SC stops garnishment of P62-B PSALM assets

MANILA, Philippines - The Supreme Court (SC) has stopped the garnishment of some P62 billion in assets of the Power Sector Assets and Liabilities Management Corp. (PSALM) intended as compensation for National Power Corp. (Napocor) employees terminated in 2003.

In a resolution released yesterday, the special Third Division of the high court stopped the execution of the writs of garnishment after being warned by the executive branch of the move’s “possible injurious effects on the economy as well as the energy sector.”

The writs were issued by the Quezon City regional trial court (RTC) pursuant to the high tribunal’s Sept. 26, 2006 voiding of National Power Board Resolution Nos. 2002-1242 and 2002-125 terminating the service of 5,000 employees of Napocor on Jan. 31, 2003.

The termination order was in line with restructuring under Republic Act No. 9311 or Electric Power Industry Reform Act of 2001.

The SC subsequently held that the illegally dismissed employees were entitled to reinstatement or payment of separation benefits.

According to the SC public information office, the order was issued to “allow the court to determine who are entitled to be paid under the terms of its previous resolutions and how much each is entitled to be paid.”

The high court also deferred action on a plea to elevate the case for resolution by full court.

The garnishment orders issued by the QC RTC covered Napocor’s current assets in the Manila Electric Co. (Meralco), Land Bank of the Philippines (LBP) and Philippine Electricity Marketing Corp. (PEMC).

Napocor earlier said that if a garnishment was allowed to proceed, the firm would be “unable to support and sustain its operational and maintenance expenses – including those needed to finance its monthly fuel supply requirement, payment of capital expenditures and payment of personal services” including salaries.

Furthermore, it would trigger not only possible bankruptcy of the agency but also of the national government as a whole, Napocor said.

It pointed out that without any budget allotted for any unscheduled expenditure, PSALM would have to rely on the national government for support through advances, or on-lending arrangements, which would entail additional government borrowings.

The state firm, which took over the assets of Napocor, is responsible for the fuel supply and operations of the Malaya Thermal Power Plant in Luzon, Power Barges 101 and 102 and Naga Coal-fired thermal power plant in the Visayas and PB 104 in Mindanao, all of which produce around 430 megawatts.

PSALM is likewise obliged to provide for the fuel requirements of independent power producer plants, namely, Ilijan Natural Gas Power Plant in Luzon and Zamboanga and General Santos diesel power plants in Mindanao.