Republic of the Philippines v. Manila Electric Company and National Power Corporation
REITERATIONFacts
The Antecedents: Manila Electric Company (MERALCO) and National Power Corporation (NPC) entered into a Contract for the Sale of Electricity (CSE) effective from January 1, 1995, to December 31, 2004. Under this contract, NPC was to supply and MERALCO was to purchase a minimum volume of electric power and energy. In 2002, 2003, and 2004, MERALCO drew less than the minimum stipulated quantities and consequently did not pay the minimum monthly charges, leading NPC to claim payment for the undrawn electricity. MERALCO objected and terminated the CSE, also submitting its own claims against NPC. The parties eventually entered into a Settlement Agreement on July 15, 2003, mediated by Ambassador Sedfrey A. Ordoñez and Antonio V. del Rosario, to resolve their disputes concerning charges, delayed transmission line construction, and NPC's sales within MERALCO's franchise area. MERALCO agreed to pay NPC P27,515,000,000.00, which was reduced to P20,050,000,000.00 after accounting for credits to MERALCO. The Settlement Agreement included a pass-through provision allowing MERALCO to recover the settlement amount from consumers, subject to approval by the Energy Regulatory Commission (ERC). Procedural History: MERALCO and NPC filed a joint application with the ERC on April 15, 2004, seeking approval of the pass-through provision of the Settlement Agreement. The Office of the Solicitor General (OSG), representing the Republic of the Philippines, intervened in the ERC proceedings in May 2008, opposing the Settlement Agreement. The ERC suspended its proceedings, prompting MERALCO to file an action for declaratory relief before the Regional Trial Court (RTC) of Pasig City in November 2009. The OSG moved to suspend the RTC proceedings and refer the parties to arbitration, which the RTC denied on November 3, 2010. The RTC also denied the OSG's motion to dismiss or stay proceedings. The pre-trial conference was reset multiple times, with the OSG repeatedly seeking cancellations. On November 24, 2010, the RTC declared the petitioner (Republic of the Philippines, represented by OSG) to have waived its right to participate in the pre-trial and present evidence. The Republic then filed a petition for certiorari, prohibition, and mandamus with the Court of Appeals (CA), assailing the RTC's orders. The CA dismissed the Republic's petition on October 14, 2011, ordering the RTC to proceed with the trial. The Republic's motion for reconsideration was denied by the CA on April 25, 2012. Subsequently, the RTC rendered a decision on the merits in the declaratory relief case on May 29, 2012. The Petition: The Republic of the Philippines, through the OSG, filed a petition for review on certiorari with the Supreme Court, seeking to overturn the CA's decision. The Republic argued that the CA erred in ignoring fundamental issues and allowing the RTC to proceed with the case. Specifically, the Republic contended that the dispute should have been resolved through arbitration as per the CSE, that the RTC lacked jurisdiction, that the RTC judge committed grave abuse of discretion by refusing inhibition and proceeding with pre-trial despite the OSG's rights, and that the Settlement Agreement was grossly disadvantageous to the government and entered into without the OSG's participation. The Republic also prayed for the parties to be directed to arbitration. The Supreme Court, however, found the petition moot and academic due to the RTC's intervening decision on the merits and affirmed the CA's ruling, holding that the CA correctly upheld the RTC's interlocutory orders and that the validity of the Settlement Agreement was not an issue in the present appeal.
Issue(s)
Whether the issues raised on certiorari against the interlocutory orders of the RTC were rendered moot and academic by the RTC's intervening rendition of a decision on the merits. Whether the Court of Appeals erred in ruling that the RTC Judge did not commit grave abuse of discretion in denying the motion to dismiss or to stay proceedings and to refer the parties to arbitration. Whether the Court of Appeals erred in ruling that the RTC Judge did not commit grave abuse of discretion in proceeding with the pre-trial and in declaring the petitioner to have waived its right to participate therein and to present evidence, despite the filing of a petition for certiorari. Whether the validity of the Settlement Agreement, including its pass-on provision and the alleged lack of OSG participation, is an issue that the Supreme Court can address in this appeal.
