Independent Electricity Market Operator of the Philippines, Inc. vs. Energy Regulatory Commission

Mandamus lies to compel the ERC to act upon a Market Fees Application duly filed by the Independent Market Operator, the ERC being legally bound to implement DOE rules and the IMO transition and having unreasonably delayed action without basis. IEMOP's status as Market Operator gave it a clear legal right to file, the ERC's duties to recognize the transition, verify pre-filing completeness, and approve or disapprove market fees were enjoined by law, and the continued inaction left no other adequate remedy.

Independent Electricity Market Operator of the Philippines, Inc. (IEMOP) is a non-stock, non-profit private corporation organized to serve as the Independent Market Operator (IMO) of the Wholesale Electricity Spot Market (WESM), while the Energy Regulatory Commission (ERC) is the independent quasi-judicial regulatory body charged under Republic Act No. 9136 (EPIRA) with enforcing EPIRA and DOE-issued rules governing WESM operations. Section 30 of the EPIRA provides for implementation of the WESM through a Market Operator — initially an autonomous group constituted by the DOE, thereafter an independent entity formed with joint endorsement of the DOE and industry participants — entitled to recover administration and operation costs through market fees subject to ERC approval.

In 2001, the EPIRA was enacted to ensure quality, reliability, security, and affordability of electric power supply and transparent, reasonable prices under free competition, establishing the WESM as the venue for trading electricity as a commodity and setting spot prices for variations from contracted quantities. On 18 November 2003, through DOE initiative, the Philippine Electricity Market Corporation (PEMC) was incorporated as a non-stock, non-profit corporation to manage and administer the WESM, and on 22 October 2004 PEMC and the National Transmission Corporation entered into a Memorandum of Agreement transferring personnel, assets, contracts, and liabilities from the Market Operations Unit of TRANSCO to PEMC, whereupon PEMC became the Autonomous Group Market Operator (AGMO) and Governance Arm. Commercial operations of the WESM began in Luzon on 26 June 2006, in Visayas on 26 December 2010, and in Mindanao in June 2017.

On 17 January 2018, the DOE issued Department Circular No. DC2018-01-0002 adopting policies for transition to the IMO, and on 03 February 2018 the PEM Board approved the Plan for Transition to the IMO (IMO Transition Plan), ratified by PEMC members on 06 February 2018. Both issuances provided that the IMO shall be an independent entity formed separate from PEMC as a private corporation to assume all Market Operator functions with transfer of necessary personnel, while PEMC would remain as Governance Arm subject to PEM Board monitoring and supervision under the WESM Rules. IEMOP was thereafter organized as a separate non-stock, non-profit private corporation incorporated by individuals independent from industry participants and government to become the IMO, and on 19 September 2018 PEMC and IEMOP executed an Operating Agreement formalizing transfer and assumption of AGMO functions, assets, and liabilities, expressly acknowledging IEMOP as duly incorporated to act as IMO pursuant to the Circular and Transition Plan. On 26 September 2018, IEMOP assumed Market Operator functions and services with transfer of related personnel, assets, and liabilities.

On 18 August 2020, IEMOP filed before the ERC its Application (With Motion for Issuance of Provisional Authority) dated 04 August 2020 for Market Fees for Calendar Year 2021, attaching documents for pre-filing requirements under Rule 6 of the ERC Rules of Practice and Procedure, which the ERC acknowledged the same day for endorsement to technical pre-filing. By e-mail dated 01 September 2020, Mr. Von Carlo Añonuevo of the Market Operations Service-Spot Market Division returned the Application to IEMOP as directed by superiors, advising that PEMC should be the applicant and attaching a pre-filing checklist with instruction to strictly comply with guidelines in ERC Decisions under Case Nos. 2014-092RC and 2015-160RC. IEMOP filed a Manifestation and Submission with Request for Confidential Treatment on 28 September 2020 and a Supplemental Submission on 12 October 2020 submitting additional documents per the checklist and reiterating its authority, followed by a Manifestation and Request for Issuance of Certification on 20 October 2020 and follow-up letters on 11 November 2020, 26 November 2020, and 07 December 2020 urging completion of technical pre-filing and issuance of certification, to which the ERC did not respond. Thus on 11 December 2020 IEMOP filed the instant petition, with further follow-ups on 21 December 2020, 06 January 2021, and 25 January 2021.

