Philippine Court Restores Villar Power Firm's License on Due Process Grounds

Regulator's Fast-Track Shutdown Violated Procedure

The Philippine Court of Appeals has reversed the Energy Regulatory Commission's decision to strip S.I. Power Corporation of its operating permits, finding that the regulator prioritized speed over legal procedure when it shut down the Villar-linked generator last year.

In a July 24 ruling made public this week, the appellate court's Special Seventh Division concluded that ERC denied SIPCOR the required notice and opportunity to defend itself before revoking its provisional authorities to operate. Associate Justice Bonifacio Pascua wrote that while Siquijor's power crisis demanded swift action, due process cannot be sacrificed for expediency.

The decision does not absolve SIPCOR of operational failures or automatically authorize the company to restart its generation units. It voids the revocation itself on procedural grounds, leaving the path forward uncertain as parties weigh their next legal moves.

Background: 568 Outages in One Year

Siquijor island endured severe power disruptions throughout 2025, with Energy Secretary Sharon Garin documenting 568 interruptions that averaged 31 outages per month. The blackouts disrupted hospitals, schools, and the tourism economy that underpins the island province.

ERC opened an investigation in June 2025 after inspectors identified operational deficiencies and a consumer filed a complaint about daily outages. The regulator summoned SIPCOR, the Province of Siquijor Electric Cooperative, and the National Power Corporation to a July 3 public hearing, requesting documents on power supply, maintenance schedules, and fuel inventory.

The ERC issued its revocation decision on August 28, 2025, and ordered SIPCOR to cease operations by 3 pm the following day after serving notice. The regulator had already granted provisional operating authorities to replacement generator TOTALPower before announcing its decision against SIPCOR.

What the Court Found

The Court of Appeals identified three procedural failures. First, the ERC consistently framed its proceedings as fact-finding but never issued a show-cause order specifying alleged violations, their legal basis, or potential penalties. The court said participation in a hearing does not cure the lack of specific notice about what is actually at stake.

Second, the regulator relied on evidence submitted after the July hearing, including an August 6 letter from the energy secretary, a University of the Philippines National Engineering Center audit, and an internal ERC memorandum. SIPCOR was not given an opportunity to contest these documents.

Third, the ERC ordered immediate shutdown on the same day it served its decision, despite its own rules generally allowing 15 days before a decision becomes final and enforceable.

The court emphasized it was not ruling on whether SIPCOR violated operational standards or limiting the ERC's authority to revoke permits when justified. The decision addresses only whether the regulator followed its own procedures.

What Happens Next

The ERC can seek reconsideration from the Court of Appeals or elevate the case to the Supreme Court. Until those options are exhausted or the decision becomes final and executory, SIPCOR's operating status remains in limbo.

SIPCOR acknowledged this uncertainty in an August 18 letter to Premiere Island Power REIT, the listed real estate investment trust that owns and leases generation assets to the power firm. SIPCOR said it is awaiting clarity on the decision's finality and execution before moving to resume operations or lift the suspension of its lease agreement with PREIT.

The Philippine Stock Exchange halted trading in PREIT shares following the disclosure. SIPCOR accounted for approximately 47 percent of PREIT's rental income in 2025 before the lease was suspended after the shutdown.

Prime Asset Ventures, the infrastructure group founded by Manny Villar, owns SIPCOR in full and controls PREIT. The case adds another chapter to Siquijor's decades-long struggle for stable electricity supply, with the legal battle now focused not on operational performance but on whether the regulator followed its own rulebook in responding to crisis.