MANILA, Philippines – The Court of Appeals (CA) has overturned the Energy Regulatory Commission’s (ERC) 2025 decision revoking the operating permits of Villar-linked S.I. Power Corporation (SIPCOR), ruling that the regulator denied the company procedural due process when it ordered the generator to halt its Siquijor operations.

But the appellate court did not rule or absolve SIPCOR of the operational failures that led to Siquijor’s power crisis, and its July 24 ruling does not itself authorize the company to restart its plants.

“Lest it be misunderstood, this Court does not absolve SIPCOR of any violations nor diminish the ERC’s power to revoke PAOs,” Associate Justice Bonifacio Pascua penned for the CA’s Special Seventh Division.

“The power situation in Siquijor demanded swift and decisive action from the ERC. Even so, due process cannot be sacrificed for mere expediency. All told, the ERC failed to afford due process in revoking the PAOs of SIPCOR’s generation units,” he added.

The court found that the ERC denied SIPCOR procedural due process by using what had been presented as a fact-finding investigation to revoke its operating authorities without formally notifying the company that its permits were at risk, while also relying on evidence SIPCOR was not given a chance to contest.

ERC Chairperson Francis Juan told Rappler that the agency would challenge the ruling by filing a motion for reconsideration through the Office of the Solicitor General.

The case stemmed from prolonged outages in Siquijor in 2025, when residents and businesses endured hours-long brownouts that disrupted hospitals, schools, and the tourism-dependent island economy. Energy Secretary Sharon Garin said the island suffered 568 power interruptions, or an average of 31 outages a month.

The ERC opened an investigation in June 2025 after its inspectors found operational deficiencies and a consumer complained of daily outages. SIPCOR, the Province of Siquijor Electric Cooperative or PROSIELCO, and the National Power Corporation were called to a July 3, 2025, public hearing and ordered to submit documents on power supply, maintenance, fuel inventory, and other operational issues.

The CA, however, said those proceedings were consistently framed as fact-finding. The ERC never issued SIPCOR the show-cause order required by its own rules, which should have specified the alleged violations, their legal basis, and the possible penalty.

“An opportunity to participate does not automatically cure the lack of specific notice of the real issue at stake,” the CA said.

The court also found that the ERC relied on documents submitted after the July hearing — including an August 6, 2025, letter from the energy secretary, a University of the Philippines National Engineering Center audit report, and an ERC supplemental memorandum — without giving SIPCOR an opportunity to contest them.

The appellate court also questioned how the shutdown was implemented. The ERC had already issued provisional authorities to operate (PAOs) to replacement generator TOTALPower before its decision against SIPCOR was promulgated. After serving the decision to SIPCOR on August 29, 2025, the regulator ordered it to cease operations by 3 pm that same day, even though ERC rules generally give parties 15 days before a decision becomes final and unappealable.

For these reasons, the CA granted SIPCOR’s petition and “reversed and set aside” the ERC’s August 28, 2025, decision.

The CA decision in CA-G.R. SP No. 191696 was promulgated on July 24 but was disclosed to the public only on Tuesday, August 18, through Premiere Island Power REIT’s (PREIT) filing with the Philippine Stock Exchange (PSE).

Does this mean SIPCOR can continue operations?

The CA decision may have voided the ERC’s revocation of SIPCOR’s license, but this does not mean SIPCOR can operate immediately. 

For one, the PAOs that allow SIPCOR’s three power plants to operate have already expired:

• Siquijor Diesel Power Plant: PAO effective March 16, 2025 to March 15, 2026
• Lazi Diesel Power Plant: PAO effective June 17, 2025 to June 16, 2026
• Siquijor Diesel Power Plant Expansion: PAO effective August 5, 2024 to August 4, 2025 SIPCOR began pre-filing for renewal on June 20, 2025 and formally applied on July 10, 2025.

Even if SIPCOR regains authority to operate, it’s unclear whether it can resume supplying PROSIELCO, the electric cooperative that acts as the island’s electric distribution utility. PROSIELCO has already signed a 15-year power supply agreement with Vivant Energy subsidiary Isla Dilaab Energy Corporation for 11 MW of capacity.

“Regardless of the final outcome of that case, the term of SIPCOR’s provisional authority to operate had already expired. Besides, its power supply agreement with PROSIELCO was already terminated,” Juan told Rappler on Wednesday, August 19.

In other words, SIPCOR’s return remains unlikely for now given that its permits have expired and PROSIELCO has already locked in a long-term power supply deal with another generator.

“I doubt if it will be able to secure a new PSA with the coop since the latter has already conducted its [competitive selection process] and executed with another generator for all its supply requirement,” Juan told Rappler.

The CA decision essentially voided the ERC’s revocation of SIPCOR’s license. But this may not necessarily mean SIPCOR can operate immediately.

SIPCOR itself has acknowledged the uncertainty. In a disclosure to the PSE on Tuesday, August 18, PREIT said SIPCOR was still awaiting these next steps before it could move to resume operations. Trading in PREIT shares was subsequently halted by the PSE following the disclosure.

“We shall continue to keep PREIT informed of material developments, particularly on the finality and execution of the Decision and the restoration of SIPCOR’s authority to operate. Once these are achieved, we formally express our intention to proceed with the lifting of the suspension of the Lease Agreement dated 11 April 2022, as amended, and PREIT’s corresponding recognition of lease revenue,” SIPCOR wrote in a letter to PREIT dated August 18.

SIPCOR is wholly owned by Prime Asset Ventures Inc., the infrastructure group founded by Manny Villar, and is PREIT’s controlling stockholder and parent company. PREIT owns and leases land, buildings, and generation assets used by SIPCOR, which accounted for about 47% of PREIT’s rental income in 2025 before the lease was suspended following SIPCOR’s shutdown.

– Rappler.com