Ruling
The Supreme Court denied the petition for review on certiorari and affirmed the decision of the Court of Appeals. The Court held that the intervening rendition of a decision on the merits by the RTC rendered the issues raised in the certiorari petition moot and academic. The Court also found that the RTC judge did not commit grave abuse of discretion in issuing the assailed orders, as the mere filing of a certiorari petition does not interrupt the proceedings of the main case absent a TRO or WPI. Furthermore, the Court stated that the validity of the Settlement Agreement was not an issue in the appeal concerning the interlocutory orders and that the RTC had the competence to determine the enforceability of the arbitration clause.
Ratio Decidendi
On Issue 1: The Supreme Court held that the intervening rendition by the RTC of a decision on the merits in Special Civil Action No. 3392 (on May 29, 2012) rendered moot and academic the resolution of any issues raised on certiorari against the interlocutory orders. The original purpose of the petition was to prevent the RTC from proceeding with the pre-trial and trial on the merits. Once the RTC had already rendered its decision, any determination of the propriety of those interlocutory orders was left without any practical value, as the event sought to be prevented had already transpired. A case that is moot and academic due to supervening events ceases to present any justiciable controversy, and courts of law will not engage in academic declarations or determine moot questions. This is a fundamental principle of judicial review, ensuring that courts address actual controversies rather than hypothetical or already resolved matters, consistent with the judicial power to settle actual controversies involving rights that are legally demandable and enforceable. On Issue 2: The Supreme Court concurred with the CA's finding that the RTC Judge did not commit grave abuse of discretion in denying the OSG's motion to dismiss or to stay proceedings and to refer the parties to arbitration. The RTC correctly found that the arbitration clause cited by the OSG was in the Contract for the Sale of Electricity (CSE), not in the Settlement Agreement, which was the subject matter of the declaratory relief petition. Furthermore, there was no unsettled dispute arising from the CSE between MERALCO and NAPOCOR that would require arbitration, as they had already reached the Settlement Agreement. The Court emphasized that the OSG, not being a party to either the CSE or the Settlement Agreement, lacked the standing to demand arbitration, as established in Ormoc Sugarcane Planter’s Association vs. Court of Appeals. The RTC's reasoning was sound, demonstrating that its actions were not arbitrary, whimsical, or capricious, thus precluding a finding of grave abuse of discretion. On Issue 3: The Supreme Court affirmed the CA's ruling that the RTC Judge did not commit grave abuse of discretion by proceeding with the pre-trial and declaring the petitioner to have waived its rights. The Court reiterated that the RTC's actions were in accord with the Rules of Court, specifically Section 7, Rule 65, which mandates that a petition for certiorari "shall not interrupt the course of the principal case, unless a temporary restraining order or a writ of preliminary injunction has been issued, enjoining the public respondent from further proceeding with the case." Since no such injunctive relief was in effect when the RTC proceeded, the RTC Judge was obligated to continue, and a failure to do so could have resulted in an administrative charge. The waiver of the right to participate and present evidence was attributed to the deliberate refusal of the OSG's counsel to actively participate in the pre-trial, despite being present in court, which is not equivalent to the active attendance required by Section 4, Rule 18 of the Rules of Court as elucidated in Development Bank of the Philippines vs. Court of Appeals, et al. On Issue 4: The Supreme Court clarified that the validity of the Settlement Agreement, including the arguments regarding its alleged disadvantageousness, the pass-on provision, and the lack of OSG participation, was not an issue properly before it in this appeal. The present appeal concerned only the propriety of the assailed interlocutory orders of the RTC as upheld by the CA. The Court asserted that the validity of the Settlement Agreement, with the exception of the pass-through provision (which falls under ERC jurisdiction), was within the primary competence of the RTC to determine in the main case for declaratory relief. The Court declined to address these substantive issues to avoid usurping the jurisdiction of the RTC and to respect the appellate process for the decision on the merits, which the petitioner had indicated an intention to appeal to the CA.
Main Doctrine
The intervening rendition of a decision on the merits by the trial court renders moot and academic any issue raised on certiorari against interlocutory orders that sought to prevent the trial court from proceeding with the case, as any determination of such issues would be left without any practical value.