Anti-Meralco case bungled in Supreme Court

A who’s who of lawyers lined up to defend the power sector last Jan. 21 at the first Supreme Court hearing on the unprecedented P4.15/kWh electricity rate hike. Retired justice Florentino Feliciano, mentor of Chief Justice Maria Lourdes Sereno, and renowned Philippine Dispute Resolution Center president and ACCRA senior partner Victor “Boy” Lazatin led the formidable cast.

The key petition was signed by the equally renowned former senator Rene Saguisag and argued by former Integrated Bar president Leonardo de Vera, who opened the hearing with a simple but compelling point: The rate hike was imposed without notice and opportunity for consumers to object. As De Vera put it, Energy Regulatory Commission rules allow “pay now, question later.” This violates the constitutional right to due process.

De Vera’s simple argument was dwarfed by the Makabayan coalition’s ambitious petition. It sent Bayan Muna Rep. Neri Colmenares, who was noted during the Cybercrime Act arguments for answering justices with “I’m not very good at the Internet” and “I’m not familiar with the technology.” Colmenares was quoted as saying at the Tuesday hearing: “I’m not very familiar with Epira (Electric Power Industry Reform Act)” and “I’m not familiar with gaming the [electricity] contracts.” Justice Marvic Leonen later reprimanded him thus: “I am surprised the justices know more than the petitioners. You brought this case.”

Colmenares gave a convoluted argument that approving the rate (in one day) was “grave abuse of discretion” by the ERC. He claimed the hike was approved amid a conspiracy where Malampaya and power plants would simultaneously shut down and drive up spot market prices. As another ground, Manila Electric Co. allegedly instructs suppliers to sell electricity allotted to it in the spot market at the highest possible bid, which increases this market’s price to the high bid and artificially increases prices passed to consumers. Upping the ante even further, he said sections of Epira are unconstitutional because these prevent regulation of pricing in the power generation sector—a claim that requires several steps to link to his case. He even digressed into an opinion that power assets should not be privatized.

In a replay of the Reproductive Health Act arguments, justices pummeled Colmenares and fellow Bayan Muna Rep. Carlos Zarate with every textbook ground to throw out a constitutional case. Because the high court is not a trier of facts—and Colmenares admitted he had not read a single power contract—the conspiracy theories are mere rumor. Because the ERC has exclusive jurisdiction over power, the petitioners should have gone there. Because the case can be resolved by scrutinizing ERC rules, the textbook approach is to focus on these and not consider Epira’s unconstitutionality. Because the high court does not decide economic policy, a politician like Colmenares should take his arguments to Congress.

Leonen delivered the coup de grace by looking for the “actual case” in which Epira is to be declared unconstitutional. Colmenares rebutted that the attack is timely even if there is no actual case. Because the Constitution states that the judiciary may only rule in an “actual case,” Colmenares thus told the justices they may not act. “Timely, but not justiciable?” Leonen ominously ended.

Sereno was in full law-professor mode: “Maybe you are not reading the same law!” “Are you paying attention, Congressman Colmenares?!” “A surgeon’s scalpel could have sufficed without using a sledgehammer.” “Do you agree that you could have had more flesh in your petition?” At the hearing’s end, Leonen noted the irony of Bayan Muna protesting a breakdown of free market economics.

Some justices probed De Vera’s more focused argument. Justice Presbitero Velasco noted he was belatedly challenging a previous amendment to ERC rules to allow certain rate hikes to become effective without hearing. Justice Teresita de Castro asked what in Epira requires hearing for such hikes. De Vera reiterated a person’s higher constitutional right to hearing before money is taken from him. Velasco gave De Vera pause when he asked if accepting his argument meant refunding all amounts under hikes in past years.

The high court has been heavily criticized for past aggressive economic rulings, yet the accusations of overcharging naturally strike a chord with the public. The present justices seem inclined to consider narrow, purely legal claims such as De Vera’s, the way they struck down lawmakers’ pork barrel because legislators cannot implement projects without violating the separation of powers. But they will steer clear of overly broad, clumsily phrased claims no matter how well-meant.

Still, the high court did issue a restraining order on the rate hike, and the hearing ended with Philippine Electricity Market Corp., National Grid Corp., and Power Sector Assets and Liabilities Management forced to join the hearings and Meralco and the ERC instructed to submit a long list of documents. Senior Associate Justice Antonio Carpio telegraphed future questions on market abuse, asking if Meralco can pass P62 to consumers if it contracts to buy power at P8 then sells but repurchases it at P62 on the spot market. Sereno likewise asked if the electricity spot market is being gamed, which she said can be observed without need to obtain evidence of collusion.

It is too early to tell just how far the justices plan to go, and an entire industry will be on its toes until they rule.

Oscar Franklin Tan (@oscarfbtan, facebook.com/OscarFranklinTan) cochairs the Philippine Bar Association’s committee on constitutional law and teaches at the University of the East.