Thereafter, by letter dated 15 February 2021 to PEMC with copy to IEMOP, the ERC Director of Market Operations Service stated the Market Fees Application was not given due course in view of Decisions in Case Nos. 2014-092RC and 2015-160RC where PEMC is and remains the Market Operator, and would only be acted upon if officially filed by PEMC. IEMOP responded on 17 February 2021 that it had performed Market Operator functions since 26 September 2018 and the cited decisions concerned prior AGMO filings. On 24 May 2021, DOE Secretary Alfonso G. Cusi wrote to the ERC Chairman reiterating establishment of the IMO and assumption by IEMOP and stating the ERC must accord IEMOP all rights including filing of market fees, while on 27 May 2021 PEMC wrote to the ERC stating it ceased to be AGMO, was restructured as Governance Arm, and IEMOP as IMO was responsible for filing market fees for ERC approval.

• Authority as Market Operator: Petitioner argued that the AGMO already transitioned to the IMO pursuant to EPIRA and DOE policy, that it had performed Market Operator functions since 26 September 2018 under the Operating Agreement, and that it was therefore the duly constituted and proper party with legal right to file and pursue the Market Fees Application.
• Unlawful Neglect and Delay: Petitioner maintained that the ERC unlawfully neglected its legal duty to consider and approve the application, failed to respond to compliance submissions and follow-up letters despite completed pre-filing requirements, and that prompt approval was indispensable to continued WESM operations.
• Nature of E-mail and Relief Sought: Petitioner argued that the 01 September 2020 e-mail was not an official act or resolution of the ERC, and emphasized that favorable resolution was not prayed for, only that the ERC act on the application and pre-filing request with dispatch until resolution on the merits.

• Proper Party and Documentary Deficiency: Respondent countered that it did not neglect its duty because it acted when it returned and rejected the application due to lacking documentary requirements, promptly communicating through the 01 September 2020 e-mail that PEMC, which remains existing and undissolved, should be the applicant, and that IEMOP ignored the instruction and showed no entitlement to PEMC's position or market fees.
• Discretionary Act Beyond Mandamus: Respondent argued that mandamus could not issue because it compels only ministerial acts and cannot direct the exercise of judgment or discretion in a particular way, nor the retraction or reversal of action already taken in the exercise of discretion.

• Mandamus Propriety: Whether the remedy of mandamus is proper to compel the ERC to act upon IEMOP's Market Fees Application.

• Mandamus Propriety: Yes. Mandamus was proper because all requisites concurred: IEMOP had a clear legal right as Market Operator to file, the ERC had legal duties to implement the IMO transition and process market fee filings, the ERC unlawfully neglected those duties and excluded IEMOP from its rights, the inaction involved grave abuse of discretion and unreasonable delay, and no other plain, speedy, and adequate remedy existed.

• Mandamus Propriety: The petition fell within jurisdiction under Section 78 of the EPIRA, which confines to the Supreme Court cases involving implementation of EPIRA, as clarified in NPC Drivers and Mechanics Association vs. National Power Corp., since enforcement of Section 30 on WESM implementation through the Market Operator and recovery of administration costs was involved. The five requisites for mandamus were present. IEMOP had a clear legal right because Section 30 of the EPIRA and Rule 4 of the EPIRA IRR define the Market Operator as either the AGMO or the IMO that assumes AGMO functions, and the transition was completed through the joint endorsement reflected in DOE D.C. No. DC2018-01-0002 and the IMO Transition Plan, the 19 September 2018 Operating Agreement acknowledging IEMOP as IMO, and confirmatory letters from the DOE Secretary on 24 May 2021 and PEMC on 27 May 2021 stating PEMC was now only the Governance Arm. The right to recover costs through market fees subject to ERC approval under Section 30, Rule 9 Section 9 of the IRR, and Section 2.10.1 of the WESM Rules, and the obligation to file under Section 2.10.2.3 of the WESM Rules, Sections 5.5 and 7.7 of the Circular, Section 7.5.1 of the Transition Plan, and Section 10.03(a) of the Operating Agreement, confirmed IEMOP as the authorized filer. Documentary deficiency was without merit because IEMOP attached proof of LGU service on the Pasig City Council, affidavit of service, affidavit of publication in the 10 August 2020 Philippine STAR with complete issue copy, and 11 August 2020 acknowledgement, plus additional submissions on 28 September and 12 October 2020 per the 01 September 2020 e-mail, satisfying Rule 6 Sections 2-3. The ERC unlawfully neglected duties to implement DOE policy, act on market fee applications, and verify pre-filing completeness with a Confirmation of Completeness E-mail or Notice of Incomplete Submission E-mail under Rule 6 Section 4 and Rule IV Section 2 of the ERC Guidelines, by insisting PEMC remained operator, returning the application without approval or disapproval constituting action under Section 4(a) of R.A. No. 11032, failing to issue a compliant denial under Sections 9(b)(2) and 9(c), ignoring post-NISE compliance within 60 days under Rule IV Section 3, and issuing only a 15 February 2021 letter to non-pre-filer PEMC citing inapplicable prior AGMO decisions. Although approval involves discretion, mandamus was available to direct action, not a particular result, due to grave abuse of discretion, manifest injustice, palpable excess of authority, and unreasonable delay, consistent with the rule that discretion must be exercised in accordance with law and the ERC has no power to ignore, waive, amend, postpone, or revoke DOE rules having force of law. No other remedy existed because without approval, disapproval, CCE, or further NISE, there was no official action to appeal, leaving market fee revenue and budgetary requirements for 2021 on hold.

