THE Court of Appeals (CA) has denied
the bid of Wholesale Electricity Spot Market (WESM) operator Philippine
Electricity Market Corp. (PEMC) to collect at least P234 million from Thermal
Mobile Inc., a power-generation company allegedly involved in the collusion to
manipulate the price of electricity in the spot market during the 2013
Malampaya shutdown.
In a 22-page decision penned by
Associate Justice Stephen Cruz, the Special Fifth Division affirmed the April
1, 2015 ruling issued by the Regional Trial Court (RTC) in Pasig City granting
Thermal Mobile Inc.’s (TMO) plea for the issuance of an injunction enjoining
the PEMC from demanding the payment of P234.9 million representing financial
penalties for violation of the Must Offer Rule (MOR).
The MOR requires generation
companies to offer all their registered capacity to the WESM in order to avoid
market manipulation through the artificial withholding of capacity or offering
at an insanely high price such that it will not be dispatched.
PEMC, which acts as the market
operator that governs WESM, found several violations of the MOR. TMO was found
to be one of the biggest violators, liable for 3,578 counts of breach of the
MOR and was fined P243.9 million.
This prompted TMO to seek refuge
from the Pasig RTC, which, in turn, stopped PEMC from demanding payment of the
penalties.
The CA gave weight to the claim of
TMO that the payment of the huge amount would jeopardize its operations.
“In the instant case, TMO
sufficiently established the importance of the issuance of the writ of
preliminary injunction. TMO, in its comment to PEMC’s petition for review,
mentioned that it is not financially capable to settle the financial penalty.
As such, payment of the enormous penalty amounting to P234,900,000 would be a
threat to its very existence,” it ruled.
“Simply stated, what is involved
herein is not just money but TMO’s very own existence, which obviously is not
susceptible of any mathematical computation and cannot be adequately
compensated in damages. In fact, no device can measure and calculate the injury
that TMO would suffer if the same would be executed and implemented,” it added.
The appellate court said the
arguments raised by PEMC in its petition “are utterly misplaced.”
PEMC argued that the Pasig RTC erred
in taking cognizance of TMO’s petition based on the rules of court on
alternative dispute resolution and resolving the same despite the fact that no
civil contract to which entitles them to arbitrate.
It added that the trial court erred
in ruling that WESM Dispute Resolution Market Manual (DRMM) and the WESM Rules
are considered the dispute-resolution agreement of the parties, thus, the court
has jurisdiction over the case.
The PEMC insisted that there is no
irreparable injury that would justify the issuance of the injunction pending
arbitration. It noted that contrary to PEMC’s claim that there is no
specific arbitration agreement which covers the relationship between PEMC and
TMO, there exists the Market Participation Agreement dated April 5, 2013, where
both parties were signatories.
Article V of the agreement
identifies WESM Rule 7.3, as well as the WESM DRMM as the applicable rule in
the event between the parties arise.
WESM DRMM states that disputes
between WESM members and the market operator should undergo the
dispute-resolution process requiring a three- stage process comprising of good
faith negotiation to amicably settle their dispute between and/or among
themselves; mediation; and/or arbitration.
“It is also worthy to note that WESM
members shall comply with the dispute-resolution process of the WESM Rules
before filing a formal complaint to the Energy Regulatory Commission, which is
what TMO did,” the CA noted.
Concurring with the ruling were
Associate Justices Jose Reyes Jr. and Jhosep Lopez.
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