Case Digest: SURNECO v.

ERC
G.R. No. 183626 : October 4, 2010

SURIGAO DEL NORTE ELECTRIC COOPERATIVE, INC. (SURNECO), Petitioner,v. ENERGY

REGULATORY COMMISSION, Respondent.

NACHURA,J.:

FACTS:

The Association of Mindanao Rural Electric Cooperatives, as representative of SURNECO and of the
other 33 rural electric cooperatives in Mindanao, filed a petition before the then Energy Regulatory Board
(ERB) for the approval of the formula for automatic cost adjustment and adoption of the National Power
Corporation (NPC) restructured rate adjustment to comply with Republic Act (R.A.) No. 7832.

The ERB granted SURNECO and other rural electric cooperatives provisional authority to use and
implement the Purchased Power Adjustment (PPA). In the meantime, the passage of R.A. No. 9136led to
the creation of the Energy Regulatory Commission (ERC), replacing and succeeding the ERB. All
pending cases before the ERB were transferred to the ERC. Thereafter, the ERC continued its review,
verification, and confirmation of the electric cooperatives implementation of the PPA formula based on the
available data and information submitted by the latter.

The ERC issued its assailed Order, mandating that the discounts earned by SURNECO from its power
supplier should be deducted from the computation of the power cost. SURNECO filed a motion for
reconsideration, but it was denied. Aggrieved, SURNECO filed a petition for review to the CA but the
same was denied. Upon denial of the motion for reconsideration, SURNECO files the instant petition.

ISSUE: Whether or not the CA erred in affirming the ERC Decision

HELD: No. CA Decision Affirmed

POLITICAL LAW- The State, in its exercise of police power, can regulate the rates imposed by a
public utility such as SURNECO

The ERC was merely implementing the system loss caps in R.A. No. 7832 when it reviewed and
confirmed SURNECOS PPA charges, and ordered the refund of the amount collected in excess of the
allowable system loss caps through its continued use of the multiplier scheme. The Commission deemed
it appropriate to clarify its PPA confirmation process particularly on the treatment of the Prompt Payment
Discount (PPD) granted to distribution utilities (DUs) by their power suppliers. The foregoing clarification
was intended to ensure that only the actual costs of purchased power are recovered by the DUs.

In directing SURNECO to refund its over-recoveries based on PPA policies, which only ensured that the
PPA mechanism remains a purely cost-recovery mechanism and not a revenue-generating scheme for
the electric cooperatives, the ERC merely exercised its authority to regulate and approve the rates
imposed by the electric cooperatives on their consumers. The ERC simply performed its mandate to
protect the public interest imbued in those rates.

As held in the case of Republic v. Manila Electric Company, 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.
Likewise, SURNECO cannot validly assert that the caps set by R.A. No. 7832 are arbitrary, or that they
violate the non-impairment clause of the Constitution for allegedly traversing the loan agreement between
NEA and ADB. Striking down a legislative enactment, or any of its provisions, can be done only by way of
a direct action, not through a collateral attack, and more so, not for the first time on appeal in order to
avoid compliance. The challenge to the laws constitutionality should also be raised at the earliest
opportunity.

Even assuming, merely for arguments sake, that the ERC issuances violated the NEA and ADB
covenant, the contract had to yield to the greater authority of the States exercise of police power. It has
long been settled that police power legislation, adopted by the State to promote the health, morals,
peace, education, good order, safety, and general welfare of the people prevail not only over future
contracts but even over those already in existence, for all private contracts must yield to the superior and
legitimate measures taken by the State to promote public welfare.

POLITICAL LAW- Administrative due process simply requires an opportunity to explain ones side
or to seek reconsideration of the action or ruling complained of.

Verily, the PPA confirmation necessitated a review of the electric cooperatives monthly documentary
submissions to substantiate their PPA charges. The cooperatives were duly informed of the need for
other required supporting documents and were allowed to submit them accordingly. In fact, hearings were
conducted. Moreover, the ERC conducted exit conferences with the electric cooperatives representatives,
SURNECO included, to discuss preliminary figures and to double-check these figures for inaccuracies, if
there were any. In addition, after the issuance of the ERC Orders, the electric cooperatives were allowed
to file their respective motions for reconsideration. It cannot be gainsaid, therefore, that SURNECO was
not denied due process
Heritage Hotel vs NUNHRIAN

NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND

ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS
CHAPTER (NUWHRAIN-HHMSC) G.R. No. 178296, January 12, 2011
FACTS:

The respondent’s petition for certification election was granted. Petitioner then discover
ed that respondent had failed to submit to the Bureau of Labor Relations (BLR) its annu
al financial report for several years and the list of its members since it filed its registratio
n papers in 1995. Consequently, it filed a Petition for Cancellation of Registration of resp
ondent, on the ground of the non-
submission of the said documents. Petitioner prayed that respondent’s Certificate of Cre
ation of Local/Chapter be cancelled and its name be deleted from the list of legitimate la
bor organizations. It further requested the suspension of the certification election proce
edings. Nevertheless, the certification election pushed through and the respondent won.

