fuel Indices, ForEx Rate Indices, and CPI, as well as
WESM prices–all over a period of time, when it evaluated the escalation
clause for issuance of Provisional Authority.
2. MERALCO’s intention in adding the clarificatory clause in the

CIC definitions is to mean that market volatility in itself cannot constitute
CIC, but if sudden and abrupt increases in prices is the result of another
event not contemplated by the parties at the time of the CSP, then it can
constitute CIC if the threshold levels are breached. Had MERALCO
factored these risks, it would have set the Reserve Prices at a much higher
rate and the bidder would have, in turn, submitted much higher offers, which
would not have been prudent for MERALCO to pursue given its mandate to
ensure a least cost approach to its procurement of power supply for its
consumers.
3.The massive disruptions in the commodity fuel value chain due to the
(i) COVID-19 pandemic exacerbated by the (ii) Indonesian coal export
ban and the (iii) Russia-Ukraine war inevitably caused the increase in the
Joint Decision
coal fuel prices beyond not only the expectation and projections of SMEC
and MERALCO, but even the prior evaluation of ERC when it issued the
Provisional Authority.
The service of Notices of Termination

against MERALCO did not render moot
the Joint Application for Price
Adjustment
It is clear that the joint motions for provisional price adjustment cover
only the period of January to May 2022. It is thus important to stress at the
outset that NASECOR’s theory that the service of Notice of Termination
against MERALCO renders moot the Joint Motion for Price Adjustment for
the period prior to termination is erroneous since these remedies are not
inconsistent with each other, that is – even if ERC grants the joint motions
for provisional price adjustment for the interim period, petitioners may still
avail of the remedy of termination if under the terms of the PSAs, their right
to terminate is allowed.
The PSAs are not financial contracts
In the Assailed Orders, the majority of the ERC described the PSA as
a financial contract. They stated that a financial contract is one with a fixed
rate. However, the majority of the ERC failed to consider that the PSAs
contain a CIC provision which allows price adjustments for specific periods.
With this CIC provision, the PSAs cannot be considered to have a fixed rate
hence, it cannot be characterized as financial contracts.
The PSAs do not contain a stipulation

pour autrui
The majority of the ERC also added that the PSAs contain a
stipulation pour autrui; and that by voluntarily submitting bids and
executing the PSAs, SPPC and SMEC assumed all risks associated with
market volatility. However, there is nothing in the PSAs that makes a grant
of favor to a third party. In fact, each PSA expressly states that no right,
benefit or cause of action whatsoever is granted to any third person. Besides,
inasmuch as the CSP contains templated forms with a CIC provision, the
fact that the supply of electric power is imbued with public interest does not
mean that the bidders must engage in a self-destructive business deal.
The significance of the CIC provision in the PSA is explained by the

dissenting minority of the ERC in this manner: “We cannot simply discount
the fact that the CIC provision and all the rest of the provisions in the PSA, a
templated form which was one of the documents made available to all the
bidders, were just as critical to them when they offered their respective bid
prices. If the CIC provision was excluded from the proforma PSA, we
Joint Decision
surmise, other bidders, if not all, would not have participated in the first
place, or the offered rates from the bidders could have significantly
increased, in view of an all-risk power supply assumption, to levels that
would no longer be prudent for MERALCO to pursue given its mandate to
optimize its cost of power supply.”
The dissenting minority also observed that when the ERC granted
authority to the Applicants to implement the PSAs, there were seven (7)
enumerated modifications but the CIC provision remains untouched and was
in fact not deliberated upon. The dissenting minority therefore finds that the
PSAs at the time of their execution did not contemplate the events that the
Applicants cited as factual grounds for the invocation of the CIC provision.
Without doubt, such considerations merit the Court’s view that the
PSAs are not financial contracts and by executing the same, petitioners did
not assume all risks, especially those that trigger the CIC provision.
Apart from the above-cited ruling, the minority of the ERC also took
into account the rate impact simulations presented by MERALCO in each
case. After the presentation of rate impact simulations in both cases, the
Regulatory Operations Service through the Chief of Tariffs and Rates
Division confirmed that granting the price adjustment remains to be the
cheapest option; and that no other data or information contradicts and
disproves the simulations presented and submitted by MERALCO. Despite
such confirmed findings, the majority of the ERC proceeded to rule against
the requested provisional price adjustment of the movants.
On the Applicability of Article 1267 of

the Civil Code
Regarding the applicability of Article 126761 of the Civil Code, there

has been two (2) views surrounding its application: (1) that Article 1267
applies only to obligations to do and not to obligations to give;62 and (2) The
law speaks of “service” that should be understood as referring to the
performance of an obligation or a prestation, and a prestation is the object of
the contract; i.e., it is the conduct (to give, to do or not to do) required of the
parties.63 At any rate, the dissenting minority of the ERC finds the factual
grounds invoked by petitioners are enough to initiate the price adjustments
based on the CIC provision of the PSA.
61
Article 1267. When the service has become so difficult as to be manifestly beyond the contemplation of
the parties, the obligor may also be released therefrom, in whole or in part.
62
Iloilo Jar Corp. v. Comglasco Corp., G.R. No. 219509, January 18, 2017.
63
Spouses Poon v. Prime Savings Bank, G.R. No. 183794, June 13, 2016.
Joint Decision
All told, the Court finds that the majority of the ERC gravely abused
its discretion when it rejected the joint motion for price adjustment despite
the substantial evidence justifying the same.
In annulling and setting aside the Assailed ERC Orders, the Court is
not convinced that the granting of the instant petitions will set a dangerous
precedent. The crux of the controversies necessarily calls for the review of
the provisions of the PSA and the relevant laws. The future litigants must
rely on the merits of their case and the contract that binds them. That the
other power suppliers will be induced to abandon their contracts is purely
speculative and lacks basis.
WHEREFORE, premises considered, the consolidated petitions of

