CA extends order restraining P14.3-billion settlement between Meralco, Napocor

MANILA, Philippines -  Manila Electric Company (Meralco) and state-owned National Power Corp. (Napocor) would have to further defer the implementation of their settlement agreement for un-procured volume of electricity in their earlier 10-year contract.

This after the Court of Appeals (CA) issued another restraining order temporarily stopping the implementation of the P14.319-billion deal that was approved by Pasig City regional trial court (RTC) in July 2003.

In a three-page resolution released to the media last Friday, the first division of the appellate court issued a writ of preliminary injunction effectively extending the 60-day temporary restraining order it issued in Dec.1 last year and which had expired last Feb. 1.

“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,” stated the ruling penned by Associate Justice Japar Dimaampao.

Presiding Justice Andres Reyes Jr. and Associate Justice Jane Aurora Lantion concurred.

The order is effective on an indefinite period, it stressed.

Apart from the implementation of the deal, the CA also further stopped the Pasig RTC 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.

 Records show that the Pasig RTC upheld last year the legality of the Meralco-Napocor agreement – except for the pass-through provisions which is reserved for the approval of the Energy Regulatory Board (ERC).

The ERC previously suspended proceedings on the settlement case as it tossed the task of resolving the questions over jurisdiction to the courts.

The regulatory body referred the issue to the Office of the Solicitor General, which had sought relief from the CA in stopping the deal for supposedly being contrary to law, morals and public policy, due to the pass-on provision under it that will impose an additional burden on the consumers.

The original settlement amount lodged by Napocor was more than P27.5 billion, but about P7.4 billion of Meralco obligations had been factored in, thus the offsetting effect on the calculated net settlement amount of P20 billion.

And since Meralco continuously sourced its supply from Napocor, at higher volumes from June 2003 to end-2004, the final settlement was further pared down to P14.319 billion.

The settlement deal was based on the estimated worth of supply which account for the un-procured volumes in their 10-year contract for the supply of electricity that lapsed in Dec. 2004.

At public hearings set by the ERC, contentions have been brought up on settlement agreement’s provisions over “future revisions on the cost based on the final computation of the utility firm’s volume of procurement.”

A mediation process was concluded by the parties in July 2003, leading to the settlement agreement.