The Regional Director of DOLE-

NCR and DOLE Secretary both held that constitutionally guaranteed freedom of associa
tion and right of workers to self-
organization outweighed respondent’s noncompliance with the statutory requirements t
o maintain its status as a legitimate labor organization.

ISSUE:

Whether or not the failure to comply with the statutory requirement(filing financial repo
rts and the list of its members) sufficient ground for the cancellation of registration of th
e respondent as a labor union.

HELD:

No, the non-

compliance should not be a ground for the cancellation. Articles 238 and 239 of the Lab
or Code provide that failure to file financial reports and the list of its members are groun
ds for the cancellation of Union Organization. However, consideration must be taken of
the fundamental rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the
rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted activities. L
abor authorities should bear in mind that registration confers upon a union the status of
legitimacy and the concomitant right and privileges granted by law to a legitimate labor
organization, particularly the right to participate in or ask for certification election in a b
argaining unit. Thus, the cancellation of a certificate of registration is the equivalent of s
nuffing out the life of a labor organization. For without such registration, it loses –
as a rule – its rights under the Labor Code.

Furthermore, that the Labor Code’s provisions on cancellation of union registration and
on reportorial requirements have been recently amended by Republic Act (R.A.) No. 948
1, An Act Strengthening the Workers’ Constitutional Right to Self-
Organization, Amending for the Purpose Presidential Decree No. 442, As Amended, Oth
erwise Known as the Labor Code of the Philippines, which says that failure to file financi
al reports and list of union members shall not be a ground for cancellation of union regis
tration but shall subject the erring officers or members to suspension, expulsion from m
embership, or any appropriate penalty.

Bocea Vs Teves

Facts:

On January 25, 2005, former President Gloria Macapagal-Arroyo signed into law R.A. No. 9335
which took effect on February 11, 2005. RA No. 9335 was enacted to optimize the revenue-
generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of
Customs (BOC). The law intends to encourage BIR and BOC officials and employees
to exceed their revenue targets by providing a system of rewards and sanctions through the creation
of a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation Board (Board). It
covers all officials and employees of the BIR and the BOC with at least six months of service,
regardless of employment status. Each Board has the duty to (1) prescribe the rules and guidelines
for the allocation, distribution and release of the Fund; (2) set criteria and procedures for removing
from the service officials and employees whose revenue collection falls short of the target; (3)
terminate personnel in accordance with the criteria adopted by the Board; (4) prescribe a system for
performance evaluation; (5) perform other functions, including the issuance of rules and regulations
and (6) submit an annual report to Congress.

Petitioner Bureau of Customs Employees Association (BOCEA) directly filed a petition for certiorari
and prohibition before the SC to declare R.A. No. 9335 and its IRR unconstitutional. Petitioner
contended that R.A. No. 9335 is a bill of attainder because it inflicts punishment upon a particular
group or class of officials and employees without trial. This is evident from the fact that the law
confers upon the Board the power to impose the penalty of removal upon employees who do not
meet their revenue targets; that the same is without the benefit of hearing; and that the removal from
service is immediately executory.

Issue:

Whether R.A. No. 9335 is a bill of attainder proscribed under Section 22, Article III of the 1987
Constitution.

Held:

R.A. No. 9335 is not a bill of attainder. A bill of attainder is a legislative act which inflicts punishment
on individuals or members of a particular group without a judicial trial. Essential to a bill of attainder
are a specification of certain individuals or a group of individuals, the imposition of a punishment,
penal or otherwise, and the lack of judicial trial.

R.A. No. 9335 does not possess the elements of a bill of attainder. It does not seek to inflict
punishment without a judicial trial. R.A. No. 9335 merely lays down the grounds for the termination of
a BIR or BOC official or employee and provides for the consequences thereof. The democratic
processes are still followed and the constitutional rights of the concerned employee are amply
protected