SECOND DIVISION

G.R. No. 179537 -- Philippine Economic Zone

Auho!i"# Petitioner, versus E$i%on &'(((n)
Co*ene!(ion Co!po!(ion# Respondent.


Promulgated:

October 23, 2009
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CONCURRING OPINION

A'AD# J.+


Petitioner Philippine Economic Zone Authorit !PEZA"
#$%
and re&pondent
Edi&on !'ataan" (ogeneration (orporation !Edi&on" entered into a $0-ear po)er
&uppl and purcha&e agreement !agreement" that )a& to ta*e e++ect on October 2,,
$99-. Edi&on undertoo* to con&truct, operate, and maintain a po)er plant that
)ould &uppl electricit to e&tabli&hment& operating at the PEZA .one in 'ataan.

On October 22, 200/ Edi&on +iled a complaint +or &peci+ic per+ormance
again&t PEZA be+ore the 0egional 1rial (ourt o+Pa&a (it in (i2il (a&e 0/-0-33-
(45.
#2%
1he complaint alleged in &ub&tance that a di&pute aro&e bet)een Edi&on
and PEZA rooted on their agreement that Edi&on )a& to &uppl po)er to PEZA at a
rate that )a& in &ome )a pegged to )hat 6ational Po)er (orporation !6P("
charged it& 7u.on utilit cu&tomer&.

Edi&on +urther alleged that, becau&e the 6P( began in $999 to ield to
popular demand +or lo)er rate& than )hat it co&t& to generate po)er, it )a&
compelled to &ell the po)er it produced to PEZA at arti+iciall lo)
rate&. 8till Edi&on managed to ma*e a pro+it becau&e o+ 6P(9& +uel &upport
&cheme. :hen it& &ide contract )ith 6P( ended, ho)e2er, Edi&on claimed that
PEZA un;u&ti+iabl re;ected it& re<ue&t +or tari++ rate increa&e& to )hich it )a&
entitled under their agreement.

Edi&on al&o claimed that PEZA granted tari++ rate relie+ to a po)er &upplier
in (ebu but )ould not con&ider extending &uch relie+ to Edi&on, entitling the latter
to terminate their agreement and reco2er a pre-termination +ee o+ o2er P-0=
million. 'ecau&e PEZA re+u&ed Edi&on9& demand +or an end to their agreement
and +or PEZA to pa pre-termination +ee ari&ing +rom it& 2iolation o+ the
agreement, Edi&on claimed a right to re&ort to arbitration a& their agreement
pro2ided. 'ut PEZA, according to Edi&on, declined it& demand&, entitling it to
come to court con+ormabl )ith the term& o+ their agreement and &ee* an order +or
the con&titution o+ a committee o+ arbitrator& to hear their di&pute&.

>n it& an&)er to the complaint,
#3%
)hile PEZA admitted that Edi&on ha&
claim& again&t it +or alleged re+u&al to grant tari++ rate ad;u&tment& that it had gi2en
other po)er &upplier& and that PEZA had re+u&ed to pa the pre-termination +ee
Edi&on a&*ed, PEZA claimed that the &uppo&ed di&pute& )ere not proper +or
arbitration &ince the pre-termination +ee in the agreement )a& ?gra2el onerou&,
uncon&cionable, greatl di&ad2antageou& to the go2ernment, again&t public polic,
and there+ore, in2alid and unen+orceable.@

PEZA +urther claimed a" that Edi&on9& termination o+ the agreement )a&
)him&ical and ba&ele&&, in it&el+ a breach o+ the agreementA b" that during the
negotiation& +or the re<ue&ted po)er rate increa&e, Edi&on declined to &ubmit
rele2ant data that PEZA needed to act on the re<ue&tA c" that, in utter bad +aith,
Edi&on cut o++ po)er &uppl to PEZA on Augu&t $3, 200/A d" that Edi&on9& moti2e
)a& to maneu2er PEZA into paing it& demand +or uncon&cionable and illegal pre-
termination +ee rather than to get it& tari++ rate ad;u&tedA and e" that thi& ill moti2e
)a& e2idenced b the +act that Edi&on had been negotiating to &ell it& po)er
engine& to 6P( e2en be+ore it a&*ed PEZA +or tari++ rate ad;u&tment.

Edi&on +iled a repl and a motion to render ;udgment on the pleading&,
contending that &ince PEZA did not challenge the +act that there are di&pute&
bet)een the partie&, Edi&on i& entitled to a re&olution o+ &uch di&pute& b a three-
member arbitration committee to be con&tituted b the 01(. Acting on thi& motion
and on the belie+ that PEZA9& an&)er did not tender a genuine i&&ue, on April ,,
200, the 01( i&&ued an order con&tituting an Arbitration (ommittee )ith (hie+
Bu&tice Andre& 6ar2a&a a& chairman and retired 8upreme (ourt Bu&tice& Cugo
Dutierre. and Bo&e E. 4eria, a& member& )ith po)er to arbitrate the di&pute&
bet)een Edi&on and PEZA. 1he 01( denied PEZA9& motion +or recon&ideration
o+ the order.

On appeal to the (ourt o+ Appeal&, the latter court a++irmed the 01(9& order
under a deci&ion dated April $0, 200-, prompting PEZA to come to thi& (ourt on
petition +or re2ie) b certiorari.

> +ull agree )ith the ponencia o+ Bu&tice (onchita (arpio 5orale& in
holding that PEZA9& an&)er to the complaint ac*no)ledged the exi&tence o+ the
remed o+ arbitration concerning an di&pute that might ari&e bet)een them
in2ol2ing their agreement, in thi& ca&e, PEZA9& alleged re+u&al to
grant Edi&on tari++ rate ad;u&tment& a& their agreement pro2ided. PEZA9& o)n
an&)er alleged that it did not et den the re<ue&ted tari++ rate ad;u&tment& and that
the dela in it& action on &uch re<ue&t had been brought about b Edi&on9& re+u&al
to &ubmit the document& and data re<uired o+ it. :hether or not PEZA did den
&uch re<ue&t it&el+ actuall pre&ent& a di&pute bet)een the partie&. Arbitration o+
the di&pute& bet)een them re&pecting alleged 2iolation& o+ the agreement i&,
there+ore, ine2itable.

> )ould li*e to add, ho)e2er, that in 2oting to grant the petition, it i& clear to
me that the (ourt doe& not re&ol2e toda the i&&ue that PEZA rai&e&: )hether or not
the pre-termination clau&e o+ it& agreement )ith Edi&on i& ?gra2el onerou&,
uncon&cionable, greatl di&ad2antageou& to the go2ernment, again&t public polic,
and there+ore, in2alid and unen+orceable.@ >n +act, i+ the Arbitration (ommittee
&hould uphold it& de+en&e that it had not arbitraril denied Edi&on9& claim +or tari++
rate ad;u&tment, the i&&ue concerning the in2alidit o+ the pre-termination clau&e o+
their agreement ma not e2en come to pa&&.



RO'ER,O A. A'AD
A&&ociate Bu&tice

#$%
A go2ernment-o)ned corporation created b P.F. 33 !$9-2".
#2%
(omplaint, rollo, p. $2$, in relation to the 0e<ue&t +or Arbitration dated October 20, 200/, p. 230.
#3%
An&)er, id. at $23.