G.R. No. 135925 - Batelec II Electric Cooperative, Inc. vs. Energy Industry Administration Bureau

BATELEC II Electric Cooperative, Inc. (BATELEC II) is an electric cooperative authorized to distribute electric power in Rosario, Batangas.
Puyat Steel Corporation (PSC) is a private galvanizing steel sheet company established in 1956 and granted pioneer status by the Board of Investments, which planned to construct a modern galvanizing plant in Rosario, Batangas.

PSC’s new plant required a delivery voltage of 69 kilovolts (kv), prompting PSC to initiate negotiations with BATELEC II for the necessary power supply.
BATELEC II, although lacking its own 69 kv transmission lines, agreed to construct the needed transmission facilities as part of its commitment to facilitate PSC’s power requirements.
On December 2, 1996, BATELEC II submitted a Bill of Materials amounting to nearly P3 million, requesting payment in order to procure materials for the construction.
On December 18, 1996, PSC accepted the proposal, effectively giving notice of award and instructing BATELEC II to proceed with the construction of the 69 kv transmission lines.

BATELEC II failed to complete the construction of the transmission lines within the promised schedule (by April 1997), thereby breaching its undertaking.
Owing to BATELEC II’s non-performance, PSC filed an application for direct power connection with the National Power Corporation (NPC) on November 17, 1997.
The Energy Industry Administration Bureau (Bureau) evaluated the technical and financial capability of BATELEC II and held a conference on December 17, 1997 to seek a settlement between the parties.

The Bureau’s evaluation of BATELEC II focused on three technical parameters: system loss, power factor, and average voltage variation.

System loss improved compared to previous years but still fell short of the prescribed 22% standard.
The power factor was at 84.33%, below the minimum required 90%, due in part to the delayed installation of reactive metering.
The average voltage variation was acceptable, but it could not offset the deficiencies in other technical areas.

The Bureau also analyzed financial capability using factors such as outstanding debt to NPC, amortization payment delays with the National Electrification Administration (NEA), average collection period, and operating expense ratio.

BATELEC II had significant shortcomings, including delays in amortization payments and not fully meeting the set collection period and operating expense standards.

Concluding that BATELEC II was neither technically nor financially capable of serving PSC’s bulk energy needs, the Bureau issued a resolution on March 16, 1998, approving PSC’s application for direct bulk power supply with NPC.
The resolution provided for service at 69 kv (due to technical limitations) and imposed conditions including compliance with new DOE rules and a fee payment of P1,000.

Following the Bureau’s resolution, PSC filed a complaint for damages, seeking a preliminary injunction and temporary restraining order (TRO) against BATELEC II to preserve its direct connection with NPC.
A Regional Trial Court (RTC) issued a temporary restraining order in favor of PSC, based on the Bureau’s resolution.
BATELEC II filed a petition for certiorari with the Court of Appeals challenging:

The issuance of the Bureau’s resolution without a prior hearing, and
The alleged improper disqualification of NPC from direct distribution within BATELEC II’s franchised area.

Additionally, BATELEC II filed a motion for reconsideration which was similarly denied by the Court of Appeals, leading to the present appeal questioning both the merits and the procedural bases of dismissal.

Whether the Court of Appeals erred in dismissing the petition for certiorari on technical grounds, particularly due to the submission of a photocopy of the NLRC decision instead of an authenticated certified true copy per Supreme Court Administrative Circular No. 3-96.
Whether the dismissal on the ground of failure to exhaust administrative remedies prior to filing the petition for certiorari under Rule 65 was proper.

Whether the Court of Appeals improperly declined to rule on the merits of the Bureau’s findings regarding BATELEC II’s technical and financial incapability to fulfill PSC’s power requirements.
The extent to which the issue regarding the disqualification of NPC from direct supply (due to the exclusive franchise of BATELEC II) should be addressed in light of the administrative findings and national policy.

Whether the petition for certiorari, being a prerogative writ, was correctly subjected to strict procedural requirements, or if any exception based on a purely legal question could allow bypassing the exhaustion of administrative remedies.