Title
BF Homes, Inc. vs. Manila Electric Co.
Case
G.R. No. 171624
Decision Date
Dec 6, 2010
BF Homes and PWCC sought injunction against MERALCO's disconnection of electric supply, claiming refund entitlement. SC ruled ERC had exclusive jurisdiction, dismissing the case.

Case Summary (G.R. No. 171624)

Key Dates and Procedural Posture

  • BF Homes and PWCC filed a petition with the Regional Trial Court (RTC), Civil Case No. 03-0151, on June 23, 2003, seeking provisional relief (writ of preliminary injunction and restraining order) to prevent MERALCO from disconnecting service to water pumps.
  • RTC, Branch 202, Las Piñas City, issued an Order granting the writ of preliminary injunction on November 21, 2003; a motion for reconsideration by MERALCO was denied January 9, 2004.
  • MERALCO filed a petition for certiorari with the Court of Appeals attacking the RTC’s exercise of jurisdiction; the Court of Appeals, in a decision dated October 27, 2005, set aside the RTC orders and dissolved the injunction. The Court of Appeals’ denial of reconsideration was resolved February 7, 2006.
  • Petitioners elevated the matter to the Supreme Court by Petition for Review on Certiorari under Rule 45; the Supreme Court affirmed the Court of Appeals’ decision and ordered the RTC to dismiss the petition for lack of jurisdiction.

Applicable Law and Regulatory Framework

  • The case turns on allocation of jurisdiction between ordinary courts and the regulatory agency for the electric power industry (the Energy Regulatory Commission, ERC) and its predecessor, the Energy Regulatory Board (ERB), including implementing authorities under Executive Order No. 172 and Republic Act No. 9136 (EPIRA).
  • EPIRA (RA 9136) confers on the ERC, inter alia, original and exclusive jurisdiction under Section 43(u) over disputes contesting rates, fees, fines and penalties imposed by the ERC and disputes among participants in the energy sector; Sections 44 and 80 effect transfers of ERB powers and preserve certain prior provisions.
  • Executive Order No. 172 (reconstituting the ERB) authorizes the Board to grant provisional relief, including provisional orders without prior hearing and scheduling expedited hearings thereafter; the ERB/ERC is a quasi‑judicial regulatory tribunal with authority to implement refunds and related measures arising from its rate determinations.

Petitioners’ Claims and Reliefs Sought in RTC

  • Petitioners invoked the Supreme Court’s MERALCO Refund rulings (which ordered MERALCO to refund an excess P0.167/kWh beginning with customers’ billing cycles from February 1998, and which authorized a P0.017/kWh rate adjustment effective February 1994) and alleged a specific refundable amount owed to them (P11,834,570.91).
  • They alleged MERALCO disconnected power to multiple water pumps (first on May 20, 2003, and again later), disrupted water supply to their communities, and demanded payment of current electric bills (approx. P4.7 million). Petitioners asked MERALCO to apply billed amounts against the refund and alleged bad faith and arbitrary conduct when MERALCO declined to apply the refund immediately.
  • Causes of action and remedies claimed included: compelling MERALCO to treat billed amounts as paid by application of the refund, injunctive relief to reconnect and prevent disconnection of water-pump electric service, and damages (moral, exemplary, litigation expenses).

MERALCO’s Answer, Counterclaims and Defenses

  • MERALCO asserted contractual and regulatory rights to discontinue service for nonpayment under the service contracts and MERALCO’s terms and conditions as approved by the Board of Energy/ERC; those terms reserve the right to disconnect for arrears or adjusted bills when meters failed to register consumption correctly or when customers failed to comply with conditions.
  • MERALCO maintained that the refund ordered by the Supreme Court and ERB/ERC must be implemented according to schedules and guidelines to be approved by the ERC, and that petitioners’ attempt to secure immediate set-off via the RTC sought to circumvent the ERC’s implementation process.
  • MERALCO argued the RTC lacked jurisdiction because the ERC has exclusive and original jurisdiction over disputes arising from rate determinations and the implementation of refunds; MERALCO counterclaimed for unpaid bills (approximately P6.55 million for May–June 2003) and damages (exemplary, moral, attorney’s fees).

RTC’s Findings and Granting of Preliminary Injunction

  • After hearing, the RTC found the requisites for a preliminary injunction satisfied, emphasizing potential irreparable injury to the public if water supply were interrupted. The court prioritized the community’s right to water and public order, reasoning that MERALCO’s right to collect was subordinated, in that instance, to the need to avert social unrest and protect use and enjoyment of water.
  • Consequently, the RTC permanently (for purposes of the injunction) restrained MERALCO from disconnecting power to petitioners’ water pumps and required BF Homes and PWCC to post a P500,000 bond.

Court of Appeals’ Rationale: ERC Primary, Original and Exclusive Jurisdiction

  • The Court of Appeals concluded that the ERC has original and exclusive jurisdiction over matters contesting rates, fees and related disputes under Section 43(u) of EPIRA and the Implementing Rules and Regulations. The dispute in the petition — the right to set off current charges against the MERALCO refund and the timing and schedule of refunds — arose directly from the ERB/ERC’s prior rate determination and implementation process and therefore falls squarely within the ERC’s competence.
  • The court applied the doctrine of primary jurisdiction: when a question involves technical or policy determinations within an administrative agency’s special competence, courts should refer or defer to the agency first. The Court of Appeals held the RTC erred in determining preliminarily matters fall within ERC purview and therefore dissolved the writ of injunction.

Legal Doctrines Emphasized by the Supreme Court

  • Jurisdiction is conferred by the Constitution or statute only; the character of the action and relief sought is determined by the material allegations of the complaint and the law involved. A prayer for relief does not expand subject matter jurisdiction.
  • Administrative agencies of limited jurisdiction may exercise powers explicitly granted by statute; the doctrine of primary jurisdiction prevents courts from deciding issues that require administrative expertise and uniformity of administrative rulings.
  • Provisional remedies ancillary to an action (such as a writ of preliminary injunction) cannot properly be exercised by a court that lacks jurisdiction over the principal action; if the RTC lacked subject matter jurisdiction over the petition, it likewise lacked authority to grant the injunction.

ERC/ERB Authority to Grant Provisional Relief

  • The Supreme Court highlighted that Executive Order No. 172 explicitly vested in the ERB (and, by succession and operation of EPIRA, the ERC) authority to grant provisional relief, including provisional orders without prior hearing, subject to prompt scheduling of hearing (Section 8 E.O. 172). That provision remained applicable post-EPIRA under Section 80, and a writ of preliminary injunction i
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