MANILA – The Court of Appeals has overturned the Energy Regulatory Commission’s (ERC) revocation of the provisional authority to operate (PAO) of Villar-owned Siquijor Island Power Corporation (SIPCOR), ruling that the company was not afforded due process.

In a 23-page decision promulgated on July 24, 2026, the CA Special Seventh Division granted SIPCOR’s petition for review after finding that the ERC failed to follow its own procedural requirements when it revoked the PAOs covering the company’s generation units.

The appellate court said the electricity situation in Siquijor required the ERC to act quickly but stressed that urgency could not justify bypassing procedural safeguards.

“The power situation in Siquijor demanded swift and decisive action from the ERC. Even so, due process cannot be sacrificed for more expediency,” the court said in the decision penned by Associate Justice Bonifacio Pascua.

SIPCOR had challenged the ERC’s action, arguing that the commission’s revocation of all its PAOs in August 2025 was invalid because the agency did not issue a show cause order as required under its rules.

The ERC had earlier cited operational and regulatory deficiencies, as well as consumer complaints involving daily power outages lasting between five and 10 hours over several years.

In an order dated June 16, 2025, the commission raised the deficiencies and complaints involving SIPCOR. It subsequently directed the company on July 3, 2025, to submit sworn statements and various documents, including complaint letters, internal maintenance protocols and inventory records.

SIPCOR argued that these directives were merely part of a fact-finding process and did not identify a specific violation or inform the company that an administrative sanction, including the revocation of its operating authority, was being considered.

The CA agreed, finding that the proceedings did not clearly notify SIPCOR that they had shifted into a quasi-judicial case in which the company’s PAOs were at risk.

“SIPCOR cannot be faulted for failing to mount a proper explanation against a sanction it was not informed was being considered,” the court said.

The appellate court noted that the ERC did not dispute that it had failed to issue the required show cause order under Rule 20(G), which governs the initiation of a motu proprio investigation that may result in administrative sanctions.

The ERC also failed to explain why it did not follow the provision, according to the CA.

“Lest it be misunderstood, this Court does not absolve SIPCOR of any violations nor diminish the ERC’s power to revoke PAOs under Section 32 of the 2023 Revised COC Rules and Section 43(e) of the EPIRA,” it said.

The court explained that Republic Act No. 9136, or the Electric Power Industry Reform Act (EPIRA), gives the ERC quasi-judicial powers, including the authority to amend or revoke the operating authority of entities that fail to comply with the law.

The CA stressed, however, that its ruling was limited to whether SIPCOR had been accorded procedural due process.

It said an examination of the ERC orders showed that the proceedings were not initially structured as an adjudicative case against SIPCOR that could result in the revocation of its PAOs.

“In other words, the ERC did not properly initiate, much less conduct, a quasi-judicial adjudication against a named respondent that could result in the revocation of PAOs,” it said.

The court added that the ERC’s authority to revoke PAOs was not in dispute, but that the commission must exercise that authority within the bounds of due process.

“That power is undisputed, but its exercise must be attended by due process. Having that power is one thing, wielding it is another,” the CA said.