• Mandamus; requisites — Mandamus lies against a tribunal, board, officer, or person who unlawfully neglects performance of an act specifically enjoined by law as a duty of office, trust, or station, or unlawfully excludes another from a right or office, where no other plain, speedy, and adequate remedy exists. The requisites are (1) clear legal right to the act demanded, (2) duty of respondent to perform as mandated by law, (3) unlawful neglect or exclusion, (4) ministerial character of the act, and (5) absence of appeal or other adequate remedy. Applied here, all requisites were found present to compel ERC processing of the market fees filing.
• Mandamus against discretionary duty — While mandamus ordinarily compels only ministerial duties, it may issue to direct performance of a discretionary duty to act, but not to act one way or the other, except where there is grave abuse of discretion, manifest injustice, or palpable excess of authority, since discretion must be exercised under and not contrary to law; it also lies to remedy official inaction and unnecessary and unreasonable delay in a clearly imposed duty. Applied here, the ERC's evaluation on the merits remained discretionary, but mandamus properly directed prompt action and dispatch toward approval or disapproval given baseless refusal and delay.
• ERC bound by DOE policy under EPIRA — Under the EPIRA, the DOE formulates policies and issues implementing rules, regulations, and circulars, while the very first mandate of the ERC is to enforce them; the ERC has no power to amend, ignore, waive, postpone, or revoke them, whether exercising executive, quasi-legislative, or quasi-judicial powers, as they have the force and effect of law. Applied here, the ERC was bound to implement the jointly endorsed AGMO-to-IMO transition and could not insist PEMC remained Market Operator contrary to DOE D.C. No. DC2018-01-0002 and the IMO Transition Plan.
• Market Operator and IMO under EPIRA Section 30 — The Market Operator implementing the WESM is either the Autonomous Group Market Operator constituted by the DOE or the Independent Market Operator jointly endorsed by the DOE and industry participants to assume AGMO functions, assets, and liabilities; the IMO becomes Market Operator upon assumption after transition. Applied here, IEMOP became Market Operator upon execution of the Operating Agreement and assumption on 26 September 2018, confirmed by DOE and PEMC.
• Recovery of WESM costs through Market Fees — The cost of administering and operating the WESM is recovered through market fees imposed on all market members, subject to ERC approval, upon filing by the Market Operator after PEM Board approval. Applied here, IEMOP as IMO bore the right and obligation to file the Calendar Year 2021 market fees under EPIRA IRR, WESM Rules, DOE Circular, Transition Plan, and Operating Agreement.

• "Mandamus may issue when there is grave abuse of discretion, manifest injustice, or palpable excess of authority in the performance of discretionary duty. This is because discretion must be exercised in accordance with, and not contrary to, the law." — States the expanded basis for mandamus beyond ministerial acts and anchors the ruling that ERC discretion could be controlled for legal non-compliance.
• "the DOE's rules, regulations, and circulars issued pursuant to the DOE's rule-making power under the EPIRA have the force and effect of law which the ERC is legally bound to follow" — Defines the controlling hierarchy between DOE and ERC and why refusal to recognize the IMO transition was unlawful.
• "[N]o application or request shall be returned to the applicant or requesting party without appropriate action." — Invokes R.A. No. 11032 to show the 01 September 2020 e-mail returning the application without approval or disapproval was not valid action or denial.

