Court extends TRO vs Psalm on IPP dispute

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A REGIONAL trial court has extended the temporary restraining order (TRO) it issued against the state-run Power Sector Assets and Liabilities Management Corp. (Psalm) in connection with the decision of Psalm terminating the Independent Power Producer Administrator (IPPA) Agreement with South Premiere Power Corp. (SPPC) over the 1,200-megawatt Ilijan combined cycle power plant.

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In a disclosure to the Philippine Stock Exchange (PSE), San Miguel Corp. (SMC), parent of SPPC, said the TRO was extended by the Mandaluyong City Regional Trial Court (RTC) Branch 208 for another 17 days.

“SPPC posted a bond in the amount of P1 million, in accordance with the order of the Court,” said SMC.

Psalm earlier said it was compelled to avail of the relief provided under the Administration Agreement (AA) with the Ilijan plant IPPA due to the failure of SPPC to pay the outstanding generation payments for the period December 26, 2012 to April 25, 2015,
But Psalm questioned the lower court’s decision, saying that only the Supreme Court (SC) has jurisdiction to grant a TRO or any other injunctive relief to complainant SPPC.

It pointed out that the TRO against Psalm runs contrary to the provisions of Republic Act 9136 or the Electric Power Industry Reform Act (Epira).

Epira mandates the government power firm to “manage the orderly sale, disposition, and privatization of National Power Corp. (NPC) generation assets, real estate and other disposable assets” as well as IPP contracts with the objective of liquidating all NPC financial obligations and stranded contract costs in an optimal manner.

In addition, as provided under Section 78 of the Epira, Psalm said that only the Supreme Court has jurisdiction to restrain or enjoin the implementation of the provisions of the Epira, which includes Psalm’s implementation of its mandate.

Psalm explained that the Administration Agreement (AA) with SPPC for the Ilijan IPPA was already terminated when SPPC applied for a TRO.

“The purpose of a TRO is to preserve the status quo . . . Reviving an already terminated contract runs counter to the preservation of the status quo, as it now creates a contractual relationship between Psalm and SPPC, when there was already none upon filing of the instant case,” Psalm argued.

Psalm said SPPC would like the court to prohibit it from terminating the Administration Agreement and reinstate it as an administrator.

Psalm specified that for the period December 26, 2012 onwards, SPPC underpaid its generation payments due Psalm by unilaterally and erroneously applying prices which were much lower than those required under the Ilijan IPPA AA that the company entered into with Psalm.

Also, despite repeated demands from Psalm in 2013 and 2014 for SPPC to immediately pay its outstanding generation payments, SPPC has repeatedly ignored acting on the issue.

“There being absolutely no dispute on Psalm’s demand for the subject unpaid generation payments, Psalm sent SPPC a final demand letter on August 10, 2015 for the payment, which by then had already amounted to P6.46 billion,” said Psalm.

Because of SPPC’s failure to still settle the outstanding generation payments, Psalm was compelled to avail of the relief provided under the Ilijan IPPA AA on September 4, 2015.

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