South Premiere Power Corporation and San Miguel Energy Corporation are
GRANTED.
With the grant of the petitions, judgment is hereby rendered:
1. ANNULLING and SETTING ASIDE the Orders dated

September 29, 2022 in ERC Case No. 2019-081 and ERC Case
No. 2019-083 for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction;
2. GRANTING the Joint Motions for Price Adjustment with

Provisional Authority and/or Interim Relief in ERC Case No.
2019-081 and ERC Case No. 2019-083, without prejudice to any
further requests for price adjustments for June 2022 onwards (for
SPPC, from June 2022 to January 25, 2023 [date of WPI] and for
SMEC, from June 2022 to the date of the finality of this Joint
Decision);
3. DENYING SMEC’s Motion for Partial Reconsideration of the

Court’s January 13, 2023 Resolution and its application for the
issuance of a writ of preliminary injunction for being moot and
academic;
4. The writ of preliminary injunction issued in favor of SPPC is

hereby made permanent.
SO ORDERED.
ORIGINAL SIGNED
MARY CHARLENE V. HERNANDEZ-AZURA
Associate Justice
Joint Decision
WE CONCUR:
ORIGINAL SIGNED
VICTORIA ISABEL A. PAREDES
Associate Justice
ORIGINAL SIGNED
FLORENCIO M. MAMAUAG, JR.
Associate Justice
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby

certified that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of the
court.
ORIGINAL SIGNED
VICTORIA ISABEL A. PAREDES
Chairperson, Thirteenth Division

SPPC v. ERC Decision

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SPPC v. ERC Decision

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Republic of the Philippines

SOUTH PREMIERE POWER CA-G.R. SP No. 176036

ENERGY REGULATORY JUNE 27, 2023

ENERGY REGULATORY PAREDES, V.I.A., CHAIRPERSON,

The instant consolidated1 petitions for certiorari2 with application for

In July 2019, MERALCO invited several power-generating entities in

On November 7, 2019, ERC issued Orders and Notices of Public

proceedings, the following were admitted as Intervenors: (1) National

Meanwhile, on June 7, 2022, NASECOR filed a Motion to Enforce

Nevertheless, ERC issued an Order dated June 17, 2022 directing

On August 5, 2022, MERALCO filed an Urgent Manifestation18,

On September 2, 2022, MERALCO filed its Supplemental Formal

On September 29, 2022, the Majority of ERC denied both Joint

On the grounds invoking the provisions of “Change in

Both petitioners did not file a motion for reconsideration or a petition

Hence, the twin petitions before Us.

Meanwhile, on November 23, 2022, the Court, through its Thirteenth

WPI conditioned upon the posting of a bond amounting to

In these petitions, SPPC and SMEC contend that:

1. The majority of ERC acted with grave abuse of discretion

(c) that the non-filing of a motion for reconsideration is excused under

Additionally, in support of their above-mentioned arguments,

(d) the Notice of Termination was only brought to ERC’s attention

(f) ERC committed grave abuse of discretion amounting to lack or

Likewise, in its motion for partial reconsideration of the denial of its

Order effectively, if not expressly, enjoined MERALCO to ensure the

II. Respondents’ Arguments:

1. Energy Regulatory Commission

ERC made the following similar arguments in support of the

(1.a) SPPC and SMEC availed of the wrong remedy in assailing

(1.d) the petitions raise pure questions of law which should be

(1.h) its discussion of the PSAs is merely in relation to the

(1.l) SMEC is not entitled to injunctive reliefs since the granting

(1.m) no injunction was issued to MERALCO in relation to the PSA;

(1.n) the Sixteenth (16th) Division of the Court is correct in denying

2. Manila Electric Company

For its part, MERALCO maintains that:

(2.b) while the PSA is a financial contract, it is subject to the

(2.c) NPC’s Notice of Gas Restrictions which affected the generation

(2.d) the contract price of SMEC’s PSA must be adjusted considering

Meanwhile, in response to SMEC’s motion for partial reconsideration

(2.f) SMEC has no clear and unmistakable right to be compensated

(2.j) notwithstanding the consolidation of SMEC’s case with SPPC’s

3. National Association of Electricity Consumers for Reforms,

(3.a) the injury claimed by petitioners cannot be remedied by injunction

(3.b) the remedy sought by petitioners is far too expansive and

(3.c) ERC never issued a writ of injunction against petitioners in any

(3.e) if no other power generator can offer to supply electricity to

(3.f) petitioners have remedies under the mechanisms available in the

III. Intervenors Power for People Coalition (P4P) Convenor Gerard

(a) the petitions do not comply with the procedural requirements

(g) petitioners cannot avail of Article 1267 of the Civil Code as a

(i) petitioners failed to meet the requisites for the issuance of

(j) it is the respondents-intervenors, instead of petitioners, who will

In its Consolidated Reply, SPPC argues that:

(1.aa) the characterization of the PSA as a financial contract is entirely

(1.ee) the filing of a motion for reconsideration before the ERC is

(1.gg) ERC’s attempt to downplay the manner by which it exceeded

(1.ii) contrary to NASECOR’s theory, the service by SPPC of a

In fine, the issues to be resolved by the Court are:

1. Whether the remedy of petition for certiorari was properly

The Court finds merit in the petitions.

The proper remedy is the petition for

Respondents’ submission that petitioners erroneously availed of the