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SUNDAY, 13 FEBRUARY 2011 21:22 JOEL R. SAN JUAN / REPORTER
THE Court of Appeals (CA) has indefinitely enjoined the enforcement of a P14.3-billion settlement reached in 2003 by the Manila Electric Co. (Meralco) and the National Power Corp. (NPC).
In a three-page resolution penned by Associate Justice Japar Dimaampao, the CA’s First Division issued a writ of preliminary injunction barring the Regional Trial Court in Pasig City from implementing its order which affirmed the validity of the settlement claim of Meralco against NPC.
It also directed the trial court to desist from conducting further proceedings and issuing orders in connection with Meralco’s civil suit pending before the Pasig RTC, seeking to compel NPC to comply with the settlement agreement.
The Pasig RTC ruled last year that the Meralco-NPC agreement was “valid and binding,” except for the pass-through provision which is reserved for the approval of the Energy Regulatory Board.
The CA issued the writ of preliminary injunction after the 60-day temporary restraining order (TRO) it issued on December 1, 2010, expired on February 1.
“It bears accent that the TRO we issued on December 1, 2010, is valid only for a period of 60 days….In light of the factual milieu obtaining this controversy, we are persuaded that there is indeed an urgent need for the issuance of a writ of preliminary injunction in order to preserve the status quo of the pending controversy until the merits of the case have been fully adjudicated upon and to forestall the injurious effects, which may be grave and irreparable, that may result from the defiance of such status quo,” the CA stressed.
The appellate court noted that it has the power to grant an application for the issuance of a preliminary injunction even without conducting a hearing.
The Office of the Solicitor General (OSG) has sought the issuance of a TRO or a writ of preliminary injunction against the enforcement of the agreement for being contrary to law, morals and public policy, due to its pass-on provision that imposes an additional burden on consumers.
It added that the settlement agreement was neither submitted nor reviewed by the OSG, in violation of the Revised Administrative Code of 2987, Executive Order 292 and the Charter of the NPC under Republic Act 6395.
Furthermore, the OSG said the NPC board breached its authority when it waived its claims under the contract for the sale of electricity.
It explained that the contract should have been submitted for its legal review and approval, considering the fact that the amount involved is gargantuan and the consequent actions that shall be undertaken by both parties are certainly imbued with public interest.
In 2007 Meralco and NPC filed a joint application for settlement of unpaid balances from their 10-year contract for the sale of electricity, which expired in December 2004.
Based on the contract which took effect in 1994, Meralco agreed to purchase 3,600 megawatts of power from NPC every year.
However, Meralco gradually reduced its power demand from NPC as it started drawing electricity from its independent power producers.
In 2001 it pushed for a renegotiation to obtain a transition supply contract, but NPC insisted on charging Meralco because it failed to meet the required minimum power purchase under the contract.
In 2004 NPC computed Meralco’s balance at P42 billion. Meralco, in turn, demanded that NPC pay it P10 billion because of transmission delays and other charges.
Subsequently, the parties agreed to a computation of Meralco’s liabilities at P14.3 billion.
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