• Antiquera vs. Baluyot, 91 Phil. 213 (1952) — Cited for the rule that mandamus issues upon grave abuse of discretion, manifest injustice, or palpable excess of authority because discretion must be exercised under law.
• Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, 256 Phil. 777 (1989) — Cited for the rule that courts may compel action through mandamus when there is unnecessary and unreasonable delay in a duty clearly imposed by law.
• Alyansa para sa Bagong Pilipinas, Inc. vs. Energy Regulatory Commission, G.R. No. 227670, 03 May 2019 — Followed as controlling on DOE rule-making supremacy and ERC's duty to enforce DOE implementing rules under EPIRA.
• Philippine Chamber of Commerce and Industry vs. Department of Energy, G.R. Nos. 228588, 229143 & 229453, 02 March 2021 — Followed together with Alyansa on the ERC being bound to apply DOE policies, rules, regulations, and circulars.
• NPC Drivers and Mechanics Association vs. National Power Corp., 737 Phil. 210 (2014) — Followed to hold Section 78 of EPIRA confines jurisdiction to the Court over questions involving enforcement of EPIRA provisions, supporting direct resort.
• De Castro vs. Judicial and Bar Council, 629 Phil. 629 (2010) — Cited for the requisites of mandamus and the general rule limiting it to ministerial duties.
• M.A. Jimenez Enterprises, Inc. vs. Ombudsman, 665 Phil. 523 (2011) — Cited for the exception allowing mandamus to direct action on discretionary duties attended by grave abuse of discretion.
• Lemi vs. Valencia, 135 Phil. 185 (1968) — Cited for the proposition that mandamus lies to remedy official inaction.

• Section 78, R.A. No. 9136 (EPIRA) — Provides implementation of EPIRA shall not be restrained or enjoined except by Supreme Court order; applied to sustain the Court's jurisdiction over enforcement of Section 30 on WESM and Market Operator.
• Section 30, R.A. No. 9136 (EPIRA) — Provides Market Operator shall implement WESM, initially an autonomous group constituted by DOE and thereafter an independent entity with transferred functions upon joint DOE-industry endorsement; applied to recognize IEMOP as IMO-Market Operator entitled to file market fees.
• Sections 38 and 43, R.A. No. 9136 (EPIRA) — Define ERC as independent quasi-judicial body and enumerate functions including enforcing EPIRA, WESM rules, and Market Operator activities; applied to delineate ERC duties and lack of independence to disregard DOE rules.
• Rule 4 and Rule 9, EPIRA Implementing Rules and Regulations — Define Market Operator, IMO, and Market Fees and provide for filing and recovery of administration costs; applied to confirm IEMOP's status and filing right.
• Section 2.10.1 and Section 2.10.2.3, WESM Rules; Sections 5.5 and 7.7, DOE D.C. No. DC2018-01-0002; Section 7.5.1, IMO Transition Plan; Section 10.03(a), Operating Agreement — Provide market fees cover Market Operator and PEM Board budgets and shall be filed by Market Operator/IMO with ERC after PEM Board approval; applied to establish IEMOP's obligation and right to file.
• Rule 65, Section 3, Rules of Court — Governs mandamus against one unlawfully neglecting a legal duty or excluding another from a right, absent other adequate remedy; applied to test propriety of the writ.
• Rule 6, ERC Rules of Practice and Procedure; Rule IV, ERC Guidelines Governing Electronic Applications, Filings and Virtual Hearings — Require pre-filing LGU service and publication with proof, ERC verification of completeness, and issuance of Confirmation of Completeness E-mail or Notice of Incomplete Submission E-mail; applied to find IEMOP compliant and ERC non-compliant.
• Sections 4(a), 9(a)(2), 9(b)(2) and 9(c), R.A. No. 11032 (Ease of Doing Business Act) — Define action as written approval or disapproval, prohibit return without appropriate action, and require fully explained written denial; applied to hold the 01 September 2020 e-mail and 15 February 2021 letter were neither action nor denial.

Hernando, J. (Acting Chairperson), Rosario, J., and Marquez, J., concurred. Perlas-Bernabe, J. (Chairperson), was on official leave.